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As Of Filer Filing For·On·As Docs:Size Issuer Agent 2/27/04 Sep Acct A of Pacific Life Ins Co 485BPOS® 2/27/04 6:2.5M RR Donnelley/FA Separate Account A of Pacific Life Insurance Co |
Document/Exhibit Description Pages Size
1: 485BPOS Supplement to Pacific Life Innovations and Pacific HTML 1.91M
Innovations Select
6: EX-99.10 Independent Auditors' Consent HTML 11K
2: EX-99.4(N) Gpa 5 Rider HTML 24K
3: EX-99.4(O)(2) Income Access Rider HTML 90K
4: EX-99.4(Q) Gia 2 Rider HTML 91K
5: EX-99.4(R) Gia 5 Rider HTML 94K
| Supplement to Pacific Life Innovations and Pacific Innovations Select |
As filed with the Securities and Exchange Commission on February 27, 2004.
Registrations Nos.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
| REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
x | |
| Pre-Effective Amendment No. __ |
¨ | |
| Post-Effective Amendment No. 15 |
x |
and/or
| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
x | |
| Amendment No. 92 |
x |
(Check appropriate box or boxes)
SEPARATE ACCOUNT A
(Exact Name of Registrant)
PACIFIC LIFE INSURANCE COMPANY
(Name of Depositor)
700 Newport Center Drive
Newport Beach, California 92660
(Address of Depositor’s Principal Executive Offices) (Zip Code)
(949) 219-3743
(Depositor’s Telephone Number, including Area Code)
Diane N. Ledger
Vice President
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
(Name and address of agent for service)
Copies of all communications to:
| Diane N. Ledger Pacific Life Insurance Company P.O. Box 9000 |
Ruth Epstein, Esq. Dechert LLP 1775 Eye Street, N.W. |
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
| ¨ | immediately upon filing pursuant to paragraph (b) of Rule 485 | |
| x | on February 27, 2004 pursuant to paragraph (b) of Rule 485 | |
| ¨ | 60 days after filing pursuant to paragraph (a) (1) of Rule 485 | |
| ¨ | on 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: Interests in the Separate Account Under Pacific Innovations and Pacific Innovations Select individual flexible premium deferred variable annuity contracts.
Filing Fee: None
SEPARATE ACCOUNT A
FORM N-4
CROSS REFERENCE SHEET
PART A
| Item No. | Prospectus Heading | |||
| 1. |
Cover Page | Cover Page
| ||
| 2. |
Definitions | TERMS USED IN THIS PROSPECTUS
| ||
| 3. |
Synopsis | AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS SELECT
| ||
| 4. |
Condensed Financial Information | YOUR INVESTMENT OPTIONS — Variable Investment Option Performance; ADDITIONAL INFORMATION — Financial Statements; FINANCIAL HIGHLIGHTS (PACIFIC INNOVATIONS ONLY)
| ||
| 5. |
General Description of Registrant, Depositor and Portfolio Companies |
AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS SELECT; PACIFIC LIFE AND THE SEPARATE ACCOUNT — Pacific Life, — Separate Account A; YOUR INVESTMENT OPTIONS — Your Variable Investment Options; ADDITIONAL INFORMATION — Voting Rights
| ||
| 6. |
Deductions | AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS SELECT; HOW YOUR INVESTMENTS ARE ALLOCATED — Transfers; CHARGES, FEES AND DEDUCTIONS; WITHDRAWALS — Optional Withdrawal
| ||
| 7. |
General Description of Variable Annuity Contracts |
AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS ELECT; PURCHASING YOR CONTRACT — How to Apply for your Contract; HOW YOUR INVESTMENTS ARE ALLOCATED; RETIREMENT BENEFITS AND OTHER PAYOUTS — Choosing Your Annuity Option, — Your Annuity Payments, — Death Benefits; ADDITIONAL INFORMATION — Voting Rights, — Changes to Your Contract, — Changes to ALL Contracts, — Inquiries and Submitting Forms and Requests, — Timing of Payments and Transactions
| ||
| 8 |
Annuity Period | RETIREMENT BENEFITS AND OTHER PAYOUTS
| ||
| 9. |
Death Benefit | RETIREMENT BENEFITS AND OTHER PAYOUTS — Death Benefits
| ||
| 10. |
Purchases and Contract Value | AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS SELECT; PURCHASING YOUR CONTRACT; HOW YOUR INVESTMENTS ARE ALLOCATED; PACIFIC LIFE AND THE SEPARATE ACCOUNT — Pacific Life; THE GENERAL ACCOUNT — Withdrawals and Transfers
| ||
| 11. |
Redemptions | AN OVERVIEW OF PACIFIC INNOVATIONS AND AN OVERVIEW OF PACIFIC INNOVATIONS SELECT; CHARGES, FEES AND DEDUCTIONS; WITHDRAWALS; ADDITIONAL INFORMATION — Timing of Payments and Transactions; THE GENERAL ACCOUNT — Withdrawals and Transfers
| ||
| 12. |
Taxes | CHARGES, FEES AND DEDUCTIONS — Premium Taxes; WITHDRAWALS — Optional Withdrawals, — Tax Consequences of Withdrawals; FEDERAL TAX STATUS
| ||
| 13. |
Legal Proceedings | Not Applicable
| ||
| 14. |
Table of Contents of the Statement of Additional Information |
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION | ||
PART B
| Item No. |
Statement of Additional Information Heading | |||
| 15. |
Cover Page | Cover Page | ||
| 16. |
Table of Contents | TABLE OF CONTENTS | ||
| 17. |
General Information and History | Not Applicable | ||
| 18. |
Services | Not Applicable | ||
| 19. |
Purchase of Securities Being Offered | THE CONTRACTS AND THE SEPARATE ACCOUNT — Calculating Subaccount Unit Values, — Systematic Transfer Programs | ||
| 20. |
Underwriters | DISTRIBUTION OF THE CONTRACTS — Pacific Select Distributors, Inc. | ||
| 21. |
Calculation of Performance Data | PERFORMANCE | ||
| 22. |
Annuity Payments | THE CONTRACTS AND THE SEPARATE ACCOUNT — Variable Annuity Payment Amounts | ||
| 23. |
Financial Statements | FINANCIAL STATEMENTS | ||
PART C
Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to this Registration Statement.
PROSPECTUS
(included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 001017062-03-000934 filed on April 25, 2003 and incorporated by reference herein.)
STATEMENT OF ADDITIONAL INFORMATION
(included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0001017062-03-000934 filed on April 25, 2003 and incorporated by reference herein.)
Supplement dated February 27, 2004 to the Prospectus dated May 1, 2003
for Pacific Innovations, a variable annuity contract
issued by Pacific Life Insurance Company
| Capitalized terms used in this Supplement are defined in the Prospectus referred to above unless otherwise defined herein. “We,” “us”, or “our” refer to Pacific Life Insurance Company; “you” or “your” refer to the Contract Owner.
Subject to state availability, for Income Access Riders with an Effective Date on or after March 1, 2004, this supplement changes the Prospectus to reflect the following:
|
||||||
|
AN OVERVIEW OF PACIFIC INNOVATIONS – Periodic Contract Expenses (calculated as a percentage of Contract Value) is amended. |
The Periodic Contract Expenses section of the Prospectus is amended to restate and include the following:
Income Access Rider Annual Charge (Optional Rider) 0.75%8
8 If you buy the Income Access Rider (subject to availability), an optional Rider, we deduct this charge proportionately from your Investment Options on each Contract Anniversary following the Effective Date of the Rider during the term of the Rider and while the Rider is in effect. If the Rider is terminated for reasons other than death or annuitization, this charge will be deducted on the effective date of termination. The 0.75% Income Access Charge is the maximum charge allowable under the terms and conditions of the rider. Currently the annual charge for the Rider is 0.40%. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under the Rider. The charge if you purchase a Rider will also be shown on the Rider in your Contract. If the Effective Date of the Rider is before March 1, 2004 the Income Access Rider Annual Charge is equal to 0.30%. |
|
AN OVERVIEW OF PACIFIC INNOVATIONS – Examples is amended. |
The Examples section is amended to read as follows:
The following examples are intended to help you compare the cost of investing in your Contract with the cost of investing in other variable annuity contracts. These costs include Contract transaction expenses, the maximum periodic Contract expenses (including the optional combination of Riders whose cumulative expenses totaled more than any other optional combination), Separate Account annual expenses, and Portfolio fees and expenses for the year ended December 31, 2003. Premium taxes and/or other taxes may also be applicable.
The examples assume that you invest $10,000 in the Contract for the time periods indicated. They also assume that your Investment has a 5% return each year and assumes the maximum and minimum fees and expenses of all of the Investment Options available. Although your actual costs may be higher or lower, based on these assumptions, your maximum and minimum costs would be:
|
|||||||||||||
| • If you surrendered your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,386 | $2,463 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $986 | $1,266 | $939 | $2,037 | |||||||||||
| • If you annuitized your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,386 | $1,716 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $986 | $546 | $939 | $2,037 | |||||||||||
| • If you did not surrender, nor annuitize, but left the money in your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $576 | $1,716 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $176 | $546 | $939 | $2,037 | |||||||||||
|
* In calculating the examples above, we used the maximum and minimum net operating expenses of all the Portfolios for the 1 year period and the maximum and minimum total operating expenses for the 3, 5 and 10 year periods as shown in the Fees And Expenses Paid By The Fund section of the Fund’s Prospectus. For more information on fees and expenses, see CHARGES, FEES AND DEDUCTIONS in this Prospectus, and see the Fund’s Prospectus.
|
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2
|
PURCHASING YOUR CONTRACT is amended. |
The Purchasing the Income Access Rider (Optional) section is replaced with the following:
Purchasing the Income Access Rider (Optional)
Subject to availability, you may purchase the optional Income Access Rider on the Contract Date or on any Contract Anniversary if:
• the age of each Annuitant is 85 years or younger on the date of purchase, and • your entire Contract Value is invested in an asset allocation program established and maintained by us for this Rider during the entire period that the Rider is in effect.
You should consult a qualified adviser for complete information and advice before purchasing the Income Access Rider or electing the Step-Up provision available under this Rider. |
|||||
| There may be adverse consequences to taking a loan while the Rider is in effect. If you have an existing loan on your Contract or are considering taking a loan, you should carefully consider whether the Rider is appropriate for you.
If you purchase the Income Access Rider within 60 days after the Contract Date or within 30 days after a Contract Anniversary, the Effective Date of the Rider will be that Contract Date or Anniversary.
The Rider allows for withdrawals from the Contract of up to the Protected Payment Amount each Contract Year, regardless of market performance, until the Remaining Protected Balance is reduced to zero.
The Income Access Rider also provides that if, on any Contract Anniversary beginning with the fifth (5th) anniversary of the Effective Date of the Income Access Rider, the Contract Value is greater than the Remaining Protected Balance, you may elect to Step-Up (increase) the Remaining Protected Balance to an amount equal to 100% of the Contract Value.
|
||||||
| For purposes of the Income Access Rider, the term “withdrawal” includes any applicable withdrawal charges and charges for premium taxes and/or other taxes, if applicable. Amounts withdrawn under the Income Access Rider will reduce the Contract Value by the amount withdrawn and will be subject to the same conditions, limitations, restrictions and all other fees, charges and deductions, if applicable, as withdrawals otherwise made under the provisions of the Contract.
The initial Protected Payment Base and initial Remaining Protected Balance are equal to:
• your Initial Purchase Payment, if the Effective Date of the Rider is on a Contract Date; or • the Contract Value, if the Effective Date of the Rider is on a Contract Anniversary. | ||||
| The initial Protected Payment Amount is equal to 7% of the initial Protected Payment Base. | ||||
|
Once these initial amounts are established, the Protected Payment Base and Protected Payment Amount will remain unchanged, provided no additional Purchase Payments are received after the Effective Date of the Rider, the total amount withdrawn each Contract Year does not exceed the Protected Payment Amount and the Remaining Protected Balance is greater than 7% of the Protected Payment Base at each Contract Anniversary.
|
3
| Example #1—Initial Values on the Effective Date based on an initial Purchase Payment of $100,000
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
|
If we receive any additional Purchase Payments to the Contract, we will immediately increase the Protected Payment Base and Remaining Protected Balance by the amount of the Purchase Payment. However, the Protected Payment Amount will remain unchanged until the next Contract Anniversary, when the Protected Payment Amount for the new Contract Year is determined.
For purposes of the Income Access Rider, we reserve the right to restrict additional Purchase Payments.
|
| Example #2—Additional Purchase Payment received after the Effective Date of the Rider but within the same Contract Year and its effect on the Protected Payment Base and Remaining Protected Balance.
|
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
|
In addition to Purchase Payments, the Contract Value is further subject to increases and/or decreases during a Contract Year as a result of additional amounts credited, charges, fees and other deductions and increases and/or decreases in the investment performance of the Variable Account. |
| While the Rider is in effect, you may make cumulative withdrawals up to the Protected Payment Amount each Contract Year without any adjustment to the Protected Payment Base, regardless of market performance, until the Remaining Protected Balance equals zero. Withdrawals may be taken in a lump sum, in multiple withdrawals or in a series of pre-authorized withdrawals within the Contract Year.
Any portion of the Protected Payment Amount not withdrawn during a Contract Year may not be carried over to the next Contract Year.
| ||||
| Example #3—Cumulative withdrawals during the second Contract Year not exceeding the Protected Payment Amount established for that Contract Year.
|
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
| Activity | $8,400 | $110,600 | $111,600 | |||||||||||||||
| Beginning of Year 3 |
$120,000 | $8,400 | $111,600 | |||||||||||||||
4
| Under the terms and conditions of your Contract, you may withdraw more than the Protected Payment Amount each Contract Year. However, withdrawals of more than the Protected Payment Amount in a Contract Year will cause an immediate adjustment to the Remaining Protected Balance, the Protected Payment Base, and, at the next Contract Anniversary, the Protected Payment Amount.
If a withdrawal does not cause the total amount withdrawn during the Contract Year to exceed the Protected Payment Amount, the Protected Payment Base will remain unchanged. The Remaining Protected Balance will decrease by the withdrawal amount immediately following the withdrawal.
If a withdrawal causes the total amount withdrawn during the Contract Year to exceed the Protected Payment Amount, we will reset the Protected Payment Base and Remaining Protected Balance immediately following the withdrawal to the lesser of:
• the Contract Value immediately after the withdrawal, or • the Remaining Protected Balance immediately before the withdrawal, less the withdrawal amount. |
|
The Protected Payment Amount will remain unchanged until the next Contract Anniversary, when the Protected Payment Amount for the new Contract Year is determined.
|
| Example #4—Cumulative withdrawals during the third Contract Year exceeding the Protected Payment Amount established for that Contract Year and its effect on the Protected Payment Base and Remaining Protected Balance.
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
| Activity | $8,400 | $110,600 | $111,600 | |||||||||||||||
| Beginning of Year 3 |
$120,000 | $8,400 | $111,600 | |||||||||||||||
| Activity (Withdrawal) |
$8,400 | $103,600 | $103,200 | |||||||||||||||
| Activity (Withdrawal) |
$5,000 | $94,000 | $94,000 | $94,000 | ||||||||||||||
| Beginning of Year 4 |
$94,000 | $6,580 | $94,000 | |||||||||||||||
| Because the $5,000 withdrawal causes the cumulative withdrawals to exceed the Protected Payment Amount, the Protected Payment Base and Remaining Protected Balance immediately after the withdrawal are reset to the lesser of (a) the Contract Value immediately after the withdrawal ($94,000); or, (b) the Remaining Protected Balance immediately before the withdrawal, less the withdrawal amount ($103,200 – $5,000 = $98,200). | ||||
|
A withdrawal may not exceed the amount available for withdrawal under the Contract, if such withdrawal would cause the cumulative withdrawals for that Contract Year to exceed the Protected Payment Amount and reduce the Contract Value to zero.
|
5
| If, immediately after a withdrawal, the cumulative withdrawals for that Contract Year do not exceed the Protected Payment Amount and the Contract Value is reduced to zero, the following will apply:
• the Protected Payment Amount will be paid under a series of pre-authorized withdrawals under a payment frequency, as elected by you, but no less frequently than annually, until the Remaining Protected Balance is reduced to zero, | ||||
| • no additional Purchase Payments will be accepted under the Contract, • any Remaining Protected Balance will not be available for payment in a lump sum or may not be applied to provide payments under an Annuity Option, and • the Contract will cease to provide any death benefit.
If the Owner or sole surviving Annuitant dies and the Contract Value is zero as of the date of death, any Remaining Protected Balance will be paid to the designated Beneficiary under the series of pre-authorized withdrawals and payment frequency then in effect at the time of the Owner’s or sole surviving Annuitant’s death.
If the Owner dies while this Rider is in effect and if the surviving spouse of the deceased Owner elects to continue the Contract in accordance with its terms, then the provisions of this Rider will continue, unless otherwise terminated. |
| You cannot request a termination of the Rider, but the Rider will automatically end on the earliest of:
• the Contract Anniversary immediately following the day any portion of the Contract Value is no longer invested according to an asset allocation program established and maintained by us for this Rider, • the Contract Anniversary immediately following the day the Remaining Protected Balance is reduced to zero, • the day of the first death of an Owner or the date of death of the sole surviving Annuitant, except as otherwise provided in the paragraph below, • the day the Contract is terminated in accordance with the provisions of the Contract, except as otherwise provided in the paragraph below, or • the Annuity Date.
The Rider and the Contract will not terminate on the first death of an Owner or death of the sole surviving Annuitant, or the day the Contract is terminated in accordance with the provision of the Contract if, at the time of those events, the Contract Value is zero and we are making pre-authorized withdrawals of the Remaining Protected Balance under the provisions of the Rider. If we are making pre-authorized withdrawals, the Contract will terminate on the Contract Anniversary immediately following the day the Remaining Protected Balance is zero. | ||||
|
Optional Step-Up in the Remaining Protected Balance
On any Contract Anniversary beginning with the fifth (5th) anniversary of the Effective Date of the Rider and before the Annuity Date, you may elect to Step-Up the Remaining Protected Balance to an amount equal to 100% of the Contract Value as of the Step-Up Date.
|
6
| The Income Access Charge may change if you elect a Step-Up, but will never exceed the Income Access Charge then being charged for this same benefit under newly issued riders. If you do not elect the optional Step-Up, the Income Access Charge on the Effective Date of the Rider will remain unchanged.
Your request for a Step-Up must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
On each Step-Up Date, we will:
(a) reset the Remaining Protected Balance to an amount equal to 100% of the Contract Value on the Step-Up Date;
(b) reset the Protected Payment Base to an amount equal to the reset Remaining Protected Balance; and | ||||
|
(c) reset the Protected Payment Amount to equal 7% of the reset Protected Payment Base.
Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
Your election to Step-Up the Remaining Protected Balance may result in a reduction in the Protected Payment Base and Protected Payment Amount.
|
| Example #5—A Step-Up in the Remaining Protected Balance at the Beginning of Contract Year 7 (Step-Up Date). This example further assumes that cumulative withdrawals for Contract Years 4, 5 and 6 do not exceed the Protected Payment Amount and no additional Purchase Payments are made during these Contract Years.
| ||||||||||||||||||
| Contract Years | Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protect Balance |
||||||||||||
| Beginning of Year 4 | $94,000 | $6,580 | $94,000 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $87,420 | ||||||||||||||||
| Beginning of Year 5 | $94,000 | $6,580 | $87,420 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $80,840 | ||||||||||||||||
| Beginning of Year 6 | $94,000 | $6,580 | $80,840 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $74,260 | ||||||||||||||||
| Beginning of Year 7 (Balances immediately before the Step-Up) |
$85,000 | $94,000 | $6,580 | $74,260 | ||||||||||||||
| Activity (Step-Up effected) | ||||||||||||||||||
| Beginning of Year 7 (Balances immediately after the Step-Up) |
$85,000 | $85,000 | $5,950 | $85,000 | ||||||||||||||
| Because the Contract Value ($85,000) on the Step-Up Date is greater than the Remaining Protected Balance ($74,260) (see balances immediately before the Step-Up), the Step-Up election: (a) resets the Remaining Protected Balance to equal the Contract Value; (b) resets the Protected Payment Base to equal the reset Remaining Protected Balance, resulting in a reduction in the Protected Payment Base; and (c) resets the Protected Payment Amount to equal 7% of the reset Protected Payment Base ($85,000 x 7% = $5,950), resulting in a reduction in the Protected Payment Amount (see balances immediately after the Step-Up).
We will provide you with written confirmation of your Step-Up election. | ||||||||||||||||||
7
|
CHARGES, FEES AND DEDUCTIONS is amended. |
The CHARGES, FEES AND DEDUCTIONS section is amended to restate the following:
Income Access Annual Charge (Optional Rider)
If you purchase the optional Income Access Rider, we will deduct an Income Access Charge from your Investment Options on a proportionate basis on each Contract Anniversary that the Rider remains in effect following the Effective Date of the Rider, and if you terminate the Rider. The Income Access Rider Annual Charge is equal to 0.40% (0.30% if the Effective Date of the Rider is before March 1, 2004.) multiplied by your Contract Value on the date the Charge is deducted.
The Income Access Charge may change if you elect the Step-Up option in the Remaining Protected Balance, but will never be more than the Income Access Charge being charged under the then current terms and conditions of the Rider and will not be more than a maximum charge of 0.75%. If you do not elect the optional Step-Up, your Income Access Charge will remain the same as it was on the Effective Date of the Rider.
Any portion of the Income Access Charge we deduct from the Fixed Option will not be greater than the annual interest credited in excess of 3%.
|
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|
PACIFIC LIFE AND THE SEPARATE ACCOUNT – Financial Highlights is amended. |
The Financial Highlights section is amended by adding the following:
The table below is designed to help you understand how the Variable Investment Options have performed. It shows the value of a Subaccount Unit at the beginning and end of each period, as well as the number of Subaccount Units at the end of each period. A Subaccount Unit is also called an Accumulation Unit.
The information in the table for the three year period ended December 31, 2003 is included in the financial statements of Separate Account A which have been audited by Deloitte & Touche LLP, independent auditors. You should read the table in conjunction with the financial statements for Separate Account A, which are included in its annual report dated as of December 31, 2003. |
8
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Blue Chip1 | ||||||||||||||||||
| 2003 | $5.86 | $7.25 | 958,358 | $5.84 | $7.21 | 271,162 | $5.82 | $7.17 | 134,395 | |||||||||
| 2002 | $8.03 | $5.86 | 1,103,279 | $8.01 | $5.84 | 278,780 | $8.00 | $5.82 | 128,787 | |||||||||
| 2001 | $10.00 | $8.03 | 1,166,467 | $10.00 | $8.01 | 272,994 | $10.00 | $8.00 | 112,661 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Aggressive Growth2 | ||||||||||||||||||
| 2003 | $6.06 | $7.57 | 105,122 | $6.03 | $7.52 | 22,031 | $6.02 | $7.49 | 3,837 | |||||||||
| 2002 | $7.91 | $6.06 | 67,878 | $7.89 | $6.03 | 29,535 | $7.88 | $6.02 | 2,756 | |||||||||
| 2001 | $10.00 | $7.91 | 203,178 | $10.00 | $7.89 | 55,731 | $10.00 | $7.88 | 14,934 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Diversified Research3 | ||||||||||||||||||
| 2003 | $7.79 | $10.19 | 574,890 | $7.74 | $10.11 | 120,430 | $7.71 | $10.05 | 89,681 | |||||||||
| 2002 | $10.42 | $7.79 | 630,716 | $10.38 | $7.74 | 141,990 | $10.35 | $7.71 | 82,571 | |||||||||
| 2001 | $10.87 | $10.42 | 663,788 | $10.85 | $10.38 | 143,436 | $10.83 | $10.35 | 100,919 | |||||||||
| 2000 | $10.00 | $10.87 | 476,150 | $10.00 | $10.85 | 122,599 | $10.00 | $10.83 | 93,630 | |||||||||
| Small-Cap Equity4 | ||||||||||||||||||
| 2003 | $12.75 | $17.70 | 258,197 | $12.65 | $17.52 | 85,247 | $12.57 | $17.39 | 48,418 | |||||||||
| 2002 | $16.92 | $12.75 | 256,864 | $16.81 | $12.65 | 95,564 | $16.74 | $12.57 | 57,806 | |||||||||
| 2001 | $17.06 | $16.92 | 300,104 | $17.53 | $16.81 | 111,966 | $17.48 | $16.74 | 85,623 | |||||||||
| 2000 | $23.01 | $17.06 | 287,957 | $22.96 | $17.53 | 82,118 | $22.93 | $17.48 | 57,867 | |||||||||
| International Large-Cap3 | ||||||||||||||||||
| 2003 | $5.06 | $6.52 | 1,555,393 | $5.03 | $6.47 | 408,364 | $5.01 | $6.43 | 229,704 | |||||||||
| 2002 | $6.24 | $5.06 | 1,518,975 | $6.21 | $5.03 | 432,067 | $6.19 | $5.01 | 243,716 | |||||||||
| 2001 | $7.74 | $6.24 | 1,843,777 | $7.72 | $6.21 | 490,702 | $7.71 | $6.19 | 327,597 | |||||||||
| 2000 | $10.00 | $7.74 | 1,202,801 | $10.00 | $7.72 | 298,948 | $10.00 | $7.71 | 218,938 | |||||||||
| Short-Duration Bond5 | ||||||||||||||||||
| 2003 | $10.00 | $10.00 | 575,417 | $10.00 | $9.99 | 108,466 | $10.00 | $9.98 | 61,377 | |||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| I-Net TollkeeperSM6 | ||||||||||||||||||
| 2003 | $2.65 | $3.74 | 495,356 | $2.64 | $3.72 | 159,863 | $2.63 | $3.70 | 77,106 | |||||||||
| 2002 | $4.38 | $2.65 | 608,093 | $4.37 | $2.64 | 173,458 | $4.35 | $2.63 | 110,387 | |||||||||
| 2001 | $6.72 | $4.38 | 642,382 | $6.71 | $4.37 | 194,993 | $6.70 | $4.35 | 103,915 | |||||||||
| 2000 | $10.00 | $6.72 | 635,944 | $10.00 | $6.71 | 193,330 | $10.00 | $6.70 | 87,487 | |||||||||
| Financial Services7 | ||||||||||||||||||
| 2003 | $7.70 | $9.79 | 123,757 | $7.67 | $9.74 | 36,048 | $7.65 | $9.69 | 16,566 | |||||||||
| 2002 | $9.14 | $7.70 | 123,469 | $9.12 | $7.67 | 39,675 | $9.11 | $7.65 | 7,358 | |||||||||
| 2001 | $10.00 | $9.14 | 117,091 | $10.00 | $9.12 | 33,833 | $10.00 | $9.11 | 4,358 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Health Sciences2 | ||||||||||||||||||
| 2003 | $6.88 | $8.68 | 133,145 | $6.86 | $8.62 | 39,052 | $6.84 | $8.59 | 9,392 | |||||||||
| 2002 | $9.10 | $6.88 | 119,884 | $9.08 | $6.86 | 37,936 | $9.07 | $6.84 | 6,760 | |||||||||
| 2001 | $10.00 | $9.10 | 142,534 | $10.00 | $9.08 | 34,324 | $10.00 | $9.07 | 5,099 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Technology8 | ||||||||||||||||||
| 2003 | $3.08 | $4.33 | 386,513 | $3.07 | $4.31 | 69,664 | $3.06 | $4.29 | 24,553 | |||||||||
| 2002 | $5.82 | $3.08 | 212,958 | $5.81 | $3.07 | 56,113 | $5.80 | $3.06 | 8,410 | |||||||||
| 2001 | $10.00 | $5.82 | 144,194 | $10.00 | $5.81 | 27,093 | $10.00 | $5.80 | 12,078 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Growth LT | ||||||||||||||||||
| 2003 | $14.55 | $19.23 | 654,094 | $14.44 | $19.04 | 192,592 | $14.35 | $18.89 | 110,829 | |||||||||
| 2002 | $20.78 | $14.55 | 810,772 | $20.65 | $14.44 | 251,607 | $20.56 | $14.35 | 148,206 | |||||||||
| 2001 | $29.92 | $20.78 | 964,288 | $29.80 | $20.65 | 276,157 | $29.71 | $20.56 | 160,026 | |||||||||
| 2000 | $38.74 | $29.92 | 750,217 | $38.67 | $29.80 | 193,399 | $38.61 | $29.71 | 120,735 | |||||||||
| Focused 309 | ||||||||||||||||||
| 2003 | $4.90 | $6.87 | 168,514 | $4.87 | $6.82 | 44,822 | $4.86 | $6.79 | 11,224 | |||||||||
| 2002 | $7.03 | $4.90 | 169,420 | $7.01 | $4.87 | 47,702 | $7.00 | $4.86 | 14,780 | |||||||||
| 2001 | $8.23 | $7.03 | 201,749 | $8.23 | $7.01 | 52,538 | $8.22 | $7.00 | 22,130 | |||||||||
| 2000 | $10.00 | $8.23 | 164,442 | $10.00 | $8.23 | 32,984 | $10.00 | $8.22 | 9,916 | |||||||||
| Mid-Cap Value10 | ||||||||||||||||||
| 2003 | $12.05 | $15.33 | 751,809 | $11.95 | $15.18 | 175,959 | $11.88 | $15.07 | 93,481 | |||||||||
| 2002 | $14.28 | $12.05 | 761,224 | $14.19 | $11.95 | 196,209 | $14.13 | $11.88 | 105,378 | |||||||||
| 2001 | $12.78 | $14.28 | 930,516 | $12.73 | $14.19 | 216,947 | $12.69 | $14.13 | 134,668 | |||||||||
| 2000 | $10.38 | $12.78 | 470,899 | $10.36 | $12.73 | 128,673 | $10.34 | $12.69 | 82,254 | |||||||||
9
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| International Value | ||||||||||||||||||
| 2003 | $9.20 | $11.58 | 813,819 | $9.12 | $11.47 | 204,191 | $9.07 | $11.38 | 106,259 | |||||||||
| 2002 | $10.83 | $9.20 | 861,134 | $10.77 | $9.12 | 219,179 | $10.72 | $9.07 | 124,578 | |||||||||
| 2001 | $14.06 | $10.83 | 913,569 | $14.01 | $10.77 | 249,388 | $13.97 | $10.72 | 135,937 | |||||||||
| 2000 | $16.10 | $14.06 | 830,900 | $16.06 | $14.01 | 195,764 | $16.04 | $13.97 | 106,837 | |||||||||
| Capital Opportunities2 | ||||||||||||||||||
| 2003 | $6.01 | $7.54 | 237,034 | $5.99 | $7.49 | 64,412 | $5.97 | $7.46 | 38,606 | |||||||||
| 2002 | $8.33 | $6.01 | 299,514 | $8.31 | $5.99 | 72,100 | $8.30 | $5.97 | 37,392 | |||||||||
| 2001 | $10.00 | $8.33 | 369,280 | $10.00 | $8.31 | 73,261 | $10.00 | $8.30 | 40,735 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Equity Index | ||||||||||||||||||
| 2003 | $14.02 | $17.74 | 534,018 | $13.91 | $17.57 | 124,056 | $13.83 | $17.44 | 77,064 | |||||||||
| 2002 | $18.32 | $14.02 | 733,827 | $18.21 | $13.91 | 179,278 | $18.12 | $13.83 | 114,455 | |||||||||
| 2001 | $21.14 | $18.32 | 963,695 | $21.06 | $18.21 | 201,357 | $21.00 | $18.12 | 116,049 | |||||||||
| 2000 | $23.64 | $21.14 | 906,008 | $23.59 | $21.06 | 162,962 | $23.56 | $21.00 | 96,281 | |||||||||
| Small-Cap Index10 | ||||||||||||||||||
| 2003 | $8.72 | $12.60 | 436,575 | $8.65 | $12.48 | 67,891 | $8.60 | $12.39 | 51,804 | |||||||||
| 2002 | $11.22 | $8.72 | 396,979 | $11.16 | $8.65 | 66,168 | $11.11 | $8.60 | 42,546 | |||||||||
| 2001 | $11.19 | $11.22 | 197,957 | $11.14 | $11.16 | 34,152 | $11.11 | $11.11 | 29,667 | |||||||||
| 2000 | $11.77 | $11.19 | 150,579 | $11.75 | $11.14 | 29,233 | $11.73 | $11.11 | 22,881 | |||||||||
| Multi-Strategy | ||||||||||||||||||
| 2003 | $13.29 | $16.16 | 208,960 | $13.18 | $16.00 | 66,444 | $13.11 | $15.88 | 36,398 | |||||||||
| 2002 | $15.50 | $13.29 | 235,769 | $15.41 | $13.18 | 76,461 | $15.34 | $13.11 | 36,624 | |||||||||
| 2001 | $15.91 | $15.50 | 316,790 | $15.84 | $15.41 | 85,642 | $15.80 | $15.34 | 43,025 | |||||||||
| 2000 | $16.01 | $15.91 | 249,340 | $15.98 | $15.84 | 47,958 | $15.95 | $15.80 | 38,460 | |||||||||
| Main Street® Core | ||||||||||||||||||
| 2003 | $11.80 | $14.77 | 501,228 | $11.71 | $14.63 | 144,049 | $11.64 | $14.52 | 97,490 | |||||||||
| 2002 | $16.71 | $11.80 | 373,550 | $16.61 | $11.71 | 142,646 | $16.54 | $11.64 | 100,552 | |||||||||
| 2001 | $18.60 | $16.71 | 486,163 | $18.53 | $16.61 | 180,975 | $18.47 | $16.54 | 127,795 | |||||||||
| 2000 | $20.22 | $18.60 | 724,450 | $20.18 | $18.53 | 202,059 | $20.15 | $18.47 | 142,904 | |||||||||
| Emerging Markets | ||||||||||||||||||
| 2003 | $5.54 | $9.20 | 234,879 | $5.49 | $9.11 | 70,810 | $5.46 | $9.04 | 34,134 | |||||||||
| 2002 | $5.79 | $5.54 | 235,161 | $5.76 | $5.49 | 67,149 | $5.73 | $5.46 | 26,351 | |||||||||
| 2001 | $6.43 | $5.79 | 295,240 | $6.41 | $5.76 | 85,950 | $6.39 | $5.73 | 27,845 | |||||||||
| 2000 | $10.14 | $6.43 | 260,387 | $10.12 | $6.41 | 77,814 | $10.11 | $6.39 | 25,872 | |||||||||
| Inflation Managed | ||||||||||||||||||
| 2003 | $14.73 | $15.72 | 815,688 | $14.61 | $15.56 | 130,364 | $14.52 | $15.45 | 71,045 | |||||||||
| 2002 | $12.94 | $14.73 | 942,533 | $12.86 | $14.61 | 135,716 | $12.80 | $14.52 | 103,323 | |||||||||
| 2001 | $12.58 | $12.94 | 703,795 | $12.53 | $12.86 | 105,804 | $12.49 | $12.80 | 65,875 | |||||||||
| 2000 | $11.41 | $12.58 | 513,300 | $11.38 | $12.53 | 79,227 | $11.37 | $12.49 | 58,293 | |||||||||
| Managed Bond | ||||||||||||||||||
| 2003 | $14.77 | $15.47 | 1,045,546 | $14.65 | $15.32 | 192,351 | $14.57 | $15.21 | 152,563 | |||||||||
| 2002 | $13.50 | $14.77 | 1,524,391 | $13.42 | $14.65 | 273,426 | $13.36 | $14.57 | 219,093 | |||||||||
| 2001 | $12.76 | $13.50 | 1,853,547 | $12.71 | $13.42 | 328,780 | $12.67 | $13.36 | 229,185 | |||||||||
| 2000 | $11.60 | $12.76 | 931,407 | $11.58 | $12.71 | 170,784 | $11.56 | $12.67 | 107,675 | |||||||||
| Small-Cap Value5 | ||||||||||||||||||
| 2003 | $10.00 | $12.57 | 169,825 | $10.00 | $12.56 | 38,405 | $10.00 | $12.55 | 17,350 | |||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Money Market | ||||||||||||||||||
| 2003 | $12.39 | $12.31 | 428,766 | $12.29 | $12.19 | 93,959 | $12.22 | $12.10 | 47,722 | |||||||||
| 2002 | $12.39 | $12.39 | 888,527 | $12.31 | $12.29 | 184,006 | $12.26 | $12.22 | 139,002 | |||||||||
| 2001 | $12.10 | $12.39 | 1,082,193 | $12.05 | $12.31 | 250,652 | $12.01 | $12.26 | 204,875 | |||||||||
| 2000 | $11.55 | $12.10 | 1,048,076 | $11.53 | $12.05 | 181,360 | $11.51 | $12.01 | 130,783 | |||||||||
| High Yield Bond | ||||||||||||||||||
| 2003 | $11.01 | $13.06 | 419,312 | $10.92 | $12.93 | 69,930 | $10.86 | $12.83 | 38,353 | |||||||||
| 2002 | $11.51 | $11.01 | 329,659 | $11.44 | $10.92 | 66,373 | $11.39 | $10.86 | 40,330 | |||||||||
| 2001 | $11.52 | $11.51 | 310,057 | $11.47 | $11.44 | 67,597 | $11.44 | $11.39 | 44,400 | |||||||||
| 2000 | $12.13 | $11.52 | 197,365 | $12.10 | $11.47 | 34,971 | $12.09 | $11.44 | 38,549 | |||||||||
| Equity Income11 | ||||||||||||||||||
| 2003 | $8.53 | $10.61 | 94,014 | $8.51 | $10.57 | 39,560 | $8.50 | $10.54 | 10,633 | |||||||||
| 2002 | $10.00 | $8.53 | 114,396 | $10.00 | $8.51 | 39,876 | $10.00 | $8.50 | 18,952 | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
10
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Equity | ||||||||||||||||||
| 2003 | $10.63 | $13.03 | 313,864 | $10.54 | $12.90 | 111,821 | $10.48 | $12.80 | 52,641 | |||||||||
| 2002 | $14.66 | $10.63 | 360,139 | $14.58 | $10.54 | 138,568 | $14.51 | $10.48 | 73,479 | |||||||||
| 2001 | $19.01 | $14.66 | 543,137 | $18.93 | $14.58 | 165,415 | $18.88 | $14.51 | 104,893 | |||||||||
| 2000 | $25.76 | $19.01 | 484,381 | $25.71 | $18.93 | 138,451 | $25.67 | $18.88 | 101,438 | |||||||||
| Aggressive Equity | ||||||||||||||||||
| 2003 | $7.19 | $9.43 | 268,930 | $7.13 | $9.34 | 98,752 | $7.09 | $9.27 | 31,490 | |||||||||
| 2002 | $9.73 | $7.19 | 292,942 | $9.67 | $7.13 | 123,803 | $9.63 | $7.09 | 42,236 | |||||||||
| 2001 | $11.92 | $9.73 | 248,174 | $11.87 | $9.67 | 116,458 | $11.84 | $9.63 | 48,382 | |||||||||
| 2000 | $15.31 | $11.92 | 318,263 | $15.28 | $11.87 | 115,708 | $15.26 | $11.84 | 53,534 | |||||||||
| Large-Cap Value10 | ||||||||||||||||||
| 2003 | $9.02 | $11.67 | 1,279,499 | $8.95 | $11.55 | 307,299 | $8.89 | $11.47 | 150,451 | |||||||||
| 2002 | $11.87 | $9.02 | 1,323,707 | $11.80 | $8.95 | 335,730 | $11.75 | $8.89 | 167,731 | |||||||||
| 2001 | $12.49 | $11.87 | 1,388,991 | $12.44 | $11.80 | 343,633 | $12.41 | $11.75 | 176,129 | |||||||||
| 2000 | $10.99 | $12.49 | 370,388 | $10.97 | $12.44 | 102,960 | $10.95 | $12.41 | 54,494 | |||||||||
| Comstock9 | ||||||||||||||||||
| 2003 | $6.65 | $8.62 | 411,986 | $6.62 | $8.56 | 99,377 | $6.60 | $8.52 | 51,040 | |||||||||
| 2002 | $8.66 | $6.65 | 178,686 | $8.64 | $6.62 | 48,813 | $8.62 | $6.60 | 14,087 | |||||||||
| 2001 | $9.75 | $8.66 | 238,806 | $9.74 | $8.64 | 50,417 | $9.74 | $8.62 | 16,437 | |||||||||
| 2000 | $10.00 | $9.75 | 90,168 | $10.00 | $9.74 | 10,501 | $10.00 | $9.74 | 12,289 | |||||||||
| Real Estate10 | ||||||||||||||||||
| 2003 | $13.58 | $18.42 | 268,185 | $13.48 | $18.24 | 57,710 | $13.39 | $18.10 | 29,940 | |||||||||
| 2002 | $13.82 | $13.58 | 275,821 | $13.74 | $13.48 | 70,497 | $13.68 | $13.39 | 46,416 | |||||||||
| 2001 | $12.91 | $13.82 | 303,119 | $12.86 | $13.74 | 79,343 | $12.82 | $13.68 | 30,363 | |||||||||
| 2000 | $9.86 | $12.91 | 181,524 | $9.84 | $12.86 | 64,951 | $9.83 | $12.82 | 27,672 | |||||||||
| Mid-Cap Growth1 | ||||||||||||||||||
| 2003 | $4.18 | $5.38 | 319,433 | $4.16 | $5.34 | 46,408 | $4.15 | $5.32 | 17,619 | |||||||||
| 2002 | $8.01 | $4.18 | 202,704 | $7.99 | $4.16 | 46,008 | $7.98 | $4.15 | 11,911 | |||||||||
| 2001 | $10.00 | $8.01 | 172,014 | $10.00 | $7.99 | 32,020 | $10.00 | $7.98 | 13,270 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 1 | This Subaccount began operations on January 2, 2001. |
| 2 | This Subaccount began operations on January 4, 2001. |
| 3 | This Subaccount began operations on January 3, 2000. |
| 4 | This Subaccount began operations on October 1, 1999. |
| 5 | This Subaccount began operations on May 1, 2003. |
| 6 | This Subaccount began operations on May 1, 2000. |
| 7 | This Subaccount began operations on January 9, 2001. |
| 8 | This Subaccount began operations on January 3, 2001. |
| 9 | This Subaccount began operations on October 2, 2000. |
| 10 | This Subaccount began operations on January 4, 1999. |
| 11 | This Subaccount began operations on January 7, 2002. |
|
ADDITIONAL INFORMATION – Financial Statements is amended. |
The Financial Statements section is amended by adding the following:
Financial Statements
The statements of assets and liabilities of Separate Account A as of December 31, 2003 and the related statements of operations for the year then ended, statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the three years in the period then ended are incorporated by reference in the Statement of Additional Information from the Annual Report of Separate Account A dated as of December 31, 2003. Pacific Life’s consolidated financial statements as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are contained in the Statement of Additional Information.
|
11
Supplement dated February 27, 2004 to the Prospectus dated May 1, 2003
for the Pacific Innovations, a variable annuity contract
issued by Pacific Life Insurance Company
| Capitalized terms used in this Supplement are defined in the Prospectuses referred to above unless otherwise defined herein. “We,” “us”, or “our” refer to Pacific Life Insurance Company; “you” or “your” refer to the Contract Owner.
This supplement changes the Prospectuses to reflect the following effective March 1, 2004:
|
||||||
|
AN OVERVIEW OF PACIFIC INNOVATIONS – Optional Riders is amended. |
The Optional Riders section is amended to restate and include the following:
Guaranteed Income Advantage II (GIA II) Rider
Subject to state availability, the optional Guaranteed Income Advantage II Rider (GIA II Rider) is only available if the Effective Date of the Rider is on or after March 1, 2004. It offers a guaranteed income advantage annuity option. You may buy the GIA II Rider on the Contract Date or on any Contract Anniversary. The GIA II Rider may not be available. Ask your registered representative about its current availability.
Guaranteed Income Advantage 5 (GIA 5) Rider
Subject to state availability, the optional Guaranteed Income Advantage 5 Rider (GIA 5 Rider) is only available if the Effective Date of the Rider is on or after March 1, 2004. It offers a guaranteed income advantage annuity option. You may buy the GIA 5 Rider on the Contract Date or on any Contract Anniversary. The GIA 5 Rider may not be available. Ask your registered representative about its current availability.
|
|||||
|
AN OVERVIEW OF PACIFIC INNOVATIONS – Periodic Contract Expenses (calculated as a percentage of Contract Value) is amended. |
The Periodic Contract Expenses table is amended by adding the following:
• Guaranteed Protection Advantage 5 Annual Charge 0.75%7 (Guaranteed Protection Charge) (Optional Rider) • Guaranteed Income Advantage II (GIA II) Rider 1.00%9 Annual Charge (Optional Rider) • Guaranteed Income Advantage 5 (GIA 5) Rider 0.75%9 Annual Charge (Optional Rider)
7 If you buy the Guaranteed Protection Advantage 5 Rider (subject to state availability), we deduct this charge from your Investment Options on each Contract Anniversary following the Effective Date of the Rider during the term of the Rider and while the Rider is in effect. If the Rider is terminated for reasons other than death or annuitization, this charge will be deducted on the effective date of termination. This charge may change if you elect the Step-Up provision allowable under the Rider. The 0.75% GPA charge is the maximum charge allowable under the terms and conditions of the Rider. Currently, the annual charge for the Rider is 0.25%. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under Rider. The charge if you purchase a Rider will also be shown on the Rider in your Contract. If the Effective Date of the Rider is before March 1, 2004] the Guaranteed Protection Charge is equal to 0.10%. 9 If you buy this optional Rider (subject to state availability), we deduct this charge on each Contract Anniversary and the Annuity Date, and when you make a full withdrawal, if the Rider is in effect on that date, or when you terminate your Rider. The 1.00% GIA II charge and the 0.75% GIA 5 charge are the maximum charges allowable under the terms and conditions of each respective Rider. Currently, the annual charge for each Rider is 0.70% for the GIA II and 0.40% for the GIA 5. The charge if you purchase a Rider will also be shown on the Rider in your Contract. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under each Rider. |
|
AN OVERVIEW OF PACIFIC INNOVATIONS – Examples is amended
|
The Examples section is amended to read as follows:
The following examples are intended to help you compare the cost of investing in your Contract with the cost of investing in other variable annuity contracts. These costs include Contract transaction expenses, the maximum periodic Contract expenses (including the optional combination of Riders whose cumulative expenses totaled more than any other optional combination), Separate Account annual expenses, and Portfolio fees and expenses for the year ended December 31, 2003. Premium taxes and/or other taxes may also be applicable.
The examples assume that you invest $10,000 in the Contract for the time periods indicated. They also assume that your Investment has a 5% return each year and assumes the maximum and minimum fees and expenses of all of the Investment Options available. Although your actual costs may be higher or lower, based on these assumptions, your maximum and minimum costs would be:
| |||||||||||||
| • If you surrendered your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,386 | $2,436 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $986 | $1,266 | $ 939 | $2,037 | |||||||||||
| • If you annuitized your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,386 | $1,716 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $986 | $546 | $939 | $2,037 | |||||||||||
| • If you did not surrender, nor annuitize, but left the money in your Contract: | ||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $576 | $1,716 | $2,838 | $5,571 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $176 | $546 | $939 | $2,037 | |||||||||||
|
* In calculating the examples above, we used the maximum and minimum net operating expenses of all the Portfolios for the 1 year period and the maximum and minimum total operating expenses for the 3, 5 and 10 year periods as shown in the Fees And Expenses Paid By The Fund section of the Fund’s Prospectus. For more information on fees and expenses, see CHARGES, FEES AND DEDUCTIONS in this Prospectus, and see the Fund’s Prospectus. | ||||||||||||||
2
|
PURCHASING YOUR CONTRACT is amended. |
The PURCHASING YOUR CONTRACT section is amended to include the following:
Purchasing the Guaranteed Income Advantage II (GIA II) Rider (Optional)
You may purchase the GIA II Rider (subject to state availability) on the Contract Date or on any Contract Anniversary. You may purchase the GIA II Rider only if the age of each Annuitant is 80 years or younger on the date the GIA II Rider is purchased. The GIA II Rider will remain in effect until the earlier of:
• the Contract Anniversary immediately following the day we receive notification from you to terminate the GIA II Rider, • the date death benefit proceeds become payable under the Contract, • the date the Contract is terminated in accordance with the terms of the Contract, or • the Annuity Date.
If your request to terminate the Rider is received at our Service Center within thirty (30) days after a Contract Anniversary, the Rider will terminate on that Contract Anniversary.
Purchasing the Guaranteed Income Advantage 5 (GIA 5) Rider (Optional)
You may purchase the GIA 5 Rider (subject to state availability) on the Contract Date or on any Contract Anniversary. You may purchase the GIA 5 Rider only if the age of each Annuitant is 80 years or younger on the date the GIA 5 Rider is purchased, and the entire Contract Value is invested according to an asset allocation program established and maintained by us for this GIA 5 Rider. The GIA 5 Rider will remain in effect until the earlier of:
• the Contract Anniversary immediately following the day any portion of the Contract Value is no longer invested according to an asset allocation program established and maintained by us for the GIA 5 Rider, • the Contract Anniversary immediately following the day we receive notification from you to terminate the GIA 5 Rider, • the date death benefit proceeds become payable under the Contract, • the date the Contract is terminated in accordance with the terms of the Contract, or • the Annuity Date.
If your request to terminate the Rider is received at our Service Center within thirty (30) days after a Contract Anniversary, the Rider will terminate on that Contract Anniversary.
If you purchase the GIA 5 Rider (including any and all previous, current, and future versions), there may be adverse consequences to taking a loan while the GIA 5 Rider is in effect. If you have an existing loan on your Contract, you should carefully consider whether the GIA 5 Rider is appropriate for you. |
3
| CHARGES, FEES AND DEDUCTIONS is amended. | The CHARGES, FEES AND DEDUCTIONS section is amended to restate and include the following:
Guaranteed Protection Advantage 5 Annual Charge (Optional Rider)
If you purchase the optional Guaranteed Protection Advantage 5 Rider, we will deduct a Guaranteed Protection Charge from your Investment Options on a proportionate basis on each Contract Anniversary that the Rider remains in effect following the Effective Date of the Rider, and if you terminate the Rider. The Guaranteed Protection Charge is equal to 0.25% (maximum charge is 0.75%), multiplied by your Contract Value on the date the Charge is deducted. If the Effective Date of the Rider is before March 1, 2004, the Guaranteed Protection Charge is equal to 0.10%.
The Guaranteed Protection Charge may change if you elect the Step-Up option but will never be more than the Guaranteed Protection Charge being charged under the then current terms and conditions of the Rider. If you do not elect the optional Step-Up, your Guaranteed Protection Charge will remain the same as it was on the Effective Date of the Rider.
Any portion of the Guaranteed Protection Charge we deduct from the Fixed Option will not be greater than the annual interest credited in excess of 3%.
Guaranteed Income Advantage II (GIA II) Annual Charge (Optional Rider)
If you purchase the GIA II Rider, we deduct annually a Guaranteed Income Advantage Charge (GIA II Charge) for expenses related to the GIA II Rider. The GIA II Charge is equal to 0.70% (maximum charge is 1.00%) multiplied by your Contract Value on the date the Charge is deducted.
We will deduct the GIA II Charge from your Investment Options on a proportionate basis:
• on each Contract Anniversary the GIA II Rider remains in effect, • on the Annuity Date, if the GIA II Rider is still in effect, and • when the GIA II Rider is terminated.
If you terminate the GIA II Rider, we will charge your Contract for the annual GIA II Charge on the effective date of termination. If you make a full withdrawal of the amount available for withdrawal during a Contract Year, we will deduct the entire GIA II Charge for the Contract Year in which you make the full withdrawal from the final payment made to you.
Guaranteed Income Advantage 5 (GIA 5) Annual Charge (Optional Rider)
If you purchase the GIA 5 Rider, we deduct annually a Guaranteed Income Advantage Charge (GIA 5 Charge) for expenses related to the GIA 5 Rider. The GIA 5 Charge is equal to 0.40% (maximum charge is 0.75%) multiplied by your Contract Value on the date the Charge is deducted.
We will deduct the GIA 5 Charge from your Investment Options on a proportionate basis:
• on each Contract Anniversary the GIA 5 Rider remains in effect, • on the Annuity Date, if the GIA 5 Rider is still in effect, and • when the GIA 5 Rider is terminated. |
4
| If you terminate the GIA 5 Rider, we will charge your Contract for the annual GIA 5 Charge on the effective date of termination. If you make a full withdrawal of the amount available for withdrawal during a Contract Year, we will deduct the entire GIA 5 Charge for the Contract Year in which you make the full withdrawal from the final payment made to you.
|
||||||
| RETIREMENT BENEFITS AND OTHER PAYOUTS – Choosing Your Annuity Option is amended. | The Choosing Your Annuity Option section is amended to include the following:
Guaranteed Income Advantage II Annuity Option
If you purchase the optional GIA II Rider (subject to state availability), you may choose any of the Annuity Options described, or you may choose the Guaranteed Income Advantage II Annuity Option if 10 years have passed since the GIA II Rider was purchased and the GIA II Rider is still in effect. You must choose fixed annuity payments under this Guaranteed Income Advantage II Annuity Option. The guaranteed income purchased per $1,000 of the net amount applied to the annuity payments will be based on an annual interest rate of 2.5% and the 1983a Annuity Mortality Table with the age set back 10 years. The net amount applied to the annuity |
|||||
| payments under the Guaranteed Income Advantage II Annuity Option will be based on the Net Guaranteed Income Base, which is described below.
Net Guaranteed Income Base—The amount applied on the Annuity Date as a single premium to provide annuity payments under the Guaranteed Income Advantage II Annuity Option. The Net Guaranteed Income Base is equal to:
• the Guaranteed Income Base as of the Annuity Date, less • any applicable withdrawal charge resulting from the conversion to the Guaranteed Income Advantage II Annuity Option, less • any Contract Debt, and less • any charge for premium taxes and/or other taxes.
Guaranteed Income Base—If you purchase the GIA II Rider on the Contract Date, the Guaranteed Income Base is initially set on the Effective Date of the Rider. If the Rider is effective on a Contract Anniversary, the Guaranteed Income Base is equal to the Contract Value on that Contract Anniversary. The Guaranteed Income Base on any Business Day after the Effective Date is the Guaranteed Income Base on the prior Business Day, increased by any additions on that day as a result of any:
• Purchase Payments received by us, plus • increases at an annual growth rate of 5%, plus • additional amounts as a result of a Step-Up in the Guaranteed Income Base
and decreased by any deductions on that day as a result of any:
• adjustments for withdrawals.
The adjustment for each withdrawal is calculated by multiplying the Guaranteed Income Base prior to the withdrawal by the ratio of the amount of the withdrawal, including any applicable withdrawal charge, to the Contract Value immediately prior to the withdrawal.
Any portion of the Net Contract Value converted to provide payments under an Annuity Option, as described in the Contract, will be considered a “withdrawal” for purposes of determining any adjustment to the Guaranteed Income Base. |
5
| The 5% annual growth rate will take into account the timing of when each Purchase Payment and withdrawal occurred. This is accomplished by applying a daily factor of 1.000133681 to each day’s Guaranteed Income Base balance.
The 5% annual growth rate will stop accruing as of the earlier of:
• the Contract Anniversary following the day the youngest Annuitant reaches his or her 80th birthday, or • the day the GIA II Rider terminates.
Election of Step-Up—On any Contract Anniversary beginning with the fifth (5th ) anniversary of the Effective Date of this Rider and before the Annuity Date, you may elect to increase the Guaranteed Income Base to an amount equal to 100% of the Contract Value as of the Step-Up Date.
The Guaranteed Income Advantage Charge may change if you elect a Step-Up in the Guaranteed Income Base. However, the Guaranteed Income Advantage Charge will never exceed the Guaranteed Income Advantage Charge then being offered for this same benefit under newly issued riders. If the Guaranteed Income Base is never stepped-up, the Guaranteed Income Advantage Charge established on the Effective Date of this Rider is guaranteed not to change.
Your Step-Up election must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
| ||||
| Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
The annuity payments that may be elected under the Guaranteed Income Advantage II Option are:
• Life Only, • Life with Period Certain, • Joint and Survivor Life, or • Period Certain Only.
If you elect the Guaranteed Income Advantage II (GIA II) Annuity Option, the waiver of withdrawal charges as described in the Contract will not apply. We will reduce the net amount applied to the annuity payments under the Guaranteed Income Advantage II Annuity Option by any remaining withdrawal charges. The rider contains annuity tables for each GIA II Annuity Option available.
Guaranteed Income Advantage 5 Annuity Option
If you purchase the optional GIA 5 Rider (subject to state availability), you may choose any of the Annuity Options described, or you may choose the Guaranteed Income Advantage 5 Annuity Option if 10 years have passed since the GIA 5 Rider was purchased and the GIA 5 Rider is still in effect. You must choose fixed annuity payments under this Guaranteed Income Advantage 5 Annuity Option. The guaranteed income purchased per $1,000 of the net amount applied to the annuity payments will be based on an annual interest rate of 2.5% and the 1983a Annuity Mortality Table with the age set back 10 years. The net amount applied to the annuity payments under the Guaranteed Income Advantage 5 Annuity Option will be based on the Net Guaranteed Income Base, which is described below. |
6
| Net Guaranteed Income Base—The amount applied on the Annuity Date as a single premium to provide annuity payments under the Guaranteed Income Advantage 5 Annuity Option. The Net Guaranteed Income Base is equal to:
• the Guaranteed Income Base as of the Annuity Date, less • any applicable withdrawal charge resulting from the conversion to the Guaranteed Income Advantage 5 Annuity Option, less • any Contract Debt, and less • any charge for premium taxes and/or other taxes.
Guaranteed Income Base—If you purchase the GIA 5 Rider on the Contract Date, the Guaranteed Income Base is initially set on the Effective Date of the Rider. If the Rider is effective on the Contract Date, the Guaranteed Income Base is equal to the Initial Purchase Payment. If the Rider is effective on a Contract Anniversary, the Guaranteed Income Base is equal to the Contract Value on that Contract Anniversary. The Guaranteed Income Base on any Business Day after the Effective Date is the Guaranteed Income Base on the prior Business Day, increased by any additions on that day as a result of any:
• Purchase Payments received by us, plus • increases at an annual growth rate of 5%, plus • additional amounts as a result of a Step-Up in the Guaranteed Income Base
and decreased by any deductions on that day as a result of any:
• adjustments for withdrawals.
The adjustment for each withdrawal is calculated by multiplying the Guaranteed Income Base prior to the withdrawal by the ratio of the amount of the withdrawal, including any applicable withdrawal charge to the Contract Value immediately prior to the withdrawal.
| ||||
| Any portion of the Net Contract Value converted to provide payments under an Annuity Option, as described in the Contract, will be considered a “withdrawal” for purposes of determining any adjustment to the Guaranteed Income Base.
The 5% annual growth rate will take into account the timing of when each Purchase Payment and withdrawal occurred. This is accomplished by applying a daily factor of 1.000133681 to each day’s Guaranteed Income Base balance.
The 5% annual growth rate will stop accruing as of the earlier of:
• the Contract Anniversary following the day the youngest Annuitant reaches his or her 80th birthday, or • the day the GIA 5 Rider terminates.
Election of Step-Up—On any Contract Anniversary beginning with the fifth (5th ) anniversary of the Effective Date of this Rider and before the Annuity Date, you may elect to increase the Guaranteed Income Base to an amount equal to 100% of the Contract Value as of the Step-Up Date.
The Guaranteed Income Advantage Charge may change if you elect a Step-Up in the Guaranteed Income Base. However, the Guaranteed Income Advantage Charge will never exceed the Guaranteed Income Advantage Charge then being offered for this same benefit under newly issued riders. If the Guaranteed Income Base is never stepped-up, the Guaranteed Income Advantage Charge established on the Effective Date of this Rider is guaranteed not to change. |
7
| Your Step-Up election must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
The annuity payments that may be elected under the Guaranteed Income Advantage 5 Option are:
• Life Only, • Life with Period Certain, • Joint and Survivor Life, or • Period Certain Only.
If you elect the Guaranteed Income Advantage 5 (GIA 5) Annuity Option, the waiver of withdrawal charges as described in the Contract will not apply. We will reduce the net amount applied to the annuity payments under the Guaranteed Income Advantage 5 Annuity Option by any remaining withdrawal charges. The rider contains annuity tables for each GIA 5 Annuity Option available. | ||||
| PACIFIC LIFE AND THE SEPARATE ACCOUNT – Financial Highlights is amended. |
The Financial Highlights section is amended by adding the following:
The table below is designed to help you understand how the Variable Investment Options have performed. It shows the value of a Subaccount Unit at the beginning and end of each period, as well as the number of Subaccount Units at the end of each period. A Subaccount Unit is also called an Accumulation Unit.
The information in the table for the three year period ended December 31, 2003 is included in the financial statements of Separate Account A which have been audited by Deloitte & Touche LLP, independent auditors. You should read the table in conjunction with the financial statements for Separate Account A, which are included in its annual report dated as of December 31, 2003.
| |||
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Blue Chip1 | ||||||||||||||||||
| 2003 | $5.86 | $7.25 | 958,358 | $5.84 | $7.21 | 271,162 | $5.82 | $7.17 | 134,395 | |||||||||
| 2002 | $8.03 | $5.86 | 1,103,279 | $8.01 | $5.84 | 278,780 | $8.00 | $5.82 | 128,787 | |||||||||
| 2001 | $10.00 | $8.03 | 1,166,467 | $10.00 | $8.01 | 272,994 | $10.00 | $8.00 | 112,661 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Aggressive Growth2 | ||||||||||||||||||
| 2003 | $6.06 | $7.57 | 105,122 | $6.03 | $7.52 | 22,031 | $6.02 | $7.49 | 3,837 | |||||||||
| 2002 | $7.91 | $6.06 | 67,878 | $7.89 | $6.03 | 29,535 | $7.88 | $6.02 | 2,756 | |||||||||
| 2001 | $10.00 | $7.91 | 203,178 | $10.00 | $7.89 | 55,731 | $10.00 | $7.88 | 14,934 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Diversified Research3 | ||||||||||||||||||
| 2003 | $7.79 | $10.19 | 574,890 | $7.74 | $10.11 | 120,430 | $7.71 | $10.05 | 89,681 | |||||||||
| 2002 | $10.42 | $7.79 | 630,716 | $10.38 | $7.74 | 141,990 | $10.35 | $7.71 | 82,571 | |||||||||
| 2001 | $10.87 | $10.42 | 663,788 | $10.85 | $10.38 | 143,436 | $10.83 | $10.35 | 100,919 | |||||||||
| 2000 | $10.00 | $10.87 | 476,150 | $10.00 | $10.85 | 122,599 | $10.00 | $10.83 | 93,630 | |||||||||
8
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Small-Cap Equity4 | ||||||||||||||||||
| 2003 | $12.75 | $17.70 | 258,197 | $12.65 | $17.52 | 85,247 | $12.57 | $17.39 | 48,418 | |||||||||
| 2002 | $16.92 | $12.75 | 256,864 | $16.81 | $12.65 | 95,564 | $16.74 | $12.57 | 57,806 | |||||||||
| 2001 | $17.06 | $16.92 | 300,104 | $17.53 | $16.81 | 111,966 | $17.48 | $16.74 | 85,623 | |||||||||
| 2000 | $23.01 | $17.06 | 287,957 | $22.96 | $17.53 | 82,118 | $22.93 | $17.48 | 57,867 | |||||||||
| International Large-Cap3 | ||||||||||||||||||
| 2003 | $5.06 | $6.52 | 1,555,393 | $5.03 | $6.47 | 408,364 | $5.01 | $6.43 | 229,704 | |||||||||
| 2002 | $6.24 | $5.06 | 1,518,975 | $6.21 | $5.03 | 432,067 | $6.19 | $5.01 | 243,716 | |||||||||
| 2001 | $7.74 | $6.24 | 1,843,777 | $7.72 | $6.21 | 490,702 | $7.71 | $6.19 | 327,597 | |||||||||
| 2000 | $10.00 | $7.74 | 1,202,801 | $10.00 | $7.72 | 298,948 | $10.00 | $7.71 | 218,938 | |||||||||
| Short-Duration Bond5 | ||||||||||||||||||
| 2003 | $10.00 | $10.00 | 575,417 | $10.00 | $9.99 | 108,466 | $10.00 | $9.98 | 61,377 | |||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| I-Net TollkeeperSM6 | ||||||||||||||||||
| 2003 | $2.65 | $3.74 | 495,356 | $2.64 | $3.72 | 159,863 | $2.63 | $3.70 | 77,106 | |||||||||
| 2002 | $4.38 | $2.65 | 608,093 | $4.37 | $2.64 | 173,458 | $4.35 | $2.63 | 110,387 | |||||||||
| 2001 | $6.72 | $4.38 | 642,382 | $6.71 | $4.37 | 194,993 | $6.70 | $4.35 | 103,915 | |||||||||
| 2000 | $10.00 | $6.72 | 635,944 | $10.00 | $6.71 | 193,330 | $10.00 | $6.70 | 87,487 | |||||||||
| Financial Services7 | ||||||||||||||||||
| 2003 | $7.70 | $9.79 | 123,757 | $7.67 | $9.74 | 36,048 | $7.65 | $9.69 | 16,566 | |||||||||
| 2002 | $9.14 | $7.70 | 123,469 | $9.12 | $7.67 | 39,675 | $9.11 | $7.65 | 7,358 | |||||||||
| 2001 | $10.00 | $9.14 | 117,091 | $10.00 | $9.12 | 33,833 | $10.00 | $9.11 | 4,358 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Health Sciences2 | ||||||||||||||||||
| 2003 | $6.88 | $8.68 | 133,145 | $6.86 | $8.62 | 39,052 | $6.84 | $8.59 | 9,392 | |||||||||
| 2002 | $9.10 | $6.88 | 119,884 | $9.08 | $6.86 | 37,936 | $9.07 | $6.84 | 6,760 | |||||||||
| 2001 | $10.00 | $9.10 | 142,534 | $10.00 | $9.08 | 34,324 | $10.00 | $9.07 | 5,099 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Technology8 | ||||||||||||||||||
| 2003 | $3.08 | $4.33 | 386,513 | $3.07 | $4.31 | 69,664 | $3.06 | $4.29 | 24,553 | |||||||||
| 2002 | $5.82 | $3.08 | 212,958 | $5.81 | $3.07 | 56,113 | $5.80 | $3.06 | 8,410 | |||||||||
| 2001 | $10.00 | $5.82 | 144,194 | $10.00 | $5.81 | 27,093 | $10.00 | $5.80 | 12,078 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Growth LT | ||||||||||||||||||
| 2003 | $14.55 | $19.23 | 654,094 | $14.44 | $19.04 | 192,592 | $14.35 | $18.89 | 110,829 | |||||||||
| 2002 | $20.78 | $14.55 | 810,772 | $20.65 | $14.44 | 251,607 | $20.56 | $14.35 | 148,206 | |||||||||
| 2001 | $29.92 | $20.78 | 964,288 | $29.80 | $20.65 | 276,157 | $29.71 | $20.56 | 160,026 | |||||||||
| 2000 | $38.74 | $29.92 | 750,217 | $38.67 | $29.80 | 193,399 | $38.61 | $29.71 | 120,735 | |||||||||
| Focused 309 | ||||||||||||||||||
| 2003 | $4.90 | $6.87 | 168,514 | $4.87 | $6.82 | 44,822 | $4.86 | $6.79 | 11,224 | |||||||||
| 2002 | $7.03 | $4.90 | 169,420 | $7.01 | $4.87 | 47,702 | $7.00 | $4.86 | 14,780 | |||||||||
| 2001 | $8.23 | $7.03 | 201,749 | $8.23 | $7.01 | 52,538 | $8.22 | $7.00 | 22,130 | |||||||||
| 2000 | $10.00 | $8.23 | 164,442 | $10.00 | $8.23 | 32,984 | $10.00 | $8.22 | 9,916 | |||||||||
| Mid-Cap Value10 | ||||||||||||||||||
| 2003 | $12.05 | $15.33 | 751,809 | $11.95 | $15.18 | 175,959 | $11.88 | $15.07 | 93,481 | |||||||||
| 2002 | $14.28 | $12.05 | 761,224 | $14.19 | $11.95 | 196,209 | $14.13 | $11.88 | 105,378 | |||||||||
| 2001 | $12.78 | $14.28 | 930,516 | $12.73 | $14.19 | 216,947 | $12.69 | $14.13 | 134,668 | |||||||||
| 2000 | $10.38 | $12.78 | 470,899 | $10.36 | $12.73 | 128,673 | $10.34 | $12.69 | 82,254 | |||||||||
| International Value | ||||||||||||||||||
| 2003 | $9.20 | $11.58 | 813,819 | $9.12 | $11.47 | 204,191 | $9.07 | $11.38 | 106,259 | |||||||||
| 2002 | $10.83 | $9.20 | 861,134 | $10.77 | $9.12 | 219,179 | $10.72 | $9.07 | 124,578 | |||||||||
| 2001 | $14.06 | $10.83 | 913,569 | $14.01 | $10.77 | 249,388 | $13.97 | $10.72 | 135,937 | |||||||||
| 2000 | $16.10 | $14.06 | 830,900 | $16.06 | $14.01 | 195,764 | $16.04 | $13.97 | 106,837 | |||||||||
| Capital Opportunities2 | ||||||||||||||||||
| 2003 | $6.01 | $7.54 | 237,034 | $5.99 | $7.49 | 64,412 | $5.97 | $7.46 | 38,606 | |||||||||
| 2002 | $8.33 | $6.01 | 299,514 | $8.31 | $5.99 | 72,100 | $8.30 | $5.97 | 37,392 | |||||||||
| 2001 | $10.00 | $8.33 | 369,280 | $10.00 | $8.31 | 73,261 | $10.00 | $8.30 | 40,735 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Equity Index | ||||||||||||||||||
| 2003 | $14.02 | $17.74 | 534,018 | $13.91 | $17.57 | 124,056 | $13.83 | $17.44 | 77,064 | |||||||||
| 2002 | $18.32 | $14.02 | 733,827 | $18.21 | $13.91 | 179,278 | $18.12 | $13.83 | 114,455 | |||||||||
| 2001 | $21.14 | $18.32 | 963,695 | $21.06 | $18.21 | 201,357 | $21.00 | $18.12 | 116,049 | |||||||||
| 2000 | $23.64 | $21.14 | 906,008 | $23.59 | $21.06 | 162,962 | $23.56 | $21.00 | 96,281 | |||||||||
9
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Small-Cap Index10 | ||||||||||||||||||
| 2003 | $8.72 | $12.60 | 436,575 | $8.65 | $12.48 | 67,891 | $8.60 | $12.39 | 51,804 | |||||||||
| 2002 | $11.22 | $8.72 | 396,979 | $11.16 | $8.65 | 66,168 | $11.11 | $8.60 | 42,546 | |||||||||
| 2001 | $11.19 | $11.22 | 197,957 | $11.14 | $11.16 | 34,152 | $11.11 | $11.11 | 29,667 | |||||||||
| 2000 | $11.77 | $11.19 | 150,579 | $11.75 | $11.14 | 29,233 | $11.73 | $11.11 | 22,881 | |||||||||
| Multi-Strategy | ||||||||||||||||||
| 2003 | $13.29 | $16.16 | 208,960 | $13.18 | $16.00 | 66,444 | $13.11 | $15.88 | 36,398 | |||||||||
| 2002 | $15.50 | $13.29 | 235,769 | $15.41 | $13.18 | 76,461 | $15.34 | $13.11 | 36,624 | |||||||||
| 2001 | $15.91 | $15.50 | 316,790 | $15.84 | $15.41 | 85,642 | $15.80 | $15.34 | 43,025 | |||||||||
| 2000 | $16.01 | $15.91 | 249,340 | $15.98 | $15.84 | 47,958 | $15.95 | $15.80 | 38,460 | |||||||||
| Main Street® Core | ||||||||||||||||||
| 2003 | $11.80 | $14.77 | 501,228 | $11.71 | $14.63 | 144,049 | $11.64 | $14.52 | 97,490 | |||||||||
| 2002 | $16.71 | $11.80 | 373,550 | $16.61 | $11.71 | 142,646 | $16.54 | $11.64 | 100,552 | |||||||||
| 2001 | $18.60 | $16.71 | 486,163 | $18.53 | $16.61 | 180,975 | $18.47 | $16.54 | 127,795 | |||||||||
| 2000 | $20.22 | $18.60 | 724,450 | $20.18 | $18.53 | 202,059 | $20.15 | $18.47 | 142,904 | |||||||||
| Emerging Markets | ||||||||||||||||||
| 2003 | $5.54 | $9.20 | 234,879 | $5.49 | $9.11 | 70,810 | $5.46 | $9.04 | 34,134 | |||||||||
| 2002 | $5.79 | $5.54 | 235,161 | $5.76 | $5.49 | 67,149 | $5.73 | $5.46 | 26,351 | |||||||||
| 2001 | $6.43 | $5.79 | 295,240 | $6.41 | $5.76 | 85,950 | $6.39 | $5.73 | 27,845 | |||||||||
| 2000 | $10.14 | $6.43 | 260,387 | $10.12 | $6.41 | 77,814 | $10.11 | $6.39 | 25,872 | |||||||||
| Inflation Managed | ||||||||||||||||||
| 2003 | $14.73 | $15.72 | 815,688 | $14.61 | $15.56 | 130,364 | $14.52 | $15.45 | 71,045 | |||||||||
| 2002 | $12.94 | $14.73 | 942,533 | $12.86 | $14.61 | 135,716 | $12.80 | $14.52 | 103,323 | |||||||||
| 2001 | $12.58 | $12.94 | 703,795 | $12.53 | $12.86 | 105,804 | $12.49 | $12.80 | 65,875 | |||||||||
| 2000 | $11.41 | $12.58 | 513,300 | $11.38 | $12.53 | 79,227 | $11.37 | $12.49 | 58,293 | |||||||||
| Managed Bond | ||||||||||||||||||
| 2003 | $14.77 | $15.47 | 1,045,546 | $14.65 | $15.32 | 192,351 | $14.57 | $15.21 | 152,563 | |||||||||
| 2002 | $13.50 | $14.77 | 1,524,391 | $13.42 | $14.65 | 273,426 | $13.36 | $14.57 | 219,093 | |||||||||
| 2001 | $12.76 | $13.50 | 1,853,547 | $12.71 | $13.42 | 328,780 | $12.67 | $13.36 | 229,185 | |||||||||
| 2000 | $11.60 | $12.76 | 931,407 | $11.58 | $12.71 | 170,784 | $11.56 | $12.67 | 107,675 | |||||||||
| Small-Cap Value5 | ||||||||||||||||||
| 2003 | $10.00 | $12.57 | 169,825 | $10.00 | $12.56 | 38,405 | $10.00 | $12.55 | 17,350 | |||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Money Market | ||||||||||||||||||
| 2003 | $12.39 | $12.31 | 428,766 | $12.29 | $12.19 | 93,959 | $12.22 | $12.10 | 47,722 | |||||||||
| 2002 | $12.39 | $12.39 | 888,527 | $12.31 | $12.29 | 184,006 | $12.26 | $12.22 | 139,002 | |||||||||
| 2001 | $12.10 | $12.39 | 1,082,193 | $12.05 | $12.31 | 250,652 | $12.01 | $12.26 | 204,875 | |||||||||
| 2000 | $11.55 | $12.10 | 1,048,076 | $11.53 | $12.05 | 181,360 | $11.51 | $12.01 | 130,783 | |||||||||
| High Yield Bond | ||||||||||||||||||
| 2003 | $11.01 | $13.06 | 419,312 | $10.92 | $12.93 | 69,930 | $10.86 | $12.83 | 38,353 | |||||||||
| 2002 | $11.51 | $11.01 | 329,659 | $11.44 | $10.92 | 66,373 | $11.39 | $10.86 | 40,330 | |||||||||
| 2001 | $11.52 | $11.51 | 310,057 | $11.47 | $11.44 | 67,597 | $11.44 | $11.39 | 44,400 | |||||||||
| 2000 | $12.13 | $11.52 | 197,365 | $12.10 | $11.47 | 34,971 | $12.09 | $11.44 | 38,549 | |||||||||
| Equity Income11 | ||||||||||||||||||
| 2003 | $8.53 | $10.61 | 94,014 | $8.51 | $10.57 | 39,560 | $8.50 | $10.54 | 10,633 | |||||||||
| 2002 | $10.00 | $8.53 | 114,396 | $10.00 | $8.51 | 39,876 | $10.00 | $8.50 | 18,952 | |||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| Equity | ||||||||||||||||||
| 2003 | $10.63 | $13.03 | 313,864 | $10.54 | $12.90 | 111,821 | $10.48 | $12.80 | 52,641 | |||||||||
| 2002 | $14.66 | $10.63 | 360,139 | $14.58 | $10.54 | 138,568 | $14.51 | $10.48 | 73,479 | |||||||||
| 2001 | $19.01 | $14.66 | 543,137 | $18.93 | $14.58 | 165,415 | $18.88 | $14.51 | 104,893 | |||||||||
| 2000 | $25.76 | $19.01 | 484,381 | $25.71 | $18.93 | 138,451 | $25.67 | $18.88 | 101,438 | |||||||||
| Aggressive Equity | ||||||||||||||||||
| 2003 | $7.19 | $9.43 | 268,930 | $7.13 | $9.34 | 98,752 | $7.09 | $9.27 | 31,490 | |||||||||
| 2002 | $9.73 | $7.19 | 292,942 | $9.67 | $7.13 | 123,803 | $9.63 | $7.09 | 42,236 | |||||||||
| 2001 | $11.92 | $9.73 | 248,174 | $11.87 | $9.67 | 116,458 | $11.84 | $9.63 | 48,382 | |||||||||
| 2000 | $15.31 | $11.92 | 318,263 | $15.28 | $11.87 | 115,708 | $15.26 | $11.84 | 53,534 | |||||||||
| Large-Cap Value10 | ||||||||||||||||||
| 2003 | $9.02 | $11.67 | 1,279,499 | $8.95 | $11.55 | 307,299 | $8.89 | $11.47 | 150,451 | |||||||||
| 2002 | $11.87 | $9.02 | 1,323,707 | $11.80 | $8.95 | 335,730 | $11.75 | $8.89 | 167,731 | |||||||||
| 2001 | $12.49 | $11.87 | 1,388,991 | $12.44 | $11.80 | 343,633 | $12.41 | $11.75 | 176,129 | |||||||||
| 2000 | $10.99 | $12.49 | 370,388 | $10.97 | $12.44 | 102,960 | $10.95 | $12.41 | 54,494 | |||||||||
10
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||
| Comstock9 | ||||||||||||||||||
| 2003 | $6.65 | $8.62 | 411,986 | $6.62 | $8.56 | 99,377 | $6.60 | $8.52 | 51,040 | |||||||||
| 2002 | $8.66 | $6.65 | 178,686 | $8.64 | $6.62 | 48,813 | $8.62 | $6.60 | 14,087 | |||||||||
| 2001 | $9.75 | $8.66 | 238,806 | $9.74 | $8.64 | 50,417 | $9.74 | $8.62 | 16,437 | |||||||||
| 2000 | $10.00 | $9.75 | 90,168 | $10.00 | $9.74 | 10,501 | $10.00 | $9.74 | 12,289 | |||||||||
| Real Estate10 | ||||||||||||||||||
| 2003 | $13.58 | $18.42 | 268,185 | $13.48 | $18.24 | 57,710 | $13.39 | $18.10 | 29,940 | |||||||||
| 2002 | $13.82 | $13.58 | 275,821 | $13.74 | $13.48 | 70,497 | $13.68 | $13.39 | 46,416 | |||||||||
| 2001 | $12.91 | $13.82 | 303,119 | $12.86 | $13.74 | 79,343 | $12.82 | $13.68 | 30,363 | |||||||||
| 2000 | $9.86 | $12.91 | 181,524 | $9.84 | $12.86 | 64,951 | $9.83 | $12.82 | 27,672 | |||||||||
| Mid-Cap Growth1 | ||||||||||||||||||
| 2003 | $4.18 | $5.38 | 319,433 | $4.16 | $5.34 | 46,408 | $4.15 | $5.32 | 17,619 | |||||||||
| 2002 | $8.01 | $4.18 | 202,704 | $7.99 | $4.16 | 46,008 | $7.98 | $4.15 | 11,911 | |||||||||
| 2001 | $10.00 | $8.01 | 172,014 | $10.00 | $7.99 | 32,020 | $10.00 | $7.98 | 13,270 | |||||||||
| 2000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||
| 1 | This Subaccount began operations on January 2, 2001. |
| 2 | This Subaccount began operations on January 4, 2001. |
| 3 | This Subaccount began operations on January 3, 2000. |
| 4 | This Subaccount began operations on October 1, 1999. |
| 5 | This Subaccount began operations on May 1, 2003. |
| 6 | This Subaccount began operations on May 1, 2000. |
| 7 | This Subaccount began operations on January 9, 2001. |
| 8 | This Subaccount began operations on January 3, 2001. |
| 9 | This Subaccount began operations on October 2, 2000. |
| 10 | This Subaccount began operations on January 4, 1999. |
| 11 | This Subaccount began operations on January 7, 2002. |
|
ADDITIONAL INFORMATION – Financial Statements is amended. |
The Financial Statements section is amended by adding the following:
Financial Statements
The statements of assets and liabilities of Separate Account A as of December 31, 2003 and the related statements of operations for the year then ended, statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the three years in the period then ended are incorporated by reference in the Statement of Additional Information from the Annual Report of Separate Account A dated as of December 31, 2003. Pacific Life’s consolidated financial statements as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are contained in the Statement of Additional Information.
|
11
Supplement dated February 27, 2004 to the Prospectus dated May 1, 2003
for Pacific Innovations Select, a variable annuity contract
issued by Pacific Life Insurance Company
| Capitalized terms used in this Supplement are defined in the Prospectus referred to above unless otherwise defined herein. “We,” “us”, or “our” refer to Pacific Life Insurance Company; “you” or “your” refer to the Contract Owner.
Subject to state availability, for Income Access Riders with an Effective Date on or after March 1, 2004, this supplement changes the Prospectus to reflect the following:
|
||||||
|
AN OVERVIEW OF PACIFIC INNOVATIONS SELECT – Periodic Contract Expenses (calculated as a percentage of Contract Value) is amended. |
The Periodic Contract Expenses section of the Prospectus is amended to restate the following:
Income Access Rider Annual Charge (Optional Rider) 0.75%9
9 If you buy the Income Access Rider (subject to availability), an optional Rider, we deduct this charge proportionately from your Investment Options on each Contract Anniversary following the Effective Date of the Rider during the term of the Rider and while the Rider is in effect. If the Rider is terminated for reasons other than death or annuitization, this charge will be deducted on the effective date of termination. The 0.75% Income Access Charge is the maximum charge allowable under the terms and conditions of the rider. Currently the annual charge for the Rider is 0.40%. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under the Rider. The charge if you purchase a Rider will also be shown on the Rider in your Contract. If the Effective Date of the Rider is before March 1 , 2004 the Income Access Rider Annual Charge is equal to 0.30%.
|
|
AN OVERVIEW OF PACIFIC INNOVATIONS SELECT – |
The Examples section is amended to read as follows:
The following examples are intended to help you compare the cost of investing in your Contract with the cost of investing in other variable annuity contracts. These costs include Contract transaction expenses, the maximum periodic Contract expenses (including the optional combination of Riders whose cumulative expenses totaled more than any other optional combination), Separate Account annual expenses, and Portfolio fees and expenses for the year ended December 31, 2003. Premium taxes and/or other taxes may also be applicable.
The examples assume that you invest $10,000 in the Contract for the time periods indicated. They also assume that your Investment has a 5% return each year and assumes the maximum and minimum fees and expenses of all of the Investment Options available. Although your actual costs may be higher or lower, based on these assumptions, your maximum and minimum costs would be:
| |||||||||||||
| • If you surrendered your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,231 | $2,145 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $831 | $982 | $1,068 | $2,302 | |||||||||||
| • If you annuitized your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,231 | $1,785 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $831 | $622 | $1,068 | $2,302 | |||||||||||
| • If you did not surrender, nor annuitize, but left the money in your Contract: | ||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $601 | $1,785 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $201 | $622 | $1,068 | $2,302 | |||||||||||
|
* In calculating the examples above, we used the maximum and minimum net operating expenses of all the Portfolios for the 1 year period and the maximum and minimum total operating expenses for the 3, 5 and 10 year periods as shown in the Fees And Expenses Paid By The Fund section of the Fund’s Prospectus. For more information on fees and expenses, see CHARGES, FEES AND DEDUCTIONS in this Prospectus, and see the Fund’s Prospectus. | ||||||||||||||
2
|
PURCHASING YOUR CONTRACT is amended. |
The Purchasing the Income Access Rider (Optional) section is replaced with the following:
Purchasing the Income Access Rider (Optional)
Subject to availability, you may purchase the optional Income Access Rider on the Contract Date or on any Contract Anniversary if:
• the age of each Annuitant is 85 years or younger on the date of purchase, and • your entire Contract Value is invested in an asset allocation program established and maintained by us for this Rider during the entire period that the Rider is in effect.
You should consult a qualified adviser for complete information and advice before purchasing the Income Access Rider or electing the Step-Up provision available under this Rider. |
|||||
|
There may be adverse consequences to taking a loan while the Rider is in effect. If you have an existing loan on your Contract or are considering taking a loan, you should carefully consider whether the Rider is appropriate for you.
If you purchase the Income Access Rider within 60 days after the Contract Date or within 30 days after a Contract Anniversary, the Effective Date of the Rider will be that Contract Date or Anniversary.
The Rider allows for withdrawals from the Contract of up to the Protected Payment Amount each Contract Year, regardless of market performance, until the Remaining Protected Balance is reduced to zero.
The Income Access Rider also provides that if, on any Contract Anniversary beginning with the fifth (5th) anniversary of the Effective Date of the Income Access Rider, the Contract Value is greater than the Remaining Protected Balance, you may elect to Step-Up (increase) the Remaining Protected Balance to an amount equal to 100% of the Contract Value. For purposes of the Income Access Rider, the term “withdrawal” includes any applicable withdrawal charges and charges for premium taxes and/or other taxes, if applicable. Amounts withdrawn under the Income Access Rider will reduce the Contract Value by the amount withdrawn and will be subject to the same conditions, limitations, restrictions and all other fees, charges and deductions, if applicable, as withdrawals otherwise made under the provisions of the Contract. |
||||||
|
The initial Protected Payment Base and initial Remaining Protected Balance are equal to:
• your Initial Purchase Payment, if the Effective Date of the Rider is on a Contract Date; or • the Contract Value, if the Effective Date of the Rider is on a Contract Anniversary. |
||||||
| The initial Protected Payment Amount is equal to 7% of the initial Protected Payment Base. | ||||||
|
Once these initial amounts are established, the Protected Payment Base and Protected Payment Amount will remain unchanged, provided no additional Purchase Payments are received after the Effective Date of the Rider, the total amount withdrawn each Contract Year does not exceed the Protected Payment Amount and the Remaining Protected Balance is greater than 7% of the Protected Payment Base at each Contract Anniversary. |
||||||
3
| Example #1—Initial Values on the Effective Date based on an initial Purchase Payment of $100,000
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
|
If we receive any additional Purchase Payments to the Contract, we will immediately
For purposes of the Income Access Rider, we reserve the right to restrict
additional
Example #2—Additional Purchase Payment received after the Effective Date of the
Rider but within the same
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
|
In addition to Purchase Payments, the Contract Value is further subject to increases and/or
decreases during a
While the Rider is in effect, you may make cumulative withdrawals up to the Protected | ||||||||||||||||||
|
Any portion of the Protected Payment Amount not withdrawn during a Contract Year
| ||||||||||||||||||
| Example #3—Cumulative withdrawals during the second Contract Year not exceeding the Protected Payment Amount established for that Contract Year.
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
| Activity | $8,400 | $110,600 | $111,600 | |||||||||||||||
| Beginning of Year 3 |
$120,000 | $8,400 | $111,600 | |||||||||||||||
4
|
Under the terms and conditions of your Contract, you may withdraw more than the
If a withdrawal does not cause the total amount withdrawn during
the Contract Year to
If a withdrawal causes the total amount withdrawn during the Contract Year to exceed the
• the Contract Value immediately after the withdrawal, or
The Protected Payment Amount will remain unchanged until the next Contract | ||||||||||||||||||
|
Example #4—Cumulative withdrawals during the third Contract Year exceeding the Protected
Payment
| ||||||||||||||||||
| Contract Years |
Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protected Balance |
||||||||||||
| Beginning of Year 1 |
$100,000 | $100,000 | $7,000 | $100,000 | ||||||||||||||
| Activity | $20,000 | $122,000 | $120,000 | $120,000 | ||||||||||||||
| Beginning of Year 2 |
$120,000 | $8,400 | $120,000 | |||||||||||||||
| Activity | $8,400 | $110,600 | $111,600 | |||||||||||||||
| Beginning of Year 3 |
$120,000 | $8,400 | $111,600 | |||||||||||||||
| Activity (Withdrawal) |
$8,400 | $103,600 | $103,200 | |||||||||||||||
| Activity (Withdrawal) |
$5,000 | $94,000 | $94,000 | $94,000 | ||||||||||||||
| Beginning of Year 4 |
$94,000 | $6,580 | $94,000 | |||||||||||||||
| Because the $5,000 withdrawal causes the cumulative withdrawals to exceed the Protected Payment Amount, the Protected Payment Base and Remaining Protected Balance immediately after the withdrawal are reset to the lesser of (a) the Contract Value immediately after the withdrawal ($94,000); or, (b) the Remaining Protected Balance immediately before the withdrawal, less the withdrawal amount ($103,200 – $5,000 = $98,200). | ||||||||||||||||||
|
A withdrawal may not exceed the amount available for withdrawal under the Contract, if such withdrawal would cause the cumulative withdrawals for that Contract Year to exceed the Protected Payment Amount and reduce the Contract Value to zero.
|
5
| If, immediately after a withdrawal, the cumulative withdrawals for that Contract Year do not exceed the Protected Payment Amount and the Contract Value is reduced to zero, the following will apply:
• the Protected Payment Amount will be paid under a series of pre-authorized withdrawals under a payment frequency, as elected by you, but no less frequently than annually, until the Remaining Protected Balance is reduced to zero, | ||||
| • no additional Purchase Payments will be accepted under the Contract, • any Remaining Protected Balance will not be available for payment in a lump sum or may not be applied to provide payments under an Annuity Option, and • the Contract will cease to provide any death benefit.
If the Owner or sole surviving Annuitant dies and the Contract Value is zero as of the date of death, any Remaining Protected Balance will be paid to the designated Beneficiary under the series of pre-authorized withdrawals and payment frequency then in effect at the time of the Owner’s or sole surviving Annuitant’s death.
If the Owner dies while this Rider is in effect and if the surviving spouse of the deceased Owner elects to continue the Contract in accordance with its terms, then the provisions of this Rider will continue, unless otherwise terminated. | ||||
|
You cannot request a termination of the Rider, but the Rider will automatically end on the earliest of:
• the Contract Anniversary immediately following the day any portion of the Contract Value is no longer invested according to an asset allocation program established and maintained by us for this Rider, • the Contract Anniversary immediately following the day the Remaining Protected Balance is reduced to zero, • the day of the first death of an Owner or the date of death of the sole surviving Annuitant, except as otherwise provided in the paragraph below, • the day the Contract is terminated in accordance with the provisions of the Contract, except as otherwise provided in the paragraph below, or • the Annuity Date.
The Rider and the Contract will not terminate on the first death of an Owner or death of the sole surviving Annuitant, or the day the Contract is terminated in accordance with the provision of the Contract if, at the time of those events, the Contract Value is zero and we are making pre-authorized withdrawals of the Remaining Protected Balance under the provisions of the Rider. If we are making pre-authorized withdrawals, the Contract will terminate on the Contract Anniversary immediately following the day the Remaining Protected Balance is zero. | ||||
|
Optional Step-Up in the Remaining Protected Balance
On any Contract Anniversary beginning with the fifth (5th) anniversary of the Effective Date of the Rider and before the Annuity Date, you may elect to Step-Up the Remaining Protected Balance to an amount equal to 100% of the Contract Value as of the Step-Up Date.
The Income Access Charge may change if you elect a Step-Up, but will never exceed the Income Access Charge then being charged for this same benefit under newly issued riders. If you do not elect the optional Step-Up, the Income Access Charge on the Effective Date of the Rider will remain unchanged. |
6
|
Your request for a Step-Up must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
On each Step-Up Date, we will:
(a) reset the Remaining Protected Balance to an amount equal to 100% of the Contract Value on the Step-Up Date;
(b) reset the Protected Payment Base to an amount equal to the reset Remaining Protected Balance; and | ||||||||||||||||||
|
(c) reset the Protected Payment Amount to equal 7% of the reset Protected Payment Base.
Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
Your election to Step-Up the Remaining Protected Balance may result in a reduction in the Protected Payment Base and Protected Payment Amount.
| ||||||||||||||||||
| Example #5—A Step-Up in the Remaining Protected Balance at the Beginning of Contract Year 7 (Step-Up Date). This example further assumes that cumulative withdrawals for Contract Years 4, 5 and 6 do not exceed the Protected Payment Amount and no additional Purchase Payments are made during these Contract Years.
| ||||||||||||||||||
| Contract Years | Purchase Payments Received |
Withdrawal Amount |
Contract Value After Activity |
Protected Payment Base (PPB) |
Protected Payment Amount (7% of PPB) |
Remaining Protect Balance |
||||||||||||
| Beginning of Year 4 | $94,000 | $6,580 | $94,000 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $87,420 | ||||||||||||||||
| Beginning of Year 5 | $94,000 | $6,580 | $87,420 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $80,840 | ||||||||||||||||
| Beginning of Year 6 | $94,000 | $6,580 | $80,840 | |||||||||||||||
| Activity (Withdrawal) |
$6,580 | $74,260 | ||||||||||||||||
| Beginning of Year 7 (Balances immediately before the Step-Up) |
$85,000 | $94,000 | $6,580 | $74,260 | ||||||||||||||
| Activity (Step-Up effected) | ||||||||||||||||||
| Beginning of Year 7 (Balances immediately after the Step-Up) |
$85,000 | $85,000 | $5,950 | $85,000 | ||||||||||||||
| Because the Contract Value ($85,000) on the Step-Up Date is greater than the Remaining Protected Balance ($74,260) (see balances immediately before the Step-Up), the Step-Up election: (a) resets the Remaining Protected Balance to equal the Contract Value; (b) resets the Protected Payment Base to equal the reset Remaining Protected Balance, resulting in a reduction in the Protected Payment Base; and (c) resets the Protected Payment Amount to equal 7% of the reset Protected Payment Base ($85,000 x 7% = $5,950), resulting in a reduction in the Protected Payment Amount (see balances immediately after the Step-Up).
We will provide you with written confirmation of your Step-Up election. | ||||||||||||||||||
7
|
CHARGES, FEES AND DEDUCTIONS is amended. |
The CHARGES, FEES AND DEDUCTIONS section is amended to restate the following:
Income Access Annual Charge (Optional Rider)
If you purchase the optional Income Access Rider, we will deduct an Income Access Charge from your Investment Options on a proportionate basis on each Contract Anniversary that the Rider remains in effect following the Effective Date of the Rider, and if you terminate the Rider. The Income Access Rider Annual Charge is equal to 0.40% (0.30% if the Effective Date of the Rider is before March 1, 2004.) multiplied by your Contract Value on the date the Charge is deducted.
The Income Access Charge may change if you elect the Step-Up option in the Remaining Protected Balance, but will never be more than the Income Access Charge being charged under the then current terms and conditions of the Rider and will not be more than a maximum charge of 0.75%. If you do not elect the optional Step-Up, your Income Access Charge will remain the same as it was on the Effective Date of the Rider.
If your Contract was issued before November 1, 2002, any portion of the Income Access Charge we deduct from the Fixed Option will not be greater than the annual interest credited in excess of 3%.
|
8
|
PACIFIC LIFE AND THE SEPARATE ACCOUNT – Financial Highlights is amended. |
The Financial Highlights section is amended by adding the following:
The table below is designed to help you understand how the Variable Investment Options have performed. It shows the value of a Subaccount Unit at the beginning and end of each period, as well as the number of Subaccount Units at the end of each period. A Subaccount Unit is also called an Accumulation Unit.
This information in the table for the three year period ended December 31, 2003 is included in the financial statements of Separate Account A which have been audited by Deloitte & Touche LLP, independent auditors. You should read the table in conjunction with the financial statements for Separate Account A, which are included in its annual report dated as of December 31, 2003.
|
| With Standard Death Benefit | With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| Blue Chip1 |
||||||||||||||||||||||
| 2003 | $7.02 | $8.66 | 19,708,773 | $7.00 | $8.61 | 8,321,304 | $6.98 | $8.57 | 4,492,838 | |||||||||||||
| 2002 | $9.64 | $7.02 | 10,249,236 | $9.62 | $7.00 | 4,341,489 | $9.61 | $6.98 | 3,460,103 | |||||||||||||
| 2001 | $10.00 | $9.64 | 3,907,567 | $10.00 | $9.62 | 1,638,628 | $10.00 | $9.61 | 1,290,854 | |||||||||||||
| Aggressive Growth2 |
||||||||||||||||||||||
| 2003 | $7.44 | $9.27 | 1,237,770 | $7.42 | $9.22 | 560,772 | $7.40 | $9.18 | 385,037 | |||||||||||||
| 2002 | $9.74 | $7.44 | 904,410 | $9.72 | $7.42 | 520,735 | $9.71 | $7.40 | 396,138 | |||||||||||||
| 2001 | $10.00 | $9.74 | 641,768 | $10.00 | $9.72 | 330,675 | $10.00 | $9.71 | 241,308 | |||||||||||||
| Diversified Research1 |
||||||||||||||||||||||
| 2003 | $7.88 | $10.28 | 3,829,014 | $7.85 | $10.22 | 1,945,268 | $7.83 | $10.18 | 1,511,183 | |||||||||||||
| 2002 | $10.56 | $7.88 | 2,648,078 | $10.55 | $7.85 | 1,400,498 | $10.54 | $7.83 | 1,389,542 | |||||||||||||
| 2001 | $10.00 | $10.56 | 1,497,959 | $10.00 | $10.55 | 689,111 | $10.00 | $10.54 | 496,758 | |||||||||||||
| Small-Cap Equity3 |
||||||||||||||||||||||
| 2003 | $8.49 | $11.76 | 2,584,270 | $8.46 | $11.69 | 1,286,592 | $8.44 | $11.64 | 854,492 | |||||||||||||
| 2002 | $11.29 | $8.49 | 1,531,073 | $11.27 | $8.46 | 943,764 | $11.26 | $8.44 | 757,769 | |||||||||||||
| 2001 | $10.00 | $11.29 | 918,780 | $10.00 | $11.27 | 474,319 | $10.00 | $11.26 | 359,490 | |||||||||||||
| International Large-Cap3 |
||||||||||||||||||||||
| 2003 | $7.48 | $9.61 | 15,132,339 | $7.46 | $9.55 | 6,493,298 | $7.44 | $9.51 | 3,578,216 | |||||||||||||
| 2002 | $9.23 | $7.48 | 6,181,781 | $9.22 | $7.46 | 2,556,131 | $9.21 | $7.44 | 2,293,198 | |||||||||||||
| 2001 | $10.00 | $9.23 | 2,663,769 | $10.00 | $9.22 | 989,214 | $10.00 | $9.21 | 886,013 | |||||||||||||
| Short Duration Bond4 |
||||||||||||||||||||||
| 2003 | $10.00 | $9.99 | 14,384,887 | $10.00 | $9.97 | 5,126,474 | $10.00 | $9.96 | 2,854,347 | |||||||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| I-Net TollkeeperSM2 |
||||||||||||||||||||||
| 2003 | $5.58 | $7.87 | 817,235 | $5.57 | $7.82 | 204,142 | $5.55 | $7.79 | 202,435 | |||||||||||||
| 2002 | $9.25 | $5.58 | 430,240 | $9.24 | $5.57 | 86,367 | $9.23 | $5.55 | 133,469 | |||||||||||||
| 2001 | $10.00 | $9.25 | 177,211 | $10.00 | $9.24 | 59,175 | $10.00 | $9.23 | 61,145 | |||||||||||||
| Financial Services2 |
||||||||||||||||||||||
| 2003 | $8.37 | $10.62 | 1,490,241 | $8.34 | $10.57 | 668,364 | $8.32 | $10.52 | 470,514 | |||||||||||||
| 2002 | $9.97 | $8.37 | 1,297,487 | $9.95 | $8.34 | 505,448 | $9.94 | $8.32 | 459,482 | |||||||||||||
| 2001 | $10.00 | $9.97 | 823,284 | $10.00 | $9.95 | 340,866 | $10.00 | $9.94 | 347,151 | |||||||||||||
| Health Sciences2 |
||||||||||||||||||||||
| 2003 | $8.61 | $10.83 | 1,742,267 | $8.58 | $10.77 | 828,543 | $8.56 | $10.72 | 705,383 | |||||||||||||
| 2002 | $11.42 | $8.61 | 1,403,390 | $11.40 | $8.58 | 608,030 | $11.39 | $8.56 | 713,719 | |||||||||||||
| 2001 | $10.00 | $11.42 | 928,216 | $10.00 | $11.40 | 384,333 | $10.00 | $11.39 | 566,124 | |||||||||||||
| Technology1 |
||||||||||||||||||||||
| 2003 | $5.16 | $7.24 | 3,014,428 | $5.15 | $7.20 | 1,073,167 | $5.13 | $7.17 | 818,208 | |||||||||||||
| 2002 | $9.78 | $5.16 | 1,487,105 | $9.77 | $5.15 | 604,395 | $9.76 | $5.13 | 515,237 | |||||||||||||
| 2001 | $10.00 | $9.78 | 625,538 | $10.00 | $9.77 | 374,247 | $10.00 | $9.76 | 345,460 | |||||||||||||
| Growth LT3 |
||||||||||||||||||||||
| 2003 | $6.60 | $8.70 | 11,422,554 | $6.58 | $8.65 | 4,362,063 | $6.56 | $8.61 | 2,811,147 | |||||||||||||
| 2002 | $9.44 | $6.60 | 8,308,946 | $9.43 | $6.58 | 3,060,290 | $9.42 | $6.56 | 2,887,113 | |||||||||||||
| 2001 | $10.00 | $9.44 | 3,483,870 | $10.00 | $9.43 | 1,294,812 | $10.00 | $9.42 | 1,275,421 | |||||||||||||
9
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| Focused 303 |
||||||||||||||||||||||
| 2003 | $7.73 | $10.82 | 820,810 | $7.71 | $10.76 | 285,259 | $7.69 | $10.72 | 260,196 | |||||||||||||
| 2002 | $11.14 | $7.73 | 559,816 | $11.12 | $7.71 | 220,187 | $11.11 | $7.69 | 211,042 | |||||||||||||
| 2001 | $10.00 | $11.14 | 384,534 | $10.00 | $11.12 | 133,218 | $10.00 | $11.11 | 151,411 | |||||||||||||
| Mid-Cap Value2 |
||||||||||||||||||||||
| 2003 | $9.71 | $12.34 | 10,139,353 | $9.68 | $12.27 | 4,442,833 | $9.66 | $12.22 | 2,890,203 | |||||||||||||
| 2002 | $11.55 | $9.71 | 6,005,013 | $11.53 | $9.68 | 2,748,866 | $11.52 | $9.66 | 2,389,821 | |||||||||||||
| 2001 | $10.00 | $11.55 | 3,095,066 | $10.00 | $11.53 | 1,301,503 | $10.00 | $11.52 | 1,186,018 | |||||||||||||
| International Value3 |
||||||||||||||||||||||
| 2003 | $7.66 | $9.62 | 16,233,519 | $7.63 | $9.56 | 6,370,903 | $7.61 | $9.53 | 3,655,738 | |||||||||||||
| 2002 | $9.04 | $7.66 | 7,111,510 | $9.03 | $7.63 | 2,574,027 | $9.02 | $7.61 | 2,461,826 | |||||||||||||
| 2001 | $10.00 | $9.04 | 2,504,993 | $10.00 | $9.03 | 834,945 | $10.00 | $9.02 | 851,203 | |||||||||||||
| Capital Opportunities1 |
||||||||||||||||||||||
| 2003 | $6.74 | $8.43 | 4,428,423 | $6.72 | $8.39 | 2,126,973 | $6.70 | $8.35 | 1,141,590 | |||||||||||||
| 2002 | $9.36 | $6.74 | 2,551,387 | $9.35 | $6.72 | 1,267,335 | $9.34 | $6.70 | 958,306 | |||||||||||||
| 2001 | $10.00 | $9.36 | 1,163,015 | $10.00 | $9.35 | 561,878 | $10.00 | $9.34 | 448,482 | |||||||||||||
| Equity Index3 |
||||||||||||||||||||||
| 2003 | $7.62 | $9.61 | 6,772,396 | $7.59 | $9.56 | 2,421,254 | $7.57 | $9.52 | 1,680,027 | |||||||||||||
| 2002 | $9.97 | $7.62 | 7,481,319 | $9.96 | $7.59 | 2,544,186 | $9.95 | $7.57 | 2,382,816 | |||||||||||||
| 2001 | $10.00 | $9.97 | 3,326,399 | $10.00 | $9.96 | 1,114,646 | $10.00 | $9.95 | 1,209,353 | |||||||||||||
| Small-Cap Index5 |
||||||||||||||||||||||
| 2003 | $8.58 | $12.37 | 5,654,000 | $8.55 | $12.30 | 2,074,241 | $8.53 | $12.25 | 1,400,194 | |||||||||||||
| 2002 | $11.07 | $8.58 | 2,655,068 | $11.05 | $8.55 | 1,065,894 | $11.04 | $8.53 | 971,831 | |||||||||||||
| 2001 | $10.00 | $11.07 | 603,720 | $10.00 | $11.05 | 204,137 | $10.00 | $11.04 | 186,900 | |||||||||||||
| Multi-Strategy6 |
||||||||||||||||||||||
| 2003 | $8.83 | $10.70 | 3,035,317 | $8.80 | $10.64 | 1,152,985 | $8.77 | $10.60 | 752,111 | |||||||||||||
| 2002 | $10.32 | $8.83 | 2,402,344 | $10.31 | $8.80 | 998,418 | $10.29 | $8.77 | 641,237 | |||||||||||||
| 2001 | $10.00 | $10.32 | 1,473,184 | $10.00 | $10.31 | 519,267 | $10.00 | $10.29 | 380,828 | |||||||||||||
| Main Street® Core3 |
||||||||||||||||||||||
| 2003 | $7.15 | $8.93 | 8,604,484 | $7.13 | $8.88 | 3,670,780 | $7.11 | $8.85 | 2,356,022 | |||||||||||||
| 2002 | $10.16 | $7.15 | 2,578,296 | $10.14 | $7.13 | 1,211,446 | $10.13 | $7.11 | 1,015,515 | |||||||||||||
| 2001 | $10.00 | $10.16 | 1,984,450 | $10.00 | $10.14 | 840,251 | $10.00 | $10.13 | 697,289 | |||||||||||||
| Emerging Markets2 |
||||||||||||||||||||||
| 2003 | $9.75 | $16.16 | 1,610,401 | $9.71 | $16.07 | 685,510 | $9.69 | $16.00 | 336,278 | |||||||||||||
| 2002 | $10.22 | $9.75 | 668,754 | $10.21 | $9.71 | 243,783 | $10.20 | $9.69 | 225,126 | |||||||||||||
| 2001 | $10.00 | $10.22 | 211,483 | $10.00 | $10.21 | 78,029 | $10.00 | $10.20 | 90,230 | |||||||||||||
| Inflation Managed3 |
||||||||||||||||||||||
| 2003 | $11.42 | $12.16 | 19,037,992 | $11.38 | $12.10 | 5,855,231 | $11.35 | $12.05 | 3,707,537 | |||||||||||||
| 2002 | $10.06 | $11.42 | 10,913,817 | $10.04 | $11.38 | 3,212,778 | $10.03 | $11.35 | 2,692,681 | |||||||||||||
| 2001 | $10.00 | $10.06 | 3,532,994 | $10.00 | $10.04 | 1,016,780 | $10.00 | $10.03 | 772,661 | |||||||||||||
| Managed Bond3 |
||||||||||||||||||||||
| 2003 | $11.24 | $11.74 | 23,854,309 | $11.20 | $11.68 | 8,974,943 | $11.17 | $11.63 | 6,038,644 | |||||||||||||
| 2002 | $10.30 | $11.24 | 18,674,851 | $10.28 | $11.20 | 6,522,651 | $10.27 | $11.17 | 5,940,033 | |||||||||||||
| 2001 | $10.00 | $10.30 | 9,330,375 | $10.00 | $10.28 | 3,094,696 | $10.00 | $10.27 | 2,643,122 | |||||||||||||
| Small-Cap Value4 |
||||||||||||||||||||||
| 2003 | $10.00 | $12.55 | 3,535,410 | $10.00 | $12.54 | 1,517,298 | $10.00 | $12.52 | 745,713 | |||||||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| Money Market3 |
||||||||||||||||||||||
| 2003 | $10.09 | $10.01 | 8,772,801 | $10.06 | $9.95 | 2,436,151 | $10.03 | $9.91 | 1,588,852 | |||||||||||||
| 2002 | $10.12 | $10.09 | 11,419,100 | $10.10 | $10.06 | 3,600,821 | $10.09 | $10.03 | 3,129,500 | |||||||||||||
| 2001 | $10.00 | $10.12 | 8,675,282 | $10.00 | $10.10 | 3,485,768 | $10.00 | $10.09 | 2,157,872 | |||||||||||||
| High Yield Bond3 |
||||||||||||||||||||||
| 2003 | $9.15 | $10.82 | 10,001,359 | $9.12 | $10.77 | 3,793,983 | $9.09 | $10.72 | 1,727,493 | |||||||||||||
| 2002 | $9.59 | $9.15 | 4,408,755 | $9.57 | $9.12 | 1,784,489 | $9.56 | $9.09 | 1,241,320 | |||||||||||||
| 2001 | $10.00 | $9.59 | 1,862,023 | $10.00 | $9.57 | 482,390 | $10.00 | $9.56 | 406,825 | |||||||||||||
| Equity Income7 |
||||||||||||||||||||||
| 2003 | $8.50 | $10.56 | 1,985,302 | $8.49 | $10.52 | 969,820 | $8.47 | $10.49 | 593,998 | |||||||||||||
| 2002 | $10.00 | $8.50 | 1,337,585 | $10.00 | $8.49 | 588,682 | $10.00 | $8.47 | 466,253 | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| Equity9 |
||||||||||||||||||||||
| 2003 | $7.36 | $9.00 | 965,248 | $7.33 | $8.95 | 455,200 | $7.31 | $8.91 | 642,882 | |||||||||||||
| 2002 | $10.18 | $7.36 | 1,105,041 | $10.16 | $7.33 | 470,399 | $10.15 | $7.31 | 529,832 | |||||||||||||
| 2001 | $10.00 | $10.18 | 954,219 | $10.00 | $10.16 | 442,282 | $10.00 | $10.15 | 388,844 | |||||||||||||
10
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| Aggressive Equity3 |
||||||||||||||||||||||
| 2003 | $8.12 | $10.63 | 1,724,803 | $8.09 | $10.57 | 666,157 | $8.07 | $10.53 | 402,565 | |||||||||||||
| 2002 | $11.01 | $8.12 | 1,014,789 | $11.00 | $8.09 | 423,805 | $10.99 | $8.07 | 369,398 | |||||||||||||
| 2001 | $10.00 | $11.01 | 293,748 | $10.00 | $11.00 | 137,859 | $10.00 | $10.99 | 113,526 | |||||||||||||
| Large-Cap Value9 |
||||||||||||||||||||||
| 2003 | $7.53 | $9.73 | 24,755,093 | $7.51 | $9.67 | 10,422,829 | $7.49 | $9.63 | 6,090,920 | |||||||||||||
| 2002 | $9.94 | $7.53 | 12,859,786 | $9.93 | $7.51 | 5,254,064 | $9.92 | $7.49 | 4,854,748 | |||||||||||||
| 2001 | $10.00 | $9.94 | 5,006,090 | $10.00 | $9.93 | 2,023,116 | $10.00 | $9.92 | 1,787,341 | |||||||||||||
| Comstock3 |
||||||||||||||||||||||
| 2003 | $7.22 | $9.33 | 6,604,550 | $7.20 | $9.28 | 2,821,909 | $7.18 | $9.25 | 1,465,531 | |||||||||||||
| 2002 | $9.43 | $7.22 | 1,198,731 | $9.42 | $7.20 | 653,082 | $9.41 | $7.18 | 459,562 | |||||||||||||
| 2001 | $10.00 | $9.43 | 703,659 | $10.00 | $9.42 | 414,009 | $10.00 | $9.41 | 341,710 | |||||||||||||
| Real Estate9 |
||||||||||||||||||||||
| 2003 | $10.72 | $14.51 | 3,694,864 | $10.69 | $14.43 | 1,394,468 | $10.66 | $14.37 | 906,395 | |||||||||||||
| 2002 | $10.94 | $10.72 | 2,355,294 | $10.92 | $10.69 | 869,518 | $10.91 | $10.66 | 742,357 | |||||||||||||
| 2001 | $10.00 | $10.94 | 1,127,914 | $10.00 | $10.92 | 415,872 | $10.00 | $10.91 | 323,797 | |||||||||||||
| Mid-Cap Growth3 |
||||||||||||||||||||||
| 2003 | $5.53 | $7.10 | 3,450,185 | $5.52 | $7.06 | 2,025,364 | $5.50 | $7.03 | 1,182,007 | |||||||||||||
| 2002 | $10.62 | $5.53 | 2,396,177 | $10.61 | $5.52 | 1,574,297 | $10.60 | $5.50 | 1,093,405 | |||||||||||||
| 2001 | $10.00 | $10.62 | 1,200,646 | $10.00 | $10.61 | 756,565 | $10.00 | $10.60 | 537,801 | |||||||||||||
| 1 | This Subaccount began operations on April 05, 2001. |
| 2 | This Subaccount began operations on April 03, 2001. |
| 3 | This Subaccount began operations on April 02, 2001. |
| 4 | This Subaccount began operations on May 1, 2003. |
| 5 | This Subaccount began operations on April 09, 2001. |
| 6 | This Subaccount began operations on April 06, 2001. |
| 7 | This Subaccount began operations on January 2, 2002. |
| 8 | This Subaccount began operations on January 7, 2002. |
| 9 | This Subaccount began operations on April 04, 2001. |
|
ADDITIONAL INFORMATION – Financial Statements is amended. |
The Financial Statements section is amended by adding the following:
Financial Statements
The statements of assets and liabilities of Separate Account A as of December 31, 2003 and the related statements of operations for the year then ended, statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the three years in the period then ended are incorporated by reference in the Statement of Additional Information from the Annual Report of Separate Account A dated as of December 31, 2003. Pacific Life’s consolidated financial statements as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are contained in the Statement of Additional Information. |
11
Supplement dated February 27, 2004 to the Prospectuses dated May 1, 2003
for Pacific Innovations Select, a variable annuity contract
issued by Pacific Life Insurance Company
| Capitalized terms used in this Supplement are defined in the Prospectus referred to above unless otherwise defined herein. “We,” “us”, or “our” refer to Pacific Life Insurance Company; “you” or “your” refer to the Contract Owner.
This supplement changes the Prospectus to reflect the following effective March 1, 2004:
| ||||
|
AN OVERVIEW OF PACIFIC INNOVATIONS SELECT – Optional Riders is amended. |
The Optional riders section is amended to restate and include the following:
Guaranteed Income Advantage (GIA) Rider
The optional Guaranteed Income Advantage Rider (GIA Rider) is only available if the Effective Date of the Rider is before March 1, 2004. It offers a guaranteed income advantage annuity option. You may buy the GIA Rider on the Contract Date or on any Contract Anniversary.
Guaranteed Income Advantage II (GIA II) Rider
Subject to state availability, the optional Guaranteed Income Advantage II Rider (GIA II Rider) is only available if the Effective Date of the Rider is on or after March 1, 2004. It offers a guaranteed income advantage annuity option. You may buy the GIA II Rider on the Contract Date or on any Contract Anniversary. The GIA II Rider may not be available. Ask your registered representative about its current availability.
Guaranteed Income Advantage 5 (GIA 5) Rider
Subject to state availability, the optional Guaranteed Income Advantage 5 Rider (GIA 5 Rider) is only available if the Effective Date of the Rider is on or after March 1, 2004. It offers a guaranteed income advantage annuity option. You may buy the GIA 5 Rider on the Contract Date or on any Contract Anniversary. The GIA 5 Rider may not be available. Ask your registered representative about its current availability.
| |||
|
AN OVERVIEW OF PACIFIC INNOVATIONS SELECT – Periodic Contract Expenses (calculated as a percentage of Contract Value) is amended. |
The Periodic contract expenses table is amended by adding the following:
• Guaranteed Income Advantage II (GIA II) Rider 1.00%6 Annual Charge (Optional Rider) • Guaranteed Income Advantage 5 (GIA 5) Rider 0.75%6 Annual Charge (Optional Rider) • Guaranteed Protection Advantage 5 Annual Charge 0.75%8 (Guaranteed Protection Charge) (Optional Rider)
6 If you buy this optional Rider (subject to state availability), we deduct this charge on each Contract Anniversary and the Annuity Date, and when you make a full withdrawal, if the Rider is in effect on that date, or when you terminate your Rider. The 1.00% GIA II charge and the 0.75% GIA 5 charge are the maximum charges allowable under the terms and conditions of each respective Rider. Currently, the annual charge for each Rider is 0.70% for the GIA II and 0.40% for the GIA 5. The charge if you purchase a Rider will also be shown on the Rider in your Contract. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under each Rider. The optional Guaranteed Income Advantage Rider (GIA Rider) is only available if the Effective Date of the Rider is before March 1, 2004. |
| 8 If you buy the Guaranteed Protection Advantage 5 Rider (subject to state availability), we deduct this charge from your Investment Options on each Contract Anniversary following the Effective Date of the Rider during the term of the Rider and while the Rider is in effect. If the Rider is terminated for reasons other than death or annuitization, this charge will be deducted on the effective date of termination. This charge may change if you elect the Step-Up provision allowable under the Rider. The 0.75% GPA charge is the maximum charge allowable under the terms and conditions of the Rider. Currently, the annual charge for the Rider is 0.25%. Under the terms and conditions of the Rider the charge will remain the same while the Rider is in effect, unless you elect the Step-Up provision provided under Rider. The charge if you purchase a Rider will also be shown on the Rider in your Contract. If the Effective Date of the Rider is before March 1, 2004 the Guaranteed Protection Charge is equal to 0.10%. |
2
|
AN OVERVIEW OF PACIFIC INNOVATIONS SELECT – |
The Examples section is amended to read as follows:
The following examples are intended to help you compare the cost of investing in your Contract with the cost of investing in other variable annuity contracts. These costs include Contract transaction expenses, the maximum periodic Contract expenses (including the optional combination of Riders whose cumulative expenses totaled more than any other optional combination), Separate Account annual expenses, and Portfolio fees and expenses for the year ended December 31, 2003. Premium taxes and/or other taxes may also be applicable.
The examples assume that you invest $10,000 in the Contract for the time periods indicated. They also assume that your Investment has a 5% return each year and assumes the maximum and minimum fees and expenses of all of the Investment Options available. Although your actual costs may be higher or lower, based on these assumptions, your maximum and minimum costs would be:
|
|||||||||||||
| • If you surrendered your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,231 | $2,145 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $831 | $982 | $1,068 | $2,302 | |||||||||||
| • If you annuitized your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $1,231 | $1,785 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $831 | $622 | $1,068 | $2,302 | |||||||||||
| • If you did not surrender, nor annuitize, but left the money in your Contract: |
||||||||||||||
| Maximum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $601 | $1,785 | $2,945 | $5,745 | |||||||||||
| Minimum* 1 Year |
3 Years | 5 Years | 10 Years | |||||||||||
| $201 | $622 | $1,068 | $2,302 | |||||||||||
|
* In calculating the examples above, we used the maximum and minimum net operating expenses of all the Portfolios for the 1 year period and the maximum and minimum total operating expenses for the 3, 5 and 10 year periods as shown in the Fees And Expenses Paid By The Fund section of the Fund’s Prospectus. For more information on fees and expenses, see CHARGES, FEES AND DEDUCTIONS in this Prospectus, and see the Fund’s Prospectus. |
||||||||||||||
3
|
PURCHASING YOUR CONTRACT is amended. |
The PURCHASING YOUR CONTRACT section is amended to include the following:
Purchasing the Guaranteed Income Advantage II (GIA II) Rider (Optional)
You may purchase the GIA II Rider (subject to state availability) on the Contract Date or on any Contract Anniversary. You may purchase the GIA II Rider only if the age of each Annuitant is 80 years or younger on the date the GIA II Rider is purchased. The GIA II Rider will remain in effect until the earlier of:
• the Contract Anniversary immediately following the day we receive notification from you to terminate the GIA II Rider, • the date death benefit proceeds become payable under the Contract, • the date the Contract is terminated in accordance with the terms of the Contract, or • the Annuity Date.
If your request to terminate the Rider is received at our Service Center within thirty (30) days after a Contract Anniversary, the Rider will terminate on that Contract Anniversary.
Purchasing the Guaranteed Income Advantage 5 (GIA 5) Rider (Optional)
You may purchase the GIA 5 Rider (subject to state availability) on the Contract Date or on any Contract Anniversary. You may purchase the GIA 5 Rider only if the age of each Annuitant is 80 years or younger on the date the GIA 5 Rider is purchased, and the entire Contract Value is invested according to an asset allocation program established and maintained by us for this GIA 5 Rider. The GIA 5 Rider will remain in effect until the earlier of:
• the Contract Anniversary immediately following the day any portion of the Contract Value is no longer invested according to an asset allocation program established and maintained by us for the GIA 5 Rider, • the Contract Anniversary immediately following the day we receive notification from you to terminate the GIA 5 Rider, • the date death benefit proceeds become payable under the Contract, • the date the Contract is terminated in accordance with the terms of the Contract, or • the Annuity Date.
If your request to terminate the Rider is received at our Service Center within thirty (30) days after a Contract Anniversary, the Rider will terminate on that Contract Anniversary.
If you purchase the GIA 5 Rider (including any and all previous, current, and future versions), there may be adverse consequences to taking a loan while the GIA 5 Rider is in effect. If you have an existing loan on your Contract, you should carefully consider whether the GIA 5 Rider is appropriate for you. |
4
|
CHARGES, FEES AND DEDUCTIONS is amended. |
The CHARGES, FEES AND DEDUCTIONS section is amended to restate and include the following:
Guaranteed Protection Advantage 5 Annual Charge (Optional Rider)
If you purchase the optional Guaranteed Protection Advantage 5 Rider, we will deduct a Guaranteed Protection Charge from your Investment Options on a proportionate basis on each Contract Anniversary that the Rider remains in effect following the Effective Date of the Rider, and if you terminate the Rider. The Guaranteed Protection Charge is equal to 0.25% (maximum charge is 0.75%) multiplied by your Contract Value on the date the Charge is deducted. If the Effective Date of the Rider is before March 1, 2004, the Guaranteed Protection Charge is equal to 0.10%.
The Guaranteed Protection Charge may change if you elect the Step-Up option but will never be more than the Guaranteed Protection Charge being charged under the then current terms and conditions of the Rider. If you do not elect the optional Step-Up, your Guaranteed Protection Charge will remain the same as it was on the Effective Date of the Rider.
If your Contract was issued before November 1, 2002, any portion of the Guaranteed Protection Charge we deduct from the Fixed Option will not be greater than the annual interest credited in excess of 3%.
Guaranteed Income Advantage II (GIA II) Annual Charge (Optional Rider)
If you purchase the GIA II Rider, we deduct annually a Guaranteed Income Advantage Charge (GIA II Charge) for expenses related to the GIA II Rider. The GIA II Charge is equal to 0.70% (maximum charge is 1.00%) multiplied by your Contract Value on the date the Charge is deducted.
We will deduct the GIA II Charge from your Investment Options on a proportionate basis:
• on each Contract Anniversary the GIA II Rider remains in effect, • on the Annuity Date, if the GIA II Rider is still in effect, and • when the GIA II Rider is terminated.
If you terminate the GIA II Rider, we will charge your Contract for the annual GIA II Charge on the effective date of termination. If you make a full withdrawal of the amount available for withdrawal during a Contract Year, we will deduct the entire GIA II Charge for the Contract Year in which you make the full withdrawal from the final payment made to you.
Guaranteed Income Advantage 5 (GIA 5) Annual Charge (Optional Rider)
If you purchase the GIA 5 Rider, we deduct annually a Guaranteed Income Advantage Charge (GIA 5 Charge) for expenses related to the GIA 5 Rider. The GIA 5 Charge is equal to 0.40% (maximum charge is 0.75%) multiplied by your Contract Value on the date the Charge is deducted.
We will deduct the GIA 5 Charge from your Investment Options on a proportionate basis:
• on each Contract Anniversary the GIA 5 Rider remains in effect, • on the Annuity Date, if the GIA 5 Rider is still in effect, and • when the GIA 5 Rider is terminated. |
5
| If you terminate the GIA 5 Rider, we will charge your Contract for the annual GIA 5 Charge on the effective date of termination. If you make a full withdrawal of the amount available for withdrawal during a Contract Year, we will deduct the entire GIA 5 Charge for the Contract Year in which you make the full withdrawal from the final payment made to you.
|
||||||
|
RETIREMENT BENEFITS AND OTHER PAYOUTS – Choosing Your Annuity Option is amended. |
The Choosing Your Annuity Option section is amended to include the following:
Guaranteed Income Advantage II Annuity Option
If you purchase the optional GIA II Rider (subject to state availability), you may choose any of the Annuity Options described, or you may choose the Guaranteed Income Advantage II Annuity Option if 10 years have passed since the GIA II Rider was purchased and the GIA II Rider is still in effect. You must choose fixed annuity payments under this Guaranteed Income Advantage II Annuity Option. The guaranteed income purchased per $1,000 of the net amount applied to the annuity payments will be based on an annual interest rate of 2.5% and the 1983a Annuity Mortality Table with the age set back 10 years. The net amount applied to the annuity payments under the Guaranteed Income Advantage II Annuity Option will be based on the Net Guaranteed Income Base, which is described below. |
|||||
|
Net Guaranteed Income Base—The amount applied on the Annuity Date as a single premium to provide annuity payments under the Guaranteed Income Advantage II Annuity Option. The Net Guaranteed Income Base is equal to:
• the Guaranteed Income Base as of the Annuity Date, less • any applicable withdrawal charge resulting from the conversion to the Guaranteed Income Advantage II Annuity Option, less • any Contract Debt, and less • any charge for premium taxes and/or other taxes.
Guaranteed Income Base—If you purchase the GIA II Rider on the Contract Date, the Guaranteed Income Base is initially set on the Effective Date of the Rider. If the Rider is effective on a Contract Anniversary, the Guaranteed Income Base is equal to the Contract Value on that Contract Anniversary. The Guaranteed Income Base on any Business Day after the Effective Date is the Guaranteed Income Base on the prior Business Day, increased by any additions on that day as a result of any:
• Purchase Payments received by us, plus • increases at an annual growth rate of 5%, plus • additional amounts as a result of a Step-Up in the Guaranteed Income Base
and decreased by any deductions on that day as a result of any:
• adjustments for withdrawals.
The adjustment for each withdrawal is calculated by multiplying the Guaranteed Income Base prior to the withdrawal by the ratio of the amount of the withdrawal, including any applicable withdrawal charge, to the Contract Value immediately prior to the withdrawal.
Any portion of the Net Contract Value converted to provide payments under an Annuity Option, as described in the Contract, will be considered a “withdrawal” for purposes of determining any adjustment to the Guaranteed Income Base. |
6
| The 5% annual growth rate will take into account the timing of when each Purchase Payment and withdrawal occurred. This is accomplished by applying a daily factor of 1.000133681 to each day’s Guaranteed Income Base balance.
The 5% annual growth rate will stop accruing as of the earlier of:
• the Contract Anniversary following the day the youngest Annuitant reaches his or her 80th birthday, or • the day the GIA II Rider terminates.
Election of Step-Up—On any Contract Anniversary beginning with the fifth (5th ) anniversary of the Effective Date of this Rider and before the Annuity Date, you may elect to increase the Guaranteed Income Base to an amount equal to 100% of the Contract Value as of the Step-Up Date.
The Guaranteed Income Advantage Charge may change if you elect a Step-Up in the Guaranteed Income Base. However, the Guaranteed Income Advantage Charge will never exceed the Guaranteed Income Advantage Charge then being offered for this same benefit under newly issued riders. If the Guaranteed Income Base is never stepped-up, the Guaranteed Income Advantage Charge established on the Effective Date of this Rider is guaranteed not to change.
Your Step-Up election must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
The annuity payments that may be elected under the Guaranteed Income Advantage II Option are:
• Life Only, • Life with Period Certain, • Joint and Survivor Life, or • Period Certain Only.
If you elect the Guaranteed Income Advantage II (GIA II) Annuity Option, the waiver of withdrawal charges as described in the Contract will not apply. We will reduce the net amount applied to the annuity payments under the Guaranteed Income Advantage II Annuity Option by any remaining withdrawal charges. The rider contains annuity tables for each GIA II Annuity Option available.
Guaranteed Income Advantage 5 Annuity Option
If you purchase the optional GIA 5 Rider (subject to state availability), you may choose any of the Annuity Options described, or you may choose the Guaranteed Income Advantage 5 Annuity Option if 10 years have passed since the GIA 5 Rider was purchased and the GIA 5 Rider is still in effect. You must choose fixed annuity payments under this Guaranteed Income Advantage 5 Annuity Option. The guaranteed income purchased per $1,000 of the net amount applied to the annuity payments will be based on an annual interest rate of 2.5% and the 1983a Annuity Mortality Table with the age set back 10 years. The net amount applied to the annuity payments under the Guaranteed Income Advantage 5 Annuity Option will be based on the Net Guaranteed Income Base, which is described below. |
7
| Net Guaranteed Income Base—The amount applied on the Annuity Date as a single premium to provide annuity payments under the Guaranteed Income Advantage 5 Annuity Option. The Net Guaranteed Income Base is equal to:
• the Guaranteed Income Base as of the Annuity Date, less • any applicable withdrawal charge resulting from the conversion to the Guaranteed Income Advantage 5 Annuity Option, less • any Contract Debt, and less • any charge for premium taxes and/or other taxes.
Guaranteed Income Base—If you purchase the GIA 5 Rider on the Contract Date, the Guaranteed Income Base is initially set on the Effective Date of the Rider. If the Rider is effective on the Contract Date, the Guaranteed Income Base is equal to the Initial Purchase Payment. If the Rider is effective on a Contract Anniversary, the Guaranteed Income Base is equal to the Contract Value on that Contract Anniversary. The Guaranteed Income Base on any Business Day after the Effective Date is the Guaranteed Income Base on the prior Business Day, increased by any additions on that day as a result of any:
• Purchase Payments received by us, plus • increases at an annual growth rate of 5%, plus • additional amounts as a result of a Step-Up in the Guaranteed Income Base
and decreased by any deductions on that day as a result of any:
• adjustments for withdrawals.
The adjustment for each withdrawal is calculated by multiplying the Guaranteed Income Base prior to the withdrawal by the ratio of the amount of the withdrawal, including any applicable withdrawal charge to the Contract Value immediately prior to the withdrawal.
Any portion of the Net Contract Value converted to provide payments under an Annuity Option, as described in the Contract, will be considered a “withdrawal” for purposes of determining any adjustment to the Guaranteed Income Base.
The 5% annual growth rate will take into account the timing of when each Purchase Payment and withdrawal occurred. This is accomplished by applying a daily factor of 1.000133681 to each day’s Guaranteed Income Base balance.
The 5% annual growth rate will stop accruing as of the earlier of:
• the Contract Anniversary following the day the youngest Annuitant reaches his or her 80th birthday, or • the day the GIA 5 Rider terminates.
Election of Step-Up—On any Contract Anniversary beginning with the fifth (5th ) anniversary of the Effective Date of this Rider and before the Annuity Date, you may elect to increase the Guaranteed Income Base to an amount equal to 100% of the Contract Value as of the Step-Up Date.
The Guaranteed Income Advantage Charge may change if you elect a Step-Up in the Guaranteed Income Base. However, the Guaranteed Income Advantage Charge will never exceed the Guaranteed Income Advantage Charge then being offered for this same benefit under newly issued riders. If the Guaranteed Income Base is never stepped-up, the Guaranteed Income Advantage Charge established on the Effective Date of this Rider is guaranteed not to change. |
8
| Your Step-Up election must be received, in a form satisfactory to us, at our Service Center within thirty (30) days after the Contract Anniversary on which the Step-Up is effective.
Once a Step-Up has been elected and is in effect, another Step-Up may not be elected until on or after the fifth (5th) anniversary of the latest Step-Up Date. We will provide you with written confirmation of your Step-Up election.
The annuity payments that may be elected under the Guaranteed Income Advantage 5 Option are:
• Life Only, • Life with Period Certain, • Joint and Survivor Life, or • Period Certain Only.
If you elect the Guaranteed Income Advantage 5 (GIA 5) Annuity Option, the waiver of withdrawal charges as described in the Contract will not apply. We will reduce the net amount applied to the annuity payments under the Guaranteed Income Advantage 5 Annuity Option by any remaining withdrawal charges. The rider contains annuity tables for each GIA 5 Annuity Option available. |
|
PACIFIC LIFE AND THE SEPARATE ACCOUNT – Financial Highlights is amended. |
The Financial Highlights section is amended by adding the following:
The table below is designed to help you understand how the Variable Investment Options have performed. It shows the value of a Subaccount Unit at the beginning and end of each period, as well as the number of Subaccount Units at the end of each period. A Subaccount Unit is also called an Accumulation Unit.
This information in the table for the three year period ended December 31, 2003 is included in the financial statements of Separate Account A which have been audited by Deloitte & Touche LLP, independent auditors. You should read the table in conjunction with the financial statements for Separate Account A, which are included in its annual report dated as of December 31, 2003.
|
| With Standard Death Benefit | With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| Blue Chip1 |
||||||||||||||||||||||
| 2003 | $7.02 | $8.66 | 19,708,773 | $7.00 | $8.61 | 8,321,304 | $6.98 | $8.57 | 4,492,838 | |||||||||||||
| 2002 | $9.64 | $7.02 | 10,249,236 | $9.62 | $7.00 | 4,341,489 | $9.61 | $6.98 | 3,460,103 | |||||||||||||
| 2001 | $10.00 | $9.64 | 3,907,567 | $10.00 | $9.62 | 1,638,628 | $10.00 | $9.61 | 1,290,854 | |||||||||||||
| Aggressive Growth2 |
||||||||||||||||||||||
| 2003 | $7.44 | $9.27 | 1,237,770 | $7.42 | $9.22 | 560,772 | $7.40 | $9.18 | 385,037 | |||||||||||||
| 2002 | $9.74 | $7.44 | 904,410 | $9.72 | $7.42 | 520,735 | $9.71 | $7.40 | 396,138 | |||||||||||||
| 2001 | $10.00 | $9.74 | 641,768 | $10.00 | $9.72 | 330,675 | $10.00 | $9.71 | 241,308 | |||||||||||||
| Diversified Research1 |
||||||||||||||||||||||
| 2003 | $7.88 | $10.28 | 3,829,014 | $7.85 | $10.22 | 1,945,268 | $7.83 | $10.18 | 1,511,183 | |||||||||||||
| 2002 | $10.56 | $7.88 | 2,648,078 | $10.55 | $7.85 | 1,400,498 | $10.54 | $7.83 | 1,389,542 | |||||||||||||
| 2001 | $10.00 | $10.56 | 1,497,959 | $10.00 | $10.55 | 689,111 | $10.00 | $10.54 | 496,758 | |||||||||||||
| Small-Cap Equity3 |
||||||||||||||||||||||
| 2003 | $8.49 | $11.76 | 2,584,270 | $8.46 | $11.69 | 1,286,592 | $8.44 | $11.64 | 854,492 | |||||||||||||
| 2002 | $11.29 | $8.49 | 1,531,073 | $11.27 | $8.46 | 943,764 | $11.26 | $8.44 | 757,769 | |||||||||||||
| 2001 | $10.00 | $11.29 | 918,780 | $10.00 | $11.27 | 474,319 | $10.00 | $11.26 | 359,490 | |||||||||||||
8
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| International Large-Cap3 |
||||||||||||||||||||||
| 2003 | $7.48 | $9.61 | 15,132,339 | $7.46 | $9.55 | 6,493,298 | $7.44 | $9.51 | 3,578,216 | |||||||||||||
| 2002 | $9.23 | $7.48 | 6,181,781 | $9.22 | $7.46 | 2,556,131 | $9.21 | $7.44 | 2,293,198 | |||||||||||||
| 2001 | $10.00 | $9.23 | 2,663,769 | $10.00 | $9.22 | 989,214 | $10.00 | $9.21 | 886,013 | |||||||||||||
| Short Duration Bond4 |
||||||||||||||||||||||
| 2003 | $10.00 | $9.99 | 14,384,887 | $10.00 | $9.97 | 5,126,474 | $10.00 | $9.96 | 2,854,347 | |||||||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| I-Net TollkeeperSM2 |
||||||||||||||||||||||
| 2003 | $5.58 | $7.87 | 817,235 | $5.57 | $7.82 | 204,142 | $5.55 | $7.79 | 202,435 | |||||||||||||
| 2002 | $9.25 | $5.58 | 430,240 | $9.24 | $5.57 | 86,367 | $9.23 | $5.55 | 133,469 | |||||||||||||
| 2001 | $10.00 | $9.25 | 177,211 | $10.00 | $9.24 | 59,175 | $10.00 | $9.23 | 61,145 | |||||||||||||
| Financial Services2 |
||||||||||||||||||||||
| 2003 | $8.37 | $10.62 | 1,490,241 | $8.34 | $10.57 | 668,364 | $8.32 | $10.52 | 470,514 | |||||||||||||
| 2002 | $9.97 | $8.37 | 1,297,487 | $9.95 | $8.34 | 505,448 | $9.94 | $8.32 | 459,482 | |||||||||||||
| 2001 | $10.00 | $9.97 | 823,284 | $10.00 | $9.95 | 340,866 | $10.00 | $9.94 | 347,151 | |||||||||||||
| Health Sciences2 |
||||||||||||||||||||||
| 2003 | $8.61 | $10.83 | 1,742,267 | $8.58 | $10.77 | 828,543 | $8.56 | $10.72 | 705,383 | |||||||||||||
| 2002 | $11.42 | $8.61 | 1,403,390 | $11.40 | $8.58 | 608,030 | $11.39 | $8.56 | 713,719 | |||||||||||||
| 2001 | $10.00 | $11.42 | 928,216 | $10.00 | $11.40 | 384,333 | $10.00 | $11.39 | 566,124 | |||||||||||||
| Technology1 |
||||||||||||||||||||||
| 2003 | $5.16 | $7.24 | 3,014,428 | $5.15 | $7.20 | 1,073,167 | $5.13 | $7.17 | 818,208 | |||||||||||||
| 2002 | $9.78 | $5.16 | 1,487,105 | $9.77 | $5.15 | 604,395 | $9.76 | $5.13 | 515,237 | |||||||||||||
| 2001 | $10.00 | $9.78 | 625,538 | $10.00 | $9.77 | 374,247 | $10.00 | $9.76 | 345,460 | |||||||||||||
| Growth LT3 |
||||||||||||||||||||||
| 2003 | $6.60 | $8.70 | 11,422,554 | $6.58 | $8.65 | 4,362,063 | $6.56 | $8.61 | 2,811,147 | |||||||||||||
| 2002 | $9.44 | $6.60 | 8,308,946 | $9.43 | $6.58 | 3,060,290 | $9.42 | $6.56 | 2,887,113 | |||||||||||||
| 2001 | $10.00 | $9.44 | 3,483,870 | $10.00 | $9.43 | 1,294,812 | $10.00 | $9.42 | 1,275,421 | |||||||||||||
| Focused 303 |
||||||||||||||||||||||
| 2003 | $7.73 | $10.82 | 820,810 | $7.71 | $10.76 | 285,259 | $7.69 | $10.72 | 260,196 | |||||||||||||
| 2002 | $11.14 | $7.73 | 559,816 | $11.12 | $7.71 | 220,187 | $11.11 | $7.69 | 211,042 | |||||||||||||
| 2001 | $10.00 | $11.14 | 384,534 | $10.00 | $11.12 | 133,218 | $10.00 | $11.11 | 151,411 | |||||||||||||
| Mid-Cap Value2 |
||||||||||||||||||||||
| 2003 | $9.71 | $12.34 | 10,139,353 | $9.68 | $12.27 | 4,442,833 | $9.66 | $12.22 | 2,890,203 | |||||||||||||
| 2002 | $11.55 | $9.71 | 6,005,013 | $11.53 | $9.68 | 2,748,866 | $11.52 | $9.66 | 2,389,821 | |||||||||||||
| 2001 | $10.00 | $11.55 | 3,095,066 | $10.00 | $11.53 | 1,301,503 | $10.00 | $11.52 | 1,186,018 | |||||||||||||
| International Value3 |
||||||||||||||||||||||
| 2003 | $7.66 | $9.62 | 16,233,519 | $7.63 | $9.56 | 6,370,903 | $7.61 | $9.53 | 3,655,738 | |||||||||||||
| 2002 | $9.04 | $7.66 | 7,111,510 | $9.03 | $7.63 | 2,574,027 | $9.02 | $7.61 | 2,461,826 | |||||||||||||
| 2001 | $10.00 | $9.04 | 2,504,993 | $10.00 | $9.03 | 834,945 | $10.00 | $9.02 | 851,203 | |||||||||||||
| Capital Opportunities1 |
||||||||||||||||||||||
| 2003 | $6.74 | $8.43 | 4,428,423 | $6.72 | $8.39 | 2,126,973 | $6.70 | $8.35 | 1,141,590 | |||||||||||||
| 2002 | $9.36 | $6.74 | 2,551,387 | $9.35 | $6.72 | 1,267,335 | $9.34 | $6.70 | 958,306 | |||||||||||||
| 2001 | $10.00 | $9.36 | 1,163,015 | $10.00 | $9.35 | 561,878 | $10.00 | $9.34 | 448,482 | |||||||||||||
| Equity Index3 |
||||||||||||||||||||||
| 2003 | $7.62 | $9.61 | 6,772,396 | $7.59 | $9.56 | 2,421,254 | $7.57 | $9.52 | 1,680,027 | |||||||||||||
| 2002 | $9.97 | $7.62 | 7,481,319 | $9.96 | $7.59 | 2,544,186 | $9.95 | $7.57 | 2,382,816 | |||||||||||||
| 2001 | $10.00 | $9.97 | 3,326,399 | $10.00 | $9.96 | 1,114,646 | $10.00 | $9.95 | 1,209,353 | |||||||||||||
| Small-Cap Index5 |
||||||||||||||||||||||
| 2003 | $8.58 | $12.37 | 5,654,000 | $8.55 | $12.30 | 2,074,241 | $8.53 | $12.25 | 1,400,194 | |||||||||||||
| 2002 | $11.07 | $8.58 | 2,655,068 | $11.05 | $8.55 | 1,065,894 | $11.04 | $8.53 | 971,831 | |||||||||||||
| 2001 | $10.00 | $11.07 | 603,720 | $10.00 | $11.05 | 204,137 | $10.00 | $11.04 | 186,900 | |||||||||||||
| Multi-Strategy6 |
||||||||||||||||||||||
| 2003 | $8.83 | $10.70 | 3,035,317 | $8.80 | $10.64 | 1,152,985 | $8.77 | $10.60 | 752,111 | |||||||||||||
| 2002 | $10.32 | $8.83 | 2,402,344 | $10.31 | $8.80 | 998,418 | $10.29 | $8.77 | 641,237 | |||||||||||||
| 2001 | $10.00 | $10.32 | 1,473,184 | $10.00 | $10.31 | 519,267 | $10.00 | $10.29 | 380,828 | |||||||||||||
| Main Street® Core3 |
||||||||||||||||||||||
| 2003 | $7.15 | $8.93 | 8,604,484 | $7.13 | $8.88 | 3,670,780 | $7.11 | $8.85 | 2,356,022 | |||||||||||||
| 2002 | $10.16 | $7.15 | 2,578,296 | $10.14 | $7.13 | 1,211,446 | $10.13 | $7.11 | 1,015,515 | |||||||||||||
| 2001 | $10.00 | $10.16 | 1,984,450 | $10.00 | $10.14 | 840,251 | $10.00 | $10.13 | 697,289 | |||||||||||||
10
| With Standard Death Benefit |
With Stepped-Up Death Benefit Rider |
With Premier Death Benefit Rider | ||||||||||||||||||||
| AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year |
AUV at Beginning of Year |
AUV at End of Year |
Number of Subaccount Units Outstanding at End of Year | ||||||||||||||
| Emerging Markets2 |
||||||||||||||||||||||
| 2003 | $9.75 | $16.16 | 1,610,401 | $9.71 | $16.07 | 685,510 | $9.69 | $16.00 | 336,278 | |||||||||||||
| 2002 | $10.22 | $9.75 | 668,754 | $10.21 | $9.71 | 243,783 | $10.20 | $9.69 | 225,126 | |||||||||||||
| 2001 | $10.00 | $10.22 | 211,483 | $10.00 | $10.21 | 78,029 | $10.00 | $10.20 | 90,230 | |||||||||||||
| Inflation Managed3 |
||||||||||||||||||||||
| 2003 | $11.42 | $12.16 | 19,037,992 | $11.38 | $12.10 | 5,855,231 | $11.35 | $12.05 | 3,707,537 | |||||||||||||
| 2002 | $10.06 | $11.42 | 10,913,817 | $10.04 | $11.38 | 3,212,778 | $10.03 | $11.35 | 2,692,681 | |||||||||||||
| 2001 | $10.00 | $10.06 | 3,532,994 | $10.00 | $10.04 | 1,016,780 | $10.00 | $10.03 | 772,661 | |||||||||||||
| Managed Bond3 |
||||||||||||||||||||||
| 2003 | $11.24 | $11.74 | 23,854,309 | $11.20 | $11.68 | 8,974,943 | $11.17 | $11.63 | 6,038,644 | |||||||||||||
| 2002 | $10.30 | $11.24 | 18,674,851 | $10.28 | $11.20 | 6,522,651 | $10.27 | $11.17 | 5,940,033 | |||||||||||||
| 2001 | $10.00 | $10.30 | 9,330,375 | $10.00 | $10.28 | 3,094,696 | $10.00 | $10.27 | 2,643,122 | |||||||||||||
| Small-Cap Value4 |
||||||||||||||||||||||
| 2003 | $10.00 | $12.55 | 3,535,410 | $10.00 | $12.54 | 1,517,298 | $10.00 | $12.52 | 745,713 | |||||||||||||
| 2002 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| Money Market3 |
||||||||||||||||||||||
| 2003 | $10.09 | $10.01 | 8,772,801 | $10.06 | $9.95 | 2,436,151 | $10.03 | $9.91 | 1,588,852 | |||||||||||||
| 2002 | $10.12 | $10.09 | 11,419,100 | $10.10 | $10.06 | 3,600,821 | $10.09 | $10.03 | 3,129,500 | |||||||||||||
| 2001 | $10.00 | $10.12 | 8,675,282 | $10.00 | $10.10 | 3,485,768 | $10.00 | $10.09 | 2,157,872 | |||||||||||||
| High Yield Bond3 |
||||||||||||||||||||||
| 2003 | $9.15 | $10.82 | 10,001,359 | $9.12 | $10.77 | 3,793,983 | $9.09 | $10.72 | 1,727,493 | |||||||||||||
| 2002 | $9.59 | $9.15 | 4,408,755 | $9.57 | $9.12 | 1,784,489 | $9.56 | $9.09 | 1,241,320 | |||||||||||||
| 2001 | $10.00 | $9.59 | 1,862,023 | $10.00 | $9.57 | 482,390 | $10.00 | $9.56 | 406,825 | |||||||||||||
| Equity Income7 |
||||||||||||||||||||||
| 2003 | $8.50 | $10.56 | 1,985,302 | $8.49 | $10.52 | 969,820 | $8.47 | $10.49 | 593,998 | |||||||||||||
| 2002 | $10.00 | $8.50 | 1,337,585 | $10.00 | $8.49 | 588,682 | $10.00 | $8.47 | 466,253 | |||||||||||||
| 2001 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| Equity9 |
||||||||||||||||||||||
| 2003 | $7.36 | $9.00 | 965,248 | $7.33 | $8.95 | 455,200 | $7.31 | $8.91 | 642,882 | |||||||||||||
| 2002 | $10.18 | $7.36 | 1,105,041 | $10.16 | $7.33 | 470,399 | $10.15 | $7.31 | 529,832 | |||||||||||||
| 2001 | $10.00 | $10.18 | 954,219 | $10.00 | $10.16 | 442,282 | $10.00 | $10.15 | 388,844 | |||||||||||||
| Aggressive Equity3 |
||||||||||||||||||||||
| 2003 | $8.12 | $10.63 | 1,724,803 | $8.09 | $10.57 | 666,157 | $8.07 | $10.53 | 402,565 | |||||||||||||
| 2002 | $11.01 | $8.12 | 1,014,789 | $11.00 | $8.09 | 423,805 | $10.99 | $8.07 | 369,398 | |||||||||||||
| 2001 | $10.00 | $11.01 | 293,748 | $10.00 | $11.00 | 137,859 | $10.00 | $10.99 | 113,526 | |||||||||||||
| Large-Cap Value9 |
||||||||||||||||||||||
| 2003 | $7.53 | $9.73 | 24,755,093 | $7.51 | $9.67 | 10,422,829 | $7.49 | $9.63 | 6,090,920 | |||||||||||||
| 2002 | $9.94 | $7.53 | 12,859,786 | $9.93 | $7.51 | 5,254,064 | $9.92 | $7.49 | 4,854,748 | |||||||||||||
| 2001 | $10.00 | $9.94 | 5,006,090 | $10.00 | $9.93 | 2,023,116 | $10.00 | $9.92 | 1,787,341 | |||||||||||||
| Comstock3 |
||||||||||||||||||||||
| 2003 | $7.22 | $9.33 | 6,604,550 | $7.20 | $9.28 | 2,821,909 | $7.18 | $9.25 | 1,465,531 | |||||||||||||
| 2002 | $9.43 | $7.22 | 1,198,731 | $9.42 | $7.20 | 653,082 | $9.41 | $7.18 | 459,562 | |||||||||||||
| 2001 | $10.00 | $9.43 | 703,659 | $10.00 | $9.42 | 414,009 | $10.00 | $9.41 | 341,710 | |||||||||||||
| Real Estate9 |
||||||||||||||||||||||
| 2003 | $10.72 | $14.51 | 3,694,864 | $10.69 | $14.43 | 1,394,468 | $10.66 | $14.37 | 906,395 | |||||||||||||
| 2002 | $10.94 | $10.72 | 2,355,294 | $10.92 | $10.69 | 869,518 | $10.91 | $10.66 | 742,357 | |||||||||||||
| 2001 | $10.00 | $10.94 | 1,127,914 | $10.00 | $10.92 | 415,872 | $10.00 | $10.91 | 323,797 | |||||||||||||
| Mid-Cap Growth3 |
||||||||||||||||||||||
| 2003 | $5.53 | $7.10 | 3,450,185 | $5.52 | $7.06 | 2,025,364 | $5.50 | $7.03 | 1,182,007 | |||||||||||||
| 2002 | $10.62 | $5.53 | 2,396,177 | $10.61 | $5.52 | 1,574,297 | $10.60 | $5.50 | 1,093,405 | |||||||||||||
| 2001 | $10.00 | $10.62 | 1,200,646 | $10.00 | $10.61 | 756,565 | $10.00 | $10.60 | 537,801 | |||||||||||||
| 1 | This Subaccount began operations on April 05, 2001. |
| 2 | This Subaccount began operations on April 03, 2001. |
| 3 | This Subaccount began operations on April 02, 2001. |
| 4 | This Subaccount began operations on May 1, 2003. |
| 5 | This Subaccount began operations on April 09, 2001. |
| 6 | This Subaccount began operations on April 06, 2001. |
| 7 | This Subaccount began operations on January 2, 2002. |
| 8 | This Subaccount began operations on January 7, 2002. |
| 9 | This Subaccount began operations on April 04, 2001. |
11
|
ADDITIONAL INFORMATION – Financial Statements is amended. |
The Financial Statements section is amended by adding the following:
Financial Statements
The statements of assets and liabilities of Separate Account A as of December 31, 2003 and the related statements of operations for the year then ended, statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the three years in the period then ended are incorporated by reference in the Statement of Additional Information from the Annual Report of Separate Account A dated as of December 31, 2003. Pacific Life’s consolidated financial statements as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are contained in the Statement of Additional Information. |
12
Supplement dated February 27, 2004 to the
Statement of Additional Informations dated May 1, 2003 for the
Pacific Value, Pacific Value for Prudential Securities, Pacific Innovations, Pacific Innovations Select,
Pacific One, Pacific One Select, Pacific Portfolios, and Pacific Odyssey,
variable annuity contracts issued by Pacific Life Insurance Company
| Capitalized terms used in this Supplement are defined in the referred to above unless otherwise defined herein. “We,” “us”, or “our” refer to Pacific Life Insurance Company; “you” or “your” refer to the Contract Owner.
This supplement changes the Statement of Additional Information to reflect the following:
|
||||||||||||||
| The FINANCIAL STATEMENTS section is amended. |
The Financial Statements section is amended by adding the following:
FINANCIAL STATEMENTS
The statements of assets and liabilities of Separate Account A as of December 31, 2003 and the related statements of operations for the year then ended and statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the three years in the period then ended are incorporated by reference in this Statement of Additional Information from the Annual Report of Separate Account A dated December 31, 2003. Pacific Life’s consolidated financial statements as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are set forth beginning on the next page. These financial statements should be considered only as bearing on the ability of Pacific Life to meet its obligations under the Contracts and not as bearing on the investment performance of the assets held in the Separate Account.
|
|||||||||||||
|
The INDEPENDENT AUDITORS section is amended. |
The Independent Auditors section is amended by adding the following:
INDEPENDENT AUDITORS
The consolidated financial statements of Pacific Life as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein.
|
|||||||||||||
FORM NO.: SAISUP304
INDEPENDENT AUDITORS’ REPORT
Pacific Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries (the Company) as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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, such consolidated financial statements present fairly, in all material respects, the financial position of Pacific Life Insurance Company and Subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets in 2002.
DELOITTE & TOUCHE LLP
Costa Mesa, CA
PL-1
Pacific Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| December 31, |
||||||||
| 2003 | 2002 | |||||||
| (In Millions) | ||||||||
| ASSETS |
||||||||
| Investments: |
||||||||
| Fixed maturity securities available for sale, at estimated fair value |
$ | 23,369 | $ | 20,747 | ||||
| Equity securities available for sale, at estimated fair value |
128 | 90 | ||||||
| Trading securities, at estimated fair value |
306 | 572 | ||||||
| Mortgage loans |
3,811 | 3,123 | ||||||
| Real estate |
168 | 153 | ||||||
| Policy loans |
5,407 | 5,115 | ||||||
| Interest in PIMCO (Note 2) |
1,089 | 2,054 | ||||||
| Other investments |
1,185 | 1,094 | ||||||
| TOTAL INVESTMENTS |
35,463 | 32,948 | ||||||
| Cash and cash equivalents |
496 | 581 | ||||||
| Deferred policy acquisition costs |
2,817 | 2,261 | ||||||
| Accrued investment income |
411 | 431 | ||||||
| Other assets |
1,028 | 760 | ||||||
| Separate account assets |
25,163 | 19,241 | ||||||
| TOTAL ASSETS |
$ | 65,378 | $ | 56,222 | ||||
| LIABILITIES AND STOCKHOLDER’S EQUITY |
||||||||
| Liabilities: |
||||||||
| Policyholder account balances |
$ | 27,921 | $ | 25,717 | ||||
| Future policy benefits |
5,053 | 4,775 | ||||||
| Short-term and long-term debt |
275 | 475 | ||||||
| Other liabilities |
1,664 | 1,797 | ||||||
| Separate account liabilities |
25,163 | 19,241 | ||||||
| TOTAL LIABILITIES |
60,076 | 52,005 | ||||||
| Commitments and contingencies (Note 18) |
||||||||
| Stockholder’s Equity: |
||||||||
| Common stock - $50 par value; 600,000 shares authorized, issued and outstanding |
30 | 30 | ||||||
| Paid-in capital |
500 | 153 | ||||||
| Unearned ESOP shares |
(29 | ) | (42 | ) | ||||
| Retained earnings |
3,736 | 3,300 | ||||||
| Accumulated other comprehensive income |
1,065 | 776 | ||||||
| TOTAL STOCKHOLDER’S EQUITY |
5,302 | 4,217 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY |
$ | 65,378 | $ | 56,222 | ||||
See Notes to Consolidated Financial Statements
PL-2
Pacific Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years Ended December 31, |
||||||||||
| 2003 | 2002 | 2001 | ||||||||
| (In Millions) | ||||||||||
| REVENUES |
||||||||||
| Insurance premiums |
$ | 1,146 | $ | 1,058 | $ 812 | |||||
| Policy fees |
932 | 857 | 821 | |||||||
| Net investment income |
1,785 | 1,681 | 1,628 | |||||||
| Net realized investment gain (loss) |
243 | (269 | ) | (13 | ) | |||||
| Commission revenue |
187 | 162 | 181 | |||||||
| Other income |
229 | 215 | 225 | |||||||
| TOTAL REVENUES |
4,522 | 3,704 | 3,654 | |||||||
| BENEFITS AND EXPENSES |
||||||||||
| Policy benefits paid or provided |
1,516 | 1,460 | 1,163 | |||||||
| Interest credited to policyholder account balances |
1,153 | 1,083 | 1,030 | |||||||
| Commission expenses |
581 | 560 | 524 | |||||||
| Operating expenses |
673 | 684 | 634 | |||||||
| TOTAL BENEFITS AND EXPENSES |
3,923 | 3,787 | 3,351 | |||||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (BENEFIT) |
599 | (83 | ) | 303 | ||||||
| Provision for income taxes (benefit) |
163 | (112 | ) | 55 | ||||||
| INCOME BEFORE CUMULATIVE ADJUSTMENTS DUE TO CHANGES IN ACCOUNTING PRINCIPLES |
436 | 29 | 248 | |||||||
| Cumulative adjustments due to changes in accounting principles, net of taxes |
(7 | ) | ||||||||
| NET INCOME |
$ | 436 | $ | 29 | $ 241 | |||||
See Notes to Consolidated Financial Statements
PL-3
Pacific Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
| Accumulated Other Comprehensive Income (Loss) |
|||||||||||||||||||||||||||
| Common Stock |
Paid-in Capital |
Unearned ESOP Shares |
Retained Earnings |
Unrealized Gain (Loss) on Derivatives and Securities Available for Sale, Net |
Minimum Pension Liability Adjustment and Other, Net |
Unrealized Gain on Interest in PIMCO, Net (Note 2) |
Total | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||
| BALANCES, |
$ | 30 | $ | 147 | ($6 | ) | $ | 3,030 | ($46 | ) | $ 77 | $ | 3,232 | ||||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||
| Net income |
241 | 241 | |||||||||||||||||||||||||
| Other comprehensive income |
128 | 111 | 239 | ||||||||||||||||||||||||
| Total comprehensive income |
480 | ||||||||||||||||||||||||||
| Other equity adjustments |
1 | 1 | |||||||||||||||||||||||||
| Allocation of unearned ESOP shares |
3 | 3 | 6 | ||||||||||||||||||||||||
| BALANCES, |
30 | 151 | (3 | ) | 3,271 | 82 | 188 | 3,719 | |||||||||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||
| Net income |
29 | 29 | |||||||||||||||||||||||||
| Other comprehensive income (loss) |
325 | ($44 | ) | 225 | 506 | ||||||||||||||||||||||
| Total comprehensive income |
535 | ||||||||||||||||||||||||||
| Issuance of ESOP note |
(46 | ) | (46 | ) | |||||||||||||||||||||||
| Allocation of unearned ESOP shares |
2 | 7 | 9 | ||||||||||||||||||||||||
| BALANCES, |
30 | 153 | (42 | ) | 3,300 | 407 | (44 | ) | 413 | 4,217 | |||||||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||
| Net income |
436 | 436 | |||||||||||||||||||||||||
| Other comprehensive income (loss) |
428 | 41 | (180 | ) | 289 | ||||||||||||||||||||||
| Total comprehensive income |
725 | ||||||||||||||||||||||||||
| Capital contribution |
350 | 350 | |||||||||||||||||||||||||
| Other equity adjustments |
(1 | ) | (1 | ) | |||||||||||||||||||||||
| Allocation of unearned ESOP shares |
(2 | ) | 13 | 11 | |||||||||||||||||||||||
| BALANCES, |
$ | 30 | $ | 500 | ($29 | ) | $ | 3,736 | $ | 835 | ($3 | ) | $ 233 | $ | 5,302 | ||||||||||||
See Notes to Consolidated Financial Statements
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Pacific Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||
| Net income |
$ | 436 | $ | 29 | $ | 241 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
| Amortization on fixed maturity securities |
(60 | ) | (81 | ) | (73 | ) | ||||||
| Depreciation and other amortization |
44 | 38 | 26 | |||||||||
| Deferred income taxes |
(26 | ) | (8 | ) | 56 | |||||||
| Net realized investment (gain) loss |
(243 | ) | 269 | 13 | ||||||||
| Net change in deferred policy acquisition costs |
(556 | ) | (148 | ) | (317 | ) | ||||||
| Interest credited to policyholder account balances |
1,153 | 1,083 | 1,030 | |||||||||
| Change in trading securities |
266 | (114 | ) | (387 | ) | |||||||
| Change in accrued investment income |
20 | (54 | ) | (42 | ) | |||||||
| Change in future policy benefits |
278 | 195 | 38 | |||||||||
| Change in other assets and liabilities |
108 | 94 | 182 | |||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
1,420 | 1,303 | 767 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||
| Fixed maturity and equity securities available for sale: |
||||||||||||
| Purchases |
(7,309 | ) | (6,228 | ) | (4,867 | ) | ||||||
| Sales |
2,143 | 921 | 905 | |||||||||
| Maturities and repayments |
2,881 | 2,155 | 1,652 | |||||||||
| Repayments of mortgage loans |
584 | 315 | 682 | |||||||||
| Proceeds from sales of real estate |
5 | 28 | 44 | |||||||||
| Purchases of mortgage loans and real estate |
(1,173 | ) | (498 | ) | (593 | ) | ||||||
| Change in policy loans |
(292 | ) | (216 | ) | (219 | ) | ||||||
| Sale of interest in PIMCO (Note 2) |
999 | |||||||||||
| Other investing activity, net |
258 | 259 | 472 | |||||||||
| NET CASH USED IN INVESTING ACTIVITIES |
(1,904 | ) | (3,264 | ) | (1,924 | ) | ||||||
(Continued)
See Notes to Consolidated Financial Statements
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Pacific Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, |
||||||||||||
| (Continued) | 2003 | 2002 | 2001 | |||||||||
| (In Millions) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||
| Policyholder account balances: |
||||||||||||
| Deposits |
$ | 5,842 | $ | 6,820 | $ | 4,690 | ||||||
| Withdrawals |
(5,604 | ) | (4,787 | ) | (3,320 | ) | ||||||
| Short-term and long-term debt: |
||||||||||||
| Net change in short-term debt |
(200 | ) | 50 | 80 | ||||||||
| Payments of long-term debt |
(14 | ) | ||||||||||
| Capital contribution |
350 | |||||||||||
| Purchase of ESOP note |
(46 | ) | ||||||||||
| Allocation of unearned ESOP shares |
11 | 9 | 6 | |||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES |
399 | 2,032 | 1,456 | |||||||||
| Net change in cash and cash equivalents |
(85 | ) | 71 | 299 | ||||||||
| Cash and cash equivalents, beginning of year |
581 | 510 | 211 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF YEAR |
$ | 496 | $ | 581 | $ | 510 | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||||||
| Income taxes paid (received) |
$ | 102 | $ | 11 | ($48 | ) | ||||||
| Interest paid |
$ | 29 | $ | 20 | $ | 23 | ||||||
See Notes to Consolidated Financial Statements
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Pacific Life Insurance Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
ORGANIZATION AND DESCRIPTION OF BUSINESS
Pacific Life Insurance Company (Pacific Life) was established in 1868 and is organized under the laws of the State of California as a stock life insurance company. Pacific Life is an indirect subsidiary of Pacific Mutual Holding Company (PMHC), a mutual holding company, and a wholly owned subsidiary of Pacific LifeCorp, an intermediate stock holding company. PMHC and Pacific LifeCorp were organized pursuant to consent received from the Insurance Department of the State of California (CA DOI) and the implementation of a plan of conversion to form a mutual holding company structure in 1997 (the Conversion).
Pacific Life and its subsidiaries and affiliates have primary business operations consisting of life insurance, annuities, pension and institutional products, group employee benefits, broker-dealer operations, and investment management and advisory services. Pacific Life’s primary business operations provide a broad range of life insurance, asset accumulation and investment products for individuals and businesses and offer a range of investment products to institutions and pension plans.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements of Pacific Life Insurance Company and Subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Pacific Life and its majority owned and controlled subsidiaries. All significant intercompany transactions and balances have been eliminated. Pacific Life prepares its regulatory financial statements based on accounting practices prescribed or permitted by the CA DOI. These consolidated financial statements materially differ from those filed with regulatory authorities (Note 4).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates include those used in determining deferred policy acquisition costs (DAC), investment valuation, including other than temporary impairments, derivative valuation and liabilities for future policy benefits. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the 2003 financial statement presentation.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
During the year ended December 31, 2001, the Company adopted Financial Accounting Standard Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities – an amendment of SFAS No. 133, and Emerging Issues Task Force (EITF) Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets. As a result, during the year ended December 31, 2001, the Company recorded a decrease to net income of $7 million, net of taxes, as a cumulative adjustment due to changes in accounting principles. Additionally, upon adoption, the Company recorded an increase to accumulated other comprehensive income (OCI) of $38 million, net of taxes, and transferred $306 million of fixed maturity securities available for sale into the trading category, which resulted in a reclassification of unrealized losses of $4 million, net of taxes, from accumulated OCI into net realized investment gain (loss) during the year ended December 31, 2001.
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Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill shall not be amortized and shall be tested for impairment annually. Other intangible assets shall be amortized over their useful lives. The Company ceased goodwill amortization as of January 1, 2002, and as a result, the Company’s net income increased $2 million for the years ended December 31, 2003 and 2002. In addition, Allianz Dresdner Asset Management of America L.P., formerly PIMCO Advisors L.P. (PIMCO), adopted SFAS No. 142 effective January 1, 2002. As a result, net investment income increased $1 million and $17 million for the years ended December 31, 2003 and 2002, respectively (Note 2). During the year ended December 31, 2003, the Company recorded goodwill impairments of $6 million (Note 7). The carrying value of goodwill as of December 31, 2003 and 2002 was $39 million and $47 million, respectively, and is included in other assets.
Effective January 1, 2003, the Company adopted FASB Interpretation No. 45 (FIN 45), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which clarifies the requirements of SFAS No. 5, Accounting for Contingencies, relating to a guarantor’s accounting for and disclosures of certain guarantees issued. FIN 45 does not apply to guarantees that are accounted for under existing insurance accounting principles. FIN 45 requires certain guarantees that are issued or modified after December 31, 2002, to be initially recorded on the consolidated statement of financial condition at fair value. Adoption of FIN 45 did not have a material impact on the Company’s consolidated financial statements (Note 18).
Effective January 1, 2003, the Company adopted SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses the recognition, measurement and reporting of costs associated with exit and disposal activities, after January 1, 2003, including restructuring activities. SFAS No. 146 establishes a change in the requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 now requires these liabilities to be recognized when actually incurred. Adoption of SFAS No. 146 did not have a material impact on the Company’s consolidated financial statements.
Effective June 1, 2003, the Company adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. Adoption of SFAS No. 150 did not have a material impact on the Company’s consolidated financial statements.
Effective July 1, 2003, the Company adopted SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. Adoption of SFAS No. 149 did not have a material impact on the Company’s consolidated financial statements.
Effective October 1, 2003, the Company adopted FASB Derivatives Implementation Group (DIG) SFAS No. 133 Implementation Issue No. B36 (DIG B36), Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments. DIG B36 establishes the criteria for the bifurcation of an instrument into a debt host contract and an embedded credit derivative. One of the examples is related to the bifurcation of an embedded derivative within a reinsurer’s receivable and ceding company’s payable that arises from a modified coinsurance (MODCO) agreement. Since the yield on the payable and receivable related to the MODCO agreement is tied to the return on a specific block of assets, rather than the overall credit worthiness of the ceding company, DIG B36 concludes that this relationship does not qualify as clearly and closely related and therefore requires bifurcation. Upon adoption of SFAS No. 133, the Company selected January 1, 1999 as the transition date for embedded derivatives. As the Company has not entered into or substantively modified any of its existing MODCO agreements since the transition date, the MODCO agreements are grandfathered from the embedded derivative provisions. Adoption of DIG B36 did not have a material impact on the Company’s consolidated financial statements.
Effective December 31, 2003, the Company adopted SFAS No. 132 (revised 2003) Employers’ Disclosures about Pensions and Other Postretirement Benefits (SFAS No. 132R). SFAS No. 132R revises employers’ disclosures about
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pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by SFAS No. 87, Employers’ Accounting for Pensions, SFAS No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 132R retains the disclosure requirements contained in SFAS No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans (Note 16).
Effective February 1, 2003, the Company adopted FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires that Variable Interest Entities (VIE) be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE’s activities, or is entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about VIEs that companies are not required to consolidate but in which a company has a significant variable interest. Adoption of FIN 46 did not have a material impact on the Company’s consolidated financial statements.
FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
In December 2003, the FASB issued FIN 46 (revised December 2003) Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (FIN 46R). FIN 46R replaced FIN 46 and clarified the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The consolidation requirements for the Company’s other VIEs created or acquired prior to December 31, 2003, will apply in the first fiscal year or interim period beginning after December 15, 2004.
The Company is currently assessing the application of FIN 46R as it relates to the Company’s following investments and activities in VIEs, which were created or acquired prior to December 31, 2003:
| Assets | Liabilities | Carrying Amount | |||||||
| (In Millions) | |||||||||
| Aviation Capital Group Trust |
$ | 632 | $ | 645 | $ | 12 | |||
| Managed Collateralized Debt Obligations |
404 | 456 | 19 | ||||||
| Asset and Mortgage-Backed Securities |
(a) | (a) | 4,270 | ||||||
| $ | 1,036 | $ | 1,101 | $ | 4,301 | ||||
(a) Information related to the total assets and total liabilities for the asset and mortgage-backed securities is not currently available.
Aviation Capital Group Holding Corp. (ACG), a majority owned subsidiary of Pacific LifeCorp, sponsored a financial asset securitization of aircraft to Aviation Capital Group Trust (Aviation Trust) in December 2000. ACG serves as the marketing and administrative agent, as well as a beneficial interest holder in the transaction. As the marketing and administrative agent, ACG earns management fees on the total rents paid, which are recorded in other income as earned. ACG recorded marketing and administrative fees of $2 million, $3 million and $3 million for the years ended December 31, 2003, 2002 and 2001, respectively, from Aviation Trust. The carrying value is comprised of beneficial interests issued by Aviation Trust, which are accounted for under the prospective method in accordance with EITF Issue No. 99-20.
The Company has sponsored two Collateralized Debt Obligations (CDOs) of high yield debt securities and assumed management of a third CDO. The Company is the collateral manager and a beneficial interest holder in such transactions. The Company earns management fees as the collateral manager on the outstanding asset balance, which are recorded in net investment income as earned. The Company recorded collateral management fees of $1 million for each of the years ended December 31, 2003, 2002 and 2001. The carrying value is comprised of beneficial interests issued by the trust, which are accounted for under the prospective method in accordance with EITF Issue No. 99-20.
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The Aviation Trust and CDOs are not currently consolidated by the Company since unrelated third parties hold controlling interest through ownership of equity in Aviation Trust and the CDOs, representing at least 3% of the value of the investment’s total assets throughout the life of the investment, and the equity class has the substantive risks and rewards of the residual interest of the investment. The debt issued by Aviation Trust and CDOs is non-recourse to the Company. The carrying value represents the Company’s maximum exposure to loss.
As part of the Company’s investment strategy, the Company purchases primarily investment grade beneficial interests in asset and mortgage-backed investments. These beneficial interests are issued from a bankruptcy-remote special purpose entity (SPE), which are collateralized by financial assets including corporate debt, equipment, and real estate mortgages. The Company has not guaranteed the performance, liquidity or obligations of the SPEs and the Company’s exposure to loss is limited to its carrying value of the beneficial interests in the SPEs. These investments represent debt investments accounted for in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, and certain investments are also accounted for under the prospective method in accordance with EITF Issue No. 99-20.
In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts, which is effective for financial statements for fiscal years beginning after December 15, 2003. SOP 03-1 provides guidance on accounting and reporting by insurance enterprises for certain non-traditional long-duration contracts, including accounting for contracts that contain death or other insurance benefit features, and for separate accounts. For contracts classified as insurance contracts that have amounts assessed against contract holders for the insurance benefit feature that are assessed in a manner that is expected to result in profits in earlier years and subsequent losses from that insurance benefit, including guaranteed minimum death benefits (GMDB) and guaranteed minimum income benefits (GMIB), a liability is required to be established in addition to the account balance to recognize the portion of such assessments that compensates the insurance enterprise for benefits to be provided in future periods. For contracts where sales inducements are offered, the costs of such inducements that meet specified criteria must be separately reported, capitalized and amortized over the life of the contracts using the same methodology as used for amortizing DAC. The Company has previously recorded GMDB and GMIB liabilities, with balances of $32 million and $51 million as of December 31, 2003 and 2002, respectively. The Company is currently evaluating the impact of adopting SOP 03-1 on its consolidated financial statements.
During 2003, the EITF discussed EITF Issue No. 03-01, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. Under EITF No. 03-01, the EITF is developing an impairment model for certain investments classified as either available for sale or held to maturity under SFAS No. 115, and investments accounted for under the cost method or the equity method. The EITF has not reached a consensus on a final impairment model. In November 2003, the EITF stated that certain quantitative and qualitative disclosures are required for all debt and marketable equity securities classified as available for sale or held to maturity under SFAS No. 115 where the estimated fair value exceeds the carrying value at the statement of financial condition date, but for which an other than temporary impairment has not been recognized. The disclosure requirements are effective for fiscal years ending after December 15, 2003, which the Company has adopted as of December 31, 2003.
INVESTMENTS
Fixed maturity and equity securities available for sale are reported at estimated fair value, with unrealized gains and losses, net of deferred income taxes and adjustments related to DAC, recorded as a component of OCI. For mortgage-backed securities and asset-backed securities included in fixed maturity securities available for sale, the Company recognizes income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. For fixed rate securities, the net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. For variable rate and impaired securities, the investment is adjusted over the remaining life of the security. These adjustments are reflected in net investment income. Trading securities are reported at estimated fair value with changes in estimated fair value included in net realized investment gain (loss).
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Investment income consists primarily of interest and dividends, net investment income from partnership interests and income from certain derivative transactions. Interest is recognized on an accrual basis and dividends are recorded on the ex-dividend date. Accrual of income is suspended for fixed maturity securities when receipt of interest payments is in doubt.
The estimated fair value of fixed maturity and equity securities is generally obtained from independent pricing services. For fixed maturity securities not able to be priced by independent services (generally private placement and low volume traded securities), an internally developed matrix is used. The matrix utilizes the fair market yield curves provided by a major independent data service which determines the discount yield based upon the security’s weighted average life, rating, and liquidity spread. The estimated fair value of the security is calculated as the present value of the estimated cash flows discounted at the yield determined above. For those securities not priced externally or by the matrix, the estimated fair value is internally determined, utilizing various techniques in valuing complex investments with variable cash flows. As of December 31, 2003, 70% of the estimated fair values of fixed maturity securities were obtained from independent pricing services, 25% from the above described matrix and 5% from other sources.
The Company assesses whether other than temporary impairments have occurred based upon the Company’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value. All securities with a gross unrealized loss at the consolidated statement of financial condition date are subjected to the Company’s process for identifying other than temporary impairments with additional focus on securities with unrealized losses greater than 20% of net carrying amount. The Company considers a wide range of factors, as described below, about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in the Company’s evaluation of each security are assumptions and estimates about the operations of the issuer and its future earnings potential.
Considerations used by the Company in the impairment evaluation process include, but are not limited to, the following:
| • | The duration and extent that the estimated fair value has been below net carrying amount |
| • | Industry factors or conditions related to a geographic area that are negatively affecting the security |
| • | Underlying valuation of assets specifically pledged to support the credit |
| • | Past due interest or principal payments or other violation of covenants |
| • | Deterioration of the overall financial condition of the specific issuer |
| • | Downgrades by a rating agency |
| • | Ability and intent to hold the investment for a period of time to allow for a recovery of value |
| • | Fundamental analysis of the liquidity and financial condition of the specific issuer |
Also, the Company estimates the cash flows over the life of certain purchased beneficial interests in securitized financial assets. Based upon current information and events, if the estimated fair value of its beneficial interests is less than or equal to its carrying amount and if there has been an adverse change in the estimated cash flows since the last revised estimate, considering both timing and amount, then an other than temporary impairment is recognized.
Securities and purchased beneficial interests that are deemed to be other than temporarily impaired are written down to estimated fair value in the period the securities or purchased beneficial interest are deemed to be impaired.
Realized gains and losses on investment transactions are determined on a specific identification basis and are included in net realized investment gain (loss). The Company includes other than temporary impairment write-downs in net realized investment gain (loss).
During the year ended December 31, 2002, the Company transferred certain equity securities from available for sale to trading securities. A loss of $18 million was included in net realized investment gain (loss) from this transfer.
Mortgage loans, net of valuation allowances and write-downs, and policy loans are stated at unpaid principal balances.
Real estate is carried at depreciated cost, net of write-downs, or, for real estate acquired in satisfaction of debt, estimated fair value less estimated selling costs at the date of acquisition, if lower than the related unpaid balance.
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Other investments primarily consist of partnership and joint ventures, derivative instruments, and low income housing related investments qualifying for tax credits (LIHTC). Partnership and joint venture interests where the Company does not have a controlling interest or a majority ownership are recorded under the cost or equity method of accounting depending on the equity ownership position.
Investments in LIHTC are recorded under either the effective interest method, if they meet certain requirements, including a projected positive yield based solely on guaranteed credits, or are recorded under the equity method if these certain requirements are not met. For investments in LIHTC recorded under the effective interest method, the amortization of the original investment and the tax credits are recorded in the provision for income taxes (benefit). For investments in LIHTC recorded under the equity method, the amortization of the initial investment is included in net investment income and the related tax credits are recorded in the provision for income taxes (benefit). The amortization recorded in net investment income was $25 million, $26 million and $27 million for the years ended December 31, 2003, 2002 and 2001, respectively.
The Company may loan securities in connection with its securities lending program administered by an authorized financial institution. The Company receives collateral in an amount equal to 102% of the estimated fair value of the loaned securities. The collateral pledged is restricted and not available for general use.
All derivatives, whether designated in hedging relationships or not, are required to be recorded at estimated fair value. If the derivative is designated as a fair value hedge, the changes in the estimated fair value of the derivative and the hedged item are recognized in net realized investment gain (loss). The change in value of the hedged item associated with the risk being hedged is reflected as an adjustment to the carrying amount of the hedged item. If the derivative is designated as a cash flow hedge, the effective portion of changes in the estimated fair value of the derivative is recorded in OCI and recognized in earnings when the hedged item affects earnings. For derivative instruments not designated as hedges, the change in estimated fair value of the derivative is recorded in net realized investment gain (loss). Estimated fair value exposure is calculated based on the aggregate estimated fair value of all derivative instruments with each counterparty, net of cash collateral received, in accordance with legally enforceable counterparty master netting agreements. If the estimated fair value exposure to the counterparty is positive, the amount is reflected in other assets whereas, if the estimated fair value exposure to the counterparty is negative, the estimated fair value is included in other liabilities.
The periodic cash flows for all hedging derivatives are recorded consistent with the hedged item on an accrual basis. For derivatives hedging securities, these amounts are included in net investment income. For derivatives hedging liabilities, these amounts are included in interest credited to policyholder account balances. For derivatives not designated as hedging instruments, the periodic cash flows are reflected in net realized investment gain (loss) on an accrual basis. Upon termination of a cash flow hedging relationship, the accumulated amount in OCI is amortized into net investment income or interest credited to policyholder account balances over the remaining life of the hedged item. Upon termination of a fair value hedging relationship, the accumulated cost basis adjustment to the hedged item is amortized into net investment income or interest credited to policyholder account balances over its remaining life.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all investments with an original maturity of three months or less.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new insurance business, principally commissions, medical examinations, underwriting, policy issue and other expenses, all of which vary with and are primarily associated with the production of new business, are deferred and recorded as an asset commonly referred to as DAC. As of December 31, 2003 and 2002, the carrying value of DAC was $2.8 billion and $2.3 billion, respectively (Note 4).
For universal life and investment-type contracts, acquisition costs are amortized through earnings in proportion to the present value of estimated gross profits (EGPs) from projected investment, mortality and expense margins and surrender charges over the estimated lives of the contracts. DAC related to traditional policies is amortized through earnings over the premium-paying period of the related policies in proportion to premium revenues recognized, using assumptions and estimates consistent with those used in computing policy reserves. DAC related to certain unrealized
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components in OCI, primarily unrealized gains and losses on securities available for sale, is amortized directly to equity through OCI.
Regular evaluations of EGPs are made to determine if actual experience or other evidence suggests that modeling assumptions should be revised. Significant assumptions in the development of EGPs include investment returns, surrender and lapse rates, interest spreads and mortality margins. Of these assumptions, the Company anticipates that investment returns are most likely to impact the rate of DAC amortization for variable annuities. For life insurance, deviations in any of the significant assumptions may impact DAC amortization. In general, favorable experience variances result in increased expected future profitability and may lower the rate of DAC amortization, whereas unfavorable experience variances result in decreased expected future profitability and may increase the rate of DAC amortization.
A change in the assumptions utilized to develop EGPs, commonly referred to as unlocking, results in a change to amounts expensed in the reporting period in which the change was made by adjusting the DAC balance to the level DAC would have been had the EGPs been calculated using the new assumptions over the entire amortization period. Revisions to the assumptions could also result in an impairment of DAC and a charge to expense if the present value of EGPs is less than the outstanding DAC balance as of the valuation date. All critical assumptions utilized to develop EGPs are routinely evaluated and necessary revisions are made to future EGPs to the extent that actual or anticipated experience indicates such a prospective change.
During the year ended December 31, 2002, the Company recorded a pretax expense of $102 million, in addition to periodic amortization expense, reflecting a reduction of the DAC asset relating to its variable annuity products. The reduction was the result of continued deterioration during 2002 of the equity markets and the Company’s decision in 2002 to revise certain assumptions, including a reduction in the long-term total return assumption for the underlying investments supporting its variable annuity products from 9.0% to 7.75%.
Value of business acquired (VOBA), included as part of DAC, represents the capitalized value relating to insurance contracts in force at the date of acquisition. Amortization of the VOBA on a block of single premium immediate and deferred annuities is calculated in proportion to the run-off in contract benefit reserves over the life of the contracts. Amortization of the VOBA on a block of universal life contracts is calculated over the expected life of the policies in proportion to the present value of EGPs from such policies. The VOBA balance was $90 million and $92 million as of December 31, 2003 and 2002, respectively.
POLICYHOLDER ACCOUNT BALANCES
Policyholder account balances on universal life and investment-type contracts are valued using the retrospective deposit method and are equal to accumulated account values, which consist of deposits received plus interest credited, less withdrawals and assessments. Interest credited to these contracts primarily ranged from 1.0% to 8.0% during 2003, 2002 and 2001.
FUTURE POLICY BENEFITS
Annuity benefit liabilities are equal to the present value of expected future payments using pricing assumptions, as applicable, for interest rates, mortality, morbidity, retirement age and expenses. Interest rates used in establishing such liabilities ranged from 1.5% to 11.0%.
Life insurance reserves are valued using the net level premium method on the basis of actuarial assumptions appropriate at policy issue. Mortality and persistency assumptions are generally based on the Company’s experience, which, together with interest and expense assumptions, include a margin for possible unfavorable deviations. Interest rate assumptions ranged from 4.5% to 9.3%. Future dividends for participating business are provided for in the liability for future policy benefits.
Dividends are accrued based on dividend formulas approved by the Pacific Life Board of Directors and reviewed for reasonableness and equitable treatment of policyholders by an independent consulting actuary. As of December 31, 2003 and 2002, participating experience rated policies paying dividends represent less than 1% of direct written life insurance in force. Dividends to policyholders are included in policy benefits paid or provided.
PL-13
Reserves for group health contracts are based on actual experience and morbidity assumptions. Liabilities for unpaid claims and claim expenses for group health contracts include estimates of claims that have been reported but not settled and estimates of claims incurred but not reported, based on the Company’s historical claims development patterns and other actuarial assumptions.
Estimates of future policy benefit reserves and liabilities are continually reviewed and, as experience develops, are adjusted as necessary. Such changes in estimates are included in earnings for the period in which such changes occur.
REVENUES, BENEFITS AND EXPENSES
Insurance premiums, primarily on group health contracts, annuity contracts with life contingencies and traditional life and term insurance contracts, are recognized as revenue when due. Benefits and expenses are matched against such revenues to recognize profits over the lives of the contracts. This matching is accomplished by providing for liabilities for future policy benefits, expenses of contract administration and the amortization of DAC.
Receipts for universal life and investment-type contracts are reported as deposits to either policyholder account balances or separate account liabilities, and are not included in revenue. Policy fees consist of mortality charges, surrender charges and expense charges that have been earned and assessed against related account values during the period. The timing of policy fee revenue recognition is determined based on the nature of the fees. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in revenue over the periods benefited. Benefits and expenses include policy benefits and claims incurred in the period that are in excess of related policyholder account balances, interest credited to policyholder account balances, expenses of contract administration and the amortization of DAC.
Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from their respective revenue and benefit and expense accounts.
Commission revenue from the Company’s broker-dealer subsidiaries is generally recorded on the trade date. Related commission expense is recorded when incurred.
DEPRECIATION AND AMORTIZATION
Depreciation of investment real estate is computed on the straight-line method over the estimated useful lives, which range from 5 to 30 years. Depreciation of investment real estate is included in net investment income. Certain other assets are depreciated or amortized on the straight-line method over periods ranging from 3 to 40 years. Depreciation and amortization of certain other assets are included in operating expenses.
INCOME TAXES
Pacific Life and its wholly owned life insurance subsidiary domiciled in Arizona, Pacific Life & Annuity Company (PL&A), are taxed as insurance companies for Federal income tax purposes. Pacific Life and its includable subsidiaries are included in the consolidated Federal income tax return of PMHC. Pacific Life’s non-insurance subsidiaries are either included in PMHC’s combined California franchise tax return or file separate state tax returns. Companies included in the consolidated Federal income tax return of PMHC and/or the combined California franchise tax return of PMHC are allocated an expense or benefit based principally on the effect of including their operations in PMHC’s returns. Deferred tax assets and liabilities are recognized for the nature tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years the differences are expected to be recovered or settled.
PL-14
SEPARATE ACCOUNTS
Separate accounts primarily include variable annuity and life contracts, as well as other single separate accounts. Separate account assets and liabilities are recorded at estimated fair value and represent legally segregated contract holder funds. Deposits to separate accounts, investment income and realized and unrealized gains and losses on the separate account assets accrue directly to contract holders and, accordingly, are not reflected in the consolidated statements of operations or cash flows. However, on certain separate account products, the Company does contractually guarantee either a minimum return or account value, for which liabilities have been recorded in future policy benefits. Amounts charged to the separate account for mortality, surrender and expense charges are included in revenues as policy fees.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments, disclosed in Notes 7, 8 and 9, has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is often required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.
| 2. | INTEREST IN PIMCO |
The Company’s beneficial economic interest in PIMCO (the interest in PIMCO) is accounted for using the cost method, since the Company has virtually no influence over PIMCO’s operating and financial policies. Effective with the amendment of the Continuing Investment Agreement described below, PIMCO changed its method of allocating net income and will not allocate any goodwill impairment or goodwill amortization, if required by future U.S. GAAP changes, to the Company. Accordingly, revenue from PIMCO became equal to distributions received and declared. Prior to the amendment of the Continuing Investment Agreement, distributions received in excess of net income allocated by PIMCO were recorded as a reduction to the interest in PIMCO.
The interest in PIMCO is reported as of December 31, 2003, at an estimated fair value of $1,089 million as determined by the put and call option price described below. The increase (decrease) in unrealized gains of ($294) million, $354 million and $177 million, net of deferred income taxes (benefit) of ($114) million, $129 million and $66 million, for the years ended December 31, 2003, 2002 and 2001, respectively, is reported as a component of OCI.
On May 5, 2000, a transaction was closed whereby Allianz of America, Inc. (Allianz), a subsidiary of Allianz AG, acquired substantially all interests in PIMCO other than those beneficially owned by the Company. In connection with this transaction, the Company exchanged its prior ownership interest for a new security, PIMCO Class E limited partnership units. The interest in PIMCO is subject to a Continuing Investment Agreement with Allianz that provides for put options held by the Company, and call options held by Allianz, respectively.
Prior to March 10, 2003, the put option gave the Company the right to require Allianz, on the last business day of each calendar quarter, to purchase all of the interest in PIMCO. The put option price was based on the per unit amount, as defined in the Continuing Investment Agreement, for the most recently completed four calendar quarters multiplied by a factor of 14. The call option gave Allianz the right to require the Company, on any January 31, April 30, July 31, or October 31, beginning on January 31, 2003, to sell its interest in PIMCO to Allianz. The call option price was based on the per unit amount, as defined in the Continuing Investment Agreement, for the most recently completed four calendar quarters multiplied by a factor of 14, if the call per unit value reached a minimum value.
On March 10, 2003, the Continuing Investment Agreement and other related agreements were amended. The amendments provide for monthly put and/or call options, limited to a maximum of $250 million per quarter through March 2004. In any month subsequent to March 2004, the Company can also put, or Allianz can also call, all of the interest in PIMCO held by the Company. Other amendments to these agreements limit the increase or decrease in the value of the put and call options to a maximum of 2% per year of the per unit amount as defined in the Continuing Investment Agreement as of December 31 of the preceding calendar year. The initial per unit value as of December 31, 2002 was $551,924 and the per unit value as of December 31, 2003 was $562,964. The per unit amount is also
PL-15
subject to a cap and a floor of $600,000 and $500,000 per unit, respectively. Distributions from PIMCO to the Company are dependent on the performance of Pacific Investment Management Company LLC (PIMCO LLC), a subsidiary of PIMCO, and will be subject to certain limitations as defined in the agreements. PIMCO LLC offers investment products through managed accounts and institutional, retail and offshore mutual funds.
During the year ended December 31, 2003, the Company exercised four put options of $250 million each to sell approximately $1 billion of its interest in PIMCO to Allianz. The pre-tax gain recognized for the year ended December 31, 2003 was $327 million.
| 3. | DEFERRED POLICY ACQUISITION COSTS |
Components of DAC are as follows:
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Balance, January 1 |
$ | 2,261 | $ | 2,113 | $ | 1,796 | ||||||
| Additions: |
||||||||||||
| Capitalized during the year |
821 | 573 | 566 | |||||||||
| Amortization: |
||||||||||||
| Allocated to commission expenses |
(210 | ) | (232 | ) | (181 | ) | ||||||
| Allocated to operating expenses |
(53 | ) | (77 | ) | (65 | ) | ||||||
| Allocated to OCI, net unrealized gains |
(2 | ) | (116 | ) | (3 | ) | ||||||
| Total amortization |
(265 | ) | (425 | ) | (249 | ) | ||||||
| Balance, December 31 |
$ | 2,817 | $ | 2,261 | $ | 2,113 | ||||||
| 4. | STATUTORY RESULTS |
Pacific Life prepares its statutory financial statements in conformity with accounting practices prescribed or permitted by the CA DOI, which is a comprehensive basis of accounting other than U.S. GAAP. The following are reconciliations of statutory capital and surplus, and statutory net income for Pacific Life, as compared to the amounts reported as stockholder’s equity and net income from these consolidated financial statements prepared in accordance with U.S. GAAP:
| December 31, |
||||||||
| 2003 | 2002 | |||||||
| (In Millions) | ||||||||
| Statutory capital and surplus |
$ | 2,359 | $ | 1,669 | ||||
| Deferred policy acquisition costs |
2,926 | 2,382 | ||||||
| Accumulated other comprehensive income |
1,065 | 776 | ||||||
| Asset valuation reserve |
436 | 401 | ||||||
| Non-admitted assets |
332 | 338 | ||||||
| Surplus notes |
(150 | ) | (150 | ) | ||||
| Deferred income taxes |
(418 | ) | (431 | ) | ||||
| Insurance and annuity reserves |
(1,185 | ) | (737 | ) | ||||
| Other |
(63 | ) | (31 | ) | ||||
| Stockholder’s equity as reported herein |
$ | 5,302 | $ | 4,217 | ||||
PL-16
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Statutory net income |
$ | 277 | $ | 13 | $ | 24 | ||||||
| Deferred policy acquisition costs |
544 | 259 | 329 | |||||||||
| Earnings of subsidiaries |
125 | (301 | ) | (60 | ) | |||||||
| Statutory expense of minimum pension liability adjustment |
81 | |||||||||||
| Unrealized losses on partnerships and joint ventures |
(20 | ) | (45 | ) | (31 | ) | ||||||
| Deferred income taxes |
(121 | ) | 4 | (29 | ) | |||||||
| Insurance and annuity reserves |
(464 | ) | 58 | 25 | ||||||||
| Other |
95 | (40 | ) | (17 | ) | |||||||
| Net income as reported herein |
$ | 436 | $ | 29 | $ | 241 | ||||||
RISK-BASED CAPITAL
Risk-based capital is a method developed by the National Association of Insurance Commissioners to measure the minimum amount of capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. The adequacy of a company’s actual capital is measured by the risk-based capital results, as determined by the formulas. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2003 and 2002, Pacific Life and PL&A exceeded the minimum risk-based capital requirements.
DIVIDEND RESTRICTIONS
Dividend payments by Pacific Life to Pacific LifeCorp in any 12-month period cannot exceed the greater of 10% of unassigned surplus as of the preceding year end or the statutory net gain from operations for the previous year, without prior approval from the CA DOI. Based on this limitation and 2003 statutory results, Pacific Life could pay $380 million in dividends in 2004 without prior approval. No dividends were paid during 2003, 2002 and 2001.
The maximum amount of ordinary dividends that can be paid by PL&A to Pacific Life without restriction cannot exceed the lesser of 10% of statutory surplus as regards to policyholders, or the statutory net gain from operations. Based on this limitation and 2003 statutory results, PL&A could pay $22 million in dividends in 2004 without prior approval. No dividends were paid during 2003, 2002 and 2001.
| 5. | CLOSED BLOCK |
In connection with the Conversion, an arrangement known as a closed block (the Closed Block) was established, for dividend purposes only, for the exclusive benefit of certain individual life insurance policies that had an experience based dividend scale for 1997. The Closed Block was designed to give reasonable assurance to holders of the Closed Block policies that policy dividends will not change solely as a result of the Conversion.
Assets that support the Closed Block, which are primarily included in fixed maturity securities, policy loans and accrued investment income, amounted to $292 million and $298 million as of December 31, 2003 and 2002, respectively. Liabilities allocated to the Closed Block, which are primarily included in future policy benefits, amounted to $317 million and $326 million as of December 31, 2003 and 2002, respectively. The contribution to income from the Closed Block amounted to $2 million, $5 million and $5 million and is primarily included in insurance premiums, net investment income and policy benefits paid or provided for the years ended December 31, 2003, 2002 and 2001, respectively.
PL-17
| 6. | ACQUISITIONS |
The Company’s acquisitions are accounted for under the purchase method of accounting.
On December 31, 2001, a transaction was closed whereby Pacific Life exchanged its 100% common stock ownership in World-Wide Holdings Limited (World-Wide) for a 22.5% common stock ownership in Scottish Re Group Limited, formerly Scottish Annuity & Life Holdings, Ltd. (Scottish). World-Wide’s assets and liabilities were approximately $164 million and $103 million, respectively. Scottish, a publicly traded specialty reinsurer, issued new ordinary shares in exchange for World-Wide at a value of $78 million. Pacific Life recorded a nonmonetary exchange gain of $13 million, net of taxes, in connection with this exchange. Goodwill resulting from this transaction was $7 million. During 2002, Pacific Life’s common stock ownership in Scottish was reduced to 16.8% when Scottish issued additional shares to the public.
In July 2003, the Company sold approximately 34% of its common stock ownership in Scottish for $30 million and recognized an after tax gain of $2 million. In addition, Scottish issued additional shares to the public further reducing the Company’s common stock ownership interest to 8.5% as of December 31, 2003. The Company accounts for its investment in Scottish on the equity method as it continues to hold two of the nine board positions on the Scottish Board of Directors.
In October 2002, a transaction was closed whereby Pacific Select Distributors, Inc. (PSD), a wholly owned subsidiary of Pacific Life, acquired a 45% ownership in Waterstone Financial Group, Inc. (Waterstone), a broker-dealer. The purchase price of $4 million was primarily recorded as goodwill. In March 2003, PSD increased its ownership in Waterstone to 62% for a purchase price of $ 1 million and began including Waterstone in the Company’s consolidated financial statements. Prior to this increased ownership, Waterstone was accounted for under the equity method.
| 7. | INVESTMENTS |
The net carrying amount, gross unrealized gains and losses, and estimated fair value of fixed maturity and equity securities available for sale are shown below. The net carrying amount represents amortized cost adjusted for other than temporary declines in value and changes in the estimated fair value of fixed maturity securities attributable to the risk designated in a fair value hedge. The estimated fair value of publicly traded securities is based on quoted market prices. For securities not actively traded, fair values were estimated based on amounts provided by independent pricing services specializing in matrix pricing and modeling techniques. The Company also estimates certain fair values based on interest rates, credit quality and average maturity utilizing matrix pricing and other modeling techniques.
PL-18
| Net |
Estimated | |||||||||||
| Gross Unrealized | ||||||||||||
| Gains | Losses | |||||||||||
| (In Millions) | ||||||||||||
| As of December 31, 2003: |
||||||||||||
| U.S. Treasury securities and obligations of U.S. government authorities and agencies |
$ | 333 | $ | 5 | $ | 19 | $ | 319 | ||||
| Obligations of states and political subdivisions |
1,080 | 181 | 6 | 1,255 | ||||||||
| Foreign governments |
384 | 49 | 11 | 422 | ||||||||
| Corporate securities |
14,439 | 1,184 | 61 | 15,562 | ||||||||
| Mortgage-backed and asset-backed securities |
5,603 | 286 | 83 | 5,806 | ||||||||
| Redeemable preferred stock |
5 | 5 | ||||||||||
| Total fixed maturity securities |
$ | 21,844 | $ | 1,705 | $ | 180 | $ | 23,369 | ||||
| Total equity securities |
$ | 106 | $ | 23 | $ | 1 | $ | 128 | ||||
| As of December 31, 2002: |
||||||||||||
| U.S. Treasury securities and obligations of U.S. government authorities and agencies |
$ | 260 | $ | 8 | $ | 268 | ||||||
| Obligations of states and political subdivisions |
790 | 182 | 972 | |||||||||
| Foreign governments |
283 | 44 | $ | 8 | 319 | |||||||
| Corporate securities |
13,191 | 885 | 251 | 13,825 | ||||||||
| Mortgage-backed and asset-backed securities |
5,244 | 290 | 176 | 5,358 | ||||||||
| Redeemable preferred stock |
5 | 5 | ||||||||||
| Total fixed maturity securities |
$ | 19,773 | $ | 1,409 | $ | 435 | $ | 20,747 | ||||
| Total equity securities |
$ | 83 | $ | 10 | $ | 3 | $ | 90 | ||||
The net carrying amount and estimated fair value of fixed maturity securities available for sale as of December 31, 2003, by contractual repayment date of principal, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| Net Carrying Amount |
Gross Unrealized | Estimated Fair Value | ||||||||||
| Gains | Losses | |||||||||||
| (In Millions) | ||||||||||||
| Due in one year or less |
$ | 880 | $ | 34 | $ | 1 | $ | 913 | ||||
| Due after one year through five years |
6,261 | 468 | 22 | 6,707 | ||||||||
| Due after five years through ten years |
5,045 | 449 | 23 | 5,471 | ||||||||
| Due after ten years |
4,055 | 468 | 51 | 4,472 | ||||||||
| 16,241 | 1,419 | 97 | 17,563 | |||||||||
| Mortgage-backed and asset-backed securities |
5,603 | 286 | 83 | 5,806 | ||||||||
| Total |
$ | 21,844 | $ | 1,705 | $ | 180 | $ | 23,369 | ||||
PL-19
The following tables present the number of investments, and the estimated fair value and gross unrealized losses for fixed maturity and equity securities, excluding securities accounted for under EITF Issue No. 99-20, where the estimated fair value had declined and remained below the net carrying amount as of December 31, 2003.
| Total | ||||||||
| Number | Estimated Fair Value |
Gross Unrealized Losses |
||||||
| (In Millions) | ||||||||
| U.S. Treasury securities and obligations of U.S. government authorities and agencies |
11 | $ | 227 | ($19) | ||||
| Obligations of states and political subdivisions |
18 | 109 | (6 | ) | ||||
| Foreign governments |
11 | 79 | (11 | ) | ||||
| Corporate securities |
214 | 1,719 | (53 | ) | ||||
| Federal agency mortgage-backed securities |
4 | 39 | ||||||
| Redeemable preferred stock |
2 | 3 | ||||||
| Total fixed maturity securities |
260 | 2,176 | (89 | ) | ||||
| Total equity securities |
26 | 6 | (1 | ) | ||||
| Total |
286 | $ | 2,182 | ($90) | ||||
| Less than 12 Months | 12 Months or Greater | |||||||||||||
| Number | Estimated Fair Value |
Gross Unrealized Losses |
Number | Estimated Fair Value |
Gross Unrealized Losses | |||||||||
| (In Millions) | (In Millions) | |||||||||||||
| U.S. Treasury securities and obligations of U.S. government authorities and agencies |
11 | $ | 227 | ($19) | ||||||||||
| Obligations of states and political subdivisions |
18 | 109 | (6) | |||||||||||
| Foreign governments |
8 | 52 | (1) | 3 | $ | 27 | ($10) | |||||||
| Corporate securities |
183 | 1,481 | (40) | 31 | 238 | (13) | ||||||||
| Federal agency mortgage-backed securities |
3 | 39 | 1 | |||||||||||
| Redeemable preferred stock |
1 | 1 | 3 | |||||||||||
| Total fixed maturity securities |
224 | 1,908 | (66) | 36 | 268 | (23) | ||||||||
| Total equity securities |
12 | 14 | 6 | (1) | ||||||||||
| Total |
236 | $ | 1,908 | ($66) | 50 | $ | 274 | ($24) | ||||||
As of December 31, 2003, the Company holds seven fixed maturity securities with an unrealized loss greater than 20% of their net carrying amount. The net carrying amount and unrealized loss of these seven securities is $44 million and ($12) million, respectively. The securities represent investments in a foreign central bank and the utilities industry.
PL-20
The Company has evaluated the temporarily impaired securities determining that the Company has the ability and intent to hold the securities until recovery.
Major categories of investment income and related investment expense are summarized as follows:
| Years Ended December 31, | |||||||||
| 2003 | 2002 | 2001 | |||||||
| (In Millions) | |||||||||
| Fixed maturity securities |
$ | 1,315 | $ | 1,211 | $ | 1,118 | |||
| Equity securities |
5 | 5 | 5 | ||||||
| Mortgage loans |
198 | 182 | 215 | ||||||
| Real estate |
32 | 34 | 64 | ||||||
| Policy loans |
200 | 203 | 202 | ||||||
| Other |
153 | 172 | 163 | ||||||
| Gross investment income |
1,903 | 1,807 | 1,767 | ||||||
| Investment expense |
118 | 126 | 139 | ||||||
| Net investment income |
$ | 1,785 | $ | 1,681 | $ | 1,628 | |||
The components of net realized investment gain (loss) are as follows:
| Years Ended December 31, | ||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Fixed maturity securities |
||||||||||||
| Gross gains on sales |
$ | 40 | $ | 18 | $ | 20 | ||||||
| Gross losses on sales |
(57 | ) | (48 | ) | (26 | ) | ||||||
| Other than temporary impairments |
(140 | ) | (209 | ) | (36 | ) | ||||||
| Other |
2 | 21 | 13 | |||||||||
| Subtotal |
(155 | ) | (218 | ) | (29 | ) | ||||||
| Equity securities |
||||||||||||
| Gross gains on sales |
7 | 5 | 28 | |||||||||
| Gross losses on sales |
(4 | ) | (11 | ) | ||||||||
| Other than temporary impairments |
(4 | ) | (25 | ) | (31 | ) | ||||||
| Other |
1 | |||||||||||
| Subtotal |
4 | (24 | ) | (14 | ) | |||||||
| Mortgage loans |
(3 | ) | (3 | ) | ||||||||
| Real estate |
(3 | ) | 5 | 9 | ||||||||
| Interest in PIMCO (Note 2) |
327 | |||||||||||
| Other investments |
73 | (29 | ) | 21 | ||||||||
| Total |
$ | 243 | ($269) | ($13) | ||||||||
PL-21
The change in unrealized gain (loss) on investments in available for sale and trading securities is as follows:
| Years Ended December 31, |
||||||||
| 2003 | 2002 | 2001 | ||||||
| (In Millions) | ||||||||
| Available for sale securities: |
||||||||
| Fixed maturity |
$551 | $735 | $140 | |||||
| Equity |
15 | (4 | ) | 5 | ||||
| Total |
$566 | $731 | $145 | |||||
| Trading securities |
$ 53 | ($18 | ) | ($17 | ) | |||
Realized gains (losses) on trading securities held as of December 31, 2003 and 2002, were $21 million and ($33) million, respectively.
Fixed maturity securities, which have been non-income producing for the twelve months preceding December 31, 2003 and 2002, totaled $5 million and $16 million, respectively.
As of December 31, 2003 and 2002, fixed maturity securities of $14 million were on deposit with state insurance departments to satisfy regulatory requirements. The Company’s interest in PIMCO (Note 2) exceeds 10% of total stockholder’s equity as of December 31, 2003.
Mortgage loans on real estate are collateralized by properties primarily located throughout the United States. As of December 31, 2003, approximately $956 million, $375 million, $341 million, $310 million and $224 million were located in California, Texas, Virginia, Michigan and Arizona, respectively.
The Company had a mortgage loan general valuation allowance of $26 million as of December 31, 2003 and 2002. During the year ended December 31, 2003, the Company recorded a specific valuation allowance of $3 million on two mortgage loans. This was in addition to a specific valuation allowance of $4 million that had been established on one of the mortgage loans during the year ended December 31, 2002. During 2003, these mortgage loans were foreclosed and transferred to real estate at a value of $28 million.
The Company did not have mortgage loans with accrued interest more than 180 days past due as of December 31, 2003 or 2002.
During the year ended December 31, 2003, one real estate investment, with a balance of $27 million, was considered impaired and written down by $4 million. Additionally, goodwill related to the acquisition of real estate property acquired through a limited liability company, was considered impaired due to the negative impact of the economy on property performance, and written down $5 million during the year ended December 31, 2003. During the year ended December 31, 2002, one real estate investment with a balance of $6 million was considered impaired and written down by $1 million.
PL-22
| 8. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The carrying amount and estimated fair value of the Company’s financial instruments are as follows:
| December 31, 2003 |
December 31, 2002 | |||||||||||
| Carrying Amount |
Estimated Fair Value |
Carrying Amount |
Estimated Fair Value | |||||||||
| (In Millions) | ||||||||||||
| Assets: |
||||||||||||
| Fixed maturity and equity securities (Note 7) |
$ | 23,497 | $ | 23,497 | $ | 20,837 | $ | 20,837 | ||||
| Trading securities |
306 | 306 | 572 | 572 | ||||||||
| Mortgage loans |
3,811 | 4,163 | 3,123 | 3,427 | ||||||||
| Policy loans |
5,407 | 5,407 | 5,115 | 5,115 | ||||||||
| Interest in PIMCO (Note 2) |
1,089 | 1,089 | 2,054 | 2,054 | ||||||||
| Derivative instruments (Note 9) |
830 | 830 | 280 | 280 | ||||||||
| Cash and cash equivalents |
496 | 496 | 581 | 581 | ||||||||
| Notes receivable from affiliates (Note 17) |
106 | 106 | ||||||||||
| Liabilities: |
||||||||||||
| Funding agreements and guaranteed interest contracts |
8,657 | 8,842 | 8,664 | 9,112 | ||||||||
| Fixed account liabilities |
5,141 | 5,149 | 3,965 | 3,986 | ||||||||
| Short-term debt |
125 | 125 | 325 | 325 | ||||||||
| Long-term debt |
150 | 178 | 150 | 175 | ||||||||
| Derivative instruments (Note 9) |
140 | 140 | 332 | 332 | ||||||||
The following methods and assumptions were used to estimate the fair value of these financial instruments as of December 31, 2003 and 2002:
TRADING SECURITIES
The estimated fair value of trading securities is based on quoted market prices.
MORTGAGE LOANS
The estimated fair value of the mortgage loan portfolio is determined by discounting the estimated future cash flows, using a market rate that is applicable to the yield, credit quality and average maturity of the composite portfolio.
POLICY LOANS
The carrying amounts of policy loans are a reasonable estimate of their fair values because interest rates are generally variable and based on current market rates.
DERIVATIVE INSTRUMENTS
Derivative instruments are reported at estimated fair value based on market quotations or internally established valuations consistent with external valuation models.
PL-23
CASH AND CASH EQUIVALENTS
The carrying values approximate fair values due to the short-term maturities of these instruments.
NOTES RECEIVABLE FROM AFFILIATES
The carrying amount of notes receivable from affiliates is a reasonable estimate of their fair value because the interest rates are variable and based on current market rates.
FUNDING AGREEMENTS AND GUARANTEED INTEREST CONTRACTS
The fair value of funding agreements and guaranteed interest contracts (GICs) is estimated using the rates currently offered for deposits of similar remaining maturities.
FIXED ACCOUNT LIABILITIES
Fixed account liabilities include annuity and deposit liabilities. The estimated fair value of annuity liabilities approximates carrying value and primarily includes policyholder deposits and accumulated credited interest. The estimated fair value of deposit liabilities with no defined maturities is the amount payable on demand.
SHORT-TERM DEBT
The carrying amount of short-term debt is a reasonable estimate of its fair value because the interest rates are variable and based on current market rates.
LONG-TERM DEBT
The estimated fair value of long-term debt is based on market quotes.
| 9. | DERIVATIVES AND HEDGING ACTIVITIES |
The Company primarily utilizes derivative instruments to manage its exposure to interest rate risk, foreign currency risk, credit risk, and equity risk. Derivative instruments are also used to manage the duration mismatch of assets and liabilities. The Company utilizes a variety of derivative instruments including swaps, foreign exchange forward contracts, caps, floors, options, and exchange traded futures contracts.
The Company applies hedge accounting by designating derivative instruments as either fair value or cash flow hedges on the date the Company enters into a derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and states how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis in accordance with its risk management policy. Hedge effectiveness is assessed quarterly by a variety of techniques including Value-at-Risk, regression analysis, and cumulative dollar offset. In certain circumstances, hedge effectiveness is assumed because the derivative instrument was constructed such that all critical terms of the derivative exactly match the hedged risk in the hedged item.
PL-24
The notional or contract amounts and estimated fair value of outstanding derivative instruments as of December 31, 2003 and 2002 are as follows:
| Net Assets (Liabilities) | ||||||||||
| Notional or 2003 |
Notional or 2002 |
Estimated 2003 |
Estimated 2002 |
|||||||
| (In Millions) | ||||||||||
| Interest rate swaps |
$ 5,206 | $ 5,300 | ($347 | ) | ($500 | ) | ||||
| Credit default and total return swaps |
1,254 | 1,430 | (8 | ) | (89 | ) | ||||
| Foreign currency swaps and forwards |
5,024 | 4,223 | 1,035 | 526 | ||||||
| Synthetic GICs |
4,835 | 3,894 | ||||||||
| Interest rate floors, caps, options, and swaptions |
3,744 | 1,289 | 10 | 11 | ||||||
| Financial futures contracts |
89 | 134 | ||||||||
| Total |
$20,152 | $16,270 | $ 690 | ($52 | ) | |||||
Although the notional amounts of derivatives do not represent amounts that must be paid or received in the future (or in the case of currency swaps represents an obligation to pay one currency and receive another), such amounts do provide an indication of their potential sensitivity to interest rates or currencies, as applicable. The market sensitivity of a derivative would approach that of a cash instrument having a face amount equal to the derivative’s notional amount.
CASH FLOW HEDGES
The Company primarily uses interest rate and foreign currency swaps and interest rate futures contracts to manage its exposure to variability in cash flows due to changes in the benchmark interest rate and foreign currencies. These cash flows include those associated with existing assets and liabilities, as well as the forecasted interest cash flows related to anticipated investment purchases and liability issuances. Such anticipated investment purchases and liability issuances are considered probable to occur and are generally completed within 10 years of the inception of the hedge.
Interest rate swap agreements involve the exchange, at specified intervals, of interest payments resulting from the difference between fixed rate and floating rate interest amounts calculated by reference to an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party.
Foreign currency swaps involve the exchange of an initial principal amount in two currencies, and the agreement to re-exchange the currencies at a future date, at an agreed exchange rate. There is also periodic exchange of interest payments in the two currencies at specified intervals, calculated using agreed upon rates and the exchanged principal amounts.
Financial futures contracts obligate the holder to buy or sell the underlying financial instrument at a specified future date for a set price and may be settled in cash or by delivery of the financial instrument. Price changes on futures are settled daily through the required margin cash flows. The notional amounts of the contracts do not represent future cash requirements, as the Company intends to close out open positions prior to expiration.
The Company has not discontinued any cash flow hedges of anticipated transactions. The Company did not record any ineffectiveness for cash flow hedges during the years ended December 31, 2003 and 2002. Over the next 12 months, the Company anticipates that $2 million of deferred losses on derivative instruments in accumulated OCI will be reclassified to earnings. For the year ended December 31, 2003, none of the Company’s hedged forecasted transactions were determined to be probable of not occurring. No component of the hedging instrument’s fair value is excluded from the determination of effectiveness.
PL-25
FAIR VALUE HEDGES
The Company primarily uses interest rate swaps, foreign currency swaps, credit default swaps, and options to manage its exposure to changes in the fair values of its assets and liabilities due to fluctuations in the benchmark interest rate, foreign currencies, and credit risk.
Credit default swaps involve the receipt or payment of fixed amounts at specific intervals in exchange for the assumption of or protection from potential credit events associated with the underlying security.
For the years ended December 31, 2003, 2002, and 2001 the ineffectiveness related to fair value hedges was immaterial and was recorded in net realized investment gain (loss). No component of the hedging instrument’s fair value is excluded from the determination of effectiveness.
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company enters into swaps, foreign currency forward contracts, interest rate futures contracts, interest rate cap and floor agreements, options, and equity indexed futures contracts without designating the derivatives as hedging instruments. Derivatives that are not designated as hedging instruments are entered into primarily to manage the Company’s interest rate risk, credit risk, equity risk, and for yield enhancement purposes. The Company uses credit default, asset, and total return swaps to manage the credit exposure of the portfolio, equity risk embedded in certain assets and liabilities, and to take advantage of market opportunities.
Asset swaps involve the receipt of floating rate payments in exchange for the rights associated with the conversion option in the underlying security. Total return swaps involve the exchange of floating rate payments for the total return performance of a specified index. Generally, no cash is exchanged at the outset of the contract and neither party makes principal payments.
Foreign exchange forward contracts are commitments to exchange foreign currency denominated payments for U.S. dollar denominated payments at a specific date.
Interest rate floor agreements entitle the Company to receive the difference between the current rate and the strike rate when the current rate of the underlying index is below the strike rate. Interest rate cap agreements entitle the Company to receive the difference between the current rate and the strike rate when the current rate of the underlying index is above the strike rate. Options purchased involve the right, but not the obligation, to purchase the underlying securities at a specified price during a given time period. Cash requirements for these instruments are generally limited to the premium paid by the Company at acquisition. Written covered options obligate the Company to deliver the underlying securities held at a specified price on the expiration date. Cash requirements for these instruments are generally limited to the price of the specified bond to be delivered.
Net realized investment gains for the years ended December 31, 2003, 2002 and 2001, include $24 million, $3 million and $19 million, respectively, related to realized gains and losses, changes in estimated fair value, and periodic net settlements of derivative instruments not designated as hedges.
EMBEDDED DERIVATIVES
The Company also purchases investment securities and issues certain insurance and reinsurance policies with embedded derivatives. When it is determined that the embedded derivative possesses economic and risk characteristics that are not clearly and closely related to those of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, it is separated from the host contract and accounted for as a stand-alone derivative. Such derivatives are recorded on the consolidated statements of financial condition at estimated fair value, with changes in their estimated fair value recorded in net realized investment gain (loss).
The Company issues synthetic GICs to Employee Retirement Income Security Act of 1974 (ERISA) qualified defined contribution employee benefit plans (ERISA Plan). The ERISA Plan uses the contracts in its stable value or guaranteed fixed income option. Synthetic GICs provide certain of the ERISA Plan’s assets a guarantee of principal and interest, as it relates to certain benefit payments. The Company has an off balance sheet risk that the value of the
PL-26
underlying assets is insufficient to meet these guarantees. To control this risk, the Company pre-approves all investment guidelines. The ERISA Plan absorbs default risk. The interest rate guarantee is reset periodically to reflect actual performance results. As of December 31, 2003, the Company had outstanding commitments to maintain liquidity for benefit payments on notional amounts of $4.8 billion compared to $3.9 billion as of December 31, 2002. The notional amounts represent the value of the ERISA Plan’s assets only and are not a measure of the exposure to the Company.
The Company offers a rider on certain variable annuity contracts that guarantees net principal over a ten year holding period. In addition, the Company offers a rider on certain variable annuity contracts that guarantees a minimum withdrawal benefit over a 14 year period subject to certain restrictions. The estimated fair value of the liability for these riders as of December 31, 2003 is zero. The notional amount is included in the interest rate floors, caps, options and swaptions category in the table above.
CREDIT EXPOSURE
In accordance with legally enforceable counterparty master agreements, credit exposure is measured on a counterparty basis as the net positive aggregate estimated fair value net of collateral received, if any. The Company attempts to limit its credit exposure by dealing with creditworthy counterparties, establishing risk control limits, executing legally enforceable master netting agreements, and obtaining collateral where appropriate. In addition, each counterparty is extensively reviewed to evaluate its financial stability before entering into each agreement and throughout the period that the financial instrument is owned. All of the credit exposure for the Company from derivative contracts is with investment grade counterparties. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance.
Because exchange traded futures and options are transacted through a regulated exchange and positions are marked to market and settled on a daily basis, the Company has little exposure to credit related losses in the event of nonperformance by counterparties to such financial instruments. The Company is required to pledge collateral for any futures contracts that are entered into. The amount of collateral that is required is determined by the exchange on which it is traded. The Company currently pledges cash and U.S. Treasury Bills to satisfy this collateral requirement.
The following table summarizes the notional and credit exposure for all derivatives for which the Company has credit exposure to a counterparty:
| December 31, 2003 | ||||||
| Notional Amount |
Credit Exposure | |||||
| (In Millions) | ||||||
| AAA |
$ | 904 | $ | 54 | ||
| AA |
2,578 | 157 | ||||
| A |
4,676 | 74 | ||||
| Total |
$ | 8,158 | $ | 285 | ||
PL-27
| 10. | POLICYHOLDER LIABILITIES |
POLICYHOLDER ACCOUNT BALANCES
The detail of the liability for policyholder account balances is as follows:
| December 31, | ||||||
| 2003 | 2002 | |||||
| (In Millions) | ||||||
| Universal life |
$ | 14,123 | $ | 13,088 | ||
| Funding agreements |
6,677 | 6,383 | ||||
| Fixed account liabilities |
5,141 | 3,965 | ||||
| Guaranteed interest contracts |
1,980 | 2,281 | ||||
| Total |
$ | 27,921 | $ | 25,717 | ||
FUTURE POLICY BENEFITS
The detail of the liability for future policy benefits is as follows:
| December 31, | ||||||
| 2003 | 2002 | |||||
| (In Millions) | ||||||
| Annuity reserves |
$ | 3,708 | $ | 3,516 | ||
| Unearned revenue reserve |
479 | 423 | ||||
| Closed block liabilities |
315 | 324 | ||||
| Policy benefits payable |
296 | 280 | ||||
| Life insurance |
235 | 208 | ||||
| Other |
20 | 24 | ||||
| Total |
$ | 5,053 | $ | 4,775 | ||
PL-28
UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
The following table provides a reconciliation for the activity in the group health unpaid claims and claim adjustment expenses, which is included in the liability for future policy benefits.
| Years Ended December 31, |
||||||||
| 2003 | 2002 | |||||||
| (In Millions) | ||||||||
| Balance at January 1 |
$ | 172 | $ | 159 | ||||
| Less reinsurance recoverable |
2 | |||||||
| Net balance at January 1 |
170 | 159 | ||||||
| Incurred related to: |
||||||||
| Current year |
784 | 753 | ||||||
| Prior years |
(20 | ) | (22 | ) | ||||
| Total incurred |
764 | 731 | ||||||
| Paid related to: |
||||||||
| Current year |
651 | 614 | ||||||
| Prior years |
126 | 106 | ||||||
| Total paid |
777 | 720 | ||||||
| Net balance at December 31 |
157 | 170 | ||||||
| Plus reinsurance recoverables |
1 | 2 | ||||||
| Balance at December 31 |
$ | 158 | $ | 172 | ||||
As a result of favorable settlement of prior years’ estimated claims, the provision for claims and claim adjustment expenses decreased by $20 million and $22 million for the years ended December 31, 2003 and 2002, respectively.
| 11. | DEBT |
SHORT-TERM DEBT
Pacific Life maintains a $700 million commercial paper program. Commercial paper debt outstanding as of December 31, 2003 was $125 million bearing an interest rate of 1.0%. There was no commercial paper debt outstanding as of December 31, 2002. In addition, Pacific Life has a bank revolving credit facility of $400 million, for which there was no debt outstanding as of December 31, 2003 and 2002. The credit facility matures in 2007.
Pacific Asset Management LLC (PAM), a wholly owned subsidiary of Pacific Life, had bank borrowings outstanding of $325 million as of December 31, 2002. The interest rate ranged from 1.5% to 1.6%. The amount of the borrowings and the interest rates reset monthly. The borrowing limit for PAM, as of December 31, 2002, was $325 million. The PAM borrowings were repaid in 2003.
LONG-TERM DEBT
Pacific Life has $150 million of surplus notes outstanding at an interest rate of 7.9% maturing on December 30, 2023. Interest is payable semiannually on June 30 and December 30. The surplus notes may not be redeemed at the option of Pacific Life or any holder of the surplus notes. The surplus notes are unsecured and subordinated to all present and future senior indebtedness and policy claims of Pacific Life. Each payment of interest and principal on the surplus notes may be made only with the prior approval of the Insurance Commissioner of the State of California. Interest expense amounted to $12 million for each of the years ended December 31, 2003, 2002 and 2001, and is included in net investment income.
PL-29
| 12. | INCOME TAXES |
The provision for income taxes (benefit) is as follows:
| Years Ended December 31, |
|||||||||||
| 2003 | 2002 | 2001 | |||||||||
| (In Millions) | |||||||||||
| Current |
$ | 189 | ($104 | ) | ($5 | ) | |||||
| Deferred |
(26 | ) | (8 | ) | 60 | ||||||
| Provision for income taxes (benefit) on income before cumulative adjustments due to changes in accounting principles |
163 | (112 | ) | 55 | |||||||
| Deferred income tax provision on cumulative adjustments due to changes in accounting principles |
(4 | ) | |||||||||
| Total |
$ | 163 | ($112 | ) | $ | 51 | |||||
The sources of the Company’s provision for deferred taxes are as follows:
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Deferred policy acquisition costs |
$ | 125 | $ | 119 | $ | 99 | ||||||
| Low income housing tax credit carryover |
74 | (43 | ) | (31 | ) | |||||||
| Investment valuation |
42 | (34 | ) | (7 | ) | |||||||
| Partnership income |
19 | (20 | ) | (26 | ) | |||||||
| Duration hedging |
(13 | ) | (1 | ) | ||||||||
| Policyholder reserves |
(113 | ) | (29 | ) | 7 | |||||||
| Interest in PIMCO (Note 2) |
(147 | ) | (8 | ) | ||||||||
| Other |
(13 | ) | 8 | 14 | ||||||||
| Provision for deferred taxes |
($26 | ) | ($8 | ) | $ | 56 | ||||||
PL-30
A reconciliation of the provision for income taxes (benefit) based on the prevailing corporate statutory tax rate to the provision reflected in the consolidated financial statements is as follows:
| Years Ended December 31, |
|||||||||
| 2003 | 2002 | 2001 | |||||||
| (In Millions) | |||||||||
| Provision for income taxes (benefit) at the statutory rate |
$209 | ($29 | ) | $106 | |||||
| State income taxes |
11 | 3 | 4 | ||||||
| Amounts related to prior periods |
(10 | ) | (39 | ) | (26 | ) | |||
| Nontaxable investment income |
(16 | ) | (9 | ) | (6 | ) | |||
| Low income housing and foreign tax credits |
(30 | ) | (32 | ) | (28 | ) | |||
| Other |
(1 | ) | (6 | ) | 5 | ||||
| Provision for income taxes (benefit) on income before cumulative adjustments due to changes in accounting principles |
163 | (112 | ) | 55 | |||||
| Deferred income tax provision on cumulative adjustments due to changes in accounting principles |
(4 | ) | |||||||
| Total |
$163 | ($112 | ) | $ 51 | |||||
The net deferred tax liability, included in other liabilities as of December 31, 2003 and 2002, is comprised of the following tax effected temporary differences:
| December 31, |
||||||||
| 2003 | 2002 | |||||||
| (In Millions) | ||||||||
| Deferred tax assets |
||||||||
| Policyholder reserves |
$ | 319 | $ | 206 | ||||
| Investment valuation |
91 | 133 | ||||||
| Deferred compensation |
34 | 29 | ||||||
| Duration hedging |
32 | 19 | ||||||
| Retirement benefits |
18 | 21 | ||||||
| Dividends |
6 | 7 | ||||||
| Low income housing tax credit carryover |
74 | |||||||
| Other |
13 | 2 | ||||||
| Total deferred tax assets |
513 | 491 | ||||||
| Deferred tax liabilities |
||||||||
| Deferred policy acquisition costs |
(444 | ) | (319 | ) | ||||
| Interest in PIMCO (Note 2) |
(240 | ) | (387 | ) | ||||
| Partnership income |
(23 | ) | (4 | ) | ||||
| Depreciation |
(10 | ) | (11 | ) | ||||
| Total deferred tax liabilities |
(717 | ) | (721 | ) | ||||
| Net deferred tax liability from operations |
(204 | ) | (230 | ) | ||||
| Unrealized gain on derivatives and securities available for sale |
(450 | ) | (219 | ) | ||||
| Unrealized gain on interest in PIMCO (Note 2) |
(129 | ) | (243 | ) | ||||
| Minimum pension liability adjustment and other |
2 | 23 | ||||||
| Net deferred tax liability |
($781 | ) | ($669 | ) | ||||
PL-31
| 13. | COMPREHENSIVE INCOME |
The Company displays comprehensive income and its components on the accompanying consolidated statements of stockholder’s equity and as follows. OCI is shown net of reclassification adjustments and net of deferred income taxes. The disclosure of the gross components of OCI and related taxes is as follows:
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Gross Holding Gain: |
||||||||||||
| Holding gain on securities available for sale |
$ | 415 | $ | 479 | $ | 101 | ||||||
| Holding gain (loss) on derivatives |
56 | (144 | ) | (25 | ) | |||||||
| Income tax expense |
(166 | ) | (117 | ) | (28 | ) | ||||||
| Reclassification adjustment: |
||||||||||||
| Realized loss on sale of securities available for sale |
163 | 243 | 52 | |||||||||
| Realized loss on derivatives |
8 | 6 | 71 | |||||||||
| Provision for income tax benefit |
(60 | ) | (87 | ) | (44 | ) | ||||||
| Allocation of holding (gain) loss to deferred policy acquisition costs |
19 | (85 | ) | 2 | ||||||||
| Provision for income (taxes) benefit |
(7 | ) | 30 | (1 | ) | |||||||
| Net unrealized gain on securities available for sale |
428 | 325 | 128 | |||||||||
| Minimum pension liability and other adjustments |
41 | (44 | ) | |||||||||
| Increase (decrease) in unrealized gain on interest in PIMCO (Note 2) |
(180 | ) | 225 | 111 | ||||||||
| Total |
$ | 289 | $ | 506 | $ | 239 | ||||||
| 14. | REINSURANCE |
The Company has reinsurance agreements with other insurance companies for the purpose of diversifying risk and limiting exposure on larger mortality risks or, in the case of a producer-owned reinsurance company, to diversify risk and retain top producing agents. Amounts receivable from reinsurers for reinsurance of future policy benefits, universal life deposits, and unpaid losses are included in other assets. All assets associated with business reinsured on a yearly renewable term and modified coinsurance basis remain with, and under the control of the Company. Amounts recoverable (payable) from (to) reinsurers include the following amounts:
| December 31, |
||||||
| 2003 | 2002 | |||||
| (In Millions) | ||||||
| Universal life deposits |
($99 | ) | ($91 | ) | ||
| Future policy benefits |
200 | 169 | ||||
| Paid claims |
54 | 37 | ||||
| Unpaid claims |
12 | 12 | ||||
| Other |
31 | 29 | ||||
PL-32
As of December 31, 2003, 86% of the reinsurance recoverables were from three reinsurers, of which 100% is secured by payables to the reinsurers. To the extent that the assuming companies become unable to meet their obligations under these agreements, the Company remains contingently liable. The Company does not anticipate nonperformance by the assuming companies. The components of insurance premiums are as follows:
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Direct premiums |
$ | 1,270 | $ | 1,181 | $ | 923 | ||||||
| Ceded reinsurance |
(158 | ) | (137 | ) | (129 | ) | ||||||
| Assumed reinsurance |
34 | 14 | 18 | |||||||||
| Insurance premiums |
$ | 1,146 | $ | 1,058 | $ | 812 | ||||||
| Revenues and benefits are shown net of the following reinsurance transactions: |
| |||||||||||
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Ceded reinsurance netted against policy fees |
$ | 103 | $ | 78 | $ | 85 | ||||||
| Ceded reinsurance netted against net investment income |
283 | 277 | 266 | |||||||||
| Ceded reinsurance netted against interest credited |
217 | 219 | 210 | |||||||||
| Ceded reinsurance netted against policy benefits |
139 | 122 | 115 | |||||||||
| Assumed reinsurance included in policy benefits |
15 | 6 | 11 | |||||||||
| 15. | SEGMENT INFORMATION |
The Company has five operating segments: Life Insurance, Institutional Products, Annuities & Mutual Funds, Group Insurance and Broker-Dealers. These segments are managed separately and have been identified based on differences in products and services offered. All other activity is included in Corporate and Other.
The Life Insurance segment offers universal life, variable universal life and other life insurance products to individuals, small businesses and corporations through a network of distribution channels that include regional life offices, sales centers, marketing organizations, wirehouse broker-dealer firms and a national producer group that has produced over 10% of the segment’s in force business.
The Institutional Products segment offers investment and annuity products to pension fund sponsors and other institutional investors primarily through its home office marketing team and other intermediaries.
The Annuities & Mutual Funds segment offers variable and fixed annuities to individuals and small businesses through National Association of Securities Dealers (NASD) firms, regional and national wirehouses, and financial institutions. During 2001, Annuities & Mutual Funds began distribution of the Pacific Funds, a multi-class, open end investment management company. Pacific Life is the investment adviser to the Pacific Funds.
The Group Insurance segment primarily offers group life, health and dental insurance, and stop loss insurance products to corporate, government and labor-management-negotiated plans. The group life, health and dental insurance is primarily distributed through a network of sales offices and the stop loss insurance is distributed through a network of third-party administrators.
PL-33
The Broker-Dealers segment includes NASD registered firms that provide securities and insurance brokerage services and investment advisory services. PSD primarily serves as the underwriter/distributor of registered investment-related products and services, principally variable life and variable annuity contracts issued by Pacific Life.
Corporate and Other primarily includes investment income, expenses and assets not attributable to the operating segments, and the operations of certain subsidiaries that do not qualify as operating segments. Corporate and Other also includes the elimination of intersegment revenues, expenses and assets, including commission revenue and expense from the sale of Pacific Life’s variable life and annuity products.
The Company uses the same accounting policies and procedures to measure segment net income and assets as it uses to measure its consolidated net income and assets. Net investment income and net realized investment gain (loss) are allocated based on invested assets purchased and held as is required for transacting the business of that segment. Overhead expenses are allocated based on services provided. Interest expense is allocated based on the short-term borrowing needs of the segment and is included in net investment income. The provision for income taxes (benefit) is allocated based on each segment’s actual tax provision.
The operating segments are allocated equity based on formulas determined by management and receive a fixed interest rate (debenture) return on their allocated equity. The debenture amount is reflected as investment expense in net investment income in the Corporate and Other segment and as investment income in the operating segments.
The Company generates substantially all of its revenues and net income from customers located in the United States. Additionally, substantially all of the Company’s assets are located in the United States.
PL-34
The following is segment information as of and for the year ended December 31, 2003:
| Life Insurance |
Institutional Products |
Annuities & Mutual Funds |
Group Insurance |
Broker- Dealers |
Corporate and Other |
Total | ||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||||
| Insurance premiums |
($ | 76 | ) | $ | 253 | $ | 969 | $ | 1,146 | |||||||||||||||||
| Policy fees |
644 | 3 | $ | 285 | 932 | |||||||||||||||||||||
| Net investment income |
685 | 876 | 197 | 25 | $ | 2 | 1,785 | |||||||||||||||||||
| Net realized investment gain (loss) |
(64 | ) | (67 | ) | (7 | ) | (5 | ) | 386 | 243 | ||||||||||||||||
| Commission revenue |
1 | $ | 682 | (496 | ) | 187 | ||||||||||||||||||||
| Other income |
21 | 4 | 117 | 1 | 58 | 28 | 229 | |||||||||||||||||||
| Total revenues |
1,210 | 1,069 | 593 | 990 | 740 | (80 | ) | 4,522 | ||||||||||||||||||
| BENEFITS AND EXPENSES |
||||||||||||||||||||||||||
| Policy benefits |
253 | 499 | 18 | 746 | 1,516 | |||||||||||||||||||||
| Interest credited |
544 | 455 | 154 | 1,153 | ||||||||||||||||||||||
| Commission expenses |
115 | 4 | 213 | 69 | 676 | (496 | ) | 581 | ||||||||||||||||||
| Operating expenses |
187 | 20 | 160 | 133 | 64 | 109 | 673 | |||||||||||||||||||
| Total benefits and expenses |
1,099 | 978 | 545 | 948 | 740 | (387 | ) | 3,923 | ||||||||||||||||||
| Income before provision for income taxes |
111 | 91 | 48 | 42 | 307 | 599 | ||||||||||||||||||||
| Provision for income taxes |
9 | 11 | 1 | 14 | 128 | 163 | ||||||||||||||||||||
| Net income |
$ | 102 | $ | 80 | $ | 47 | $ | 28 | $ | 0 | $ | 179 | $ | 436 | ||||||||||||
| Total assets |
$ | 21,343 | $ | 14,911 | $ | 26,757 | $ | 484 | $ | 114 | $ | 1,769 | $ | 65,378 | ||||||||||||
| Deferred policy acquisition costs |
1,197 | 73 | 1,547 | 2,817 | ||||||||||||||||||||||
| Separate account assets |
4,083 | 419 | 20,661 | 25,163 | ||||||||||||||||||||||
| Policyholder and contract liabilities |
15,355 | 12,765 | 4,651 | 203 | 32,974 | |||||||||||||||||||||
| Separate account liabilities |
4,083 | 419 | 20,661 | 25,163 | ||||||||||||||||||||||
PL-35
The following is segment information as of and for the year ended December 31, 2002:
| Life Insurance |
Institutional Products |
Annuities & Mutual Funds |
Group Insurance |
Broker- Dealers |
Corporate and Other |
Total | ||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||||
| Insurance premiums |
($74) | $ | 191 | $ | 941 | $ | 1,058 | |||||||||||||||||||
| Policy fees |
604 | 3 | $ | 250 | 857 | |||||||||||||||||||||
| Net investment income |
668 | 806 | 119 | 26 | $ | 62 | 1,681 | |||||||||||||||||||
| Net realized investment loss |
(83 | ) | (71 | ) | (11 | ) | (104 | ) | (269 | ) | ||||||||||||||||
| Commission revenue |
1 | $ | 546 | (385 | ) | 162 | ||||||||||||||||||||
| Other income |
26 | 9 | 101 | 2 | 42 | 35 | 215 | |||||||||||||||||||
| Total revenues |
1,141 | 938 | 460 | 969 | 588 | (392 | ) | 3,704 | ||||||||||||||||||
| BENEFITS AND EXPENSES |
||||||||||||||||||||||||||
| Policy benefits |
240 | 428 | 69 | 723 | 1,460 | |||||||||||||||||||||
| Interest credited |
530 | 459 | 94 | 1,083 | ||||||||||||||||||||||
| Commission expenses |
116 | 7 | 222 | 66 | 534 | (385 | ) | 560 | ||||||||||||||||||
| Operating expenses |
165 | 15 | 160 | 132 | 53 | 159 | 684 | |||||||||||||||||||
| Total benefits and expenses |
1,051 | 909 | 545 | 921 | 587 | (226 | ) | 3,787 | ||||||||||||||||||
| Income (loss) before provision for income taxes (benefit) |
90 | 29 | (85 | ) | 48 | 1 | (166 | ) | (83 | ) | ||||||||||||||||
| Provision for income taxes (benefit) |
11 | (3 | ) | (34 | ) | 17 | (103 | ) | (112 | ) | ||||||||||||||||
| Net income (loss) |
$ | 79 | $ | 32 | ($51) | $ | 31 | $ | 1 | ($63) | $ | 29 | ||||||||||||||
| Total assets |
$ | 18,930 | $ | 15,727 | $ | 18,437 | $ | 497 | $ | 92 | $ | 2,539 | $ | 56,222 | ||||||||||||
| Deferred policy acquisition costs |
1,007 | 73 | 1,181 | 2,261 | ||||||||||||||||||||||
| Separate account assets |
3,296 | 1,935 | 14,010 | 19,241 | ||||||||||||||||||||||
| Policyholder and contract liabilities |
14,170 | 12,631 | 3,467 | 224 | 30,492 | |||||||||||||||||||||
| Separate account liabilities |
3,296 | 1,935 | 14,010 | 19,241 | ||||||||||||||||||||||
PL-36
The following is segment information for the year ended December 31, 2001:
| Life Insurance |
Institutional Products |
Annuities & Mutual |
Group Insurance |
Broker- Dealers |
Corporate and Other |
Total | ||||||||||||||||||||
| REVENUES | (In Millions) | |||||||||||||||||||||||||
| Insurance premiums |
($59 | ) | $ | 113 | $ | 723 | $ | 35 | $ | 812 | ||||||||||||||||
| Policy fees |
582 | 2 | $ | 237 | 821 | |||||||||||||||||||||
| Net investment income |
645 | 831 | 67 | 19 | $ | 1 | 65 | 1,628 | ||||||||||||||||||
| Net realized investment gain (loss) |
6 | 2 | (21 | ) | (13 | ) | ||||||||||||||||||||
| Commission revenue |
580 | (399 | ) | 181 | ||||||||||||||||||||||
| Other income |
28 | 10 | 99 | 2 | 40 | 46 | 225 | |||||||||||||||||||
| Total revenues |
1,196 | 962 | 403 | 746 | 621 | (274 | ) | 3,654 | ||||||||||||||||||
| BENEFITS AND EXPENSES |
||||||||||||||||||||||||||
| Policy benefits |
205 | 351 | 27 | 557 | 23 | 1,163 | ||||||||||||||||||||
| Interest credited |
506 | 457 | 67 | 1,030 | ||||||||||||||||||||||
| Commission expenses |
149 | 3 | 149 | 50 | 567 | (394 | ) | 524 | ||||||||||||||||||
| Operating expenses |
172 | 20 | 148 | 113 | 49 | 132 | 634 | |||||||||||||||||||
| Total benefits and expenses |
1,032 | 831 | 391 | 720 | 616 | (239 | ) | 3,351 | ||||||||||||||||||
| Income (loss) before provision for income taxes (benefit) |
164 | 131 | 12 | 26 | 5 | (35 | ) | 303 | ||||||||||||||||||
| Provision for income taxes (benefit) |
38 | 34 | (2 | ) | 7 | 2 | (24 | ) | 55 | |||||||||||||||||
| Income (loss) before cumulative adjustments due to changes in accounting principles |
126 | 97 | 14 | 19 | 3 | (11 | ) | 248 | ||||||||||||||||||
| Cumulative adjustments due to changes in accounting principles, net of taxes |
(3 | ) | (8 | ) | (1 | ) | 1 | 4 | (7 | ) | ||||||||||||||||
| Net income (loss) |
$ | 123 | $ | 89 | $ | 13 | $ | 20 | $ | 3 | ($7 | ) | $ | 241 | ||||||||||||
| 16. | EMPLOYEE BENEFIT PLANS |
PENSION PLANS
Pacific Life provides a defined benefit pension plan covering all eligible employees of Pacific LifeCorp and certain of its subsidiaries. On July 1, 2000, Pacific Life converted this final average pay formula defined benefit plan to a cash balance approach. Active employees’ existing benefits in this plan were converted to opening balances and will increase over time from credits, based on years of service and compensation levels, and quarterly interest accruals. The full-benefit vesting period for all participants is five years. Pacific Life’s funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in ERISA, plus such additional amounts as may be determined appropriate. Contributions are intended to provide not only for benefits attributed to employment to date but also for those expected to be earned in the future. All such contributions are made to a tax-exempt trust. Plan assets consist primarily of group annuity contracts issued by Pacific Life, as well as mutual funds managed by PIMCO.
In addition, Pacific Life maintains supplemental employee retirement plans (SERPs) for certain eligible employees. As of December 31, 2003 and 2002, the projected benefit obligation was $84 million and $75 million, respectively.
PL-37
During 2002, amounts transferred to the SERPs from another compensation plan, including related plan amendments, totaled $43 million. The fair value of plan assets as of December 31, 2003 and 2002 was zero. The net periodic benefit cost of the SERPs was $8 million, $6 million and $5 million for the years ended December 31, 2003, 2002 and 2001, respectively.
Components of the net periodic pension expense are as follows:
| Years Ended December 31, |
||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (In Millions) | ||||||||||||
| Service cost - benefits earned during the year |
$ | 16 | $ | 15 | $ | 14 | ||||||
| Interest cost on projected benefit obligation |
18 | 16 | 14 | |||||||||
| Expected return on plan assets |
(13 | ) | (14 | ) | (16 | ) | ||||||
| Amortization of net obligations and prior service cost |
4 | 1 | ||||||||||
| Net periodic pension expense |
$ | 25 | $ | 18 | $ | 12 | ||||||
The following tables set forth the changes in benefit obligation, plan assets and funded status reconciliation:
| December 31, |
||||||||
| 2003 | 2002 | |||||||
| (In Millions) | ||||||||
| Change in Benefit Obligation: |
||||||||
| Benefit obligation, beginning of year |
$ | 279 | $ | 208 | ||||
| Service cost |
16 | 15 | ||||||
| Interest cost |
18 | 16 | ||||||
| Transfer of liabilities and plan amendments |
43 | |||||||
| Actuarial loss |
24 | 13 | ||||||
| Benefits paid |
(22 | ) | (16 | ) | ||||
| Benefit obligation, end of year |
$ | 315 | $ | 279 | ||||
| Change in Plan Assets: |
||||||||
| Fair value of plan assets, beginning of year |
$ | 175 | $ | 181 | ||||
| Actual return on plan assets |
44 | (26 | ) | |||||
| Employer contributions |
45 | 36 | ||||||
| Benefits paid |
(22 | ) | (16 | ) | ||||
| Fair value of plan assets, end of year |
$ | 242 | $ | 175 | ||||
| Funded Status Reconciliation: |
||||||||
| Funded status |
($73 | ) | ($104) | |||||
| Unrecognized transition asset |
4 | 4 | ||||||
| Unrecognized prior service cost |
6 | 7 | ||||||
| Unrecognized actuarial loss |
58 | 69 | ||||||
| Accrued benefit liability |
($5 | ) | ($24 | ) | ||||
PL-38
| December 31, | |||||||
| 2003 | 2002 | ||||||
| (In Millions) | |||||||
| Amounts recognized in the consolidated statement of financial condition consist of: |
|||||||
| Prepaid benefit cost |
$ | 63 | |||||
| Accrued benefit liability |
(86 | ) | ($103 | ) | |||
| Intangible asset |
9 | 11 | |||||
| Accumulated other comprehensive income |
9 | 68 | |||||
| Net amount recognized |
($5 | ) | ($24 | ) | |||
| Other comprehensive (income) loss attributable to change in additional minimum pension liability |
($59 | ) | $68 | ||||
| December 31, | ||||||
| 2003 | 2002 | |||||
| Weighted-average assumptions used to determine benefit obligations |
||||||
| Discount rate |
6.00 | % | 6.75 | % | ||
| Rate of compensation increase |
4.00 | % | 4.00 | % | ||
| Year Ended December 31, | |||||
| 2003 | 2002 | ||||
| Weighted-average assumptions used to determine net periodic benefit costs |
|||||
| Discount rate |
6.75 | % | 7.00% | ||
| Expected long-term return on plan assets |
8.00 | % | 8.50% | ||
| Rate of compensation increase |
4.00 | % | 4.50% | ||
In developing the expected long-term rate of return on plan assets, the Company considers many factors. These factors consist of a review of historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the plan’s portfolio. The Company also considers current market conditions as well as the views of financial advisers and economists.
Benefit payments for the year ended December 31, 2003, amounted to $22 million. Pacific Life expects to contribute $23 million to the plans in 2004. The expected benefit payments are as follows (In Millions):
| Years Ending December 31: |
|||
| 2004 |
$ | 30 | |
| 2005 |
29 | ||
| 2006 |
30 | ||
| 2007 |
34 | ||
| 2008 |
30 | ||
| 2009-2013 |
152 | ||
PL-39
The Company’s pension plans weighted average asset allocations by asset category are as follows:
| December 31, |
||||||
| 2003 | 2002 | |||||
| Asset Category |
||||||
| Equity-type investments |
67 | % | 62 | % | ||
| Fixed income investments |
33 | % | 38 | % | ||
| Total |
100 | % | 100 | % | ||
It is intended that the defined benefit pension plan assets be invested in equity-type and fixed income investments, as long as the investments are consistent with the assumption of more than average risk and appropriate overall diversification is maintained and liquidity is sufficient to meet cash flow requirements. The targeted portfolio allocation is 70-80% equity-type and 20-30% fixed income investments. The defined benefit pension plan establishes and maintains a fundamental and long-term orientation in the determination of asset mix and selection of investment funds. This tolerance for more than average risk and long-term orientation provides the basis for a larger allocation to equities with some additional bias to higher risk investments for higher return.
POSTRETIREMENT BENEFITS
Pacific Life provides a defined benefit health care plan and a defined benefit life insurance plan (the Plans) that provide postretirement benefits for all eligible retirees and their dependents. Generally, qualified employees may become eligible for these benefits if they reach normal retirement age, have been covered under Pacific Life’s policy as an active employee for a minimum continuous period prior to the date retired, and have an employment date before January 1, 1990. The Plans contain cost-sharing features such as deductibles and coinsurance, and require retirees to make contributions which can be adjusted annually. Pacific Life’s commitment to qualified employees who retire after April 1, 1994 is limited to specific dollar amounts. Pacific Life reserves the right to modify or terminate the Plans at any time. As in the past, the general policy is to fund these benefits on a pay-as-you-go basis.
The net periodic postretirement benefit cost for each of the years ended December 31, 2003, 2002 and 2001 was $1 million. As of December 31, 2003 and 2002, the accumulated benefit obligation was $21 million and $19 million, respectively. The fair value of the plan assets as of December 31, 2003 and 2002 was zero. The amount of accrued benefit cost included in other liabilities was $22 million and $23 million as of December 31, 2003 and 2002, respectively.
The Plans include both indemnity and HMO coverage. The assumed health care cost trend rate used in measuring the accumulated benefit obligation was 12.0% and 13.0% for 2003 and 2002, respectively, and is assumed to decrease gradually to 5.0% in 2010 and remain at that level thereafter.
The amount reported is materially affected by the health care cost trend rate assumptions. If the health care cost trend rate assumptions were increased by 1%, the accumulated postretirement benefit obligation as of December 31, 2003 would be increased by 7.3%, and the aggregate of the service and interest cost components of the net periodic benefit cost would increase by 8.6%. If the health care cost trend rate assumptions were decreased by 1%, the accumulated postretirement benefit obligation as of December 31, 2003 would be decreased by 6.4%, and the aggregate of the service and interest cost components of the net periodic benefit cost would decrease by 7.6%.
The discount rate used in determining the accumulated postretirement benefit obligation was 6.0% and 6.75% for 2003 and 2002, respectively.
PL-40
Benefit payments for the year ended December 31, 2003 amounted to $2 million, which included $1 million of participant contributions. The expected benefit payments are as follows (In Millions):
| Years Ending December 31: |
|||
| 2004 |
$ | 2 | |
| 2005 |
3 | ||
| 2006 |
3 | ||
| 2007 |
3 | ||
| 2008 |
3 | ||
| 2009-2013 |
15 | ||
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was enacted. As of December 31, 2003, the Company’s retiree medical plan provides prescription drug coverage for eligible retirees. On January 12, 2004, the FASB issued FASB Staff Position (FSP) No. 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003. FSP No. 106-1 permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one time election to defer accounting for the effects of the Act, which the Company did in January 2004. The information relating to the postretirement benefits described in this note does not reflect the effects of the Act. Once specific authoritative guidance on the accounting for the Federal subsidy provided to plan sponsors when their plans provide prescription drug coverage is available, the Company will reflect the Act in the liabilities associated with the postretirement benefits described herein.
OTHER PLANS
Pacific Life provides a voluntary Retirement Incentive Savings Plan (RISP) pursuant to Section 401(k) of the Internal Revenue Code covering all eligible employees of Pacific LifeCorp and certain of its subsidiaries. Pacific Life’s RISP matches 75% of each employee’s contributions, up to a maximum of 6.0% of eligible employee compensation, to an Employee Stock Ownership Plan (ESOP). ESOP contributions made by the Company amounted to $11 million, $10 million and $9 million for the years ended December 31, 2003, 2002 and 2001, respectively, and are included in operating expenses.
The ESOP was formed at the time of the Conversion and is only available to the participants of the RISP in the form of matching contributions. Pacific LifeCorp issued 1.7 million shares of common stock to the ESOP in 1997, in exchange for a promissory note of $21 million bearing an interest rate of 6.5%. Interest and principal payments are due semiannually in equal installments through September 2, 2012. In 1999, Pacific Life loaned cash to the ESOP to pay off the promissory note due Pacific LifeCorp. The interest rate was reduced to 6.0% effective September 2, 1999. This loan was repaid in 2002.
On January 9, 2002, Pacific Life loaned cash of $46 million to the ESOP in exchange for a 5.5% promissory note due January 9, 2017. The ESOP then purchased 2 million shares of newly issued common stock of Pacific LifeCorp at a price of $23.00 per share in exchange for cash. These newly issued shares were purchased in order for the ESOP to maintain its matching contributions to participants in the plan. Interest and principal payments made by the ESOP to Pacific Life are funded by contributions from Pacific Life.
Amounts loaned to the ESOP by Pacific Life are included in unearned ESOP shares. The unearned ESOP shares account is reduced as ESOP shares are released for allocation to participants through ESOP contributions by Pacific Life. In addition, when the fair value of ESOP shares being released for allocation to participants is different from the original issue price of those shares, the difference is recorded in paid-in capital.
The Company has deferred compensation plans that permit eligible employees to defer portions of their compensation and earn interest on the deferred amounts. The interest rate is determined annually. The compensation that has been deferred has been accrued and the primary expense related to this plan, other than compensation, is interest on the deferred amounts. The Company also has performance-based incentive compensation plans for its employees.
PL-41
| 17. | TRANSACTIONS WITH AFFILIATES |
Pacific Life serves as the investment adviser for the Pacific Select Fund, the investment vehicle provided to the Company’s variable life and variable annuity contractholders, and the Pacific Funds (Note 15). Pacific Life charges advisory and other fees based primarily upon the net asset value of the underlying portfolios. These charges amounted to $141 million, $123 million and $120 million for the years ended December 31, 2003, 2002 and 2001, respectively, and are included in other income. In addition, Pacific Life provides certain support services to the Pacific Select Fund, the Pacific Funds and other affiliates based on an allocation of actual costs. Fees amounted to $4 million, $4 million and $1 million for the years ended December 31, 2003, 2002 and 2001, respectively.
Included in insurance premiums are amounts ceded to subsidiaries of Scottish (Note 6), of $16 million and $3 million for the years ended December 31, 2003 and 2002, respectively.
PAM has an agreement to loan Pacific LifeCorp up to $350 million at variable rates. The outstanding balance as of December 31, 2002 was $76 million. The interest rate as of December 31, 2002 was 1.7%. This loan was repaid during 2003.
PAM had an agreement to loan ACG up to $100 million at variable rates. The outstanding balance as of December 31, 2002 was $11 million. The interest rate as of December 31, 2002 was 3.4%. This loan was repaid during 2003.
PAM has an agreement to loan Pacific Asset Funding, LLC (PAF), a wholly owned subsidiary of Pacific LifeCorp, up to $53 million at variable rates. The outstanding balance as of December 31, 2002 was $19 million. The interest rate as of December 31, 2002 was 1.6%. This loan was repaid during 2003.
| 18. | COMMITMENTS AND CONTINGENCIES |
The Company has outstanding commitments to make investments, primarily in fixed maturity securities, mortgage loans, limited partnerships and other investments, as follows (In Millions):
| Years Ending December 31: |
|||
| 2004 |
$ | 833 | |
| 2005 through 2008 |
691 | ||
| 2009 and thereafter |
131 | ||
| Total |
$ | 1,655 | |
The Company leases office facilities under various noncancelable operating leases. Rent expense, which is included in operating expenses, in connection with these leases was $17 million, $16 million and $15 million for the years ended December 31, 2003, 2002 and 2001, respectively. Aggregate minimum future commitments are as follows (In Millions):
| Years Ending December 31: |
|||
| 2004 |
$ | 18 | |
| 2005 through 2008 |
52 | ||
| 2009 and thereafter |
20 | ||
| Total |
$ | 90 | |
In December 2002, Pacific Life entered into a participation agreement with a third-party lender to share in the liquidity commitment for outstanding borrowings of a credit facility of ACG for amounts in excess of $500 million. As of December 31, 2002, Pacific Life’s share of this facility was $45 million. The facility was repaid in 2003 upon which the liquidity commitment related to the facility was extinguished.
PL-42
Pacific Life and PAM have an operating agreement in which Pacific Life at all times will be the managing member of PAM and Pacific Life will cause PAM to maintain certain financial ratios. Pacific Life’s support is limited to a maximum of $350 million. Additionally, in connection with the operations of certain of the Company’s broker-dealer subsidiaries, Pacific Life has made commitments to provide for additional capital funding as may be required.
The Company is a respondent in a number of legal proceedings, some of which involve allegations for extra-contractual damages. In the opinion of management, the outcome of the foregoing proceedings is not likely to have a material adverse effect on the consolidated financial position or results of operations of the Company.
The Company has from time to time divested certain of its businesses. In connection with such divestitures, there may be lawsuits, claims and proceedings instituted or asserted against the Company related to the period that the businesses were owned by the Company or pursuant to indemnifications provided by the Company in connection with the respective transactions, with terms that range in duration and often are not explicitly defined. Because the amounts of these types of indemnifications often are not explicitly stated, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. The Company has not historically made significant payments for these indemnifications. The estimated maximum potential amount of future payments under these obligations is not determinable due to the lack of a stated maximum liability for certain matters and therefore no related liability has been recorded. Management believes that judgments, if any, against the Company related to such matters is not likely to have a material adverse effect on the consolidated financial position or results of operations of the Company.
The Company provides routine indemnifications relating to lease agreements. Currently, the Company has several such agreements in place with various expiration dates. Based on historical experience and evaluation of the specific indemnities, management believes that judgments, if any, against the Company related to such matters is not likely to have a material adverse effect on the consolidated financial position or results of operations of the Company.
The Company operates in a business environment, which is subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, interest rate risk, investment market risk, credit risk and legal and regulatory changes.
Interest rate risk is the potential for interest rates to change, which can cause fluctuations in the value of investments, the liabilities for future policy benefits and the carrying amount of DAC. To the extent that fluctuations in interest rates cause the duration of assets and liabilities to differ, the Company may have to sell assets prior to their maturity and realize losses. The Company controls its exposure to this risk by utilizing, among other things, asset/liability matching techniques that attempt to match the duration of assets and liabilities and utilization of derivative instruments. Additionally, the Company includes contractual provisions limiting withdrawal rights for certain of its products. A substantial portion of the Company’s liabilities is not subject to surrender or can be surrendered only after deduction of a surrender charge or a market value adjustment.
The Company’s investments in equity related securities and results from its variable products, including the carrying amount of DAC, are subject to changes in equity prices and the capital markets.
Credit risk is the risk that issuers of investments owned by the Company may default or that other parties may not be able to pay amounts due to the Company. The Company manages its investments to limit credit risk by diversifying its portfolio among various security types and industry sectors. The credit risk of financial instruments is controlled through credit approval procedures, limits and ongoing monitoring. Real estate and mortgage loan investment risks are limited by diversification of geographic location and property type. Management does not believe that significant concentrations of credit risk exist.
The Company is also exposed to credit loss in the event of nonperformance by the counterparties to interest rate swap contracts and other derivative securities. The Company manages this risk through credit approvals and limits on exposure to any specific counterparty and obtaining collateral. However, the Company does not anticipate nonperformance by the counterparties. The Company determines counterparty credit quality by reference to ratings from independent rating agencies or, where such ratings are not available, by internal analysis.
PL-43
The Company is subject to various state and Federal regulatory authorities. The potential exists for changes in regulatory initiatives which can result in additional, unanticipated expense to the Company. Existing Federal laws and regulations affect the taxation of life insurance or annuity products and insurance companies. There can be no assurance as to what, if any, cases might be decided or future legislation might be enacted, or if decided or enacted, whether such cases or legislation would contain provisions with possible negative effects on the Company’s life insurance or annuity products.
PL-44
PART II
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A: None
Part B:
| (1) | Registrant’s Financial Statements |
Audited Financial Statements dated as of December 31, 2003 which are incorporated by reference from the 2003 Annual Report include the following for Separate Account A:
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
| (2) | Depositor’s Financial Statements |
Audited Consolidated Financial Statements dated as of December 31, 2003 and 2002, and for the three year period ended December 31, 2003, included in Part B include the following for Pacific Life:
Independent Auditors’ Report
Consolidated Statements of Financial Condition
Consolidated Statements of Operations
Consolidated Statements of Stockholder’s Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
| (b) | Exhibits |
| 1. (a) | Resolution of the Board of Directors of the Depositor authorizing establishment of Separate Account A and Memorandum establishing Separate Account A.1 |
| (b) | Memorandum Establishing Two New Variable Accounts—Aggressive Equity and Emerging Markets Portfolios.1 |
| (c) | Resolution of the Board of Directors of Pacific Life Insurance Company authorizing conformity to the terms of the current Bylaws.1 |
II-1
| 2. |
Not applicable
| |||||
| 3. |
(a) | Distribution Agreement between Pacific Mutual Life and Pacific Select Distributors, Inc (PSD)1
| ||||
| (b) | Form of Selling Agreement between Pacific Mutual Life, PSD and Various Broker-Dealers1
| |||||
| 4. |
(a) | (1) | Pacific Innovations—Form of Individual Flexible Premium Deferred Variable Annuity Contract (Form No. 10-12600)1
| |||
| (2) | Pacific Innovations Select—Form of Individual Flexible Premium Deferred Variable Annuity Contract (Form No. 10-10300)11
| |||||
| (b) | Qualified Pension Plan Rider (Form No. R90-PEN-V)1
| |||||
| (c) | 403(b) Tax-Sheltered Annuity Rider10
| |||||
| (d) | Section 457 Plan Rider (Form No. 24-123799)1
| |||||
| (e) | Individual Retirement Annuity Rider (Form No. 20-18900)11
| |||||
| (f) | Roth Individual Retirement Annuity Rider (Form No. 20-19000)11
| |||||
| (g) | SIMPLE Individual Retirement Annuity Rider (Form No. 20-19100)11
| |||||
| (h) | Qualified Retirement Plan Rider10
| |||||
| (i) | (1) | Pacific Innovations—Stepped-Up Death Benefit Rider (Form No. 20-12601)1
| ||||
| (2) | Pacific Innovations Select—Stepped-Up Death Benefit Rider (Form No. 20-13500)5
| |||||
| (j) | (1) | Premier Death Benefit Rider (Form No. 20-12602)1
| ||||
| (2) | Premier Death Benefit Rider (Form No. 20-18000)11
| |||||
| (k) | Guaranteed Earnings Enhancement (EEG) Rider (Form No. 20-14900)6
| |||||
| (l) | Guaranteed Income Advantage (GIA) Rider (Form No. 20-15100)8
| |||||
| (m) | Form of Guaranteed Protection Advantage (GPA) Rider (Form No. 20-16200)9
| |||||
| (n) | Form of Guaranteed Protection Advantage 5 Rider (Form No. 20-19500)
| |||||
| (o) | (1) Income Access Rider (Form No. 20-19800)12
| |||||
| (2) | Form of Income Access Rider (Form No. 20-1104)
| |||||
| (p) | Pacific Innovations Select—DCA Plus Fixed Option Rider (Form No. 20-1103)14
| |||||
| (q) | Form of Guaranteed Income Advantage II Rider (Form No. 20-1109)
| |||||
| (r) | Form of Guaranteed Income Advantage 5 Rider (Form No. 20-1102)
| |||||
| 5. |
(a) | (1) | Pacific Innovations—Variable Annuity Application (Form No. 25-12610)4
| |||
| (2) | Pacific Innovations Select – Variable Annuity Application (Form No. 25-10300)11
| |||||
| (b) | Variable Annuity PAC APP1
| |||||
| (c) | Application/Confirmation Form2
| |||||
| (d) | Guaranteed Income Advantage (GIA) Rider Request (Form No. 1209-1A)9
| |||||
| (e) | Form of Guaranteed Earnings Enhancement (EEG) Rider Request Application6
| |||||
| (f) | Form of Guaranteed Protection Advantage (GPA) Rider Request (Form No. 55-16600)9
| |||||
| (g) | Form of Guaranteed Protection Advantage 5 Rider Request Form (Form No. 2311-BA)12
| |||||
| (h) | Form of Income Access Rider Request Form (Form No. 2315-3A)12
| |||||
| 6. |
(a) | Pacific Life’s Articles of Incorporation1
| ||||
| (b) | By-laws of Pacific Life1
| |||||
| 7 |
Not applicable
| |||||
| 8. |
(a) | Fund Participation Agreement7
| ||||
| (b) | Addendum to the Fund Participation Agreement (to add the Strategic Value and Focused 30 Portfolios) 7
| |||||
| (c) | Addendum to the Fund Participation Agreement (to add nine new Portfolios)7
| |||||
| (d) | Addendum to the Fund Participation Agreement (to add the Equity Income and Research Portfolios)10
| |||||
| 9 |
Opinion and Consent of legal officer of Pacific Life as to the legality of Contracts being registered.1 | |||||
II-2
| 10. |
Independent Auditors’ Consent
| |||
| 11. |
Not applicable
| |||
| 12. |
Not applicable
| |||
| 13. |
(1) | Pacific Innovations – Performance Calculations13
| ||
| (2) | Pacific Innovations Select—Performance Calculations13
| |||
| 14. | Not applicable
| |||
| 15. | Powers of Attorney10
| |||
| 16. | Not applicable | |||
| 1 | Included in Registrant’s Form N-4, File No. 333-93059, Accession No. 0000912057-99-009849 filed on December 17, 1999 and incorporated by reference herein. |
| 2 | Included in Registrant’s Form N-4, File No. 333-93059, Accession No. 0000912057-00-015739 filed on March 31, 2000 and incorporated by reference herein. |
| 3 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0000912057-00-018010 filed on April 14, 2000 and incorporated by reference herein. |
| 4 | Included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0000912057-00-052614 filed on December 7, 2000 and incorporated by reference herein. |
| 5 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0000912057-00-055027 filed on December 28, 2000 and incorporated by reference herein. |
| 6 | Included in Registrant’s Form N-4/A, File No. 333-93059 Accession No. 0000912057-01-007165 filed on March 2, 2001 and incorporated by reference herein. |
| 7 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0000912057-01-510459 filed on April 25, 2001 and incorporated by reference herein. |
| 8 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0001017062-01-500247 filed on May 10, 2001 and incorporated by reference herein. |
| 9 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0000898430-01-503115 filed on October 25, 2001 and incorporated by reference herein. |
| 10 | Included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0001017062-02-000788 filed on April 30, 2002 and incorporated by reference herein. |
| 11 | Included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0001017062-02-002149 filed on December 19, 2002 and incorporated by reference herein. |
| 12 | Included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0001017062-03-000460 filed on March 18, 2003 and incorporated by reference herein. |
| 13 | Included in Registrant’s Form N-4/B, File No. 333-93059, Accession No. 0001017062-03-000934 filed on April 25, 2003 and incorporated by reference herein. |
| 14 | Included in Registrant’s Form N-4/A, File No. 333-93059, Accession No. 0001193125-03-099264 filed on December 24, 2003 and incorporated by reference herein. |
Item 25. Directors and Officers of Pacific Life
| Name and Address | Positions and Offices with Pacific Life
| |
| Thomas C. Sutton |
Director, Chairman of the Board, and Chief Executive Officer
| |
| Glenn S. Schafer |
Director and President
| |
| Khanh T. Tran |
Director, Executive Vice President and Chief Financial Officer
| |
| David R. Carmichael |
Director, Senior Vice President and General Counsel
| |
| Audrey L. Milfs |
Director, Vice President and Corporate Secretary
| |
| Edward R. Byrd |
Vice President and Controller
| |
| Brian D. Klemens |
Vice President and Treasurer
| |
| Gerald W. Robinson |
Executive Vice President |
The address for each of the persons listed above is as follows:
700 Newport Center Drive
Newport Beach, California 92660
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| Item 26. | Persons Controlled by or Under Common Control with Pacific Life or Separate Account A |
The following is an explanation of the organization chart of Pacific Life’s subsidiaries:
PACIFIC LIFE, SUBSIDIARIES & AFFILIATED ENTERPRISES
LEGAL STRUCTURE
Pacific Life is a California Stock Life Insurance Company wholly-owned by Pacific LifeCorp (a Delaware Stock Holding Company) which is, in turn, 98% owned by Pacific Mutual Holding Company (a California Mutual Holding Company). Other subsidiaries of Pacific LifeCorp are: a 91% ownership of Aviation Capital Group Holding Corp. (a Delaware Corporation); College Savings Bank (a New Jersey Chartered Capital Stock Savings Bank) and its subsidiary College Savings Trust (a Montana Chartered Uninsured Trust Company); M.L. Stern & Co., LLC (a Delaware Limited Liability Company) and its subsidiary Tower Asset Management, LLC (a Delaware Limited Liability Company); Pacific Asset Funding, LLC (a Delaware Limited Liability Company) and its subsidiaries PL Trading Company, LLC (a Delaware Limited Liability Company) and Pacific Life Trade Services, Limited (a Hong Kong Limited Corporation); and Pacific Life & Annuity Services, Inc. (a Colorado Corporation). A Subsidiary of Aviation Capital Group Holding Corp., is Aviation Capital Group Corp. (a Delaware Corporation), which in turn, is the parent of: ACG Acquisition V Corporation (a Delaware Corporation), and ACG Trust II Holding LLC, and has a 50% ownership of ACG Acquisition VI LLC (a Nevada Limited Liability Company); and a 33% ownership of ACG Acquisition IX LLC. ACG Trust II Holding LLC owns Aviation Capital Group Trust II (a Delaware statutory trust), which in turn owns ACG Acquisition XXV LLC, ACG Acquisition XXVI LLC, and ACG Acquisition XXIX LLC. Subsidiaries of ACG Acquisition XXV LLC are ACG Acquisition 37-38 LLCS and ACG Acquisition Ireland II, Limited (an Irish Corporation); ACG Acquisition XXVI LLC; and ACG Acquisition XXVII LLC. Subsidiaries of ACG Acquisition VI LLC are: a 34% ownership of ACG Acquisition VIII LLC; a 20% ownership of ACG Acquisition XIV LLC; and a 20% ownership of ACG Acquisition XIX LLC, which in turn owns ACG Acquisition XIX Holding LLC, which owns Aviation Capital Group Trust (a Delaware statutory trust). Subsidiaries of Aviation Capital Group Trust are: ACG Acquisition XV LLC; ACG Acquisition XX LLC and its subsidiary ACG Acquisition Ireland, Limited (an Irish Corporation); and ACG Acquisition XXI, LLC and ACG Acquisition XXIX LLC. Subsidiaries of ACG Acquisition XXIX LLC are: ACG Acquisition XXX LLCs; ACG Acquisition 35 LLC; ACG Acquisition 32-34, 36 and 39 LLCs; and ACGFS LLC. Pacific Life is the parent company of: Pacific Life & Annuity Company (an Arizona Stock Life Insurance Company); Pacific Select Distributors, Inc.; Pacific Asset Management LLC (a Delaware Limited Liability Company); Confederation Life Insurance and Annuity Company (a Georgia Company); a 9% ownership of Scottish Re Group Limited [(a Cayman Islands Holding Company) abbreviated structure]; a 95% ownership of Grayhawk Golf Holdings, LLC (a Delaware Limited Liability Company), and its subsidiary Grayhawk Golf L.L.C. (an Arizona Limited Liability Company); a 67% ownership of Pacific Mezzanine Associates, L.L.C. (a Delaware Limited Liability Company) and its subsidiary Pacific Mezzanine Investors, L.L.C., (a Delaware Limited Liability Company) who is the sole general partner of the PMI Mezzanine Fund, L.P. (a Delaware Limited Partnership); Las Vegas Golf I, LLC (a Delaware Limited Liability Company); Las Vegas Golf II, LLC (a Delaware Limited Liability Company); and North Carolina Property, LLC (a Delaware Limited Liability Company). Subsidiaries of Pacific Asset Management LLC are: a 21% ownership of Carson-Pacific LLC (a Delaware Limited Liability Company); PMRealty Advisors Inc.; a non-managing membership interest in Allianz-PacLife Partners LLC (a Delaware Limited Liability Company); and Pacific Financial Products Inc. (a Delaware Corporation). Allianz-PacLife Partners LLC and Pacific Financial Products, Inc., own the Class E units of Allianz Dresdner Asset Management of America L.P. (a Delaware Limited Partnership). Subsidiaries of Pacific Select Distributors, Inc., include: Associated Financial Group, Inc., Mutual Service Corporation (a Michigan Corporation), United Planners’ Group, Inc. (an Arizona Corporation), and a 62% ownership of Waterstone Financial Group, Inc. (an Illinois Corporation). Subsidiaries of Associated Financial Group, Inc., are Associated Planners Investment Advisory, Inc., Associated Securities Corp., West Coast Realty Management, Inc., Associated Planners Securities Corporation of Nevada, Inc. (a Nevada Corporation), and West Coast Realty Advisors, Inc. Subsidiaries of Mutual Service Corporation are Advisors’ Mutual Service Center, Inc. (a Michigan Corporation) and Contemporary Financial Solutions, Inc. (a Delaware Corporation). United Planners’ Group, Inc. is the general partner and holds an approximate 45% general partnership interest in United Planners’ Financial Services of America (an Arizona Limited Partnership). Subsidiaries of United Planners’ Financial Services of America are UPFSA Insurance Agency of Arizona, Inc. (an Arizona Corporation), UPFSA Insurance Agency of California, Inc., United Planners Insurance Agency of Massachusetts, Inc. (a Massachusetts Corporation). All corporations are 100% owned unless otherwise indicated. All entities are California corporations unless otherwise indicated.
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Item 27. Number of Contractholders
| (1) Pacific Innovations – Approximately |
2,669 | Qualified | ||
| 2,419 | Non Qualified | |||
| (2) Pacific Innovations Select – Approximately |
30,691 | Qualified | ||
| 19,915 | Non Qualified |
Item 28. Indemnification
| (a) | The Distribution Agreement between Pacific Life and Pacific Select Distributors, Inc. (PSD) provides substantially as follows: |
Pacific Life hereby agrees to indemnify and hold harmless PSD and its officers and directors, and employees for any expenses (including legal expenses), losses, claims, damages, or liabilities incurred by reason of any untrue statement or representation of a material fact or any omission or alleged omission to state a material fact required to be stated to make other statements not misleading, if made in reliance on any prospectus, registration statement, post-effective amendment thereof, or sales materials supplied or approved by Pacific Life or the Separate Account. Pacific Life shall reimburse each such person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, liability, damage, or claim. However, in no case shall Pacific Life be required to indemnify for any expenses, losses, claims, damages, or liabilities which have resulted from the willful misfeasance, bad faith, negligence, misconduct, or wrongful act of PSD.
PSD hereby agrees to indemnify and hold harmless Pacific Life, its officers, directors, and employees, and the Separate Account for any expenses, losses, claims, damages, or liabilities arising out of or based upon any of the following in connection with the offer or sale of the contracts: (1) except for such statements made in reliance on any prospectus, registration statement or sales material supplied or approved by Pacific Life or the Separate Account, any untrue or alleged untrue statement or representation is made; (2) any failure to deliver a currently effective prospectus; (3) the use of any unauthorized sales literature by any officer, employee or agent of PSD or Broker; (4) any willful misfeasance, bad faith, negligence, misconduct or wrongful act. PSD shall reimburse each such person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, liability, damage, or claim.
| (b) | The Form of Selling Agreement between Pacific Life, Pacific Select Distributors, Inc. (PSD) and Various Broker-Dealers provides substantially as follows: |
Pacific Life and PSD agree to indemnify and hold harmless Selling Broker-Dealer and General Agent, their officers, directors, agents and employees, against any and all losses, claims, damages or liabilities to which they may become subject under the 1933 Act, the 1934 Act, or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
II-5
out of or are based upon any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact required to be stated or necessary to make the statements made not misleading in the registration statement for the Contracts or for the shares of Pacific Select Fund (the “Fund”) filed pursuant to the 1933 Act, or any prospectus included as a part thereof, as from time to time amended and supplemented, or in any advertisement or sales literature approved in writing by Pacific Life and PSD pursuant to Section IV.E. of this Agreement.
Selling Broker-Dealer and General Agent agree to indemnify and hold harmless Pacific Life, the Fund and PSD, their officers, directors, agents and employees, against any and all losses, claims, damages or liabilities to which they may become subject under the 1933 Act, the 1934 Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (a) any oral or written misrepresentation by Selling Broker-Dealer or General Agent or their officers, directors, employees or agents unless such misrepresentation is contained in the registration statement for the Contracts or Fund shares, any prospectus included as a part thereof, as from time to time amended and supplemented, or any advertisement or sales literature approved in writing by Pacific Life and PSD pursuant to Section IV.E. of this Agreement, (b) the failure of Selling Broker-Dealer or General Agent or their officers, directors, employees or agents to comply with any applicable provisions of this Agreement or (c) claims by Sub-agents or employees of General Agent or Selling Broker-Dealer and General Agent will reimburse Pacific Life or PSD or any director, officer, agent or employee of either entity for any legal or other expenses reasonably incurred by Pacific Life, PSD, or such officer, director, agent or employee in connection with investigating or defending any such loss, claims, damages, liability or action. This indemnity agreement will be in addition to any liability which Broker-Dealer may otherwise have.
II-6
Item 29. Principal Underwriters
| (a) | PSD also acts as principal underwriter for Pacific Select Variable Annuity Separate Account, Separate Account B, Pacific Corinthian Variable Separate Account, Pacific Select Separate Account, Pacific Select Exec Separate Account, COLI Separate Account, COLI II Separate Account, COLI III Separate Account, Separate Account A of Pacific Life & Annuity Company, Pacific Select Exec Separate Account of Pacific Life & Annuity Company, |
| (b) | For information regarding PSD, reference is made to Form B-D, SEC File No. 8-15264, which is herein incorporated by reference. |
| (c) | PSD retains no compensation or net discounts or commissions from the Registrant. |
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules under that section will be maintained by Pacific Life at 700 Newport Center Drive, Newport Beach, California 92660.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The registrant hereby undertakes:
| (a) | to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in this registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted, unless otherwise permitted. |
| (b) | to include either (1) as a 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, or (3) to deliver a Statement of Additional Information with the Prospectus. |
| (c) | 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. |
II-7
Additional Representations
(a) The Registrant and its Depositor are relying upon American Council of Life Insurance, SEC No-Action Letter, SEC Ref. No. 1P-6-88 (November 28, 1988) with respect to annuity contracts offered as funding vehicles for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code, and the provisions of paragraphs (1)-(4) of this letter have been complied with.
(b) The Registrant and its Depositor are relying upon Rule 6c-7 of the Investment Company Act of 1940 with respect to annuity contracts offered as funding vehicles to participants in the Texas Optional Retirement Program, and the provisions of Paragraphs (a)-(d) of the Rule have been complied with.
(c) REPRESENTATION PURSUANT TO SECTION 26(f) OF THE INVESTMENT COMPANY ACT OF 1940: Pacific Life Insurance Company and Registrant represent that the fees and charges to be deducted under the Variable Annuity Contract (“Contract”) described in the prospectus contained in this registration statement are, in the aggregate, reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed in connection with the Contract.
II-8
SIGNATURES
Pursuant to the requirements of 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 Post-Effective Amendment No. 15 to the Registration Statement on Form N-4 to be signed on its behalf by the undersigned thereunto duly authorized in the City of Newport Beach, and the State of California on this 27th day of February.
| SEPARATE ACCOUNT
A (Registrant) | ||
| By: |
PACIFIC LIFE INSURANCE COMPANY | |
| By: |
| |
| Thomas C. Sutton* Chairman and Chief Executive Officer | ||
| By: |
PACIFIC LIFE INSURANCE COMPANY | |
| (Depositor) | ||
| By: |
| |
| Thomas C. Sutton* Chairman and Chief Executive Officer | ||
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 15 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
| Signature |
Title |
Date | ||
Thomas C. Sutton* |
Director, Chairman of the Board and Chief Executive Officer | February 27, 2004 | ||
|
Glenn S. Schafer* |
Director and President | February 27, 2004 | ||
Khanh T. Tran* |
Director, Executive Vice President and Chief Financial Officer | February 27, 2004 | ||
David R. Carmichael* |
Director, Senior Vice President and General Counsel | February 27, 2004 | ||
Audrey L. Milfs* |
Director, Vice President and Corporate Secretary | February 27, 2004 | ||
Edward R. Byrd* |
Vice President and Controller | February 27, 2004 | ||
Brian D. Klemens* |
Vice President and Treasurer | February 27, 2004 | ||
Gerald W. Robinson* |
Executive Vice President | February 27, 2004 | ||
| *By: | /s/ DAVID R. CARMICHAEL |
February 27, 2004 | ||||||||||||||||||||||||||||
| David R. Carmichael as attorney-in-fact |
||||||||||||||||||||||||||||||
(Powers of Attorney are contained in Post-Effective Amendment No. 9 of the Registration Statement filed on Form N-4/B for Separate Account A, File No. 333-93059, Accession No. 0001017062-02-000788 filed on April 30, 2002, as Exhibit 15.)
II-9
| This ‘485BPOS’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/30/23 | ||||
| 1/9/17 | ||||
| 9/2/12 | ||||
| 12/15/04 | ||||
| Corrected on: | 4/21/04 | |||
| 3/1/04 | ||||
| Filed on / Effective on: | 2/27/04 | 485BPOS, NSAR-U | ||
| 2/23/04 | ||||
| 1/12/04 | ||||
| 12/31/03 | 24F-2NT, N-30D, NSAR-U | |||
| 12/24/03 | 485APOS | |||
| 12/15/03 | ||||
| 12/8/03 | ||||
| 10/1/03 | ||||
| 7/1/03 | ||||
| 6/30/03 | 485BPOS | |||
| 6/1/03 | ||||
| 5/31/03 | ||||
| 5/1/03 | ||||
| 4/25/03 | 485BPOS | |||
| 3/18/03 | 485BPOS | |||
| 3/10/03 | ||||
| 2/1/03 | ||||
| 1/31/03 | ||||
| 1/1/03 | ||||
| 12/31/02 | 24F-2NT, N-30D, NSAR-U | |||
| 12/19/02 | 485BPOS | |||
| 11/1/02 | ||||
| 4/30/02 | 485BPOS | |||
| 1/9/02 | ||||
| 1/7/02 | ||||
| 1/2/02 | ||||
| 1/1/02 | ||||
| 12/31/01 | 24F-2NT, 485BPOS, N-30D, NSAR-U | |||
| 10/25/01 | 485APOS | |||
| 5/10/01 | 485APOS | |||
| 4/25/01 | 485BPOS | |||
| 4/9/01 | ||||
| 4/6/01 | ||||
| 4/5/01 | ||||
| 4/4/01 | ||||
| 4/3/01 | 497 | |||
| 4/2/01 | 497 | |||
| 3/2/01 | 485APOS | |||
| 1/9/01 | ||||
| 1/4/01 | 497 | |||
| 1/3/01 | 497 | |||
| 1/2/01 | ||||
| 1/1/01 | ||||
| 12/28/00 | 485APOS | |||
| 12/7/00 | 485BPOS, 497 | |||
| 10/2/00 | 497 | |||
| 7/1/00 | ||||
| 5/5/00 | 497 | |||
| 5/1/00 | ||||
| 4/14/00 | N-4/A | |||
| 3/31/00 | N-4/A | |||
| 1/3/00 | ||||
| 12/20/99 | 497, N-4 | |||
| 12/17/99 | ||||
| 10/1/99 | ||||
| 9/2/99 | ||||
| 1/4/99 | ||||
| 1/1/99 | ||||
| 4/1/94 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/15/24 Sep Acct A of Pacific Life Ins Co 485BPOS 5/01/24 4:15M Toppan Merrill/FA 4/17/23 Sep Acct A of Pacific Life Ins Co 485BPOS 5/01/23 3:14M Toppan Merrill/FA 4/18/22 Sep Acct A of Pacific Life Ins Co 485BPOS 5/01/22 3:52M Toppan Merrill/FA 10/20/21 Sep Acct A of Pacific Life Ins Co 485BPOS 10/20/21 2:626K Toppan Merrill/FA 4/19/21 Sep Acct A of Pacific Life Ins Co 485BPOS 5/01/21 4:38M Toppan Merrill/FA |