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American National Variable Annuity Separate Account, et al. – ‘485BPOS’ on 4/29/16

On:  Friday, 4/29/16, at 5:11pm ET   ·   Effective:  5/1/16   ·   Accession #:  1193125-16-569985   ·   File #s:  333-30318, 811-07600

Previous ‘485BPOS’:  ‘485BPOS’ on 4/28/15   ·   Next & Latest:  ‘485BPOS’ on 4/27/17

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/29/16  American Nat’l Var Annuity … Acct 485BPOS     5/01/16    4:6.2M                                   RR Donnelley/FAAmerican National Variable Annuity Separate Account WealthQuest III Group Unallocated Variable AnnuityWealthQuest III Variable Annuity

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Va 2016 Registration Statement                      HTML   3.74M 
 4: EX-99.10    Consent                                             HTML      6K 
 2: EX-99.6(B)  Copy of the By-Laws of the Depositor                HTML     43K 
 3: EX-99.9     An Opinion and Consent of Counsel                   HTML     10K 


485BPOS   —   Va 2016 Registration Statement
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Table of Contents
"Glossary
"Synopsis
"What is the purpose of the Contract?
"What are my investment options?
"How do I purchase a Contract?
"How do I allocate Purchase Payments?
"Can I transfer amounts among the investment alternatives?
"What is the death benefit under the Contract?
"Can I get my money if I need it?
"How can I receive annuity payments?
"What are the charges and deductions under the Contract?
"What are the tax consequences associated with the Contract?
"If I have questions, where can I go?
"Fee Tables
"Expenses Before the Annuity Date
"Contract Owner Transaction Expenses
"Sales Load as a Percentage of Purchase Payments
"Surrender Charge
"Periodic Charges Other Than Portfolio Expenses
"Annual Portfolio Expenses
"Expenses During the Annuity Period
"Accumulation Unit Values
"Contract
"Type of Contract
"Contract Transactions
"Contract Application and Purchase Payments
"Allocation of Purchase Payments
"Ways to Make Purchase Payments
"Crediting of Accumulation Units
"Allocation of Charges and Other Deductions to the Subaccounts and the Fixed Account
"Determining Accumulation Unit Values
"Transfers
"Telephone Transactions
"Special Programs
"Charges and Deductions
"Other Charges
"Deduction of Fees
"Exception to Charges
"Distributions Under the Contract
"Distributions Before Annuity Date
"Surrenders
"Systematic Withdrawal Program
"Waiver of Surrender Charges
"Death Benefit Before Annuity Date
"Minimum Guaranteed Death Benefit Rider
"3% Guaranteed Death Benefit Rider
"5% Guaranteed Death Benefit Rider
"Distributions During the Annuity Period
"Election of Annuity Option
"Annuity Options
"Value of Variable Basis Annuity Payments
"Assumed Investment Rates
"Annuity Provisions
"The Company, Separate Account and Funds
"American National Insurance Company
"The Separate Account
"The Funds
"Voting Rights
"Changes in Investment Options
"Fixed Account
"Federal Tax Matters
"Introduction
"Tax Status of the Contracts
"Taxation of Annuities in General
"Withdrawals
"Penalty Tax
"Annuity Payments
"Taxation of Death Benefit Proceeds
"Transfers or Assignments of a Contract
"Required Distributions
"Withholding
"Multiple Contracts
"Exchanges
"Taxation of Qualified Contracts
"Distributions from Qualified Contracts
"Possible Changes in Taxation
"Other Tax Issues
"Investment Performance
"Distribution of the Contract
"Legal Proceedings
"Financial Statements
"Additional Information
"The Contract
"Computation of Variable Annuity Payments
"Annuity Unit Value
"Summary
"Exceptions to Charges
"Assignment
"Minimum Distributions Program
"Tax Matters
"Records and Reports
"Performance
"Yields
"State Law Differences
"Separate Account
"Termination of Participating Agreements
"Legal Matters
"Experts
"Report of Independent Registered Public Accounting Firm
"Report of Independent Registered Public Accounting Firm on Internal Control
"Consolidated Statements of Financial Position as of December 31, 2015 and 2014
"Consolidated Statements of Operations for the years ended December 31, 2015, 2014, and 2013
"Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014, and 2013
"Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2015, 2014, and 2013
"Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014, and 2013
"Notes to the Consolidated Financial Statements

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  VA 2016 Registration Statement  
Table of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES

ACT OF 1933

Post-Effective Amendment No. 18

and/ or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY

ACT OF 1940

Amendment No. 55

American National Variable Annuity Separate Account

(Exact Name of Registrant)

American National Insurance Company

(Name of Depositor)

One Moody Plaza, Galveston, Texas 77550

(Address of Depositor’s Principal Executive Offices) (Zip Code)

(409)763-4661

(Depositor’s Telephone Number, Including Area Code)

 

Name and Address of Agent for service:

   Please send copies of communications to:

Dwain Akins, Esq., Senior Vice President

   Gregory Garrison

American National Insurance Company

   Greer, Herz & Adams, L.L.P.

One Moody Plaza

   With copy to: One Moody Plaza

Galveston, TX 77550

   Galveston, Texas 77550

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.

ü

   On May 1, 2016 pursuant to paragraph (b) of Rule 485.

¨

   60 days after filing pursuant to paragraph (a)(1) of Rule 485.

¨

   On May 1, 2016 pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

 

¨

   This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: deferred variable annuity contract


Table of Contents

WEALTHQUEST III VARIABLE ANNUITY

Issued by American National Insurance Company

Home Office: One Moody Plaza, Galveston, Texas 77550-7947

1-800-306-2959

To make Service, Transaction Requests,

or Additional Purchase Payments, mail to:

American National Variable Contracts Department

P. O. Box 9001, League City, Texas 77574

Proper Lockbox Payments may also be sent to P. O. Box 4531, Houston, Texas 77210-4531

Prospectus May 1, 2016

This Prospectus describes a deferred Variable Annuity Contract issued to either individuals or groups depending upon the state in which the Contract is issued. (See the “Type of Contract” provision of this Prospectus.)

You can allocate your Contract value to the American National Variable Annuity Separate Account (the “Separate Account”), which reflects the investment performance of the Portfolios selected by you, and our Fixed Account which earns a guaranteed minimum interest rate. Each Subaccount of the Separate Account invests in shares of a corresponding Portfolio listed below:

 

Fidelity® Variable Insurance Products Service Class 2

  Federated Insurance Series   

VIP Government Money Market Portfolio1

  Federated Managed Volatility Fund II   

VIP Mid Cap Portfolio

  Federated High Income Bond Fund II – Primary Shares   

VIP Index 500 Portfolio

  Federated Fund for U.S. Government Securities II   

VIP Contrafund® Portfolio

  Federated Kaufmann Fund II – Primary Shares   

VIP Growth Opportunities Portfolio

  Federated Quality Bond Fund II – Primary Shares   

VIP Equity-Income Portfolio

 

    

VIP Investment Grade Bond Portfolio

  The Alger Portfolios – Class I-2 Shares   

VIP Growth & Income Portfolio

  Alger Small Cap Growth Portfolio3   

VIP Value Portfolio

  Alger Large Cap Growth Portfolio   

VIP Value Strategies Portfolio

  Alger Mid Cap Growth Portfolio   
  Alger Capital Appreciation Portfolio   

T Rowe Price

  Alger Growth & Income Portfolio   

Equity Income Portfolio

  Alger Balanced Portfolio   

Mid-Cap Growth Portfolio2

    

International Stock Portfolio

Limited-Term Bond Portfolio

  AIM Variable Insurance Funds (Invesco Variable Insurance Funds) – Series I Shares   
  Invesco V.I. Global Health Care Fund   

MFS ® Variable Insurance Trust (“VIT”) Initial Class Shares

  Invesco V.I. Small Cap Equity Fund   

MFS Growth Series (VIT)

  Invesco V.I. Managed Volatility Fund   

MFS Research Series (VIT)

  Invesco V.I. Mid Cap Growth Fund   

MFS Investors Trust Series (VIT)

  Invesco V.I. Diversified Dividend Fund   

MFS ® Variable Insurance Trust  II (“VIT II) Initial Class Shares

  Invesco V.I. Technology Fund   

MFS Core Equity Portfolio (VIT II)

  Invesco V.I. Global Real Estate Fund   

 

1  Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.
2  Not available for investment in Contracts issued on or after May 1, 2004.
3  Not available for investment for Contracts issued on or after July 1, 2007.

This Prospectus contains information that you should know before purchasing a Contract. Additional information about the Contract is contained in a Statement of Additional Information (“SAI”) filed with the Securities and Exchange Commission, (“SEC”) which is incorporated by reference into this Prospectus. You may obtain a free copy of the SAI, which is dated the same date as this Prospectus, by writing us at American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574, or calling us at 1-800-306-2959. The Table of Contents of the SAI appears on the last page of this Prospectus. The SEC maintains an Internet web site (http://www.sec.gov) that contains material incorporated by reference into this Prospectus, SAI, and other information regarding companies that file electronically with the SEC. For more information on the Portfolios, see their prospectuses.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

Interests in the Contract are not deposits or obligations of, or guaranteed or endorsed by any bank, nor is the Contract federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency. The Contract involves investment risk, including possible loss of principal.

Please read this Prospectus carefully and keep it for future reference.

 

 

Form 4879

   Rev 5-16                    


Table of Contents

TABLE OF CONTENTS

 

     Page

Glossary

   4

Synopsis

   5

What is the purpose of the Contract?

   5

What are my investment options?

   5

How do I purchase a Contract?

   5

How do I allocate Purchase Payments?

   5

Can I transfer amounts among the investment alternatives?

   5

What is the death benefit under the Contract?

   6

Can I get my money if I need it?

   6

How can I receive annuity payments?

   6

What are the charges and deductions under the Contract?

   6

What are the tax consequences associated with the Contract?

   6

If I have questions, where can I go?

   7

Fee Tables

   7

Expenses Before the Annuity Date

   7

Contract Owner Transaction Expenses

   7

Sales Load as a Percentage of Purchase Payments

   7

Deferred Sales Load (“Surrender Charge”)

   7

Periodic Charges Other Than Portfolio Expenses

   8

Annual Portfolio Expenses

   8

Expenses During the Annuity Period

   8

Accumulation Unit Values

   12

Contract

   52

Type of Contract

   52

Contract Transactions

   52

Contract Application and Purchase Payments

   52

Allocation of Purchase Payments

   53

Ways to Make Purchase Payments

   53

Crediting of Accumulation Units

   53

Allocation of Charges and Other Deductions to the Subaccounts and the Fixed Account

   53

Determining Accumulation Unit Values

   54

Transfers

   54

Telephone Transactions

   57

Special Programs

   57

Charges and Deductions

   58

Surrender Charge

   58

Other Charges

   59

Deduction of Fees

   60

Exception to Charges

   60

Distributions Under the Contract

   60

Distributions Before Annuity Date

   60

Surrenders

   60

Systematic Withdrawal Program

   61

Waiver of Surrender Charges

   61

 

2


Table of Contents

Death Benefit Before Annuity Date

   62

Minimum Guaranteed Death Benefit Rider

   63

3% Guaranteed Death Benefit Rider

   64

5% Guaranteed Death Benefit Rider

   64

Distributions During the Annuity Period

   64

Election of Annuity Option

   64

Annuity Options

   65

Value of Variable Basis Annuity Payments

   66

Assumed Investment Rates

   66

Annuity Provisions

   67

The Company, Separate Account and Funds

   67

American National Insurance Company

   67

The Separate Account

   67

The Funds

   68

Voting Rights

   72

Changes in Investment Options

   73

Fixed Account

   73

Federal Tax Matters

   74

Introduction

   74

Tax Status of the Contracts

   74

Taxation of Annuities in General

   74

Withdrawals

   74

Penalty Tax

   74

Annuity Payments

   75

Taxation of Death Benefit Proceeds

   75

Transfers or Assignments of a Contract

   75

Required Distributions

   75

Withholding

   75

Multiple Contracts

   75

Exchanges

   76

Taxation of Qualified Contracts

   76

Distributions from Qualified Contracts

   76

Possible Changes in Taxation

   77

Other Tax Issues

   78

Investment Performance

   79

Distribution of the Contract

   79

Legal Proceedings

   80

Financial Statements

   81

Additional Information

   82

 

3


Table of Contents

GLOSSARY

Accumulation Period. The time between the date Accumulation Units are first purchased by you and the earliest of (1) the Annuity Date; (2) the date the Contract is surrendered; or (3) the date of the Contract Owner’s death.

Accumulation Unit. A unit used by us to calculate a Contract’s value during the Accumulation Period.

Accumulation Value. The sum of (1) the value of your Accumulation Units and (2) value in the Fixed Account.

Annuitant. The person or persons who will receive annuity payments.

Annuity Date. The date annuity payments begin.

Annuity Period. The time during which annuity payments are made.

Annuity Unit. A unit used by us to calculate the dollar amount of variable basis annuity payments.

Company (“American National,” “we,” “our” or “us”). American National Insurance Company.

Contract. The contract described in this Prospectus.

Contract Owner (“I”, “my”, “you” or “your”). Unless changed by notice to us, the Contract Owner is as stated in the application.

Contract Anniversary. An anniversary of the Date of Issue.

Contract Year. A one (1) year period, commencing on either the Date of Issue or a Contract Anniversary.

Date of Issue. The date a Contract is issued.

Enhanced Death Benefit Riders. Optional death benefits available at an additional cost.

Fixed Account. A part of our General Account which will accumulate interest at a fixed rate.

Fund. A registered, open-end management investment company, or “mutual fund,” in which the Separate Account invests.

General Account. All of our assets except those segregated in Separate Accounts.

Home Office. American National Insurance Company Home Office is located at One Moody Plaza, Galveston, Texas 77550-7947.

Non-Qualified Contract. A Contract that does not receive favorable tax treatment under the Internal Revenue Code.

Portfolio. A series of a registered investment company designed to meet specified investment objectives.

Purchase Payment. A payment made to us during the Accumulation Period less any premium tax charges incurred at the time the Purchase Payment is made.

Subaccount. A subdivision of the Separate Account that invests in a corresponding Portfolio of a Fund.

Qualified Contract. A Contract issued in connection with a retirement plan that receives favorable tax treatment under the Internal Revenue Code.

Valuation Date. Each day the New York Stock Exchange (“NYSE”) is open for regular trading. Accumulation Values are calculated on Valuation Dates.

Valuation Period. The period of time over which we determine changes in accumulation unit values. Each valuation period begins at the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time on each valuation date) and ends at the close of regular trading of the New York Stock Exchange on the next valuation date.

Variable Annuity. An annuity with payments and value that vary in dollar amount based on performance of the investments you choose.

 

4


Table of Contents

SYNOPSIS

What is the purpose of the Contract?

The Contract allows you to accumulate funds, on a tax-deferred basis, that will increase or decline in value based on the performance of investments you choose. You should use the Contract for retirement planning or other long-term goals. The Contract is designed for purchasers seeking tax-deferred accumulation of assets, generally for long-term purposes. The tax-deferred feature is most attractive to people in high federal (and state) tax brackets. You should not invest in this Contract if you are looking for a short-term investment or if you cannot take the risk of losing money that you invest.

There are various fees and charges associated with variable annuities. The tax deferral feature of variable annuities is unnecessary when purchased to fund a qualified plan, since the plan would already provide tax deferral in most cases. You should consider whether the other features and benefits, such as the opportunity for lifetime income benefits, the death benefit, and the guaranteed level of certain charges, make the Contract appropriate for your needs.

What are my investment options?

You can invest your Purchase Payments in one (1) or more of the Subaccounts of the Separate Account, each of which invests exclusively in shares of a corresponding Portfolio.

Each Subaccount and corresponding Portfolio has its own investment objective. Some of the Portfolios have similar investment objectives. (See the “Funds” provision of this Prospectus.) There is no assurance that Portfolios will achieve their investment objectives. Accordingly, you could lose some or all of your Accumulation Value.

You can also invest in our Fixed Account.

H ow do I purchase a Contract?

You can purchase a Contract by submitting a completed application and the minimum Purchase Payment to our Home Office. You must make at least a $5,000 minimum initial Purchase Payment and any subsequent Purchase Payments must be at least $2,000. However, if you are applying for a Contract as part of a Qualified Plan you may make a minimum initial Purchase Payment of $100, provided you intend to make Purchase Payments of at least $1,200 per year. We may change these amounts.

Without our prior approval, the maximum Purchase Payment under a Contract is $1,000,000. Purchase Payments will not be accepted after you reach age 86.

For a limited time, usually ten (10) days after you receive the Contract, you can return the Contract to our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 and receive a refund. (See the “Contract Application and Purchase Payments” provision of this Prospectus.)

How do I allocate Purchase Payments?

You can allocate your Purchase Payments among the available Subaccounts and the Fixed Account. You cannot allocate less than 1% of a Purchase Payment to any one (1) investment option. The minimum initial allocation into any Subaccount and into the Fixed Account is $100.

Can I transfer amounts among the investment alternatives?

You can generally make transfers among Subaccounts and to our Fixed Account at any time. Transfers from our Fixed Account before the Annuity Date are limited. Transfers from our Fixed Account after the Annuity Date are not permitted. Before the Annuity Date, any transfer after the first twelve (12) transfers in a Contract Year will be subject to a $10.00 exchange fee. We reserve the right to reject a transfer or impose additional transfer restrictions if, in our judgment, a Contract Owner’s transfer or transfer practices adversely affect any underlying Portfolios or other Contract Owners. (See the “Transfers” provision of this Prospectus.)

 

5


Table of Contents

What is the death benefit under the Contract?

If you or the Annuitant die before the Annuity Date, the death benefit will be equal to the greater of: (i) the amount of the Accumulation Value on the date due proof of death is received at our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574, or (ii) the sum of all Purchase Payments made less any withdrawals made prior to the date of death. The death benefit may be more if you selected an Enhanced Death Benefit Rider. (See “Death Benefit Before Annuity Date” in the “Distributions Under the Contract” section of this Prospectus.)

Can I get my money if I need it?

You can withdraw all or part of your Accumulation Value at any time by sending us a written request before the Annuity Date. Such withdrawal may be subject to a Surrender Charge, an IRS penalty tax and income tax. If your Contract was purchased in connection with a retirement plan, such withdrawal may also be subject to plan restrictions. Withdrawals from a Contract qualified under Section 403(b) of the Internal Revenue Code may be restricted. (See the “Taxation of Qualified Contracts” provision under the section “Federal Tax Matters” of this Prospectus.) If the Accumulation Value is less than $2,000, we will terminate the Contract and pay the surrender value to you. (See the “Surrenders” provision in the “Distributions Under the Contract” section of this Prospectus.) Depending upon the annuity option selected, you may also be able to withdraw any amount remaining during the Annuity Period. (See the “Annuity Options” provision in the “Distributions Under the Contract” section of this Prospectus.)

How can I receive annuity payments?

You can choose from a number of annuity payment options, which include:

 

  monthly payments for a number of years;

 

  payments for life;

 

  payments made jointly.

You can also choose to receive your Annuity Payments on a fixed or variable basis. Variable payments will increase or decrease based on the investment performance of the Portfolios. (See the “Annuity Options” provision in the “Distributions Under the Contract” section of this Prospectus.)

What are the charges and deductions under the Contract?

For the charges and deductions that apply, see the “Fee Tables” immediately following this section and see the “Charges and Deductions” section of this Prospectus.

What are the tax consequences associated with the Contract?

You are generally required to pay taxes on amounts earned in a Non-Qualified Contract only when they are withdrawn. When you take distributions or withdrawals from a Contract, taxable earnings are considered to be paid out first, followed by the investment in the Contract. All or a portion of each annuity payment you receive under a Non-Qualified Contract will be taxable.

Distributions from a Contract are taxed as ordinary income. You may owe a 10% federal income tax penalty for distributions or withdrawals taken before age 591/2.

You are generally required to pay taxes on all amounts withdrawn from a Qualified Contract because Purchase Payments were made with before-tax dollars. Restrictions and penalties may apply to withdrawals from Qualified Contracts. (See the “Federal Tax Matters” section of this Prospectus.)

 

6


Table of Contents

If I have questions, where can I go?

“If you have any questions about the Contract, you can contact your registered representative or write us at American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574, or call us at 1-800-306-2959. If mail is addressed differently, there may be delays in the processing of requested transactions.”

FEE TABLES

Expenses Before the Annuity Date

The following tables summarize the charges we will make before the Annuity Date. The tables also summarize the fees and expenses of the Portfolios. You should consider this information with the information under the section “Charges and Deductions” in this Prospectus.

Contract Owner Transaction Expenses

The first table describes the fees and expenses that you pay at the time you buy the Contract, surrender the Contract, or transfer accumulation value between subaccounts. State premium taxes will be deducted if assessed by a state.

Sales Load as a Percentage of Purchase Payments:     0%

Deferred Sales Load (“Surrender Charge”)

Free Withdrawal Amount

In any Contract Year, you can withdraw the greater of (1) 10% of your Accumulation Value at the time of the withdrawal or (2) your Accumulation Value less total Purchase Payments (the “Free Withdrawal Amount”) with no Surrender Charge. The portion of a withdrawal in excess of the Free Withdrawal Amount is a withdrawal of Purchase Payments and is subject to a Surrender Charge. If you withdraw less than 10% of your Accumulation Value, the Free Withdrawal Amount available under the 10% option for any subsequent withdrawal in that Contract Year will be reduced by the percentage previously withdrawn. (See the “Surrender Charge” provision in the “Charges and Deductions” section in this Prospectus.)

Calculation of Surrender Charges

Surrender Charges vary, depending on the number of complete years elapsed since the Purchase Payment being withdrawn was paid, on a “first-paid, first-withdrawn” basis. The Surrender Charge will be deducted from your Accumulation Value, if sufficient. If your Accumulation Value is not sufficient, your withdrawal will be reduced accordingly. Surrender Charges will be a percentage of each Purchase Payment or portion thereof withdrawn as illustrated in the following table:

 

Number of Completed Years

Since Purchase Payment

Made

  

Surrender Charge as a Percentage

of the Purchase Payment

Withdrawn or Surrendered

Less than 1

   7.0%

1

   7.0%

2

   6.0%

3

   5.0%

4

   4.0%

5

   3.0%

6

   2.0%

7 and thereafter

   0.0%

 

7


Table of Contents

EXCHANGE FEE

   $10

A fee of $10 is charged for transfers among the Subaccounts and Fixed Account after twelve (12) transfers per Contract Year.

PERIODIC CHARGES OTHER THAN PORTFOLIO EXPENSES

The next table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including Portfolio fees and expenses.

 

ANNUAL CONTRACT FEE1

   $35

SEPARATE ACCOUNT ANNUAL EXPENSES2

 

      Base Policy
Only
         Base Policy Plus
Enhanced Death
Benefit
     
           

Min. Guar.

Rider

   3% Rider    5% Rider

(as percentage of average net assets)

                   

Mortality Risk

   0.70%    0.80%    0.90%    1.05%

Expense Risk Fee

   0.40%    0.40%    0.40%    0.40%

Administrative Asset Fee

   0.10%    0.10%    0.10%    0.10%

Total Separate Account

                   

Annual Expenses

   1.20%    1.30%    1.40%    1.55%

 

  1  Annual Contract Fee is not charged if all of your Accumulation Value is in Fixed Account or is greater than $50,000 on the last day of a Contract Year.
  2 These fees do not apply to funds in the Fixed Account.

Annual Portfolio Expenses

The next table shows the minimum and maximum total operating expenses charged by the Portfolio that you may pay periodically during the time that you own the Contract. More detail concerning each Portfolio’s fees and expenses is contained in the prospectus for each Portfolio.

 

      Minimum    Maximum

Total Expenses3

   0.35%    1.53%

(before fee waivers or reimbursements)

 

  3  Expenses are shown as a percentage of a Portfolio’s average net assets as of December 31, 2015. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Portfolios have agreed to waive their fees and/or reimburse the Portfolios’ expenses in order to keep the expenses below specified limits. In some cases, these expense limitations may be contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. The minimum and maximum Total Annual Portfolio Operating Expenses for all the Portfolios after all fee waivers and expense reimbursements are 0.35% and 1.53% respectively. Please see the prospectus for each Portfolio for information regarding the expenses for each Portfolio including fee reduction and/or expense reimbursement arrangements, if applicable.

Expenses During the Annuity Period

During the Annuity Period, we will charge the Separate Account a mortality risk fee of .70%, an expense risk fee of .45%, and an administrative asset fee of ..10%. The Portfolios corresponding to the Subaccounts in which you have invested will charge the Portfolio annual expenses described above. No other fees or expenses are charged against the Contract during the Annuity Period.

Examples

The following examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other Variable Annuity Contracts. These costs include Contract Owner transaction expenses, Contract Fees, Separate Account annual expenses and Portfolio fees and expenses.

 

8


Table of Contents

Example with highest Portfolio expenses:

This example assumes that you invest $10,000 in the Contract for the time periods indicated. The example also assumes that your investment has a 5% return each year and assumes the maximum fees and expenses of any of the Portfolios for the year ended December 31, 2015. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If you surrender your Contract at the end of the applicable time period:

 

1 year    3 years    5 years    10 years

$1,023

   $954    $779    $403

If you annuitize at the end of the applicable time period:

 

1 year    3 years    5 years    10 years

$1,023

   $954    $779    $403

If you do not surrender your Contract:

 

1 year    3 years    5 years    10 years

$358

   $368    $377    $403

You should not consider the examples as representative of past or future expenses.

The purpose of the preceding tables is to assist you in understanding the various costs and expenses that you will bear directly or indirectly. The tables reflect expenses of the Separate Account and the Portfolios. The expenses shown above for the Portfolios are assessed at the underlying fund level and are not direct charges against the Separate Account’s assets or reductions from Accumulation Value. These expenses are taken into consideration in computing the Portfolio’s net asset value, which is the share price used to calculate the value of an Accumulation Unit. Actual expenses may be more or less than shown. As required by the Securities and Exchange Commission, the example assumes a 5% annual rate of return. This hypothetical rate of return is not intended to be representative of past or future performance of a Portfolio. For a more complete description of the management fees of the Funds, see their prospectuses.

 

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Table of Contents

Example with lowest Portfolio expenses:

This example uses the same assumptions as the prior example, except that it assumes the minimum fees and expenses of any of the Portfolios for the year ended December 31, 2015. Your actual expenses will vary depending upon the Portfolios you select. Although your actual costs may be higher, based on these assumptions, your cost would be:

If you surrender your Contract at the end of the applicable time period:

 

1 year

   3 years    5 years    10 years

$863

   $813    $647    $248

If you annuitize at the end of the applicable time period:

 

1 year

   3 years    5 years    10 years

$863

   $813    $647    $248

If you do not surrender your Contract:

 

1 year

   3 years    5 years    10 years

$198

   $208    $218    $248

You should not consider the examples as representative of past or future expenses.

The purpose of the preceding tables is to assist you in understanding the various costs and expenses that you will bear directly or indirectly. The tables reflect expenses of the Separate Account and the Portfolios. The expenses shown above for the Portfolios are assessed at the underlying fund level and are not direct charges against the Separate Account’s assets or reductions from Accumulation Value. These expenses are taken into consideration in computing the Portfolio’s net asset value, which is the share price used to calculate the value of an Accumulation Unit. Actual expenses may be more or less than shown. As required by the Securities and Exchange Commission, the example assumes a 5% annual rate of return. This hypothetical rate of return is not intended to be representative of past or future performance of a Portfolio. For a more complete description of the management fees of the Funds, see their prospectuses.

 

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ACCUMULATION UNIT VALUES

For Contracts With No Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

INVESCO V.I. MID CAP GROWTH FUND

                       

Accumulation Unit Value at beginning of period

  $ 13.976      $ 13.092      $ 9.671   

Accumulation Unit Value at end of period

  $ 13.976      $ 13.976      $ 13.092   

Number of Accumulation Units outstanding at end of period

    1,120        1,233        1,346   

INVESCO V.I. DIVERSIFIED DIVIDEND FUND

                       

Accumulation Unit Value at beginning of period

  $ 39.691      $ 35.603      $ 27.498   

Accumulation Unit Value at end of period

  $ 40.028      $ 39.691      $ 35.603   

Number of Accumulation Units outstanding at end of period

    898        902        1,241   

INVESCO V.I. GLOBAL HEALTH CARE FUND

                       

Accumulation Unit Value at beginning of period

  $ 2.348      $ 1.986      $ 1.430   

Accumulation Unit Value at end of period

  $ 2.393      $ 2.348      $ 1.986   

Number of Accumulation Units outstanding at end of period

    52,885        22,414        22,886   

INVESCO V.I. GLOBAL REAL ESTATE FUND

                       

Accumulation Unit Value at beginning of period

  $ 3.293      $ 2.908      $ 2.865   

Accumulation Unit Value at end of period

  $ 3.206      $ 3.293      $ 2.908   

Number of Accumulation Units outstanding at end of period

    122,693        147,782        164,048   

INVESCO V.I. SMALL CAP EQUITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.721      $ 1.701      $ 1.252   

Accumulation Unit Value at end of period

  $ 1.606      $ 1.721      $ 1.701   

Number of Accumulation Units outstanding at end of period

    125,068        132,128        171,059   

INVESCO V.I. TECHNOLOGY FUND

                       

Accumulation Unit Value at beginning of period

  $ 0.923      $ 0.841      $ 0.680   

Accumulation Unit Value at end of period

  $ 0.974      $ 0.923      $ 0.841   

Number of Accumulation Units outstanding at end of period

    140,437        154,264        203,074   

INVESCO V.I. MANAGED VOLATILITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.657      $ 1.391      $ 1.271   

Accumulation Unit Value at end of period

  $ 1.602      $ 1.657      $ 1.391   

Number of Accumulation Units outstanding at end of period

            135,790                145,769                192,221   

 

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2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 21.287       $ 1.025       $ 0.818       $ 0.595       $ 1.160       $ 1.047       $ 0.913   
$ 9.671       $ 21.287       $ 1.025       $ 0.818       $ 0.595       $ 1.160       $ 1.047   
  1,581         826         20,520         21,518         22,872         26,662         28,240   
                                                               
$ 23.442       $ 0.564       $ 0.510       $ 0.411       $ 1.026       $ 1.335       $ 1.160   
$ 27.498       $ 23.442       $ 0.564       $ 0.510       $ 0.411       $ 1.026       $ 1.335   
  1,396         1,401         48,545         48,768         49,002         52,583         47,020   
                                                               
$ 1.197       $ 1.165       $ 1.129       $ 0.888       $ 1.259       $ 1.139       $ 1.096   
$ 1.430       $ 1.197       $ 1.165       $ 1.129       $ 0.888       $ 1.259       $ 1.139   
  19,146         45,490         35,942         31,193         43,043         48,116         69,087   
                                                               
$ 2.264       $ 2.450       $ 2.110       $ 1.624       $ 2.969       $ 3.181       $ 2.258   
$ 2.865       $ 2.264       $ 2.450       $ 2.110       $ 1.624       $ 2.969       $ 3.181   
  176,609         205,575         242,983         291,465         273,751         321,097         312,345   
                                                               
$ 1.113       $ 1.135       $ 0.893       $ 0.745       $ 1.098       $ 1.035       $ 0.918   
$ 1.252       $ 1.113       $ 1.135       $ 0.893       $ 0.745       $ 1.098       $ 1.035   
  162,117         197,678         192,527         173,726         163,995         189,489         98,355   
                                                               
$ 0.618       $ 0.659       $ 0.550       $ 0.354       $ 0.645       $ 0.606       $ 0.555   
$ 0.680       $ 0.618       $ 0.659       $ 0.550       $ 0.354       $ 0.645       $ 0.606   
  202,127         188,629         231,876         309,009         158,145         134,166         109,421   
                                                               
$ 1.242       $ 1.079       $ 1.028       $ 0.904       $ 1.354       $ 1.136       $ 0.916   
$ 1.271       $ 1.242       $ 1.079       $ 1.028       $ 0.904       $ 1.354       $ 1.136   
              240,492               259,386               373,980               509,033               570,991             632,820             333,164   

 

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ACCUMULATION UNIT VALUES

For Contracts With No Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

ALGER BALANCED PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.404      $ 1.298      $ 1.140   

Accumulation Unit Value at end of period

  $ 1.407      $ 1.404      $ 1.298   

Number of Accumulation Units outstanding at end of period

    286,669        317,190        359,330   

ALGER LARGE CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.254      $ 1.144      $ 0.857   

Accumulation Unit Value at end of period

  $ 1.261      $ 1.254      $ 1.144   

Number of Accumulation Units outstanding at end of period

    304,114        312,001        337,879   

ALGER GROWTH & INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.295      $ 1.165      $ 0.908   

Accumulation Unit Value at end of period

  $ 1.293      $ 1.295      $ 1.165   

Number of Accumulation Units outstanding at end of period

    93,783        113,347        127,791   

ALGER CAPITAL APPRECIATION PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.702      $ 1.514      $ 1.134   

Accumulation Unit Value at end of period

  $ 1.786      $ 1.702      $ 1.514   

Number of Accumulation Units outstanding at end of period

    342,952        420,417        468,216   

ALGER MID CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.668      $ 1.563      $ 1.164   

Accumulation Unit Value at end of period

  $ 1.622      $ 1.668      $ 1.563   

Number of Accumulation Units outstanding at end of period

    116,945        136,287        294,673   

ALGER SMALL CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.471      $ 1.482      $ 1.117   

Accumulation Unit Value at end of period

  $ 1.405      $ 1.471      $ 1.482   

Number of Accumulation Units outstanding at end of period

    130,909        176,539        238,605   

FEDERATED MANAGED VOLATILITY FUND II

                       

Accumulation Unit Value at beginning of period

  $ 1.558      $ 1.518      $ 1.262   

Accumulation Unit Value at end of period

  $ 1.423      $ 1.558      $ 1.518   

Number of Accumulation Units outstanding at end of period

            189,242                174,827                223,277   

 

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2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.086       $ 1.099       $ 1.008       $ 0.789       $ 1.170       $ 1.054       $ 1.019   
$ 1.140       $ 1.086       $ 1.099       $ 1.008       $ 0.789       $ 1.170       $ 1.054   
  459,656         660,907         784,438         1,069,239         1,112,868         1,287,028         1,344,254   
                                                               
$ 0.789       $ 0.802       $ 0.714       $ 0.491       $ 0.923       $ 0.778       $ 0.749   
$ 0.857       $ 0.789       $ 0.802       $ 0.714       $ 0.491       $ 0.923       $ 0.778   
  358,117         379,583         377,609         377,935         414,854         349,749         313,600   
                                                               
$ 0.818       $ 0.777       $ 0.701       $ 0.534       $ 0.897       $ 0.824       $ 0.763   
$ 0.908       $ 0.818       $ 0.777       $ 0.701       $ 0.534       $ 0.897       $ 0.824   
  125,573         133,124         133,397         130,398         148,817         221,643         152,370   
                                                               
$ 0.970       $ 0.985       $ 0.874       $ 0.585       $ 1.080       $ 0.818       $ 0.695   
$ 1.134       $ 0.970       $ 0.985       $ 0.874       $ 0.585       $ 1.080       $ 0.818   
  485,840         504,484         625,965         667,271         954,951         731,831         156,812   
                                                               
$ 1.014       $ 1.119       $ 0.949       $ 0.633       $ 1.538       $ 1.183       $ 1.087   
$ 1.164       $ 1.014       $ 1.119       $ 0.949       $ 0.633       $ 1.538       $ 1.183   
  290,568         353,563         496,881         671,075         690,014         561,646         417,105   
                                                               
$ 1.005       $ 1.051       $ 0.849       $ 0.590       $ 1.119       $ 0.966       $ 0.814   
$ 1.117       $ 1.005       $ 1.051       $ 0.849       $ 0.590       $ 1.119       $ 0.966   
  259,982         342,195         471,322         545,072         653,078         624,054         496,508   
                                                               
$ 1.125       $ 1.086       $ 0.981       $ 0.774       $ 0.984       $ 0.957       $ 0.838   
$ 1.262       $ 1.125       $ 1.086       $ 0.981       $ 0.774       $ 0.984       $ 0.957   
              309,687               330,950               316,890                50,209                61,449                77,154               114,636   

 

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ACCUMULATION UNIT VALUES

For Contracts With No Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FEDERATED HIGH INCOME BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $           2.179      $           2.147      $           2.031   

Accumulation Unit Value at end of period

  $ 2.097      $ 2.179      $ 2.147   

Number of Accumulation Units outstanding at end of period

    242,936        298,047        315,655   

FEDERATED KAUFMANN FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 2.080      $ 1.918      $ 1.386   

Accumulation Unit Value at end of period

  $ 2.186      $ 2.080      $ 1.918   

Number of Accumulation Units outstanding at end of period

    31,129        49,171        53,748   

FEDERATED QUALITY BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 1.413      $ 1.378      $ 1.381   

Accumulation Unit Value at end of period

  $ 1.393      $ 1.413      $ 1.378   

Number of Accumulation Units outstanding at end of period

    81,221        101,293        134,473   

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II

                       

Accumulation Unit Value at beginning of period

  $ 1.284      $ 1.242      $ 1.283   

Accumulation Unit Value at end of period

  $ 1.275      $ 1.284      $ 1.242   

Number of Accumulation Units outstanding at end of period

    269,238        87,192        260,035   

FIDELITY VIP CONTRAFUND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 2.161      $ 1.959      $ 1.514   

Accumulation Unit Value at end of period

  $ 2.144      $ 2.161      $ 1.959   

Number of Accumulation Units outstanding at end of period

    805,716        940,314        1,273,501   

FIDELITY VIP EQUITY-INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.664      $ 1.553      $ 1.229   

Accumulation Unit Value at end of period

  $ 1.575      $ 1.664      $ 1.553   

Number of Accumulation Units outstanding at end of period

    416,179        445,630        476,468   

FIDELITY VIP GROWTH & INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.875      $ 1.722      $ 1.308   

Accumulation Unit Value at end of period

  $ 1.806      $ 1.875      $ 1.722   

Number of Accumulation Units outstanding at end of period

    132,204        161,986        169,301   

FIDELITY VIP GROWTH OPPORTUNITIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.451      $ 1.312      $ 0.965   

Accumulation Unit Value at end of period

  $ 1.150      $ 1.451      $ 1.312   

Number of Accumulation Units outstanding at end of period

    272,694        370,812        389,414   

 

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2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.792       $ 1.725       $ 1.522       $ 1.007       $ 1.378       $ 0.998       $ 0.932   
$ 2.031       $ 1.792       $ 1.725       $ 1.522       $ 1.007       $ 1.378       $ 0.998   
  463,112         552,477         617,819         751,026         642,225         638,630         103,520   
                                                               
$ 1.196       $ 1.396       $ 1.188       $ 0.936       $ 1.627       $ 1.360       $ 1.229   
$ 1.386       $ 1.196       $ 1.396       $ 1.188       $ 0.936       $ 1.627       $ 1.353   
  64,990         107,505         129,284         79,558         56,637         58,681         1,666,974   
                                                               
$ 1.273       $ 1.260       $ 1.175       $ 0.988       $ 1.078       $ 1.036       $ 1.231   
$ 1.381       $ 1.273       $ 1.260       $ 1.175       $ 0.988       $ 1.078       $ 1.348   
  134,693         142,997         139,494         163,938         217,706         201,429         489,580   
                                                               
$ 1.261       $ 1.207       $ 1.161       $ 1.117       $ 1.084       $ 1.033       $ 1.198   
$ 1.283       $ 1.261       $ 1.207       $ 1.161       $ 1.117       $ 1.084       $ 1.360   
  268,957         247,984         271,889         157,011         119,190         52,154         18,654   
                                                               
$ 1.319       $ 1.374       $ 1.189       $ 0.888       $ 1.569       $ 1.353       $ 1.006   
$ 1.514       $ 1.319       $ 1.374       $ 1.189       $ 0.888       $ 1.569       $ 1.036   
  1,462,611         1,662,256         1,841,464         2,186,187         2,359,975         2,225,007         90,531   
                                                               
$ 1.063       $ 1.069       $ 0.941       $ 0.733       $ 1.298       $ 1.297       $ 1.003   
$ 1.229       $ 1.063       $ 1.069       $ 0.941       $ 0.733       $ 1.298       $ 1.033   
  534,931         693,601         374,113         368,479         350,682         308,624         23,870   
                                                               
$ 1.119       $ 1.118       $ 0.987       $ 0.787       $ 1.371       $ 1.240       $ 1.112   
$ 1.308       $ 1.119       $ 1.118       $ 0.987       $ 0.787       $ 1.371       $ 1.240   
  157,918         164,285         175,523         190,198         179,412         146,446         76,562   
                                                               
$ 0.819       $ 0.813       $ 0.666       $ 0.463       $ 1.045       $ 0.861       $ 0.829   
$ 0.965       $ 0.819       $ 0.813       $ 0.666       $ 0.463       $ 1.045       $ 0.861   
              362,880               392,400               374,706               395,933               306,686               423,299               221,807   

 

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ACCUMULATION UNIT VALUES

For Contracts With No Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FIDELITY VIP INDEX 500 PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $           1.519      $           1.357      $           1.041   

Accumulation Unit Value at end of period

  $ 1.517      $ 1.519      $ 1.357   

Number of Accumulation Units outstanding at end of period

    617,281        740,964        928,393   

FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.371      $ 1.314      $ 1.358   

Accumulation Unit Value at end of period

  $ 1.343      $ 1.371      $ 1.314   

Number of Accumulation Units outstanding at end of period

    164,325        185,163        375,593   

FIDELITY VIP MID CAP PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 3.357      $ 3.204      $ 2.386   

Accumulation Unit Value at end of period

  $ 3.262      $ 3.357      $ 3.204   

Number of Accumulation Units outstanding at end of period

    596,077        624,503        750,604   

FIDELITY VIP GOVERNMENT MONEY MARKET PORTFOLIO (Class 2)*

                       

Accumulation Unit Value at beginning of period

  $ 0.945      $ 0.956      $ 0.968   

Accumulation Unit Value at end of period

  $ 0.934      $ 0.945      $ 0.956   

Number of Accumulation Units outstanding at end of period

    493,378        521,326        718,016   

FIDELITY VIP VALUE PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.764      $ 1.607      $ 1.230   

Accumulation Unit Value at end of period

  $ 1.726      $ 1.764      $ 1.607   

Number of Accumulation Units outstanding at end of period

    105,650        87,477        98,713   

FIDELITY VIP VALUE STRATEGIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.994      $ 1.895      $ 1.473   

Accumulation Unit Value at end of period

  $ 1.907      $ 1.994      $ 1.895   

Number of Accumulation Units outstanding at end of period

    90,048        134,723        113,441   

MFS CORE EQUITY PORTFOLIO**

                       

Accumulation Unit Value at beginning of period

  $ 1.228      $ 1.117      $ 0.840   

Accumulation Unit Value at end of period

  $ 23.135      $ 1.228      $ 1.117   

Number of Accumulation Units outstanding at end of period

    712        13,649        16,454   

*Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.

**Effective March 27, 2015, the MFS Core Equity Series reorganized and merged into the MFS Core Equity Portfolio.

 

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2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.911       $ 0.906       $ 0.799       $ 0.640       $ 1.031       $ 0.992       $ 0.870   
$ 1.041       $ 0.911       $ 0.906       $ 0.799       $ 0.640       $ 1.031       $ 0.992   
  1,162,435         1,343,242         1,716,289         2,094,174         2,137,982         2,205,481         1,775,792   
                                                               
$ 1.301       $ 1.231       $ 1.158       $ 1.014       $ 1.064       $ 1.035       $ 1.006   
$ 1.358       $ 1.301       $ 1.231       $ 1.158       $ 1.014       $ 1.064       $ 1.035   
  392,972         396,352         597,106         229,243         209,173         231,999         157,392   
                                                               
$ 2.108       $ 2.394       $ 1.884       $ 1.364       $ 2.287       $ 2.007       $ 1.807   
$ 2.386       $ 2.108       $ 2.394       $ 1.884       $ 1.364       $ 2.287       $ 2.007   
  795,051         1,062,672         1,506,893         1,468,224         1,509,570         1,510,292         1,110,006   
                                                               
$ 0.979       $ 0.991       $       $       $       $       $   
$ 0.968       $ 0.979       $ 0.991       $       $       $       $   
  1,325,743         2,263,622         2,675,796                                   
                                                               
$ 1.033       $ 1.074       $ 0.925       $ 0.659       $ 1.249       $ 1.241       $ 1.098   
$ 1.230       $ 1.033       $ 1.074       $ 0.925       $ 0.659       $ 1.249       $ 1.241   
  119,141         152,608         165,567         125,353         131,306         132,071         63,231   
                                                               
$ 1.173       $ 1.305       $ 1.044       $ 0.673       $ 1.399       $ 1.343       $ 1.172   
$ 1.473       $ 1.173       $ 1.305       $ 1.044       $ 0.673       $ 1.399       $ 1.343   
  162,046         224,437         377,799         267,722         280,949         341,099         150,775   
                                                               
$ 0.732       $ 0.748       $ 0.646       $ 0.494       $ 0.821       $ 0.748       $ 0.665   
$ 0.840       $ 0.732       $ 0.748       $ 0.646       $ 0.494       $ 0.821       $ 0.748   
               16,570                18,462                35,711                53,945                62,906                76,213                79,258   

 

19


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With No Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

MFS GROWTH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.137      $ 1.056      $ 0.781   

Accumulation Unit Value at end of period

  $ 1.208      $ 1.137      $ 1.056   

Number of Accumulation Units outstanding at end of period

    155,125        147,395        138,913   

MFS INVESTORS TRUST SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.652      $ 1.506      $ 1.154   

Accumulation Unit Value at end of period

  $ 1.635      $ 1.652      $ 1.506   

Number of Accumulation Units outstanding at end of period

    10,330        10,636        10,925   

MFS RESEARCH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.436      $ 1.319      $ 1.009   

Accumulation Unit Value at end of period

  $ 1.430      $ 1.436      $ 1.319   

Number of Accumulation Units outstanding at end of period

    4,520        4,554        4,598   

T. ROWE PRICE EQUITY INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2,194      $ 2.068      $ 1.613   

Accumulation Unit Value at end of period

  $ 2.019      $ 2.194      $ 2.068   

Number of Accumulation Units outstanding at end of period

    723,606        757,915        882,293   

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.111      $ 1.139      $ 1.010   

Accumulation Unit Value at end of period

  $ 1.088      $ 1.111      $ 1.139   

Number of Accumulation Units outstanding at end of period

    591,953        841,648        892,692   

T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.393      $ 1.401      $ 1.416   

Accumulation Unit Value at end of period

  $ 1.381      $ 1.393      $ 1.401   

Number of Accumulation Units outstanding at end of period

            234,821                268,597                238,313   

T. ROWE PRICE MID-CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 3.046      $ 2.726      $ 2.018   

Accumulation Unit Value at end of period

  $ 3.208      $ 3.046      $ 2.726   

Number of Accumulation Units outstanding at end of period

    5,792        6,346        11,328   

 

20


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.673       $ 0.684       $ 0.600       $ 0.441       $ 0.713       $ 0.596       $ 0.559   
$ 0.781       $ 0.673       $ 0.684       $ 0.600       $ 0.441       $ 0.713       $ 0.596   
  153,823         159,013         167,490         231,869         285,284         263,367         195,752   
                                                               
$ 0.980       $ 1.014       $ 0.926       $ 0.737       $ 1.114       $ 1.022       $ 0.916   
$ 1.154       $ 0.980       $ 1.014       $ 0.926       $ 0.737       $ 1.114       $ 1.022   
  11,195         92,892         238,923         243,147         268,793         395,301         411,939   
                                                               
$ 0.871       $ 0.885       $ 0.750       $ 0.599       $ 0.949       $ 0.849       $ 0.777   
$ 1.009       $ 0.871       $ 0.885       $ 0.750       $ 0.599       $ 0.949       $ 0.849   
  6,046         6,200         8,262         8,150         14,343         18,335         83,405   
                                                               
$ 1.394       $ 1.421       $ 1.250       $ 1.007       $ 1.596       $ 1.564       $ 1.330   
$ 1.613       $ 1.394       $ 1.421       $ 1.250       $ 1.007       $ 1.596       $ 1.564   
  993,332         1,280,251         1,391,678         1,776,669         1,852,222         1,852,085         1,423,550   
                                                               
$ 0.863       $ 1.002       $ 0.886       $ 0.589       $ 1.161       $ 1.040       $ 0.884   
$ 1.010       $ 0.863       $ 1.002       $ 0.886       $ 0.589       $ 1.161       $ 1.040   
  994,302         1,185,862         1,426,368         1,230,882         1,383,770         1,224,019         692,466   
                                                               
$ 1.398       $ 1.393       $ 1.368       $ 1.277       $ 1.273       $ 1.222       $ 1.188   
$ 1.416       $ 1.398       $ 1.393       $ 1.368       $ 1.277       $ 1.273       $ 1.222   
  268,235         400,545         487,305         562,706         543,725         604,346         551,769   
                                                               
$ 1.793       $ 1.838       $ 1.458       $ 1.009       $ 1.695       $ 1.460       $ 1.386   
$ 2.018       $ 1.793       $ 1.838       $ 1.458       $ 1.009       $ 1.695       $ 1.460   
               11,160                  58,974               137,161               166,341               174,931               223,923               244,045   

 

21


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 3% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

INVESCO V.I. MID CAP GROWTH FUND

                       

Accumulation Unit Value at beginning of period

  $          13.899      $          13.047      $ 9.656   

Accumulation Unit Value at end of period

  $ 13.871      $ 13.899      $          13.047   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. DIVERSIFIED DIVIDEND FUND

                       

Accumulation Unit Value at beginning of period

  $ 39.500      $ 35.503      $ 27.476   

Accumulation Unit Value at end of period

  $ 39.756      $ 39.500      $ 35.503   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. GLOBAL HEALTH CARE FUND

                       

Accumulation Unit Value at beginning of period

  $ 2.284      $ 1.935      $ 1.396   

Accumulation Unit Value at end of period

  $ 2.323      $ 2.284      $ 1.935   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. GLOBAL REAL ESTATE FUND

                       

Accumulation Unit Value at beginning of period

  $ 3.203      $ 2.834      $ 2.798   

Accumulation Unit Value at end of period

  $ 3.112      $ 3.203      $ 2.834   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. SMALL CAP EQUITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.673      $ 1.658      $ 1.223   

Accumulation Unit Value at end of period

  $ 1.559      $ 1.673      $ 1.658   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. TECHNOLOGY FUND

                       

Accumulation Unit Value at beginning of period

  $ 0.897      $ 0.819      $ 0.664   

Accumulation Unit Value at end of period

  $ 0.945      $ 0.897      $ 0.819   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. MANAGED VOLATILITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.612      $ 1.356      $ 1.241   

Accumulation Unit Value at end of period

  $ 1.555      $ 1.612      $ 1.356   

Number of Accumulation Units outstanding at end of period

                    

 

22


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 21.211       $ 1.005       $ 0.823       $ 0.586       $ 1.145       $ 1.035       $ 0.904   
$ 9.656       $ 21.211       $ 1.005       $ 0.823       $ 0.586       $ 1.145       $ 1.035   
                                                    
                                                               
$ 23.470       $ 0.553       $ 0.508       $ 0.405       $ 1.012       $ 1.319       $ 1.149   
$ 27.476       $       $ 0.553       $ 0.508       $ 0.405       $ 1.012       $ 1.319   
                                                    
                                                               
$ 1.171       $ 1.143       $ 1.101       $ 0.874       $ 1.242       $ 1.126       $ 1.085   
$ 1.396       $ 1.171       $ 1.143       $ 1.101       $ 0.874       $ 1.242       $ 1.126   
                                                    
                                                               
$ 2.215       $ 2.403       $ 2.073       $ 1.599       $ 2.929       $ 3.145       $ 2.236   
$ 2.798       $ 2.215       $ 2.403       $ 2.073       $ 1.599       $ 2.929       $ 3.145   
                                                  11,746   
                                                               
$ 1.089       $ 1.112       $ 0.878       $ 0.734       $ 1.083       $ 1.023       $ 0.909   
$ 1.223       $ 1.089       $ 1.112       $ 0.878       $ 0.734       $ 1.083       $ 1.023   
                                                    
                                                               
$ 0.605       $ 0.646       $ 0.540       $ 0.348       $ 0.636       $ 0.599       $ 0.550   
$ 0.664       $ 0.605       $ 0.646       $ 0.540       $ 0.348       $ 0.636       $ 0.599   
                                                    
                                                               
$ 1.215       $ 1.058       $ 1.001       $ 0.891       $ 1.335       $ 1.123       $ 0.907   
$               1.241       $        1.215       $         1.058       $         1.001       $         0.891       $         1.335       $         1.123   
                                                    

 

23


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 3% Guaranteed Death Benefit Rider

 

Subaccount    2015      2014      2013  

ALGER BALANCED PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $           1.363       $           1.263       $           1.111   

Accumulation Unit Value at end of period

   $ 1.363       $ 1.363       $ 1.263   

Number of Accumulation Units outstanding at end of period

                       

ALGER LARGE CAP GROWTH PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $ 1.218       $ 1.113       $ 0.835   

Accumulation Unit Value at end of period

   $ 1.221       $ 1.218       $ 1.113   

Number of Accumulation Units outstanding at end of period

                       

ALGER GROWTH & INCOME PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $ 1.258       $ 1.134       $ 0.885   

Accumulation Unit Value at end of period

   $ 1.252       $ 1.258       $ 1.134   

Number of Accumulation Units outstanding at end of period

     1,253         1,258         1,264   

ALGER CAPITAL APPRECIATION PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $ 1.653       $ 1.473       $ 1.105   

Accumulation Unit Value at end of period

   $ 1.730       $ 1.653       $ 1.473   

Number of Accumulation Units outstanding at end of period

     1,547         1,554         1,561   

ALGER MID CAP GROWTH PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $ 1.619       $ 1.520       $ 1.135   

Accumulation Unit Value at end of period

   $ 1.572       $ 1.619       $ 1.520   

Number of Accumulation Units outstanding at end of period

                     27   

ALGER SMALL CAP GROWTH PORTFOLIO

                          

Accumulation Unit Value at beginning of period

   $ 1.428       $ 1.442       $ 1.089   

Accumulation Unit Value at end of period

   $ 1.361       $ 1.428       $ 1.442   

Number of Accumulation Units outstanding at end of period

                       

FEDERATED MANAGED VOLATILITY FUND II

                          

Accumulation Unit Value at beginning of period

   $ 1.513       $ 1.476       $ 1.203   

Accumulation Unit Value at end of period

   $ 1.379       $ 1.513       $ 1.476   

Number of Accumulation Units outstanding at end of period

                       

FEDERATED HIGH INCOME BOND FUND II – Primary Shares

                          

Accumulation Unit Value at beginning of period

   $ 2.115       $ 2.089       $ 1.980   

Accumulation Unit Value at end of period

   $ 2.032       $ 2.115       $ 2.089   

Number of Accumulation Units outstanding at end of period

                       

 

24


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
  1.060       $ 1.075       $ 0.988       $ 0.775       $ 1.152       $ 1.040       $ 1.007   
  1.111       $ 1.060       $ 1.075       $ 0.988       $ 0.775       $ 1.152       $ 1.040   
                  336         343         353         360         366   
                                                               
  0.771       $ 0.785       $ 0.702       $ 0.482       $ 0.908       $ 0.768       $ 0.741   
  0.835       $ 0.771       $ 0.785       $ 0.702       $ 0.482       $ 0.908       $ 0.768   
                                                    
                                                               
  0.799       $ 0.760       $ 0.770       $ 0.527       $ 0.883       $ 0.813       $ 0.754   
  0.885       $ 0.799       $ 0.760       $ 0.770       $ 0.527       $ 0.883       $ 0.813   
  1,272         1,280         1,288         1,298         1,313         1,322         1,332   
                                                               
  0.947       $ 0.964       $ 0.953       $ 0.575       $ 1.063       $ 0.807       $ 0.686   
  1.105       $ 0.947       $ 0.964       $ 0.953       $ 0.575       $ 1.063       $ 0.807   
  1,570         1,580         2,075         2,098         2,131         2,153         2,174   
                                                               
  0.990       $ 1.095       $ 0.930       $ 0.621       $ 1.514       $ 1.167       $ 1.075   
  1.135       $ 0.990       $ 1.095       $ 0.930       $ 0.621       $ 1.514       $ 1.167   
  37         49         60         72         85         99         108   
                                                               
  0.982       $ 1.028       $ 0.832       $ 0.580       $ 1.101       $ 0.953       $ 0.805   
  1.089       $ 0.982       $ 1.028       $ 0.832       $ 0.580       $ 1.101       $ 0.953   
                                                  6,334   
                                                               
  1.098       $ 1.063       $ 0.962       $ 0.760       $ 0.968       $ 0.944       $ 0.828   
  1.203       $ 1.098       $ 1.063       $ 0.962       $ 0.760       $ 0.968       $ 0.944   
                                                    
                                                               
  1.751       $ 1.688       $ 1.492       $ 0.990       $ 1.356       $ 1.330       $ 1.217   
                1.980       $         1.751       $         1.688       $         1.492       $         0.990       $         1.356       $         1.330   
                                                    

 

25


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 3% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FEDERATED KAUFMANN FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $           2.040      $           1.885      $           1.365   

Accumulation Unit Value at end of period

  $ 2.140      $ 2.040      $ 1.885   

Number of Accumulation Units outstanding at end of period

                    

FEDERATED QUALITY BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 1.386      $ 1.354      $ 1.359   

Accumulation Unit Value at end of period

  $ 1.364      $ 1.386      $ 1.354   

Number of Accumulation Units outstanding at end of period

                    

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II

                       

Accumulation Unit Value at beginning of period

  $ 1.259      $ 1.221      $ 1.264   

Accumulation Unit Value at end of period

  $ 1.248      $ 1.259      $ 1.221   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP CONTRAFUND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 2.098      $ 1.906      $ 1.476   

Accumulation Unit Value at end of period

  $ 2.078      $ 2.098      $ 1.906   

Number of Accumulation Units outstanding at end of period

    191        192        192   

FIDELITY VIP EQUITY-INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.632      $ 1.526      $ 1.210   

Accumulation Unit Value at end of period

  $ 1.541      $ 1.632      $ 1.526   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP GROWTH & INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.839      $ 1.692      $ 1.288   

Accumulation Unit Value at end of period

  $ 1.768      $ 1.839      $ 1.692   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP GROWTH OPPORTUNITIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.408      $ 1.276      $ 0.941   

Accumulation Unit Value at end of period

  $ 1.463      $ 1.408      $ 1.276   

Number of Accumulation Units outstanding at end of period

                    

 

26


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.180       $ 1.380       $ 1.186       $ 0.929       $ 1.618       $ 1.356       $ 1.197   
$ 1.365       $ 1.180       $ 1.380       $ 1.186       $ 0.929       $ 1.618       $ 1.356   
                                                    
                                                               
$ 1.257       $ 1.246       $ 1.164       $ 0.980       $ 1.073       $ 1.032       $ 1.005   
$ 1.359       $ 1.257       $ 1.246       $ 1.164       $ 0.980       $ 1.073       $ 1.032   
                                                    
                                                               
$ 1.245       $ 1.193       $ 1.151       $ 1.109       $ 1.079       $ 1.029       $ 1.002   
$ 1.264       $ 1.245       $ 1.193       $ 1.151       $ 1.109       $ 1.079       $ 1.029   
                                                    
                                                               
$ 1.289       $ 1.344       $ 0.973       $ 0.873       $ 1.544       $ 1.335       $ 1.215   
$ 1.476       $ 1.289       $ 1.344       $ 0.973       $ 0.873       $ 1.544       $ 1.335   
  194         195         196         2,055         2,061         2,065         2,069   
                                                               
$ 1.049       $ 1.057       $ 0.932       $ 0.728       $ 1.291       $ 1.293       $ 1.093   
$ 1.210       $ 1.049       $ 1.057       $ 0.932       $ 0.728       $ 1.291       $ 1.293   
                                          10,609           
                                                               
$ 1.105       $ 1.105       $ 0.978       $ 0.781       $ 1.363       $ 1.236       $ 1.111   
$ 1.288       $ 1.105       $ 1.105       $ 0.978       $ 0.781       $ 1.363       $ 1.236   
                                          10,052           
                                                               
$ 0.800       $ 0.795       $ 0.653       $ 0.455       $ 1.029       $ 0.849       $ 0.819   
$               0.941       $         0.800       $         0.795       $         0.653       $         0.455       $         1.029       $         0.849   
                                                    

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 3% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FIDELITY VIP INDEX 500 PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.474      $ 1.320      $ 1.014   

Accumulation Unit Value at end of period

  $ 1.469      $ 1.474      $ 1.320   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.345      $ 1.291      $ 1.337   

Accumulation Unit Value at end of period

  $ 1.315      $ 1.345      $ 1.291   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP MID CAP PORTFOLIO (Class 2)*

                       

Accumulation Unit Value at beginning of period

  $ 3.265      $ 3.123      $ 2.331   

Accumulation Unit Value at end of period

  $ 3.167      $ 3.265      $ 3.123   

Number of Accumulation Units outstanding at end of period

    1,055        1,059        1,064   

FIDELITY VIP GOVERNMENT MONEY MARKET PORTFOLIO (Class 2)*

                       

Accumulation Unit Value at beginning of period

  $ 0.936      $ 0.949      $ 0.962   

Accumulation Unit Value at end of period

  $ 0.932      $ 0.936      $ 0.949   

Number of Accumulation Units outstanding at end of period

                  54   

FIDELITY VIP VALUE PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.730      $ 1.579      $ 1.211   

Accumulation Unit Value at end of period

  $ 1.689      $ 1.730      $ 1.579   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP VALUE STRATEGIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.956      $ 1.862      $ 1.451   

Accumulation Unit Value at end of period

  $ 1.867      $ 1.956      $ 1.862   

Number of Accumulation Units outstanding at end of period

                    

MFS CORE EQUITY PORTFOLIO**

                       

Accumulation Unit Value at beginning of period

  $ 1.192      $ 1.087      $ 0.819   

Accumulation Unit Value at end of period

  $          23.099      $           1.192      $           1.087   

Number of Accumulation Units outstanding at end of period

                    

*Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.

** Effective March 27, 2015, the MFS Core Equity Series reorganized and merged into the MFS Core Equity Portfolio.

 

28


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.890       $ 0.886       $ 0.795       $ 0.629       $ 1.015       $ 0.979       $ 0.860   
$ 1.104       $ 0.890       $ 0.886       $ 0.795       $ 0.629       $ 1.015       $ 0.979   
                  382         390         401         409         417   
                                                               
$ 1.284       $ 1.217       $ 1.147       $ 1.008       $ 1.058       $ 1.031       $ 1.004   
$ 1.337       $ 1.284       $ 1.217       $ 1.147       $ 1.008       $ 1.058       $ 1.031   
  6,525         6,536         6,546                         12,317           
                                                               
$ 2.063       $ 2.347       $ 1.800       $ 1.343       $ 2.256       $ 1.983       $ 1.789   
$ 2.331       $ 2.063       $ 2.347       $ 1.800       $ 1.343       $ 2.256       $ 1.983   
  4,208         4,235         4,530         4,564         4,536         4,554         10,581   
                                                               
$ 0.976       $ 0.989       $       $       $       $       $   
$ 0.962       $ 0.976       $ 0.989       $       $       $       $   
  6,574         6,633         6,693                                   
                                                               
$ 1.019       $ 1.062       $ 0.916       $ 0.654       $ 1.242       $ 1.237       $ 1.096   
$ 1.211       $ 1.019       $ 1.062       $ 0.916       $ 0.654       $ 1.242       $ 1.237   
                                                    
                                                               
$ 1.158       $ 1.291       $ 1.036       $ 0.669       $ 1.392       $ 1.339       $ 1.170   
$ 1.451       $ 1.158       $ 1.291       $ 1.036       $ 0.669       $ 1.392       $ 1.339   
                                                  4,503   
                                                               
$ 0.714       $ 0.732       $ 0.633       $ 0.485       $ 0.808       $ 0.737       $ 0.657   
$               0.819       $         0.714       $         0.732       $         0.633       $         0.485       $         0.808       $         0.737   
                                                    

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 3% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

MFS GROWTH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.104      $ 1.027      $ 0.761   

Accumulation Unit Value at end of period

  $ 1.171      $ 1.104      $ 1.027   

Number of Accumulation Units outstanding at end of period

                    

MFS INVESTORS TRUST SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.603      $ 1.465      $ 1.125   

Accumulation Unit Value at end of period

  $ 1.585      $ 1.603      $ 1.465   

Number of Accumulation Units outstanding at end of period

                    

MFS RESEARCH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.394      $ 1.283      $ 0.983   

Accumulation Unit Value at end of period

  $ 1.386      $ 1.394      $ 1.283   

Number of Accumulation Units outstanding at end of period

                    

T. ROWE PRICE EQUITY INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2.130      $ 2.011      $ 1.572   

Accumulation Unit Value at end of period

  $ 1.956      $ 2.130      $ 2.011   

Number of Accumulation Units outstanding at end of period

                    

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.078      $ 1.107      $ 0.985   

Accumulation Unit Value at end of period

  $ 1.054      $ 1.078      $ 1.107   

Number of Accumulation Units outstanding at end of period

                    

T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.352      $ 1.362      $ 1.380   

Accumulation Unit Value at end of period

  $ 1.338      $ 1.352      $ 1.362   

Number of Accumulation Units outstanding at end of period

                    

T. ROWE PRICE MID-CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2.958      $ 2.651      $ 1.967   

Accumulation Unit Value at end of period

  $           3.108      $           2.958      $           2.651   

Number of Accumulation Units outstanding at end of period

                    

 

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Table of Contents
2012      2011      2010      2009      2088      2007      2006  
                                                               
$ 0.658       $ 0.669       $ 0.588       $ 0.433       $ 0.702       $ 0.588       $ 0.552   
$ 0.761       $ 0.658       $ 0.669       $ 0.588       $ 0.433       $ 0.702       $ 0.588   
                                                    
                                                               
$ 0.957       $ 0.992       $ 0.906       $ 0.724       $ 1.097       $ 1.009       $ 0.905   
$ 1.125       $ 0.957       $ 0.992       $ 0.906       $ 0.724       $ 1.097       $ 1.009   
                                                    
                                                               
$ 0.850       $ 0.866       $ 0.758       $ 0.589       $ 0.934       $ 0.837       $ 0.768   
$ 0.983       $ 0.850       $ 0.866       $ 0.758       $ 0.589       $ 0.934       $ 0.837   
                                                    
                                                               
$ 1.361       $ 1.390       $ 1.240       $ 0.990       $ 1.571       $ 1.543       $ 1.315   
$ 1.572       $ 1.361       $ 1.390       $ 1.240       $ 0.990       $ 1.571       $ 1.543   
                          6,451         6,479         15,164         17,015   
                                                               
$ 0.843       $ 0.981       $ 0.870       $ 0.578       $ 1.143       $ 1.026       $ 0.874   
$ 0.985       $ 0.843       $ 0.981       $ 0.870       $ 0.578       $ 1.143       $ 1.026   
                                                    
                                                               
$ 1.366       $ 1.363       $ 1.341       $ 1.255       $ 1.253       $ 1.205       $ 1.174   
$ 1.380       $ 1.366       $ 1.363       $ 1.341       $ 1.255       $ 1.253       $ 1.205   
                                                    
                                                               
$ 1.752       $ 1.799       $ 0.932       $ 0.991       $ 1.669       $ 1.440       $ 1.370   
$               1.967       $         1.752       $         1.799       $         0.932       $         0.991       $         1.669       $         1.440   
                                                    

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 5% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

INVESCO V.I. MID CAP GROWTH FUND

                       

Accumulation Unit Value at beginning of period

  $ 13.842      $ 13.013      $ 9.645   

Accumulation Unit Value at end of period

  $ 13.794      $ 13.842      $ 13.013   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. DIVERSIFIED DIVIDEND FUND

                       

Accumulation Unit Value at beginning of period

  $ 39.278      $ 35.356      $ 27.403   

Accumulation Unit Value at end of period

  $ 39.473      $ 39.278      $ 35.356   

Number of Accumulation Units outstanding at end of period

    959        898        833   

INVESCO V.I. GLOBAL HEALTH CARE FUND

                       

Accumulation Unit Value at beginning of period

  $ 2.237      $ 1.899      $ 1.372   

Accumulation Unit Value at end of period

  $ 2.272      $ 2.237      $ 1.899   

Number of Accumulation Units outstanding at end of period

    11,939        12,501        22,020   

INVESCO V.I. GLOBAL REAL ESTATE FUND

                       

Accumulation Unit Value at beginning of period

  $ 3.138      $ 2.781      $ 2.749   

Accumulation Unit Value at end of period

  $ 3.044      $ 3.138      $ 2.781   

Number of Accumulation Units outstanding at end of period

    17,571        17,646        25,040   

INVESCO V.I. SMALL CAP EQUITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.639      $ 1.627      $ 1.202   

Accumulation Unit Value at end of period

  $ 1.525      $ 1.639      $ 1.627   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. TECHNOLOGY FUND

                       

Accumulation Unit Value at beginning of period

  $ 0.879      $ 0.804      $ 0.652   

Accumulation Unit Value at end of period

  $ 0.925      $ 0.879      $ 0.804   

Number of Accumulation Units outstanding at end of period

    9,265        9,802        9,993   

INVESCO V.I. MANAGED VOLATILITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.579      $ 1.330      $ 1.220   

Accumulation Unit Value at end of period

  $ 1.521      $ 1.579      $ 1.330   

Number of Accumulation Units outstanding at end of period

             20,351                 19,851                 19,129   

 

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2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 21.187       $ 0.991       $ 0.857       $ 0.579       $ 1.133       $ 1.026       $ 0.897   
$ 9.645       $ 21.187       $ 0.991       $ 0.857       $ 0.579       $ 1.133       $ 1.026   
          286         6,763         7,032         8,328         7,493         7,826   
                                                               
$ 23.444       $ 0.545       $ 0.502       $ 0.340       $ 1.002       $ 1.308       $ 1.141   
$ 27.403       $ 23.444       $ 0.545       $ 0.502       $ 0.340       $ 1.002       $ 1.308   
  757         664         25,179                                   
                                                               
$ 1.153       $ 1.126       $ 1.083       $ 0.864       $ 1.230       $ 1.117       $ 1.077   
$ 1.372       $ 1.153       $ 1.126       $ 1.083       $ 0.864       $ 1.230       $ 1.117   
  22,933         18,531         18,494         11,815         11,824         11,824         11,824   
                                                               
$ 2.180       $ 2.368       $ 2.026       $ 1.580       $ 2.899       $ 3.118       $ 2.220   
$ 2.749       $ 2.180       $ 2.368       $ 2.026       $ 1.580       $ 2.899       $ 3.118   
  23,341         27,590         37,879         37,741         38,371         37,227         29,492   
                                                               
$ 1.072       $ 1.096       $ 0.866       $ 0.725       $ 1.073       $ 1.015       $ 0.903   
$ 1.202       $ 1.072       $ 1.096       $ 0.866       $ 0.725       $ 1.073       $ 1.015   
                                                    
                                                               
$ 0.596       $ 0.637       $ 0.936       $ 0.344       $ 0.630       $ 0.594       $ 0.546   
$ 0.652       $ 0.596       $ 0.637       $ 0.936       $ 0.344       $ 0.630       $ 0.594   
  10,094         1,063         1,066         1,068                           
                                                               
$ 1.196       $ 1.043       $ 1.000       $ 0.880       $ 1.322       $ 1.113       $ 0.901   
$ 1.220       $ 1.196       $ 1.043       $ 1.000       $ 0.880       $ 1.322       $ 1.113   
               20,986                17,082                17,570                81,322                79,297                64,791                64,791   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 5% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

ALGER BALANCED PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.333      $ 1.237      $ 1.090   

Accumulation Unit Value at end of period

  $ 1.332      $ 1.333      $ 1.237   

Number of Accumulation Units outstanding at end of period

    15,269        16,547        17,217   

ALGER LARGE CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.191      $ 1.090      $ 0.820   

Accumulation Unit Value at end of period

  $ 1.193      $ 1.191      $ 1.090   

Number of Accumulation Units outstanding at end of period

    47,273        47,282        132,178   

ALGER GROWTH & INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.230      $ 1.111      $ 0.868   

Accumulation Unit Value at end of period

  $ 1.223      $ 1.230      $ 1.111   

Number of Accumulation Units outstanding at end of period

    7,676        8,485        123,930   

ALGER CAPITAL APPRECIATION PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.617      $ 1.443      $ 1.084   

Accumulation Unit Value at end of period

  $ 1.690      $ 1.617      $ 1.443   

Number of Accumulation Units outstanding at end of period

    41,946        43,941        46,744   

ALGER MID CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.584      $ 1.489      $ 1.114   

Accumulation Unit Value at end of period

  $ 1.535      $ 1.584      $ 1.489   

Number of Accumulation Units outstanding at end of period

    13,425        13,425        142,048   

ALGER SMALL CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.397      $ 1.413      $ 1.068   

Accumulation Unit Value at end of period

  $ 1.330      $ 1.397      $ 1.413   

Number of Accumulation Units outstanding at end of period

    14,427        14,323        93,987   

FEDERATED MANAGED VOLATILITY FUND II

                       

Accumulation Unit Value at beginning of period

  $ 1.480      $ 1.446      $ 1.207   

Accumulation Unit Value at end of period

  $ 1.347      $ 1.480      $ 1.446   

Number of Accumulation Units outstanding at end of period

              6,174                  6,179                  6,185   

 

34


Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.042       $ 1.058       $ 0.974       $ 0.765       $ 1.139       $ 1.030       $ 0.998   
$ 1.090       $ 1.042       $ 1.058       $ 0.974       $ 0.765       $ 1.139       $ 1.030   
  17,864         17,938         18,107         11,253         11,276         15,599         16,019   
                                                               
$ 0.758       $ 0.772       $ 0.692       $ 0.476       $ 0.898       $ 0.760       $ 0.734   
$ 0.820       $ 0.758       $ 0.772       $ 0.692       $ 0.476       $ 0.898       $ 0.760   
  159,513         219,783         240,934         275,520         309,155         320,903         355,221   
                                                               
$ 0.785       $ 0.748       $ 0.677       $ 0.520       $ 0.873       $ 0.805       $ 0.748   
$ 0.868       $ 0.785       $ 0.748       $ 0.677       $ 0.520       $ 0.873       $ 0.805   
  123,961         123,944         132,202         132,263         132,342         132,341         132,254   
                                                               
$ 0.931       $ 0.948       $ 0.854       $ 0.568       $ 1.051       $ 0.799       $ 0.681   
$ 1.084       $ 0.931       $ 0.948       $ 0.854       $ 0.568       $ 1.051       $ 0.799   
  49,612                50,718                52,105                41,362                43,364                43,617                36,993   
                                                               
$ 0.973       $ 1.078       $ 0.917       $ 0.614       $ 1.497       $ 1.156       $ 1.066   
$ 1.114       $ 0.973       $ 1.078       $ 0.917       $ 0.614       $ 1.497       $ 1.156   
              146,900         205,704         203,579         204,943         195,644         171,772         130,066   
                                                               
$ 0.965       $ 1.012       $ 0.820       $ 0.573       $ 1.089       $ 0.943       $ 0.798   
$ 1.068       $ 0.965       $ 1.012       $ 0.820       $ 0.573       $ 1.089       $ 0.943   
  97,871         186,313         185,948         154,085         155,183         140,024         92,161   
                                                               
$ 1.079       $ 1.046       $ 0.923       $ 0.751       $ 0.957       $ 0.935       $ 0.821   
$ 1.207       $ 1.079       $ 1.046       $ 0.923       $ 0.751       $ 0.957       $ 0.935   
  6,191         30,203         52,026         25,577         27,426         13,570         15,098   

 

35


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 5% Guaranteed Death Benefit Rider

 

Subaccount     2015        2014        2013   

FEDERATED HIGH INCOME BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $           2.069      $           2.046      $           1.943   

Accumulation Unit Value at end of period

  $ 1.985      $ 2.069      $ 2.046   

Number of Accumulation Units outstanding at end of period

    18,937        23,558        24,752   

FEDERATED KAUFMANN FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 2.011      $ 1.861      $ 1.349   

Accumulation Unit Value at end of period

  $ 2.106      $ 2.011      $ 1.861   

Number of Accumulation Units outstanding at end of period

    13,725        14,866        16,256   

FEDERATED QUALITY BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 1.366      $ 1.337      $ 1.344   

Accumulation Unit Value at end of period

  $ 1.342      $ 1.366      $ 1.337   

Number of Accumulation Units outstanding at end of period

    14,373        14,373        40,353   

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II

                       

Accumulation Unit Value at beginning of period

  $ 1.241      $ 1.205      $ 1.249   

Accumulation Unit Value at end of period

  $ 1.228      $ 1.241      $ 1.205   

Number of Accumulation Units outstanding at end of period

                    

FIDELITY VIP CONTRAFUND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 2.053      $ 1.867      $ 1.448   

Accumulation Unit Value at end of period

  $ 2.030      $ 2.053      $ 1.867   

Number of Accumulation Units outstanding at end of period

    102,068        130,291        280,709   

FIDELITY VIP EQUITY-INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.609      $ 1.506      $ 1.197   

Accumulation Unit Value at end of period

  $ 1.517      $ 1.609      $ 1.506   

Number of Accumulation Units outstanding at end of period

    18,712        18,865        18,983   

FIDELITY VIP GROWTH & INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.813      $ 1.670      $ 1.273   

Accumulation Unit Value at end of period

  $ 1.740      $ 1.813      $ 1.670   

Number of Accumulation Units outstanding at end of period

           527        529   

FIDELITY VIP GROWTH OPPORTUNITIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.378      $ 1.250      $ 0.923   

Accumulation Unit Value at end of period

  $ 1.429      $ 1.378      $ 1.250   

Number of Accumulation Units outstanding at end of period

           11,225        11,918   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.720       $ 1.661       $ 1.463       $ 0.977       $ 1.341       $ 1.317       $ 1.207   
$ 1.943       $ 1.720       $ 1.661       $ 1.463       $ 0.977       $ 1.341       $ 1.317   
  125,916         165,577         119,860         107,657         114,697         152,778         136,048   
                                                               
$ 1.168       $ 1.368       $ 1.153       $ 0.924       $ 1.612       $ 1.352       $ 1.195   
$ 1.349       $ 1.168       $ 1.368       $ 1.153       $ 0.924       $ 1.612       $ 1.352   
  17,163         25,252         37,423         15,614         14,556         14,994         16,530   
                                                               
$ 1.244       $ 1.235       $ 1.156       $ 0.975       $ 1.068       $ 1.030       $ 1.004   
$ 1.344       $ 1.244       $ 1.235       $ 1.156       $ 0.975       $ 1.068       $ 1.030   
  40,353         65,790         75,421         66,430         69,042         43,340         3,564   
                                                               
$ 1.232       $ 1.183       $ 1.143       $ 1.103       $ 1.074       $ 1.027       $ 1.001   
$ 1.249       $ 1.232       $ 1.183       $ 1.143       $ 1.103       $ 1.074       $ 1.027   
                                                    
                                                               
$ 1.266       $ 1.323       $ 1.149       $ 0.861       $ 1.527       $ 1.322       $ 1.205   
$ 1.448       $ 1.266       $ 1.323       $ 1.149       $ 0.861       $ 1.527       $ 1.322   
  292,026         304,743         379,514         388,621         415,152         391,862         336,851   
                                                               
$ 1.038       $ 1.048       $ 0.905       $ 0.724       $ 1.286       $ 1.290       $ 1.092   
$ 1.197       $ 1.038       $ 1.048       $ 0.905       $ 0.724       $ 1.286       $ 1.290   
  19,467         46,537         55,019         21,153         44,134         56,441         31,817   
                                                               
$ 1.094       $ 1.096       $ 1.000       $ 0.777       $ 1.358       $ 1.233       $ 1.110   
$ 1.273       $ 1.094       $ 1.096       $ 1.000       $ 0.777       $ 1.358       $ 1.233   
  532         3,401         12,348         12,351         12,354         8,410         3,768   
                                                               
$ 0.786       $ 0.783       $ 0.644       $ 0.449       $ 1.017       $ 0.841       $ 0.812   
$ 0.923       $ 0.786       $ 0.783       $ 0.644       $ 0.449       $ 1.017       $ 0.841   
               13,842                75,259                99,223               103,827               110,330                78,302                90,442   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 5% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FIDELITY VIP INDEX 500 PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $           1.442      $           1.293      $           0.995   

Accumulation Unit Value at end of period

  $ 1.435      $ 1.442      $ 1.293   

Number of Accumulation Units outstanding at end of period

    71,805        89,027        329,158   

FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.326      $ 1.275      $ 1.322   

Accumulation Unit Value at end of period

  $ 1.294      $ 1.326      $ 1.275   

Number of Accumulation Units outstanding at end of period

    365        388        411   

FIDELITY VIP MID CAP PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 3.198      $ 3.063      $ 2.290   

Accumulation Unit Value at end of period

  $ 3.098      $ 3.198      $ 3.063   

Number of Accumulation Units outstanding at end of period

    31,303        56,252        86,291   

FIDELITY VIP GOVERNMENT MONEY MARKET PORTFOLIO (Class 2)*

                       

Accumulation Unit Value at beginning of period

  $ 0.929      $ 0.944      $ 0.958   

Accumulation Unit Value at end of period

  $ 0.915      $ 0.929      $ 0.944   

Number of Accumulation Units outstanding at end of period

    66,305        89,325        166,163   

FIDELITY VIP VALUE PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.705      $ 1.559      $ 1.198   

Accumulation Unit Value at end of period

  $ 1.663      $ 1.705      $ 1.559   

Number of Accumulation Units outstanding at end of period

    5,972               14,278   

FIDELITY VIP VALUE STRATEGIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.928      $ 1.838      $ 1.434   

Accumulation Unit Value at end of period

  $ 1.837      $ 1.928      $ 1.838   

Number of Accumulation Units outstanding at end of period

    21,010        21,118        22,096   

MFS CORE EQUITY PORTFOLIO**

                       

Accumulation Unit Value at beginning of period

  $ 1.166      $ 1.065      $ 0.803   

Accumulation Unit Value at end of period

  $ 23.072      $ 1.166      $ 1.065   

Number of Accumulation Units outstanding at end of period

                  109,883   

*Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.

**Effective March 27, 2015, the MFS Core Equity Series reorganized and merged into the MFS Core Equity Portfolio.

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.874       $ 0.872       $ 0.772       $ 0.621       $ 1.004       $ 0.969       $ 0.853   
$ 0.995       $ 0.874       $ 0.872       $ 0.772       $ 0.621       $ 1.004       $ 0.969   
  334,918         458,007         507,813         565,182         685,244         779,986         584,829   
                                                               
$ 1.271       $ 1.206       $ 1.139       $ 1.002       $ 1.054       $ 1.029       $ 1.003   
$ 1.322       $ 1.271       $ 1.206       $ 1.139       $ 1.002       $ 1.054       $ 1.029   
  433         48,887         31,130         21,722         20,544         21,164         13,022   
                                                               
$ 2.030       $ 2.313       $ 1.827       $ 1.328       $ 2.233       $ 1.966       $ 1.777   
$ 2.290       $ 2.030       $ 2.313       $ 1.827       $ 1.328       $ 2.233       $ 1.966   
  90,510         105,845         151,737         154,229         156,717         129,506         99,328   
                                                               
$ 0.973       $ 0.988       $       $       $       $       $   
$ 0.958       $ 0.973       $ 0.988       $       $       $       $   
  161,951         247,899         422,646                                   
                                                               
$ 1.009       $ 1.053       $ 0.931       $ 0.650       $ 1.237       $ 1.234       $ 1.095   
$ 1.198       $ 1.009       $ 1.053       $ 0.931       $ 0.650       $ 1.237       $ 1.234   
  14,278         20,053         29,315         29,315         29,314         34,795         12,615   
                                                               
$ 1.146       $ 1.280       $ 1.029       $ 0.664       $ 1.386       $ 1.335       $ 1.169   
$ 1.434       $ 1.146       $ 1.280       $ 1.029       $ 0.664       $ 1.386       $ 1.335   
  22,238         32,496         32,589         34,360         36,714         25,435         12,582   
                                                               
$ 0.702       $ 0.720       $ 0.627       $ 0.479       $ 0.799       $ 0.730       $ 0.652   
$ 0.803       $ 0.702       $ 0.720       $ 0.627       $ 0.479       $ 0.799       $ 0.730   
              109,883               109,883               109,883               109,883               109,896               118,992               120,485   

 

39


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With 5% Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

MFS GROWTH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.086      $ 1.012      $ 0.751   

Accumulation Unit Value at end of period

  $ 1.150      $ 1.086      $ 1.012   

Number of Accumulation Units outstanding at end of period

    56,910        57,758        173,505   

MFS INVESTORS TRUST SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.569      $ 1.435      $ 1.104   

Accumulation Unit Value at end of period

  $ 1.548      $ 1.569      $ 1.435   

Number of Accumulation Units outstanding at end of period

                    

MFS RESEARCH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.369      $ 1.261      $ 0.968   

Accumulation Unit Value at end of period

  $ 1.358      $ 1.369      $ 1.261   

Number of Accumulation Units outstanding at end of period

                    

T. ROWE PRICE EQUITY INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2.083      $ 1.971      $ 1.543   

Accumulation Unit Value at end of period

  $ 1.911      $ 2.083      $ 1.971   

Number of Accumulation Units outstanding at end of period

    54,936        53,931        185,394   

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.055      $ 1.085      $ 0.966   

Accumulation Unit Value at end of period

  $ 1.030      $ 1.055      $ 1.085   

Number of Accumulation Units outstanding at end of period

    34,225        44,264        53,762   

T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.323      $ 1.335      $ 1.354   

Accumulation Unit Value at end of period

  $ 1.307      $ 1.323      $ 1.335   

Number of Accumulation Units outstanding at end of period

    55,948        61,377        97,797   

T. ROWE PRICE MID-CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2.893      $ 2.598      $ 1.930   

Accumulation Unit Value at end of period

  $ 3.036      $ 2.893      $ 2.598   

Number of Accumulation Units outstanding at end of period

              6,457                  6,460                 69,379   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.650       $ 0.662       $ 0.583       $ 0.430       $ 0.698       $ 0.585       $ 0.551   
$ 0.751       $ 0.650       $ 0.662       $ 0.583       $ 0.430       $ 0.698       $ 0.585   
  204,734         205,305         208,786         230,644         240,234         240,340         340,891   
                                                               
$ 0.941       $ 0.977       $ 0.909       $ 0.714       $ 1.084       $ 0.999       $ 0.898   
$ 1.104       $ 0.941       $ 0.977       $ 0.909       $ 0.714       $ 1.084       $ 0.999   
          10,819         10,827         10,835         10,845         18,096         17,090   
                                                               
$ 0.839       $ 0.856       $ 0.731       $ 0.583       $ 0.927       $ 0.832       $ 0.765   
$ 0.968       $ 0.839       $ 0.856       $ 0.731       $ 0.583       $ 0.927       $ 0.832   
  25,506         25,506         25,506         25,506         25,506         25,529         25,529   
                                                               
$ 1.338       $ 1.368       $ 1.208       $ 0.977       $ 1.553       $ 1.528       $ 1.304   
$ 1.543       $ 1.338       $ 1.368       $ 1.208       $ 0.977       $ 1.553       $ 1.528   
  192,802         336,412         384,287         375,426         384,340         359,532         278,567   
                                                               
$ 0.829       $ 0.965       $ 0.857       $ 0.571       $ 1.130       $ 1.016       $ 0.866   
$ 0.966       $ 0.829       $ 0.965       $ 0.857       $ 0.571       $ 1.130       $ 1.016   
  52,374         68,890         121,893         184,015         231,586         457,909         157,264   
                                                               
$ 1.342       $ 1.342       $ 1.322       $ 1.239       $ 1.239       $ 1.193       $ 1.164   
$ 1.354       $ 1.342       $ 1.342       $ 1.322       $ 1.239       $ 1.239       $ 1.193   
  89,837         146,001         146,697         144,730         135,608         180,482         115,102   
                                                               
$ 1.721       $ 1.771       $ 1.404       $ 0.979       $ 1.650       $ 1.426       $ 1.358   
$ 1.930       $ 1.721       $ 1.771       $ 1.404       $ 0.979       $ 1.650       $ 1.426   
               69,384                69,391                81,971                82,585                80,931                82,003                92,809   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With Minimum Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

INVESCO V.I. MID CAP GROWTH FUND

                       

Accumulation Unit Value at beginning of period

  $ 13.938      $ 13.070      $ 9.664   

Accumulation Unit Value at end of period

  $ 13.924      $ 13.938      $ 13.070   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. DIVERSIFIED DIVIDEND FUND

                       

Accumulation Unit Value at beginning of period

  $ 39.649      $ 35.601      $ 27.524   

Accumulation Unit Value at end of period

  $ 39.946      $ 39.649      $ 35.601   

Number of Accumulation Units outstanding at end of period

                  193   

INVESCO V.I. GLOBAL HEALTH CARE FUND

                       

Accumulation Unit Value at beginning of period

  $ 2.316      $ 1.960      $ 1.413   

Accumulation Unit Value at end of period

  $ 2.358      $ 2.316      $ 1.960   

Number of Accumulation Units outstanding at end of period

    21,531        21,531        21,531   

INVESCO V.I. GLOBAL REAL ESTATE FUND

                       

Accumulation Unit Value at beginning of period

  $ 3.248      $ 2.871      $ 2.832   

Accumulation Unit Value at end of period

  $ 3.159      $ 3.248      $ 2.871   

Number of Accumulation Units outstanding at end of period

    2,662        7,872        7,876   

INVESCO V.I. SMALL CAP EQUITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.697      $ 1.679      $ 1.238   

Accumulation Unit Value at end of period

  $ 1.583      $ 1.697      $ 1.679   

Number of Accumulation Units outstanding at end of period

                    

INVESCO V.I. TECHNOLOGY FUND

                       

Accumulation Unit Value at beginning of period

  $ 0.910      $ 0.830      $ 0.672   

Accumulation Unit Value at end of period

  $ 0.959      $ 0.910      $ 0.830   

Number of Accumulation Units outstanding at end of period

    45,190        45,196        45,203   

INVESCO V.I. MANAGED VOLATILITY FUND

                       

Accumulation Unit Value at beginning of period

  $ 1.635      $ 1.373      $ 1.256   

Accumulation Unit Value at end of period

  $ 1.579      $ 1.635      $ 1.373   

Number of Accumulation Units outstanding at end of period

              4,966                 13,073                 23,064   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 21.227       $ 1.015       $ 0.824       $ 0.591       $ 1.153       $ 1.041       $ 0.908   
$ 9.664       $       $ 1.015       $ 0.824       $ 0.591       $ 1.153       $ 1.041   
                          17,091         32,710         27,012         27,058   
                                                               
$ 23.488       $ 0.559       $ 0.538       $ 0.408       $ 1.019       $ 1.327       $ 1.155   
$ 27.524       $       $ 0.559       $ 0.538       $ 0.408       $ 1.019       $ 1.327   
  285                 12,199         12,864         10,817         10,314         10,395   
                                                               
$ 1.184       $ 1.154       $ 1.122       $ 0.881       $ 1.251       $ 1.133       $ 1.090   
$ 1.413       $ 1.184       $ 1.154       $ 1.122       $ 0.881       $ 1.251       $ 1.133   
  21,532         21,534         41,328         41,336         41,866         43,327         43,330   
                                                               
$ 2.239       $ 2.426       $ 2.092       $ 1.611       $ 2.949       $ 3.163       $ 2.247   
$ 2.832       $ 2.239       $ 2.426       $ 2.092       $ 1.611       $ 2.949       $ 3.163   
  11,264         11,151         11,030         10,897         49,991         46,927         172,023   
                                                               
$ 1.101       $ 1.124       $ 0.944       $ 0.740       $ 1.091       $ 1.029       $ 0.914   
$ 1.238       $ 1.101       $ 1.124       $ 0.944       $ 0.740       $ 1.091       $ 1.029   
  943         1,734         1,117         1,059         1,196         1,200         1,164   
                                                               
$ 0.612       $ 0.653       $ 0.544       $ 0.351       $ 0.641       $ 0.603       $ 0.553   
$ 0.672       $ 0.612       $ 0.653       $ 0.544       $ 0.351       $ 0.641       $ 0.603   
  45,213         45,224         54,322         354,875         53,115         66,829         66,851   
                                                               
$ 1.229       $ 1.069       $ 1.019       $ 0.898       $ 1.344       $ 1.129       $ 0.912   
$ 1.256       $ 1.229       $ 1.069       $ 1.019       $ 0.898       $ 1.344       $ 1.129   
               29,690                25,377                26,271                51,342               151,593               350,742               324,785   

 

43


Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With Minimum Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

ALGER BALANCED PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.383      $ 1.280      $ 1.125   

Accumulation Unit Value at end of period

  $ 1.385      $ 1.383      $ 1.280   

Number of Accumulation Units outstanding at end of period

    762        7,871        18,573   

ALGER LARGE CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.236      $ 1.128      $ 0.846   

Accumulation Unit Value at end of period

  $ 1.241      $ 1.236      $ 1.128   

Number of Accumulation Units outstanding at end of period

    43,439        48,942        69,491   

ALGER GROWTH & INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.276      $ 1.149      $ 0.896   

Accumulation Unit Value at end of period

  $ 1.272      $ 1.276      $ 1.149   

Number of Accumulation Units outstanding at end of period

    27,625        29,661        39,302   

ALGER CAPITAL APPRECIATION PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.677      $ 1.494      $ 1.119   

Accumulation Unit Value at end of period

  $ 1.758      $ 1.677      $ 1.494   

Number of Accumulation Units outstanding at end of period

    19,101        25,731        29,737   

ALGER MID CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.643      $ 1.541      $ 1.150   

Accumulation Unit Value at end of period

  $ 1.597      $ 1.643      $ 1.541   

Number of Accumulation Units outstanding at end of period

    31,328        34,564        57,914   

ALGER SMALL CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.449      $ 1.462      $ 1.103   

Accumulation Unit Value at end of period

  $ 1.383      $ 1.449      $ 1.462   

Number of Accumulation Units outstanding at end of period

              8,240                  8,247                 29,769   

FEDERATED MANAGED VOLATILITY FUND II

                       

Accumulation Unit Value at beginning of period

  $ 1.535      $ 1.497      $ 1.246   

Accumulation Unit Value at end of period

  $ 1.401      $ 1.535      $ 1.497   

Number of Accumulation Units outstanding at end of period

    726        730        6,115   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.073       $ 1.087       $ 0.998       $ 0.782       $ 1.161       $ 1.047       $ 1.013   
$ 1.125       $ 1.073       $ 1.087       $ 0.998       $ 0.782       $ 1.161       $ 1.047   
  21,778         30,637         118,246         64,752         222,742         230,733         208,028   
                                                               
$ 0.780       $ 0.793       $ 0.709       $ 0.487       $ 0.915       $ 0.773       $ 0.745   
$ 0.846       $ 0.780       $ 0.793       $ 0.709       $ 0.487       $ 0.915       $ 0.773   
  98,463         102,088         150,589         154,934         180,321         186,513         118,427   
                                                               
$ 0.808       $ 0.769       $ 0.694       $ 0.534       $ 0.890       $ 0.819       $ 0.759   
$ 0.896       $ 0.808       $ 0.769       $ 0.694       $ 0.534       $ 0.890       $ 0.819   
  41,132         132,253         199,373         230,875         255,355         207,425         82,838   
                                                               
$ 0.959       $ 0.974       $ 0.865       $ 0.580       $ 1.071       $ 0.813       $ 0.691   
$ 1.119       $ 0.959       $ 0.974       $ 0.865       $ 0.580       $ 1.071       $ 0.813   
  52,156         101,031         140,726         391,435         200,672         460,069         62,771   
                                                               
$ 1.002       $ 1.107       $ 0.939       $ 0.627       $ 1.526       $ 1.175       $ 1.081   
$ 1.150       $ 1.002       $ 1.107       $ 0.939       $ 0.627       $ 1.526       $ 1.175   
  39,127         155,198         171,350         450,494         270,716         187,265         168,467   
                                                               
$ 0.993       $ 1.039       $ 0.840       $ 0.585       $ 1.110       $ 0.959       $ 0.810   
$ 1.103       $ 0.993       $ 1.039       $ 0.840       $ 0.585       $ 1.110       $ 0.959   
  14,665         40,672         222,822         42,964         75,573         316,385         319,485   
                                                               
$ 1.111       $ 1.075       $ 0.873       $ 0.767       $ 0.976       $ 0.951       $ 0.833   
$ 1.246       $ 1.111       $ 1.075       $ 0.873       $ 0.767       $ 0.976       $ 0.951   
           14,972                32,319                36,097                 4,580                87,238                87,245                87,251   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With Minimum Guaranteed Death Benefit Rider

 

Subaccount     2015        2014        2013   
FEDERATED HIGH INCOME BOND FUND II – Primary Shares                        

Accumulation Unit Value at beginning of period

  $           2.147      $           2.118      $           2.005   

Accumulation Unit Value at end of period

  $ 2.065      $ 2.147      $ 2.118   

Number of Accumulation Units outstanding at end of period

    28,229        30,851        33,707   

FEDERATED KAUFMANN FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 2.060      $ 1.902      $ 1.375   

Accumulation Unit Value at end of period

  $ 2.163      $ 2.060      $ 1.902   

Number of Accumulation Units outstanding at end of period

                    

FEDERATED QUALITY BOND FUND II – Primary Shares

                       

Accumulation Unit Value at beginning of period

  $ 1.400      $ 1.366      $ 1.370   

Accumulation Unit Value at end of period

  $ 1.378      $ 1.400      $ 1.366   

Number of Accumulation Units outstanding at end of period

    3,688        3,691        3,707   

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II

                       

Accumulation Unit Value at beginning of period

  $ 1.272      $ 1.231      $ 1.274   

Accumulation Unit Value at end of period

  $ 1.262      $ 1.272      $ 1.231   

Number of Accumulation Units outstanding at end of period

    4,509        4,947        4,960   

FIDELITY VIP CONTRAFUND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 2.130      $ 1.932      $ 1.495   

Accumulation Unit Value at end of period

  $ 2.111      $ 2.130      $ 1.932   

Number of Accumulation Units outstanding at end of period

    40,693        51,169        115,813   

FIDELITY VIP EQUITY-INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.648      $ 1.539      $ 1.220   

Accumulation Unit Value at end of period

  $ 1.558      $ 1.648      $ 1.539   

Number of Accumulation Units outstanding at end of period

    15,970        19,811        32,815   

FIDELITY VIP GROWTH & INCOME PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.857      $ 1.707      $ 1.298   

Accumulation Unit Value at end of period

  $ 1.787      $ 1.857      $ 1.707   

Number of Accumulation Units outstanding at end of period

    32,405        32,351        32,385   

FIDELITY VIP GROWTH OPPORTUNITIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.430      $ 1.294      $ 0.953   

Accumulation Unit Value at end of period

  $ 1.486      $ 1.430      $ 1.294   

Number of Accumulation Units outstanding at end of period

    2,262        2,003        2,008   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 1.771       $ 1.706       $ 1.507       $ 0.999       $ 1.367       $ 1.339       $ 1.224   
$ 2.005       $ 1.771       $ 1.706       $ 1.507       $ 0.999       $ 1.367       $ 1.339   
  46,992         50,986         260,195         645,046         118,242         124,144         131,936   
                                                               
$ 1.188       $ 1.388       $ 1.140       $ 0.932       $ 1.622       $ 1.358       $ 1.198   
$ 1.375       $ 1.188       $ 1.388       $ 1.140       $ 0.932       $ 1.622       $ 1.358   
  1,342         5,435         7,529         6,143         6,966         25,670         2,672   
                                                               
$ 1.265       $ 1.253       $ 1.176       $ 0.984       $ 1.075       $ 1.034       $ 1.006   
$ 1.370       $ 1.265       $ 1.253       $ 1.176       $ 0.984       $ 1.075       $ 1.034   
  12,183         27,906         165,549         34,190         17,571                   
                                                               
$ 1.253       $ 1.200       $ 1.172       $ 1.113       $ 1.081       $ 1.031       $ 1.003   
$ 1.274       $ 1.253       $ 1.200       $ 1.172       $ 1.113       $ 1.081       $ 1.031   
  9,059         9,077         13,963         28,933         190,472         25,080         4,167   
                                                               
$ 1.304       $ 1.359       $ 1.177       $ 0.880       $ 1.557       $ 1.344       $ 1.222   
$ 1.495       $ 1.304       $ 1.359       $ 1.177       $ 0.880       $ 1.557       $ 1.344   
  121,840         196,979         242,172         300,392         382,720         404,775         338,141   
                                                               
$ 1.056       $ 1.063       $ 0.931       $ 0.731       $ 1.294       $ 1.295       $ 1.094   
$ 1.220       $ 1.056       $ 1.063       $ 0.931       $ 0.731       $ 1.294       $ 1.295   
  42,228         43,885         56,438         58,252         131,125         122,034         79,449   
                                                               
$ 1.112       $ 1.111       $ 0.983       $ 0.784       $ 1.367       $ 1.238       $ 1.111   
$ 1.298       $ 1.112       $ 1.111       $ 0.983       $ 0.784       $ 1.367       $ 1.238   
  32,470         41,512         42,147         44,851         44,722         17,318           
                                                               
$ 0.809       $ 0.804       $ 0.660       $ 0.459       $ 1.037       $ 0.855       $ 0.824   
$ 0.953       $ 0.809       $ 0.804       $ 0.660       $ 0.459       $ 1.037       $ 0.855   
               19,619                19,627         19,640                19,655                19,679                64,073                13,133   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With Minimum Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

FIDELITY VIP INDEX 500 PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $           1.496      $           1.338      $           1.028   

Accumulation Unit Value at end of period

  $ 1.493      $ 1.496      $ 1.338   

Number of Accumulation Units outstanding at end of period

    194,191        200,855        238,942   

FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.358      $ 1.303      $ 1.348   

Accumulation Unit Value at end of period

  $ 1.329      $ 1.358      $ 1.303   

Number of Accumulation Units outstanding at end of period

    5,449        6,359        6,380   

FIDELITY VIP MID CAP PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 3.311      $ 3.163      $ 2.358   

Accumulation Unit Value at end of period

  $ 3.215      $ 3.311      $ 3.163   

Number of Accumulation Units outstanding at end of period

    40,986        58,369        103,118   

FIDELITY VIP GOVERNMENT MONEY MARKET PORTFOLIO (Class 2)*

                       

Accumulation Unit Value at beginning of period

  $ 0.940      $ 0.953      $ 0.965   

Accumulation Unit Value at end of period

  $ 0.928      $ 0.940      $ 0.953   

Number of Accumulation Units outstanding at end of period

    216,113        255,959        462,539   

FIDELITY VIP VALUE PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.747      $ 1.593      $ 1.221   

Accumulation Unit Value at end of period

  $ 1.707      $ 1.747      $ 1.593   

Number of Accumulation Units outstanding at end of period

    34,189        32,669        32,669   

FIDELITY VIP VALUE STRATEGIES PORTFOLIO (Class 2)

                       

Accumulation Unit Value at beginning of period

  $ 1.975      $ 1.878      $ 1.462   

Accumulation Unit Value at end of period

  $ 1.887      $ 1.975      $ 1.878   

Number of Accumulation Units outstanding at end of period

    6,116        6,744        9,514   

MFS CORE EQUITY PORTFOLIO**

                       

Accumulation Unit Value at beginning of period

  $ 1.210      $ 1.102      $ 0.829   

Accumulation Unit Value at end of period

  $ 23.117      $ 1.210      $ 1.102   

Number of Accumulation Units outstanding at end of period

                  1,433   

*Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.

**Effective March 27, 2015, the MFS Core Equity Series reorganized and merged into the MFS Core Equity Portfolio

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.900       $ 0.896       $ 0.791       $ 0.634       $ 1.023       $ 0.986       $ 0.865   
$ 1.028       $ 0.900       $ 0.896       $ 0.791       $ 0.634       $ 1.023       $ 0.986   
  218,287         255,237         347,311         401,565         502,603         477,810         453,254   
                                                               
$ 1.293       $ 1.224       $ 1.153       $ 1.011       $ 1.061       $ 1.033       $ 1.005   
$ 1.348       $ 1.293       $ 1.224       $ 1.153       $ 1.011       $ 1.061       $ 1.033   
  6,758         22,473         180,575         26,721         17,099                   
                                                               
$ 2.086       $ 2.370       $ 1.868       $ 1.354       $ 2.271       $ 1.995       $ 1.798   
$ 2,358       $ 2.086       $ 2.370       $ 1.868       $ 1.354       $ 2.271       $ 1.995   
  133,174         169,704         286,296         292,554         289,201         411,957         524,028   
                                                               
$ 0.978       $ 0.990       $       $       $       $       $   
$ 0.965       $ 0.978       $ 0.990       $       $       $       $   
  758,321         490,629         562,606                                   
                                                               
$ 1.026       $ 1.068       $ 0.932       $ 0.656       $ 1.245       $ 1.239       $ 1.097   
$ 1.221       $ 1.026       $ 1.068       $ 0.932       $ 0.656       $ 1.245       $ 1.239   
  32,669         40,324         40,966         44,247         52,537                   
                                                               
$ 1.165       $ 1.298       $ 1.041       $ 0.671       $ 1.395       $ 1.341       $ 1.171   
$ 1.462       $ 1.165       $ 1.298       $ 1.041       $ 0.671       $ 1.395       $ 1.341   
  10,747         40,212         44,957         148,653         59,240         110,467           
                                                               
$ 0.723       $ 0.740       $ 0.634       $ 0.489       $ 0.814       $ 0.742       $ 0.661   
$ 0.829       $ 0.723       $ 0.740       $ 0.634       $ 0.489       $ 0.814       $ 0.742   
                1,530                40,991                41,067                41,054                41,023                41,019                40,558   

 

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Table of Contents

ACCUMULATION UNIT VALUES

For Contracts With Minimum Guaranteed Death Benefit Rider

 

Subaccount   2015     2014     2013  

MFS GROWTH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.120      $ 1.042      $ 0.771   

Accumulation Unit Value at end of period

  $ 1.190      $ 1.120      $ 1.042   

Number of Accumulation Units outstanding at end of period

    4,877        18,308        30,745   

MFS INVESTORS TRUST SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.627      $ 1.485      $ 1.139   

Accumulation Unit Value at end of period

  $ 1.610      $ 1.627      $ 1.485   

Number of Accumulation Units outstanding at end of period

    46,047        58,678        59,933   

MFS RESEARCH SERIES

                       

Accumulation Unit Value at beginning of period

  $ 1.415      $ 1.301      $ 0.996   

Accumulation Unit Value at end of period

  $ 1.408      $ 1.415      $ 1.301   

Number of Accumulation Units outstanding at end of period

    277        279        280   

T. ROWE PRICE EQUITY INCOME PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 2.162      $ 2.039      $ 1.593   

Accumulation Unit Value at end of period

  $ 1.987      $ 2.162      $ 2.039   

Number of Accumulation Units outstanding at end of period

    121,479        152,263        225,915   

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.095      $ 1.123      $ 0.997   

Accumulation Unit Value at end of period

  $ 1.071      $ 1.095      $ 1.123   

Number of Accumulation Units outstanding at end of period

    21,822        32,310        54,948   

T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 1.372      $ 1.381      $ 1.398   

Accumulation Unit Value at end of period

  $ 1.359      $ 1.372      $ 1.381   

Number of Accumulation Units outstanding at end of period

             30,243                 27,600                 24,736   

T. ROWE PRICE MID-CAP GROWTH PORTFOLIO

                       

Accumulation Unit Value at beginning of period

  $ 3.002      $ 2.689      $ 1.993   

Accumulation Unit Value at end of period

  $ 3.158      $ 3.002      $ 2.689   

Number of Accumulation Units outstanding at end of period

    916        1,535        1,541   

 

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Table of Contents
2012      2011      2010      2009      2008      2007      2006  
                                                               
$ 0.666       $ 0.677       $ 0.594       $ 0.437       $ 0.708       $ 0.592       $ 0.556   
$ 0.771       $ 0.666       $ 0.677       $ 0.594       $ 0.437       $ 0.708       $ 0.592   
  31,300         33,461         61,724         61,305         79,217         79,829         64,494   
                                                               
$ 0.969       $ 1.003       $ 0.905       $ 0.730       $ 1.106       $ 1.016       $ 0.910   
$ 1.139       $ 0.969       $ 1.003       $ 0.905       $ 0.730       $ 1.106       $ 1.016   
  69,431         70,771         72,250         73,583         74,295         53,371         86,842   
                                                               
$ 0.861       $ 0.876       $ 0.765       $ 0.594       $ 0.942       $ 0.843       $ 0.773   
$ 0.996       $ 0.861       $ 0.876       $ 0.765       $ 0.594       $ 0.942       $ 0.843   
  282         284         286         288         31,862         31,861         31,861   
                                                               
$ 1.377       $ 1.405       $ 1.238       $ 0.998       $ 1.583       $ 1.553       $ 1.323   
$ 1.593       $ 1.377       $ 1.405       $ 1.238       $ 0.998       $ 1.583       $ 1.553   
  284,455         337,909         462,256         406,245         574,441         560,065         437,007   
                                                               
$ 0.853       $ 0.992       $ 0.878       $ 0.584       $ 1.152       $ 1.033       $ 0.879   
$ 0.997       $ 0.853       $ 0.992       $ 0.878       $ 0.584       $ 1.152       $ 1.033   
  120,019         119,685         200,294         451,618         217,063         230,749         133,221   
                                                               
$ 1.382       $ 1.378       $ 1.360       $ 1.266       $ 1.263       $ 1.213       $ 1.181   
$ 1.398       $ 1.382       $ 1.378       $ 1.360       $ 1.266       $ 1.263       $ 1.213   
  30,070         36,089         48,557         46,322         411,468         70,150         68,638   
                                                               
$ 1.772       $ 1.819       $ 1.417       $ 1.000       $ 1.682       $ 1.450       $ 1.378   
$ 1.993       $ 1.772       $ 1.819       $ 1.417       $ 1.000       $ 1.682       $ 1.450   
                1,548                 2,288               101,562                11,720                12,344                31,569                23,684   

 

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CONTRACT

Type of Contract

This Prospectus offers an individual deferred Variable Annuity Contract providing for future annuity payments. You can choose to vary your Purchase Payments or pay a single Purchase Payment. The Contract can be either a Qualified or Non-Qualified Contract.

In certain states, the Contract may be offered as a group Contract with individual ownership represented by certificates. The discussion of Contracts in this Prospectus applies equally to certificates under group Contracts, unless the content specifies otherwise.

Certain provisions of the Contracts may be different than the general description in this Prospectus, and certain riders and options may not be available, because of legal restrictions in your state. See your Contract for specific variations since any such state variations will be included in your Contract or in riders or endorsements attached to your Contract. See your agent or contact us for specific information that may be applicable to your state.

Contract Transactions

Surrenders and transfers requested by you and Purchase Payments made by you (except for Proper Lockbox Payments as defined in the “Ways to Make Purchase Payments” section) are processed only on Valuation Dates that American National Insurance Company is open for business. We are closed for business on Friday, November 25, 2016, Friday, December 23, 2016 and Monday, December 26, 2016 in observation of the Thanksgiving and Christmas holidays. On Valuation Dates on which we are closed for business, only scheduled automated transactions (i.e. monthly deductions, periodic charges, dollar cost averaging program, Portfolio rebalancing program, systematic withdrawal program) and Proper Lockbox Payments as defined in the “Ways to Make Purchase Payments” section will be processed. All other transactions will be processed on the next Valuation Date that we are open for business.

Contract Application and Purchase Payments

To purchase a Contract, you must complete an application and send the minimum Purchase Payment to our Home Office. (See “Allocation of Purchase Payments” following this provision.) If your application cannot be processed within five (5) business days after receipt, we will request your permission to retain the payment until the completed application is received. If the application is not completed, and we do not receive such permission within five (5) business days after receipt of the payment, we will return your payment. We will credit your initial Purchase Payment to the Contract within two (2) business days after a completed application is received at our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574. All additional Purchase Payments will be credited with an effective date on the date the additional Purchase Payment is received in our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574.

You have a “free look” period during which you can return the Contract to our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 and get a refund. The refund will equal the greater of (1) all of your Purchase Payments plus any charges for premium taxes deducted there from or (2) Accumulation Value plus any expenses deducted during such period. The “free look” period is established by state law and generally expires ten (10) days after you receive a Contract. We require that Purchase Payments received by us be allocated to the Subaccount that invests in the Fidelity VIP Money Market Portfolio until the end of the fifteen (15) day period after the Date of Issue, or thirty-five (35) day period after the Date of Issue for a Contract issued to a person age 60 or over in California. Thereafter, amounts allocated to such Subaccount and Purchase Payments paid are allocated as directed by you. We will credit Purchase Payments received by us after the fifteen (15) day period, or thirty-five (35) day period for a Contract issued to a person age 60 or over in California, effective when such payments are received at our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574. No Surrender Charges are assessed on refunds.

 

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Allocation of Purchase Payments

After the end of the fifteen (15) day period, or thirty-five (35) day period for a Contract issued to a person age 60 or over in California, after the Date of Issue, the initial Purchase Payment and subsequent Purchase Payments will be allocated to the Subaccounts and the Fixed Account according to your instructions in the application. You can change these allocations at any time by written instruction to our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 or by telephone, if a properly completed telephone transfer authorization form is on file with us.

Ways to Make Purchase Payments

You may make Purchase Payments by check drawn on a U.S. Bank in U.S. dollars and made payable to American National Insurance Company or “ANICO.” If you do not receive a billing statement, send your additional Purchase Payments (after the initial Purchase Payment) directly to American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574. If you receive a billing statement, you may send a Proper Lockbox Payment in the pre-printed envelope to our lockbox at P. O. Box 4531, Houston, Texas 77210-4531. A “Proper Lockbox Payment” is defined as a Purchase Payment (1) accompanied by a billing notice; (2) in the exact amount of the Purchase Payment, as specified in the billing notice; and (3) for a contract that is in force and has not been surrendered. If an additional Purchase Payment is received at our lockbox that is not a Proper Lockbox Payment, the additional Purchase Payment and any accompanying material will be forwarded to our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574, which will cause a delay in the processing of the requested transaction for an in force contract. If the additional Purchase Payment is for a contract that is no longer in force, it will not be processed and will be returned to you.

If we receive your Purchase Payment through payroll allotment, such as salary deduction or salary reduction programs, we consider that we receive your Purchase Payment on the day we actually receive it, rather than the day the deduction from your payroll occurs. This is important for you to know because your Purchase Payment receives no interest or earnings for the time between the deduction from your payroll and our receipt of the payment.

Crediting of Accumulation Units

Before the Annuity Date, Purchase Payments will be used to purchase Accumulation Units in Subaccounts and be allocated to the Fixed Account as you have instructed. We will determine the number of Accumulation Units purchased by dividing the dollar amount of the Purchase Payment allocated to a Subaccount by the Accumulation Unit value for that Subaccount computed following such allocation.

Allocation of Charges and Other Deductions to the Subaccounts and the Fixed Account

Unless you instruct differently, deductions from the Subaccounts and the Fixed Account will be made, pro rata, to the extent necessary for us to:

 

    collect charges (except the Annual Contract Fee which is allocated pro-rata only among the Subaccounts);

 

    pay surrender value;

 

    provide benefits.

We will immediately reinvest dividends and capital gain distributions received from a Portfolio at net asset value in shares of that Portfolio.

 

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Determining Accumulation Unit Values

The Accumulation Unit Value of each Subaccount reflects the investment performance of that Subaccount. We calculate Accumulation Unit Value on each Valuation Date by multiplying the Accumulation Unit Value for the preceding Valuation Date by a net investment factor for that Subaccount. The net investment factor is determined on each Subaccount on each Valuation Date as follows:

 

    add the per share amount of any dividends or capital gains distributions declared by the corresponding Portfolio during the Valuation Period to the net asset value of a share in the Portfolio at the close of business on such Valuation Date;

 

    divide by the net asset value of a share in the Portfolio on the preceding Valuation Date; and

 

    subtract the applicable administrative asset fee and mortality and expense risk fees.

We will calculate the Accumulation Unit Value for each Subaccount at the end of each Valuation Period. Investment performance of the Portfolios will increase or decrease the Accumulation Unit Value for each corresponding Subaccount the Portfolio expenses and the deduction of certain charges by us will decrease the Accumulation Unit Value for each Subaccount.

Transfers

Transfers Before Annuity Date. You can make transfers among the Subaccounts and the Fixed Account subject to the following restrictions:

 

    Requests for transfers must be in writing and must be received by our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 or may be made by calling us if a properly completed telephone authorization form is on file with us.

 

    Requests for transfers must be clear and complete to be in good order.

 

    Transfers from Subaccounts must be at least $250, or the balance of the Subaccount, if less.

 

    The minimum amount which may remain in a Subaccount after a transfer is $1,000.

 

    Each Contract Year, the total amount transferred from the Fixed Account cannot exceed the greater of (1) 10% of the amount in the Fixed Account on the date of transfer or (2) $1,000 unless you are participating in the Dollar Cost Averaging Program.

 

    The first twelve (12) transfers in a Contract Year are free. A $10.00 fee will be deducted from the amount transferred for each additional transfer. (See the “Exchange Fee” provision in the “Charges and Deduction” section of this Prospectus.)

We will make transfers and determine values at the end of the Valuation Period in which your transfer request is received. We will only make transfers that are in good order. We may revoke or modify the transfer privilege. You cannot transfer to the dollar cost averaging Fixed Account options.

Special Note on Frequent Transfers—Additional Restrictions. The Contract is not appropriate for frequent transfers, market timing or any other kind of short-term trading strategy among Subaccounts. If you intend to trade frequently and/or use market timing investment strategies, you should not purchase this Contract.

 

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When you make a request to transfer Accumulation Value from one (1) Subaccount to another, your request triggers the purchase and redemption of shares of the affected Portfolios. These types of frequent transactions are referred to as “Frequent Trading,” “Market Timing,” or “Short-term Trading.” We discourage Frequent Trading. Frequent Trading can have adverse effects for other Contract Owners, as well as other investors in the Portfolios. As these adverse effects occur in the value of the Portfolios, the value of the units in the corresponding Subaccounts is similarly affected. The adverse effects may occur in the following situations:

 

    When purchases or redemption of shares of a Portfolio are made at net asset values that do not reflect the true value of the shares. This is often referred to as “arbitrage” and results in dilution of the value of the ownership interest of other investors in the Portfolio.

 

    When a Portfolio is forced to liquidate holdings at an inopportune time in order to pay a redemption. Unexpectedly large or frequent redemptions can cause a Portfolio to sell investments prematurely and thereby lose otherwise available investment opportunities and gains.

 

    When a Portfolio must maintain an unusually high liquidity level in order to satisfy redemptions caused by Frequent Trading. If investors in a Portfolio engage in Frequent Trading, a Portfolio must increase liquidity, or, in other words, keep higher levels of cash and cash equivalents instead of keeping the Portfolio invested in longer term assets. Higher liquidity can result in lower returns on the Portfolio assets.

 

    When a Portfolio incurs increased brokerage commissions and administrative costs as a result of the Frequent Trading. Frequent Trading often causes a Portfolio to trade its investments more frequently. Such increased trading generally results in an increase in brokerage commission expenses and administrative costs for the Portfolios. The increased costs and expenses result in lower returns for investors in the Portfolios

For the reasons discussed, we have adopted policies and procedures to help us identify and prevent Frequent Trading practices. While our policies and procedures are designed to identify and protect against Frequent Trading practices, there can be no certainty that we will identify and prevent Frequent Trading in all instances. When we do identify Frequent Trading, we will apply our policies and procedures consistently to all Contract Owners without special arrangement, waiver, or exception.

If we determine that you are engaging in Frequent Trading activity among the Subaccounts, we may, without prior notice, refuse to honor or process a transfer, reverse a transfer, or impose certain restrictions on your transfer privileges. If we reverse a transfer, we will do so within two (2) Valuation Dates. We will attempt to inform you or your registered representative by telephone that the transfer has been deemed Frequent Trading or otherwise potentially harmful to others, that the transfer has not been honored, and/or that your transfer privileges have been restricted.

We monitor for Frequent Trading activity among the Subaccounts based upon established parameters applied consistently to all Contract Owners. Such parameters may include, without limitation, the length of the holding period between transfers into a Subaccount and transfers out of the Subaccount, the number of transfers in a specified period, the dollar amount of transfers, and/or any combination of the foregoing. For purposes of applying the parameters used to detect potential Frequent Trading and other potentially harmful activity, we may aggregate transfers made in two (2) or more Contracts that we believe are connected, such as two (2) policies with the same Owner, or owned by spouses, or owned by different partnerships or corporations that are under common control.

We may vary our Frequent Trading policies and procedures from Subaccount to Subaccount, and may be more restrictive with regard to certain Subaccounts than others. Our Frequent Trading policies and procedures are currently the same for all Subaccounts. We may, however, not always apply Frequent Trading detection methods to Subaccounts investing in Portfolios that, in our judgment, would not be particularly attractive for Frequent Trading or susceptible to the harmful effects of Frequent Trading discussed above.

 

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We may also vary our Frequent Trading policies and procedures among other variable insurance products to account for differences in various factors, such as operational systems and Contract provisions. The Company retains the discretion to change its Frequent Trading policies and procedures at any time. The Company may even abandon such policies and procedures in the future; however, it is the Company’s present intention to maintain a diligent effort to discourage, detect and deter Frequent Trading.

We reserve the right to place restrictions on the transfer privileges of all Contract Owners we believe may otherwise engage in Frequent Trading or trading activity that is otherwise harmful to others. For example, we may only accept transfers by U.S. mail. We may refuse transfer requests submitted by phone, facsimile, e-mail or by any other electronic means. We may implement and administer redemption fees imposed by one (1) or more of the Portfolios in the future.

Portfolio Frequent Trading Restrictions. In addition to the restrictions we impose, each of the Portfolios may have its own Frequent Trading policies and procedures with respect to purchases and sales of Portfolio shares. The prospectuses of the Portfolios describe any such policies and procedures. The Frequent Trading policies and procedures of a Portfolio may be different, and more or less restrictive, than the Frequent Trading policies and procedures of other Portfolios and the Frequent Trading policies and procedures for the Contract described in this Prospectus.

We are legally obligated to provide information about each amount you cause to be invested into or removed from the Portfolio. If a Portfolio identifies you as having violated the Portfolio’s Frequent Trading Policies, we are obligated at the Portfolio’s request, to restrict or prohibit any further investment by you in respect to that Portfolio. Any such restriction or prohibition may remain in place indefinitely. You should review and comply with each Portfolio’s Frequent Trading Policies, which are disclosed in the Portfolios’ current prospectuses.

Postponed Transfers. Payment of withdrawal amounts and transfers may be postponed whenever:

 

    the NYSE is closed other than customary weekend and holiday closings, or trading on the NYSE is restricted as determined by the SEC;

 

    the SEC by order permits postponement for the protection of the Contract Owners; or

 

    an emergency exists, as determined by the SEC, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account’s net assets.

Transfers after the Annuity Date. After the Annuity Date, you can only make twelve (12) transfers among Subaccounts each Contract Year. You can transfer Annuity Units of one (1) Subaccount to Annuity Units of another Subaccount and to the Fixed Account at any time other than during the five (5) day interval before any annuity payment date. Transfers from the Fixed Account to the Subaccounts are not permitted during the Annuity Period.

 

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Telephone Transactions

You may make certain transactions under this Contract by telephoning us if you have executed and filed a telephone authorization form with us. You may only make telephone transactions by calling 1-800-306-2959. We reserve the right to limit or prohibit telephone transactions.

Transactions that can be conducted over the telephone include:

 

    transferring values;

 

    changing how your purchase payments are allocated;

 

    initiating, changing and stopping a Dollar Cost Averaging Program or a Rebalancing Program.

We will employ reasonable procedures to confirm that telephone instructions are genuine. These procedures may include, but are not limited to:

 

    requiring callers to identify themselves and the Contract Owner or others (e.g., beneficiary) by name, social security number, date of birth, or other identifying information;

 

    confirming telephone transactions in writing to you; and/or

 

    recording telephone transactions.

There are risks associated with telephone transactions that do not exist if a written request is submitted. Anyone authorizing or making telephone requests bears those risks. We will not be liable for any liability or losses resulting from unauthorized or allegedly unauthorized telephone requests that we believe are genuine.

Please note that our telephone system may not always be available for telephone calls or facsimile transmissions. Any telephone system, whether it is ours, yours, your service provider’s, or your registered representative’s, can experience unscheduled outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you can make your transaction request by writing our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574.

Special Programs

 

  Dollar Cost Averaging Program – If you have at least $10,000 Accumulation Value in your Contract, you can instruct us to periodically transfer an amount or percentage from a Subaccount or the Fixed Account to any Subaccount(s). The transfers can be made monthly, quarterly, semi-annually or annually. The amount transferred each time must be at least $1,000. The minimum transfer to each Subaccount must be at least $100. Transfers of Accumulation Value pursuant to this program will not be counted in determining whether the exchange fee applies. The program will be stopped if, on a transfer date, the Accumulation Value is less than $5,000. You can change the allocation instructions or stop the program by sending written notice or calling us by telephone if a properly completed telephone authorization form is on file with us. You can request participation in or discontinue the dollar cost averaging program at any time.

 

 

Fixed Account Dollar Cost Averaging Program – If you participate in the Fixed Account dollar cost averaging program, you may designate an amount to be held in one of the dollar cost averaging Fixed Account options until it is transferred to the Subaccounts or the Fixed Account as selected by you. The two options you must select from are a six (6) month or a twelve (12) month dollar cost averaging period. When you make an allocation to one of the dollar cost averaging Fixed Account options for this purpose, we will set an interest rate applicable to that amount. We will then credit interest at that rate to that amount until it has been entirely transferred to your chosen Subaccounts or the Fixed Account. Consistent with the option selected by you, we will complete the transfers within either six (6) or twelve (12) months of the allocation date, which will be the Date of Issue. At our discretion, we may change the rate that we set for new allocations to the dollar cost averaging Fixed Account options. We will never, however, set a rate less

 

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than an effective annual rate of 3%. The program is available only for Purchase Payments received on or prior to the Date of Issue. The minimum Purchase Payment to participate in the six (6) month dollar cost averaging option is $2,500. The minimum Purchase Payment to participate in the twelve (12) month dollar cost averaging option is $5,000. If you terminate the Fixed Account dollar cost averaging program any remaining balance in the Fixed Account dollar cost averaging option will be transferred to the Fixed Account.

Dollar cost averaging results in the purchase of more Accumulation Units when Accumulation Unit Value is low, and fewer when Accumulation Unit Value is high. There is no guarantee that dollar cost averaging, will result in higher Accumulation Value or otherwise be successful.

 

  Rebalancing Program - Under the rebalancing program, you can instruct us to allocate Purchase Payments and Accumulation Value among the Subaccounts and Fixed Account. In accordance with allocation instructions specified by you, we will rebalance your Accumulation Value by allocating Purchase Payments and transferring Accumulation Value among the Subaccounts and the Fixed Account. Rebalancing will be performed on a quarterly, semi-annual or annual basis as specified in the application. Transfers of Accumulation Value pursuant to this program will not be counted in determining whether the exchange fee applies. At the time the program begins, there must be at least $10,000 of Accumulation Value under the Contract. The program will be stopped if, on a rebalancing date, the Accumulation Value is less than $ 5,000. You can change the allocation instructions or stop the program by sending written notice or calling us by telephone if a properly completed telephone authorization form is on file with us. You can request participation in or discontinue such special program at any time.

There is no charge for participation in such special programs.

CHARGES AND DEDUCTIONS

Surrender Charge

Since no sales charge is deducted from your Purchase Payments, a Surrender Charge may be imposed on withdrawals to cover expenses of distributing the Contract. (See the “Deferred Sales Load (‘Surrender Charge’)” in the “Fee Tables” section of this Prospectus.)

Assume you have $40,000 Accumulation Value, $38,000 of which represents total Purchase Payments and $2,000 of which represents Accumulation Value less total Purchase Payments.

 

    Example 1 - Assume you want to withdraw $7,000. You can withdraw the greater of (1) 10% of your $40,000 Accumulation Value or (2) Accumulation Value minus total Purchase Payments with no Surrender Charge. Since 10% of your Accumulation Value, $4,000, is greater than Accumulation Value minus total Purchase Payments, $2,000, your Free Withdrawal Amount will be $4,000.

Accordingly, $4,000 of your withdrawal will be free of Surrender Charge. The remaining $3,000 is a withdrawal of Purchase Payments and will be subject to a Surrender Charge.

 

    Example 2 - Assume you have made a $3,000 withdrawal and want to make an additional $5,000 withdrawal in the same Contract Year. The first withdrawal would have been free because it was less than the Free Withdrawal Amount. However, such withdrawal would have utilized a portion of the Free Withdrawal Amount available in that Contract Year. The first part of the formula for calculating the Free Withdrawal Amount will be reduced by 7.5%, which is the percentage the first surrender was of your Accumulation Value at that time. If there have been no additional Purchase Payments or increases in the amount by which your Accumulation Value exceeds your total Purchase Payments since the first withdrawal, the Free Withdrawal Amount for the second withdrawal will be the greater of (1) 2.5% of your Accumulation Value, which is $925.00 or (2) Accumulation Value minus total Purchase Payments, which is zero. Accordingly, $925 of your second withdrawal will be free of Surrender Charges. The remaining $4,075 will be a withdrawal of Purchase Payments and will be subject to a Surrender Charge.

Even if your Accumulation Value is less than the total of your Purchase Payments, your Surrender Charge for a full surrender will be based upon the total of your Purchase Payments. Assume that you have $30,000 Accumulation Value, but you have paid $38,000 in Purchase Payments. On a full surrender, you can still

 

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withdraw 10% of your Accumulation Value, or $3,000, without a Surrender Charge; however, the applicable Surrender Charge percentage would then be applied to the total Purchase Payments less the Free Withdrawal Amount, or $35,000, not the $30,000 in Accumulation Value.

Other Charges

Your Contract before the Annuity Date is subject to certain other charges:

 

  Administrative Charges

A $35 Annual Contract Fee for each Contract Year unless all of your Accumulation Value is in the Fixed Account or is greater than $50,000 on the last day of a Contract Year.

An administrative asset fee charged daily against the Separate Account at an annual rate of 0.10%.

The Administrative Charges compensate us for administering the Contract.

 

  Premium Taxes

Premium taxes (which presently range from 0% to 3.5%) will be deducted from Purchase Payments if assessed by a state.

 

  Mortality and Expense Risk Fees

We assume the risks that Annuitants as a class may live longer than expected and that fees may not be sufficient to cover our actual costs. In assuming these risks, we agree to make annuity payments to the Annuitant or other payee for as long as the Annuitant may live. In addition, we are at risk for the death benefits payable under the Contract.

For our promises to accept these risks, a mortality and expense risk fee will be assessed daily against the Separate Account during the Accumulation Period at a rate of 1.1% per annum, and during the Annuity Period at a rate of 1.15% per annum. This fee does not apply to funds in the Fixed Account.

If you select one of our optional Enhanced Death Benefit Riders, we will charge you a higher mortality risk fee during the Accumulation Period. The mortality and expense risk fee will be 1.20% for Contracts which include the minimum guaranteed death benefit rider. The mortality and expense risk fee will be 1.30% for Contracts which include the 3% guaranteed death benefit rider. The mortality and expense risk fee will be 1.45% for Contracts which include the 5% guaranteed death benefit rider. We will calculate a separate Accumulation Unit Value for the Contracts without an Enhanced Death Benefit Rider, and for Contracts with each type of Rider, in order to reflect the differences in the mortality risk fees. Mortality and expense risk fees do not apply to funds in the Fixed Account.

 

  Charges for Taxes

Presently, there are none. We may, however, make a charge in the future if income or gains within the Separate Account incur federal, state, or local taxes or if our tax treatment changes. Charges for such taxes, if any, would be deducted from the Separate Account and the Fixed Account.

 

  Exchange Fee

A $10.00 exchange fee is charged for transfers among the Subaccounts and Fixed Account after twelve (12) transfers per Contract Year. Such fee compensates us for the costs of effecting the transfers. The exchange fee will be deducted from the amount transferred.

 

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Deduction of Fees

Deductions for Annual Contract Fees will be prorated among the Subaccounts.

Exceptions to Charges

We may reduce charges in sales to a trustee, employer, or similar entity if we determine that such sales reduce our sales or administrative expenses. We may also reduce charges in sales to directors, officers and bona fide full-time employees (and their spouses and minor children) of the Company.

The Contract may be sold directly, without compensation, to a registered representative, to employees, officers, directors, and trustees of the Company and our affiliated companies, and spouses and immediate family members (i.e., children, siblings, parents, and grandparents) of the foregoing, and to employees, officers, directors, trustees and registered representatives of any broker-dealer authorized to sell the Contract, and spouses and immediate family members of the foregoing. In such case, a Contract may be credited with some or all of the cost savings resulting from such direct sale, but only if such credit will not be unfairly discriminatory to any person.

DISTRIBUTIONS UNDER THE CONTRACT

DISTRIBUTIONS BEFORE ANNUITY DATE

Surrenders

You can surrender your Contract, in whole or in part, before the Annuity Date subject to the following limitations:

 

  If a partial surrender would leave less than $2,000 Accumulation Value, the Contract must be fully surrendered.

 

  A partial surrender request should specify the allocation of that surrender among the Subaccounts and the Fixed Account. If not specified, we will prorate the surrender among the Subaccounts and the Fixed Account. Surrender Charges will be deducted from the Accumulation Value remaining after a partial surrender.

The Accumulation Unit value for Surrenders will be the applicable Accumulation Unit value determined on the Valuation Date following receipt by us at our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 of your surrender request.

Surrender value is determined by:

 

  multiplying the number of Accumulation Units for each Subaccount times the Accumulation Unit Value;

 

  adding any Accumulation Value in the Fixed Account; and

 

  deducting any Surrender Charge.

We expect to pay surrenders within seven (7) days of receipt of your written request in proper form. We may delay payment of a partial surrender from the Fixed Account for up to six (6) months.

Unless you provide us a written election not to have federal and state income taxes withheld, we are required by law to withhold such taxes from the taxable portion of any surrender, and to remit that amount to the federal and/or state government.

 

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Systematic Withdrawal Program

Under the Systematic Withdrawal Program, you can instruct us to make payments of a predetermined dollar amount of Accumulation Value from one or more Subaccounts and the Fixed Account monthly, quarterly, semi-annually or annually. The total minimum systematic withdrawal payment is $100. The minimum systematic withdrawal from any one Subaccount or the Fixed Account is $50. Systematic withdrawals can be started at any time. We must receive written notification from you specifying the amount and frequency and timing of payment. You can specify the Subaccount from which systematic withdrawals will be made. If you do not specify, withdrawals will be taken pro-rata from each Subaccount. Surrender Charges will apply.

Because distributions may be taxable, you should consult your tax adviser before requesting systematic withdrawals. (See the “Federal Tax Matters” section of this Prospectus.)

Under the Systematic Withdrawal Program, you can participate in the Minimum Distributions Program by instructing us to calculate and make minimum distributions required if the Contract is used with a Qualified Plan. (See the “Taxation of Qualified Contracts” provision in the “Federal Tax Matters” section of this Prospectus.) We will determine the amount required to be distributed based on information you provide and choices you make. To participate in the Minimum Distributions Program, you must notify us of such election in writing in the calendar year during which you attain age 701/2. The Minimum Distributions Program is subject to all rules applicable to the Systematic Withdrawal Program. In addition, certain rules apply only to the Minimum Distributions Program. For a description of the requirements applicable to the Minimum Distributions Program, see “Minimum Distributions Program” in the Statement of Additional Information. Numerous special tax rules apply to Contract Owners whose Contract is used with a qualified plan. You should consult a tax adviser before electing to participate in the Minimum Distributions Program.

Waiver of Surrender Charges

We will waive Surrender Charges in the following situations:

Confinement Waiver – The Surrender Charge will be waived upon receipt of written proof from a licensed physician that you have been confined in any of the following facilities for at least sixty (60) consecutive days:

 

    a hospital which

 

  (1) is licensed or recognized by the state in which it is located;

 

  (2) provides or operates diagnostic and major surgery facilities for medical care and treatment of injured and sick persons on an inpatient basis;

 

  (3) charges for its services; and

 

  (4) provides twenty-four (24) hour nursing service by or under the supervision of a graduate registered nurse (R.N.).

 

    a convalescent care facility which

 

  (1) is licensed by the state in which it is located as a convalescent nursing facility, a skilled nursing facility, a convalescent hospital, a convalescent unit of a hospital, an intermediate care facility, or a custodial care facility;

 

  (2) provides continuous nursing service by or under the supervision of a physician or a graduate registered nurse (R.N.);

 

  (3) maintains a daily record of each patient and makes your record available for review by us; and

 

  (4) administers a planned program of observation and treatment by a physician in accordance with existing standards of medical practice.

 

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    a hospice facility which

 

  (1) is licensed, certified or registered by the state in which it is located as a hospice facility;

 

  (2) provides a formal care program for terminally ill patients whose life expectancy is less than six (6) months; and

 

  (3) provides services on an inpatient basis as directed by a physician.

This waiver is not available:

 

  (1) if you are confined in a hospital, nursing home or hospice facility on the Date of Issue;

 

  (2) if the application is signed by power of attorney;

 

  (3) if you are more than age 80 on the Date of Issue;

 

  (4) if you enter the hospital, convalescent care facility or hospice facility within ninety (90) days from the Date of Issue; or

 

  (5) concerning surrenders or withdrawals requested more than ninety (90) days after the last day of confinement in such facility.

Disability Waiver - The Surrender Charge will be waived while you are physically disabled or diagnosed with a disabling terminal illness. Such waiver is subject to the following requirements:

 

    proof of disability or disabling terminal illness, including written confirmation of receipt of Social Security Disability Benefits;

 

    proof of continued disability; and

 

    examination by a licensed physician chosen by us at our option.

This waiver is not available:

 

  (1)  if you are receiving Social Security Disability Benefits on the Date of Issue;

 

  (2)  if you are age 65 or older;

 

  (3)  if you were diagnosed with a terminal illness before the Date of Issue; or

 

  (4)  if you reside in certain states.

Death Benefit Before Annuity Date

If you or the Annuitant die before the Annuity Date, we will pay a standard death benefit equal to the greater of the Accumulation Value on the date due proof of death is received at our Home Office, or the sum of all Purchase Payments made less any withdrawals made prior to the date of death.

When you purchase your Contract, you may select an Enhanced Death Benefit Rider. The Enhanced Death Benefit Rider provides a minimum guaranteed death benefit should you or the Annuitant die before the Annuity Date. If you are not a natural person, the enhanced death benefit applies to the Annuitant’s death. If you select this rider, the death benefit will be the greater of the Accumulation Value or that provided by the Enhanced Death Benefit Rider. We will charge a higher mortality risk fee if you select one of these riders. If the Accumulation Value is greater than the death benefit provided by the Enhanced Death Benefit Rider, you will not receive any benefit from the Enhanced Death Benefit Rider or the higher mortality risk fee you paid for such rider. An Enhanced Death Benefit Rider can only be selected at the Date of Issue. If selected, the rider cannot be changed or terminated unless the entire Contract is terminated. The rider expires on the Annuity Date. We offer three (3) optional Enhanced Death Benefit Riders:

 

  (1) minimum guaranteed death benefit rider;

 

  (2) 3% guaranteed death benefit rider; and

 

  (3) 5% guaranteed death benefit rider.

 

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Minimum Guaranteed Death Benefit Rider

We recalculate the minimum guaranteed death benefit of your Contract each time you make a partial surrender, systematic withdrawal, and at the end of each six (6) Contract Years. During the first six (6) Contract Years, the minimum guaranteed death benefit will equal all Purchase Payments made less reductions to reflect partial surrenders and systematic withdrawals, if any, during such period. At the start of each subsequent six (6) Contract Year period, the minimum guaranteed death benefit will equal the greater of:

 

  (1) the Accumulation Value at the start of such six (6) Contract Year period; or

 

  (2) the minimum guaranteed death benefit at the start of the immediately preceding six (6) Contract Year period prior to you attaining age 85, plus Purchase Payments less a reduction to reflect partial surrenders and systematic withdrawals, made since the start of such immediately preceding six (6) Contract Year period.

For all other dates, the minimum guaranteed death benefit will equal the minimum guaranteed death benefit at the start of such six (6) Contract Year period, plus Purchase Payments and less a reduction to reflect partial surrenders or systematic withdrawals made during such period. A reduction in the minimum guaranteed death benefit is made each time you make a partial surrender or systematic withdrawal. The reduction is calculated by dividing the minimum guaranteed death benefit on the date immediately before a partial surrender or systematic withdrawal by the Accumulation Value on the date immediately prior to the surrender or withdrawal and multiplying the result by the amount of the partial surrender or systematic withdrawal (inclusive of any related Surrender Charge).

Example 1 - Assume you have made $4,000 in total Purchase Payments during the first six (6) Contract Year period and have made no partial surrenders or systematic withdrawals. Your minimum guaranteed death benefit at the end of the first six (6) Contract Year period would be $4,000.

Example 2 - Assume you make a $2,000 partial surrender in the third Contract Year of the first six (6) Contract Year period, at which time you have made $4,000 in total Purchase Payments, and your Contract’s Accumulation Value is $8,000. Your minimum guaranteed death benefit would be recalculated and reduced at the time of such partial surrender. The amount of such reduction would be $1,000, which is calculated by:

 

    dividing the minimum guaranteed death benefit immediately before the partial surrender ($4,000) by Accumulation Value at that time ($8,000); and

 

    multiplying such amount ($4,000 divided by $8,000, or .5) times the amount of the partial surrender ($2,000).

Your minimum guaranteed death benefit before the partial surrender ($4,000) would be reduced by the amount necessary ($1,000) to reflect the partial surrender which would result in a new minimum guaranteed death benefit of $3,000.

Example 3 - Assume you make a $4,000 partial surrender in the second Contract Year of the second six (6) Contract Year period. Assume further that you have made $1,000 in total Purchase Payments since the end of the first six (6) Contract Year period, that your Contract Accumulation Value is $10,000 and that the minimum guaranteed death benefit at the start of the second six (6) Contract Year period is $8,000. Your minimum guaranteed death benefit would be recalculated and reduced at the time of such partial surrender. The amount of such reduction would be $3,600, which is calculated by:

 

    dividing the minimum guaranteed death benefit immediately before the partial surrender of $9,000 ($8,000 for the minimum guaranteed death benefit at the end of the last six (6) Contract Year period plus $1,000 in Purchase Payments made since the end of the last six (6) Contract Year period) by Accumulation Value at that time ($10,000); and

 

    multiplying such amount ($9,000 divided by $10,000, or .9) times the amount of the partial surrender ($4,000).

 

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Your minimum guaranteed death benefit before the partial surrender ($9,000) would be reduced by the amount necessary ($3,600) to reflect the partial surrender which would result in a new minimum guaranteed death benefit of $5,400.

3% Guaranteed Death Benefit Rider

The 3% guaranteed death benefit is equal to (a) your total Purchase Payments, (b) less reductions to reflect any partial surrenders and systematic withdrawals, (c) plus interest at an annual effective rate of 3%. In no event will the 3% guaranteed death benefit exceed 200% of the net of Purchase Payments reduced by any partial surrenders and systematic withdrawals. Interest will accrue to the earlier of the date we receive proof of death; or

 

  (1) the day of the oldest Contract Owner’s 85th birthday; or

 

  (2) if the Contract Owner is a not a natural person, the oldest Annuitant’s 85th birthday.

After the 85th birthday of the oldest Owner, or if the Contract Owner is not a natural person, the oldest Annuitant, we will only adjust the 3% guaranteed death benefit for subsequent Purchase Payments, and for reductions to reflect subsequent partial surrenders or systematic withdrawals.

5% Guaranteed Death Benefit Rider

The 5% guaranteed death benefit is calculated in the same manner as the 3% guaranteed death benefit except that the interest is accrued at an annual effective rate of 5%, instead of 3%.

We expect to pay the death benefit in a lump sum to the beneficiary named in the Contract within seven (7) business days of receipt of proof of death in proper form.

In lieu of payment in a lump sum, you can elect that the death benefit be applied under one of the annuity options described in the “Annuity Options” provision in the “Distributions During the Annuity Period” section of this Prospectus. If you do not make such election, the beneficiary can do so. The person selecting the annuity option settlement may also designate contingent beneficiaries to receive any amounts due after death of the first beneficiary. The manner in which annuity payments to the beneficiary are determined and may vary, are described below under the subsection “Distributions During the Annuity Period.”

DISTRIBUTIONS DURING THE ANNUITY PERIOD

We will pay a monthly income benefit to the Annuitant beginning on the Annuity Date provided the Annuitant is still living. All or part of any amount payable at the Annuity Date may be applied to any of the annuity options. We will discharge in a single sum any liability under an assignment of the Contract and any applicable federal, state, municipal or other taxes, fees or assessments based on or predicated on the Purchase Payments which have not otherwise been deducted or offset. The remaining amount is the net sum payable. The minimum amount that we will apply to an Annuity Option is $5,000. No election can be made unless such election would produce an initial annuity payment of at least $100. Fixed basis income payment and variable basis income payment options are available. Our consent is required for any payment to a corporation, association, partnership, or trustee. Once an annuity payment is made, the annuity option cannot be changed to another annuity option.

Election of Annuity Option

 

  Non-Qualified Contracts – The form of annuity is elected in the application. A Contract cannot be purchased after the Annuitant’s age 85 and annuity payments must begin no later than Annuitant’s age 95. If you have not elected an annuity option, we will begin fixed basis payments at age 95 under Option 2, Life Annuity with 120 monthly payments certain. (See the “Federal Tax Matters” section of this Prospectus.)

 

 

Qualified Contracts – The form of annuity is elected in the application. A Contract cannot be purchased after age 85. Generally, under the Internal Revenue Code, annuity payments must begin no later than April 1st of the calendar year following the calendar year in which the Annuitant reaches 701/2 or retires. If you

 

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have not elected an annuity option, we will begin fixed basis payments under Option 2, Life Annuity with 120 monthly payments certain. (See the “Federal Tax Matters” section of this Prospectus.)

Annuity Options

The following annuity options are available.

 

  Option 1 - Life Annuity – Annuity payment payable monthly, during the lifetime of an individual, ceasing with the last annuity payment due before the death of the individual. This option offers the maximum level of monthly annuity payments since there is no provision for a minimum number of annuity payments or a death benefit for beneficiaries. It would be possible under this option for an individual to receive only one (1) annuity payment if death occurred before the due date of the second annuity payment, two (2) if death occurred before the third annuity payment date, etc.

 

  Option 2 - Life Annuity with ten (10) or twenty (20) Years Certain and Life Thereafter – An annuity payable monthly during the lifetime of an individual with payments made for a period certain of not less than ten (10) or twenty (20) years, as elected. The annuity payments will be continued to a designated beneficiary until the end of the period certain upon the death of the individual.

 

  Option 3 - Unit Refund Life Annuity – This option is available on variable basis income payment only. An annuity payable monthly during the lifetime of an individual with annuity payments made for a period certain not less than the number of months determined by dividing (1) the amount applied under this option by (2) the amount of the first monthly annuity payment. This option guarantees that the Annuity Units, but not the dollar value applied under this payout, will be repaid to the payee or his beneficiary.

 

  Option 4 - Joint and Survivor Annuity – An annuity payable monthly during the joint lifetime of two (2) named individuals and thereafter during the lifetime of the survivor, ceasing with the last annuity payment due before the survivor’s death. It would be possible under this option for only (1) one annuity payment to be made if both individuals under the option died before the second annuity payment date, or only two (2) annuity payments if both died before the third annuity payment date, etc.

 

  Option 5 - Installment Payments, Fixed Period – An amount payable monthly, for a fixed number of years not exceeding thirty (30). Fixed basis annuity payments will include interest at the effective rate of 2.5% per year.

 

  Option 6 - Equal Installment Payments, Fixed Amount – An amount payable in equal monthly installments (not less than $6.25 per $1,000 applied) until the amount applied, adjusted by Subaccount investment results (variable basis payments) or interest at an effective rate of 2.5% per year (fixed basis payments), is exhausted. The final annuity payment will be the remaining balance.

 

  Option 7 - Deposit Option - This option is available on a fixed basis payment only. The amount due may be left on deposit with us for placement in the General Account with interest at the rate of not less than 2.5% per year. Interest will be paid annually, semiannually, quarterly or monthly as elected.

 

  Other Annuity Forms - May be agreed upon.

At any time, any amount remaining under Option 5, 6, or 7 may be withdrawn or, if that amount is at least $5,000, may be applied under any one (1) of the first four (4) options. In no case may payments under Option 1, 2, 3 or 4, be commuted. Under Option 5 and 6, you will receive the present value of any remaining payments using a discount rate equal to the effective interest rate used to compute the benefit plus 1%. For Option 7, you will receive the remaining balance.

The lump sum payment requested will be paid within seven (7) days of receipt of the request at our American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574 based on the value computed on the next Valuation Date after receipt of the request. If the beneficiary dies while receiving annuity payments certain under Option 2, 3, 5, or 6 above, the present value of any remaining certain payments will be paid in a lump sum to the estate of the beneficiary. If the beneficiary dies after Option 7 has started, the balance held by us will be paid to the beneficiary’s estate.

 

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Value of Variable Basis Annuity Payments

If you elect variable basis payments, the dollar amount of the first variable basis payment will depend on the annuity purchase rates described in your Contract for the annuity option you choose. These rates vary based on the Annuitant’s attained age at settlement and if applicable, gender, and if applicable, upon the attained age at settlement and gender of a second person you designate. Under such table, the longer the life expectancy of the Annuitant or the longer the period for which we guarantee to make payments under the option, the smaller the amount the first variable basis payment will be. As provided in your Contract and as explained below we may adjust the age used to determine payments. After your first payment, the dollar amount of your payments will vary based on the investment performance of the Subaccount(s) you invest in and the Contract’s assumed interest rate.

Assumed Investment Rates

The assumed investment rate is an assumption we make regarding the investment performance of the Subaccounts you select. This rate is simply the total return, after expenses, you need to keep your variable income payments level. We assume an effective annual rate of 2.5%.

The annuity tables in the Contract used to calculate the annuity payments are based on an “assumed investment rate” of 2.5%. If the actual investment performance of the particular Subaccount selected is such that the net investment return is 2.5% per annum, the annuity payments will be as shown in the tables. If the actual net investment return exceeds 2.5%, the annuity payments will be higher than as shown in the tables. If the actual net investment return is less than 2.5%, the annuity payments will be lower than in the tables.

In other words, if the annualized investment performance after expenses, of your Subaccounts, measured between the day that the last payment was made and the day on which we are calculating the new payment, is less than 2.5%, then the dollar amount of your variable basis income payment will decrease. Conversely, if the annualized investment performance, after expenses, of your Subaccounts, measured between the day that the last payment was made and the day on which we are calculating the new payment, is greater than 2.5%, then the dollar amount of your income payment will increase.

At your election, where state law permits, an immediate annuity Contract may provide annuity benefits based on an assumed investment rate other than 2.5%. The annuity rates for immediate annuity Contracts are available upon request to us.

On the Annuity Date the net sum payable is applied and we determine the number of your Annuity Units for each Subaccount you select. The number of Annuity Units will not change unless you make a transfer. On the Annuity Date, the number of Annuity Units for a Subaccount is the portion of the first payment from that Subaccount divided by the Annuity Unit value for that Subaccount on the day the first payment is due. Each subsequent variable basis income payment will equal the sum of payments for each Subaccount. The payment for a Subaccount is the number of Annuity Units for that Subaccount times the Annuity Unit value for that Subaccount on the date the income payment is calculated.

Following the Annuity Date, the Annuity Unit value of each Subaccount for any Valuation Period will equal the Annuity Unit value for the preceding Valuation Period multiplied by the product of (a) and (b), where:

 

  a) is the net investment factor for the Valuation Period for which we are calculating the Annuity Unit value; and

 

  b) is an assumed interest rate factor equal to .99993235 raised to a power equal to the number of days in the Valuation Period.

The assumed interest rate factor in (b) above is the daily equivalent of dividing by one (1) plus the assumed investment rate of 2.5%. We may offer a plan that has a different assumed investment rate. If we do, the assumed investment rate factor we use in (b) above would change.

 

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Annuity Provisions

We determine non-qualified life contingent annuity payments based on the Annuity 2000 Mortality Table and 2.5% interest which reflects the age and sex of the Annuitant and the type of annuity option selected. The attained age at settlement will be adjusted downward by one (1) year for each full five (5) year period that has elapsed since January 1, 2000. The annuity payment will also vary with the investment performance of Portfolios you choose.

We determine qualified life contingent annuity payments based on the Annuity 2000 Mortality Table (50% male and 50% female blend) and 2.5% interest which reflects the age of the Annuitant and type of annuity option selected and will vary with the investment performance of Portfolios you choose. The attained age at settlement will be adjusted downward by one (1) year for each full five (5) year period that has lapsed since January 1, 2000. The effect of this adjustment is a reduction in the annuity payment provided.

THE COMPANY, SEPARATE ACCOUNT, AND FUNDS

American National Insurance Company

The Company is a stock life insurance company chartered in 1905 in the State of Texas. We write individual and group life and accident and health insurance and annuities. Our Home Office is located in the American National Insurance Building, One Moody Plaza, Galveston, Texas 77550-7947. The Libbie Shearn Moody Trust owns approximately 37% of the outstanding stock of American National Insurance Company. The Moody Foundation, which has an approximately 79% contingent remainder interest in the Libbie Shearn Moody Trust, owns approximately 23% of the outstanding stock of American National Insurance Company.

We are regulated by the Texas Department of Insurance and are subject to the insurance laws and regulations of other states where we operate. Each year, we file a National Association of Insurance Commissioners convention blank with the Texas Department of Insurance. Such convention blank covers our operations and reports on our financial condition and the Separate Account’s financial condition as of December 31 of the preceding year. Periodically, the Texas Department of Insurance examines and certifies the adequacy of the Separate Account’s and our liabilities and reserves. Obligations under the Contract are our obligations.

The Separate Account

We established the Separate Account under Texas law on July 30, 1991. The Separate Account’s assets are held exclusively for the benefit of persons entitled to payments under Variable Annuity Contracts issued by us. We are the legal holder of the Separate Account’s assets and will cause the total market value of such assets to be at least equal to the Separate Account’s reserve and other Contract liabilities. Such assets are held separate and apart from our General Account assets. We maintain records of all purchases and redemptions of shares of Portfolios by each of the Subaccounts. Liabilities arising out of any other business we conduct cannot be charged against the assets of the Separate Account. Income, as well as both realized and unrealized gains or losses from the Separate Account’s assets, is credited to or charged against the Separate Account without regard to income, gains or losses arising out of other business that we conduct. However, if the Separate Account’s assets exceed its liabilities, the excess is available to cover the liabilities of our General Account.

The Separate Account is registered with the Securities and Exchange Commission (“SEC”) as a unit investment trust, which is a type of investment company. Such registration does not involve any SEC supervision of management or investment policies or practices. There are numerous Subaccounts within the Separate Account available to Contract Owners and each invests only in a corresponding Portfolio.

The Separate Account is not our only Separate Account that invests in the Portfolios. Other Separate Accounts, including those funding other Variable Annuity Contracts, variable life insurance policies and other insurance company variable Contracts and retirement plans, invest in some of the Portfolios. We do not believe this results in any disadvantages to you. However, there is a theoretical possibility that a material conflict of interest could arise with Owners of variable life insurance policies and Owners of other Variable Annuity Contracts whose values are allocated to other Separate Accounts investing in the Portfolios. There is also a theoretical possibility that a material conflict could arise between the interests of Contract Owners or

 

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Owners of other Contracts and the retirement plans or their participants which invest in the Portfolios. If a material conflict arises, we will take any necessary steps, including removing the Portfolio from the Separate Account, to resolve the matter. The Board of Directors of each Portfolio will monitor events in order to identify any material conflicts that may arise and determine what action, if any, to take in response to those events or conflicts. See the accompanying prospectuses for the Portfolios for more information.

The Funds

Each Subaccount invests in shares of a corresponding Portfolio of a Fund. Before investing in any of the Subaccounts, the accompanying prospectuses for the Portfolios should be read in conjunction with this Prospectus. The prospectuses contain a full description of the Funds, their investment policies and restrictions, risks, charges and expenses and other aspects of their operation. You may obtain a copy of these prospectuses by calling 1-800-306-2959, or writing to American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574. If mail is addressed differently, there may be delays in the processing of requested transactions. The investment objectives of each Portfolio are stated below.

 

FUND:         THE ALGER PORTFOLIOS CLASS I-2 SHARES

ADVISER:   FRED ALGER MANAGEMENT, INC.

Subaccount investing in:

 

  

Investment objective:

 

  
Alger Small Cap Growth Portfolio*    seeks long-term capital appreciation   
Alger Large Cap Growth Portfolio    seeks long-term capital appreciation   
Alger Mid Cap Growth Portfolio    seeks long-term capital appreciation   
Alger Capital Appreciation Portfolio    seeks long-term capital appreciation   
Alger Growth & Income Portfolio    seeks to provide capital appreciation and current income   
Alger Balanced Portfolio    seeks current income and long-term capital appreciation   
*Not available for investment for contracts issued on or after July 1, 2007.   

 

FUND:         FEDERATED INSURANCE SERIES

ADVISER:   FEDERATED EQUITY MANAGEMENT COMPANY OF PENNSYLVANIA IS THE ADVISER FOR FEDERATED KAUFMANN FUND II

Subaccount investing in:

 

  

Investment objective:

 

  

Federated Kaufmann Fund II – Primary Shares

Subadvised by: Federated Global Investment

Management Corp.

 

   seeks capital appreciation   

 

FUND:         FEDERATED INSURANCE SERIES

ADVISER:   FEDERATED GLOBAL INVESTMENT MANAGEMENT CORP.; FEDERATED INVESTMENT MANAGEMENT COMPANY AND FEDERATED EQUITY MANAGEMENT COMPANY OF PENNSYLVANIA IS THE ADVISER FOR FEDERATED MANAGED VOLATILITY FUND II

Subaccount investing in:

 

  

Investment objective:

 

  
Federated Managed Volatility Fund II    seeks to achieve high current income and moderate capital appreciation   

 

FUND:         FEDERATED INSURANCE SERIES

ADVISER:   FEDERATED INVESTMENT MANAGEMENT COMPANY IS THE ADVISER FOR FEDERATED HIGH INCOME BOND FUND II, FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II AND FEDERATED QUALITY FUND II

Subaccount investing in:

 

  

Investment objective:

 

  
Federated High Income Bond Fund II – Primary Shares    seeks high current income   
Federated Fund for U.S. Government Securities II    seeks to provide current income   
Federated Quality Bond Fund II – Primary Shares    seeks to provide current income   

 

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FUND:         FIDELITY VARIABLE INSURANCE PRODUCTS SERVICE CLASS 2

ADVISER:   FIDELITY MANAGEMENT & RESEARCH COMPANY

Subaccount investing in:

 

  

Investment objective:

 

  

VIP Government Money Market Portfolio*

subadvised by:

   seeks as high a level of current income as is consistent with preservation of capital and liquidity.   
Fidelity Investments Money Management, Inc.      
Fidelity Research & Analysis Company      
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Hong Kong) Limited      
Fidelity Management & Research (Japan) Inc.      
Fidelity International Investment Advisors      

Fidelity International Investment Advisors (U.K.) Limited

 

       

VIP Mid Cap Portfolio

subadvised by:

   seeks long-term growth of capital   
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity Investments Japan Limited, FMR Co., Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      

FMR Co., Inc.

 

       

VIP Index 500 Portfolio

 

   seeks investment results that correspond to the total return of common stocks publicly traded in the U.S., as represented by the Standard & Poor’s 500SM Index (S&P 500®)   
Subadvised by:      
Geode Capital Management      

FMR Co., Inc.

 

       

VIP Contrafund® Portfolio

subadvised by:

   seeks long-term capital appreciation   
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      
Fidelity Investments Japan Limited, FMR Co., Inc.      
FMR Co., Inc.      

* Effective December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market portfolio and was renamed Fidelity VIP Government Money Market Portfolio.

 

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Subaccount investing in:

 

  

Investment objective:

 

  
VIP Growth Opportunities Portfolio    seeks to provide capital growth   
subadvised by:      
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      
Fidelity Investments Japan Limited, FMR Co., Inc.      

FMR Co., Inc.

 

       

VIP Equity-Income Portfolio

 

   seeks reasonable income and will also consider the potential for capital appreciation. The Fund’s goal is to achieve a yield which exceeds the composite yield on the securities comprising the S&P 500®   
subadvised by:      

FMR Co., Inc.

 

       

VIP Investment Grade Bond Portfolio

 

   seeks as high a level of current income as is consistent with the preservation of capital   
subadvised by:      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      

Fidelity Investments Money Management, Inc.

 

       

VIP Growth & Income Portfolio

 

   seeks high total return through a combination of current income and capital appreciation.   
subadvised by:      
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      
Fidelity Investments Japan Limited, FMR Co., Inc.      

FMR Co., Inc.

 

       

VIP Value Portfolio

 

   seeks capital appreciation   
subadvised by:      
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      
Fidelity Investments Japan Limited, FMR Co., Inc.      

FMR Co., Inc.

 

       
VIP Value Strategies Portfolio    seeks capital appreciation   
subadvised by:      
Fidelity Management & Research (U.K.) Inc.      
Fidelity Management & Research (Far East) Inc.      
Fidelity International Investment Advisors      
Fidelity International Investment Advisors (U.K.) Limited      
Fidelity Investments Japan Limited, FMR Co., Inc.      
FMR Co., Inc.        

 

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FUND:         AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS)* – SERIES I SHARES

ADVISER:   INVESCO ADVISERS, INC.

Subaccount investing in:

  

Investment objective:

  
Invesco V.I. Global Health Care Fund    seeks long-term growth of capital   
Invesco V.I. Small Cap Equity Fund    seeks long-term growth of capital   
Invesco V.I. Managed Volatility Fund    seeks both capital appreciation and current income while managing portfolio volatility.   
Invesco V.I. Mid Cap Growth Fund    seeks growth of capital   
Invesco V.I. Diversified Dividend Fund    seeks reasonable current income and long-term growth of income and capital   
Invesco V.I. Technology Fund    seeks long-term growth of capital   
Invesco V.I. Global Real Estate Fund    seeks total return through growth of capital and current income.   
Subadvisor(s): Invesco Canada Ltd.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited and Invesco Asset Management Deutschland, GmbH.   

 

FUND:         MFS® VARIABLE INSURANCE TRUST (“VIT”)

                    MFS® VARIABLE INSURANCE TRUST II (“VIT II”)

ADVISER:   MASSACHUSETTS FINANCIAL SERVICES COMPANY

Subaccount investing in:

 

  

Investment objective:

 

  
MFS Core Equity Portfolio (VIT II)    seeks capital appreciation   
MFS Growth Series (VIT)    seeks capital appreciation   
MFS Research Series (VIT)    seeks capital appreciation   
MFS Investors Trust Series (VIT)    seeks capital appreciation   

 

                     T. ROWE PRICE

ADVISER:   T. ROWE PRICE ASSOCIATES, INC. IS RESPONSIBLE FOR SELECTION AND MANAGEMENT OF THE PORTFOLIO INVESTMENTS OF T. ROWE PRICE EQUITY SERIES, INC. AND THE T. ROWE PRICE FIXED INCOME SERIES, INC.

 

ADVISER:   T. ROWE PRICE ASSOCIATES, INC., ADVISER, AND T. ROWE PRICE INTERNATIONAL, INC. AND T. ROWE PRICE SINGAPORE PRIVATE LTD., SUB-ADVISERS, ARE RESPONSIBLE FOR SELECTION AND MANAGEMENT OF THE PORTFOLIO INVESTMENTS OF T. ROWE PRICE INTERNATIONAL SERIES, INC.

 

FUND:         T. ROWE PRICE EQUITY SERIES, INC.

Subaccount investing in:

 

  

Investment objective:

 

  
T. Rowe Price Equity Income Portfolio    seeks to provide a high level of dividend income and long-term capital growth primarily through investments in the common stocks of established companies   
T. Rowe Price Mid-Cap Growth Portfolio*    seeks to provide long-term capital appreciation by investing in mid-cap stocks with potential for above-average earnings growth   

 

FUND:         T. ROWE PRICE FIXED INCOME SERIES, INC.

Subaccount investing in:

 

  

Investment objective:

 

  
T. Rowe Price Limited-Term Bond Portfolio    seeks a high level of income consistent with moderate fluctuations in principal value   

 

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FUND:         T. ROWE PRICE INTERNATIONAL SERIES, INC.

Subaccount investing in:

  

Investment objective:

  
T. Rowe Price International Stock Portfolio    seeks long-term growth of capital through investments primarily in the common stocks of established, non-U.S. companies   

*Not available for investment in Contracts issued on or after May 1, 2004.

The Funds, their managers, or affiliates thereof, may make payments to American National and/or its affiliates in connection with certain administrative, marketing and other services that we (and our affiliates) provide and the expenses that we incur. These payments may be derived, in whole or in part, from “Rule 12b-1” fees deducted from Fund assets and/or from the profits the investment advisor or sub-advisor receives from the advisory fee deducted from Fund assets. Contract Owners, through their indirect investment in the Funds, bear the costs of these advisory and 12b-1 fees. The amount of these payments may be substantial, may vary between Funds and Portfolios, and generally are based on a percentage of the assets in the Funds that are attributable to the Contracts and other variable insurance products issued by American National. American National may use these payments for any corporate purpose, including payment of expenses that American National and/or its affiliates incur in promoting, marketing, and administering the Contracts, and, in its role as an intermediary to the Funds. American National and its affiliates may profit from these payments.

During 2015, we received the following amounts with respect to the following Funds:

 

Fund    Amount We Received       

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

   $ 104,280      

The Alger Fund

     122,057      

Fidelity Variable Insurance Products

     943,496      

Federated Insurance Series

     138,108      

MFS Variable Insurance Trust

     18,091      

T. Rowe Price

     173,054      

During 2016, we expect to receive the following percentages of the Accumulation Value under the Contracts that are invested in each Fund:

 

Fund    Percentage We Anticipate Receiving

AIM Variable Insurance Funds
(Invesco Variable Insurance Funds)

     .25  

The Alger Fund

     .25  

Fidelity Variable Insurance Products

     .40  

Federated Insurance Series

     .25  

MFS Variable Insurance Trust

     .15  

T. Rowe Price Funds

     .15  

The Portfolios are sold only to Separate Accounts of insurance companies offering Variable Annuity and variable life insurance Contracts and, in some cases, to certain qualified pension and retirement plans. The Portfolios are not sold to the general public and should not be mistaken for other Portfolios offered by the same sponsor or that have similar names.

Voting Rights

Since we are the legal holder of the Portfolio shares in the Separate Account, we have the right to vote such shares at shareholders’ meetings. To the extent required by law, we will vote in accordance with instructions from Contract Owners. The number of votes for which a Contract Owner has the right to provide instructions will be determined as of the record date selected by the Fund. We will furnish you proper forms, materials, and reports to enable you to give us instructions if you choose.

 

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The number of shares of a Portfolio for which you can give instructions is determined by dividing the Accumulation Value held in the corresponding Subaccount by the net asset value of one (1) share in such Portfolio. Fractional shares will be counted. Shares of a Portfolio held in a Subaccount for which you have not given timely instructions and other shares held in a Subaccount will be voted by us in the same proportion as those shares in that Subaccount for which timely instructions are received. Voting instructions to abstain will be applied on a pro rata basis to reduce the votes eligible to be cast. Should applicable federal securities laws or regulations permit, we may vote shares of the Portfolios in our own right.

Changes in Investment Options

We may establish additional Subaccounts, which would invest in additional Portfolios chosen by us. We may also, from time to time, discontinue the availability of existing Subaccounts. If we do, we may, by appropriate endorsement, make such changes to the Contract as we believe are necessary or appropriate. In addition, if a Subaccount is discontinued, we may redeem shares in the corresponding Portfolio and substitute shares of another Portfolio. We will not do so, or make other changes without prior notice to you and without complying with other applicable laws. Such laws may require approval by the SEC and the Texas Department of Insurance.

If we deem it to be in your best interest, and subject to any required approvals, we may combine the Separate Account with another of our Separate Accounts.

Fixed Account

Before the Annuity Date, you can allocate all or a portion of your Purchase Payments to the Fixed Account. In addition, if you participate in our Fixed Account dollar cost averaging program, you may designate amounts to be held in dollar cost averaging Fixed Account options. Subject to certain limitations, you can also transfer Accumulation Value from the Subaccounts to the Fixed Account. Transfers from the Fixed Account and from either of the dollar cost averaging Fixed Account options to the Subaccounts are restricted. (See the “Transfers” and the “Special Programs” provisions in the “Contract” section of this Prospectus.)

Purchase Payments allocated to and transfers from a Subaccount to the Fixed Account are placed in our General Account. Purchase Payments allocated to one of the dollar cost averaging Fixed Account options are placed in our General Account. We have sole discretion regarding the investment of and bear the investment risk with respect to the assets in our General Account. You bear the risk that the Fixed Account declared rate would fall to a lower rate after the expiration of a declared rate period. Because of exemptive and exclusionary provisions, interests in the General Account have not been registered under the Securities Act of 1933 (the “33 Act”) and the General Account has not been registered as an investment company under the Investment Company Act of 1940 (the “40 Act”). Accordingly, neither the General Account nor any interest therein is generally subject to the provisions of the 33 Act or the 40 Act. We understand that the staff of the SEC has not reviewed the disclosures in this Prospectus relating to the Fixed Account or any of the dollar cost averaging Fixed Account options portion of the Contract. However, disclosures regarding the Fixed Account or any of the dollar cost averaging Fixed Account options portion of the Contract may be subject to generally applicable provisions of the federal securities laws regarding the accuracy and completeness of statements made in prospectuses.

 

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FEDERAL TAX MATTERS

The Following Discussion Is General and Is Not Tax Advice

Introduction

The following summary describes some of the federal income tax rules that apply to a Contract. This summary is not complete and does not cover all tax situations. Special tax rules, not discussed here, may apply to certain individuals. This discussion is not tax advice. You should consult a competent tax adviser for more complete information. This discussion is based upon our understanding of the present federal income tax laws. We do not know if these laws will change or how the Internal Revenue Service (the “IRS”) will interpret them. Moreover, the discussion below does not consider any applicable state or other tax laws. We have included additional discussion regarding taxes in the Statement of Additional Information.

Tax Status of the Contracts

The following discussion assumes that the Contract will qualify as an annuity Contract for federal income tax purposes. The Statement of Additional Information explains the requirements for qualifying as an annuity Contract.

Taxation of Annuities in General

If you are a natural person, you generally will not be taxed on increases in the Accumulation Value until you receive payments under the Contract. Any distribution of payments, including a full or partial surrender of a Contract, may subject you to income tax. If you assign or pledge (or agree to assign or pledge) any portion of a Contract’s Accumulation Value, this generally will be considered a distribution of payments to you and may be taxable.

Corporations, partnerships, trusts, and other entities that own a Contract generally must include in income increases in the excess of the Accumulation Value over the investment in the Contract. There are some exceptions to this rule and such a prospective Contract Owner should discuss these with a tax adviser.

The “investment in the contract” generally equals the amount, if any, of Purchase Payments paid with after-tax dollars (that is, Purchase Payments that were not excluded from the individual’s gross income) less any amounts withdrawn that were not taxable.

The following discussion applies to Contracts owned by natural persons.

Withdrawals

If you make a partial surrender from a Non-Qualified Contract (including Systematic Withdrawals), the amount received will be taxed as ordinary income, up to an amount equal to the excess (if any) of the Accumulation Value immediately before the distribution over the investment in the Contract at that time. In the case of a full surrender under a Non-Qualified Contract, the amount received generally will be taxable as ordinary income to the extent it exceeds the investment in the Contract.

Penalty Tax

For all distributions from Non-Qualified Contracts, there is a federal tax penalty equal to 10% of the amount treated as taxable income. However, in general, there is no penalty tax on distributions:

 

  made after the taxpayer reaches age 591/2;

 

  made because of the death of the Contract Owner;

 

  attributable to the taxpayer becoming disabled; or

 

  made as part of a series of substantially equal periodic payments for the life, or life expectancy, of the taxpayer.

There are other exceptions and special rules may apply to the exceptions listed above. You should consult a tax adviser with regard to exceptions from the penalty tax.

 

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Annuity Payments

Although the tax consequences may vary depending on the annuity payment method elected under the Contract, generally only the portion of the annuity payment that represents the amount by which the Accumulation Value exceeds the investment in the Contract will be taxed.

 

  For Variable Annuity payments, in general the taxable portion of each annuity payment is determined by a formula which establishes a specific non-taxable dollar amount of each annuity payment. This dollar amount is determined by dividing the investment in the Contract by the total number of expected annuity payments.

 

  For fixed annuity payments, in general there is no tax on the portion of each annuity payment which reflects the ratio that the investment in the Contract bears to the total expected value of annuity payments for the term of the payments; however, the remainder of each annuity payment is taxable.

In all cases, after the investment in the Contract is recovered, the full amount of any additional annuity payments is taxable.

Taxation of Death Benefit Proceeds

Amounts may be distributed from a Contract because of your death or the death of the Annuitant. Generally, such amounts are taxable to the recipient as follows:

 

  if distributed in a lump sum, they are taxed in the same manner as a full surrender of the Contract; or

 

  if distributed under an annuity option, they are taxed in the same way as annuity payments, as described above.

Transfers or Assignments of a Contract

A transfer or assignment of a Contract, the designation of certain Annuitants, or the selection of certain Annuity Dates may result in tax consequences that are not discussed herein. You should consult a tax advisor as to the tax consequences of any such transaction.

Required Distributions

In order to be treated as an annuity Contract for federal income tax purposes, the Code requires any Non-Qualified annuity Contract to contain certain provisions concerning how an interest in the Contract is distributed on the Owner’s death. The Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We may modify the Contracts if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise.

Withholding

Annuity distributions generally are subject to withholding for the recipient’s federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. Withholding is mandatory for certain Qualified Contracts.

Multiple Contracts

All Non-Qualified, deferred annuity Contracts that are issued by us (or our affiliates) to the same Owner during any calendar year are treated as one (1) annuity Contract for purposes of determining the amount includible in income when a taxable distribution occurs. In addition, there may be other situations in which the U.S. Treasury Department may conclude that it would be appropriate to aggregate two (2) or more annuity Contracts purchased by the same Owner (it has authority to issue regulations on aggregating multiple Contracts). Accordingly, you should consult a tax advisor before purchasing more than one (1) annuity Contract.

 

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Exchanges

Section 1035 of the Internal Revenue Code (the “Code”) provides generally for tax-free exchanges of one (1) annuity Contract for another. A number of special rules and procedures apply to section 1035 exchanges. Anyone wishing to take advantage of section 1035 should consult a tax advisor.

Taxation of Qualified Contracts

The Qualified Contracts are designed for retirement plans that qualify for special income tax treatment under Sections 401(a), 403(b), 408, or 457 of the Code. Certain requirements apply to the purchase of a Qualified Contract and to distributions therefrom in order for you to receive favorable tax treatment. The following discussion assumes that Qualified Contracts qualify for the intended special federal income tax treatment.

The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and conditions of the plan itself. In general, adverse tax consequences may result from:

 

    contributions made in excess of specified limits;

 

    distributions received prior to age 591/2 (subject to certain exceptions);

 

    distributions that do not conform to specified commencement and minimum distribution rules;

 

    aggregate distributions in excess of a specified annual amount; and

 

    contributions or distributions made in other circumstances.

The terms and conditions of the retirement plans may limit the rights otherwise available to you under a Qualified Contract. You are responsible for determining that contributions, distributions, and other transactions with respect to a Qualified Contract comply with applicable law. If you are considering purchasing an annuity Contract for use with any qualified retirement plan, you should get legal and tax advice.

Distributions from Qualified Contracts

Annuity payments from Qualified Contracts are generally taxed in the same manner as under a Non-Qualified Contract. When a withdrawal from a Qualified Contract occurs, all or some of the amount received is taxable. For Qualified Contracts, the investment in the Contract can be zero; in that case, the full amount of all distributions would be taxable. Distributions from certain qualified plans are generally subject to mandatory withholding.

For qualified plans under Sections 401(a), 403(b), and 457, the Code requires that distributions generally must begin by the later of April 1 of the calendar year following the calendar year in which the Contract Owner (or plan participant): (a) reaches age 701/2; or (b) retires. Distributions must be made in a specified form and manner. If the participant is a “five percent (5%) owner” (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the Contract Owner (or plan participant) reaches age 701/2. For Individual Retirement Annuities (IRAs) described in Section 408 of the Code, distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the Contract Owner (or plan participant) reaches age 701/2.

 

q Corporate and Self-Employed Pension and Profit Sharing Plans - Section 401(a) of the Code permits employers to establish retirement plans for employees and permits self-employed individuals to establish retirement plans for themselves and their employees. Adverse tax or other legal consequences to the plan, to the Plan Participant, or to both may result if this Contract is purchased by a 401(a) plan and later assigned or transferred to any individual. Employers intending to use the Contract with such plans should consult a tax advisor.

 

q Tax Sheltered Annuities - Under Code Section 403(b), public school systems and certain tax-exempt organizations may purchase annuity Contracts for their employees. Generally, payments to Section 403(b) annuity Contracts will be excluded from the gross income of the employee, subject to certain limitations. However, these payments may be subject to FICA (Social Security) taxes. Under Section 403(b) annuity Contracts, the following amounts may only be distributed upon death of the employee, attainment of age 59 12, and separation from service, disability, or financial hardship:

 

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  (a) salary reduction contributions made in years beginning after December 31, 1988;

 

  (b) earnings on those contributions; and

 

  (c) earnings in such years on amounts held as of the last year beginning before January 1, 1989.

 

  In addition, income attributable to elective contributions may not be distributed in the case of hardship.

 

q Individual Retirement Annuities - Section 408 of the Code permits certain eligible individuals to contribute to an individual retirement program known as an “Individual Retirement Annuity” or “IRA.” Section 408 of the Code limits the amount, which may be contributed to an IRA each year to the lesser of a specified dollar amount for the year or 100% of the Contract Owner’s adjusted gross income. These contributions may be deductible in whole or in part depending on the individual’s income. The limit on the amount contributed to an IRA does not apply to distributions from certain other types of qualified plans that are “rolled over” on a tax-deferred basis into an IRA. Amounts in the IRA (other than non-deductible contributions) are taxed when distributed from the IRA. Distributions prior to age 59 12 (unless certain exceptions apply) are subject to a 10% penalty tax.

 

q Roth IRAs - Effective January 1, 1998, section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to certain limitations, are not deductible, and must be made in cash or as a rollover or transfer from another IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax, and other special rules may apply. Distributions from a Roth IRA generally are not taxed, except that, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (i) before age 59 12 (subject to certain exceptions) or (ii) during the five (5) taxable years starting with the year in which the first contribution is made to the Roth IRA.

 

q Deferred Compensation Plans - Section 457 of the Code provides for certain deferred compensation plans available with respect to service for state governments, local governments, political subdivisions, agencies, instrumentalities and certain affiliates of such entities, and tax-exempt organizations. These plans are subject to various restrictions on contributions and distributions. Under non-governmental plans, all amounts are subject to the claims of general creditors of the employer and depending on the terms of the particular plan, the employer may be entitled to draw on deferred amounts for purposes unrelated to its Section 457 plan obligations. In general, distributions from a deferred compensation plan are prohibited unless made after the plan participant attains age 70 12, separates from service, dies, or suffers an unforeseeable financial emergency. Distributions under these plans are taxable as ordinary income in the year paid or made available. Adverse tax consequences may result from certain distributions that do not conform to applicable commencement and minimum distribution rules.

Possible Changes in Taxation

Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation or other means (such as U.S. Treasury Department regulations, Internal Revenue Service revenue rulings, and judicial decisions). It is possible that any change could be retroactive (that is, effective prior to the date of the change). You should consult a tax adviser regarding such developments and their effect on the Contract.

 

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Other Tax Issues

Qualified Plans have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan, adoption agreement, or consult a tax advisor for more information about these distribution rules.

“Eligible rollover distributions” from section 401(a), 403(b), and governmental 457 plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is any distribution to an employee (or employee’s spouse or former spouse as beneficiary or alternate payee) from such a plan, except certain distributions such as distributions required by the Code, distributions in a specified annuity form, or hardship distributions. The 20% withholding does not apply, however, to nontaxable distributions or if the employee chooses a “direct rollover” from the plan to a tax-qualified plan, IRA or tax sheltered annuity or to a governmental 457 plan that agrees to separately account for rollover contributions.

Other distributions from Qualified Plans generally are subject to withholding for the Plan Participant’s federal income tax liability. The withholding rate varies according to the type of distribution and the Participant’s tax status. The Participant will be provided the opportunity to elect not to have tax withheld from distributions.

While no attempt is being made to discuss the Federal estate tax implications of the Contract, a purchaser should keep in mind that the value of an annuity Contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity Contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning advisor for more information.

Under certain circumstances, the Code may impose a “generation skipping transfer tax” when all or part of an annuity Contract is transferred to, or a death benefit is paid to, an individual two (2) or more generations younger than the Participant. Regulations issued under the Code may require us to deduct the tax from the Contract, or from any applicable payment, and pay it directly to the IRS.

The Internal Revenue Service recently announced that income received by residents of Puerto Rico under life insurance or annuity Contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States Federal income tax.

The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity Contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser’s country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding U.S. state, and foreign taxation with respect to an annuity Contract purchase.

We have the right to modify the Contract in response to legislative changes that could otherwise diminish the favorable tax treatment of the group unallocated Contract. We make no guarantee regarding the tax status of the Contract and do not intend the above discussion as tax advice.

 

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INVESTMENT PERFORMANCE

Investment Performance information for the Subaccounts may appear in reports and advertising to current and prospective Contract Owners. The performance information is based on historical investment experience of the Subaccounts and the Portfolios and does not indicate or represent future performance.

Total returns are based on the overall dollar or percentage change in value of a hypothetical investment. Total return quotations reflect changes in Portfolio share prices, the automatic reinvestment by the Separate Account of all distributions and the deduction of applicable annuity charges (including any contingent deferred sales charges that would apply if a Contract Owner surrendered the Contract at the end of the period indicated). Quotations of total return may also be shown that do not take into account certain contractual charges such as a contingent deferred sales load. The total return percentage will be higher under this method than under the standard method described above.

A cumulative total return reflects performance over a stated period. An average annual total return reflects the hypothetical annually compounded return that would have produced the same cumulative total return if the performance had been constant over the entire period. Because average annual total returns tend to smooth out variations in a Subaccount’s returns, you should recognize that they are not the same as actual year-by-year results.

Some Subaccounts may also advertise yield. These measures reflect the income generated by an investment in the Subaccount over a specified period of time. This income is annualized and shown as a percentage. Yields do not take into account capital gains or losses or the contingent deferred sales load or Enhanced Death Benefit rider costs.

The Subaccount investing in the Fidelity VIP Government Money Market Portfolio may advertise its current and effective yield. Current yield reflects the income generated by an investment in the Subaccount over a seven (7) day period. Effective yield is calculated in a similar manner except that income earned is assumed to be reinvested.

DISTRIBUTION OF THE CONTRACT

Principal Underwriter

ANICO Financial Services, Inc. (“ANFS”), a subsidiary of American National Insurance Company, located at One Moody Plaza Suite 1423, Galveston, TX 77550, is the distributor and principal underwriter of the Contract. ANFS was organized under the laws of the State of Texas in 2010; is registered with the SEC under the Securities Exchange Act of 1934 (“1934 Act”) as a broker/dealer; and is a member of the Financial Industry Regulatory Authority (“FINRA”). More information about ANFS is available through FINRA BrokerCheck at http://www.finra.org or by calling 1-800-289-9999.

Sales of the Contracts

ANFS offers the Contracts through selling agreements with other broker/dealers registered under the 1934 Act to sell the Contracts (“selling brokers”). In order to satisfy the insurance regulations of the various states, such selling brokers usually maintain licensing as insurance agencies or include insurance agencies with which they are affiliated in the selling agreements. The selling brokers’ registered representatives are registered with FINRA and, as necessary, are licensed as insurance producers in the states in which they do business and are appointed by us.

On behalf of ANFS, we pay commissions associated with the promotion and sale of the Contracts to the selling brokers. The amount of the commission varies but is not expected to exceed approximately 7.0% of your aggregated purchase payments. We pay commissions either as a percentage of first year Purchase Payments or as a combination of a percentage of first year Purchase Payments and percentage of Accumulation Value in subsequent years. We may also pay other marketing related expenses associated with the promotion and sale of the Contracts.

The amount of commissions we pay may vary based on the options that are available under a Contract and on the optional benefits a Contract Owner elects when he or she purchases the Contract. We may offer a range

 

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of initial commission and persistency trail commission options (which may take into account, among other things, the length of time Purchase Payments have been held under the Contract, Accumulation Values and elected features and benefits).

When a Contract is sold through a selling broker, we pay the entire sales commission directly to the selling broker; the selling broker may retain a portion of the commission before it pays a commission or other compensation to the registered representative who sold the Contract. Commissions are paid to the selling brokers under their respective agreements with ANFS. ANFS passes through commissions it receives to the selling broker for their respective sales.

In addition to such commissions, we may pay dining or entertainment expenses for the selling brokers or their representatives. The selling brokers may from time to time invite us to participate in conferences sponsored by the selling broker. The selling broker typically requests that we pay a fee ranging from a nominal amount to $250,000 for our participation, but the amount actually paid is usually negotiated. In calendar year 2015, the actual fees paid ranged from $100 to $35,000, depending upon our level of participation in the conference. Finally, we may pay a selling broker an additional sales incentive contingent upon a specified level of qualifying premium of variable life insurance sales. Currently, we do not have selling brokers qualifying for such contingent incentives.

We intend to recover commissions, marketing, administrative and other expenses and costs of Contract benefits through fees and charges imposed under the Contracts. Commissions paid on the Contracts, including other sale incentives and marketing payments, are not charged directly to you or to your Accumulation Value but are taken into account when setting the levels of fees and charges that you do pay.

LEGAL PROCEEDINGS

The Company and its affiliates, like other life insurance companies, are involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving other insurers, substantial damages have been sought and material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, we believe at the present time no lawsuits are pending or threatened that are reasonably likely to have a material adverse impact on the Separate Account or on our ability to meet our obligations under the Contracts.

 

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FINANCIAL STATEMENTS

“The consolidated financial statements for the Company and its subsidiaries and the financial statements for the Separate Account are located in the Statement of Additional Information. If you would like a free copy of the Statement of Additional Information, call 1-800-306-2959 or send a written request to:

American National Variable Contracts Department

P. O. Box 9001

League City, Texas 77574

 

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STATEMENT OF ADDITIONAL INFORMATION

A Registration Statement describing the Contract has been filed with the Securities and Exchange Commission, under the Securities Act of 1933. This Prospectus does not contain all the information in the Registration Statement, its amendments and exhibits. Please refer to the Registration Statement for further information concerning us, the Separate Account and the Contract offered. Statements contained in this Prospectus as to the terms of the Contract and other legal instruments are summaries. For the complete text of those Contracts and instruments, please refer to those documents as filed with the SEC and available on the SEC’s website at http://www.sec.gov. The table of contents for the Statement of Additional Information follows:

 

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TABLE OF CONTENTS

 

     Page

The Contract

   3

Computation of Variable Annuity Payments

   3

Annuity Unit Value

   3

Summary

   4

Exceptions to Charges

   4

Assignment

   5

Minimum Distributions Program

   5

Distribution of the Contract

   5

Tax Matters

   6

Records and Reports

   7

Performance

   7

Yields

   8

State Law Differences

   9

Separate Account

   9

Termination of Participating Agreements

   9

Legal Matters

   13

Experts

   13

Financial Statements

   13

A Statement of Additional Information containing more detailed information about the Contract and the Separate Account is available free by writing us at the address below or by calling 1-800-306-2959.

“American National Variable Contracts Department

P. O. Box 9001

League City, Texas 77574

 

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LOGO

 

Form 4879    Rev 5-16


Table of Contents

PART B

STATEMENT OF ADDITIONAL INFORMATION

FOR THE

WEALTHQUEST III VARIABLE ANNUITY

ISSUED BY

AMERICAN NATIONAL INSURANCE COMPANY

ONE MOODY PLAZA, GALVESTON TEXAS 77550-7947

1-800-306-2959

RELATING TO THE PROSPECTUS DATED MAY 1, 2016

Registrant

American National Variable Annuity Separate Account

One Moody Plaza

Galveston, Texas 77550-7947

Depositor

American National Insurance Company

One Moody Plaza

Galveston, Texas 77550-7947

Principal Underwriter

ANICO Financial Services, Inc. (ANFS)

One Moody Plaza, Suite 1423

Galveston, Texas 77550-7947

Independent Registered Public Accounting Firm

KPMG LLP

811 Main Street, Suite 4500

Houston, Texas 77002

This Statement of Additional Information dated May 1, 2016 expands upon subjects discussed in the prospectus for the Contract. You may obtain a copy of the prospectus dated May 1, 2016 by calling 1-800-306-2959, or writing to American National Variable Contracts Department, P. O. Box 9001, League City, Texas 77574. Terms used in the prospectus for the Contract are incorporated in this Statement. All terms not specifically defined in this Statement shall have the meaning set forth in the prospectus.

This Statement of Additional Information is not a prospectus and should be read only in conjunction with the prospectus for the Contract (“the Contract”).

 

Form 4879-SAI

   Rev. 5-16

 

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TABLE OF CONTENTS

 

   
     Page  

The Contract

     3   

Computation Of Variable Annuity Payments

     3   

Annuity Unit Value

     3   

Summary

     4   

Exceptions To Charges

     4   

Assignment

     5   

Minimum Distributions Program

     5   

Distribution Of The Contract

     5   

Tax Matters

     6   

Records And Reports

     7   

Performance

     7   

Yields

     8   

State Law Differences

     9   

Separate Account

     9   

Termination Of Participating Agreements

     9   

Legal Matters

     13   

Experts

     13   

Financial Statements

     13   

 

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THE CONTRACT

The following information provides additional information about the Contract, supplements the description in the prospectus, and may be of interest to some Contract Owners.

COMPUTATION OF VARIABLE ANNUITY PAYMENTS

The amount of the first variable annuity payment to the Annuitant will depend on the following: the amount of Accumulation Value applied to effect the variable annuity as of the tenth day immediately preceding the date annuity payments commence; the amount of any premium tax owed (if applicable); the annuity option selected; and the age of the Annuitant. The Contract contains tables indicating the dollar amount of the first annuity payment under annuity options 1, 2, 4, and 5 for each $1,000 of Accumulation Value at various ages. These tables are based upon the Annuity 2000 Mortality Table (promulgated by the Society of Actuaries) and an Assumed Investment Rate (“AIR”) of 2.5% per annum.

In any subsequent month, the dollar amount of the variable annuity payment is determined by multiplying the number of Annuity Units in the applicable Subaccount(s) by the value of such Annuity Unit on the tenth day preceding the due date of such payment. The Annuity Unit value will increase or decrease in proportion to the net investment return of the Subaccount(s) underlying the Variable Annuity since the date of the previous annuity payment, less an adjustment to neutralize the 2.5% or other AIR referred to above.

Therefore, the dollar amount of variable annuity payments after the first will vary depending on whether the net investment return is greater or less than the 2.5% (or other AIR) per annum. For example, assuming a 2.5% AIR, if Subaccounts underlying the Contract have a cumulative net investment return of 4% over a one (1) year period, the first annuity payment in the next year will be approximately 1.5 percentage points greater than the payment on the same date in the preceding year, and subsequent payments will continue to vary with the investment experience of the applicable Subaccount(s). If such net investment return is 1% over a one (1) year period, the first annuity payment in the next year will be approximately 1.5 percentage points less than the payment on the same date in the preceding year, and subsequent payments will continue to vary with the investment experience of the applicable Subaccount(s).

ANNUITY UNIT VALUE

The value of an Annuity Unit is calculated at the same time that the value of an Accumulation Unit is calculated and is based on the same values for shares of the corresponding Portfolio. The following illustrations show, by use of hypothetical examples, the method of determining the Annuity Unit value and the amount of Variable Annuity payments.

Illustration: Calculation of Annuity Unit Value

Annuity of 120 monthly payments certain

 

1.

   Annuity Unit value, beginning of period     $ .980000   

2.

   Net investment factor for period     1.001046   

3.

   Daily adjustment for 2.5% assumed investment rate  
       .999932^30 = .99796   

4.

   (2) x (3)     .99900   

5.

   Annuity Unit value, end of period                    (1) x (4)     $.97902   

 

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Illustration: Annuity Payments

Annuity of 120 monthly payments certain

 

1.

   Number of Accumulation Units at Annuity Date      10,000.00   

2.

   Accumulation Unit value (10 days prior to date of first monthly payment)      $1.800000   

3.

   Accumulation Value of Contract (1) x (2)      $18,000.00   

4.

   First monthly annuity payment per $1,000 of net sum payable (assume equal to Accumulation Value)      $9.39   

5.

   First monthly annuity payment (3) x (4) / 1,000      $169.02   

6.

   Annuity Unit value (10 days prior to date of first monthly payment)      $.980000   

7.

   Number of Annuity Units (5) / (6)      172.469   

8.

   Assume Annuity Unit value for second month equal to      $.997000   

9.

   Second monthly annuity payment (7) x (8)      $171.95   

10.

   Assume Annuity Unit value for third month equal to      $.953000   

11.

   Third monthly annuity payment (7) x (10)      $164.36   

SUMMARY

In conclusion, for a variable annuity the key element to pricing the annuity is unknown; there is no interest rate guarantee made and the payment amount will depend upon actual future results. The technique used to overcome this obstacle is the calculation of the premium for the annuity using an AIR. The initial Variable Annuity payment is based upon this premium; subsequent payments will increase or decrease depending upon the relationship between the AIR and the actual investment performance of Subaccounts to be passed on to the annuitant. Suppose the underlying Portfolio showed a monthly return of 1% after the first month, the payee’s second monthly payment would be (assuming thirty (30) days between payments and an initial annuity payment of $100):

$100 x [1.01/(1.025)30/365] = $100.80

The AIR methodology means that at each payment date the value in an annuity is updated to reflect actual investment results to date, but continued assumption of the AIR for the remainder of the Annuity Period.

EXCEPTIONS TO CHARGES

The surrender charges, mortality and expense risk fees and administrative charges may be reduced for, or additional amounts credited on, sales of Contracts to a trustee, employer, or similar entity representing a group where American National Insurance Company (“American National”) determines that such sales result in savings of sales or administrative expenses. In addition, directors, officers and bona fide full-time employees (and their spouses and minor children) of American National may be permitted to purchase Contracts with substantial reduction of the surrender charges, mortality and expense risk fees, or administrative charges.

The Contract may be sold directly, without compensation, to a registered representative, to employees, officers, directors, and trustees of American National and its affiliated companies, and spouses and immediate family members (i.e., children, siblings, parents, and grandparents) of the foregoing, and to employees, officers, directors, trustees and registered representatives of any broker-dealer authorized to sell the Contracts, and spouses and immediate family members of the foregoing. If sold under these circumstances, a Contract may be credited with in part or in whole any cost savings resulting from the Contract being sold directly, rather than through an agent with an associated commission, but only if such credit will not be unfairly discriminatory to any person.

 

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ASSIGNMENT

The Contract may be assigned by the Contract Owner except when issued to plans or trusts qualified under Section 403(b) or 408 of the Internal Revenue Code (“The Code”). 401(k) Contracts are also not assignable.

MINIMUM DISTRIBUTIONS PROGRAM

Under the Systematic Withdrawal Program, the Contract Owner can elect to participate in the “Minimum Distributions Program” by instructing American National to calculate and make minimum distributions that may be required if the Contract is used with a tax qualified plan. There is no charge to participate in the Minimum Distribution Program. American National calculates the minimum distribution assuming the minimum distribution amount is based solely on the value of the Contract Owner’s Contract. However, the required minimum distribution amounts applicable to the Contract Owner’s particular situation may depend on other annuities, savings, or investments of which American National is not aware, so that the required amount may be greater than the minimum distribution amount American National calculates based on the Contract Owner’s Contract. The Minimum Distributions Program is subject to all the rules applicable to the Systematic Withdrawal Program. In addition, certain rules apply only to the Minimum Distributions Program. These rules are described below.

In order to participate in the Minimum Distributions Program, the Contract Owner must notify American National of such election in writing in the calendar year in which the Contract Owner attains age 70 12. If the Contract Owner is taking payments under the Systematic Withdrawal Program when the Minimum Distributions Program is elected, the existing Systematic Withdrawal Program will be discontinued.

American National will determine the amount that is required to be distributed from a Contract each year based on the information provided by the Contract Owner and elections made by the Contract Owner. The Contract Owner specifies whether the withdrawal amount will be based on a life expectancy calculated on a single life basis, or on a joint life basis. American National calculates a required distribution amount each year based on the Internal Revenue Code’s minimum distribution rules.

The Minimum Distributions Program is based on American National’s understanding of the present federal income tax laws, as the Internal Revenue Service (“IRS”) currently interprets them. Numerous special tax rules apply to Contract owners whose Contracts are used with qualified plans. Contract Owners should consult a tax advisor before electing to participate in the Minimum Distributions Programs.

DISTRIBUTION OF THE CONTRACT

The Contracts are offered to the public through broker/dealers registered under federal securities laws and, as necessary, insurance agencies licensed under state insurance laws. The offering of the Contracts is continuous and we do not anticipate discontinuing the offering of the Contracts, however, we reserve the right to do so.

Pursuant to a Distribution and Administrative Services Agreement (the “Distribution Agreement”) with ANICO Financial Services, Inc. (“ANFS”), one of our subsidiaries, ANFS acts as the principal underwriter for distribution of the Contracts. ANFS’s home office is located at One Moody Plaza, Suite 1423, Galveston, TX 77550. ANFS offers the Contracts through selling agreements with other broker/dealers (“selling brokers”) registered under the Securities Exchange Act of 1934 (the “1934 Act”) to sell the Contracts. The selling brokers sell the Contracts through registered representatives. The registered representatives are registered with the Financial Industry Regulatory Authority (“FINRA”) and, as necessary, with the states in which they do business. Those registered representatives are also licensed as insurance producers in the states in which they do business and are appointed by us.

 

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In connection with their activities as a Principal Underwriter, ANFS is responsible for:

 

    Distribution of the Contracts;

 

    Compliance with the requirements of any applicable state broker-dealer regulations and the 1934 Act;

 

    Keeping correct records and books of account in accordance with Rules 17a-3 and 17a-4 of the 1934 Act; and

 

    Training persons registered with ANFS

Pursuant to the Distribution Agreement and an Expense Sharing Agreement, we have agreed to provide ANFS service and facilities and to assume all expenses of ANFS in consideration of ANFS serving as principal underwriter for our variable products. Commissions are paid to the selling brokers under their respective agreements with ANFS. ANFS passes through commissions it receives to the selling broker for their respective sales.

WE PAID AGGREGATE COMMISSIONS OF $1,762,901 IN 2015, $1,927,547 IN 2014 AND $1,695,284 IN 2013 TO ANFS. FOR THE SALE OF VARIABLE LIFE POLICIES AND VARIABLE ANNUITY CONTRACTS BY ITS REGISTERED REPRESENTATIVES AND THE SELLING BROKERS. ANFS DID NOT RETAIN ANY OF THESE COMMISSIONS.

TAX MATTERS

Diversification Requirements. The Code requires that the investments underlying the Separate Account be “adequately diversified” in order for the Contracts to be treated as annuities for federal income tax purposes. We intend that the Separate Account, through the Portfolios, will satisfy these diversification requirements.

In certain circumstances, the Contract Owners of variable annuity Contracts may be considered for federal income tax purposes to be the owners of the assets of the Separate Account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the Contract Owners would be currently taxed on income and gains attributable to the Separate Account assets. There is little guidance in this area, and some features of the Contracts, such as the flexibility of a Contract Owner to allocate Purchase Payments and transfer Accumulation Value, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give Contract Owners investment control over the Separate Account assets, we reserve the right to modify the Contracts as necessary to prevent a Contract Owner from being treated as the owner of the Separate Account assets supporting a Contract.

Required Distributions. In order to be treated as an annuity contract for federal income tax purposes, each non-qualified deferred annuity Contract must provide that:

 

  (i) if a Contract Owner dies on or after the Annuity Date but before the entire interest in the Contract has been distributed, the remaining interest in the Contract will be distributed at least as rapidly as under the distribution method that was used immediately before the Contract Owner died; and

 

  (ii) if a Contract Owner dies before the Annuity Date, the entire interest in the Contract will be distributed within five (5) years after the Contract Owner dies.

These requirements are considered satisfied as to any portion of the Contract Owner’s interest that is (i) payable as annuity payments which begin within one (1) year of the Contract Owner’s death, and (ii) which are made over the life of the Beneficiary or over a period not extending beyond the Beneficiary’s life expectancy.

If the Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner and no distribution is required.

Other rules may apply to Qualified Contracts.

 

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RECORDS AND REPORTS

Reports concerning each Contract will be sent annually to each Contract Owner. Contract Owners will additionally receive annual and semiannual reports concerning the underlying funds and annual reports concerning the Separate Account. Contract Owners will also receive confirmations of receipt of Purchase Payments, changes in allocation of Purchase Payments and transfer of Accumulation Units.

PERFORMANCE

Performance information for any Subaccount may be compared, in reports and advertising to:

 

  the Standard & Poor’s 500®Composite Stock Price Index (“S&P 500®”),

 

  Dow Jones Industrial Average (“DJIA”),

 

  Donoghue’s Money Market Institutional Averages;

 

  other variable annuity Separate Accounts or other investment products tracked by Lipper Analytical Services, Lehman-Brothers, Morningstar, or the Variable Annuity Research and Data Service, widely used independent research firms which rank mutual funds and other investment companies by overall performance, investment objectives, and assets, and

 

  the Consumer Price Index (measure for inflation) to assess the real rate of return from an investment in a Contact.

Unmanaged indices may assume the reinvestment of dividends but generally do not reflect deductions for annuity charges and investment management costs.

Total returns, yields and other performance information may be quoted numerically or in a table, graph, or similar illustration. Reports and advertising may also contain other information including:

 

  the ranking of any Subaccount derived from rankings of variable annuity Separate Accounts or other investment products tracked by Lipper Analytical Series or by rating services, companies, publications or other persons who rank Separate Accounts or other investment products on overall performance or other criteria, and

 

  the effect of tax deferred compounding on a Subaccount’s investment returns, or returns in general, which may be illustrated by graphs, charts, or otherwise, and which may include a comparison, at various points in time, of the return from an investment in a Contract (or returns in general) on a tax-deferred basis (assuming one or more tax rates) with the return on a taxable basis.

Total Return (Standardized Performance)

Each Subaccount may state its total return or yield in sales literature and advertisements. Any statements of total return, yield, or other performance data of a Subaccount, other than yield quotations, will be accompanied by information on that Subaccount’s standardized total return for the most recent one (1), five (5), and ten (10) year periods or, if less, the period from the Subaccount’s inception of operation.

Total return quoted in advertising reflects all aspects of a Subaccount’s return, including the automatic reinvestment by the Separate Account of all distributions and any change in the Subaccount’s value over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical historical investment in the Subaccount over a stated period, and then calculating the annually-compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. For example, a cumulative return of 100% over ten (10) years would produce an average annual return of 7.18%, which is the steady rate that would equal 100% growth on a compounded basis in ten (10) years. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that the Subaccount’s performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of a Subaccount.

Average annual total returns are computed by finding the average annual compounded rates of return over the periods shown that would equate the initial amount invested to the withdrawal value, in accordance with the following formula prescribed by the Securities and Exchange Commission (“SEC”):

P(1+T)n = ERV

 

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where P is a hypothetical investment payment of $1,000, T is the average annual total return, n is the number of years, and ERV is the withdrawal value at the end of the periods shown. Since the Contract is intended as a long-term product, the average annual total returns assume that no money was withdrawn from the Contract prior to the end of the period. Non-standardized total return is computed in a similar manner, except that different time periods and hypothetical initial payments may be used, and certain charges may not be reflected.

In addition to average annual returns, the Subaccounts may advertise un-averaged or cumulative total returns reflecting the simple change in value of an investment over a stated period.

From time to time, sales literature or advertisements may also quote average annual total returns for periods prior to the date the Separate Account commenced operations. Such performance information for the Subaccounts will be calculated based on the performance of the Portfolios and the assumption that the Subaccounts were in existence for the same periods as those indicated for the Portfolios, with the level of Contract charges currently in effect.

Total Return (Non-standard Performance)

From time to time, sales literature or advertisements may also quote average annual total returns that do not reflect the Surrender Charge. These are calculated in exactly the same way as the average annual total returns described above, except that the ending redeemable value of the hypothetical account for the period is replaced with an ending value for the period that does not take into account any charges on amounts surrendered. Sales literature or advertisements may also quote average annual total returns for periods prior to the date the Separate Account commenced operations, calculated based on the performance of the Portfolios and the assumption that the Subaccounts were in existence for the same periods as those indicated for the Portfolios, with the level of Contract charges currently in effect except for the Surrender Charge.

YIELDS

Some Subaccounts may also advertise yields. Yields quoted in advertising reflect the change in value of a hypothetical investment in the Subaccount over a stated period of time, not taking into account capital gains or losses. Yields are annualized and stated as a percentage. Yields do not reflect the impact of any contingent deferred sales load. Yields quoted in advertising may be based on historical 7-day periods. Current yield of a money market Subaccount will reflect the income generated over a 7-day period. Current yield is calculated by determining the net change, exclusive of capital changes, in the value of a hypothetical account having one (1) Accumulation Unit at the beginning of the period and dividing the difference by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by (365/7). The resulting yield figure will be carried to the nearest hundredth of a percent. Effective yield for a money market Subaccount is calculated in a similar manner to current yield except that investment income is assumed to be reinvested throughout the year at the 7-day rate. Effective yield is obtained by taking the base period returns as computed above and then compounding the base period return by adding 1, raising the sum to a power equal to (365/7) and subtracting one (1) from the result, according to the formula prescribed by the SEC:

Effective Yield = [(Base Period Return +1)365/7] - 1

Since the reinvestment of income is assumed in the calculation of effective yield, it will generally be higher than current yield.

A 30-day yield for bond Subaccounts will reflect the income generated by a Subaccount over a 30-day period. Yield will be computed by dividing the net investment income per Accumulation Unit earned during the period by the maximum offering price per Accumulation Unit on the last day of the period, according to the following formula prescribed by the SEC:

Yield = 2[([a – b]/cd + 1)6 - 1]

where a = net investment income earned by the applicable Portfolio, b = expenses for the period including expenses charged to the Contract Owner accounts, c = the average daily number of Accumulation Units outstanding during the period, and d = the maximum offering price per Accumulation Unit on the last day of the period.

 

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STATE LAW DIFFERENCES

Differences in state laws may require American National to offer a Contract in one or more states which is more favorable to a Contract Owner than that offered in other states.

SEPARATE ACCOUNT

The Separate Account will purchase and redeem shares of the Portfolios at net asset value. The net asset value of a share is equal to the total assets of the Portfolio less the total liabilities of the Portfolio divided by the number of shares outstanding.

American National will redeem shares in the Portfolios as needed to:

 

  collect charges;

 

  pay surrenders;

 

  provide benefits; or

 

  transfer assets from one Subaccount to another, or to the Fixed Account.

Any dividend or capital gain distribution received from a Portfolio will be reinvested immediately at net asset value in shares of that Portfolio and retained as assets of the corresponding Subaccount.

The Separate Account may include Subaccounts that are not available under the Contract. American National may from time to time discontinue the availability of some of the Subaccounts. If the availability of a Subaccount is discontinued, American National may redeem any shares in the corresponding Portfolio and substitute shares of another Portfolio of a registered open-end management company.

American National may also establish additional Subaccounts. Each new Subaccount would correspond to a Portfolio of a registered, open-end management company. American National would establish the terms upon which existing Contract Owners could purchase units of a new Subaccount.

If any of these substitutions or changes are made, American National may change the Contract by sending an endorsement. American National may:

 

  operate the Separate Account as a management company,

 

  de-register the Separate Account if registration is no longer required,

 

  combine the Separate Account with other Separate Accounts,

 

  restrict or eliminate any voting rights associated with the Separate Account, or

 

  transfer the assets of the Separate Account relating to the Contracts to another Separate Account.

American National would, of course, not make any changes to the menu of Portfolios or to the Separate Account without complying with applicable laws and regulations. Such laws and regulations may require notice to and approval from the Contract Owners, the SEC, and state insurance regulatory authorities.

TERMINATION OF PARTICIPATION AGREEMENTS

The participation agreements pursuant to which the funds sell their shares to the Separate Account contain varying provisions regarding termination. The following generally summarizes those provisions.

Fidelity Variable Insurance Products – Service class 2

All participation agreements for the Fidelity Funds provide for termination:

 

  upon sixty (60) days advance written notice by any party;

 

  by American National, with respect to any Fidelity Portfolio if American National determines that shares of such Fidelity Portfolio are not reasonably available to meet the requirements of the Contracts;

 

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  by American National, with respect to any Fidelity Portfolio if any of the shares of such Fidelity Portfolio are not registered, issued, or sold in accordance with applicable state or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts;

 

  by American National, with respect to any Fidelity Portfolio if such Fidelity Portfolio ceases to be qualified as a Regulated Investment Company under Subchapter M of the Code, or if American National reasonably believes the Fidelity Funds may fail to so qualify;

 

  by American National, with respect to any Fidelity Portfolio if such Fidelity Portfolio fails to meet the diversification requirements specified in the Fidelity participation agreement;

 

  by the Fidelity Funds, or the underwriter, upon a determination by either, that American National has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  by American National, upon a determination by American National that either the Fidelity Funds or the underwriter has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  by the Fidelity Funds, or the underwriter, forty-five (45) days after American National gives the Fidelity Funds and the underwriter written notice of American National’s intention to make another investment company available as a funding vehicle for the Contracts, if at the time such notice was given, no other notice of termination of the Fidelity participation agreement was then outstanding; or

 

  upon a determination that a material irreconcilable conflict exists between the interests of the Contract Owners and other investors in the Fidelity Funds or between American National’s interests in the Fidelity Funds and the interests of other insurance companies invested in the Fidelity Funds.

T. Rowe Price

This participation agreement provides for termination:

 

  upon six (6) months advance written notice by any party;

 

  by American National, with respect to any T. Rowe Price Portfolio, if American National determines that shares of such T. Rowe Price Portfolio are not reasonably available to meet the requirements of the Contracts;

 

  by American National, with respect to any T. Rowe Price Portfolio, if any of the shares of such T. Rowe Price Portfolio are not registered, issued, or sold in accordance with applicable state or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts;

 

  by the T. Rowe Price Funds or the underwriter, upon the institution of formal proceedings against American National by the SEC, FINRA, or any other regulatory body regarding American National’s duties under the T. Rowe Price participation agreement or related to the sale of the Contracts, the operation of the Separate Account, or the purchase of T. Rowe Price Funds shares, if the T. Rowe Price Funds or the underwriter determines that such proceedings will have a material adverse effect on American National’s ability to perform under the T. Rowe Price participation agreement;

 

  by American National, upon the institution of formal proceedings against the T. Rowe Price Funds or the underwriter by the SEC, FINRA, or any other regulatory body, if American National determines that such proceedings will have a material adverse effect upon the ability of the T. Rowe Price Funds or the underwriter to perform its obligations under the T. Rowe Price participation agreement;

 

  by American National, with respect to any T. Rowe Price Portfolio, if such T. Rowe Price Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code, or if American National reasonably believes the T. Rowe Price Funds may fail to so qualify;

 

  by American National, with respect to any T. Rowe Price Portfolio, if such T. Rowe Price Portfolio fails to meet the diversification requirements specified in the T. Rowe Price participation agreement, or American National reasonably believes the T. Rowe Price Portfolio may fail to so comply;

 

  by the T. Rowe Price Funds or the underwriter, upon a determination by either, that American National has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

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  by American National, upon a determination by American National, that either the T. Rowe Price Funds or the underwriter has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  by the T. Rowe Price Funds or the underwriter sixty (60) days after American National gives the T. Rowe Price Funds and the underwriter written notice of American National’s intention to make another investment company available as a funding vehicle for the Contracts, if, at the time such notice was given, no other notice of termination of the T. Rowe Price participation agreement was then outstanding; or

 

  upon a determination that a material irreconcilable conflict exists between the Contract Owners and other investors in the T. Rowe Price Funds or between American National’s interests in the T. Rowe Price Funds and interests of other insurance companies invested in the T. Rowe Price Funds.

Federated Fund Insurance Series

This participation agreement provides for termination:

 

  upon one-hundred-eighty days advance written notice by any party;

 

  at American National’s option, if American National determines that shares of the Federated Portfolios are not reasonably available to meet the requirements of the Contracts;

 

  at the option of the Federated Fund, or the underwriter, upon the institution of formal proceedings against American National by the SEC, FINRA, or any other regulatory body regarding American National’s duties under the Federated participation agreement or related to the sale of the Contracts, the operation of the Separate Account, or the purchase of Federated Fund shares;

 

  at American National’s option, upon the institution of formal proceedings against the Federated Fund or the underwriter by the SEC, FINRA, or any other regulatory body;

 

  upon a requisite vote of the Contract Owners to substitute shares of another fund for shares of the Federated Fund;

 

  if any of the shares of a Federated Portfolio are not registered, issued, or sold in accordance with applicable state or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts;

 

  upon a determination by the Federated Fund that an irreconcilable conflict exists between the Contract Owners and other investors in the Federated Fund or between American National’s interests in the Federated Fund and the interests of other insurance companies invested in the Federated Fund;

 

  at American National’s option if the Federated Fund or a Federated Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code; or

 

  at American National’s option if the Federated Fund or a Federated Portfolio fails to meet the diversification requirements specified in the Federated participation agreement.

MFS Variable Insurance Trust

This participation agreement provides for termination:

 

  upon six (6) months advance written notice by any party;

 

  at American National’s option, to the extent the shares of any MFS Portfolio are not reasonably available to meet the requirements of the Contracts or are not “appropriate funding vehicles” for the Contracts, as determined by American National;

 

  at the option of the MFS Fund, or the underwriter, upon the institution of formal proceedings against American National by the SEC, FINRA, or any other regulatory body regarding American National’s duties under the MFS participation agreement or related to the sale of the Contracts, the operation of the Separate Account, or the purchase of shares of the MFS Fund;

 

  at American National’s option, upon the institution of formal proceedings against the MFS Fund by the SEC, FINRA, or any other regulatory body regarding the MFS Fund’s or the underwriter’s duties under the MFS participation agreement or related to the sale of shares of the MFS Fund;

 

 

at the option of any party, upon receipt of any necessary regulatory approvals or the vote of the Contract Owners to substitute shares of another fund for the shares of the MFS Fund, provided American National gives the MFS Fund and

 

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the underwriter thirty (30) days advance written notice of any proposed vote or other action taken to replace the shares of the MFS Fund;

 

  by the MFS Fund or the underwriter, upon a determination by either that American National has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  by American National upon a determination by American National that the MFS Fund or the underwriter has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  at the option of any party, upon another party’s material breach of any provision of the MFS participation agreement; or

 

  upon assignment of the MFS participation agreement, unless made with the written consent of the parties to the MFS participation agreement.

The Alger Portfolios Class I-2 Shares

This participation agreement provides for termination:

 

  upon six (6) months advance written notice by any party;

 

  at American National’s option to the extent the shares of any Alger Portfolios are not reasonably available to meet the requirements of the Contracts or are not “appropriate funding vehicles” for the Contracts, as determined by American National;

 

  at the option of the Alger Portfolios, or the underwriter, upon the institution of formal proceedings against American National by the SEC, FINRA, or any other regulatory body regarding American National’s duties under the Alger Portfolios participation agreement or related to the sale of the Contracts, the operation of the Separate Account, or the purchase of shares of the Alger Portfolios;

 

  at American National’s option, upon the institution of formal proceedings against the Alger Portfolios by the SEC, FINRA, or any other regulatory body regarding the Alger Portfolios or the underwriter’s duties under the Alger Portfolios participation agreement or related to the sale of shares of the Alger Portfolios;

 

  at the option of any party, upon receipt of any necessary regulatory approvals or the vote of the Contract Owners to substitute shares of another fund for the shares of the Alger Portfolios, provided American National gives the Alger Portfolios and the underwriter thirty (30) days advance written notice of any proposed vote or other action taken to replace the shares of the Alger Portfolios;

 

  by the Alger Portfolios, or the underwriter, upon a determination by either that American National has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  by American National, upon a determination, by American National that the Alger Portfolios or the underwriter has suffered a material adverse change in its business, operations, financial condition, or prospects, or is the subject of material adverse publicity;

 

  at the option of any party, upon another party’s material breach of any provision of the Alger Portfolios participation agreement; or

 

  upon assignment of the Alger Portfolios participation agreement, unless made with the written consent of the parties to the Alger Portfolios participation agreement.

Invesco Variable Insurance Funds

The AIM Funds participation agreement generally provides for termination:

 

  Upon six (6) months advance written notice by any party, with or without cause; or

 

  Upon ninety days advance written notice to the other party upon the institution of formal proceedings by the FINRA, the SEC or any state insurance regulator or any other regulatory body if the notifying party reasonably determines that such proceedings would have a material likelihood of imposing material adverse consequences; or

 

  Upon two (2)-business-days advance written notice for certain specified reasons (i.e. for cause).

 

12


Table of Contents

LEGAL MATTERS

Greer, Herz and Adams, LLP, General Counsel has reviewed various matters of Texas law pertaining to the Contract, including the validity of the Contract and our right to issue the Contract under Texas insurance law.

EXPERTS

The consolidated statements of financial position of American National Insurance Company and subsidiaries (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2015, and the related financial statement schedules I – V, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2015 have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

Additionally, the statement of net assets of the segregated subaccounts of American National Variable Annuity Separate Account as of December 31, 2015, and the related statement of operations for the year, or lesser period, then ended and the related statements of changes in net assets for each of the years, or lesser periods, in the two-year period then ended and the financial highlights for each of the years, or lesser periods, in the five-year period then ended have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

FINANCIAL STATEMENTS

The financial statements of American National Insurance Company should be considered only as bearing on the ability of American National Insurance Company to meet its obligations under the Contracts. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.

 

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Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors of American National Insurance Company and Policy Owners of American National Variable Annuity Separate Account:

We have audited the accompanying statement of net assets of Alger Balanced Portfolio - Class I-2, Alger Capital Appreciation Portfolio - Class I-2, Alger Growth & Income Portfolio - Class I-2, Alger Large Cap Growth Portfolio - Class I-2, Alger Mid Cap Growth Portfolio - Class I-2, Alger Small Cap Growth Portfolio - Class I-2, Federated Fund for U.S. Government Securities II, Federated High Income Bond Fund II - Primary Shares, Federated Kaufmann Fund II - Primary Shares, Federated Managed Volatility Fund II, Federated Quality Bond Fund II - Primary Shares, Fidelity VIP Asset Manager Portfolio - Initial Class, Fidelity VIP Asset Manager Portfolio - Service Class 2, Fidelity VIP Asset Manager: Growth Portfolio - Initial Class, Fidelity VIP Balanced Portfolio - Initial Class, Fidelity VIP Contrafund Portfolio - Initial Class, Fidelity VIP Contrafund Portfolio - Service Class 2, Fidelity VIP Equity-Income Portfolio - Initial Class, Fidelity VIP Equity-Income Portfolio - Service Class 2, Fidelity VIP Government Money Market Portfolio – Initial Class, Fidelity VIP Government Money Market Portfolio – Service Class 2, Fidelity VIP Growth - Initial Class, Fidelity VIP Growth and Income - Initial Class, Fidelity VIP Growth and Income - Service Class 2, Fidelity VIP Growth Opportunities Portfolio - Initial Class, Fidelity VIP Growth Opportunities Portfolio - Service Class 2, Fidelity VIP High Income - Initial Class, Fidelity VIP Index 500 Portfolio - Initial Class, Fidelity VIP Index 500 Portfolio - Service Class 2, Fidelity VIP Investment Grade Bond Portfolio - Initial Class, Fidelity VIP Investment Grade Bond Portfolio - Service Class 2, Fidelity VIP Mid Cap Portfolio - Initial Class, Fidelity VIP Mid Cap Portfolio - Service Class 2, Fidelity VIP Overseas Portfolio - Initial Class, Fidelity VIP Value Portfolio - Service Class 2, Fidelity VIP Value Strategies - Service Class 2, Invesco V.I. Diversified Dividend Fund - Series I, Invesco V.I. Global Health Care Fund - Series I, Invesco V.I. Global Real Estate Fund - Series I, Invesco V.I. Managed Volatility Fund - Series I, Invesco V.I. Mid Cap Growth Fund, Invesco V.I. Small Cap Equity Fund - Series I, Invesco V.I. Technology Fund - Series I, Lazard Retirement Emerging Markets Portfolio, Lazard Retirement Small/Mid Cap Portfolio, MFS Core Equity Series - Initial Class, MFS Growth Series - Initial Class, MFS Investors Trust Series - Initial Class, MFS Research Series - Initial Class, T. Rowe Price Equity Income Portfolio, T. Rowe Price International Stock Portfolio, T. Rowe Price Limited-Term Bond Portfolio, T. Rowe Price Mid-Cap Growth Portfolio, Van Eck VIP Emerging Markets Fund - Initial Class, and Van Eck VIP Global Hard Assets Fund - Initial Class segregated subaccounts of American National Variable Annuity Separate Account (the Account) as of December 31, 2015, and the related statement of operations for the year then ended, and the related statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years, or the lesser periods, in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights referred to above are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2015 by correspondence with the underlying mutual funds or their transfer agent. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the aforementioned segregated subaccounts of American National Variable Annuity Separate Account as of December 31, 2015, and the results of their operations for the year then ended, changes in net assets for each of the years in the two-year period then ended, and their financial highlights for each of the years, or the lesser periods, in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Houston, Texas

April 29, 2016

 

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Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
WealthQuest Variable Annuity II                  

Alger Balanced Portfolio - Class I-2

     4,691          $ 14.39          $ 52          $ 68          $ 1.38          48,989    

Alger Capital Appreciation Portfolio - Class I-2

     352          67.42          24          24          1.63          14,552    

Alger Growth & Income Portfolio - Class I-2

     4,152          16.25          47          67          1.25          54,128    

Alger Large Cap Growth Portfolio - Class I-2

     2,343          53.26          99          125          1.25          99,449    

Alger Mid Cap Growth Portfolio - Class I-2

     19,567          19.51          290          382          1.58          241,860    

Alger Small Cap Growth Portfolio - Class I-2

     3,784          20.47          101          77          1.29          59,832    

Federated Fund for U.S. Government Securities II

     17,445          10.88          196          190          1.70          111,469    

Federated High Income Bond Fund II - Primary Shares

     65,785          6.36          422          418          2.06          203,433    

Federated Kaufmann Fund II - Primary Shares

     6,035          17.42          90          105          2.27          46,312    

Federated Managed Volatility Fund II

     6,000          9.29          54          56          1.41          39,661    

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

     10,960          18.91          149          207          1.78          116,376    

Fidelity VIP Asset Manager Portfolio - Initial Class

     13,795          15.76          204          217          1.94          111,990    

Fidelity VIP Contrafund Portfolio - Initial Class

     39,660          33.92          1,066          1,345          3.13          429,387    

Fidelity VIP Government Money Market Portfolio - Service Class 2

     482,268          1.00          482          482          0.93          518,008    

Fidelity VIP Growth Opportunities Portfolio - Initial Class

     15,311          31.75          291          486          1.87          259,473    

Fidelity VIP Index 500 Portfolio - Initial Class

     4,934          206.43          678          1,019          2.28          447,391    

Lazard Retirement Emerging Markets Portfolio

     6,072          15.70          99          95          2.66          35,825    

Lazard Retirement Small-Mid Cap Portfolio

     21,190          7.39          179          157          3.03          51,742    

MFS Core Equity Portfolio - Initial Class

     7,801          21.28          183          166          23.13          7,178    

MFS Growth Series - Initial Class

     11,421          40.17          248          459          2.62          175,292    

MFS Investors Trust Series - Initial Class

     4,431          26.58          98          118          1.78          66,146    

MFS Research Series - Initial Class

     4,217          26.68          82          113          1.92          58,491    

T. Rowe Price Equity Income Portfolio

     11,151          26.81          219          299          2.32          129,130    

T. Rowe Price International Stock Portfolio

     8,801          14.67          99          129          1.53          84,457    

T. Rowe Price Limited-Term Bond Portfolio

     14,181          4.84          71          69          1.50          45,677    

T. Rowe Price Mid-Cap Growth Portfolio

     29,517          25.70          661          759          5.00          151,833    

VanEck VIP Emerging Markets Fund - Initial Class

     17,514          10.50          149          184          2.67          68,894    

VanEck VIP Global Hard Assets Fund - Initial Class

     1,068          16.88          29          18          1.88          9,611    

Investrac Gold Variable Annuity

                 

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

     8,727          18.91          112          165          2.59          63,769    

Fidelity VIP Asset Manager Portfolio - Initial Class

     4,711          15.76          69          74          2.88          25,774    

Fidelity VIP Balanced Portfolio - Initial Class

     631          16.27          11          10          1.75          5,876    

Fidelity VIP Contrafund Portfolio - Initial Class

     32,927          33.92          768          1,117          5.41          206,266    

Fidelity VIP Equity-Income Portfolio - Initial Class

     38,684          20.46          776          791          3.77          209,932    

 

See accompanying notes to the financial statements.

 

15


Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 

Investrac Gold Variable Annuity - (Continued)

                 

Fidelity VIP Government Money Market Portfolio - Initial Class

     889,209          $ 1.00          $ 889          $ 889          $ 1.33          669,706    

Fidelity VIP Growth - Initial Class

     15,081          65.75          543          992          4.36          227,444    

Fidelity VIP Growth and Income - Initial Class

     3,975          18.88          56          75          1.58          47,628    

Fidelity VIP Growth Opportunities Portfolio - Initial Class

     -           31.75                  -           1.40          -     

Fidelity VIP High Income - Initial Class

     23,205          4.95          126          115          2.18          52,671    

Fidelity VIP Index 500 Portfolio - Initial Class

     7,559          206.43          1,036          1,560          4.82          323,591    

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

     1,140          12.37          15          14          2.44          5,769    

Fidelity VIP Mid Cap Portfolio - Initial Class

     17,614          32.65          533          575          4.84          118,790    

Fidelity VIP Overseas Portfolio - Initial Class

     8,615          19.08          134          164          2.19          75,153    

T. Rowe Price Equity Income Portfolio

     3,981          26.81          79          107          1.93          55,307    

T. Rowe Price International Stock Portfolio

     3,925          14.67          56          58          1.08          53,423    

T. Rowe Price Mid-Cap Growth Portfolio

     12,885          25.70          313          331          3.76          88,025    

WealthQuest III Variable Annuity - No Rider

                 

Alger Balanced Portfolio - Class I-2

     28,033          14.39          328          403          1.41          286,669    

Alger Capital Appreciation Portfolio - Class I-2

     9,085          67.42          534          613          1.79          342,952    

Alger Growth & Income Portfolio - Class I-2

     7,459          16.25          84          121          1.29          93,783    

Alger Large Cap Growth Portfolio - Class I-2

     7,198          53.26          326          383          1.26          304,114    

Alger Mid Cap Growth Portfolio - Class I-2

     9,723          19.51          131          190          1.62          116,945    

Alger Small Cap Growth Portfolio - Class I-2

     8,985          20.47          246          184          1.40          130,909    

Federated Fund for U.S. Government Securities II

     31,556          10.88          349          343          1.28          269,238    

Federated High Income Bond Fund II - Primary Shares

     80,114          6.36          542          510          2.10          242,936    

Federated Kaufmann Fund II - Primary Shares

     3,906          17.42          66          68          2.19          31,129    

Federated Managed Volatility Fund II

     28,993          9.29          278          269          1.42          189,242    

Federated Quality Bond Fund II - Primary Shares

     10,314          10.97          117          113          1.39          81,221    

Fidelity VIP Contrafund Portfolio - Service Class 2

     51,947          33.26          1,326          1,728          2.14          805,716    

Fidelity VIP Equity-Income Portfolio - Service Class 2

     32,699          20.04          663          655          1.57          416,179    

Fidelity VIP Government Money Market Portfolio - Service Class 2

     460,686          1.00          461          461          0.93          493,378    

Fidelity VIP Growth and Income - Service Class 2

     12,877          18.54          201          239          1.81          132,204    

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     13,114          31.40          262          412          1.51          272,694    

Fidelity VIP Index 500 Portfolio - Service Class 2

     4,584          204.25          704          936          1.52          617,281    

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     18,259          12.09          230          221          1.34          164,325    

Fidelity VIP Mid Cap Portfolio - Service Class 2

     61,096          31.83          1,985          1,945          3.26          596,077    

Fidelity VIP Value Portfolio - Service Class 2

     13,803          13.21          184          182          1.73          105,650    

Fidelity VIP Value Strategies - Service Class 2

     11,732          14.64          172          172          1.91          90,048    

Invesco V.I. Diversified Dividend Fund - Series I

     1,545          23.27          24          36          40.03          898    

 

See accompanying notes to the financial statements.

 

16


Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 

WealthQuest III Variable Annuity - No Rider - (Continued)

                 

Invesco V.I. Global Health Care Fund - Series I

     3,986          $ 31.75          $ 124          $ 127          $ 2.39          52,885    

Invesco V.I. Global Real Estate Fund - Series I

     24,043          16.36          329          393          3.21          122,693    

Invesco V.I. Managed Volatility Fund - Series I

     19,119          11.38          278          218          1.60          135,790    

Invesco V.I. Mid Cap Growth Fund - Series I

     2,910          5.38          12          16          13.98          1,120    

Invesco V.I. Small Cap Equity Fund - Series I

     11,388          17.64          245          201          1.61          125,068    

Invesco V.I. Technology Fund - Series I

     7,262          18.83          127          137          0.97          140,437    

MFS Core Equity Portfolio - Initial Class

     775          21.28          18          16          23.13          713    

MFS Growth Series - Initial Class

     4,666          40.17          123          187          1.21          155,125    

MFS Investors Trust Series - Initial Class

     636          26.58          13          17          1.64          10,330    

MFS Research Series - Initial Class

     242          26.68                          1.43          4,520    

T. Rowe Price Equity Income Portfolio

     54,491          26.81          1,151          1,461          2.02          723,606    

T. Rowe Price International Stock Portfolio

     43,896          14.67          621          644          1.09          591,953    

T. Rowe Price Limited-Term Bond Portfolio

     66,980          4.84          331          324          1.38          234,821    

T. Rowe Price Mid-Cap Growth Portfolio

     723          25.70          17          19          3.21          5,792    

WealthQuest III Variable Annuity - 6 yr Ratchet

                 

Alger Balanced Portfolio - Class I-2

     73          14.39                          1.39          762    

Alger Capital Appreciation Portfolio - Class I-2

     498          67.42          28          34          1.76          19,101    

Alger Growth & Income Portfolio - Class I-2

     2,163          16.25          19          35          1.27          27,625    

Alger Large Cap Growth Portfolio - Class I-2

     1,012          53.26          50          54          1.24          43,439    

Alger Mid Cap Growth Portfolio - Class I-2

     2,564          19.51          35          50          1.60          31,328    

Alger Small Cap Growth Portfolio - Class I-2

     557          20.47          15          11          1.38          8,240    

Federated Fund for U.S. Government Securities II

     523          10.88                          1.26          4,509    

Federated High Income Bond Fund II - Primary Shares

     9,164          6.36          61          58          2.06          28,229    

Federated Kaufmann Fund II - Primary Shares

     -           17.42          -                             

Federated Managed Volatility Fund II

     110          9.29                          1.41          726    

Federated Quality Bond Fund II - Primary Shares

     463          10.97                          1.38          3,688    

Fidelity VIP Contrafund Portfolio - Service Class 2

     2,583          33.26          67          86          2.11          40,693    

Fidelity VIP Equity-Income Portfolio - Service Class 2

     1,241          20.04          24          25          1.56          15,970    

Fidelity VIP Government Money Market Portfolio - Service Class 2

     200,630          1.00          201          201          0.93          216,113    

Fidelity VIP Growth and Income - Service Class 2

     3,123          18.54          44          58          1.79          32,405    

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     107          31.40                          1.49          2,262    

Fidelity VIP Index 500 Portfolio - Service Class 2

     1,419          204.25          193          290          1.49          194,191    

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     599          12.09                          1.33          5,449    

 

See accompanying notes to the financial statements.

 

17


Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 

WealthQuest III Variable Annuity - 6 yr Ratchet - (Continued)

                 

Fidelity VIP Mid Cap Portfolio - Service Class 2

     4,139          $ 31.83          $ 137          $ 132          $ 3.21          40,986    

Fidelity VIP Value Portfolio - Service Class 2

     4,419          13.21          56          58          1.71          34,189    

Fidelity VIP Value Strategies - Service Class 2

     788          14.64          13          12          1.89          6,116    

Invesco V.I. Diversified Dividend Fund - Series I

             23.27                          39.95            

Invesco V.I. Global Health Care Fund - Series I

     1,599          31.75          28          51          2.36          21,531    

Invesco V.I. Global Real Estate Fund - Series I

     514          16.36                          3.16          2,662    

Invesco V.I. Managed Volatility Fund - Series I

     689          11.38          10                  1.58          4,966    

Invesco V.I. Small Cap Equity Fund - Series I

             17.64                          1.58            

Invesco V.I. Technology Fund - Series I

     2,302          18.83          34          43          0.96          45,190    

MFS Core Equity Portfolio - Initial Class

             21.28                          23.12            

MFS Growth Series - Initial Class

     144          40.17                          1.19          4,877    

MFS Investors Trust Series - Initial Class

     2,789          26.58          63          74          1.61          46,047    

MFS Research Series - Initial Class

     15          26.68                          1.41          277    

T. Rowe Price Equity Income Portfolio

     9,005          26.81          182          241          1.99          121,479    

T. Rowe Price International Stock Portfolio

     1,593          14.67          21          23          1.07          21,822    

T. Rowe Price Limited-Term Bond Portfolio

     8,492          4.84          42          41          1.36          30,243    

T. Rowe Price Mid-Cap Growth Portfolio

     112          25.70                          3.16          916    

WealthQuest III Variable Annuity - 3% Rollup

                 

Alger Capital Appreciation Portfolio - Class I-2

     40          67.42                          1.73          1,547    

Alger Growth & Income Portfolio - Class I-2

     97          16.25                          1.25          1,253    

Alger Mid Cap Growth Portfolio - Class I-2

             19.51                          1.57            

Fidelity VIP Contrafund Portfolio - Service Class 2

     12          33.26                          2.08          191    

Fidelity VIP Government Money Market Portfolio - Service Class 2

             1.00                          0.92            

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

             12.09                          1.32            

Fidelity VIP Mid Cap Portfolio - Service Class 2

     105          31.83                          3.17          1,055    

WealthQuest III Variable Annuity - 5% Rollup

                 

Alger Balanced Portfolio - Class I-2

     1,413          14.39          15          20          1.33          15,269    

Alger Capital Appreciation Portfolio - Class I-2

     1,052          67.42          58          71          1.69          41,946    

Alger Growth & Income Portfolio - Class I-2

     578          16.25                          1.22          7,676    

Alger Large Cap Growth Portfolio - Class I-2

     1,059          53.26          49          56          1.19          47,273    

Alger Mid Cap Growth Portfolio - Class I-2

     1,056          19.51          14          21          1.54          13,425    

Alger Small Cap Growth Portfolio - Class I-2

     937          20.47          26          19          1.33          14,427    

Federated High Income Bond Fund II - Primary Shares

     5,911          6.36          40          38          1.99          18,937    

Federated Kaufmann Fund II - Primary Shares

     1,659          17.42          26          29          2.11          13,725    

Federated Managed Volatility Fund II

     895          9.29                          1.35          6,174    

Federated Quality Bond Fund II - Primary Shares

     1,758          10.97          20          19          1.34          14,373    

Fidelity VIP Contrafund Portfolio - Service Class 2

     6,228          33.26          152          207          2.03          102,068    

 

See accompanying notes to the financial statements.

 

18


Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 

WealthQuest III Variable Annuity - 5% Rollup - (Continued)

                 

Fidelity VIP Equity-Income Portfolio - Service Class 2

     1,416          $ 20.04          $ 28          $ 28          $ 1.52          18,712    

Fidelity VIP Government Money Market Portfolio - Service Class 2

     60,663          1.00          61          61          0.91          66,305    

Fidelity VIP Growth and Income - Service Class 2

             18.54                                    

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

             31.40                                    

Fidelity VIP Index 500 Portfolio - Service Class 2

     505          204.25          73          103          1.44          71,805    

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     39          12.09                          1.29          365    

Fidelity VIP Mid Cap Portfolio - Service Class 2

     3,046          31.83          98          97          3.10          31,303    

Fidelity VIP Value Portfolio - Service Class 2

     752          13.21          12          21          1.66          5,972    

Fidelity VIP Value Strategies - Service Class 2

     2,637          14.64          27          39          1.84          21,010    

Invesco V.I. Diversified Dividend Fund - Series I

     1,626          23.27          27          38          39.47          959    

Invesco V.I. Global Health Care Fund - Series I

     855          31.75          20          27          2.27          11,939    

Invesco V.I. Global Real Estate Fund - Series I

     3,269          16.36          47          53          3.04          17,571    

Invesco V.I. Managed Volatility Fund - Series I

     2,721          11.38          38          31          1.52          20,351    

Invesco V.I. Technology Fund - Series I

     455          18.83                          0.92          9,265    

MFS Core Equity Portfolio - Initial Class

             21.28                                    

MFS Growth Series - Initial Class

     1,629          40.17          34          65          1.15          56,910    

MFS Investors Trust Series - Initial Class

             26.58                                    

MFS Research Series - Initial Class

             26.68                                    

T. Rowe Price Equity Income Portfolio

     3,915          26.81          83          105          1.91          54,936    

T. Rowe Price International Stock Portfolio

     2,402          14.67          32          35          1.03          34,225    

T. Rowe Price Limited-Term Bond Portfolio

     15,104          4.84          75          73          1.31          55,948    

T. Rowe Price Mid-Cap Growth Portfolio

     763          25.70          20          20          3.04          6,457    

WealthQuest III Group Unallocated Variable Annuity

                 

Alger Balanced Portfolio - Class I-2

     39,491          14.39          505          568          1.57          362,278    

Alger Capital Appreciation Portfolio - Class I-2

     12,582          67.42          876          848          1.99          426,053    

Alger Growth & Income Portfolio - Class I-2

     11,338          16.25          168          184          1.44          127,859    

Alger Large Cap Growth Portfolio - Class I-2

     4,272          53.26          268          228          1.41          161,925    

Alger Mid Cap Growth Portfolio - Class I-2

     30,056          19.51          461          586          1.81          324,271    

Alger Small Cap Growth Portfolio - Class I-2

     16,883          20.47          477          346          1.57          220,654    

Federated Fund for U.S. Government Securities II

     36,732          10.88          410          400          1.40          286,215    

Federated High Income Bond Fund II - Primary Shares

     138,991          6.36          966          884          2.34          378,089    

Federated Kaufmann Fund II - Primary Shares

     21,347          17.42          375          372          2.39          155,359    

Federated Managed Volatility Fund II

     41,839          9.29          428          389          1.59          244,984    

Federated Quality Bond Fund II - Primary Shares

     27,798          10.97          317          305          1.53          199,911    

 

See accompanying notes to the financial statements.

 

19


Table of Contents

American National Variable Annuity Separate Account

Statement of Net Assets

As of December 31, 2015

(Amounts in thousands except for unit and share information)

 

                                                                                                                                                                 
     Shares      NAV      Investments
at cost
     Investments
at value
     Unit
Value
     Units
Outstanding
 

WealthQuest III Group Unallocated Variable Annuity - (Continued)

                 

Fidelity VIP Asset Manager Portfolio - Service Class 2

     440          $ 15.45          $         $ 7         $ 1.71          3,983    

Fidelity VIP Contrafund Portfolio - Service Class 2

     52,745          33.26          1,510          1,754         2.39          733,897    

Fidelity VIP Equity-Income Portfolio - Service Class 2

     10,884          20.04          250          218         1.72          126,499    

Fidelity VIP Government Money Market Portfolio - Service Class 2

     3,649,169          1.00          3,649          3,649         0.98          3,718,823    

Fidelity VIP Growth and Income - Service Class 2

     6,993          18.54          129          130         1.98          65,564    

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     10,712          31.40          328          336         1.68          199,805    

Fidelity VIP Index 500 Portfolio - Service Class 2

     4,820          204.25          774          984         1.69          582,241    

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     32,158          12.09          411          389         1.47          264,308    

Fidelity VIP Mid Cap Portfolio - Service Class 2

     50,111          31.83          1,690          1,595         3.63          438,899    

Fidelity VIP Value Portfolio - Service Class 2

     15,913          13.21          242          210         1.89          111,231    

Fidelity VIP Value Strategies - Service Class 2

     32,283          14.64          462          473         2.09          226,285    

Invesco V.I. Diversified Dividend Fund - Series I

     3,569          23.27          78          83         41.79          1,987    

Invesco V.I. Global Health Care Fund - Series I

     15,493          31.75          503          492         2.67          184,507    

Invesco V.I. Global Real Estate Fund - Series I

     28,298          16.36          462          463         3.57          129,630    

Invesco V.I. Managed Volatility Fund - Series I

     36,355          11.38          565          414         1.78          231,802    

Invesco V.I. Mid Cap Growth Fund - Series I

     18,074          5.38          102          97         14.43          6,739    

Invesco V.I. Small Cap Equity Fund - Series I

     28,089          17.64          613          495         1.79          276,933    

Invesco V.I. Technology Fund - Series I

     8,199          18.83          156          154         1.08          142,322    

MFS Core Equity Portfolio - Initial Class

     267          21.28                  6         23.29          244    

MFS Growth Series - Initial Class

     9,879          40.17          380          397         1.35          294,214    

MFS Investors Trust Series - Initial Class

     5,212          26.58          139          139         1.82          75,990    

MFS Research Series - Initial Class

     816          26.68          23          22         1.60          13,637    

T. Rowe Price Equity Income Portfolio

     67,616          26.81          1,555          1,813         2.25          805,442    

T. Rowe Price International Stock Portfolio

     72,738          14.67          1,082          1,067         1.21          879,941    

T. Rowe Price Limited-Term Bond Portfolio

     129,204          4.84          641          625         1.54          406,321    

T. Rowe Price Mid-Cap Growth Portfolio

     11,029          25.70          300          283         3.58          79,264    

 

See accompanying notes to the financial statements.

 

20


Table of Contents

American National Variable Annuity Separate Account

Statement of Operations

Year ended December 31, 2015

(Amounts in thousands)

 

 

                                                                                                                                                                                                                 
                                  Net Change in     Net Increase  
     Net         Realized Gain      Realized Gains     Net Realized         Unrealized Appreciation     (Decrease) in Net  
     Investment         Distributions from      (Losses) on Sales     Gains (Losses)         or Depreciation of     Assets Resulting  
     Income (Loss)         Underlying Mutual Fund      of Investments     on Investments         Investments     from Operations  
  

 

 

 

WealthQuest Variable Annuity II

             

Alger Balanced Portfolio - Class I-2

   $ -      $ -       $ 1      $ 1      $ (1   $ -   

Alger Capital Appreciation Portfolio - Class I-2

     -        3         -        3        (2     1   

Alger Growth & Income Portfolio - Class I-2

     -        -         2        2        (2     -   

Alger Large Cap Growth Portfolio - Class I-2

     (2     14         3        17        (14     1   

Alger Mid Cap Growth Portfolio - Class I-2

     (5     -         4        4        (10     (11

Alger Small Cap Growth Portfolio - Class I-2

     (1     23         -        23        (25     (3

Federated Fund for U.S. Government Securities II

     3        -         (1     (1     (4     (2

Federated High Income Bond Fund II - Primary Shares

     20        -         -        -        (38     (18

Federated Kaufmann Fund II - Primary Shares

     (2     18         8        26        (18     6   

Federated Managed Volatility Fund II

     2        -         2        2        (10     (6

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

     -        -         32        32        (30     2   

Fidelity VIP Asset Manager Portfolio - Initial Class

     1        19         9        28        (28     1   

Fidelity VIP Contrafund Portfolio - Initial Class

     (4     127         47        174        (177     (7

Fidelity VIP Government Money Market Portfolio - Service Class 2

     (8     -         -        -        -        (8

Fidelity VIP Growth Opportunities Portfolio - Initial Class

     (5     49         45        94        (67     22   

Fidelity VIP Index 500 Portfolio - Initial Class

     7        1         58        59        (64     2   

Lazard Retirement Emerging Markets Portfolio

     (1     -         (4     (4     (22     (27

Lazard Retirement Small-Mid Cap Portfolio

     (2     12         (4     8        (11     (5

MFS Core Equity Portfolio - Initial Class

     1        24         89        113        (108     6   

MFS Growth Series - Initial Class

     (5     26         71        97        (60     32   

MFS Investors Trust Series - Initial Class

     (1     13         1        14        (15     (2

MFS Research Series - Initial Class

     (1     9         11        20        (19     -   

T. Rowe Price Equity Income Portfolio

     2        7         23        30        (58     (26

T. Rowe Price International Stock Portfolio

     (1     3         5        8        (9     (2

T. Rowe Price Limited-Term Bond Portfolio

     -        -         -        -        -        -   

T. Rowe Price Mid-Cap Growth Portfolio

     (10     102         49        151        (91     50   

VanEck VIP Emerging Markets Fund - Initial Class

     (2     12         (3     9        (39     (32

VanEck VIP Global Hard Assets Fund - Initial Class

     -        -         -        -        (8     (8

Investrac Gold Variable Annuity

             

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

     -        -         1        1        (3     (2

Fidelity VIP Asset Manager Portfolio - Initial Class

     -        5         -        5        (6     (1

Fidelity VIP Balanced Portfolio - Initial Class

     -        -         -        -        -        -   

Fidelity VIP Contrafund Portfolio - Initial Class

     (5     112         61        173        (172     (4

Fidelity VIP Equity-Income Portfolio - Initial Class

     15        78         (9     69        (129     (45

Fidelity VIP Government Money Market Portfolio - Initial Class

     (14     -         -        -        -        (14

Fidelity VIP Growth - Initial Class

     (11     30         26        56        10        55   

Fidelity VIP Growth and Income - Initial Class

     1        4         -        4        (7     (2

Fidelity VIP Growth Opportunities Portfolio - Initial Class

     -        -         8        8        (8     -   

Fidelity VIP High Income - Initial Class

     6        -         1        1        (13     (6

Fidelity VIP Index 500 Portfolio - Initial Class

     10        1         20        21        (32     (1

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

     -        -         -        -        -        -   

Fidelity VIP Mid Cap Portfolio - Initial Class

     (6     78         43        121        (129     (14

Fidelity VIP Overseas Portfolio - Initial Class

     -        -         -        -        4        4   

T. Rowe Price Equity Income Portfolio

     -        2         8        10        (21     (11

 

See accompanying notes to the financial statements.

 

21


Table of Contents

American National Variable Annuity Separate Account

Statement of Operations

Year ended December 31, 2015

(Amounts in thousands)

 

                                                                                                                                                                                                                                                                             
                                  Net Change in     Net Increase  
     Net         Realized Gain          Realized Gains         Net Realized         Unrealized Appreciation     (Decrease) in Net  
     Investment         Distributions from          (Losses) on Sales         Gains (Losses)         or Depreciation of     Assets Resulting  
     Income (Loss)         Underlying Mutual Fund          of Investments         on Investments         Investments     from Operations  
  

 

 

 

Investrac Gold Variable Annuity - (Continued)

             

T. Rowe Price International Stock Portfolio

   $ -      $ 1       $ 1      $ 2      $ (3   $ (1

T. Rowe Price Mid-Cap Growth Portfolio

     (5     44         1        45        (25     15   

WealthQuest III Variable Annuity - No Rider

             

Alger Balanced Portfolio - Class I-2

     4        -         13        13        (16     1   

Alger Capital Appreciation Portfolio - Class I-2

     (7     69         88        157        (116     34   

Alger Growth & Income Portfolio - Class I-2

     -        -         7        7        (9     (2

Alger Large Cap Growth Portfolio - Class I-2

     (5     42         4        46        (39     2   

Alger Mid Cap Growth Portfolio - Class I-2

     (2     -         20        20        (20     (2

Alger Small Cap Growth Portfolio - Class I-2

     (3     53         3        56        (63     (10

Federated Fund for U.S. Government Securities II

     1        -         -        -        (3     (2

Federated High Income Bond Fund II - Primary Shares

     29        -         (5     (5     (41     (17

Federated Kaufmann Fund II - Primary Shares

     (1     15         8        23        (17     5   

Federated Managed Volatility Fund II

     9        1         2        3        (39     (27

Federated Quality Bond Fund II - Primary Shares

     3        -         (1     (1     (5     (3

Fidelity VIP Contrafund Portfolio - Service Class 2

     (8     180         147        327        (332     (13

Fidelity VIP Equity-Income Portfolio - Service Class 2

     12        68         4        72        (123     (39

Fidelity VIP Government Money Market Portfolio - Service Class 2

     (6     -         -        -        -        (6

Fidelity VIP Growth and Income - Service Class 2

     2        15         35        50        (60     (8

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     (6     43         99        142        (118     18   

Fidelity VIP Index 500 Portfolio - Service Class 2

     5        1         122        123        (129     (1

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     3        -         (1     (1     (6     (4

Fidelity VIP Mid Cap Portfolio - Service Class 2

     (21     270         216        486        (511     (46

Fidelity VIP Value Portfolio - Service Class 2

     1        26         39        65        (68     (2

Fidelity VIP Value Strategies - Service Class 2

     (1     -         74        74        (78     (5

Invesco V.I. Diversified Dividend Fund - Series I

     1        -         -        -        -        1   

Invesco V.I. Global Health Care Fund - Series I

     (1     11         8        19        (18     -   

Invesco V.I. Global Real Estate Fund - Series I

     10        -         32        32        (53     (11

Invesco V.I. Managed Volatility Fund - Series I

     -        84         (4     80        (88     (8

Invesco V.I. Mid Cap Growth Fund - Series I

     -        1         1        2        (2     -   

Invesco V.I. Small Cap Equity Fund - Series I

     (3     44         23        67        (78     (14

Invesco V.I. Technology Fund - Series I

     (2     14         7        21        (11     8   

MFS Core Equity Portfolio - Initial Class

     -        2         7        9        (10     (1

MFS Growth Series - Initial Class

     (2     10         2        12        -        10   

MFS Investors Trust Series - Initial Class

     -        2         -        2        (2     -   

MFS Research Series - Initial Class

     -        1         -        1        (1     -   

T. Rowe Price Equity Income Portfolio

     10        33         67        100        (241     (131

T. Rowe Price International Stock Portfolio

     (5     13         63        76        (82     (11

T. Rowe Price Limited-Term Bond Portfolio

     -        -         (3     (3     -        (3

T. Rowe Price Mid-Cap Growth Portfolio

     -        2         1        3        (2     1   

WealthQuest III Variable Annuity - 6 yr Ratchet

             

Alger Balanced Portfolio - Class I-2

     -        -         2        2        (2     -   

Alger Capital Appreciation Portfolio - Class I-2

     (1     4         6        10        (8     1   

Alger Growth & Income Portfolio - Class I-2

     1        -         2        2        (2     1   

Alger Large Cap Growth Portfolio - Class I-2

     (1     6         2        8        (6     1   

Alger Mid Cap Growth Portfolio - Class I-2

     (1     -         3        3        (4     (2

Alger Small Cap Growth Portfolio - Class I-2

     -        3         -        3        (4     (1

 

See accompanying notes to the financial statements.

 

22


Table of Contents

American National Variable Annuity Separate Account

Statement of Operations

Year ended December 31, 2015

(Amounts in thousands)

 

                                                                                                                                                                                                                                                                             
                                    Net Change in     Net Increase  
     Net         Realized Gain          Realized Gains          Net Realized          Unrealized Appreciation     (Decrease) in Net  
     Investment         Distributions from          (Losses) on Sales          Gains (Losses)          or Depreciation of     Assets Resulting  
     Income (Loss)         Underlying Mutual Fund          of Investments          on Investments          Investments     from Operations  
  

 

 

 

WealthQuest III Variable Annuity - 6 yr Ratchet - (Continued)

               

Federated Fund for U.S. Government Securities II

   $ -      $ -       $ -       $ -       $ -      $ -   

Federated High Income Bond Fund II - Primary Shares

     3        -         -         -         (5     (2

Federated Kaufmann Fund II - Primary Shares

     -        -         -         -         -        -   

Federated Managed Volatility Fund II

     -        -         -         -         -        -   

Federated Quality Bond Fund II - Primary Shares

     -        -         -         -         -        -   

Fidelity VIP Contrafund Portfolio - Service Class 2

     -        10         15         25         (24     1   

Fidelity VIP Equity-Income Portfolio - Service Class 2

     1        3         2         5         (7     (1

Fidelity VIP Government Money Market Portfolio - Service Class 2

     (3     -         -         -         -        (3

Fidelity VIP Growth and Income - Service Class 2

     -        3         -         3         (6     (3

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     -        -         -         -         -        -   

Fidelity VIP Index 500 Portfolio - Service Class 2

     1        -         3         3         (5     (1

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     -        -         -         -         -        -   

Fidelity VIP Mid Cap Portfolio - Service Class 2

     (2     27         23         50         (46     2   

Fidelity VIP Value Portfolio - Service Class 2

     -        9         8         17         (18     (1

Fidelity VIP Value Strategies - Service Class 2

     -        -         6         6         (6     -   

Invesco V.I. Diversified Dividend Fund - Series I

     -        -         -         -         -        -   

Invesco V.I. Global Health Care Fund - Series I

     (1     5         -         5         (3     1   

Invesco V.I. Global Real Estate Fund - Series I

     -        -         9         9         (9     -   

Invesco V.I. Managed Volatility Fund - Series I

     -        3         1         4         (4     -   

Invesco V.I. Small Cap Equity Fund - Series I

     -        -         -         -         -        -   

Invesco V.I. Technology Fund - Series I

     (1     4         -         4         (2     1   

MFS Core Equity Portfolio - Initial Class

     -        -         -         -         -        -   

MFS Growth Series - Initial Class

     -        1         7         8         (6     2   

MFS Investors Trust Series - Initial Class

     -        8         5         13         (14     (1

MFS Research Series - Initial Class

     -        -         -         -         -        -   

T. Rowe Price Equity Income Portfolio

     1        5         26         31         (56     (24

T. Rowe Price International Stock Portfolio

     -        -         3         3         (3     -   

T. Rowe Price Limited-Term Bond Portfolio

     (1     -         -         -         -        (1

T. Rowe Price Mid-Cap Growth Portfolio

     -        -         -         -         -        -   

WealthQuest III Variable Annuity - 3% Rollup

               

Alger Capital Appreciation Portfolio - Class I-2

     -        -         -         -         -        -   

Alger Growth & Income Portfolio - Class I-2

     -        -         -         -         -        -   

Alger Mid Cap Growth Portfolio - Class I-2

     -        -         -         -         -        -   

Fidelity VIP Contrafund Portfolio - Service Class 2

     -        -         -         -         -        -   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     -        -         -         -         -        -   

Fidelity VIP Mid Cap Portfolio - Service Class 2

     -        -         -         -         -        -   

Fidelity VIP Government Money Market Portfolio - Service Class 2

     -        -         -         -         -        -   

WealthQuest III Variable Annuity - 5% Rollup

               

Alger Balanced Portfolio - Class I-2

     -        -         1         1         (1     -   

Alger Capital Appreciation Portfolio - Class I-2

     (1     8         2         10         (5     4   

Alger Growth & Income Portfolio - Class I-2

     -        -         -         -         -        -   

Alger Large Cap Growth Portfolio - Class I-2

     (1     6         -         6         (5     -   

Alger Mid Cap Growth Portfolio - Class I-2

     -        -         -         -         -        -   

Alger Small Cap Growth Portfolio - Class I-2

     -        6         -         6         (6     -   

Federated High Income Bond Fund II - Primary Shares

     2        -         -         -         (4     (2

Federated Kaufmann Fund II - Primary Shares

     -        4         1         5         (3     2   

Federated Managed Volatility Fund II

     -        -         -         -         (1     (1

 

See accompanying notes to the financial statements.

 

23


Table of Contents

American National Variable Annuity Separate Account

Statement of Operations

Year ended December 31, 2015

(Amounts in thousands)

 

                                                                                                                                                                                                                                                                             
                                  Net Change in     Net Increase  
     Net         Realized Gain      Realized Gains     Net Realized         Unrealized Appreciation     (Decrease) in Net  
     Investment         Distributions from      (Losses) on Sales     Gains (Losses)         or Depreciation of     Assets Resulting  
     Income (Loss)         Underlying Mutual Fund      of Investments     on Investments         Investments     from Operations  
  

 

 

 

WealthQuest III Variable Annuity - 5% Rollup - (Continued)

             

Federated Quality Bond Fund II - Primary Shares

   $ 1      $ -       $ -      $ -      $ (1   $ -   

Fidelity VIP Contrafund Portfolio - Service Class 2

     (1     24         13        37        (36     -   

Fidelity VIP Equity-Income Portfolio - Service Class 2

     1        3         -        3        (5     (1

Fidelity VIP Government Money Market Portfolio - Service Class 2

     (1     -         -        -        -        (1

Fidelity VIP Growth and Income - Service Class 2

     -        -         -        -        -        -   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     -        -         6        6        (5     1   

Fidelity VIP Index 500 Portfolio - Service Class 2

     -        -         12        12        (12     -   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     -        -         -        -        -        -   

Fidelity VIP Mid Cap Portfolio - Service Class 2

     (2     22         12        34        (32     -   

Fidelity VIP Value Portfolio - Service Class 2

     -        1         1        2        (2     -   

Fidelity VIP Value Strategies - Service Class 2

     (1     -         5        5        (7     (3

Invesco V.I. Diversified Dividend Fund - Series I

     -        -         -        -        -        -   

Invesco V.I. Global Health Care Fund - Series I

     -        2         1        3        (3     -   

Invesco V.I. Global Real Estate Fund - Series I

     1        -         1        1        (4     (2

Invesco V.I. Managed Volatility Fund - Series I

     -        11         -        11        (12     (1

Invesco V.I. Technology Fund - Series I

     -        1         -        1        -        1   

MFS Core Equity Portfolio - Initial Class

     -        -         -        -        -        -   

MFS Growth Series - Initial Class

     (1     4         1        5        -        4   

MFS Investors Trust Series - Initial Class

     -        -         -        -        -        -   

MFS Research Series - Initial Class

     -        -         -        -        -        -   

T. Rowe Price Equity Income Portfolio

     -        2         1        3        (13     (10

T. Rowe Price International Stock Portfolio

     (1     1         3        4        (4     (1

T. Rowe Price Limited-Term Bond Portfolio

     -        -         -        -        -        -   

T. Rowe Price Mid-Cap Growth Portfolio

     -        3         -        3        (1     2   

WealthQuest III Group Unallocated Variable Annuity

             

Alger Balanced Portfolio - Class I-2

     10        -         4        4        (8     6   

Alger Capital Appreciation Portfolio - Class I-2

     (2     93         50        143        (94     47   

Alger Growth & Income Portfolio - Class I-2

     3        -         20        20        (21     2   

Alger Large Cap Growth Portfolio - Class I-2

     (1     25         40        65        (52     12   

Alger Mid Cap Growth Portfolio - Class I-2

     (2     -         63        63        (78     (17

Alger Small Cap Growth Portfolio - Class I-2

     (2     101         4        105        (121     (18

Federated Fund for U.S. Government Securities II

     9        -         (2     (2     (7     -   

Federated High Income Bond Fund II - Primary Shares

     46        -         5        5        (77     (26

Federated Kaufmann Fund II - Primary Shares

     (2     56         31        87        (67     18   

Federated Managed Volatility Fund II

     33        4         29        33        (125     (59

Federated Quality Bond Fund II - Primary Shares

     13        -         (5     (5     (9     (1

Fidelity VIP Asset Manager Portfolio - Service Class 2

     -        -         -        -        (1     (1

Fidelity VIP Contrafund Portfolio - Service Class 2

     7        172         165        337        (347     (3

Fidelity VIP Equity-Income Portfolio - Service Class 2

     6        31         7        38        (56     (12

Fidelity VIP Government Money Market Portfolio - Service Class 2

     (14     -         -        -        -        (14

Fidelity VIP Growth and Income - Service Class 2

     3        7         11        18        (24     (3

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     (1     38         31        69        (56     12   

Fidelity VIP Index 500 Portfolio - Service Class 2

     15        1         62        63        (70     8   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     9        -         (5     (5     (9     (5

Fidelity VIP Mid Cap Portfolio - Service Class 2

     (3     245         134        379        (407     (31

Fidelity VIP Value Portfolio - Service Class 2

     4        26         53        79        (87     (4

Fidelity VIP Value Strategies - Service Class 2

     3        -         117        117        (141     (21

 

See accompanying notes to the financial statements.

 

24


Table of Contents

American National Variable Annuity Separate Account

Statement of Operations

Year ended December 31, 2015

(Amounts in thousands)

 

                                                                                                                                                                                                                                                                             
                              Net Change in     Net Increase  
     Net         Realized Gain          Realized Gains     Net Realized     Unrealized Appreciation     (Decrease) in Net  
     Investment         Distributions from          (Losses) on Sales     Gains (Losses)     or Depreciation of     Assets Resulting  
     Income (Loss)         Underlying Mutual Fund          of Investments     on Investments     Investments     from Operations  
  

 

 

 

WealthQuest III Group Unallocated Variable Annuity - (Continued)

             

Invesco V.I. Diversified Dividend Fund - Series I

   $ 1      $ -       $ 7      $ 7      $ (6   $ 2   

Invesco V.I. Global Health Care Fund - Series I

     (2     49         48        97        (100     (5

Invesco V.I. Global Real Estate Fund - Series I

     16        -         50        50        (76     (10

Invesco V.I. Managed Volatility Fund - Series I

     4        155         27        182        (198     (12

Invesco V.I. Mid Cap Growth Fund - Series I

     -        10         19        29        (28     1   

Invesco V.I. Small Cap Equity Fund - Series I

     (3     124         78        202        (240     (41

Invesco V.I. Technology Fund - Series I

     (1     16         10        26        (15     10   

MFS Core Equity Portfolio- Initial Class

     1        8         21        29        (27     3   

MFS Growth Series - Initial Class

     (1     53         224        277        (245     31   

MFS Investors Trust Series - Initial Class

     -        16         5        21        (23     (2

MFS Research Series - Initial Class

     -        1         -        1        (2     (1

T. Rowe Price Equity Income Portfolio

     28        41         80        121        (296     (147

T. Rowe Price International Stock Portfolio

     7        21         66        87        (118     (24

T. Rowe Price Limited-Term Bond Portfolio

     6        -         (3     (3     (2     1   

T. Rowe Price Mid-Cap Growth Portfolio

     -        43         10        53        (35     18   

 

See accompanying notes to the financial statements.

 

25


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

Year ended December 31, 2015

(Amounts in thousands)

 

          Changes from operations               Changes from policy transactions                        
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at  
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,  
    2014     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2015  

WealthQuest Variable Annuity II

                   

Alger Balanced Portfolio - Class I-2

  $ 68      $ -      $ 1      $ (1   $ -      $ -      $ -      $ -        -      $ 68   

Alger Capital Appreciation Portfolio - Class I-2

    23        -        3        (2     1        1        (1     -        1        24   

Alger Growth & Income Portfolio - Class I-2

    72        -        2        (2     -        (1     (4     (5     (5     67   

Alger Large Cap Growth Portfolio - Class I-2

    129        (2     17        (14     1        (1     (4     (5     (4     125   

Alger Mid Cap Growth Portfolio - Class I-2

    402        (5     4        (10     (11     1        (10     (9     (20     382   

Alger Small Cap Growth Portfolio - Class I-2

    77        (1     23        (25     (3     3        -        3        -        77   

Federated Fund for U.S. Government Securities II

    197        3        (1     (4     (2     76        (81     (5     (7     190   

Federated High Income Bond Fund II - Primary Shares

    373        20        -        (38     (18     75        (12     63        45        418   

Federated Kaufmann Fund II - Primary Shares

    124        (2     26        (18     6        3        (28     (25     (19     105   

Federated Managed Volatility Fund II

    71        2        2        (10     (6     2        (11     (9     (15     56   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

    283        -        32        (30     2        -        (78     (78     (76     207   

Fidelity VIP Asset Manager Portfolio - Initial Class

    284        1        28        (28     1        (1     (67     (68     (67     217   

Fidelity VIP Contrafund Portfolio - Initial Class

    1,540        (4     174        (177     (7     4        (192     (188     (195     1,345   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    780        (8     -        -        (8     7        (297     (290     (298     482   

Fidelity VIP Growth Opportunities Portfolio - Initial Class

    523        (5     94        (67     22        17        (76     (59     (37     486   

Fidelity VIP Index 500 Portfolio - Initial Class

    1,140        7        59        (64     2        96        (219     (123     (121     1,019   

Lazard Retirement Emerging Markets Portfolio

    149        (1     (4     (22     (27     4        (31     (27     (54     95   

Lazard Retirement Small-Mid Cap Portfolio

    173        (2     8        (11     (5     2        (13     (11     (16     157   

MFS Core Equity Portfolio - Initial Class

    195        1        113        (108     6        191        (226     (35     (29     166   

MFS Growth Series - Initial Class

    535        (5     97        (60     32        (1     (107     (108     (76     459   

MFS Investors Trust Series - Initial Class

    122        (1     14        (15     (2     2        (4     (2     (4     118   

MFS Research Series - Initial Class

    135        (1     20        (19     -        1        (23     (22     (22     113   

T. Rowe Price Equity Income Portfolio

    389        2        30        (58     (26     -        (64     (64     (90     299   

T. Rowe Price International Stock Portfolio

    139        (1     8        (9     (2     -        (8     (8     (10     129   

T. Rowe Price Limited-Term Bond Portfolio

    86        -        -        -        -        -        (17     (17     (17     69   

T. Rowe Price Mid-Cap Growth Portfolio

    882        (10     151        (91     50        5        (178     (173     (123     759   

VanEck VIP Emerging Markets Fund - Initial Class

    224        (2     9        (39     (32     4        (12     (8     (40     184   

VanEck VIP Global Hard Assets Fund - Initial Class

    24        -        -        (8     (8     2        -        2        (6     18   

Investrac Gold Variable Annuity

                   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

    168        -        1        (3     (2     -        (1     (1     (3     165   

Fidelity VIP Asset Manager Portfolio - Initial Class

    75        -        5        (6     (1     1        (1     -        (1     74   

Fidelity VIP Balanced Portfolio - Initial Class

    10        -        -        -        -        -        -        -        -        10   

Fidelity VIP Contrafund Portfolio - Initial Class

    1,284        (5     173        (172     (4     11        (174     (163     (167     1,117   

Fidelity VIP Equity-Income Portfolio - Initial Class

    888        15        69        (129     (45     1        (53     (52     (97     791   

Fidelity VIP Government Money Market Portfolio - Initial Class

    1,120        (14     -        -        (14     6        (223     (217     (231     889   

Fidelity VIP Growth - Initial Class

    966        (11     56        10        55        13        (42     (29     26        992   

Fidelity VIP Growth and Income - Initial Class

    78        1        4        (7     (2     (1     -        (1     (3     75   

Fidelity VIP Growth Opportunities Portfolio - Initial Class

    14        -        8        (8     -        -        (14     (14     (14     -   

Fidelity VIP High Income - Initial Class

    121        6        1        (13     (6     -        -        -        (6     115   

Fidelity VIP Index 500 Portfolio - Initial Class

    1,585        10        21        (32     (1     21        (45     (24     (25     1,560   

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

    15        -        -        -        -        -        (1     (1     (1     14   

Fidelity VIP Mid Cap Portfolio - Initial Class

    669        (6     121        (129     (14     10        (90     (80     (94     575   

Fidelity VIP Overseas Portfolio - Initial Class

    162        -        -        4        4        1        (3     (2     2        164   

T. Rowe Price Equity Income Portfolio

    136        -        10        (21     (11     4        (22     (18     (29     107   

T. Rowe Price International Stock Portfolio

    59        -        2        (3     (1     3        (3     -        (1     58   

T. Rowe Price Mid-Cap Growth Portfolio

    311        (5     45        (25     15        5        -        5        20        331   

 

See accompanying notes to the financial statements.

 

26


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

Year ended December 31, 2015

(Amounts in thousands)

 

          Changes from operations               Changes from policy transactions                        
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at  
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,  
    2014     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2015  

WealthQuest III Variable Annuity - No Rider

                   

Alger Balanced Portfolio - Class I-2

  $ 445      $ 4      $ 13      $ (16   $ 1      $ 10      $ (53   $ (43   $ (42   $ 403   

Alger Capital Appreciation Portfolio - Class I-2

    716        (7     157        (116     34        27        (164     (137     (103     613   

Alger Growth & Income Portfolio - Class I-2

    147        -        7        (9     (2     2        (26     (24     (26     121   

Alger Large Cap Growth Portfolio - Class I-2

    391        (5     46        (39     2        4        (14     (10     (8     383   

Alger Mid Cap Growth Portfolio - Class I-2

    227        (2     20        (20     (2     2        (37     (35     (37     190   

Alger Small Cap Growth Portfolio - Class I-2

    260        (3     56        (63     (10     4        (70     (66     (76     184   

Federated Fund for U.S. Government Securities II

    112        1        -        (3     (2     242        (9     233        231        343   

Federated High Income Bond Fund II - Primary Shares

    649        29        (5     (41     (17     6        (128     (122     (139     510   

Federated Kaufmann Fund II - Primary Shares

    102        (1     23        (17     5        1        (40     (39     (34     68   

Federated Managed Volatility Fund II

    272        9        3        (39     (27     39        (15     24        (3     269   

Federated Quality Bond Fund II - Primary Shares

    143        3        (1     (5     (3     5        (32     (27     (30     113   

Fidelity VIP Contrafund Portfolio - Service Class 2

    2,032        (8     327        (332     (13     26        (317     (291     (304     1,728   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    742        12        72        (123     (39     3        (51     (48     (87     655   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    493        (6     -        -        (6     72        (98     (26     (32     461   

Fidelity VIP Growth and Income - Service Class 2

    304        2        50        (60     (8     9        (66     (57     (65     239   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    538        (6     142        (118     18        7        (151     (144     (126     412   

Fidelity VIP Index 500 Portfolio - Service Class 2

    1,125        5        123        (129     (1     86        (274     (188     (189     936   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    254        3        (1     (6     (4     5        (34     (29     (33     221   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    2,428        (21     486        (511     (46     377        (814     (437     (483     1,945   

Fidelity VIP Value Portfolio - Service Class 2

    235        1        65        (68     (2     78        (129     (51     (53     182   

Fidelity VIP Value Strategies - Service Class 2

    269        (1     74        (78     (5     79        (171     (92     (97     172   

Invesco V.I. Diversified Dividend Fund - Series I

    36        1        -        -        1        (1     -        (1     -        36   

Invesco V.I. Global Health Care Fund - Series I

    53        (1     19        (18     -        87        (13     74        74        127   

Invesco V.I. Global Real Estate Fund - Series I

    487        10        32        (53     (11     3        (86     (83     (94     393   

Invesco V.I. Managed Volatility Fund - Series I

    242        -        80        (88     (8     2        (18     (16     (24     218   

Invesco V.I. Mid Cap Growth Fund - Series I

    17        -        2        (2     -        1        (2     (1     (1     16   

Invesco V.I. Small Cap Equity Fund - Series I

    227        (3     67        (78     (14     41        (53     (12     (26     201   

Invesco V.I. Technology Fund - Series I

    142        (2     21        (11     8        6        (19     (13     (5     137   

MFS Core Equity Portfolio - Initial Class

    17        -        9        (10     (1     17        (17     -        (1     16   

MFS Growth Series - Initial Class

    168        (2     12        -        10        12        (3     9        19        187   

MFS Investors Trust Series - Initial Class

    18        -        2        (2     -        -        (1     (1     (1     17   

MFS Research Series - Initial Class

    7        -        1        (1     -        (1     -        (1     (1     6   

T. Rowe Price Equity Income Portfolio

    1,663        10        100        (241     (131     55        (126     (71     (202     1,461   

T. Rowe Price International Stock Portfolio

    935        (5     76        (82     (11     7        (287     (280     (291     644   

T. Rowe Price Limited-Term Bond Portfolio

    374        -        (3     -        (3     26        (73     (47     (50     324   

T. Rowe Price Mid-Cap Growth Portfolio

    19        -        3        (2     1        1        (2     (1     -        19   

WealthQuest III Variable Annuity - 6 yr Ratchet

                   

Alger Balanced Portfolio - Class I-2

    11        -        2        (2     -        -        (10     (10     (10     1   

Alger Capital Appreciation Portfolio - Class I-2

    43        (1     10        (8     1        2        (12     (10     (9     34   

Alger Growth & Income Portfolio - Class I-2

    38        1        2        (2     1        (1     (3     (4     (3     35   

Alger Large Cap Growth Portfolio - Class I-2

    60        (1     8        (6     1        -        (7     (7     (6     54   

Alger Mid Cap Growth Portfolio - Class I-2

    57        (1     3        (4     (2     1        (6     (5     (7     50   

Alger Small Cap Growth Portfolio - Class I-2

    12        -        3        (4     (1     -        -        -        (1     11   

Federated Fund for U.S. Government Securities II

    6        -        -        -        -        1        (1     -        -        6   

Federated High Income Bond Fund II - Primary Shares

    66        3        -        (5     (2     -        (6     (6     (8     58   

Federated Kaufmann Fund II - Primary Shares

    -        -        -        -        -        -        -        -        -        -   

Federated Managed Volatility Fund II

    1        -        -        -        -        -        -        -        -        1   

Federated Quality Bond Fund II - Primary Shares

    5        -        -        -        -        -        -        -        -        5   

 

See accompanying notes to the financial statements.

 

27


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

Year ended December 31, 2015

(Amounts in thousands)

 

          Changes from operations               Changes from policy transactions                        
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at  
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,  
    2014     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2015  

WealthQuest III Variable Annuity - 6 yr Ratchet - (Continued)

                   

Fidelity VIP Contrafund Portfolio - Service Class 2

  $ 109      $ -      $ 25      $ (24   $ 1      $ -      $ (24   $ (24   $ (23   $ 86   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    33        1        5        (7     (1     (1     (6     (7     (8     25   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    241        (3     -        -        (3     1        (38     (37     (40     201   

Fidelity VIP Growth and Income - Service Class 2

    60        -        3        (6     (3     1        -        1        (2     58   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    3        -        -        -        -        -        -        -        -        3   

Fidelity VIP Index 500 Portfolio - Service Class 2

    301        1        3        (5     (1     -        (10     (10     (11     290   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    9        -        -        -        -        (1     (1     (2     (2     7   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    232        (2     50        (46     2        42        (144     (102     (100     132   

Fidelity VIP Value Portfolio - Service Class 2

    71        -        17        (18     (1     14        (26     (12     (13     58   

Fidelity VIP Value Strategies - Service Class 2

    13        -        6        (6     -        15        (16     (1     (1     12   

Invesco V.I. Diversified Dividend Fund - Series I

    -        -        -        -        -        -        -        -        -     

Invesco V.I. Global Health Care Fund - Series I

    50        (1     5        (3     1        -        -        -        1        51   

Invesco V.I. Global Real Estate Fund - Series I

    26        -        9        (9     -        (1     (17     (18     (18     8   

Invesco V.I. Managed Volatility Fund - Series I

    21        -        4        (4     -        1        (14     (13     (13     8   

Invesco V.I. Small Cap Equity Fund - Series I

    -        -        -        -        -        -        -        -        -        -   

Invesco V.I. Technology Fund - Series I

    41        (1     4        (2     1        1        -        1        2        43   

MFS Core Equity Portfolio - Initial Class

    -        -        -        -        -        -        -        -        -        -   

MFS Growth Series - Initial Class

    21        -        8        (6     2        (1     (16     (17     (15     6   

MFS Investors Trust Series - Initial Class

    95        -        13        (14     (1     -        (20     (20     (21     74   

MFS Research Series - Initial Class

    -        -        -        -        -        -        -        -        -        -   

T. Rowe Price Equity Income Portfolio

    329        1        31        (56     (24     2        (66     (64     (88     241   

T. Rowe Price International Stock Portfolio

    35        -        3        (3     -        -        (12     (12     (12     23   

T. Rowe Price Limited-Term Bond Portfolio

    38        (1     -        -        (1     5        (1     4        3        41   

T. Rowe Price Mid-Cap Growth Portfolio

    5        -        -        -        -        -        (2     (2     (2     3   

WealthQuest III Variable Annuity - 3% Rollup

                   

Alger Capital Appreciation Portfolio - Class I-2

    3        -        -        -        -        -        -        -        -        3   

Alger Growth & Income Portfolio - Class I-2

    2        -        -        -        -        -        -        -        -        2   

Alger Mid Cap Growth Portfolio - Class I-2

    -        -        -        -        -        -        -        -        -        -   

Fidelity VIP Contrafund Portfolio - Service Class 2

    -        -        -        -        -        -        -        -        -        -   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    -        -        -        -        -        -        -        -        -        -   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    -        -        -        -        -        -        -        -        -        -   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    3        -        -        -        -        -        -        -        -        3   

WealthQuest III Variable Annuity - 5% Rollup

                   

Alger Balanced Portfolio - Class I-2

    22        -        1        (1     -        -        (2     (2     (2     20   

Alger Capital Appreciation Portfolio - Class I-2

    71        (1     10        (5     4        -        (4     (4     -        71   

Alger Growth & Income Portfolio - Class I-2

    10        -        -        -        -        -        (1     (1     (1     9   

Alger Large Cap Growth Portfolio - Class I-2

    56        (1     6        (5     -        -        -        -        -        56   

Alger Mid Cap Growth Portfolio - Class I-2

    21        -        -        -        -        -        -        -        -        21   

Alger Small Cap Growth Portfolio - Class I-2

    20        -        6        (6     -        (1     -        (1     (1     19   

Federated High Income Bond Fund II - Primary Shares

    49        2        -        (4     (2     1        (10     (9     (11     38   

Federated Kaufmann Fund II - Primary Shares

    30        -        5        (3     2        (1     (2     (3     (1     29   

Federated Managed Volatility Fund II

    9        -        -        (1     (1     -        -        -        (1     8   

Federated Quality Bond Fund II - Primary Shares

    20        1        -        (1     -        (1     -        (1     (1     19   

Fidelity VIP Contrafund Portfolio - Service Class 2

    267        (1     37        (36     -        -        (60     (60     (60     207   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    30        1        3        (5     (1     -        (1     (1     (2     28   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    83        (1     -        -        (1     7        (28     (21     (22     61   

Fidelity VIP Growth and Income - Service Class 2

    1        -        -        -        -        -        (1     (1     (1     -   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    15        -        6        (5     1        1        (17     (16     (15     -   

 

See accompanying notes to the financial statements.

 

28


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

Year ended December 31, 2015

(Amounts in thousands)

 

          Changes from operations               Changes from policy transactions                        
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at  
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,  
    2014     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2015  

WealthQuest III Variable Annuity - 5% Rollup - (Continued)

                   

Fidelity VIP Index 500 Portfolio - Service Class 2

  $ 128      $ -      $ 12      $ (12   $ -      $ 1      $ (26   $ (25   $ (25   $ 103   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    1        -        -        -        -        (1     -        (1     (1     -   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    181        (2     34        (32     -        2        (86     (84     (84     97   

Fidelity VIP Value Portfolio - Service Class 2

    -        -        2        (2     -        21        -        21        21        21   

Fidelity VIP Value Strategies - Service Class 2

    41        (1     5        (7     (3     13        (12     1        (2     39   

Invesco V.I. Diversified Dividend Fund - Series I

    35        -        -        -        -        3        -        3        3        38   

Invesco V.I. Global Health Care Fund - Series I

    28        -        3        (3     -        1        (2     (1     (1     27   

Invesco V.I. Global Real Estate Fund - Series I

    55        1        1        (4     (2     2        (2     -        (2     53   

Invesco V.I. Managed Volatility Fund - Series I

    31        -        11        (12     (1     1        -        1        -        31   

Invesco V.I. Technology Fund - Series I

    9        -        1        -        1        -        (1     (1     -        9   

MFS Core Equity Portfolio - Initial Class

    -        -        -        -        -        -        -        -        -        -   

MFS Growth Series - Initial Class

    63        (1     5        -        4        (1     (1     (2     2        65   

MFS Investors Trust Series - Initial Class

    -        -        -        -        -        -        -        -        -        -   

MFS Research Series - Initial Class

    -        -        -        -        -        -        -        -        -        -   

T. Rowe Price Equity Income Portfolio

    112        -        3        (13     (10     6        (3     3        (7     105   

T. Rowe Price International Stock Portfolio

    47        (1     4        (4     (1     1        (12     (11     (12     35   

T. Rowe Price Limited-Term Bond Portfolio

    81        -        -        -        -        (1     (7     (8     (8     73   

T. Rowe Price Mid-Cap Growth Portfolio

    19        -        3        (1     2        (1     -        (1     1        20   

WealthQuest III Group Unallocated Variable Annuity

                   

Alger Balanced Portfolio - Class I-2

    504        10        4        (8     6        79        (21     58        64        568   

Alger Capital Appreciation Portfolio - Class I-2

    787        (2     143        (94     47        175        (161     14        61        848   

Alger Growth & Income Portfolio - Class I-2

    262        3        20        (21     2        19        (99     (80     (78     184   

Alger Large Cap Growth Portfolio - Class I-2

    404        (1     65        (52     12        34        (222     (188     (176     228   

Alger Mid Cap Growth Portfolio - Class I-2

    630        (2     63        (78     (17     106        (133     (27     (44     586   

Alger Small Cap Growth Portfolio - Class I-2

    432        (2     105        (121     (18     97        (165     (68     (86     346   

Federated Fund for U.S. Government Securities II

    382        9        (2     (7     -        63        (45     18        18        400   

Federated High Income Bond Fund II - Primary Shares

    988        46        5        (77     (26     97        (175     (78     (104     884   

Federated Kaufmann Fund II - Primary Shares

    394        (2     87        (67     18        120        (160     (40     (22     372   

Federated Managed Volatility Fund II

    908        33        33        (125     (59     21        (481     (460     (519     389   

Federated Quality Bond Fund II - Primary Shares

    362        13        (5     (9     (1     33        (89     (56     (57     305   

Fidelity VIP Asset Manager Portfolio - Service Class 2

    7        -        -        (1     (1     1        -        1        -        7   

Fidelity VIP Contrafund Portfolio - Service Class 2

    1,911        7        337        (347     (3     274        (428     (154     (157     1,754   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    344        6        38        (56     (12     38        (152     (114     (126     218   

Fidelity VIP Government Money Market Portfolio - Service Class 2

    4,268        (14     -        -        (14     379        (984     (605     (619     3,649   

Fidelity VIP Growth and Income - Service Class 2

    140        3        18        (24     (3     30        (37     (7     (10     130   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    244        (1     69        (56     12        156        (76     80        92        336   

Fidelity VIP Index 500 Portfolio - Service Class 2

    1,039        15        63        (70     8        105        (168     (63     (55     984   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    476        9        (5     (9     (5     47        (129     (82     (87     389   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    2,195        (3     379        (407     (31     618        (1,187     (569     (600     1,595   

Fidelity VIP Value Portfolio - Service Class 2

    286        4        79        (87     (4     198        (270     (72     (76     210   

Fidelity VIP Value Strategies - Service Class 2

    566        3        117        (141     (21     216        (288     (72     (93     473   

Invesco V.I. Diversified Dividend Fund - Series I

    98        1        7        (6     2        22        (39     (17     (15     83   

Invesco V.I. Global Health Care Fund - Series I

    384        (2     97        (100     (5     268        (155     113        108        492   

Invesco V.I. Global Real Estate Fund - Series I

    686        16        50        (76     (10     72        (285     (213     (223     463   

Invesco V.I. Managed Volatility Fund - Series I

    644        4        182        (198     (12     38        (256     (218     (230     414   

Invesco V.I. Mid Cap Growth Fund - Series I

    132        -        29        (28     1        33        (69     (36     (35     97   

Invesco V.I. Small Cap Equity Fund - Series I

    844        (3     202        (240     (41     121        (429     (308     (349     495   

 

See accompanying notes to the financial statements.

 

29


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

Year ended December 31, 2015

(Amounts in thousands)

 

          Changes from operations               Changes from policy transactions                        
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at  
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,  
    2014     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2015  

WealthQuest III Group Unallocated Variable Annuity - (Continued)

                   

Invesco V.I. Technology Fund - Series I

  $ 179      $ (1   $ 26      $ (15   $ 10      $ 32      $ (67   $ (35   $ (25   $ 154   

MFS Core Equity Portfolio - Initial Class

    119        1        29        (27     3        118        (234     (116     (113     6   

MFS Growth Series - Initial Class

    1,031        (1     277        (245     31        65        (730     (665     (634     397   

MFS Investors Trust Series - Initial Class

    148        -        21        (23     (2     22        (29     (7     (9     139   

MFS Research Series - Initial Class

    19        -        1        (2     (1     9        (5     4        3        22   

T. Rowe Price Equity Income Portfolio

    2,056        28        121        (296     (147     147        (243     (96     (243     1,813   

T. Rowe Price International Stock Portfolio

    1,181        7        87        (118     (24     284        (374     (90     (114     1,067   

T. Rowe Price Limited-Term Bond Portfolio

    662        6        (3     (2     1        46        (84     (38     (37     625   

T. Rowe Price Mid-Cap Growth Portfolio

    251        -        53        (35     18        49        (40     9        27        278   

 

See accompanying notes to the financial statements.

 

30


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

As of December 31, 2014

(Amounts in thousands)

 

          Changes from operations           Changes from policy transactions                    
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at    
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,    
    2013     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2014  
 

 

 

 

Wealthquest Variable Annuity II

                   

Alger Balanced Portfolio - Class I-2

  $ 63      $ -      $ -      $ 4      $ 4      $ 1      $ -      $ 1      $ 5      $ 68     

Alger Capital Appreciation Portfolio - Class I-2

    15        -        5        (3     2        9        (3     6        8        23     

Alger Growth & Income Portfolio - Class I-2

    78        1        4        3        8        (1     (13     (14     (6     72     

Alger Large Cap Growth Portfolio - Class I-2

    173        (2     50        (35     13        2        (59     (57     (44     129     

Alger Mid Cap Growth Portfolio - Class I-2

    410        (5     9        23        27        (1     (34     (35     (8     402     

Alger Small Cap Growth Portfolio - Class I-2

    73        (1     7        (7     (1     5        -        5        4        77     

Federated Fund for U.S. Government Securities II

    212        3        -        3        6        1        (22     (21     (15     197     

Federated High Income Bond Fund II - Primary Shares

    408        19        (1     (13     5        2        (42     (40     (35     373     

Federated Kaufmann Fund II - Primary Shares

    117        (1     14        (3     10        -        (3     (3     7        124     

Federated Managed Volatility Fund II

    97        1        12        (12     1        1        (28     (27     (26     71     

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

    271        -        3        10        13        4        (5     (1     12        283     

Fidelity VIP Asset Manager Portfolio - Initial Class

    290        -        18        (6     12        5        (23     (18     (6     284     

Fidelity VIP Contrafund Portfolio - Initial Class

    1,407        (4     39        112        147        11        (25     (14     133        1,540     

Fidelity VIP Growth Opportunities Portfolio - Initial Class

    497        (5     16        40        51        1        (26     (25     26        523     

Fidelity VIP Index 500 Portfolio - Initial Class

    1,306        3        93        38        134        -        (300     (300     (166     1,140     

Fidelity VIP Money Market Portfolio - Service Class 2

    775        (11     -        -        (11     162        (146     16        5        780     

Lazard Retirement Emerging Markets Portfolio

    162        1        -        (10     (9     2        (6     (4     (13     149     

Lazard Retirement Small/Mid Cap Portfolio

    175        (2     23        (4     17        (1     (18     (19     (2     173     

MFS Core Equity Series - Initial Class

    192        (1     9        10        18        1        (16     (15     3        195     

MFS Growth Series - Initial Class

    576        (5     88        (44     39        -        (80     (80     (41     535     

MFS Investors Trust Series - Initial Class

    145        (1     18        (7     10        1        (34     (33     (23     122     

MFS Research Series - Initial Class

    192        (1     44        (33     10        -        (67     (67     (57     135     

T. Rowe Price Equity Income Portfolio

    524        2        71        (47     26        -        (161     (161     (135     389     

T. Rowe Price International Stock Portfolio

    155        -        8        (11     (3     -        (13     (13     (16     139     

T. Rowe Price Limited-Term Bond Portfolio

    98        -        -        (1     (1     -        (11     (11     (12     86     

T. Rowe Price Mid-Cap Growth Portfolio

    816        (10     104        -        94        4        (32     (28     66        882     

Van Eck VIP Emerging Markets Fund - Initial Class

    276        (2     25        (29     (6     2        (48     (46     (52     224     

Van Eck VIP Global Hard Assets Fund - Initial Class

    81        -        -        (7     (7     2        (52     (50     (57     24     

Investrac Gold Variable Annuity

                   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

    161        -        1        6        7        1        (1     -        7        168     

Fidelity VIP Asset Manager Portfolio - Initial Class

    76        -        5        (1     4        -        (5     (5     (1     75     

Fidelity VIP Balanced Portfolio - Initial Class

    35        -        6        (3     3        15        (43     (28     (25     10     

Fidelity VIP Contrafund Portfolio - Initial Class

    1,485        (7     115        26        134        34        (369     (335     (201     1,284     

Fidelity VIP Equity-Income Portfolio - Initial Class

    954        12        (5     55        62        30        (158     (128     (66     888     

Fidelity VIP Growth - Initial Class

    904        (11     28        72        89        25        (52     (27     62        966     

Fidelity VIP Growth and Income - Initial Class

    80        -        3        3        6        -        (8     (8     (2     78     

Fidelity VIP Growth Opportunities Portfolio - Initial Class

    13        -        -        1        1        -        -        -        1        14     

Fidelity VIP High Income - Initial Class

    150        5        16        (20     1        14        (44     (30     (29     121     

Fidelity VIP Index 500 Portfolio - Initial Class

    1,609        3        74        100        177        18        (219     (201     (24     1,585     

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

    247        2        (8     16        10        23        (265     (242     (232     15     

Fidelity VIP Mid Cap Portfolio - Initial Class

    651        (7     32        6        31        16        (29     (13     18        669     

Fidelity VIP Money Market Portfolio - Initial Class

    1,385        (18     -        -        (18     116        (363     (247     (265     1,120     

Fidelity VIP Overseas Portfolio - Initial Class

    263        (1     (5     (14     (20     4        (85     (81     (101     162     

T. Rowe Price Equity Income Portfolio

    144        -        6        1        7        2        (17     (15     (8     136     

T. Rowe Price International Stock Portfolio

    58        -        -        (2     (2     4        (1     3        1        59     

T. Rowe Price Mid-Cap Growth Portfolio    

    288        (4     54        (17     33        30        (40     (10     23        311     

 

See accompanying notes to the financial statements.

 

31


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

As of December 31, 2014

(Amounts in thousands)

 

          Changes from operations           Changes from policy
transactions
                   
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at    
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,    
    2013     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2014  
 

 

 

 

Wealthquest III Variable Annuity - No Rider

                   

Alger Balanced Portfolio - Class I-2

  $ 466      $ 4      $ 22      $ 9      $ 35      $ 22      $ (78   $ (56   $ (21   $ 445     

Alger Capital Appreciation Portfolio - Class I-2

    709        (8     153        (58     87        35        (115     (80     7        716     

Alger Growth & Income Portfolio - Class I-2

    149        1        4        9        14        3        (19     (16     (2     147     

Alger Large Cap Growth Portfolio - Class I-2

    386        (4     73        (35     34        6        (35     (29     5        391     

Alger Mid Cap Growth Portfolio - Class I-2

    460        (5     157        (126     26        4        (263     (259     (233     227     

Alger Small Cap Growth Portfolio - Class I-2

    354        (3     67        (70     (6     17        (105     (88     (94     260     

Federated Fund for U.S. Government Securities II

    323        8        (13     12        7        (1     (217     (218     (211     112     

Federated High Income Bond Fund II - Primary Shares

    678        33        2        (24     11        29        (69     (40     (29     649     

Federated Kaufmann Fund II - Primary Shares

    103        (1     14        (5     8        1        (10     (9     (1     102     

Federated Managed Volatility Fund II

    339        7        43        (38     12        -        (79     (79     (67     272     

Federated Quality Bond Fund II - Primary Shares

    185        5        3        (3     5        19        (66     (47     (42     143     

Fidelity VIP Contrafund Portfolio - Service Class 2

    2,495        (14     470        (232     224        41        (728     (687     (463     2,032     

Fidelity VIP Equity-Income Portfolio - Service Class 2

    740        10        21        21        52        1        (51     (50     2        742     

Fidelity VIP Growth and Income - Service Class 2

    292        2        17        8        27        19        (34     (15     12        304     

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    511        (6     19        38        51        3        (27     (24     27        538     

Fidelity VIP Growth Strategies Portfolio - Service Class 2

    332        (4     22        18        36        2        (38     (36     -        332     

Fidelity VIP Index 500 Portfolio - Service Class 2

    1,259        2        191        (61     132        108        (374     (266     (134     1,125     

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    494        1        (14     27        14        6        (260     (254     (240     254     

Fidelity VIP Mid Cap Portfolio - Service Class 2

    2,405        (27     222        (98     97        86        (492     (406     (309     2,096     

Fidelity VIP Money Market Portfolio - Service Class 2

    687        (7     -        -        (7     443        (630     (187     (194     493     

Fidelity VIP Value Leaders Portfolio - Service Class 2

    142        -        28        (19     9        3        (73     (70     (61     81     

Fidelity VIP Value Portfolio - Service Class 2

    159        -        16        (2     14        4        (23     (19     (5     154     

Fidelity VIP Value Strategies - Service Class 2

    215        (1     6        4        9        59        (14     45        54        269     

Invesco V.I. Diversified Dividend Fund - Series I

    44        -        4        -        4        1        (13     (12     (8     36     

Invesco V.I. Global Health Care Fund - Series I

    45        (1     3        6        8        1        (1     -        8        53     

Invesco V.I. Global Real Estate Fund - Series I

    477        2        41        18        61        29        (80     (51     10        487     

Invesco V.I. Managed Volatility Fund - Series I

    267        5        27        13        45        3        (73     (70     (25     242     

Invesco V.I. Mid Cap Growth Fund - Series I

    18        -        1        1        2        (1     (2     (3     (1     17     

Invesco V.I. Small Cap Equity Fund - Series I

    290        (3     66        (65     (2     55        (116     (61     (63     227     

Invesco V.I. Technology Fund - Series I

    171        (2     26        (11     13        -        (42     (42     (29     142     

MFS Core Equity Series - Initial Class

    18        -        1        -        1        1        (3     (2     (1     17     

MFS Growth Series - Initial Class

    147        (2     13        -        11        14        (4     10        21        168     

MFS Investors Trust Series - Initial Class

    16        -        1        -        1        1        -        1        2        18     

MFS Research Series - Initial Class

    6        -        -        -        -        1        -        1        1        7     

T. Rowe Price Equity Income Portfolio

    1,824        9        207        (113     103        118        (382     (264     (161     1,663     

T. Rowe Price International Stock Portfolio

    1,016        (2     52        (72     (22     106        (165     (59     (81     935     

T. Rowe Price Limited-Term Bond Portfolio

    334        -        (3     1        (2     147        (105     42        40        374     

T. Rowe Price Mid-Cap Growth Portfolio

    31        -        5        (2     3        (1     (14     (15     (12     19     

Wealthquest III Variable Annuity - 6 yr Ratchet

                   

Alger Balanced Portfolio - Class I-2

    24        -        4        (2     2        -        (15     (15     (13     11     

Alger Capital Appreciation Portfolio - Class I-2

    44        (1     10        (5     4        1        (6     (5     (1     43     

Alger Growth & Income Portfolio - Class I-2

    45        -        5        (1     4        1        (12     (11     (7     38     

Alger Large Cap Growth Portfolio - Class I-2

    78        (1     17        (9     7        -        (25     (25     (18     60     

Alger Mid Cap Growth Portfolio - Class I-2

    89        (1     18        (12     5        1        (38     (37     (32     57     

Alger Small Cap Growth Portfolio - Class I-2

    44        -        2        (3     (1     (1     (30     (31     (32     12     

Federated Fund for U.S. Government Securities II

    6        -        -        -        -        -        -        -        -        6     

Federated High Income Bond Fund II - Primary Shares    

    71        3        1        (3     1        -        (6     (6     (5     66     

 

See accompanying notes to the financial statements.

 

32


Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

As of December 31, 2014

(Amounts in thousands)

 

          Changes from operations           Changes from policy transactions                    
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at    
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,    
    2013     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2014  
 

 

 

 

Wealthquest III Variable Annuity - 6 yr Ratchet

                   

Federated Managed Volatility Fund II

  $ 9      $  -      $ 2      $ (2   $ -      $ 1      $ (9   $ (8   $ (8   $ 1   

Federated Quality Bond Fund II - Primary Shares

    5        -        -        -        -        -        -        -        -        5   

Fidelity VIP Contrafund Portfolio - Service Class 2

    224        (1     48        (30     17        -        (132     (132     (115     109   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    51        -        8        (5     3        -        (21     (21     (18     33   

Fidelity VIP Growth and Income - Service Class 2

    55        -        -        5        5        -        -        -        5        60   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    3        -        -        -        -        -        -        -        -        3   

Fidelity VIP Growth Strategies Portfolio - Service Class 2

    35        -        -        4        4        -        -        -        4        39   

Fidelity VIP Index 500 Portfolio - Service Class 2

    320        -        10        26        36        1        (56     (55     (19     301   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    8        -        -        -        -        1        -        1        1        9   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    326        (3     24        (9     12        -        (145     (145     (133     193   

Fidelity VIP Money Market Portfolio - Service Class 2

    441        (4     -        -        (4     34        (230     (196     (200     241   

Fidelity VIP Value Leaders Portfolio - Service Class 2

    24        -        -        2        2        (1     (11     (12     (10     14   

Fidelity VIP Value Portfolio - Service Class 2

    52        -        2        3        5        -        -        -        5        57   

Fidelity VIP Value Strategies - Service Class 2

    18        -        2        (1     1        (1     (5     (6     (5     13   

Invesco V.I. Diversified Dividend Fund - Series I

    7        -        3        (2     1        -        (8     (8     (7     -   

Invesco V.I. Global Health Care Fund - Series I

    42        (1     2        6        7        1        -        1        8        50   

Invesco V.I. Global Real Estate Fund - Series I

    23        -        -        3        3        -        -        -        3        26   

Invesco V.I. Managed Volatility Fund - Series I

    32        1        6        (1     6        (1     (16     (17     (11     21   

Invesco V.I. Technology Fund - Series I

    38        (1     3        1        3        -        -        -        3        41   

MFS Core Equity Series - Initial Class

    2        -        1        (1     -        -        (2     (2     (2     -   

MFS Growth Series - Initial Class

    32        -        7        (5     2        -        (13     (13     (11     21   

MFS Investors Trust Series - Initial Class

    89        -        8        1        9        (1     (2     (3     6        95   

T. Rowe Price Equity Income Portfolio

    461        2        59        (37     24        1        (157     (156     (132     329   

T. Rowe Price International Stock Portfolio

    62        (1     8        (8     (1     2        (28     (26     (27     35   

T. Rowe Price Limited-Term Bond Portfolio

    34        -        -        -        -        5        (1     4        4        38   

T. Rowe Price Mid-Cap Growth Portfolio

    4        -        1        -        1        -        -        -        1        5   

Wealthquest III Variable Anniuty - 3% Rollup

                   

Alger Capital Appreciation Portfolio - Class I-2

    2        -        -        -        -        1        -        1        1        3   

Alger Growth & Income Portfolio - Class I-2

    1        -        -        -        -        1        -        1        1        2   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    3        -        -        -        -        -        -        -        -        3   

Wealthquest III Variable Annuity - 5% Rollup

                   

Alger Balanced Portfolio - Class I-2

    21        -        -        1        1        1        (1     -        1        22   

Alger Capital Appreciation Portfolio - Class I-2

    67        (1     12        (4     7        1        (4     (3     4        71   

Alger Growth & Income Portfolio - Class I-2

    138        1        53        (46     8        (1     (135     (136     (128     10   

Alger Large Cap Growth Portfolio - Class I-2

    144        (1     37        (32     4        (1     (91     (92     (88     56   

Alger Mid Cap Growth Portfolio - Class I-2

    212        (2     29        (23     4        (1     (194     (195     (191     21   

Alger Small Cap Growth Portfolio - Class I-2

    133        (1     16        (21     (6     -        (107     (107     (113     20   

Federated High Income Bond Fund II - Primary Shares

    51        2        -        (2     -        2        (4     (2     (2     49   

Federated Kaufmann Fund II - Primary Shares

    30        -        4        (1     3        -        (3     (3     -        30   

Federated Managed Volatility Fund II

    9        -        1        (1     -        -        -        -        -        9   

Federated Quality Bond Fund II - Primary Shares

    54        1        -        -        1        1        (36     (35     (34     20   

Fidelity VIP Contrafund Portfolio - Service Class 2

    524        (4     50        (8     38        -        (295     (295     (257     267   

Fidelity VIP Equity-Income Portfolio - Service Class 2

    29        1        -        1        2        -        (1     (1     1        30   

Fidelity VIP Growth and Income - Service Class 2

    1        -        -        -        -        -        -        -        -        1   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    15        -        1        1        2        -        (2     (2     -        15   

Fidelity VIP Growth Strategies Portfolio - Service Class 2

    1        -        -        -        -        -        -        -        -        1   

Fidelity VIP Index 500 Portfolio - Service Class 2    

    426        (2     108        (78     28        -        (326     (326     (298     128   

 

See accompanying notes to the financial statements.

 

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Table of Contents

American National Variable Annuity Separate Account

Statement of Changes in Net Assets

As of December 31, 2014

(Amounts in thousands)

 

          Changes from operations           Changes from policy transactions                    
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at    
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,    
    2013     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2014  
 

 

 

 

Wealthquest III Variable Annuity - 5% Rollup

                   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

  $ 1      $ -      $ -      $ -      $ -      $ -      $ -      $ -      $ -      $ 1     

Fidelity VIP Mid Cap Portfolio - Service Class 2

    264        (3     23        (13     7        3        (94     (91     (84     180     

Fidelity VIP Money Market Portfolio - Service Class 2

    157        (2     -        -        (2     4        (76     (72     (74     83     

Fidelity VIP Value Portfolio - Service Class 2

    22        -        6        (4     2        -        (24     (24     (22     -   

Fidelity VIP Value Strategies - Service Class 2

    41        (1     1        2        2        1        (3     (2     -        41     

Invesco V.I. Diversified Dividend Fund - Series I

    29        -        -        3        3        3        -        3        6        35     

Invesco V.I. Global Health Care Fund - Series I

    42        -        14        (8     6        6        (26     (20     (14     28     

Invesco V.I. Global Real Estate Fund - Series I

    70        -        12        (4     8        3        (26     (23     (15     55     

Invesco V.I. Managed Volatility Fund - Series I

    25        1        1        3        5        2        (1     1        6        31     

Invesco V.I. Technology Fund - Series I

    8        -        1        -        1        -        -        -        1        9     

MFS Core Equity Series - Initial Class

    117        (1     59        (54     4        1        (122     (121     (117     -   

MFS Growth Series - Initial Class

    176        (2     79        (71     6        -        (119     (119     (113     63     

T. Rowe Price Equity Income Portfolio

    365        -        97        (83     14        1        (268     (267     (253     112     

T. Rowe Price International Stock Portfolio

    58        -        7        (8     (1     3        (13     (10     (11     47     

T. Rowe Price Limited-Term Bond Portfolio

    131        (1     (1     -        (2     3        (51     (48     (50     81     

T. Rowe Price Mid-Cap Growth Portfolio

    180        (2     49        (38     9        1        (171     (170     (161     19     

WealthQuest III Group Unallocated Variable Annuity

                   

Alger Balanced Portfolio - Class I-2

    495        8        18        13        39        96        (126     (30     9        504     

Alger Capital Appreciation Portfolio - Class I-2

    795        (2     193        (94     97        170        (275     (105     (8     787     

Alger Growth & Income Portfolio - Class I-2

    215        4        19        6        29        80        (62     18        47        262     

Alger Large Cap Growth Portfolio - Class I-2

    336        -        104        (69     35        159        (126     33        68        404     

Alger Mid Cap Growth Portfolio - Class I-2

    759        (2     90        (41     47        46        (222     (176     (129     630     

Alger Small Cap Growth Portfolio - Class I-2

    826        (2     69        (74     (7     76        (463     (387     (394     432     

Federated Fund for U.S. Government Securities II

    358        10        (5     12        17        131        (124     7        24        382     

Federated High Income Bond Fund II - Primary Shares

    1,385        70        32        (77     25        343        (765     (422     (397     988     

Federated Kaufmann Fund II - Primary Shares

    417        (1     76        (40     35        61        (119     (58     (23     394     

Federated Managed Volatility Fund II

    786        24        69        (64     29        135        (42     93        122        908     

Federated Quality Bond Fund II - Primary Shares

    573        21        5        (5     21        77        (309     (232     (211     362     

Fidelity VIP Asset Manager Portfolio - Service Class 2

    7        -        -        -        -        -        -        -        -        7     

Fidelity VIP Contrafund Portfolio - Service Class 2

    2,573        6        471        (254     223        148        (1,033     (885     (662     1,911     

Fidelity VIP Equity-Income Portfolio - Service Class 2

    258        8        15        -        23        108        (45     63        86        344     

Fidelity VIP Growth and Income - Service Class 2

    149        2        24        (13     13        48        (70     (22     (9     140     

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

    370        (1     98        (67     30        66        (222     (156     (126     244     

Fidelity VIP Growth Strategies Portfolio - Service Class 2

    585        (2     99        (41     56        62        (287     (225     (169     416     

Fidelity VIP Index 500 Portfolio - Service Class 2

    1,197        11        126        (8     129        121        (408     (287     (158     1,039   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

    460        7        (2     18        23        90        (97     (7     16        476   

Fidelity VIP Mid Cap Portfolio - Service Class 2

    2,284        (7     242        (134     101        196        (802     (606     (505     1,779   

Fidelity VIP Money Market Portfolio - Service Class 2

    4,380        (15     -        -        (15     698        (795     (97     (112     4,268   

Fidelity VIP Value Leaders Portfolio - Service Class 2

    155        1        9        10        20        41        (32     9        29        184   

Fidelity VIP Value Portfolio - Service Class 2

    121        1        18        (7     12        11        (42     (31     (19     102   

Fidelity VIP Value Strategies - Service Class 2

    823        2        112        (76     38        55        (350     (295     (257     566   

Invesco V.I. Diversified Dividend Fund - Series I

    152        2        24        (15     11        35        (100     (65     (54     98   

Invesco V.I. Global Health Care Fund - Series I

    609        (2     170        (83     85        47        (357     (310     (225     384   

Invesco V.I. Global Real Estate Fund - Series I

    593        8        44        32        84        214        (205     9        93        686   

Invesco V.I. Managed Volatility Fund - Series I

    535        16        70        12        98        246        (235     11        109        644   

Invesco V.I. Mid Cap Growth Fund - Series I

    76        -        2        5        7        57        (8     49        56        132   

Invesco V.I. Small Cap Equity Fund - Series I    

    1,075        (3     192        (183     6        97        (334     (237     (231     844   

 

See accompanying notes to the financial statements.

 

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American National Variable Annuity Separate Account

Statement of Changes in Net Assets

As of December 31, 2014

(Amounts in thousands)

 

          Changes from operations           Changes from policy transactions                    
                      Net change in                       Net increase              
                      unrealized     Net increase           Policy     (decrease) in net              
    Net assets at           Net realized gain     appreciation or     (decrease) in net           terminations,     assets from     Total increase     Net assets at    
    December 31,     Net investment     (loss) on     depreciation of     assets resulting     Policy purchase     withdrawals and     policy     (decrease) in net     December 31,    
    2013     income (loss)     investments     investments     from operations     payments     charges     transactions     assets     2014  
 

 

 

 

WealthQuest III Group Unallocated Variable Annuity

                   

Invesco V.I. Technology Fund - Series I

  $ 215      $ (1   $ 34      $  (17   $ 16      $ 62      $ (114   $ (52   $  (36   $ 179     

MFS Core Equity Series - Initial Class

    151        1        20        (6     15        19        (66     (47     (32     119     

MFS Growth Series - Initial Class

    894        (2     124        (38     84        185        (132     53        137        1,031     

MFS Investors Trust Series - Initial Class

    154        -        24        (10     14        31        (51     (20     (6     148     

MFS Research Series - Initial Class

    23        -        4        (2     2        7        (13     (6     (4     19     

T. Rowe Price Equity Income Portfolio

    2,367        31        249        (133     147        199        (657     (458     (311     2,056     

T. Rowe Price International Stock Portfolio

    1,554        8        96        (125     (21     238        (590     (352     (373     1,181     

T. Rowe Price Limited-Term Bond Portfolio

    680        6        (6     1        1        189        (208     (19     (18     662     

T. Rowe Price Mid-Cap Growth Portfolio

    251        (1     52        (18     33        44        (77     (33     -        251     

 

See accompanying notes to the financial statements.

 

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Table of Contents
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American National Variable Annuity Separate Account (“Separate Account”) was established on July 30, 1991 under Texas law as a separate investment account of American National Insurance Company (“Sponsor”). The Separate Account began operations on April 20, 1994. The Separate Account’s assets are segregated from the Sponsor’s general assets and are used only to support variable annuity products issued by the Sponsor. The Separate Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust.

These financial statements report the results of the subaccounts for the various variable annuity products. As of December 31, 2015, there are 56 active subaccounts within the Separate Account, although not all subaccounts are offered in each product. Each of the subaccounts is invested only in a corresponding portfolio of the following mutual fund companies: The Alger Portfolios, Federated Insurance Series, Fidelity Variable Insurance Products, Invesco Variable Insurance Funds, MFS Variable Insurance Trust, VanEck VIP Trust, T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc. and Lazard Retirement Series.

On March 27, 2015, MFS Core Equity Series (VIT) Fund reorganized and merged into MFS Core Equity Portfolio (VIT II). Activities prior to the merger are reflected as part of the MFS Core Equity Series (VIT) Fund, while activities after the merger are reflected as part of the MFS Core Equity Portfolio (VIT II).

On April 24, 2015, the Fidelity VIP Growth Strategies Portfolio merged into the Fidelity VIP Mid Cap Portfolio. Activities prior to the merger are reflected as part of the Fidelity VIP Growth Strategies Portfolio, while activities after the merger are reflected as part of the Fidelity VIP Mid Cap Portfolio. On the same day, Fidelity VIP Value Leaders Portfolio merged into Fidelity VIP Value Portfolio. Activities prior to the merger are reflected as part of the Fidelity VIP Value Leaders Portfolio, while activities after the merger are reflected as part of the Fidelity VIP Value Portfolio.

On December 1, 2015, the Fidelity VIP Money Market Portfolio transitioned to a government money market fund and has changed its name to Fidelity VIP Government Money Market Portfolio. Activities prior to the name change are reflected as Fidelity VIP Money Market Portfolio, while activities after the transition are reflected as Fidelity VIP Government Money Market Portfolio.

On May 1, 2016 the T. Rowe Price Prime Reserve Portfolio will be converted to the T. Rowe Price Government Money Portfolio. Activities prior to the merger are reflected as part of the T. Rowe Price Prime Reserve, while activities after the merger are reflected as part of the T. Rowe Price Government Money Portfolio.

The financial statements of the Separate Account have been prepared on an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of the financial statements. Actual results in the future could differ from management’s estimates.

Investments - Investments in shares of the separate investment portfolios are stated at fair value. The determination of fair value is based on a three-tier hierarchy as follows:

 

Level 1    Unadjusted quoted prices from active markets for identical assets.
Level 2    Quoted prices in markets that are not active or inputs that are observable directly or indirectly from market data or can be corroborated through observed market data.
Level 3    Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The fair values for the shares of the separate investment portfolios are determined through a quoted market price from each respective portfolio, which meets the level one hierarchy definition. The net asset value for each share is equal to the quoted market price. Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the basis of identified cost. Capital gain distributions and dividends from mutual funds are recorded and reinvested upon receipt.

Federal Taxes - The operations of the Separate Account form a part of, and are taxed with, the operations of the Sponsor. Under the Internal Revenue Code, all ordinary income and capital gains allocated to the policyholders are not taxed to the Sponsor. As a result, the unit values of the subaccounts are not affected by federal income taxes on distributions received by the subaccounts. Accordingly, no provision for income taxes is required in the accompanying financial statements.

 

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Table of Contents
(2) SECURITY PURCHASES AND SALES

For the period ended December 31, 2015, the aggregate cost of purchases (including reinvestment of dividend distributions and transfers between mutual fund portfolios) and proceeds from sales of investments in the mutual portfolios were as follows (in thousands):

 

Fund

     Purchases        Sales  

Alger Balanced Portfolio - Class I-2

       $ 112           $ 92   

Alger Capital Appreciation Portfolio - Class I-2

       379           351   

Alger Growth & Income Portfolio - Class I-2

       28           136   

Alger Large Cap Growth Portfolio - Class I-2

       129           256   

Alger Mid Cap Growth Portfolio - Class I-2

       109           196   

Alger Small Cap Growth Portfolio - Class I-2

       289           240   

Federated Fund for U.S. Government Securities II

       398           141   

Federated High Income Bond Fund II - Primary Shares

       293           346   

Federated Kaufmann Fund II - Primary Shares

       215           234   

Federated Managed Volatility Fund II

       116           513   

Federated Quality Bond Fund II - Primary Shares

       57           123   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

       7           84   

Fidelity VIP Asset Manager Portfolio - Initial Class

       30           72   

Fidelity VIP Asset Manager Portfolio - Service Class 2

       1           -   

Fidelity VIP Balanced Portfolio - Initial Class

       -           -   

Fidelity VIP Contrafund Portfolio - Initial Class

       273           394   

Fidelity VIP Contrafund Portfolio - Service Class 2

       710           855   

Fidelity VIP Equity-Income Portfolio - Initial Class

       105           64   

Fidelity VIP Equity-Income Portfolio - Service Class 2

       176           220   

Fidelity VIP Government Money Market Portfolio - Initial Class

       4           233   

Fidelity VIP Government Money Market Portfolio - Service Class 2

       454           1,466   

Fidelity VIP Growth - Initial Class

       40           51   

Fidelity VIP Growth and Income - Initial Class

       5           1   

Fidelity VIP Growth and Income - Service Class 2

       73           107   

Fidelity VIP Growth Opportunities Portfolio - Initial Class

       67           97   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

       244           250   

Fidelity VIP High Income - Initial Class

       -           2   

Fidelity VIP Index 500 Portfolio - Initial Class

       164           292   

Fidelity VIP Index 500 Portfolio - Service Class 2

       235           497   

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

       -           1   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

       68           168   

Fidelity VIP Mid Cap Portfolio - Initial Class

       87           95   

Fidelity VIP Mid Cap Portfolio - Service Class 2

       1,610           2,259   

Fidelity VIP Overseas Portfolio - Initial Class

       4           5   

Fidelity VIP Value Portfolio - Service Class 2

       371           428   

Fidelity VIP Value Strategies - Service Class 2

       330           493   

Invesco V.I. Diversified Dividend Fund - Series I

       28           40   

Invesco V.I. Global Health Care Fund - Series I

       422           173   

Invesco V.I. Global Real Estate Fund - Series I

       111           397   

Invesco V.I. Managed Volatility Fund - Series I

       301           292   

Invesco V.I. Mid Cap Growth Fund - Series I

       46           72   

Invesco V.I. Small Cap Equity Fund - Series I

       328           486   

Invesco V.I. Technology Fund - Series I

       72           89   

Lazard Retirement Emerging Markets Portfolio

       4           33   

Lazard Retirement Small-Mid Cap Portfolio

       13           15   

MFS Core Equity Portfolio - Initial Class

       372           480   

MFS Growth Series - Initial Class

       172           868   

MFS Investors Trust Series - Initial Class

       64           58   

MFS Research Series - Initial Class

       20           30   

T. Rowe Price Equity Income Portfolio

       371           551   

T. Rowe Price International Stock Portfolio

       349           709   

T. Rowe Price Limited-Term Bond Portfolio

       90           190   

T. Rowe Price Mid-Cap Growth Portfolio

       254           236   

VanEck VIP Emerging Markets Fund - Initial Class

       17           15   

VanEck VIP Global Hard Assets Fund - Initial Class

       3           -   
    

 

 

      

 

 

 

Total

       $                     10,220           $                     15,496   
    

 

 

      

 

 

 

 

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(3) POLICY CHARGES AND DEDUCTIONS

Mortality and Expense Risk Charges - Mortality risk and expense risk charges are assessed daily against the Separate Account’s net asset value. This fee was assessed during 2015 on policies in both the accumulation period and the annuity period, and varied by product as follows:

 

WealthQuest Variable Annuity II    1.15%
Investrac Gold Variable Annuity    1.25%
Group Unallocated Variable Annuity    0.35%
WealthQuest III Variable Annuity    1.10% (with No Riders, accumulation period)
WealthQuest III Variable Annuity    1.15% (with No Riders, annuity period)
WealthQuest III Variable Annuity   

1.20% (with Minimum Guaranteed. Death Benefit Rider,

             6 year Ratchet)

WealthQuest III Variable Annuity    1.30% (3% Guaranteed Death Benefit Rider)
WealthQuest III Variable Annuity    1.45% (5% Guaranteed Death Benefit Rider)

Administrative Charges - The Sponsor’s administrative charges consist of an annual contract fee and a daily administrative asset fee. The annual contract fee ranges between $0 and $35 and is generally waived for those contract values greater than $50,000. At the time of full surrender, the annual contract fee will be deducted on a pro rata basis. The administrative asset fee ranges between 0.10% and 0.90% annually for all contracts. These charges are deducted through redemption of units of interest from applicable policyholders’ accounts. The Group Unallocated Variable Annuity annual administration fees based on total contract value are as follows:

 

$0 – 500,000

 

  

0.90%

 

$500,001 – 1,000,000

 

  

0.70%

 

$1,000,001 – 3,000,000

 

  

0.50%

 

$3,000,001 – 5,000,000

 

  

0.25%

 

$5,000,001 and above

 

  

0%

 

Surrender Charge - On withdrawals of that portion of the accumulation value representing purchase payments, a surrender charge is imposed based upon the number of contract years from date of issue. The surrender charge ranges from a maximum of 7% to 0% depending upon the product and year of withdrawal.

Transfer Charge - A range between $0 and $10 transfer charge is imposed after the first twelve transfers in any one policy year for transfers made among the subaccounts.

Premium Charge - Premium taxes for certain jurisdictions are deducted from premiums paid based on state of residence. The Sponsor’s current practice is to deduct any state imposed premium tax from purchase payments. If a state only imposes premium taxes upon annuitization, the Sponsor will deduct these taxes from the contract value upon annuitization.

 

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Table of Contents

(4) FINANCIAL HIGHLIGHTS

The Sponsor sells a number of variable annuity products having unique combinations of features and fees that are charged against the policyholder’s account balance (see Note 3). Differences in fee structures result in a variety of expense ratios and total returns. The following table was developed by determining which products offered by the Separate Account have the lowest and highest total return (all ratios are percentages):

 

    At December 31,      For the years ended December 31,  
    Units      Unit Fair Value      Net Assets      Investment1      Expense Ratio2      Total Return3  
    (000s)      Lowest to Highest      (000s)      Income Ratio      Lowest to Highest      Lowest to Highest  

Alger Balanced Portfolio - Class I-2

  

           

2015

    714         1.33 to 1.57         1,059         2.10         1.20 to 1.55         0.00 to 1.29   

2014

    716         1.33 to 1.55         1,050         1.93         1.20 to 1.55         7.50 to 8.96   

2013

    793         1.24 to 1.42         1,069         1.15         1.20 to 1.55         13.51 to 14.88   

2012

    1,032         1.09 to 1.24         1,209         1.35         1.20 to 1.55         4.59 to 5.86   

2011

    1,444         1.04 to 1.17         1,605         3.19         1.20 to 1.55         (1.51) to (0.32)   

Alger Capital Appreciation Portfolio - Class I-2

  

           

2015

    846         1.63 to 1.99         1,593         11.03         1.20 to 1.55         4.32 to 5.85   

2014

    925         1.55 to 1.88         1,643         14.91         1.20 to 1.55         12.00 to 13.27   

2013

    1,036         1.44 to 1.66         1,632         11.59         1.20 to 1.55         33.11 to 34.72   

2012

    1,141         1.08 to 1.23         1,341         1.02         1.20 to 1.55         16.47 to 17.89   

2011

    1,435         0.89 to 1.05         1,437         0.13         1.20 to 1.55         (1.83) to (0.65)   

Alger Growth & Income Portfolio - Class I-2

  

           

2015

    312         1.22 to 1.44         418         1.68         1.20 to 1.55         (0.81) to 0.70   

2014

    393         1.23 to 1.43         531         2.18         1.20 to 1.55         10.75 to 11.97   

2013

    530         1.11 to 1.28         626         1.97         1.20 to 1.55         27.92 to 29.46   

2012

    531         0.87 to 0.99         488         3.19         1.20 to 1.55         10.61 to 11.95   

2011

    681         0.78 to 0.88         562         1.94         1.20 to 1.55         4.88 to 6.14   

Alger Large Cap Growth Portfolio - Class I-2

  

           

2015

    656         1.19 to 1.41         846         9.95         1.20 to 1.55         0.00 to 1.44   

2014

    803         1.19 to 1.39         1,040         15.22         1.20 to 1.55         9.17 to 10.88   

2013

    960         1.09 to 1.25         1,117         0.78         1.20 to 1.55         33.00 to 34.61   

2012

    1,038         0.82 to 0.93         902         1.19         1.20 to 1.55         8.17 to 9.48   

2011

    1,179         0.76 to 0.85         940         1.28         1.20 to 1.55         (1.88) to (0.70)   

Alger Mid Cap Growth Portfolio - Class I-2

  

           

2015

    728         1.54 to 1.81         1,229         -           1.20 to 1.55         (3.09) to (1.63)   

2014

    774         1.58 to 1.84         1,337         -           1.20 to 1.55         6.08 to 7.43   

2013

    1,207         1.49 to 1.71         1,930         0.34         1.20 to 1.55         33.75 to 35.37   

2012

    1,322         1.11 to 1.27         1,581         -           1.20 to 1.55         14.41 to 15.80   

2011

    1,827         0.97 to 1.09         1,892         0.36         1.20 to 1.55         (9.68) to (8.59)   

Alger Small Cap Growth Portfolio - Class I-2

  

           

2015

    434         1.29 to 1.57         637         25.77         1.20 to 1.55         (5.15) to (3.68)   

2014

    522         1.36 to 1.63         801         6.71         1.20 to 1.55         (0.89) to 0.35   

2013

    925         1.41 to 1.62         1,430         13.12         1.20 to 1.55         32.2 to 33.79   

2012

    1,039         1.07 to 1.21         1,211         21.18         1.20 to 1.55         10.76 to 12.10   

2011

    1,438         0.93 to 1.08         1,491         -           1.20 to 1.55         (4.67) to (3.52)   

Federated Fund for U.S. Government Securities II

  

           

2015

    671         1.26 to 1.70         939         2.30         1.20 to 1.55         (1.16) to 0.72   

2014

    481         1.27 to 1.72         697         3.37         1.20 to 1.55         3.06 to 3.96   

2013

    661         1.23 to 1.34         899         3.66         1.20 to 1.55         (3.32) to (2.39)   

2012

    1,005         1.27 to 1.37         1,443         4.08         1.20 to 1.55         1.64 to 2.61   

2011

    1,119         1.25 to 1.69         1,576         4.13         1.20 to 1.55         4.41 to 5.41   

Federated High Income Bond Fund II - Primary Shares

  

           

2015

    872         1.99 to 2.34         1,908         5.81         1.20 to 1.55         (4.19) to (2.90)   

2014

    937         2.07 to 2.41         2,125         6.22         1.20 to 1.55         1.15 to 2.41   

2013

    1,157         2.05 to 2.35         2,593         7.18         1.20 to 1.55         5.34 to 6.61   

2012

    1,471         1.94 to 2.21         3,086         8.10         1.20 to 1.55         12.92 to 14.29   

2011

    1,751         1.72 to 1.93         3,228         9.04         1.20 to 1.55         3.55 to 4.80   

Federated Kaufmann Fund II - Primary Shares

  

        

2015

    247         2.11 to 2.39         574         15.25         1.20 to 1.55         4.85 to 5.75   

2014

    296         2.01 to 2.26         650         10.24         1.20 to 1.55         8.00 to 9.43   

2013

    331         1.86 to 2.07         667         8.53         1.20 to 1.55         37.97 to 39.63   

2012

    436         1.35 to 1.48         633         -           1.20 to 1.55         15.48 to 16.88   

2011

    527         1.17 to 1.27         654         1.29         1.20 to 1.55         (14.61) to (13.58)   

 

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Table of Contents

Federated Managed Volatility Fund II

  

        

2015

    481         1.35 to 1.59         723         5.67         1.20 to 1.55         (9.09) to (7.56)   

2014

    755         1.48 to 1.72         1,261         10.34         1.20 to 1.55         2.32 to 3.41   

2013

    773         1.45 to 1.66         1,240         3.01         1.20 to 1.55         19.87 to 21.32   

2012

    863         1.21 to 1.37         1,138         9.06         1.20 to 1.55         11.79 to 13.15   

2011

    1,226         1.08 to 1.21         1,442         4.03         1.20 to 1.55         3.17 to 4.41   

Federated Quality Bond Fund II - Primary Shares

  

           

2015

    299         1.34 to 1.53         442         4.10         1.20 to 1.55         (2.19) to 0.00   

2014

    355         1.37 to 1.53         530         4.71         1.20 to 1.55         2.31 to 3.13   

2013

    565         1.34 to 1.48         818         3.13         1.20 to 1.55         (0.52) to 0.68   

2012

    908         1.34 to 1.47         1,320         3.93         1.20 to 1.55         8.03 to 9.34   

2011

    900         1.24 to 1.35         1,194         3.86         1.20 to 1.55         0.70 to 1.92   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

  

           

2015

    180         1.78 to 2.59         372         1.20         1.25 to 1.40         (1.15) to (1.11)   

2014

    221         1.80 to 2.62         451         1.18         1.25 to 1.40         4.32 to 4.45   

2013

    222         1.72 to 2.51         432         1.23         1.25 to 1.40         20.71 to 20.89   

2012

    254         1.43 to 2.08         417         1.86         1.25 to 1.40         13.84 to 14.01   

2011

    256         1.25 to 1.83         368         1.39         1.25 to 1.40         (7.47) to (7.33)   

Fidelity VIP Asset Manager Portfolio - Initial Class

  

        

2015

    138         1.94 to 2.88         291         9.02         1.25 to 1.40         (1.37) to (1.02)   

2014

    170         1.96 to 2.92         359         6.20         1.25 to 1.40         4.36 to 4.46   

2013

    182         1.88 to 2.80         366         1.85         1.25 to 1.40         14.10 to 14.27   

2012

    179         1.64 to 2.45         321         2.31         1.25 to 1.40         10.91 to 11.08   

2011

    188         1.48 to 2.21         304         2.48         1.25 to 1.40         (3.91) to (3.77)   

Fidelity VIP Asset Manager Portfolio - Service Class 2

  

        

2015

    4         1.71         7         8.29         1.25         (0.58)   

2014

    4         1.72         7         6.02         1.25         5.47   

2013

    4         1.63         7         1.62         1.25         14.94   

2012

    4         1.42         6         2.12         1.25         11.84   

2011

    4         1.27         5         2.29         1.25         (3.15)   

Fidelity VIP Balanced Portfolio - Initial Class

  

        

2015

    6         1.75         10         4.70         1.40         (0.57)   

2014

    6         1.76         10         18.69         1.40         8.63   

2013

    21         1.62         35         6.01         1.40         18.00   

2012

    20         1.37         28         7.13         1.40         13.46   

2011

    95         1.21         115         3.52         1.40         (4.95)   

Fidelity VIP Contrafund Portfolio - Initial Class

  

        

2015

    636         3.13 to 5.41         2,462         10.05         1.25 to 1.40         (0.73) to (0.63)   

2014

    724         3.15 to 5.45         2,824         2.85         1.25 to 1.40         10.30 to 10.51   

2013

    794         2.85 to 4.94         2,892         1.05         1.25 to 1.40         29.46 to 29.66   

2012

    920         2.20 to 3.82         2,631         1.34         1.25 to 1.40         14.79 to 14.96   

2011

    1,118         1.91 to 3.32         2,801         0.91         1.25 to 1.40         (3.88) to (3.73)   

Fidelity VIP Contrafund Portfolio - Service Class 2

  

           

2015

    1,683         2.03 to 2.39         3,775         10.31         1.20 to 1.55         (0.98) to 0.00   

2014

    1,922         2.05 to 2.39         4,319         2.33         1.20 to 1.55         9.79 to 11.32   

2013

    2,868         1.87 to 2.15         5,816         0.85         1.20 to 1.55         28.94 to 30.50   

2012

    3,314         1.45 to 1.65         5,185         1.08         1.20 to 1.55         14.35 to 15.73   

2011

    4,135         1.27 to 1.42         5,638         0.73         1.20 to 1.55         (4.28) to (3.12)   

Fidelity VIP Equity-Income Portfolio - Initial Class

  

           

2015

    210         3.77         791         12.46         1.40         (5.28)   

2014

    223         3.98         888         4.06         1.40         7.18   

2013

    257         3.71         954         9.15         1.40         26.37   

2012

    280         2.94         824         9.56         1.40         15.67   

2011

    305         2.54         775         2.30         1.40         (0.43)   

Fidelity VIP Equity-Income Portfolio - Service Class 2

  

        

2015

    577         1.52 to 1.72         926         13.00         1.20 to 1.55         (5.59) to (4.97)   

2014

    675         1.61 to 1.81         1,149         4.14         1.20 to 1.55         6.90 to 8.29   

2013

    683         1.51 to 1.67         1,078         8.99         1.20 to 1.55         25.86 to 27.38   

2012

    766         1.20 to 1.31         955         8.94         1.20 to 1.55         15.25 to 16.64   

2011

    959         1.04 to 1.12         1,028         2.89         1.20 to 1.55         (0.89) to 0.30   

 

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Table of Contents

Fidelity VIP Government Money Market Portfolio - Initial Class

  

        

2015

    670         1.33         889         0.03         1.40         (1.48)   

2014

    832         1.35         1,120         0.01         1.40         (1.10)   

2013

    1,015         1.36         1,385         0.03         1.40         (1.36)   

2012

    1,086         1.38         1,503         0.14         1.40         (1.26)   

2011

    1,161         1.40         1,627         0.11         1.40         (1.28)   

Fidelity VIP Government Money Market Portfolio - Service Class 2

  

        

2015

    5,013         0.91 to 0.98         4,854         0.01         1.20 to 1.55         (2.15) to 0.00   

2014

    6,028         0.93 to 0.98         5,865         0.01         1.20 to 1.55         (1.70) to (0.80)   

2013

    6,592         0.94 to 0.99         6,440         0.01         1.20 to 1.55         (1.53) to (0.34)   

2012

    8,235         0.96 to 0.99         8,082         0.01         1.20 to 1.55         (1.54) to (0.34)   

2011

    14,374         0.97 to 0.99         14,228         0.01         1.20 to 1.55         (1.52) to (0.33)   

Fidelity VIP Growth - Initial Class

  

        

2015

    227         4.36         992         3.34         1.40         5.57   

2014

    234         4.13         966         0.19         1.40         9.88   

2013

    240         3.76         904         0.36         1.40         34.44   

2012

    252         2.80         705         0.57         1.40         13.09   

2011

    324         2.47         802         0.71         1.40         (1.19)   

Fidelity VIP Growth and Income - Initial Class

  

     

2015

    48         1.58         75         7.11         1.40         (3.66)   

2014

    48         1.64         78         1.73         1.40         9.26   

2013

    53         1.50         80         1.78         1.40         31.71   

2012

    65         1.14         74         2.42         1.40         16.91   

2011

    64         0.97         63         1.83         1.40         0.20   

Fidelity VIP Growth and Income - Service Class 2

  

        

2015

    230         1.74 to 1.98         427         7.16         1.20 to 1.55         (2.94) to (3.87)   

2014

    264         1.81 to 2.04         505         1.55         1.20 to 1.55         8.36 to 10.06   

2013

    283         1.67 to 1.85         497         1.78         1.20 to 1.55         31.20 to 32.78   

2012

    269         1.27 to 1.40         359         2.00         1.20 to 1.55         16.42 to 17.83   

2011

    314         1.09 to 1.18         358         1.22         1.20 to 1.55         0.40 to 1.61   

Fidelity VIP Growth Opportunities Portfolio - Initial Class

  

        

2015

    259         1.40 to 1.87         486         9.81         1.25 to 1.40         3.89 to 4.48   

2014

    302         1.34 to 1.80         537         0.32         1.25 to 1.40         10.45 to 11.03   

2013

    317         1.21 to 1.62         510         0.37         1.25 to 1.40         35.98 to 36.19   

2012

    324         0.89 to 1.19         383         0.41         1.25 to 1.40         17.94 to 18.12   

2011

    376         0.76 to 1.01         376         0.15         1.25 to 1.40         0.88 to 1.03   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

  

        

2015

    475         1.43 to 1.68         751         10.48         1.20 to 1.55         3.62 to 5.00   

2014

    536         1.38 to 1.60         800         0.07         1.20 to 1.55         10.40 to 11.31   

2013

    661         1.25 to 1.44         899         0.10         1.20 to 1.55         35.42 to 37.06   

2012

    691         0.92 to 1.05         690         0.13         1.20 to 1.55         17.48 to 18.90   

2011

    1,000         0.79 to 0.88         848         -           1.20 to 1.55         0.40 to 1.61   

Fidelity VIP High Income - Initial Class

  

        

2015

    53         2.18         115         6.83         1.40         (4.80)   

2014

    53         2.29         121         5.28         1.40         (0.46)   

2013

    65         2.30         150         5.69         1.40         4.47   

2012

    70         2.20         154         5.99         1.40         12.63   

2011

    69         1.95         135         6.72         1.40         2.59   

Fidelity VIP Index 500 Portfolio - Initial Class

  

     

2015

    771         2.28 to 4.82         2,579         2.05         1.25 to 1.40         (0.21) to 0.00   

2014

    830         2.28 to 4.83         2,725         1.60         1.25 to 1.40         12.10 to 12.40   

2013

    1,017         2.03 to 4.31         2,915         2.87         1.25 to 1.40         30.41 to 30.60   

2012

    1,134         1.55 to 3.30         2,447         3.41         1.25 to 1.40         14.30 to 14.47   

2011

    1,296         1.36 to 2.89         2,411         4.33         1.25 to 1.40         0.62 to 0.77   

Fidelity VIP Index 500 Portfolio - Service Class 2

  

     

2015

    1,466         1.44 to 1.69         2,313         1.87         1.20 to 1.55         (0.67) to 0.60   

2014

    1,650         1.50 to 1.68         2,593         1.40         1.20 to 1.55         12.05 to 13.00   

2013

    2,301         1.29 to 1.49         3,202         2.72         1.20 to 1.55         29.88 to 31.45   

2012

    2,472         1.00 to 1.13         2,623         3.07         1.20 to 1.55         13.85 to 15.23   

2011

    3,575         1.25 to 1.83         3,344         4.14         1.20 to 1.55         0.22 to 1.43   

 

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Table of Contents

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

  

        

2015

    6         2.44         14         2.69         1.40         (2.01)   

2014

    6         2.49         15         4.73         1.40         4.20   

2013

    103         2.39         247         2.14         1.40         (3.14)   

2012

    242         2.47         598         5.37         1.40         4.42   

2011

    201         2.36         474         5.23         1.40         5.85   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

  

        

2015

    434         1.29 to 1.47         617         2.44         1.20 to 1.55         (3.01) to (1.34)   

2014

    511         1.33 to 1.49         740         1.76         1.20 to 1.55         3.76 to 5.34   

2013

    708         1.27 to 1.41         963         3.23         1.20 to 1.55         (3.57) to (2.41)   

2012

    810         1.32 to 1.45         1,137         5.06         1.20 to 1.55         3.97 to 5.23   

2011

    833         1.27 to 1.38         1,110         4.52         1.20 to 1.55         5.27 to 6.66   

Fidelity VIP Mid Cap Portfolio - Initial Class

  

        

2015

    119         4.84         575         13.07         1.40         (2.81)   

2014

    134         4.98         669         2.55         1.40         4.84   

2013

    137         4.75         651         13.05         1.40         34.34   

2012

    155         3.54         550         8.79         1.40         13.23   

2011

    162         3.12         507         0.40         1.40         (11.85)   

Fidelity VIP Mid Cap Portfolio - Service Class 2

  

        

2015

    -           -           -           -           -           -     

2014

    506         1.41 to 1.64         788         -           1.20 to 1.55         11.55 to 13.28   

2013

    683         1.26 to 1.45         953         0.07         1.20 to 1.55         34.61 to 36.23   

2012

    679         0.94 to 1.06         700         -           1.20 to 1.55         9.81 to 11.14   

2011

    755         0.86 to 0.96         704         -           1.20 to 1.55         (10.61) to (9.53)   

Fidelity VIP Mid Cap Portfolio - Service Class 2

  

        

2015

    1,108         3.10 to 3.63         3,772         14.33         1.20 to 1.55         (3.13) to (2.16)   

2014

    1,220         3.20 to 3.71         4,251         2.47         1.20 to 1.55         4.40 to 5.74   

2013

    1,592         3.06 to 3.51         5,282         13.28         1.20 to 1.55         33.78 to 35.39   

2012

    1,758         2.29 to 2.59         4,333         7.58         1.20 to 1.55         12.79 to 14.16   

2011

    2,367         2.03 to 2.27         5,144         0.17         1.20 to 1.55         (12.22) to (11.16)   

Fidelity VIP Overseas Portfolio - Initial Class

  

        

2015

    75         2.19         164         1.52         1.40         2.34   

2014

    76         2.14         162         1.12         1.40         (9.37)   

2013

    112         2.36         263         1.74         1.40         28.62   

2012

    116         1.84         212         2.56         1.40         19.05   

2011

    159         1.54         246         1.41         1.40         (18.31)   

Fidelity VIP Value Portfolio - Service Class 2

  

        

2015

    -           -           -           -           -           -     

2014

    179         1.47 to 1.53         270         0.83         1.20 to 1.55         6.61 to 11.78   

2013

    232         1.32 to 1.44         321         0.39         1.20 to 1.55         33.14 to 34.40   

2012

    274         0.99 to 1.07         281         2.23         1.20 to 1.55         12.15 to 13.22   

2011

    292         0.98 to 1.03         266         1.12         1.20 to 1.55         (9.39) to (8.52)   

Fidelity VIP Value Portfolio - Service Class 2

  

     

2015

    257         1.66 to 1.89         460         18.73         1.20 to 1.55         (2.92) to (1.56)   

2014

    174         1.71 to 1.92         313         4.85         1.20 to 1.55         9.54 to 11.00   

2013

    216         1.56 to 1.73         354         8.29         1.20 to 1.55         30.15 to 31.72   

2012

    297         1.20 to 1.31         376         1.41         1.20 to 1.55         18.69 to 20.13   

2011

    365         1.01 to 1.09         385         0.63         1.20 to 1.55         (4.17) to (3.02)   

Fidelity VIP Value Strategies - Service Class 2

  

     

2015

    343         1.84 to 2.09         696         0.96         1.20 to 1.55         (4.66) to (3.69)   

2014

    424         1.93 to 2.17         889         0.71         1.20 to 1.55         4.88 to 6.39   

2013

    549         1.84 to 2.04         1,097         0.69         1.20 to 1.55         28.18 to 29.73   

2012

    575         1.43 to 1.57         883         0.69         1.20 to 1.55         25.10 to 26.62   

2011

    724         1.15 to 1.24         877         0.68         1.20 to 1.55         (10.43) to (9.35)   

Invesco V.I. Capital Development Fund - Series I

  

        

2015

    -           -           -           -           -           -     

2014

    -           -           -           -           -           -     

2013

    -           -           -           -           -           -     

2012

    -           -           -           -           -           -     

2011

    5         21.19 to 21.38         101         -           1.20 to 1.55         (54.57) to (54.48)   

 

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Table of Contents

Invesco V.I. Diversified Dividend Fund - Series I

  

        

2015

    4         39.47 to 41.79         157         1.57         1.20 to 1.55         0.48 to 1.70   

2014

    4         39.28 to 41.09         169         1.51         1.20 to 1.55         11.10 to 12.44   

2013

    6         35.36 to 36.55         232         2.84         1.20 to 1.55         -     

2012

    8         27.40 to 27.99         210         2.24         1.20 to 1.55         16.89 to 18.31   

2011

    7         23.44 to 23.66         172         -           1.20 to 1.55         (8.65) to (7.91)   

Invesco V.I. Dynamics Fund - Series I

  

        

2015

    -           -           -           -           -           -     

2014

    -           -           -           -           -           -     

2013

    -           -           -           -           -           -     

2012

    -           -           -           -           -           -     

2011

    -           -           -           -           1.20 to 1.55         10.91 to 11.34   

Invesco V.I. Financial Services Fund - Series I

  

        

2015

    -           -           -           -           -           -     

2014

    -           -           -           -           -           -     

2013

    -           -           -           -           -           -     

2012

    -           -           -           -           -           -     

2011

    -           -           -           0.19         1.20 to 1.55         6.07 to 6.48   

Invesco V.I. Global Health Care Fund - Series I

  

        

2015

    271         2.27 to 2.67         697         11.12         1.20 to 1.55         1.34 to 3.09   

2014

    205         2.24 to 2.59         515         3.63         1.20 to 1.55         17.98 to 19.10   

2013

    347         1.90 to 2.17         738         0.77         1.20 to 1.55         38.38 to 40.05   

2012

    286         1.37 to 1.55         434         -           1.20 to 1.55         19.03 to 20.47   

2011

    377         1.15 to 1.29         478         -           1.20 to 1.55         2.35 to 3.59   

Invesco V.I. Global Real Estate Fund - Series I

  

        

2015

    273         3.04 to 3.57         917         3.28         1.20 to 1.55         (3.18) to (1.92)   

2014

    362         3.14 to 3.64         1,254         1.57         1.20 to 1.55         12.92 to 14.29   

2013

    383         2.78 to 3.18         1,163         3.60         1.20 to 1.55         1.13 to 2.35   

2012

    438         2.75 to 3.11         1,307         0.55         1.20 to 1.55         26.14 to 27.67   

2011

    488         2.18 to 2.44         1,145         3.40         1.20 to 1.55         (7.94) to (6.83)   

Invesco V.I. Managed Volatility Fund - Series I

  

        

2015

    393         1.52 to 1.78         671         32.73         1.20 to 1.55         (3.80) to (2.73)   

2014

    530         1.58 to 1.83         938         7.80         1.20 to 1.55         18.68 to 20.12   

2013

    585         1.33 to 1.52         859         4.93         1.20 to 1.55         9.05 to 10.37   

2012

    704         1.22 to 1.38         939         6.80         1.20 to 1.55         2.00 to 3.24   

2011

    822         1.20 to 1.34         1,069         3.04         1.20 to 1.55         14.66 to 16.04   

Invesco V.I. Mid Cap Growth Fund - Series I

  

        

2015

    8         13.98 to 14.43         113         8.57         1.20 to 1.55         0.00 to 0.84   

2014

    10         13.98 to 14.31         149         -           1.20 to 1.55         6.78 to 7.69   

2013

    7         9.67 to 13.79         94         0.37         1.20 to 1.55         35.69 to 36.98   

2012

    9         9.67 to 9.73         84         0.07         1.20 to 1.55         (54.57) to (54.48)   

Invesco V.I. Small Cap Equity Fund - Series I

  

        

2015

    402         1.58 to 1.79         696         18.98         1.20 to 1.55         (7.06) to (5.79)   

2014

    576         1.70 to 1.90         1,071         8.03         1.20 to 1.55         1.11 to 1.99   

2013

    748         1.68 to 1.86         1,365         1.05         1.20 to 1.55         -     

2012

    659         1.24 to 1.36         879         -           1.20 to 1.55         12.42 to 13.49   

2011

    728         1.10 to 1.20         856         -           1.20 to 1.55         (2.01) to (1.07)   

Invesco V.I. Technology Fund - Series I

  

        

2015

    337         0.92 to 1.08         343         9.79         1.20 to 1.55         4.55 to 5.88   

2014

    385         0.88 to 1.02         371         7.13         1.20 to 1.55         9.42 to 10.76   

2013

    492         0.80 to 0.92         432         7.19         1.20 to 1.55         23.22 to 24.71   

2012

    658         0.65 to 0.74         470         -           1.20 to 1.55         9.56 to 10.89   

2011

    858         0.60 to 0.67         560         0.21         1.20 to 1.55         (6.51) to (5.38)   

Lazard Retirement Emerging Markets Portfolio

  

        

2015

    36         2.66         95         1.25         1.25         (21.07)   

2014

    44         3.37         149         2.62         1.25         (5.67)   

2013

    45         3.58         162         1.89         1.25         (2.47)   

2012

    46         3.67         171         2.80         1.25         20.53   

2011

    50         3.04         152         1.79         1.25         (19.02)  

 

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Table of Contents

Lazard Retirement Small-Mid Cap Portfolio

  

        

2015

    52         3.03         157         7.15         1.25         9.67   

2014

    55         3.14         173         15.96         1.25         9.67   

2013

    61         2.86         175         12.83         1.25         33.41   

2012

    75         2.15         160         23.80         1.25         9.00   

2011

    112         1.97         220         7.13         1.25         (10.20)   

MFS Core Equity Portfolio - Initial Class

  

        

2015

    -           -           -           -           -           -     

2014

    193         1.17 to 2.14         331         0.59         1.20 to 1.55         9.81 to 10.09   

2013

    350         1.06 to 1.22         480         1.01         1.20 to 1.55         32.53 to 34.13   

2012

    363         0.80 to 0.91         379         0.65         1.20 to 1.55         14.43 to 15.82   

2011

    427         0.70 to 1.27         384         1.00         1.20 to 1.55         (2.54) to (1.36)   

MFS Core Equity Portfolio - Initial Class

  

        

2015

    8         23.07 to 23.29         188         41.90         1.20 to 1.55         980.84 to 1,612.50   

2014

    -           -           -           -           -           -     

2013

    -           -           -           -           -           -     

2012

    -           -           -           -           -           -     

2011

    -           -           -           -           -           -     

MFS Growth Series - Initial Class

  

        

2015

    686         1.15 to 2.62         1,114         6.47         1.20 to 1.55         7.42 to 8.70   

2014

    1,260         1.09 to 2.46         1,818         6.38         1.20 to 1.55         7.42 to 8.70   

2013

    1,366         1.01 to 1.16         1,824         1.00         1.20 to 1.55         34.75 to 36.37   

2012

    1,363         0.75 to 0.85         1,356         -           1.20 to 1.55         15.57 to 16.97   

2011

    1,512         0.65 to 1.46         1,291         0.20         1.20 to 1.55         (1.85) to (0.67)   

MFS Investors Trust Series - Initial Class

  

        

2015

    199         1.55 to 1.82         348         11.80         1.20 to 1.55         (1.27) to (0.55)   

2014

    218         1.57 to 1.83         383         8.01         1.20 to 1.55         9.39 to 10.89   

2013

    252         1.44 to 1.65         404         1.05         1.20 to 1.55         30.02 to 31.59   

2012

    285         1.10 to 1.25         349         0.70         1.20 to 1.55         17.34 to 18.76   

2011

    425         0.94 to 1.07         436         1.08         1.20 to 1.55         (3.68) to (2.52)   

MFS Research Series - Initial Class

  

        

2015

    77         1.36 to 1.92         141         7.84         1.20 to 1.55         (0.73) to 0.63   

2014

    87         1.37 to 1.93         161         6.84         1.20 to 1.55         8.41 to 9.83   

2013

    129         1.26 to 1.45         221         0.56         1.20 to 1.55         30.25 to 31.82   

2012

    202         0.97 to 1.10         254         0.93         1.20 to 1.55         15.46 to 16.86   

2011

    597         0.84 to 1.17         594         0.89         1.20 to 1.55         (1.98) to (0.80)   

T. Rowe Price Equity Income Portfolio

  

        

2015

    1,890         1.91 to 2.32         4,026         3.88         1.20 to 1.55         (8.17) to (7.02)   

2014

    2,032         2.08 to 2.52         4,685         1.73         1.20 to 1.55         5.55 to 6.79   

2013

    2,631         1.97 to 2.27         5,685         1.56         1.20 to 1.55         27.73 to 29.27   

2012

    2,999         1.54 to 1.75         5,046         2.18         1.20 to 1.55         15.34 to 16.74   

2011

    4,117         1.34 to 1.60         5,969         1.71         1.20 to 1.55         (2.24) to (1.06)   

T. Rowe Price International Stock Portfolio

  

     

2015

    1,666         1.03 to 1.53         1,956         2.68         1.20 to 1.55         (2.83) to (1.63)   

2014

    2,022         1.06 to 1.56         2,396         1.60         1.20 to 1.55         (2.87) to (2.31)   

2013

    2,395         1.09 to 1.25         2,903         0.78         1.20 to 1.55         12.30 to 13.65   

2012

    3,019         0.97 to 1.10         3,246         1.21         1.20 to 1.55         16.61 to 18.02   

2011

    3,572         0.83 to 1.22         3,272         1.38         1.20 to 1.55         (14.17) to (13.14)   

T. Rowe Price Limited-Term Bond Portfolio

  

     

2015

    773         1.31 to 1.54         1,132         1.16         1.20 to 1.55         (1.32) to 0.00   

2014

    845         1.32 to 1.54         1,241         1.31         1.20 to 1.55         (1.11) to 0.33   

2013

    868         1.33 to 1.54         1,277         1.48         1.20 to 1.55         (1.41) to (0.22)   

2012

    1,043         1.35 to 1.54         1,552         2.00         1.20 to 1.55         0.87 to 2.10   

2011

    1,740         1.34 to 1.53         2,551         3.34         1.20 to 1.55         0.04 to 1.25   

T. Rowe Price Mid-Cap Growth Portfolio

  

        

2015

    332         3.04 to 5.00         1,415         13.08         1.20 to 1.55         5.03 to 6.23   

2014

    361         2.89 to 4.75         1,496         10.68         1.20 to 1.55         11.24 to 12.81   

2013

    448         2.60 to 2.99         1,570         7.53         1.20 to 1.55         34.59 to 36.22   

2012

    637         1.93 to 2.19         1,661         8.53         1.20 to 1.55         12.14 to 13.50   

2011

    864         1.72 to 2.80         1,927         8.94         1.20 to 1.55         (2.79) to (1.62)   

 

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Table of Contents

VanEck VIP Emerging Markets Fund - Initial Class

  

     

2015

    69         2.67         184         6.27         1.25         (14.97)   

2014

    71         3.14         224         11.31         1.25         (1.73)   

2013

    86         3.20         276         1.49         1.25         10.63   

2012

    88         2.89         254         -         1.25         28.19   

2011

    96         2.25         216         -         1.25         (26.66)   

VanEck VIP Global Hard Assets Fund - Initial Class

  

        

2015

    10         1.88         18         0.05         1.25         (34.04)   

2014

    8         2.85         24         0.13         1.25         (20.21)   

2013

    23         3.57         81         2.29         1.25         9.16   

2012

    26         3.27         87         8.78         1.25         2.10   

2011

    24         3.21         77         2.81         1.25         (17.49)   

 

1 These ratios represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.
2 These ratios represent the annualized policy expenses of the separate account, consisting primarily of mortality and expense charges. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to policyholder accounts through the redemption of units and expenses of the underlying fund are excluded.
3 These ratios represent the total return, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented

 

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Table of Contents

(5) UNIT CHANGES

The changes in units outstanding for the periods ended December 31, 2015 and 2014 were as follows:

 

            2014             2015         

Fund

   December 31, 2013
Units Outstanding
     Units
Purchased
     Units
Redeemed
     December 31, 2014
Units Outstanding
     Units
Purchased
     Units
Redeemed
     December 31, 2015
Units Outstanding
 

Alger Balanced Portfolio - Class I-2

     792,843         79,681         156,895         715,629         58,485         60,147         713,967   

Alger Capital Appreciation Portfolio - Class I-2

     1,036,364         126,263         237,711         924,916         105,543         184,308         846,151   

Alger Growth & Income Portfolio - Class I-2

     529,673         61,401         197,811         393,263         14,106         95,045         312,324   

Alger Large Cap Growth Portfolio - Class I-2

     959,580         126,462         283,380         802,662         25,475         171,937         656,200   

Alger Mid Cap Growth Portfolio - Class I-2

     1,207,226         27,981         461,137         774,070         56,810         103,051         727,829   

Alger Small Cap Growth Portfolio - Class I-2

     924,768         63,511         466,471         521,808         63,283         151,029         434,062   

Federated Fund for U.S. Government Securities II

     660,567         96,873         276,410         481,030         276,894         86,493         671,431   

Federated High Income Bond Fund II - Primary Shares

     1,156,500         156,332         375,435         937,397         76,491         142,264         871,624   

Federated Kaufmann Fund II - Primary Shares

     330,851         28,952         64,011         295,792         49,415         98,682         246,525   

Federated Managed Volatility Fund II

     772,939         79,059         96,817         755,181         38,172         312,566         480,787   

Federated Quality Bond Fund II - Primary Shares

     564,932         63,154         273,082         355,004         24,269         80,080         299,193   

Fidelity VIP Asset Manager Growth Portfolio - Initial Class

     221,585         2,438         3,041         220,982         542         41,379         180,145   

Fidelity VIP Asset Manager Portfolio - Initial Class

     181,612         2,082         13,305         170,389         334         32,959         137,764   

Fidelity VIP Asset Manager Portfolio - Service Class 2

     4,055         -           36         4,019         -         36         3,983   

Fidelity VIP Balanced Portfolio - Initial Class

     21,305         9,438         24,862         5,881         -         5         5,876   

Fidelity VIP Contrafund Portfolio - Initial Class

     794,143         10,078         80,186         724,035         2,909         91,291         635,653   

Fidelity VIP Contrafund Portfolio - Service Class 2

     2,868,427         85,778         1,032,229         1,921,976         124,881         364,292         1,682,565   

Fidelity VIP Equity-Income Portfolio - Initial Class

     256,910         7,079         41,049         222,940         390         13,398         209,932   

Fidelity VIP Equity-Income Portfolio - Service Class 2

     682,573         62,554         70,268         674,859         23,760         121,259         577,360   

Fidelity VIP Government Money Market Portfolio - Initial Class

     1,014,766         85,101         267,686         832,181         4,229         166,704         669,706   

Fidelity VIP Government Money Market Portfolio - Service Class 2

     6,592,030         1,385,446         1,949,066         6,028,410         476,206         1,491,989         5,012,627   

Fidelity VIP Growth - Initial Class

     240,449         6,644         12,831         234,262         2,793         9,611         227,444   

Fidelity VIP Growth and Income - Initial Class

     53,047         -           5,395         47,652         8         32         47,628   

Fidelity VIP Growth and Income - Service Class 2

     282,516         36,664         55,620         263,560         20,215         53,602         230,173   

Fidelity VIP Growth Opportunities Portfolio - Initial Class

     316,821         385         15,577         301,629         9,444         51,600         259,473   

Fidelity VIP Growth Opportunities Portfolio - Service Class 2

     660,827         46,902         171,379         536,350         97,766         159,355         474,761   

Fidelity VIP High Income - Initial Class

     65,199         6,031         18,471         52,759         -         88         52,671   

Fidelity VIP Index 500 Portfolio - Initial Class

     1,017,456         3,691         191,601         829,546         45,633         104,197         770,982   

Fidelity VIP Index 500 Portfolio - Service Class 2

     2,301,446         155,367         806,869         1,649,944         120,970         305,396         1,465,518   

Fidelity VIP Investment Grade Bond Portfolio - Initial Class

     103,214         9,525         106,583         6,156         -         387         5,769   

Fidelity VIP Investment Grade Bond Portfolio - Service Class 2

     707,541         65,537         261,628         511,450         35,371         112,374         434,447   

Fidelity VIP Mid Cap Portfolio - Initial Class

     137,059         3,239         5,904         134,394         1,724         17,328         118,790   

Fidelity VIP Mid Cap Portfolio - Service Class 2

     2,274,934         126,605         675,279         1,726,260         281,940         899,880         1,108,320   

Fidelity VIP Overseas Portfolio - Initial Class

     111,510         1,171         36,907         75,774         755         1,376         75,153   

Fidelity VIP Value Portfolio - Service Class 2

     448,093         39,411         135,157         352,347         156,148         251,453         257,042   

Fidelity VIP Value Strategies - Service Class 2

     548,557         54,290         179,014         423,833         146,014         226,388         343,459   

Invesco V.I. Diversified Dividend Fund - Series I

     6,422         977         3,226         4,173         594         923         3,844   

Invesco V.I. Global Health Care Fund - Series I

     346,508         23,113         165,099         204,522         129,932         63,592         270,862   

Invesco V.I. Global Real Estate Fund - Series I

     383,061         72,580         93,758         361,883         20,956         110,283         272,556   

Invesco V.I. Managed Volatility Fund - Series I

     585,458         142,538         197,604         530,392         22,217         159,700         392,909   

Invesco V.I. Mid Cap Growth Fund - Series I

     7,065         4,099         724         10,440         2,326         4,907         7,859   

Invesco V.I. Small Cap Equity Fund - Series I

     748,243         85,608         257,386         576,465         86,800         261,264         402,001   

Invesco V.I. Technology Fund - Series I

     492,174         64,146         171,563         384,757         36,063         83,606         337,214   

Lazard Retirement Emerging Markets Portfolio

     45,314         519         1,521         44,312         1,094         9,581         35,825   

Lazard Retirement Small-Mid Cap Portfolio

     61,287         -           6,046         55,241         416         3,915         51,742   

MFS Core Equity Portfolio - Initial Class

     349,688         16,102         173,157         192,633         14,728         199,226         8,135   

MFS Growth Series - Initial Class

     1,365,973         173,036         278,858         1,260,151         59,083         632,816         686,418   

MFS Investors Trust Series - Initial Class

     252,462         18,281         52,501         218,242         11,843         31,572         198,513   

MFS Research Series - Initial Class

     128,835         4,948         46,686         87,097         4,653         14,825         76,925   

T. Rowe Price Equity Income Portfolio

     2,631,166         143,811         743,262         2,031,715         92,864         234,679         1,889,900   

T. Rowe Price International Stock Portfolio

     2,394,548         288,854         661,343         2,022,059         228,236         584,474         1,665,821   

T. Rowe Price Limited-Term Bond Portfolio

     868,433         232,972         256,657         844,748         53,150         124,888         773,010   

T. Rowe Price Mid-Cap Growth Portfolio

     448,014         24,308         111,020         361,302         17,968         46,983         332,287   

VanEck VIP Emerging Markets Fund - Initial Class

     86,350         614         15,588         71,376         1,398         3,880         68,894   

VanEck VIP Global Hard Assets Fund - Initial Class

     22,773         725         15,237         8,261         1,359         9         9,611   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     42,066,092         4,412,356         12,300,339         34,178,109         3,126,655         8,573,104         28,731,660   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

46


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AMERICAN NATIONAL INSURANCE COMPANY

FINANCIAL STATEMENTS

 

47


Table of Contents
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Annual Consolidated Financial Statements

 

Report of Independent Registered Public Accounting Firm

     49   

Report of Independent Registered Public Accounting Firm on Internal Control

     50   

Consolidated Statements of Financial Position as of December 31, 2015 and 2014

     51   

Consolidated Statements of Operations for the years ended December 31, 2015, 2014, and 2013

     52   

Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014, and 2013

     53   

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2015, 2014, and 2013

     53   

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014, and 2013

     54   

Notes to the Consolidated Financial Statements

     55   

 

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

American National Insurance Company:

We have audited the accompanying consolidated statements of financial position of American National Insurance Company and subsidiaries (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three year period ended December 31, 2015. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedules I to V. These consolidated financial statements and financial statements schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American National Insurance Company and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 29, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Houston, Texas

February 29, 2016

 

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

American National Insurance Company:

We have audited American National Insurance Company’s (the Company) internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements’ Annual Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

In our opinion, American National Insurance Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of American National Insurance Company and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2015, and the related financial statement schedules I-V, and our report dated February 29, 2016 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Houston, Texas

February 29, 2016

 

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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands, except share data)

 

     December 31,  
     2015     2014  
           (As Adjusted)  

ASSETS

    

Fixed maturity, bonds held-to-maturity, at amortized cost (Fair value $7,755,553 and $8,652,913)

   $ 7,609,420      $ 8,225,050   

Fixed maturity, bonds available-for-sale, at fair value (Amortized cost $5,427,831 and $4,694,716)

     5,483,916        4,921,807   

Equity securities, at fair value (Cost $810,826 and $739,384)

     1,514,979        1,516,978   

Mortgage loans on real estate, net of allowance

     3,483,280        3,359,586   

Policy loans

     407,491        405,979   

Investment real estate, net of accumulated depreciation of $212,139 and $193,611

     581,255        479,062   

Short-term investments

     460,612        431,000   

Other invested assets

     173,042        220,255   
  

 

 

   

 

 

 

Total investments

     19,713,995        19,559,717   
  

 

 

   

 

 

 

Cash and cash equivalents

     190,237        209,455   

Investments in unconsolidated affiliates

     379,348        311,779   

Accrued investment income

     177,474        185,943   

Reinsurance recoverables

     413,881        428,654   

Prepaid reinsurance premiums

     77,907        56,019   

Premiums due and other receivables

     285,446        280,587   

Deferred policy acquisition costs

     1,324,669        1,253,544   

Property and equipment, net

     120,680        110,794   

Current tax receivable

     4,091        8,669   

Other assets

     140,788        137,856   

Separate account assets

     918,446        1,001,515   
  

 

 

   

 

 

 

Total assets

   $ 23,746,962      $ 23,544,532   
  

 

 

   

 

 

 

LIABILITIES

    

Future policy benefits

    

Life

   $ 2,853,962      $ 2,770,232   

Annuity

     1,113,057        1,006,748   

Accident and health

     65,034        58,364   

Policyholders’ account balances

     10,829,173        10,781,285   

Policy and contract claims

     1,280,011        1,297,708   

Unearned premium reserve

     812,977        755,051   

Other policyholder funds

     305,836        291,775   

Liability for retirement benefits

     207,635        195,712   

Notes payable

     128,436        108,177   

Deferred tax liabilities, net

     219,295        287,175   

Other liabilities

     550,629        550,843   

Separate account liabilities

     918,446        1,001,515   
  

 

 

   

 

 

 

Total liabilities

     19,284,491        19,104,585   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Common stock, $1.00 par value, - Authorized 50,000,000, Issued 30,832,449 and 30,832,449, Outstanding 26,894,456 and 26,871,942 shares

     30,832        30,832   

Additional paid-in capital

     13,689        9,248   

Accumulated other comprehensive income

     352,620        490,782   

Retained earnings

     4,157,184        3,998,642   

Treasury stock, at cost

     (102,043     (101,941
  

 

 

   

 

 

 

Total American National stockholders’ equity

     4,452,282        4,427,563   

Noncontrolling interest

     10,189        12,384   
  

 

 

   

 

 

 

Total stockholders’ equity

     4,462,471        4,439,947   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 23,746,962      $ 23,544,532   
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

 

     Years ended December 31,  
     2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

PREMIUMS AND OTHER REVENUE

      

Premiums

      

Life

   $ 305,350      $ 307,771      $ 293,173   

Annuity

     183,125        190,357        155,162   

Accident and health

     196,777        216,868        212,931   

Property and casualty

     1,153,267        1,100,975        1,074,260   

Other policy revenues

     250,265        224,254        210,224   

Net investment income

     834,831        932,858        1,016,810   

Net realized investment gains

     87,385        48,062        124,144   

Other-than-temporary impairments 

     (27,942     (6,640     (4,591

Other income

     34,397        36,085        37,097   
  

 

 

   

 

 

   

 

 

 

Total premiums and other revenues

     3,017,455        3,050,590        3,119,210   
  

 

 

   

 

 

   

 

 

 

BENEFITS, LOSSES AND EXPENSES

      

Policyholder benefits

      

Life

     386,785        351,271        345,566   

Annuity

     230,221        234,173        193,840   

Claims incurred

      

Accident and health

     146,805        144,799        139,762   

Property and casualty

     776,562        745,540        746,636   

Interest credited to policyholders’ account balances

     293,464        353,492        426,102   

Commissions for acquiring and servicing policies

     425,338        397,126        371,948   

Other operating expenses

     501,377        485,865        503,051   

Change in deferred policy acquisition costs

     (11,785     9,578        29,835   
  

 

 

   

 

 

   

 

 

 

Total benefits, losses and expenses

     2,748,767        2,721,844        2,756,740   
  

 

 

   

 

 

   

 

 

 

Income before federal income tax and equity in earnings of unconsolidated affiliates

     268,688        328,746        362,470   
  

 

 

   

 

 

   

 

 

 

Less: Provision for federal income taxes

      

Current

     93,979        77,547        73,798   

Deferred

     9,741        19,067        34,277   
  

 

 

   

 

 

   

 

 

 

Total provision for federal income taxes

     103,720        96,614        108,075   

Equity in earnings of unconsolidated affiliates

     77,408        14,694        16,019   
  

 

 

   

 

 

   

 

 

 

Net income

     242,376        246,826        270,414   

Less: Net income (loss) attributable to noncontrolling interest, net of tax

     (612     1,491        3,933   
  

 

 

   

 

 

   

 

 

 

Net income attributable to American National

   $ 242,988      $ 245,335      $ 266,481   
  

 

 

   

 

 

   

 

 

 

Amounts available to American National common stockholders

      

Earnings per share

      

Basic

   $ 9.04      $ 9.15      $ 9.95   

Diluted

     9.02        9.11        9.90   

Cash dividends to common stockholders

     3.14        3.08        3.08   

Weighted average common shares outstanding

     26,876,522        26,802,841        26,791,900   

Weighted average common shares outstanding and dilutive potential common shares

     26,950,066        26,918,670        26,914,591   

See accompanying notes to the consolidated financial statements.

 

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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

 

     Years ended December 31,  
     2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

Net income

   $ 242,376      $ 246,826      $ 270,414   
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

      

Change in net unrealized gain (losses) on securities

     (114,717     110,214        87,095   

Foreign currency transaction and translation adjustments

     (1,630     (954     (512

Defined benefit pension plan adjustment

     (21,815     (32,190     85,119   
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

     (138,162     77,070        171,702   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     104,214        323,896        442,116   

Less: Comprehensive income (loss) attributable to noncontrolling interest

     (612     1,491        3,933   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income attributable to American National

   $ 104,826      $ 322,405      $ 438,183   
  

 

 

   

 

 

   

 

 

 
AMERICAN NATIONAL INSURANCE COMPANY   
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY   
(In thousands)   
     Years ended December 31,  
     2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

Common Stock

      

Balance at beginning and end of the period

   $ 30,832      $ 30,832      $ 30,832   
  

 

 

   

 

 

   

 

 

 

Additional Paid-In Capital

      

Balance as of January 1,

     9,248        4,650        —     

Reissuance of treasury shares

     2,129        1,635        3,025   

Income tax effect from restricted stock arrangement

     1,165        —          80   

Amortization of restricted stock

     1,147        2,963        1,545   
  

 

 

   

 

 

   

 

 

 

Balance at end of the period

     13,689        9,248        4,650   
  

 

 

   

 

 

   

 

 

 

Accumulated Other Comprehensive Income

      

Balance as of January 1,

     490,782        413,712        242,010   

Other comprehensive income (loss)

     (138,162     77,070        171,702   
  

 

 

   

 

 

   

 

 

 

Balance at end of the period

     352,620        490,782        413,712   
  

 

 

   

 

 

   

 

 

 

Retained Earnings

      

Balance as of January 1,

     3,998,642        3,836,112        3,652,462   

Net income attributable to American National

     242,988        245,335        266,481   

Cash dividends to common stockholders

     (84,446     (82,805     (82,831
  

 

 

   

 

 

   

 

 

 

Balance at end of the period

     4,157,184        3,998,642        3,836,112   
  

 

 

   

 

 

   

 

 

 

Treasury Stock

      

Balance as of January 1,

     (101,941     (97,441     (98,286

Reissuance (purchase) of treasury shares

     (102     (4,500     845   
  

 

 

   

 

 

   

 

 

 

Balance at end of the period

     (102,043     (101,941     (97,441
  

 

 

   

 

 

   

 

 

 

Noncontrolling Interest

      

Balance as of January 1,

     12,384        12,757        11,491   

Contributions

     1,859        981        483   

Distributions

     (3,442     (2,845     (3,150

Net income (loss) attributable to noncontrolling interest

     (612     1,491        3,933   
  

 

 

   

 

 

   

 

 

 

Balance at end of the period

     10,189        12,384        12,757   
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

   $ 4,462,471      $ 4,439,947      $ 4,200,622   
  

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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AMERICAN NATIONAL INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     Years ended December 31,  
     2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

OPERATING ACTIVITIES

      

Net income

   $ 242,376      $ 246,826      $ 270,414   

Adjustments to reconcile net income to net cash provided by operating activities

      

Net realized investment gains

     (87,385     (48,062     (124,144

Other-than-temporary impairments

     27,942        6,640        4,591   

Amortization of premiums, discounts and loan origination fees

     2,701        7,294        6,052   

Net capitalized interest on policy loans and mortgage loans

     (31,360     (32,122     (28,060

Depreciation

     40,573        38,414        31,176   

Interest credited to policyholders’ account balances

     293,464        353,492        426,102   

Charges to policyholders’ account balances

     (250,265     (224,254     (210,224

Deferred federal income tax expense

     9,741        19,067        34,277   

Equity in earnings of unconsolidated affiliates

     (77,408     (14,694     (16,019

Distributions from equity method investments

     819        5,186        20,718   

Changes in

      

Policyholder liabilities

     259,645        200,718        96,435   

Deferred policy acquisition costs

     (11,785     9,578        29,835   

Reinsurance recoverables

     14,773        (13,911     4,000   

Premiums due and other receivables

     (5,512     (1,184     3,517   

Prepaid reinsurance premiums

     (21,887     1,850        (1,043

Accrued investment income

     8,470        8,887        12,484   

Current tax receivable/payable

     4,578        9,838        (3,929

Liability for retirement benefits

     (31,435     (19,084     8,763   

Other, net

     (8,587     2,306        (19,837
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     379,458        556,785        545,108   
  

 

 

   

 

 

   

 

 

 

INVESTING ACTIVITIES

      

Proceeds from sale/maturity/prepayment of

      

Held-to-maturity securities

     1,150,650        661,125        1,619,721   

Available-for-sale securities

     574,391        910,691        914,813   

Investment real estate

     19,788        63,030        84,371   

Mortgage loans

     836,443        606,738        758,677   

Policy loans

     56,773        55,542        58,460   

Other invested assets

     71,564        40,882        13,975   

Disposals of property and equipment

     4,681        11,269        553   

Distributions from unconsolidated affiliates

     130,742        41,779        25,055   

Payment for the purchase/origination of

      

Held-to-maturity securities

     (525,950     (439,422     (1,087,447

Available-for-sale securities

     (1,343,795     (1,044,602     (1,057,004

Investment real estate

     (106,255     (51,699     (45,345

Mortgage loans

     (962,267     (668,073     (914,740

Policy loans

     (26,459     (29,093     (26,623

Other invested assets

     (38,101     (27,705     (18,443

Additions to property and equipment

     (32,596     (31,951     (25,583

Contributions to unconsolidated affiliates

     (132,004     (12,560     (122,512

Change in short-term investments

     (29,612     64,386        (182,300

Other, net

     14,412        4,331        (1,336
  

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (337,595     154,668        (5,708
  

 

 

   

 

 

   

 

 

 

FINANCING ACTIVITIES

      

Policyholders’ account deposits

     1,405,350        1,002,420        895,227   

Policyholders’ account withdrawals

     (1,400,661     (1,532,023     (1,484,656

Change in notes payable

     20,259        (5,672     (49,535

Dividends to stockholders

     (84,446     (82,805     (82,831

Payments to noncontrolling interest

     (1,583     (1,864     (2,667
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (61,081     (619,944     (724,462
  

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (19,218     91,509        (185,062

Beginning of the period

     209,455        117,946        303,008   
  

 

 

   

 

 

   

 

 

 

End of the period

   $ 190,237      $ 209,455      $ 117,946   
  

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Nature of Operations

American National Insurance Company and its consolidated subsidiaries (collectively “American National” or “the Company”) offer a broad spectrum of insurance products, including individual and group life insurance, annuities, health insurance, and property and casualty insurance. Business is conducted in all 50 states, the District of Columbia and Puerto Rico.

Note 2 – Summary of Significant Accounting Policies and Practices

The consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and are reported in U.S. currency. American National consolidates entities that are wholly-owned and those in which American National owns less than 100% but controls, as well as variable interest entities in which American National is the primary beneficiary. Intercompany balances and transactions with consolidated entities have been eliminated. Investments in unconsolidated affiliates are accounted for using the equity method of accounting. Certain amounts in prior years have been reclassified to conform to current year presentation.

The preparation of the consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported consolidated financial statement balances. Actual results could differ from those estimates.

Investments

Investment securities – Bonds classified as held-to-maturity are carried at amortized cost. Bonds classified as available-for-sale are carried at fair value. Equity securities are classified as available-for-sale and carried at fair value. After-tax net unrealized gains or losses on available-for-sale securities are reflected in stockholders’ equity as a component of “Accumulated Other Comprehensive Income” (“AOCI”).

Mortgage loans on real estate are stated at unpaid principal balance, adjusted for any unamortized discount, deferred expenses, and allowances. Accretion of discounts is recorded using the effective yield method. Interest income, prepayment fees and accretion of discounts and origination fees are reported in “Net investment income” in the consolidated statements of operations. Interest income earned on impaired and non-impaired loans is accrued on the principal amount of the loan based on contractual interest rate. However, interest ceases to accrue for loans on which interest is more than 90 days past due, when the collection of interest is not probable or when a loan is in foreclosure. Income on past due loans is reported on a cash basis. When a loan becomes current, it is placed back into accrual status. Cash receipts on impaired loans are recorded as a reduction of principal, interest income, expense reimbursement or other manner in accordance with the loan agreement. Gains and losses from the sale of loans and changes in allowances are reported in “Net realized investment gains” in the consolidated statements of operations.

Each mortgage loan is evaluated quarterly and placed in a watchlist if events occur or circumstances exist that could indicate that American National will be unable to collect all amounts due according to the contractual terms. Additionally, loans with estimated collateral value less than their balance and loans with characteristics indicative of higher than normal credit risks are reviewed quarterly. All loans in the watchlist are analyzed individually for impairment. If a loan is concluded to be fully collectible, no loss allowance is recorded. Loans are considered impaired when, based upon current information and events, it is probable that all amounts due under the contractual terms of the loan will be uncollectible. A specific allowance for loan losses is established for the excess carrying value of the loan over either: (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, or (ii) the estimated fair value of the underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent. Allowances are also established on groups of loans with similar characteristics, such as property types, if based on experience, it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. The allowance is reviewed quarterly to determine if it is adequate, or if a recovery of the asset is assured and the allowance can be reduced.

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

 

Management believes the recorded allowance is adequate and is the best estimate of probable loan losses, including losses incurred at the reporting date but not identified by a specific loan. The allowance is based on historical loan loss experience, known and inherent risks in the portfolio, adverse situations affecting the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Loans are charged off as uncollectible only when the loan is forgiven by a legal agreement. Prior to charging off a loan, an allowance is recorded based on the estimated recoverable amount. Upon forgiveness, both the allowance and the loan balance are reduced which results in no further gain or loss.

Policy loans are carried at cost, which approximates fair value.

Investment real estate including related improvements, are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset (typically 15 to 50 years). Rental income is recognized on a straight-line basis over the term of the respective lease. American National classifies a property as held-for-sale if it commits to a plan to sell a property within one year and actively markets the property in its current condition for a price that is reasonable in comparison to its estimated fair value. Real estate held-for-sale is stated at the lower of depreciated cost or estimated fair value less expected disposition costs, and is not depreciated while it is classified as held-for-sale. American National periodically reviews its investment real estate for impairment and tests properties for recoverability whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable and the carrying value of the property exceeds its estimated fair value. Properties whose carrying values are greater than their undiscounted cash flows are written down to their estimated fair value, with the impairment loss included in “Realized investment gains (losses)” in the consolidated statements of operations. Impairment losses are based upon the estimated fair value of real estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks as well as other appraisal methods. Real estate acquired upon foreclosure is recorded at the lower of its cost, or its estimated fair value at the date of foreclosure.

Real Estate Joint Ventures and Other Limited Partnership Interests—In which the Company has more than a minor interest or influence over the investee’s operations, but it does not have a controlling interest and is not the primary beneficiary, are accounted for using the equity method. These investments are reported as “Investments in unconsolidated affiliates” in the consolidated statements of financial position. For certain joint ventures, American National records its share of earnings using a lag methodology of one to three months when timely financial information is not available and the contractual right does not exist to receive such financial information. In addition to the investees’ impairment analysis of its underlying investments, American National routinely evaluates its investments in those investees for impairments. American National considers financial and other information provided by the investee, other known information and inherent risks in the underlying investments, as well as future capital commitments, in determining whether impairment has occurred. When an impairment is deemed to have occurred at the joint venture level, American National recognizes its share within “Equity in earnings (losses) of unconsolidated affiliates” to record the investment at its fair value. When an impairment results from American National’s separate analysis, an adjustment is made through “Net realized investment gains ” to record the investment at its fair value.

Short-term investments comprised of commercial paper, are carried at amortized cost, which approximates fair value.

Other invested assets comprised primarily of tax credit partnerships, CAPCO investments, mineral rights and limited liability interests, are carried at cost, less allowance for depletion, where applicable. Other invested assets also include equity-indexed options which are carried at fair value. Impairments for other invested assets are considered on an individual basis.

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

 

Impairments are evaluated quarterly and where management believes that the carrying value will not be realized, an other-than-temporary impairment (“OTTI”) loss is recorded.

All fixed maturity securities with unrealized losses are assessed to determine if the creditworthiness of any of those securities has deteriorated to a point where its carrying value will not be realized at maturity. For fixed maturity securities at December 31, 2015, the unrealized losses on fixed maturity securities that were not other-than-temporarily impaired were the result of credit spread widening. There were no delinquent coupon payments attributed to these securities at December 31, 2015.

For all fixed maturity securities in unrealized loss positions which American National does not intend to sell and for which it is not more-likely-than-not that it will be required to sell before its anticipated recovery, American National assesses whether the amortized cost basis of securities will be recovered by comparing the net present value of the expected cash flows from those securities with its amortized cost basis. Management estimates the expected cash flows using historical experience information as well as market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security. The net present value of the expected cash flows from fixed maturity securities is calculated by discounting management’s best estimate of expected cash flows at the effective interest rate implicit in the fixed maturity security when acquired. If the net present value of the expected cash flows is less than the amortized cost, an OTTI has occurred in the form of a credit loss. The credit loss is recognized in earnings in the amount of excess amortized cost over the net present value of the expected cash flows. If the fair value is less than the net present value of its expected cash flows at the impairment measurement date, a non-credit loss exists which is recorded in other comprehensive income (loss) for the difference between the fair value and the net present value of the expected cash flows.

After the recognition of an OTTI, fixed maturity securities are accounted for as if they had been purchased on the OTTI measurement date, with a cost basis equal to their previous amortized cost less the related OTTI losses recognized in earnings. The new cost basis of an other-than-temporarily impaired security is not adjusted for subsequent increases in estimated fair value. Should there be a significant increase in the estimate of cash flows expected to be collected from previously impaired securities, the increase would be accounted for prospectively by accreting it as interest income over its remaining life.

American National evaluates quarterly all equity securities in unrealized loss positions and recognizes an OTTI loss on those where a market price recovery is not expected in a reasonable period of time. All equity securities with unrealized losses are also evaluated for credit quality. OTTI is recognized if management believes the carrying value of securities will not be realized, regardless of the length of time that they have had an unrealized loss.

Derivative instruments are purchased as hedges of a recognized asset or liability, and are recorded in the consolidated statements of financial position at fair value. The change in fair value of derivative assets and liabilities is reported in the consolidated statements of operations as “Net investment income” and “Interest credited to policyholder’ account balances,” respectively. American National does not apply hedge accounting treatment to its derivative instruments.

Cash and cash equivalents include cash on-hand and in banks, as well as amounts invested in money market funds and are reported as “Cash and cash equivalents” in the consolidated statements of financial position.

Property and equipment consist of buildings occupied by American National, data processing equipment, and furniture and equipment, which are carried at cost, less accumulated depreciation. Depreciation is calculated using straight-line and accelerated methods over the estimated useful lives of the assets (3 to 50 years).

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

 

Insurance specific assets and liabilities

Deferred policy acquisition costs (“DAC”) are capitalized costs related directly to the successful acquisition of new or renewal insurance contracts. Significant costs are incurred to acquire insurance and annuity contracts, including commissions and certain underwriting, policy issuance and processing expenses.

DAC on traditional life and health products is amortized with interest over the anticipated premium-paying period of the related policies, in proportion to the ratio of annual premium revenue expected to be received over the life of the policies. Expected premium revenue is estimated by using the same mortality, morbidity and withdrawal assumptions used in computing liabilities for future policy benefits. DAC is reduced by a provision for possible inflation of maintenance and settlement expenses determined by means of grading interest rates.

DAC on universal life, limited-pay and investment-type contracts is amortized as a level percentage of the present value of anticipated gross profits from investment yields, mortality, and surrender charges. The effect of the realization of unrealized gains (losses) on DAC is recognized within AOCI in the consolidated statements of financial position as of the reporting date. A change in interest rates could have a significant impact on DAC calculated for these contracts.

DAC associated with property and casualty business is amortized over the coverage period of the related policies, in relation to premium earned.

For short-duration and long-duration contracts, DAC is grouped consistent with the manner in which insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment income is not anticipated in assessing the recoverability of DAC for short-duration contracts.

Liabilities for future policy benefits for traditional products have been provided on a net level premium method based on estimated investment yields, withdrawals, mortality, and other assumptions that were appropriate at the time policies were issued. Estimates are based on historical experience, adjusted for possible adverse deviation. These estimates are periodically reviewed and compared with actual experience. When it is determined that future expected experience differs significantly from existing assumptions, the estimates are revised for current and future issues.

Policyholders’ account balances represent the contract value that has accrued to the benefit of the policyholders related to universal-life, limited-pay and investments-type contracts. These are generally equal to the accumulated deposits, plus interest credited, reduced by withdrawals, payouts, and accumulated policyholder assessments.

Reserves for claims and claim adjustment expenses (“CAE”) are established to provide for the estimated costs of paying claims. These reserves include estimates for both case reserves and incurred but not reported (“IBNR”) claim reserves. Case reserves include the liability for reported but unpaid claims. IBNR reserves include a provision for potential development on case reserves, losses on claims currently closed which may reopen in the future, as well as incurred but not reported claims. These reserves also include an estimate of the expense associated with settling claims, including legal and other fees and the general expenses of administering the claims adjustment process.

Reinsurance—Reinsurance recoverables are estimated amounts due to American National from reinsurers related to paid and unpaid ceded claims and CAE and are presented net of a reserve for collectability. Recoveries of gross ultimate losses are estimated by a review of individual large claims and the ceded portion of IBNR using assumed distribution of loss by percentage retained. The most significant assumption is the average size of the individual losses for those claims that have occurred but have not yet been reported. The ultimate amount of the reinsurance ceded recoverable is unknown until all losses settle.

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

 

Separate account assets and liabilities

Separate account assets and liabilities are funds intended to meet the investment objectives of contract holders who bear the investment risk. Investment income and investment gains and losses from these separate funds accrue to the benefit of the contract holders. Separate accounts are established in conformity with insurance laws and are not chargeable with liabilities that arise from any other business of American National. American National reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from American National’s general account liabilities; (iii) investments are directed by the contract holder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contract holder. The assets of these accounts are carried at fair value. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and related liability increases are excluded from benefits and expenses in the consolidated financial statements.

Premiums, benefits, claims incurred and expenses

Traditional ordinary life and health premiums are recognized as revenue when due. Benefits and expenses are associated with earned premiums to result in recognition of profits over the term of the insurance contracts.

Annuity premiums received on limited-pay and supplemental annuity contracts involving a significant life contingency are recognized as revenue when due. Deferred annuity premiums are recorded as deposits rather than recognized as revenue. Revenues from deferred annuity contracts are principally surrender charges and, in the case of variable annuities, administrative fees assessed to contractholders.

Universal life and single premium whole life revenues represent amounts assessed to policyholders including mortality charges, surrender charges actually paid and earned policy service fees. Amounts included in expenses are benefits in excess of account balances returned to policyholders.

Property and casualty premiums are recognized as revenue proportionately over the contract period, net of reinsurance ceded. Claims incurred consist of claims and CAE paid and the change in reserves, net of reinsurance received and recoverable.

Participating insurance policies

Participating business comprised approximately 6.7% of the life insurance in-force at December 31, 2015 and 19.6% of life premiums in 2015. Of the total participating business, 77.8% was written by Farm Family Life Insurance Company (“Farm Family Life”). For the participating business excluding Farm Family Life, the allocation of dividends to participating policyowners is based upon a comparison of experienced rates of mortality, interest and expenses, as determined periodically for representative plans of insurance, issue ages and policy durations, with the corresponding rates assumed in the calculation of premiums.

For the Farm Family Life participating business, profits earned on participating business are reserved for the payment of dividends to policyholders, except for the stockholders’ share of profits on participating policies, which is limited to the greater of 10% of the profit on participating business, or 50 cents per thousand dollars of the face amount of participating life insurance in-force. Participating policyholders’ interest includes the accumulated net income from participating policies reserved for payment to such policyholders in the form of dividends (less net income allocated to stockholders as indicated above) as well as a pro rata portion of unrealized investment gains (losses), net of tax.

Federal income taxes

American National files a consolidated life and non-life federal income tax return. Certain subsidiaries that are consolidated for financial reporting are not eligible to be included in the consolidated federal income tax return; accordingly, they file separate returns.

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

 

Deferred federal income tax assets and liabilities are recognized to reflect the future tax consequences attributable to differences between the financial statement amounts of assets and liabilities and their respective tax bases. Deferred taxes are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled.

American National recognizes tax benefits on uncertain tax positions if it is “more-likely-than-not” the position based on its technical merits will be sustained by taxing authorities. American National recognizes the largest benefit that is greater than 50% likely of being ultimately realized upon settlement. Tax benefits not meeting the “more-likely-than-not” threshold, if applicable, are included with “Other liabilities” in the consolidated statements of financial position.

Interest and penalties assessed, if applicable, are classified as current federal income taxes in the consolidated statements of operations.

Pension and postretirement benefit plans

Pension and postretirement benefit obligations and costs are calculated using concepts in accordance with GAAP. The discount rate and the expected return on plan assets are important elements of expense and/or liability measurement, and these key assumptions are evaluated annually. Other assumptions involve demographic factors such as retirement age, mortality, turnover and compensation.

American National uses a discount rate to determine the present value of future benefits on the measurement date. The guideline for setting this rate is a high-quality long-term corporate bond rate. To determine the expected long-term rate of return on plan assets, a building-block method is used. The expected rate of return on each asset is broken down into inflation, the real risk-free rate of return (i.e., the long-term estimate of future returns on default-free U.S. government securities), and the risk premium for each asset class (i.e., the expected return in excess of the risk-free rate). Using this approach, the calculated return will fluctuate from year to year; however, it is American National’s policy to hold this long-term assumption relatively constant.

Stock-based compensation

Stock Appreciation Rights (“SARs”) liability and compensation cost is based on the fair value of the grants and are remeasured each reporting period through the settlement date. The fair value of the SAR’s is calculated using the Black-Scholes-Merton option-pricing model. The key assumptions used in the model include: the grant date and remeasurement date stock prices, expected life of the SARs and the risk-free rate of return. The compensation liability related to the SAR award is included in “Other liabilities” in the consolidated statements of financial position.

Restricted Stock (“RS”) equity and compensation cost is based on the fair value of the underlying stock at grant date. The compensation cost accrued is included in “Additional paid-in capital” in the consolidated statements of financial position.

Restricted Stock Units (“RSU”) provides the recipients of the awards the option to settle vested RSUs in either cash or American National common stock. Effective December 31, 2012, American National’s Board Compensation Committee modified the settlement provision within the outstanding restricted stock units, which changed the RSU classification from an equity to a liability award. The liability is remeasured each reporting period through the vesting date and is adjusted for changes in fair value. The compensation liability related to the RSUs is included in “Other Liabilities” in the consolidated statements of financial position.

 

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Note 2 – Summary of Significant Accounting Policies and Practices – (Continued)

Litigation contingencies

Existing and potential litigation is reviewed quarterly to determine if any adjustments to liabilities for possible losses are necessary. Reserves for losses are established whenever they are probable and estimable. If no one estimate within the range of possible losses is more probable than any other, a reserve is recorded based on the lowest amount of the range.

Note 3 – Recently Issued Accounting Pronouncements

Adoption of New Accounting Standards

In January 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-01, Accounting for Investments in Qualified Affordable Housing Projects. The new standard allows a proportional amortization approach and treats the net investment performance as a component of income tax expense. Previously, these investments were accounted for under the equity method that records changes to investment value as a component of investment income and generates a deferred tax balance until the investment terminates. American National adopted this standard effective January 1, 2015, with retrospective adoption as of January 1, 2013. Upon adoption, the opening balance of stockholders’ equity was reduced by $818,000 at January 1, 2013.

Financial statement amounts previously reported were revised as shown below (in thousands):

 

     As of December 31, 2014  
     As Reported      As Adjusted      Effect of Change  

Investment in unconsolidated affiliates

   $ 319,283       $ 311,779       $ (7,504

Deferred tax liabilities, net

     290,112         287,175         (2,937

Retained earnings

     4,003,209         3,998,642         (4,567
     As Reported      As Adjusted      Effect of Change  

Year ended December 31, 2014

        

Provision for federal income taxes, current

   $ 72,327       $ 77,547       $ 5,220   

Provision for federal income taxes, deferred

     19,704         19,067         (637

Equity in earnings of unconsolidated affiliates

     11,969         14,694         2,725   

Net Income attributable to American National

     247,193         245,335         (1,858

Year ended December 31, 2013

        

Provision for federal income taxes, current

   $ 64,928       $ 73,798       $ 8,870   

Provision for federal income taxes, deferred

     34,713         34,277         (436

Equity in earnings of unconsolidated affiliates

     9,476         16,019         6,543   

Net Income attributable to American National

     268,372         266,481         (1,891

 

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Note 3 – Recently Issued Accounting Pronouncements – (Continued)

American National’s investments in Qualified Affordable Housing Projects were $42,097,000 and $32,778,000 as of December 31, 2015 and 2014, respectively. For the years ended December 31, 2015 and 2014, American National recognized tax credits and other tax benefits of $8,872,000 and $7,817,000, respectively, and amortized cost of $7,480,000 and $6,378,000, relating to these investments. At December 31, 2015 American National had commitments to provide additional funding to these investments during the following fiscal years as follows (in thousands):

 

Expected year of payment

     2016         2017         2018         2019         2020         Total   

Equity commitments

   $ 10,247         1,064         626         1,385         —         $ 13,322   

Future Adoption of New Accounting Standards— The FASB issued the following accounting guidance relevant to American National:

In May 2014, the FASB issued guidance that will supersede most existing revenue recognition requirements in U.S. GAAP. Insurance contracts generally are excluded from the scope of the guidance. For those contracts which are impacted, the transaction price is attributed to the underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer. In August 2015, the effective date of the guidance was deferred one year and is now effective for reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is evaluating the impact of adoption, which is not expected to be material to the Company’s financial statements.

In February 2015, the FASB issued guidance amending the consolidation analysis. The guidance modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities. The guidance eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs. The amended guidance is effective for reporting periods beginning after December 15, 2015. The impact of the adoption is not expected to be material to the Company’s financial statements.

In May 2015, the FASB issued guidance to expand the disclosures an insurance entity would provide about its short duration contracts. The disclosure about the liability for unpaid claims and claim adjustment expenses is intended to increase the transparency of significant estimates made in the measuring of those liabilities. It is also intended to provide insight into an insurance entity’s ability to underwrite and anticipate costs associated with claims. The amended guidance is effective for annual reporting periods beginning after December 15, 2015 and for interim reporting periods beginning after December 15, 2016. The guidance affects disclosures only and will not impact the Company’s results of operations or financial position.

 

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Note 4 – Investment in Securities

The cost or amortized cost and fair value of investments in securities are shown below (in thousands):

 

    December 31, 2015  
    Cost or
Amortized Cost
    Gross Unrealized
Gains
    Gross Unrealized
(Losses)
    Fair Value  

Fixed maturity securities, bonds held-to-maturity

       

U.S. states and political subdivisions

  $ 324,643      $ 22,318      $ (444   $ 346,517   

Foreign governments

    4,101        867        —          4,968   

Corporate debt securities

    6,985,844        263,927        (158,101     7,091,670   

Residential mortgage-backed securities

    277,135        18,351        (1,286     294,200   

Collateralized debt securities

    1,924        100        —          2,024   

Other debt securities

    15,773        401        —          16,174   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total bonds held-to-maturity

    7,609,420        305,964        (159,831     7,755,553   
 

 

 

   

 

 

   

 

 

   

 

 

 

Fixed maturity securities, bonds available-for-sale

       

U.S. treasury and government

    24,024        702        (34     24,692   

U.S. states and political subdivisions

    933,958        39,808        (1,275     972,491   

Foreign governments

    5,000        1,733        —          6,733   

Corporate debt securities

    4,431,765        120,471        (107,614     4,444,622   

Residential mortgage-backed securities

    25,629        2,155        (420     27,364   

Collateralized debt securities

    7,455        629        (70     8,014   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total bonds available-for-sale

    5,427,831        165,498        (109,413     5,483,916   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

       

Common stock

    794,839        718,225        (22,035     1,491,029   

Preferred stock

    15,987        7,964        (1     23,950   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities

    810,826        726,189        (22,036     1,514,979   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investments in securities

  $ 13,848,077      $ 1,197,651      $ (291,280   $ 14,754,448   
 

 

 

   

 

 

   

 

 

   

 

 

 
    December 31, 2014  
    Cost or
Amortized Cost
    Gross Unrealized
Gains
    Gross Unrealized
(Losses)
    Fair Value  

Fixed maturity securities, bonds held-to-maturity

       

U.S. states and political subdivisions

  $ 323,053      $ 26,800      $ (93   $ 349,760   

Foreign governments

    29,130        1,293        —          30,423   

Corporate debt securities

    7,517,195        424,845        (47,315     7,894,725   

Residential mortgage-backed securities

    336,853        22,317        (1,535     357,635   

Collateralized debt securities

    2,232        238        —          2,470   

Other debt securities

    16,587        1,313        —          17,900   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total bonds held-to-maturity

    8,225,050        476,806        (48,943     8,652,913   
 

 

 

   

 

 

   

 

 

   

 

 

 

Fixed maturity securities, bonds available-for-sale

       

U.S. treasury and government

    22,415        825        (7     23,233   

U.S. states and political subdivisions

    802,846        36,151        (1,381     837,616   

Foreign governments

    5,000        2,021        —          7,021   

Corporate debt securities

    3,812,771        203,048        (15,770     4,000,049   

Residential mortgage-backed securities

    40,988        1,903        (492     42,399   

Collateralized debt securities

    10,696        863        (70     11,489   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total bonds available-for-sale

    4,694,716        244,811        (17,720     4,921,807   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

       

Common stock

    719,651        774,650        (7,176     1,487,125   

Preferred stock

    19,733        10,121        (1     29,853   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities

    739,384        784,771        (7,177     1,516,978   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investments in securities

  $ 13,659,150      $ 1,506,388      $ (73,840   $ 15,091,698   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

63


Table of Contents

Note 4 – Investment in Securities – (Continued)

 

The amortized cost and fair value, by contractual maturity, of fixed maturity securities are shown below (in thousands):

 

     December 31, 2015  
     Bonds Held-to-Maturity      Bonds Available-for-Sale  
     Amortized Cost      Fair Value      Amortized Cost      Fair Value  

Due in one year or less

   $ 253,733       $ 257,904       $ 259,630       $ 261,111   

Due after one year through five years

     2,753,119         2,911,920         1,103,407         1,158,800   

Due after five years through ten years

     4,275,052         4,243,409         3,468,145         3,445,337   

Due after ten years

     321,666         337,270         591,649         613,680   

Without single maturity date

     5,850         5,050         5,000         4,988   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 7,609,420       $ 7,755,553       $ 5,427,831       $ 5,483,916   
  

 

 

    

 

 

    

 

 

    

 

 

 

Actual maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Residential and commercial mortgage-backed securities, which are not due at a single maturity, have been allocated to their respective categories based on the year of final contractual maturity.

Proceeds from sales of available-for-sale securities, with the related gross realized gains and losses, are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Proceeds from sales of available-for-sale securities

   $ 86,793       $ 184,918       $ 228,159   

Gross realized gains

     34,434         38,301         43,263   

Gross realized losses

     (592      (3,635      (3,413

Gains and losses are determined using specific identification of the securities sold. During 2015 and 2014, bonds with a carrying value of $171,000 and $44,781,000, respectively, were transferred from held-to-maturity to available-for-sale after a significant deterioration in the issuers’ creditworthiness became evident. An unrealized loss of $53,000 and an unrealized gain of $1,301,000 were established in 2015 and 2014, respectively following the transfer at fair value.

In accordance with various regulations, American National had bonds on deposit with regulating authorities with a carrying value of $51,877,000 and $51,767,000 at December 31, 2015 and 2014, respectively. In addition, American National has pledged bonds in connection with agreements and transactions, such as financing and reinsurance agreements. The carrying value of bonds pledged was $77,360,000 and $65,331,000 at December 31, 2015 and 2014, respectively.

 

64


Table of Contents

Note 4 – Investment in Securities – (Continued)

 

The components of the change in net unrealized gains (losses) on securities are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Bonds available-for-sale

   $ (171,006    $ 83,809       $ (205,827

Equity securities

     (73,441      108,066         282,668   
  

 

 

    

 

 

    

 

 

 

Change in net unrealized gains (losses) on securities during the year

     (244,447      191,875         76,841   

Adjustments for

        

Deferred policy acquisition costs

     59,340         (14,611      59,893   

Participating policyholders’ interest

     8,646         (9,046      (2,300

Deferred federal income tax benefit (expense)

     61,744         (58,004      (47,339
  

 

 

    

 

 

    

 

 

 

Change in net unrealized gains (losses) on securities, net of tax

   $ (114,717    $ 110,214       $ 87,095   
  

 

 

    

 

 

    

 

 

 

The gross unrealized losses and fair value of the investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are shown below (in thousands):

 

     December 31, 2015  
     Less than 12 months      12 Months or more      Total  
     Unrealized
(Losses)
    Fair
Value
     Unrealized
(Losses)
    Fair
Value
     Unrealized
(Losses)
    Fair
Value
 

Fixed maturity securities, bonds held-to-maturity

  

U.S. states and political subdivisions

   $ (444   $ 19,412       $ —        $ —         $ (444   $ 19,412   

Corporate debt securities

     (93,285     1,912,178         (64,816     283,469         (158,101     2,195,647   

Residential mortgage-backed securities

     (449     21,275         (837     14,721         (1,286     35,996   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total bonds held-to-maturity

     (94,178     1,952,865         (65,653     298,190         (159,831     2,251,055   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Fixed maturity securities, bonds available-for-sale

              

U.S. treasury and government

     (34     18,802         —          —           (34     18,802   

U.S. states and political subdivisions

     (1,223     80,807         (52     2,569         (1,275     83,376   

Corporate debt securities

     (81,638     1,796,357         (25,976     90,784         (107,614     1,887,141   

Residential mortgage-backed securities

     (228     15,273         (192     4,984         (420     20,257   

Collateralized debt securities

     (66     2,115         (4     253         (70     2,368   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total bonds available-for-sale

     (83,189     1,913,354         (26,224     98,590         (109,413     2,011,944   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Equity securities

              

Common stock

     (22,035     136,694         —          —           (22,035     136,694   

Preferred stock

     —          —           (1     —           (1     —     
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total equity securities

     (22,035     136,694         (1     —           (22,036     136,694   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ (199,402   $ 4,002,913       $ (91,878   $ 396,780       $ (291,280   $ 4,399,693   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

65


Table of Contents

Note 4 – Investment in Securities – (Continued)

 

     December 31, 2014  
     Less than 12 months      12 Months or more      Total  
     Unrealized
(Losses)
    Fair
Value
     Unrealized
(Losses)
    Fair
Value
     Unrealized
(Losses)
    Fair
Value
 

Fixed maturity securities, bonds held-to-maturity

  

U.S. states and political subdivisions

   $ (37   $ 3,388       $ (56   $ 2,465       $ (93   $ 5,853   

Corporate debt securities

     (20,575     523,766         (26,740     662,362         (47,315     1,186,128   

Residential mortgage-backed securities

     (232     12,186         (1,303     31,163         (1,535     43,349   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total bonds held-to-maturity

     (20,844     539,340         (28,099     695,990         (48,943     1,235,330   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Fixed maturity securities, bonds available-for-sale

              

U.S. treasury and government

     (7     14,552         —          —           (7     14,552   

U.S. states and political subdivisions

     (166     27,719         (1,215     78,851         (1,381     106,570   

Corporate debt securities

     (8,852     384,451         (6,918     288,808         (15,770     673,259   

Residential mortgage-backed securities

     (170     9,386         (322     14,042         (492     23,428   

Collateralized debt securities

     (63     2,033         (7     339         (70     2,372   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total bonds available-for-sale

     (9,258     438,141         (8,462     382,040         (17,720     820,181   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Equity securities

              

Common stock

     (7,176     43,907         —          —           (7,176     43,907   

Preferred stock

     (1     —           —          —           (1     —     
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total equity securities

     (7,177     43,907         —          —           (7,177     43,907   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ (37,279   $ 1,021,388       $ (36,561   $ 1,078,030       $ (73,840   $ 2,099,418   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

As of December 31, 2015, the securities with unrealized losses including those exceeding one year were not deemed to be other-than-temporarily impaired. American National has the ability and intent to hold those securities until a market price recovery or maturity. It is not more-likely-than-not that American National will be required to sell them prior to recovery, and recovery is expected in a reasonable period of time. It is possible an issuer’s financial circumstances may be different in the future, which may lead to a different impairment conclusion in future periods.

Bonds distributed by credit quality rating, using both Standard & Poor’s and Moody’s ratings, are shown below:

 

     December 31,  
     2015     2014  

AAA

     5.4     5.0

AA

     12.0        12.8   

A

     36.5        39.4   

BBB

     43.3        39.5   

BB and below

     2.8        3.3   
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 

Equity securities by market sector distribution are shown below:

 

     December 31,  
     2015     2014  

Consumer goods

     20.5     20.4

Energy and utilities

     10.3        13.3   

Finance

     20.0        19.1   

Healthcare

     14.6        14.0   

Industrials

     8.2        8.4   

Information technology

     17.8        16.2   

Other

     8.6        8.6   
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 

 

66


Table of Contents

Note 5 – Mortgage Loans

Generally, commercial mortgage loans are secured by first liens on income-producing real estate. American National attempts to maintain a diversified portfolio by considering the location of the underlying collateral. The distribution based on carrying amount of mortgage loans by location are as follows:

 

     December 31,  
     2015     2014  

East North Central

     18.8     19.4

East South Central

     4.8        5.0   

Mountain

     11.6        11.0   

Pacific

     10.7        10.8   

South Atlantic

     18.8        21.9   

West South Central

     29.0        24.9   

Other

     6.3        7.0   
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 

During 2015, American National foreclosed on three loans with a recorded investment of $24,333,000, and one loan was in the process of foreclosure with a recorded investment of $2,450,000. Two loans were in the process of foreclosure with a recorded investment of $15,945,000 for the same period in 2014. American National sold one loan with a recorded investment of $2,702,000 resulting in a realized loss of $1,602,000 for the year ended December 31, 2015. No loans were sold in 2014.

The age analysis of past due loans is shown below (in thousands):

 

     30-59 Days      60-89 Days      More Than      Total      Current      Total  
     Past Due      Past Due      90 Days            Amount     Percent  

December 31, 2015

                   

Industrial

   $ —         $ —         $ —         $ —         $ 704,426       $ 704,426        20.1   

Office

     —           5,883         2,450         8,333         1,252,484         1,260,817        36.1   

Retail

     19,088         —           —           19,088         583,810         602,898        17.2   

Other

     —           —           —           —           928,034         928,034        26.6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 19,088       $ 5,883       $ 2,450       $ 27,421       $ 3,468,754       $ 3,496,175        100.0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Allowance for loan losses

                    (12,895  
                 

 

 

   

Total, net of allowance

                  $ 3,483,280     
                 

 

 

   

December 31, 2014

                   

Industrial

   $ —         $ —         $ —         $ —         $ 702,541       $ 702,541        20.9   

Office

     —           —           19,327         19,327         1,201,833         1,221,160        36.1   

Retail

     —           —           —           —           615,813         615,813        18.1   

Other

     —           —           —           —           837,932         837,932        24.9   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ —         $ —         $ 19,327       $ 19,327       $ 3,358,119       $ 3,377,446        100.0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Allowance for loan losses

                    (17,860  
                 

 

 

   

Total, net of allowance

                  $ 3,359,586     
                 

 

 

   

Total mortgage loans are net of unamortized discounts of $452,000 and $658,000 and unamortized origination fees of $22,637,000 and $15,659,000 at December 31, 2015 and 2014, respectively. No unearned income is included in these amounts.

 

67


Table of Contents

Note 5 – Mortgage Loans – (Continued)

 

Allowance for Credit Losses

The credit quality of the mortgage loan portfolio is assessed by evaluating the credit risk of the borrowers. A loan is classified as performing or non-performing based on whether all of the contractual terms of the loan have been met.

Loans not evaluated individually for collectability are segregated by property-type and location, and allowance factors are applied. These factors are developed annually and reviewed quarterly based on our historical loss experience adjusted for the expected trend in the rate of foreclosure losses. Allowance factors are higher for loans of certain property types and in certain regions based on loss experience or a blended historical loss factor.

The change in allowance for credit losses in mortgage loans is shown below (in thousands):

 

     Collectively      Individually         
     Evaluated      Evaluated         
     for Impairment      for Impairment      Total  

Balance at December 31, 2012

   $ 11,519       $ 493       $ 12,012   

Change in allowance

     169         —           169   
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2013

     11,688         493         12,181   
  

 

 

    

 

 

    

 

 

 

Change Due to Factor Development

     127         —           127   

Change in allowance

     462         5,090         5,552   
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2014

     12,277         5,583         17,860   
  

 

 

    

 

 

    

 

 

 

Change in allowance

     (1,561      (3,404      (4,965
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2015

   $ 10,716       $ 2,179       $ 12,895   
  

 

 

    

 

 

    

 

 

 

At December 31, 2015 and 2014, the recorded investment for loans collectively evaluated for impairment was $3,442,211,000 and $3,321,241,000, respectively. The recorded investment for loans individually evaluated for impairment was $53,964,000 and $56,205,000, respectively.

 

68


Table of Contents

Note 5 – Mortgage Loans – (Continued)

 

Loans individually evaluated for impairment with and without an allowance recorded are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  
     Average      Interest      Average      Interest      Average      Interest  
     Recorded      Income      Recorded      Income      Recorded      Income  
     Investment      Recognized      Investment      Recognized      Investment      Recognized  

With an allowance

                 

Office

   $ 18,062       $ 1,342       $ 29,371       $ 2,203       $ —         $ —     

Retail

     —           —           —           —           493         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 18,062       $ 1,342       $ 29,371       $ 2,203       $ 493       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Without an allowance

                 

Office

   $ 28,765       $ 1,834       $ 27,019       $ 1,728       $ 12,444       $ 809   

Industrial

     —           —           2,721         146         2,773         180   

Retail

     8,856         540         —           —           1,673         103   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 37,621       $ 2,374       $ 29,740       $ 1,874       $ 16,890       $ 1,092   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     December 31,  
     2015      2014  
            Unpaid             Unpaid  
     Recorded      Principal      Recorded      Principal  
     Investment      Balance      Investment      Balance  

With an allowance

           

Office

   $ 16,168       $ 17,855       $ 26,563       $ 31,653   

Retail

     —           —           —           493   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 16,168       $ 17,855       $ 26,563       $ 32,146   
  

 

 

    

 

 

    

 

 

    

 

 

 

Without an allowance

           

Office

   $ 29,091       $ 29,091       $ 26,941       $ 26,941   

Industrial

     —           —           2,702         2,702   

Retail

     8,705         8,705         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 37,796       $ 37,796       $ 29,643       $ 29,643   
  

 

 

    

 

 

    

 

 

    

 

 

 

Troubled Debt Restructurings

American National has granted concessions which are classified as troubled debt restructurings to mortgage loan borrowers. Concessions are generally one of, or a combination of, a delay in payment of principal or interest, a reduction of the contractual interest rate or an extension of the maturity date. American National considers the amount, timing and extent of concessions in determining any impairment or changes in the specific allowance for loan losses recorded in connection with a troubled debt restructuring. The carrying value after specific allowance, before and after modification in a troubled debt restructuring, may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

 

69


Table of Contents

Note 5 – Mortgage Loans – (Continued)

 

Troubled debt restructuring mortgage loan information is as follows (in thousands, except number of contracts):

 

     Years ended December 31,  
     2015      2014  
     Number of
contracts
     Recorded
investment pre-
modification
     Recorded
investment post
modification
     Number of
contracts
     Recorded
investment pre-
modification
     Recorded
investment post
modification
 
                   
                   

Office

     2       $ 12,211       $ 12,211         1       $ 6,432       $ 6,432   

There are $882,000 of commitments to lend additional funds to debtors whose loans have been modified in troubled debt restructuring, and there have been no defaults on modified loans during the periods presented.

Note 6 – Investment Real Estate

Investment real estate by property-type and geographic distribution are as follows:

 

     December 31,  
     2015     2014  

Industrial

     10.9     13.0

Office

     38.1        25.0   

Retail

     37.0        44.1   

Other

     14.0        17.9   
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 
     December 31,  
     2015     2014  

East North Central

     11.4     4.5

East South Central

     3.6        4.6   

Mountain

     12.6        9.6   

Pacific

     5.6        7.1   

South Atlantic

     10.1        12.2   

West South Central

     50.7        55.6   

Other

     6.0        6.4   
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 

American National regularly invests in real estate partnerships and joint ventures. American National frequently participates in the design of these entities with the sponsor, but in most cases, its involvement is limited to financing. Through analysis performed by American National, some of these partnerships and joint ventures have been determined to be variable interest entities (“VIEs”). In certain instances, in addition to an economic interest in the entity, American National holds the power to direct the most significant activities of the entity and is deemed the primary beneficiary or consolidator of the entity. The assets of the consolidated VIEs are restricted and must first be used to settle their liabilities. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit of American National, as American National’s obligation is limited to the amount of its committed investment. American National has not provided financial or other support to the VIEs in the form of liquidity arrangements, guarantees, or other commitments to third parties that may affect the fair value or risk of its variable interest in the VIEs in 2015 or 2014.

 

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Note 6 – Investment Real Estate – (Continued)

 

The assets and liabilities relating to the VIEs included in the consolidated financial statements are as follows (in thousands):

 

     December 31,  
     2015      2014  

Investment real estate

   $ 174,264       $ 140,032   

Short-term investments

     1         1   

Cash and cash equivalents

     3,855         2,495   

Accrued investment income

     557         683   

Other receivables

     8,101         7,999   

Other assets

     8,210         8,483   
  

 

 

    

 

 

 

Total assets of consolidated VIEs

   $ 194,988       $ 159,693   
  

 

 

    

 

 

 

Notes payable

   $ 128,436       $ 108,177   

Other liabilities

     19,436         8,954   
  

 

 

    

 

 

 

Total liabilities of consolidated VIEs

   $ 147,872       $ 117,131   
  

 

 

    

 

 

 

The notes payable in the consolidated statements of financial position pertain to the borrowings of the consolidated VIEs. The liability of American National Insurance Company relating to notes payable of the consolidated VIEs is limited to the amount of its direct or indirect investment in the respective ventures, which totaled $34,699,000 and $15,016,000 at December 31, 2015 and 2014, respectively. The total long-term portion of notes payable, $97,026,000, consists of three notes with the following interest rates: 4.0%, one note with adjusted LIBOR plus LIBOR margin, and one note at LIBOR. The long-term notes payable will mature beyond 5 years. The current portion of notes payable, $31,410,000, maturing in 2016, consists of two notes with the following interest: prime plus 0.5%, and a loan with adjusted LIBOR plus LIBOR margin.

For other VIEs in which American National is a partner, it is not the primary beneficiary and these entities are not consolidated, as the major decisions that most significantly impact the economic activities of the VIE require unanimous consent of all partners. The carrying amount and maximum exposure to loss relating to unconsolidated VIEs follows (in thousands):

 

     December 31,  
     2015      2014  
     Carrying
Amount
     Maximum
Exposure
to Loss
     Carrying
Amount
     Maximum
Exposure
to Loss
 

Investment in unconsolidated affiliates

   $ 236,816       $ 236,816       $ 157,620       $ 157,620   

Mortgage loans

     212,228         212,228         172,408         172,408   

Accrued investment income

     661         661         721         721   

As of December 31, 2015, no real estate investments were classified as held for sale.

 

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Table of Contents

Note 7 – Derivative Instruments

American National purchases over-the-counter equity-indexed options as economic hedges against fluctuations in the equity markets to which equity-indexed products are exposed. Equity-indexed contracts include a fixed host universal-life insurance or annuity contract and an equity-indexed embedded derivative. The detail of derivative instruments is shown below (in thousands, except number of instruments):

 

        December 31,  

Derivatives Not Designated

as Hedging Instruments

 

Location in the Consolidated

Statements of Financial Position

  2015     2014  
    Number of
Instruments
    Notional
Amounts
    Estimated
Fair Value
    Number of
Instruments
    Notional
Amounts
    Estimated
Fair Value
 
             

Equity-indexed options

 

Other invested assets

    419      $ 1,200,600      $ 123,007        436      $ 1,095,300      $ 189,449   

Equity-indexed embedded derivative

 

Policyholders’ account balances

    51,815        1,067,600        242,412        42,287        961,300        208,187   

 

Derivatives Not Designated

as Hedging Instruments

 

Location in the Consolidated

Statements of Operations

  Gains (Losses) Recognized in Income on Derivatives  
    Years ended December 31,  
    2015     2014     2013  

Equity-indexed options

 

Net investment income

  $ (9,103   $ 52,071      $ 83,307   

Equity-indexed embedded derivative

 

Interest credited to policyholders’ account balances

    6,439        (32,071     (67,177

Note 8 – Net Investment Income and Realized Investment Gains (Losses)

Net investment income is shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Bonds

   $ 558,837       $ 596,013       $ 631,561   

Equity securities

     36,314         35,324         30,668   

Mortgage loans

     204,913         204,499         221,773   

Real estate

     12,833         10,823         11,504   

Options

     (9,103      52,071         83,307   

Other invested assets

     31,037         34,128         37,997   
  

 

 

    

 

 

    

 

 

 

Total

   $ 834,831       $ 932,858       $ 1,016,810   
  

 

 

    

 

 

    

 

 

 

Realized investment gains (losses) are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Bonds

   $ 16,300       $ 25,580       $ 25,577   

Equity securities

     60,485         22,089         35,322   

Mortgage loans

     (220      (5,679      834   

Real estate

     10,872         7,035         62,531   

Other invested assets

     (52      (963      (120
  

 

 

    

 

 

    

 

 

 

Total

   $ 87,385       $ 48,062       $ 124,144   
  

 

 

    

 

 

    

 

 

 

Other-than-temporary impairment losses are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Bonds

   $ (286    $ (41    $ —     

Equity securities

     (27,656      (6,599      (4,591
  

 

 

    

 

 

    

 

 

 

Total

   $ (27,942    $ (6,640    $ (4,591
  

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Note 9 – Fair Value of Financial Instruments

The carrying amount and fair value of financial instruments are shown below (in thousands):

 

     December 31,  
     2015      2014  
     Carrying
Amount
     Fair Value      Carrying
Amount
     Fair Value  

Financial assets

  

Fixed maturity securities, bonds held-to-maturity

   $ 7,609,420       $ 7,755,553       $ 8,225,050       $ 8,652,913   

Fixed maturity securities, bonds available-for-sale

     5,483,916         5,483,916         4,921,807         4,921,807   

Equity securities

     1,514,979         1,514,979         1,516,978         1,516,978   

Equity-indexed options

     123,007         123,007         189,449         189,449   

Mortgage loans on real estate, net of allowance

     3,483,280         3,621,978         3,359,586         3,618,944   

Policy loans

     407,491         407,491         405,979         405,979   

Short-term investments

     460,612         460,612         431,000         431,000   

Separate account assets

     918,446         918,446         1,001,515         1,001,515   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 20,001,151       $ 20,285,982       $ 20,051,364       $ 20,738,585   
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Investment contracts

   $ 8,787,376       $ 8,787,376       $ 8,894,747       $ 8,894,747   

Embedded derivative liability for equity-indexed contracts

     242,412         242,412         208,187         208,187   

Notes payable

     128,436         128,436         108,177         108,177   

Separate account liabilities

     918,446         918,446         1,001,515         1,001,515   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 10,076,670       $ 10,076,670       $ 10,212,626       $ 10,212,626   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability. A fair value hierarchy is used to determine fair value based on a hypothetical transaction at the measurement date from the perspective of a market participant. American National has evaluated the types of securities in its investment portfolio to determine an appropriate hierarchy level based upon trading activity and the observability of market inputs. The classification of assets or liabilities within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:

 

Level 1    Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2    Quoted prices in markets that are not active or inputs that are observable directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3    Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect American National’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Fixed Maturity Securities and Equity Options—American National utilizes a pricing service to estimate fair value measurements. The estimates of fair value for most fixed maturity securities, including municipal bonds, provided by the pricing service are disclosed as Level 2 measurements as the estimates are based on observable market information rather than market quotes.

 

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Note 9 – Fair Value of Financial Instruments – (Continued)

The pricing service utilizes market quotations for fixed maturity securities that have quoted prices in active markets. Since fixed maturity securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Additionally, an option adjusted spread model is used to develop prepayment and interest rate scenarios.

The pricing service evaluates each asset class based on relevant market information, credit information, perceived market movements and sector news. The market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and economic events. The extent of the use of each market input depends on the asset class and the market conditions. Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant. For some securities, additional inputs may be necessary.

American National has reviewed the inputs and methodology used and the techniques applied by the pricing service to produce quotes that represent the fair value of a specific security. The review confirms that the pricing service is utilizing information from observable transactions or a technique that represents a market participant’s assumptions. American National does not adjust quotes received from the pricing service. The pricing service utilized by American National has indicated that they will only produce an estimate of fair value if there is objectively verifiable information available.

American National holds a small amount of private placement debt and fixed maturity securities that have characteristics that make them unsuitable for matrix pricing. For these securities, a quote from an independent broker (typically a market maker) is obtained. Due to the disclaimers on the quotes that indicate that the price is indicative only, American National includes these fair value estimates in Level 3.

For securities priced using a quote from an independent broker, such as the equity options and certain fixed maturity securities, American National uses a market-based fair value analysis to validate the reasonableness of prices received from an independent broker. Price variances above a certain threshold are analyzed further to determine if any pricing issue exists. This analysis is performed quarterly.

Equity Securities—For publicly-traded equity securities, prices are received from a nationally recognized pricing service that are based on observable market transactions, and these securities are classified as Level 1 measurements. For certain preferred stock, current market quotes in active markets are unavailable. In these instances, an estimate of fair value is received from the pricing service. The service utilizes similar methodologies to price preferred stocks as it does for fixed maturity securities. These estimates are disclosed as Level 2 measurements. American National tests the accuracy of the information provided by reference to other services regularly.

Mortgage Loans—The fair value of mortgage loans is estimated using discounted cash flow analyses on a loan by loan basis by applying a discount rate to expected cash flows from future installment and balloon payments. The discount rate takes into account general market trends and specific credit risk trends for the individual loan. Factors used to arrive at the discount rate include inputs from spreads based on U.S. Treasury notes and the loan’s credit quality, region, property type, lien priority, payment type and current status.

Embedded Derivative—The embedded derivative liability for equity-indexed contracts is measured at fair value and is recalculated each reporting period using equity option pricing models. To validate the assumptions used to price the embedded derivative liability, American National measures and compares embedded derivative returns against the returns of equity options held to hedge the liability cash flows.

 

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Table of Contents

Note 9 – Fair Value of Financial Instruments – (Continued)

The significant unobservable input used to calculate the fair value of the embedded derivatives is equity option implied volatility. An increase in implied volatility will result in an increase in the value of the equity-indexed embedded derivatives, all other things being equal. At December 31, 2015 and 2014, the one year implied volatility used to estimate embedded derivative value was 17.5% and 17.3%, respectively.

Other Financial Instruments—Other financial instruments classified as Level 3 measurements, as there is little or no market activity, are as follows:

Policy loans—The carrying value of policy loans is the outstanding balance plus any accrued interest. Due to the collateralized nature of policy loans such that they cannot be separated from the policy contracts and the unpredictable timing of repayments and the fact that settlement is at outstanding value, American National believes the carrying value of policy loans approximates fair value.

Investment contracts —The carrying value of investment contracts is equivalent to the accrued account balance. The accrued account balance consists of deposits, net of withdrawals, plus or minus interest credited, fees and charges assessed and other adjustments. American National believes that the carrying value of investment contracts approximates fair value because the majority of these contracts’ interest rates reset to current rates offered at anniversary.

Notes payable— Notes payable are carried at outstanding principal balance. The carrying value of the notes payable approximates fair value because the underlying interest rates approximate market rates at the balance sheet date.

 

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Table of Contents

Note 9 – Fair Value of Financial Instruments – (Continued)

 

Quantitative Disclosures

The fair value hierarchy measurements of the financial instruments are shown below (in thousands):

 

     Fair Value Measurement as of December 31, 2015  
     Total
Fair Value
     Level 1      Level 2      Level 3  

Financial assets

  

Fixed maturity securities, bonds held-to-maturity

           

U.S. states and political subdivisions

   $ 346,517       $ —         $ 346,517       $ —     

Foreign governments

     4,968         —           4,968         —     

Corporate debt securities

     7,091,670         —           7,010,165         81,505   

Residential mortgage-backed securities

     294,200         —           293,267         933   

Collateralized debt securities

     2,024         —           2,024         —     

Other debt securities

     16,174         —           12,355         3,819   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total bonds held-to-maturity

     7,755,553         —           7,669,296         86,257   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed maturity securities, bonds available-for-sale

           

U.S. treasury and government

     24,692         —           24,692         —     

U.S. states and political subdivisions

     972,491         —           969,996         2,495   

Foreign governments

     6,733         —           6,733         —     

Corporate debt securities

     4,444,622         —           4,431,263         13,359   

Residential mortgage-backed securities

     27,364         —           24,958         2,406   

Collateralized debt securities

     8,014         —           6,144         1,870   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total bonds available-for-sale

     5,483,916         —           5,463,786         20,130   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities

           

Common stock

     1,491,029         1,491,029         —           —     

Preferred stock

     23,950         23,950         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     1,514,979         1,514,979         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Options

     123,007         —           —           123,007   

Mortgage loans on real estate

     3,621,978         —           3,621,978         —     

Policy loans

     407,491         —           —           407,491   

Short-term investments

     460,612         —           460,612         —     

Separate account assets

     918,446         —           918,446         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 20,285,982       $ 1,514,979       $ 18,134,118       $ 636,885   
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Investment contracts

   $ 8,787,376       $ —         $ —         $ 8,787,376   

Embedded derivative liability for equity-indexed contracts

     242,412         —           —           242,412   

Notes payable

     128,436         —           —           128,436   

Separate account liabilities

     918,446         —           918,446         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 10,076,670       $ —         $ 918,446       $ 9,158,224   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

76


Table of Contents

Note 9 – Fair Value of Financial Instruments – (Continued)

 

     Fair Value Measurement as of December 31, 2014  
     Total
Fair Value
     Level 1      Level 2      Level 3  

Financial assets

  

Fixed maturity securities, bonds held-to-maturity

           

U.S. states and political subdivisions

   $ 349,760       $ —         $ 349,760       $ —     

Foreign governments

     30,423         —           30,423         —     

Corporate debt securities

     7,894,725         —           7,833,564         61,161   

Residential mortgage-backed securities

     357,635         —           356,670         965   

Collateralized debt securities

     2,470         —           —           2,470   

Other debt securities

     17,900         —           12,975         4,925   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total bonds held-to-maturity

     8,652,913         —           8,583,392         69,521   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed maturity securities, bonds available-for-sale

           

U.S. treasury and government

     23,233         —           23,233         —     

U.S. states and political subdivisions

     837,616         —           835,106         2,510   

Foreign governments

     7,021         —           7,021         —     

Corporate debt securities

     4,000,049         —           3,941,925         58,124   

Residential mortgage-backed securities

     42,399         —           40,473         1,926   

Collateralized debt securities

     11,489         —           9,616         1,873   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total bonds available-for-sale

     4,921,807         —           4,857,374         64,433   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities

           

Common stock

     1,487,125         1,487,125         —           —     

Preferred stock

     29,853         29,853         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     1,516,978         1,516,978         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Options

     189,449         —           —           189,449   

Mortgage loans on real estate

     3,618,944         —           3,618,944         —     

Policy loans

     405,979         —           —           405,979   

Short-term investments

     431,000         —           431,000         —     

Separate account assets

     1,001,515         —           1,001,515         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 20,738,585       $ 1,516,978       $ 18,492,225       $ 729,382   
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Investment contracts

   $ 8,894,747       $ —         $ —         $ 8,894,747   

Embedded derivative liability for equity-indexed contracts

     208,187         —           —           208,187   

Notes payable

     108,177         —           —           108,177   

Separate account liabilities

     1,001,515         —           1,001,515         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 10,212,626       $ —         $ 1,001,515       $ 9,211,111   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Note 9 – Fair Value of Financial Instruments – (Continued)

 

For financial instruments measured at fair value on a recurring basis using Level 3 inputs during the period, a reconciliation of the beginning and ending balances is shown below (in thousands):

 

     Level 3  
     Assets      Liability  
     Investment      Equity-Indexed      Embedded  
     Securities      Options      Derivative  

Balance at December 31, 2012

   $ 107,036       $ 82,625       $ 75,032   

Total realized and unrealized investment gains (losses) included in other comprehensive income

     9,355         —           —     

Net fair value change included in realized gains (losses)

     1,082         —           —     

Net gain (loss) for derivatives included in net investment income

     —           76,268         —     

Net change included in interest credited

     —           —           67,177   

Purchases, sales and settlements or maturities

        

Purchases

     2,153         15,906         —     

Sales

     (10,452      —           —     

Settlements or maturities

     (7,268      (10,046      —     

Premiums less benefits

     —           —           6,226   

Gross transfers out of Level 3

     (53,602      —           —     
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2013

     48,304         164,753         148,435   
  

 

 

    

 

 

    

 

 

 

Total realized and unrealized investment gains (losses) included in other comprehensive income

     (11,746      —           —     

Net fair value change included in realized gains (losses)

     13,056         —           —     

Net gain (loss) for derivatives included in net investment income

     —           44,492         —     

Net change included in interest credited

     —           —           32,071   

Purchases, sales and settlements or maturities

        

Purchases

     —           16,844         —     

Sales

     (37,803      —           —     

Settlements or maturities

     (10      (36,640      —     

Premiums less benefits

     —           —           27,681   

Gross transfers into Level 3

     54,241         —           —     

Gross transfers out of Level 3

     (1,609      —           —     
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2014

     64,433         189,449         208,187   
  

 

 

    

 

 

    

 

 

 

Total realized and unrealized investment gains (losses) included in other comprehensive income

     427         —           —     

Net fair value change included in realized gains (losses)

     —           —           —     

Net gain (loss) for derivatives included in net investment income

     —           (13,889      —     

Net change included in interest credited

     —           —           (6,439

Purchases, sales and settlements or maturities

        

Purchases

     —           22,369         —     

Sales

     (2      (55,279      —     

Settlements or maturities

     (479      (19,643      —     

Premiums less benefits

     —           —           40,664   

Gross transfers into Level 3

     10,228         —           —     

Gross transfers out of Level 3

     (54,477      —           —     
  

 

 

    

 

 

    

 

 

 

Balance at December 31, 2015

   $ 20,130       $ 123,007       $ 242,412   
  

 

 

    

 

 

    

 

 

 

Within the net gain (loss) for derivatives included in net investment income were unrealized losses of $50,114,000 relating to assets still held at December 31, 2015 and gains of $24,108,000 and $72,071,000 at December 31, 2014 and 2013, respectively.

There were no transfers between Level 1 and Level 2 fair value hierarchies. The transfers into Level 3 during the years ended December 31, 2015 and 2014, were the result of existing securities no longer being priced by the third-party pricing service at the end of the period. American National’s valuation of these securities involves judgment regarding assumptions market participants would use including quotes from independent brokers. The transfers out of Level 3 were securities being priced by a third-party service at the end of the period, using inputs that are observable or derived from market data, which resulted in classification of these assets as Level 2.

 

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Note 10 – Deferred Policy Acquisition Costs

Deferred policy acquisition costs are shown below (in thousands):

 

                 Accident     Property        
     Life     Annuity     & Health     & Casualty     Total  

Balance at December 31, 2012

   $ 653,416      $ 406,540      $ 49,206      $ 138,513      $ 1,247,675   

Additions

     107,410        49,397        13,263        208,889        378,959   

Amortization

     (82,658     (85,756     (15,249     (225,131     (408,794

Effect of change in unrealized gains on available-for-sale securities

     5,916        53,977        —          —          59,893   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change

     30,668        17,618        (1,986     (16,242     30,058   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2013

     684,084        424,158        47,220        122,271        1,277,733   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Additions

     110,195        47,400        19,530        213,237        390,362   

Amortization

     (78,181     (79,135     (18,966     (223,658     (399,940

Effect of change in unrealized gains on available-for-sale securities

     (4,629     (9,982     —          —          (14,611
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change

     27,385        (41,717     564        (10,421     (24,189
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2014

     711,469        382,441        47,784        111,850        1,253,544   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Additions

     108,615        64,724        20,249        236,785        430,373   

Amortization

     (77,567     (81,793     (23,643     (235,585     (418,588

Effect of change in unrealized gains on available-for-sale securities

     13,506        45,834        —          —          59,340   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change

     44,554        28,765        (3,394     1,200        71,125   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2015

   $ 756,023      $ 411,206      $ 44,390      $ 113,050      $ 1,324,669   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commissions comprise the majority of the additions to deferred policy acquisition costs for each year.

Note 11 – Liability for Future Policy Benefits and Policyholder Account Balances

American National establishes liabilities for amounts payable under insurance and annuity policies. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of expected benefit payments reduced by the present value of expected premiums. Such liabilities are established on a block of business based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, disability incidence, disability termination, investment return, inflation, expenses, and other contingent events as appropriate to the respective product type.

Future policy benefits for non-participating traditional life insurance are equal to the aggregate of the present value of expected benefit payments and related expenses less the present value of expected net premiums. Assumptions as to mortality and persistency are based upon American National’s experience when the basis of the liability is established. Interest rates for the aggregate future policy benefit liabilities range from 3.0% to 8.0%.

Future policy benefit liabilities for participating traditional life insurance are equal to the aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non-forfeiture interest rate, ranging from 2.5% to 5.5%) and mortality rates guaranteed in calculating the cash surrender values described in such contracts; and (ii) the liability for terminal dividends.

Future policy benefit liabilities for individual fixed deferred annuities after annuitization and single premium immediate annuities are equal to the present value of expected future payments. The interest rate used in establishing such liabilities range from 3.0% to 6.0% for all policies in-force.

 

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Note 11 – Liability for Future Policy Benefits and Policyholder Account Balances – (Continued)

Future policy benefit liabilities for non-medical health insurance are calculated using the net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. The interest rate used in establishing such liabilities range from 3.5% to 8.0%.

Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. The interest rate used in establishing such liabilities range from 3.0% to 4.5%.

Liabilities for universal life secondary guarantees and paid-up guarantees are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. American National regularly evaluates estimates used and adjusts the additional liability balances with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the secondary and paid-up guarantee liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are consistent with historical Standard & Poor’s experience. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios.

American National periodically reviews its estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies, guarantees and riders and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur.

Policyholder account balances relate to investment-type contracts and universal life-type policies. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase and non-variable group annuity contracts. Policyholder account balances are equal to (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest, ranging from 1.0% to 8.0% (some annuities have enhanced first year crediting rates ranging from 1.0% to 7.0%), less expenses, mortality charges, and withdrawals; and (iii) fair value adjustments.

Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses

The liability for unpaid claims and claim adjustment expenses (“claims”) for accident and health, and property and casualty insurance is included in “Policy and contract claims” in the consolidated statements of financial position and is the amount estimated for claims that have been reported but not settled and IBNR claims. Liability for unpaid claims are estimated based upon American National’s historical experience and actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs and reduced for anticipated salvage and subrogation. The effects of the changes are included in the consolidated results of operations in the period in which the changes occur.

 

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Note 12 – Liability for Unpaid Claims and Claim Adjustment Expenses – (Continued)

 

Information regarding the liability for unpaid claims is shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Unpaid claims balance, beginning

   $ 1,132,394       $ 1,096,301       $ 1,168,047   

Less reinsurance recoverables

     245,906         215,164         256,885   
  

 

 

    

 

 

    

 

 

 

Net beginning balance

     886,488         881,137         911,162   
  

 

 

    

 

 

    

 

 

 

Incurred related to

        

Current

     950,228         940,466         938,620   

Prior years

     (22,830      (44,806      (46,872
  

 

 

    

 

 

    

 

 

 

Total incurred claims

     927,398         895,660         891,748   
  

 

 

    

 

 

    

 

 

 

Paid claims related to

        

Current

     580,476         561,887         578,831   

Prior years

     346,445         328,422         342,942   
  

 

 

    

 

 

    

 

 

 

Total paid claims

     926,921         890,309         921,773   
  

 

 

    

 

 

    

 

 

 

Net balance

     886,965         886,488         881,137   

Plus reinsurance recoverables

     217,337         245,906         215,164   
  

 

 

    

 

 

    

 

 

 

Unpaid claims balance, ending

   $ 1,104,302       $ 1,132,394       $ 1,096,301   
  

 

 

    

 

 

    

 

 

 

The net and gross reserve calculations have shown favorable development as a result of favorable loss emergence compared to what was implied by the loss development patterns used in the original estimation of losses in prior years. Estimates for ultimate incurred claims attributable to insured events of prior years decreased by approximately $22,830,000 in 2015 and $44,806,000 in 2014 and $46,872,000 in 2013, reflecting lower-than-anticipated losses in the personal auto, other liability, and commercial multi-peril lines of business.

Note 13 – Reinsurance

American National reinsures portions of certain life insurance policies to provide a greater diversification of risk and manage exposure on larger risks. For the issue ages zero to 65, the maximum amount that would be retained by one life insurance company (American National) would be $1,500,000 individual life, $250,000 individual accidental death, $100,000 group life, and $125,000 credit life (total $1,975,000). If individual, group and credit insurance were all in force at the same time, the maximum risk on any one life could be $3,775,000. For the issue ages 66 and over, the maximum amount that would be retained by one life insurance company (American National) would be $700,000 individual life, $250,000 individual accidental death, $100,000 group life, and $125,000 credit life (total $1,175,000). If individual, group and credit insurance were all in force at the same time, the maximum risk on any one life could be $2,750,000.

For the Property and Casualty segment, American National retained the first $1,000,000 of loss per risk in 2015. For 2016, American National will retain the first $500,000 of loss per workers’ compensation risk and $1,500,000 of loss per non-workers’ compensation risk. Workers’ compensation reinsurance coverage for losses between $500,000 and $1,000,000 follows satisfaction of a $2,000,000 annual aggregate deductible. Reinsurance covers up to $6,000,000 of property and liability losses per risk. For 2015, additional excess property per risk coverage was purchased to cover risks up to $20,000,000, and excess casualty clash coverage was purchased to cover losses up to $60,000,000. Excess casualty clash covers losses incurred as a result of one casualty event involving multiple policies, excess policy limits, and extra contractual obligations. Facultative reinsurance cover is purchased for individual risks attaching at $20,000,000, as needed. Corporate catastrophe coverage is also in place for losses up to a $500,000,000 event. Catastrophe aggregate reinsurance coverage is also purchased. This coverage is provided by two contracts. The first contract provides for $30,000,000 of coverage after $90,000,000 of aggregated catastrophe losses has been reached. The first $10,000,000 of each catastrophe loss contributes to the $90,000,000 aggregation of losses. This catastrophe aggregate reinsurance coverage was placed at 97.5% for 2015 and increased to 100% for 2016. The second aggregate contract is the Stretch & Aggregate cover. It consists of a $35,000,000 annual limit available either wholly or in part across two layers. The first layer is 8.75% of $400,000,000 excess of $100,000,000 on an occurrence basis. The second layer provides aggregate protection. Subject loss is $35,000,000 excess of $5,000,000 of each catastrophe. Recoveries follow satisfaction of a $45,000,000 annual aggregate deductible. This cover was placed at 100% on July 1, 2014 and again on July 1, 2015. It is in place until June 30, 2016. American National expects to place the cover again on July 1, 2016.

 

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Note 13 – Reinsurance – (Continued)

 

American National remains primarily liable with respect to any reinsurance ceded, and would bear the entire loss if the reinsurer does not meet their obligations under any reinsurance treaties. American National had amounts recoverable from reinsurers of $413,881,000 and $428,654,000 at December 31, 2015 and 2014, respectively. None of the amount outstanding at December 31, 2015 is the subject of litigation or is in dispute with the reinsurers involved. Management believes the unfavorable resolution of any dispute that may arise would not have a material impact on American National’s consolidated financial statements.

The amounts in the consolidated financial statements include the impact of reinsurance. Information regarding the effect of reinsurance is shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Direct premiums

   $ 2,069,434       $ 2,049,447       $ 1,970,400   

Reinsurance premiums assumed from other companies

     188,368         227,076         189,067   

Reinsurance premiums ceded to other companies

     (419,283      (460,552      (423,941
  

 

 

    

 

 

    

 

 

 

Net premiums

   $ 1,838,519       $ 1,815,971       $ 1,735,526   
  

 

 

    

 

 

    

 

 

 

Life insurance in-force and related reinsurance amounts are shown below (in thousands):

 

     December 31,  
     2015      2014      2013  

Direct life insurance in-force

   $ 90,194,532       $ 85,570,057       $ 80,038,270   

Reinsurance risks assumed from other companies

     120         6,007         32,019   

Reinsurance risks ceded to other companies

     (29,891,183      (30,007,131      (30,577,123
  

 

 

    

 

 

    

 

 

 

Net life insurance in-force

   $ 60,303,469       $ 55,568,933       $ 49,493,166   
  

 

 

    

 

 

    

 

 

 

Note 14 – Federal Income Taxes

A reconciliation of the effective tax rate to the statutory federal tax rate is shown below (in thousands, except percentages):

 

     Years ended December 31,  
     2015     2014     2013  
                 (As Adjusted)     (As Adjusted)  
     Amount     Rate     Amount     Rate     Amount     Rate  

Income tax on pre-tax income

   $ 121,134        35.0   $ 115,061        35.0   $ 126,865        35.0

Tax-exempt investment income

     (7,589     (2.2     (6,680     (2.0     (6,366     (1.8

Dividend exclusion

     (8,183     (2.4     (7,620     (2.3     (6,928     (1.9

Miscellaneous tax credits, net

     (9,103     (2.6     (7,888     (2.4     (7,757     (2.1

Low income housing tax credit expense

     4,862        1.4        4,583        1.4        8,434        2.3   

Other items, net

     2,599        0.8        (842     (0.3     (6,173     (1.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 103,720        30.0   $ 96,614        29.4   $ 108,075        29.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

American National made income tax payments of $80,759,000, $61,821,000 and $73,993,000 during 2015, 2014, and 2013, respectively.

 

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Note 14 – Federal Income Taxes – (Continued)

 

The tax effects of temporary differences that gave rise to the deferred tax assets and liabilities are shown below (in thousands):

 

     December 31,  
     2015      2014  
            (As Adjusted)  

DEFERRED TAX ASSETS

     

Invested assets, principally due to impairment losses

   $ 58,234       $ 58,375   

Investment in bonds, principally due to differences between GAAP and tax basis

     6,780         1,897   

Investment in real estate and other invested assets, principally due to investment valuation allowances

     7,867         12,280   

Policyholder funds, principally due to policy reserve discount

     181,003         205,821   

Policyholder funds, principally due to unearned premium reserve

     33,214         32,153   

Participating policyholders’ surplus

     50,648         46,672   

Pension

     77,976         73,604   

Commissions and other expenses

     7,003         6,998   

Other assets

     33,150         29,939   

Tax carryforwards

     —           1,651   
  

 

 

    

 

 

 

Gross deferred tax assets

     455,875         469,390   
  

 

 

    

 

 

 

DEFERRED TAX LIABILITIES

     

Marketable securities, principally due to net unrealized gains

     265,577         361,352   

Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods

     355,416         331,274   

Property, plant and equipment, principally due to difference between GAAP and tax depreciation methods

     23,636         16,995   

Other liabilities

     30,541         46,944   
  

 

 

    

 

 

 

Gross deferred tax liabilities

     675,170         756,565   
  

 

 

    

 

 

 

Total net deferred tax

   $ (219,295    $ (287,175
  

 

 

    

 

 

 

Management believes that a sufficient level of taxable income will be achieved over time to utilize the deferred tax assets in the consolidated federal tax return; therefore, no valuation allowance was recorded as of December 31, 2015 and 2014.

The statute of limitations for the examination of federal income tax returns by the Internal Revenue Service for years 2006 to 2009 has been extended. In the opinion of management, all prior year deficiencies have been paid or adequate provisions have been made for any tax deficiencies that may be upheld. No provision for penalties was established, and no interest expense was incurred for 2015 or 2014 relating to uncertain tax positions. Management does not believe there are any uncertain tax benefits that could be recognized within the next twelve months that would decrease American National’s effective tax rate.

 

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Note 15 – Accumulated Other Comprehensive Income

The components of and changes in the accumulated other comprehensive income (“AOCI”), and the related tax effects, are shown below (in thousands):

 

     Net Unrealized
Gains
(Losses)

on Securities
    Defined
Benefit
Pension Plan
Adjustments
    Foreign
Currency
Adjustments
    AOCI  

Balance at December 31, 2012

   $ 370,842      $ (129,003   $ 171      $ 242,010   
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts reclassified from AOCI (net of tax benefit $14,757 and expense $6,204)

     (27,407     11,522        —          (15,885

Unrealized holding gains arising during the period (net of tax expense $41,970)

     77,035        —          —          77,035   

Unrealized adjustment to DAC (net of tax expense $20,931)

     38,962        —          —          38,962   

Unrealized losses on investments attributable to participating policyholders’ interest (net of tax benefit $805)

     (1,495     —          —          (1,495

Actuarial gain arising during the period (net of tax expense of $39,630)

     —          73,597        —          73,597   

Foreign currency adjustment (net of tax benefit $276)

     —          —          (512     (512
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2013

     457,937        (43,884     (341     413,712   
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts reclassified from AOCI (net of tax benefit $12,379 and expense $1,547)

     (22,990     2,873        —          (20,117

Unrealized holding gains arising during the period (net of tax expense $79,535)

     147,709        —          —          147,709   

Unrealized adjustment to DAC (net of tax benefit $5,986)

     (8,625     —          —          (8,625

Unrealized losses on investments attributable to participating policyholders’ interest (net of tax benefit $3,166)

     (5,880     —          —          (5,880

Actuarial loss arising during the period (net of tax benefit of $18,880)

     —          (35,063     —          (35,063

Foreign currency adjustment (net of tax benefit $514)

     —          —          (954     (954
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2014

     568,151        (76,074     (1,295     490,782   
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts reclassified from AOCI (net of tax benefit $12,845 and expense $3,429)

     (23,856     6,368        —          (17,488

Unrealized holding losses arising during the period (net of tax benefit $72,711)

     (135,035     —          —          (135,035

Unrealized adjustment to DAC (net of tax expense $20,786)

     38,554        —          —          38,554   

Unrealized gains on investments attributable to participating policyholders’ interest (net of tax expense $3,026)

     5,620        —          —          5,620   

Actuarial loss arising during the period (net of tax benefit of $15,175)

     —          (28,183     —          (28,183

Foreign currency adjustment (net of tax benefit $878)

     —          —          (1,630     (1,630
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2015

   $ 453,434      $ (97,889   $ (2,925   $ 352,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Note 16 – Stockholders’ Equity and Noncontrolling Interests

American National has one class of common stock with a par value of $1.00 per share and 50,000,000 authorized shares. The amounts outstanding at the dates indicated are shown below:

 

     Years ended December 31,  
     2015      2014      2013  

Common stock

        

Shares issued

     30,832,449         30,832,449         30,832,449   

Treasury shares

     (3,937,993      (3,960,507      (3,937,261
  

 

 

    

 

 

    

 

 

 

Outstanding shares

     26,894,456         26,871,942         26,895,188   

Restricted shares

     (76,000      (142,667      (190,667
  

 

 

    

 

 

    

 

 

 

Unrestricted outstanding shares

     26,818,456         26,729,275         26,704,521   
  

 

 

    

 

 

    

 

 

 

Stock-based compensation

American National has one stock-based compensation plan, which allows for grants of Non-Qualified Stock Options, Stock Appreciation Rights (“SAR”), Restricted Stock (“RS”) Awards, Restricted Stock Units (“RSU”), Performance Awards, Incentive Awards or any combination thereof. This plan is administered by the American National Board Compensation Committee. Incentive awards under this plan are made to officers meeting established performance objectives. All awards are subject to review and approval both at the time of setting applicable performance objectives and at payment of the awards. The number of shares available for grants under the plan cannot exceed 2,900,000 shares, and no more than 200,000 shares may be granted to any one individual in any calendar year. Grants are made to certain officers and directors as compensation and to align their interests with those of other shareholders.

SAR, RS and RSU information for the periods indicated are shown below:

 

     SAR      RS Shares      RS Units  
     Shares     Weighted-Average
Grant Date

Fair Value
     Shares     Weighted-Average
Grant Date
Fair Value
     Units     Weighted-Average
Grant Date
Fair Value
 

Outstanding at December 31, 2012

     108,951      $ 111.31         185,334      $ 109.13         127,059      $ 75.06   

Granted

     —          —           10,000        80.05         71,084        80.05   

Exercised

     (19,849     103.61         (4,667     111.60         (76,378     77.04   

Forfeited

     (334     96.53         —          —           (396     77.20   

Expired

     (14,333     107.93         —          —           —          —     
  

 

 

      

 

 

      

 

 

   

Outstanding at December 31, 2013

     74,435        114.08         190,667        107.54         121,369        76.23   
  

 

 

      

 

 

      

 

 

   

Granted

     —          —           —          —           66,383        113.49   

Exercised

     (3,226     95.54         (48,000     108.00         (59,438     76.53   

Forfeited

     —          —           —          —           (100     113.49   

Expired

     (16,279     115.11         —          —           —          —     
  

 

 

      

 

 

      

 

 

   

Outstanding at December 31, 2014

     54,930        114.86         142,667        107.39         128,214        95.82   
  

 

 

      

 

 

      

 

 

   

Granted

     —          —           —          —           83,093        104.75   

Exercised

     (116     73.97         (66,667     103.58         (75,119     91.35   

Forfeited

     —          —           —          —           (463     105.30   

Expired

     (16,722     114.42         —          —           —          —     
  

 

 

      

 

 

      

 

 

   

Outstanding at December 31, 2015

     38,092      $ 115.18         76,000      $ 110.73         135,725      $ 103.73   
  

 

 

      

 

 

      

 

 

   

 

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Note 16 – Stockholders’ Equity and Noncontrolling Interests – (Continued)

 

     SAR      RS Shares      RS Units  

Weighted-average contractual remaining life (in years)

     1.17         3.52         1.78   

Exercisable shares

     38,094         N/A         N/A   

Weighted-average exercise price

   $ 115.18       $ 110.73       $ 103.73   

Weighted-average exercise price exercisable shares

     115.18         N/A         N/A   

Compensation expense (credit)

        

Year ended December 31, 2015

   $ (72,000    $ 1,147,000       $ 6,635,000   

Year ended December 31, 2014

     (23,000      2,963,000         7,710,000   

Year ended December 31, 2013

     374,000         2,219,000         12,342,000   

Fair value of liability award

        

December 31, 2015

   $ 37,000         N/A       $ 19,415,000   

December 31, 2014

     167,000         N/A         16,301,000   

The SARs give the holder the right to cash compensation based on the difference between the stock price on the grant date and the stock price on the exercise date. The SARs vest at a rate of 20% per year for five years and expire five years after vesting.

RS awards entitle the participant to full dividend and voting rights. Each RS share awarded has the value of one share of restricted stock and vests 10 years from the grant date. Unvested shares are restricted as to disposition, and are subject to forfeiture under certain circumstances. Compensation expense is recognized over the vesting period. The restrictions on these awards lapse after 10 years and most of these awards feature a graded vesting schedule in the case of the retirement of an award holder. Restricted stock awards for 350,334 shares have been granted at an exercise price of zero, of which 76,000 shares are unvested.

RSU awards allow the recipient of the awards to settle the vested RSUs in either shares of American National’s common stock or cash. RSUs vest after a three-year graded vesting requirement or over a shorter period as a result of death, disability or retirement after age 65.

Earnings per share

Basic earnings per share were calculated using a weighted average number of shares outstanding. Diluted earnings per share include RS and RSU award shares.

 

     Years ended December 31,  
     2015      2014      2013  
            (As Adjusted)      (As Adjusted)  

Weighted average shares outstanding

     26,876,522         26,802,841         26,791,900   

Incremental shares from RS awards and RSUs

     73,544         115,829         122,691   
  

 

 

    

 

 

    

 

 

 

Total shares for diluted calculations

     26,950,066         26,918,670         26,914,591   
  

 

 

    

 

 

    

 

 

 

Net income attributable to American National (in thousands)

   $ 242,988       $ 245,335       $ 266,481   

Basic earnings per share

   $ 9.04       $ 9.15       $ 9.95   

Diluted earnings per share

     9.02         9.11         9.90   

 

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Note 16 – Stockholders’ Equity and Noncontrolling Interests – (Continued)

 

Statutory Capital and Surplus

Risk Based Capital (“RBC”) is a measure insurance regulators use to evaluate the capital adequacy of American National Insurance Company and its insurance subsidiaries. RBC is calculated using formulas applied to certain financial balances and activities that consider, among other things, investment risks related to the type and quality of investments, insurance risks associated with products and liabilities, interest rate risks and general business risks. Insurance companies that do not maintain capital and surplus at a level at least 200% of the authorized control level RBC are required to take certain actions. At December 31, 2015 and 2014, American National Insurance Company’s statutory capital and surplus was $2,925,935,000 and $2,879,154,000, respectively. American National Insurance Company and each of its insurance subsidiaries had statutory capital and surplus at December 31, 2015 and 2014, substantially above 200% of the authorized control level.

American National and its insurance subsidiaries prepare statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile, which include certain components of the National Association of Insurance Commissioners’ Codification of Statutory Accounting Principles (“NAIC Codification”). NAIC Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting practices continue to be established by individual state laws and permitted practices. Modifications by the various state insurance departments may impact the statutory capital and surplus of American National Insurance Company and its insurance subsidiaries.

Statutory accounting differs from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus.

One of American National’s insurance subsidiaries has been granted a permitted practice from the Missouri Department of Insurance to record as the valuation of its investment in a wholly-owned subsidiary that is the attorney-in-fact for a Texas domiciled insurer, the statutory capital and surplus of the Texas domiciled insurer. This permitted practice increases the statutory capital and surplus of both American National Insurance Company and the Missouri domiciled insurance subsidiary by $67,076,000 and $62,807,000 at December 31, 2015 and 2014, respectively. Additionally, the statutory capital and surplus of both American National Insurance Company and the Missouri domiciled insurance subsidiary would have remained substantially above the company action level RBC had it not used the permitted practice.

The statutory capital and surplus and net income of our life and property and casualty insurance entities in accordance with statutory accounting practices are shown below (in thousands):

 

            December 31,  
            2015      2014  

Statutory capital and surplus

        

Life insurance entities

      $ 1,900,939       $ 1,904,128   

Property and casualty insurance entities

        1,033,942         984,155   
     Years ended December 31,  
     2015      2014      2013  

Statutory net income

        

Life insurance entities

   $ 136,170       $ 169,823       $ 191,932   

Property and casualty insurance entities

     71,823         73,076         61,737   

 

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Note 16 – Stockholders’ Equity and Noncontrolling Interests – (Continued)

Dividends

American National Insurance Company’s payment of dividends to stockholders is restricted by statutory regulations. The restrictions require life insurance companies to maintain minimum amounts of capital and surplus, and in the absence of special approval, limit the payment of dividends to the greater of the prior year’s statutory net income from operations, or 10% of prior year statutory surplus. American National Insurance Company is permitted to pay total dividends of $292,593,000 during 2016, without prior approval of the Texas Department of Insurance. Similar restrictions on amounts that can transfer in the form of dividends, loans, or advances to American National Insurance Company apply to its insurance subsidiaries.

Noncontrolling interests

American National County Mutual Insurance Company (“County Mutual”) is a mutual insurance company that is owned by its policyholders. American National has a management agreement that effectively gives it control of County Mutual. As a result, County Mutual is included in the consolidated financial statements of American National. Policyholder interests in the financial position of County Mutual are reflected as noncontrolling interest of $6,750,000 at December 31, 2015 and 2014.

American National Insurance Company and its subsidiaries exercise significant control or ownership of various joint ventures, resulting in their consolidation into American National’s consolidated financial statements. The interests of the other partners in the consolidated joint ventures are shown as noncontrolling interests of $3,439,000 and $5,634,000 at December 31, 2015 and 2014, respectively.

 

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Note 17 – Segment Information

Management organizes the business into five operating segments:

 

    Life—markets whole, term, universal, indexed and variable life insurance on a national basis primarily through career, multiple-line, and independent agents as well as direct marketing channels.

 

    Annuity—offers fixed, indexed, and variable annuity products. These products are primarily sold through independent agents, brokers, and financial institutions, along with multiple-line and career agents.

 

    Health—primary lines of business are Medicare supplement, stop loss, other supplemental health products and credit disability insurance. Health products are typically distributed through independent agents and managing general underwriters.

 

    Property and Casualty—writes personal, agricultural and commercial coverages and credit-related property insurance. These products are primarily sold through multiple-line and independent agents.

 

    Corporate and Other—consists of net investment income from investments not allocated to the insurance segments and revenues from non-insurance operations.

The accounting policies of the segments are the same as those described in Note 2 to the consolidated financial statements. All revenues and expenses specifically attributable to policy transactions are recorded directly to the appropriate operating segment. Revenues and expenses not specifically attributable to policy transactions are allocated to each segment as follows:

 

    Recurring income from bonds and mortgage loans is allocated based on the assets allocated to each line of business at the average yield available from these assets.

 

    Net investment income from all other assets is allocated to the insurance segments in accordance with the amount of capital allocated to each segment, with the remainder recorded in the Corporate and Other business segment.

 

    Expenses are allocated based upon various factors, including premium and commission ratios of the operating segments.

The following summarizes the results of operations measured as the income before federal income taxes, and equity in earnings of unconsolidated affiliates by operating segments (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  
            (As Adjusted)      (As Adjusted)  

Life

   $ 33,453       $ 43,352       $ 19,627   

Annuity

     59,955         95,736         95,887   

Health

     1,925         25,559         25,255   

Property and Casualty

     68,990         89,632         74,068   

Corporate and Other

     104,365         74,467         147,633   
  

 

 

    

 

 

    

 

 

 

Total

   $ 268,688       $ 328,746       $ 362,470   
  

 

 

    

 

 

    

 

 

 

Total Assets

        

Life

   $ 5,718,553       $ 5,565,791       $ 5,367,551   

Annuity

     10,888,447         10,766,619         11,104,180   

Health

     463,600         489,873         468,520   

Property and Casualty

     2,040,102         1,992,741         2,120,645   

Corporate and other

     4,636,260         4,729,508         4,258,977   
  

 

 

    

 

 

    

 

 

 

Total

   $ 23,746,962       $ 23,544,532       $ 23,319,873   
  

 

 

    

 

 

    

 

 

 

 

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Note 18 – Pension and Postretirement Benefits

Pension benefits

On October 31, 2013, American National adopted certain amendments to freeze all of its remaining unfrozen defined benefit pension plans as of December 31, 2013. Prior to the plan amendments, American National had a qualified defined benefit pension plan covering virtually all employees and two non-qualified defined benefit pension plans covering executives. Effective December 31, 2013, no additional benefits accrued through these plans for additional years of service credit or future salary increase credit, and no new participants were added to the plans. Benefits earned by eligible employees prior to the effective date of the plan amendments have not been affected. The plan amendments did not result in any curtailment gain or loss.

The tax-qualified plan has three separate noncontributory programs. One of the programs covers Career Sales and Service Division agents and managers. The other two programs cover salaried and management employees and corporate clerical employees subject to a collective bargaining agreement. The program covering salaried and management employees, provides pension benefits that are based on years of service and the employee’s compensation during the five years before retirement. The programs covering hourly employees and agents generally provide benefits that are based on the employee’s career average earnings and years of service. The non-tax-qualified pension plans cover key executive employees and restore benefits that would otherwise be curtailed by statutory limits on qualified plan benefits. In addition, American National also has one frozen, tax-qualified, defined-benefit pension plan covering employees of the Farm Family companies hired prior to January 1, 1997. Effective January 1, 1997, benefits through this plan were frozen, and no new participants have been added.

Amounts recognized in the consolidated statements of financial position consist of (in thousands):

 

     2015      2014  

Reconciliation of benefit obligation

     

Obligation at January 1,

   $ 513,151       $ 458,270   

Service cost

     97         111   

Interest cost on projected benefit obligation

     18,721         20,612   

Actuarial loss

     21,451         61,906   

Benefits paid

     (29,277      (27,748
  

 

 

    

 

 

 

Obligation at December 31,

     524,143         513,151   
  

 

 

    

 

 

 

Reconciliation of fair value of plan assets

     

Fair value of plan assets at January 1,

     324,179         302,467   

Actual return on plan assets

     (1,051      28,363   

Employer contributions

     28,712         21,097   

Benefits paid

     (29,277      (27,748
  

 

 

    

 

 

 

Fair value of plan assets at December 31,

     322,563         324,179   
  

 

 

    

 

 

 

Funded status at December 31,

   $ (201,580    $ (188,972
  

 

 

    

 

 

 

The components of net periodic benefit cost for the defined benefit pension plans are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Service cost

   $ 97       $ 111       $ 19,873   

Interest cost

     18,721         20,612         20,277   

Expected return on plan assets

     (20,856      (20,402      (20,354

Amortization of net actuarial loss

     9,797         4,421         17,726   
  

 

 

    

 

 

    

 

 

 

Net periodic benefit cost

   $ 7,759       $ 4,742       $ 37,522   
  

 

 

    

 

 

    

 

 

 

 

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Note 18 – Pension and Postretirement Benefits – (Continued)

 

Amounts related to the defined benefit pension plans recognized as a component of OCI are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014      2013  

Actuarial gain (loss)

   $ (33,562    $ (49,523    $ 130,953   

Deferred tax (expense) benefit

     11,747         17,333         (45,834
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss), net of tax

   $ (21,815    $ (32,190    $ 85,119   
  

 

 

    

 

 

    

 

 

 

The estimated actuarial loss for the plan that will be amortized out of AOCI into the net periodic benefit cost over the next fiscal year is $13,391,000. Amounts recognized as a component of AOCI that have not been recognized as a component of the combined net periodic benefit cost of the defined benefit pension plans, are shown below (in thousands):

 

     Years ended December 31,  
     2015      2014  

Net actuarial loss

   $ (150,598    $ (117,036

Deferred tax benefit

     52,709         40,962   
  

 

 

    

 

 

 

Amounts included in AOCI

   $ (97,889    $ (76,074
  

 

 

    

 

 

 

The weighted average assumptions used are shown below:

 

     Used for Net Benefit     Used for Benefit  
     Cost in Fiscal Year     Obligations  
     1/1/2015 to 12/31/2015     as of 12/31/2015  

Discount rate

     3.70     4.08

Rate of compensation increase

     —          —     

Long-term rate of return

     7.45        7.41   

American National’s funding policy for the qualified pension plans is to make annual contributions to meet the minimum funding standards of ERISA. The unfunded plans will be funded out of general corporate assets when necessary. American National contributed $28,712,000, $21,097,000, and $10,065,000 to the qualified and non-qualified pension plan in 2015, 2014 and 2013, respectively. American National and its affiliates expect to contribute $19,600,000 to its qualified and non-qualified pension plan in 2016.

The following table shows pension benefit payments, which reflect expected future service as appropriate, that are expected to be paid (in thousands):

 

2016

   $ 39,452   

2017

     30,871   

2018

     34,839   

2019

     30,340   

2020

     33,919   

2021-2025

     163,579   

 

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Note 18 – Pension and Postretirement Benefits – (Continued)

 

American National utilizes third-party pricing services to estimate fair value measurements of its pension plan assets. Refer to Note 9 for further information concerning the valuation methodologies and related inputs utilized by the third-party pricing services. The fair values of the pension plan assets by asset category are shown below (in thousands):

 

     December 31, 2015  
     Total      Level 1      Level 2      Level 3  

Asset Category

           

Corporate debt securities

   $ 41,365       $ —         $ 41,365       $ —     

Residential mortgage-backed securities

     803         —           803         —     

Mutual fund

     9,405         9,405         —           —     

Equity securities by sector

           

Consumer goods

     50,485         50,485         —           —     

Energy and utilities

     22,525         22,525         —           —     

Financials

     47,469         47,469         —           —     

Healthcare

     2,306         2,306         —           —     

Industrials

     29,050         29,050         —           —     

Information technology

     16,522         16,522         —           —     

Other

     65,410         65,410         —           —     

Commercial paper

     30,511         —           30,511         —     

Unallocated group annuity contract

     5,763         —           5,763         —     

Other

     949         862         87         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 322,563       $ 244,034       $ 78,529       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     December 31, 2014  
     Total      Level 1      Level 2      Level 3  

Asset Category

           

Corporate debt securities

   $ 53,768       $ —         $ 53,768       $ —     

Residential mortgage-backed securities

     887         —           887         —     

Mutual fund

     9,591         9,591         —           —     

Equity securities by sector

           

Consumer goods

     51,586         51,586         —           —     

Energy and utilities

     32,287         32,287         —           —     

Financials

     43,186         43,186         —           —     

Healthcare

     28,256         28,256         —           —     

Industrials

     16,145         16,145         —           —     

Information technology

     30,157         30,157         —           —     

Other

     31,094         31,094         —           —     

Commercial paper

     21,053         —           21,053         —     

Unallocated group annuity contract

     6,053         —           6,053         —     

Other

     116         28         88         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 324,179       $ 242,330       $ 81,849       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Note 18 – Pension and Postretirement Benefits – (Continued)

The investment policy for the retirement plan assets is designed to provide the highest return possible commensurate with sound and prudent underwriting practices. The investment diversification goals are to have investments in cash and cash equivalents as necessary for liquidity, debt securities up to 100% and equity securities up to 75% of the total invested plan assets. The amount invested in any particular investment is limited based on credit quality, and no single investment may at the time of purchase be more than 5% of the total invested assets.

The corporate debt securities category are investment grade bonds of U.S and foreign issuers denominated and payable in U.S. dollars from diverse industries, with a maturity of 1 to 30 years. Foreign bonds in the aggregate shall not exceed 20% of the bond portfolio. Residential mortgage-backed securities represent asset-backed securities with a maturity date 1 to 30 years with a rating of NAIC 1 or 2.

Equity portfolio managers have discretion to choose the degree of concentration in various issues and industry sectors for the equity securities. Permitted securities are those for which there is an active market providing liquidity for the specific security.

Commercial paper investments generally have a credit rating of A2 Moody’s or P2 by Standard & Poor’s with at least BBB rating on the issuer’s outstanding debt, or selected issuers with no outstanding debt.

Postretirement life and health benefits

American National provides certain health and dental benefits to a closed block of retirees and their dependents who met certain age and length of service requirements as of December 31, 1993. The primary retiree health benefit plan provides Medicare Supplemental and prescription drug benefits. The plan is contributory, with American National’s contribution limited to $40 per month for retirees and spouses with any additional contributions necessary, being made by the retirees. Under American National’s various group benefit plans for active employees, life insurance benefits are provided upon retirement for eligible participants who meet certain age and length of service requirements. Effective June 1, 2014 Farm Family moved their life insurance coverage from a third party vendor to American National.

The accrued postretirement benefit obligation, included in the liability for retirement benefits, was $6,055,000 and $6,740,000 at December 31, 2015 and 2014, respectively. These amounts were approximately equal to the unfunded accumulated postretirement benefit obligation. Since American National’s contributions to the cost of the retiree benefit plans are fixed, the health care cost trend rate will have no effect on the future expense or the accumulated postretirement benefit obligation.

Savings plans

American National sponsors one defined contribution (401(k) plan) for all employees. The 401(k) plan allows employees to contribute up to the maximum allowable amount as determined by the IRS. The expense associated with this plan was $12,146,000 and $12,350,000 for 2015 and 2014, respectively.

 

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Note 19 – Commitments and Contingencies

Commitments

American National and its subsidiaries lease insurance sales office space in various cities. The remaining long-term lease commitments at December 31, 2015 were approximately $4,932,000.

American National had aggregate commitments at December 31, 2015, to purchase, expand or improve real estate, to fund fixed interest rate mortgage loans, and to purchase other invested assets of $704,698,000 of which $492,081,000 is expected to be funded in 2016 with the remainder funded in 2017 and beyond.

American National has a $100,000,000 short-term variable rate borrowing facility containing a $55,000,000 sub-feature for the issuance of letters of credit. Borrowings under the facility are at the discretion of the lender and would be used only for funding working capital requirements. The combination of borrowings and outstanding letters of credit cannot exceed $100,000,000 at any time. As of December 31, 2015 and 2014, the outstanding letters of credit were $9,501,000 and $12,214,000, respectively, and there were no borrowings on this facility. This facility expires on October 30, 2016. American National expects it will be renewed on substantially equivalent terms upon expiration.

Guarantees

American National has guaranteed bank loans for customers of a third-party marketing operation. The bank loans are used to fund premium payments on life insurance policies issued by American National. The loans are secured by the cash values of the life insurance policies. If the customer were to default on the bank loan, American National would be obligated to pay off the loans. As the cash values of the life insurance policies always equal or exceed the balance of the loans, management does not foresee any loss on these guarantees. The total amount of the guarantees outstanding as of December 31, 2015, was approximately $206,376,000, while the total cash value of the related life insurance policies was approximately $210,104,000.

Litigation

American National and certain subsidiaries, in common with the insurance industry in general, are defendants in various lawsuits concerning alleged breaches of contracts, various employment matters, allegedly deceptive insurance sales and marketing practices, and miscellaneous other causes of action arising in the ordinary course of operations. Certain of these lawsuits include claims for compensatory and punitive damages. We provide accruals for these items to the extent we deem the losses probable and reasonably estimable. After reviewing these matters with legal counsel, based upon information presently available, management is of the opinion that the ultimate resultant liability, if any, would not have a material adverse effect on American National’s consolidated financial position, liquidity or results of operations; however, assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future.

Such speculation warrants caution, as the frequency of large damage awards, which bear little or no relation to the economic damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given lawsuit. These lawsuits are in various stages of development, and future facts and circumstances could result in management changing its conclusions. It is possible that, if the defenses in these lawsuits are not successful, and the judgments are greater than management can anticipate, the resulting liability could have a material impact on our consolidated financial position, liquidity or results of operations. With respect to the existing litigation, management currently believes that the possibility of a material judgment adverse to American National is remote and no estimate of range can be made for loss contingencies that are at least reasonably possible but not accrued.

 

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Note 20 – Related Party Transactions

American National has entered into recurring transactions and agreements with certain related parties. These include mortgage loans, management contracts, agency commission contracts, marketing agreements, accident and health insurance contracts, and legal services. The impact on the consolidated financial statements of significant related party transactions is shown below (in thousands):

 

        Dollar Amount of Transactions     Amount due to (from) American National  
        Years ended December 31,     December 31,  

Related Party

 

Financial Statement Line Impacted

  2015     2014     2015     2014  

Gal-Tex Hotel Corporation

  Mortgage loan on real estate     $1,326        $1,234        $5,182        $6,508   

Gal-Tex Hotel Corporation

  Net investment income     428        521        31        39   

Greer, Herz & Adams, LLP

  Other operating expenses     7,951        10,146        (274)        (309)   

Mortgage Loans to Gal-Tex Hotel Corporation (“Gal-Tex”): American National holds a first mortgage loan originated in 1999, with an interest rate of 7.25% and final maturity date of April 1, 2019 issued to Gal-Tex, which is collateralized by a hotel property in San Antonio, Texas. This loan is current as to principal and interest payments.

Transactions with Greer, Herz & Adams, LLP: Irwin M. Herz, Jr. is an American National advisory director and a Partner with Greer, Herz & Adams, LLP, which serves as American National’s General Counsel.

Note 21 – Selected Quarterly Financial Data

The unaudited selected quarterly financial data is shown below (in thousands, except per share data):

 

     Three months ended  
     March 31,     June 30,     September 30,      December 31,  
     2015     2014     2015     2014     2015      2014      2015     2014  
           (As Adjusted)           (As Adjusted)            (As Adjusted)            (As Adjusted)  

Total premiums and other revenues

   $ 756,567      $ 772,436      $ 717,506      $ 754,786      $ 699,859       $ 746,170       $ 843,523      $ 777,198   

Total benefits, losses and expenses

     665,208        697,968        668,099        688,864        653,199         651,395         762,261        683,617   

Income before federal income tax and equity in earnings of unconsolidated affiliates

     91,359        74,468        49,407        65,922        46,660         94,775         81,262        93,581   

Total provision for federal income taxes

     45,690        22,908        15,210        21,783        18,134         28,535         24,686        23,388   

Equity in earnings (losses) of unconsolidated affiliates

     56,584        (62     462        12,797        16,339         3,576         4,023        (1,617

Net income

     102,253        51,498        34,659        56,936        44,865         69,816         60,599        68,576   

Net income (loss) attributable to noncontrolling interest

     (729     (756     (394     (238     2,852         2,877         (2,341     (392

Net income attributable to American National

     102,982        52,254        35,053        57,174        42,013         66,939         62,940        68,968   

Earnings per share attributable to American National

                  

Basic

     3.84        1.95        1.30        2.13        1.56         2.50         2.34        2.57   

Diluted

     3.82        1.94        1.30        2.11        1.56         2.49         2.33        2.56   

 

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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES

(In thousands)

 

     December 31, 2015  

Type of Investment

   Cost or
Amortized Cost (1)
     Estimated Fair
Value
     Amount at Which
Shown in the
Consolidated
Statement of
Financial Position
 

Fixed maturities

        

Bonds held-to-maturity

        

U.S. states and political subdivisions

   $ 324,643       $ 346,517       $ 324,643   

Foreign governments

     4,101         4,968         4,101   

Corporate debt securities

     6,985,844         7,091,670         6,985,844   

Residential mortgage-backed securities

     277,135         294,200         277,135   

Collateralized debt securities

     1,924         2,024         1,924   

Other debt securities

     15,773         16,174         15,773   

Bonds available-for-sale

        

U.S.treasury government

     24,024         24,692         24,692   

U.S. states and political subdivisions

     933,958         972,491         972,491   

Foreign governments

     5,000         6,733         6,733   

Corporate debt securities

     4,431,765         4,444,621         4,444,621   

Residential mortgage-backed securities

     25,629         27,365         27,365   

Collateralized debt securities

     7,455         8,014         8,014   

Equity securities

        

Common stocks

        

Consumer goods

     144,359         310,110         310,110   

Energy and utilities

     115,378         151,786         151,786   

Finance

     160,585         287,296         287,296   

Healthcare

     98,028         221,782         221,782   

Industrials

     49,103         124,106         124,106   

Information technology

     134,070         269,497         269,497   

Other

     93,316         126,452         126,452   

Preferred stocks

     15,987         23,950         23,950   

Other Investments

        

Mortgage loans on real estate, net of allowance

     3,483,280         3,621,978         3,483,280   

Investment real estate, net of accumulated depreciation

     524,459            524,459   

Real estate acquired in satisfaction of debt

     56,796            56,796   

Policy loans

     407,491         407,491         407,491   

Options

     84,457         123,007         123,007   

Other long-term investments

     50,035            50,035   

Short-term investments

     460,612         460,612         460,612   
  

 

 

    

 

 

    

 

 

 

Total investments

   $ 18,915,207       $ 19,367,536       $ 19,713,995   
  

 

 

    

 

 

    

 

 

 

 

(1) Original cost of equity securities and, as to fixed maturity securities, original cost reduced by repayments and valuation write-downs and adjusted for amortization of premiums or accrual of discounts.

See accompanying Report of Independent Registered Public Accounting Firm.

 

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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

 

     December 31,  

Condensed Statements of Financial Position

   2015     2014  
           (As Adjusted)  

Assets

    

Fixed maturity securities

   $ 9,341,563      $ 9,567,848   

Equity securities

     2,690        —     

Mortgage loans on real estate, net of allowance

     3,386,231        3,266,361   

Other invested assets

     1,953,680        1,858,444   

Investment in subsidiaries

     2,431,398        2,301,218   

Deferred policy acquisition costs

     1,091,031        1,023,778   

Separate account assets

     918,446        1,001,515   

Other assets

     633,953        629,531   
  

 

 

   

 

 

 

Total assets

   $ 19,758,992      $ 19,648,695   
  

 

 

   

 

 

 

Liabilities

    

Policy liabilities

   $ 3,841,499      $ 3,625,092   

Policyholders’ account balances

     9,943,694        9,975,383   

Separate account liabilities

     918,446        1,001,515   

Other liabilities

     603,071        619,142   
  

 

 

   

 

 

 

Total liabilities

     15,306,710        15,221,132   
  

 

 

   

 

 

 

Shareholders’ equity

    

Common stock

     30,832        30,832   

Additional paid-in capital

     13,689        9,248   

Accumulated other comprehensive income

     352,620        490,782   

Retained earnings

     4,157,184        3,998,642   

Treasury stock, at cost

     (102,043     (101,941
  

 

 

   

 

 

 

Total stockholders’ equity

     4,452,282        4,427,563   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 19,758,992      $ 19,648,695   
  

 

 

   

 

 

 

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes therein.

See accompanying Report of Independent Registered Public Accounting Firm.

 

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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

 

     Years ended December 31,  

Condensed Statements of Operations

   2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

Premiums and other revenues

      

Premiums and other policy revenues

   $ 820,194      $ 786,823      $ 734,506   

Net investment income

     672,093        772,355        861,354   

Net realized investment gain

     21,258        18,702        73,791   

Other-than-temporary impairments

     (60     (41     —     

Other income

     15,785        10,803        12,083   
  

 

 

   

 

 

   

 

 

 

Total premiums and other revenues

     1,529,270        1,588,642        1,681,734   
  

 

 

   

 

 

   

 

 

 

Benefits, losses and expenses

      

Policyholder benefits

     615,180        574,975        520,806   

Other operating expenses

     764,913        812,762        913,914   
  

 

 

   

 

 

   

 

 

 

Total benefits, losses and expenses

     1,380,093        1,387,737        1,434,720   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations before federal income tax and equity in earnings of subsidiaries

     149,177        200,905        247,014   
  

 

 

   

 

 

   

 

 

 

Provision for federal income taxes

     47,501        63,454        50,927   

Equity in earnings of subsidiaries, net of tax

     141,312        107,884        70,394   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 242,988      $ 245,335      $ 266,481   
  

 

 

   

 

 

   

 

 

 

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes therein.

See accompanying Report of Independent Registered Public Accounting Firm.

 

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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

 

     Years ended December 31,  

Condensed Statements of Cash Flows

   2015     2014     2013  
           (As Adjusted)     (As Adjusted)  

OPERATING ACTIVITIES

      

Net income

   $ 242,988      $ 245,335      $ 266,481   

Adjustments to reconcile net income to net cash provided by operating activities

      

Net realized investments gains

     (21,258     (18,702     (73,791

Other-than-temporary impairments

     60        41        —     

Amortization (accretion) of premiums, discounts and loan origination fees

     (2,293     3,581        1,216   

Net capitalized interest on policy loans and mortgage loans

     (27,346     (27,922     (23,864

Depreciation

     24,716        21,822        18,618   

Interest credited to policyholders’ account balances

     263,362        324,325        395,013   

Charges to policyholders’ account balances

     (238,169     (212,690     (199,285

Deferred federal income tax (benefit) expense

     8,091        16,429        (15,245

Net income of subsidiaries

     (135,678     (106,751     (61,871

Equity in (earnings) losses of affiliates

     (5,634     3,800        (8,523

Distributions from equity method investments

     —          408        2,411   

Changes in

      

Accrued investment income

     6,995        9,801        9,336   

Reinsurance recoverables

     (14,778     2,312        (1,025

Prepaid reinsurance premiums

     3,050        2,318        7,575   

Premiums due and other receivables

     2,331        3,873        9,531   

Deferred policy acquisition costs

     (13,323     7,560        28,216   

Policyholder liabilities

     222,928        152,923        38,188   

Liability for retirement benefits

     (23,263     (12,552     12,656   

Current tax receivable/payable

     7,551        8,181        9,936   

Other, net

     (20,471     (29,831     (9,993
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     279,859        394,261        405,580   
  

 

 

   

 

 

   

 

 

 

INVESTING ACTIVITIES

      

Proceeds from sale/maturity/prepayment of

      

Held-to-maturity securities

     827,234        452,846        1,207,038   

Available for sale securities

     340,274        625,563        599,228   

Investment real estate

     18,929        53,859        8,006   

Mortgage loans

     809,742        578,098        756,554   

Policy loans

     44,257        45,732        47,018   

Other invested assets

     71,469        40,791        88,883   

Disposals of property and equipment

     2,721        43,869        270   

Distributions from affiliates and subsidiaries

     15,958        439        10,581   

Payment for the purchase/origination of

      

Held-to-maturity securities

     (336,902     (287,694     (701,776

Available for sale securities

     (744,480     (572,299     (556,940

Investment real estate

     (69,145     (23,959     (28,882

Mortgage loans

     (933,879     (633,401     (908,512

Policy loans

     (21,106     (23,621     (21,682

Other invested assets

     (37,958     (43,423     (46,168

Additions to property and equipment

     (24,352     (56,651     (5,991

Contributions to unconsolidated affiliates

     (47,130     (1,035     (949

Change in short-term investments

     (42,258     4,518        (401,682

Change in investment in subsidiaries

     (20,782     —          —     

Other, net

     (3     24,636        1,642   
  

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (147,411     228,268        46,638   
  

 

 

   

 

 

   

 

 

 

FINANCING ACTIVITIES

      

Policyholders’ account deposits

     1,280,756        941,400        835,942   

Policyholders’ account withdrawals

     (1,337,668     (1,479,004     (1,420,675

Dividends to stockholders

     (84,446     (82,805     (82,831
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (141,358     (620,409     (667,564
  

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (8,910     2,120        (215,346

Beginning of the period

     48,446        46,326        261,672   
  

 

 

   

 

 

   

 

 

 

End of the period

   $ 39,536      $ 48,446      $ 46,326   
  

 

 

   

 

 

   

 

 

 

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes therein.

See accompanying notes to the consolidated financial statements.

 

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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION

(In thousands)

 

          Future Policy                                            
          Benefits,
Policyholders’
                                           
          Account Balances,                       Benefits,     Amortization              
    Deferred     Benefits, Policy and                       Claims, Losses     of Deferred              
    Policy     Contract Claims                 Net     and     Policy     Other        
    Acquisition     and Other     Unearned     Premium     Investment     Settlement     Acquisition     Operating     Premiums  

Segment

  Cost     Policyholder Funds     Premiums     Revenue     Income (1)     Expenses     Costs     Expenses (2)     Written  

2015

                 

Life

  $ 756,023      $ 4,860,263      $ 35,810      $ 305,350      $ 226,076      $ 386,785      $ 77,567      $ 201,112      $  —     

Annuity

    411,206        10,410,157        —          183,125        459,458        230,221        81,793        54,037        —     

Health

    44,390        293,325        43,558        196,777        10,135        146,805        23,643        45,047        —     

Property & Casualty

    113,050        883,328        733,610        1,153,267        55,620        776,562        235,585        156,583        1,187,980   

Corporate & Other

    —          —          —          —          83,542        —          —          44,598        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,324,669      $ 16,447,073      $ 812,978      $ 1,838,519      $ 834,831      $ 1,540,373      $ 418,588      $ 501,377      $ 1,187,980   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2014

                 

Life

  $ 711,469      $ 4,720,075      $ 35,524      $ 307,771      $ 232,389      $ 351,271      $ 78,181      $ 194,927      $  —     

Annuity

    382,441        10,286,205        —          190,357        545,887        234,173        79,135        56,487        —     

Health

    47,784        316,684        46,137        216,868        11,692        144,799        18,966        43,261        —     

Property & Casualty

    111,850        883,148        673,390        1,100,975        58,843        745,540        223,658        130,655        1,109,029   

Corporate & Other

    —          —          —          —          84,047        —          —          60,535        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,253,544      $ 16,206,112      $ 755,051      $ 1,815,971      $ 932,858      $ 1,475,783      $ 399,940      $ 485,865      $ 1,109,029   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2013

                 

Life

  $ 684,084      $ 4,559,721      $ 35,935      $ 293,173      $ 230,763      $ 345,566      $ 82,658      $ 207,520      $  —     

Annuity

    424,158        10,641,769        —          155,162        632,536        193,840        85,756        63,326        —     

Health

    47,220        320,457        48,269        212,931        11,314        139,762        15,249        46,646        —     

Property & Casualty

    122,271        889,939        655,674        1,074,260        66,632        746,636        225,131        128,437        1,069,694   

Corporate & Other

    —          —          —          —          75,565        —          —          57,122        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,277,733      $ 16,411,886      $ 739,878      $ 1,735,526      $ 1,016,810      $ 1,425,804      $ 408,794      $ 503,051      $ 1,069,694   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Net investment income from fixed income assets (bonds and mortgage loans on real estate) is allocated to insurance lines based on the funds generated by each line at the average yield available from these fixed income assets at the time such funds become available. Net investment income from policy loans is allocated to the insurance lines according to the amount of loans made by each line. Net investment income from all other assets is allocated to the insurance lines as necessary to support the equity assigned to that line with the remainder allocated to capital & surplus.
(2) Identifiable expenses are charged directly to the appropriate line of business. The remaining expenses are allocated to the lines based upon various factors including premium ratio within the respective lines.

See accompanying Report of Independent Registered Public Accounting Firm.

 

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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE IV - REINSURANCE INFORMATION

(In thousands)

 

          Ceded to     Assumed           Percentage of  
    Direct     Other     from Other     Net     Amount  
    Amount     Companies     Companies     Amount     Assumed to Net  

Year Ended December 31, 2015

         

Life insurance in-force

  $ 90,194,532      $ 29,891,183      $ 120      $ 60,303,469        0.0
 

 

 

   

 

 

   

 

 

   

 

 

   

Premiums earned

         

Life and annuity

  $ 590,131      $ 101,636      $ (20   $ 488,475        0.0   

Accident and health

    241,140        224,623        180,260        196,777        91.6   

Property and casualty

    1,238,163        93,024        8,128        1,153,267        0.7   
 

 

 

   

 

 

   

 

 

   

 

 

   

Total premiums

  $ 2,069,434      $ 419,283      $ 188,368      $ 1,838,519        10.2   
 

 

 

   

 

 

   

 

 

   

 

 

   

Year Ended December 31, 2014

         

Life insurance in-force

  $ 85,570,057      $ 30,007,131      $ 6,007      $ 55,568,933        0.0   
 

 

 

   

 

 

   

 

 

   

 

 

   

Premiums earned

         

Life and annuity

  $ 594,568      $ 96,577      $ 137      $ 498,128        0.0   

Accident and health

    271,004        274,368        220,232        216,868        101.6   

Property and casualty

    1,183,875        89,607        6,707        1,100,975        0.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

Total premiums

  $ 2,049,447      $ 460,552      $ 227,076      $ 1,815,971        12.5   
 

 

 

   

 

 

   

 

 

   

 

 

   

Year Ended December 31, 2013

         

Life insurance in-force

  $ 80,038,270      $ 30,577,123      $ 32,019      $ 49,493,166        0.1   
 

 

 

   

 

 

   

 

 

   

 

 

   

Premiums earned

         

Life and annuity

  $ 541,025      $ 93,240      $ 550      $ 448,335        0.1   

Accident and health

    271,847        240,505        181,589        212,931        85.3   

Property and casualty

    1,157,528        90,196        6,928        1,074,260        0.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

Total premiums

  $ 1,970,400      $ 423,941      $ 189,067      $ 1,735,526        10.9
 

 

 

   

 

 

   

 

 

   

 

 

   

See accompanying Report of Independent Registered Public Accounting Firm.

AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

 

          Additions     Deductions        
    Balance at                       Balance at  
    Beginning of     Charged to           Change in     End of  
    Period     Expense     Written off     Estimate (1)     Period  

2015

         

Investment valuation allowances:

         

Mortgage loans on real estate

  $ 17,860      $ 220      $ (5,185   $
 

  
 
  
  $ 12,895   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2014

         

Investment valuation allowances:

         

Mortgage loans on real estate

  $ 12,181      $ 5,679      $ —        $
 

  
 
  
  $ 17,860   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2013

         

Investment valuation allowances:

         

Mortgage loans on real estate

  $ 12,012      $ 171      $ —        $ (2   $ 12,181   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Decrease in the required valuation allowance for mortgage loans as a result of changes to the estimate in calculating the mortgage loan allowance based on enhanced methodology.

See accompanying Report of Independent Registered Public Accounting Firm.

 

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WQVA Part C

 

Item 24. Financial Statements and Exhibits

 

  (a)

Financial Statements

1. Part A of the registration statement. Condensed financial information reflecting the value and number of units outstanding for each class of Accumulation Units of the Separate Account for the years ended December 31, 2005 through December 31, 2015.

2. Part B of the registration statement. The most recent audited financial statements of the Separate Account as of December 31, 2015 and for each of the years or periods presented. The consolidated financial statements of the American National Insurance Company as of December 31, 2015 and for each of the years in the three (3) year period ended December 31, 2015.

 

  (b)

Exhibits

Exhibit 1 — Copy of the resolutions of the Board of Directors of the Depositor authorizing the establishment of the Registrant [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 2 — Not applicable.

Exhibit 3 — Distribution and Administrative Services Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 3(a) – Distribution and Selling Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on April 29, 2011].

Exhibit 3(b) – Termination of Distribution and Selling Agreement [previously filed with Registrant’s N-4 for this registration statement (number 333-30318) filed on April 26, 2013].

Exhibit 3(c) – Distribution and Administrative Services Agreement [previously filed with Registrant’s N-4 for this registration statement (number 333-30318) filed on April 26, 2013].

Exhibit 4 — Form of each Variable Annuity Contract [previously filed with Registrant’s pre-effective amendment number two to this registration statement (number 333-30318) filed on July 26, 2000].

Exhibit 4(a) — Form of Group Policy Cover Page for Non-Qualified Contract [previously filed with Registrant’s pre-effective amendment number two to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(b) — Form of Group Policy Cover Page for Qualified Contract [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(c) — Form of Non-Qualified Contract [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(d) — Form of Qualified Contract [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(e) — Form of Minimum Guaranteed Death Benefit Rider [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(f) — Form of Group Contract Minimum Guaranteed Death Benefit Rider [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(g) — Form of 3% Guaranteed Death Benefit Rider [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(h) — Form of Group 3% Guaranteed Death Benefit Rider [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 4(i) — Form of 5% Guaranteed Death Benefit Rider [incorporated herein by reference to pre-effective amendment number one to registration statement on Form N-4 (333-30318) filed on June 27, 2000].


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Exhibit 4(j) — Form of Group 5% Guaranteed Death Benefit Rider [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 5 — Form of application used with any Variable Annuity Contract [previously filed with Registrant’s pre-effective amendment number one to this registration statement (number 333-30318) filed on June 27, 2000].

Exhibit 6(a) — Copy of the Articles of Incorporation of the Depositor [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 6(b) — Copy of the By-laws of the Depositor [filed herewith].

Exhibit 7(a) — Reinsurance Agreement between Continental Assurance Company and American National Insurance Company [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on April 30, 2004].

Exhibit 7(b) – Letter dated August 7, 2009 from Munich American Reassurance Company regarding rates on block of Variable Annuity Guaranteed Minimum Death Benefit (GMDB) reinsurance [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on April 30, 2010].

Exhibit 8(a) — Form of American National Investment Account, Inc. Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(b) — Form of Variable Insurance Products Fund II Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(c) — Form of Variable Insurance Products Fund III Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(d) — Form of T. Rowe Price International Series, Inc. T. Rowe Price Equity Series, Inc., and T. Rowe Price Fixed Income Series, Inc. [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(e) — Form of MFS Variable Insurance Trust Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(f) — Form of Federated Insurance Series Fund Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(g) — Form of Fred Alger American Fund Participation Agreement [previously filed with Registrant’s Form N-4 for this registration statement (number 333-30318) filed on February 14, 2000].

Exhibit 8(h) — Form of AIM Fund Participation Agreement [previously filed with Registrant’s post-effective amendment number 7 to this registration statement (number 333-30318) filed on April 27, 2006].

Exhibit 8(i) - Form of MFS Variable Insurance Trust Participation Agreement [Registrant’s Form N-4 for this registration statement (number 333-30318) effective March 28, 2015 (filed on April 28, 2015)].

Exhibit 9 — An opinion of counsel and consent to its use as to the legality of the securities being registered, indicating whether they will be legally issued and will represent binding obligations of the depositor (filed herewith).

Exhibit 10 — Consent of Independent Registered Public Accounting firm (filed herewith).

Exhibit 11 — Not applicable.

Exhibit 12 — Not applicable.

Exhibit 14 — Power of Attorney (previously filed with Registrant’s post effective amendment number six, filed on April 29, 2005).

Exhibit 14(a) – Power of Attorney for Messrs. Ansell, Pederson, Yarbrough, Payne and Pozzi dated April 14, 2015 (filed on April 28, 2015).


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Item 25. Directors and Officers of Depositor

The principal business address of the directors and officers, unless otherwise indicated, is American National Insurance Company, One Moody Plaza, Galveston, Texas 77550.

 

Directors     

Name

   Business Address

Arthur Oleen Dummer

   955 East Pioneer Road
   Draper, UT 84020-9334

James Edward Pozzi

   President, Chief Executive Officer, Chairman of the Board
   American National Insurance Company
   One Moody Plaza
   Galveston, TX 77550

Frances Anne Moody-Dahlberg

   The Moody Foundation
   3710 Rawlins Street, #910
   Dallas, TX 75219

E. J. “Jere” Pederson

   29 Adler Circle
   Galveston, TX 77551

William C. Ansell

  

1011 Tremont

Galveston, TX 77550

James P. Payne

  

11150 Rio Vista Drive

Austin, TX 78726

James Daniel Yarbrough

   2621 Gerol Drive
   Galveston, TX 77551
Officers     

Name

   Office

David Alan Behrens

   Executive Vice President, Independent Marketing

John Joseph Dunn, Jr.

   Executive Vice President, Corporate Chief Financial Officer and Treasurer

Johnny David Johnson

   Executive Vice President, Corporate Business Process Officer & CIO

Gregory Victor Ostergren

   Executive Vice President, Director of Multiple Line & Chief Corporate Risk Officer
   1949 East Sunshine
   Springfield, MO 65899

James Walter Pangburn

   Executive Vice President, Credit Insurance Division
   2450 South Shore Boulevard
   League City, TX 77573


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Hoyt J. Strickland

   Executive Vice President, Career Sales & Service Division

Dwain Allen Akins

   Senior Vice President, Corporate Relations, Chief Corporate Compliance Officer

Albert Louis Amato, Jr.

   Senior Vice President, Life New Business and Pension Administration

Scott Frankie Brast

   Senior Vice President, Real Estate/Mortgage Loan
   2525 South Shore Boulevard
   League City, TX 77573

Brian Neil Bright

   Senior Vice President, Computing Services
   3030 Invincible
   League City, TX 77573

Frank Vincent Broll, Jr.

   Senior Vice President and Actuary

Scott C. Campbell

   Senior Vice President, Chief Marketing Officer, Multiple Line
   1949 East Sunshine
   Springfield, MO 65899

William Franklin Carlton

   Senior Vice President and Corporate Controller

Lee C. Ferrell

   Senior Vice President, Independent Marketing Operations

Bernard Stephen Gerwel

   Senior Vice President, Chief Corporate Digital Officer
   1949 East Sunshine
   Springfield, MO 65899

Anne Marie LeMire

   Senior Vice President, Fixed Income and Equity Investments
   2450 South Shore Boulevard
   League City, TX 77573

Bruce Murray LePard

   Senior Vice President, Chief Human Resources Officer

Meredith Myron Mitchell

   Senior Vice President, Application Development & Support

Edward Bruce Pavelka

   Senior Vice President, Life Policy Administration

Ronald Clark Price

   Senior Vice President, Multiple Line Marketing

John F. Simon

   Senior Vice President and Actuary

Shannon Lee Smith

   Senior Vice President, Chief Agencies Officer, Multiple Line
   1949 East Sunshine
   Springfield, MO 65899

James P. Stelling

   Senior Vice President, Chief Health Compliance Officer
   2450 South Shore Boulevard
   League City, Texas 77573

Timothy A. Walsh

   Senior Vice President, Chief Operating Officer, Multiple Line

Dr. John F. White

   Senior Vice President, Medical Director (Life, Health, Group)

John Mark Flippin

   Secretary

Terrance K. Ball

   Vice President, Credit Insurance, Sales
   2450 South Shore Boulevard
   League City, TX 77573


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Matthew Russell Byrd    Vice President and Associate Actuary, Chief Life and Corporate Risk Officer
Steven Lee Dobbe    Vice President, IMG Broker Dealer Marketing
Dustin J. Dusek    Vice President, Associate Actuary and Illustration Actuary
Christopher J. Falconer    Vice President, Associate Actuary
Barbara N. Faulkenhagen    Vice President, IT Support Services

Denny Walton Fisher, Jr.

   Vice President, Mortgage Loan Investments
   2525 South Shore Boulevard
   League City, TX 77573

James L. Flinn

   Vice President, Chief P&C Risk Officer
   1949 East Sunshine
   Springfield, MO 65899
Deborah Kay Janson    Vice President, Corporate Planning

Richard Steven Katz

   Vice President, Direct Marketing Sales
   2450 South Shore Boulevard
   League City, TX 77573
Dr. Harry Bertrand Kelso, Jr.    Vice President and Associate Medical Director (Life, Health, Group)

Darren William King

   Vice President, Equities
   2450 South Shore Boulevard
   League City, TX 77573

Robert Jay Kirchner

   Vice President, Real Estate Investments
   2525 South Shore Boulevard
   League City, TX 77573

Murray A. Klein

   Vice President, Credit Insurance Financial Marketing
   2450 South Shore Boulevard
   League City, TX 77573
Craig Warren Klenk    Vice President, IMG Brokerage Sales

Debra R. Lambson

   Vice President, CMO Health
   2450 South Shore Boulevard
   League City, TX 77573
Sara Liane Latham    Vice President and Actuary

Gary H. Lukovich

   Vice President, Multiple Line Distribution & Sales
   1949 East Sunshine
   Springfield, MO 65899
George Arthur Macke    Vice President, General Auditor

Bradley Wayne Manning

   Vice President, Life Claims & Customer Contact Center
   2525 South Shore Boulevard
   League City, TX 77573
Michael Scott Marquis    Vice President, Life New Business

Edwin Vince Matthews, III

   Vice President, Mortgage Loan Investments
   2525 South Shore Boulevard
   League City, TX 77573


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Tracy L. Milina

  

Vice President, Health/Administration

2450 South Shore Boulevard

   League City, TX 77573

Ronald Joseph Ostermayer

   Vice President, Group/Third Party Operations
   2450 South Shore Boulevard
   League City, TX 77573

Richard Clarence Putz

   Vice President, IT Security, Compliance and Risk

William Corley Ray

   Vice President, Agency Education and Development, Multiple Line

Daniel A. Safriet

   Vice President, Credit Insurance Sales
   1037 N. Main Street
   Wake Forest, NC 27587

Robert Walter Schefft

   Vice President, IMG Advanced Sales and Marketing

Gerald Anthony Schillaci

   Vice President and Actuary

Steven Schnack

   Vice President, Health Claims
   2450 South Shore Boulevard
   League City, TX 77573

David Harvin Schutz

   Vice President, IMG National Accounts

Olivia K. Smith

   Vice President, Human Resources

Wayne Allen Smith

   Vice President, Career Sales & Service Division

D. Denise Snedden

   Vice President, Assistant Treasurer
   2525 South Shore Boulevard
   League City, TX 77573

Clarence Ellsworth Tipton

   Vice President and Senior Chief Health Actuary
   2450 South Shore Boulevard
   League City, TX 77573

Mark A. Walker

   Vice President, Credit Insurance, Special Markets
   2450 South Shore Boulevard
   League City, TX 77573

Deanna L. Walton

   Vice President, eBusiness Systems

William Henry Watson, III

   Vice President, Chief Health Actuary
   2450 South Shore Boulevard
   League City, TX 77573

Michael J. Anderson

   Asst. Vice President, Assistant Health Actuary
   2450 South Shore Boulevard
   League City, TX 77573

Charles N. Atwood

   Asst. Vice President, Credit Insurance Sales
   2450 South Shore Boulevard
   League City, TX 77573


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Patricia Ann Boudreaux

   Asst. Vice President, Credit Insurance Marketing Support
   2450 South Shore Boulevard
   League City, TX 77573

Elden James Brashaw

   Asst. Vice President, Corporate Financial Control

Andrew C. Brewer

   Asst. Vice President, Assistant Actuary

Jason M. Broussard

   Asst. Vice President, Pension Administration

Philip Chairez

   Asst. Vice President, Life and Annuity Business Support/Compliance

Joseph Wayne Cucco

   Asst. Vice President, Director of Advanced Life Sales, Multiple Line

Laurane D. Debowski

   Asst. Vice President, CSSD Field Operations

Charlie Delgado

   Asst. Vice President, Credit Insurance Finance & Risk Management
   2450 South Shore Boulevard
   League City, TX 77573

Elizabeth L. Fontenot

   Asst. Vice President, Health Administration
   2450 South Shore Boulevard
   League City, TX 77473

Traie D. Franklin

   Asst. Vice President, IMG Marketing Operations

Sharon W. Garner

   Asst. Vice President, Life New Business

Renee E. Garrett

   Asst. Vice President, Life and Health Systems

N. Iris Gillies

   Asst. Vice President, Human Resources

Pamela M. Griffin

   Asst. Vice President, Career Life Sales
   1169 Inverness Cove Way
   Birmingham, AL 35242

William Joseph Hogan

   Asst. Vice President, Health & HIPPA Compliance
   2450 South Shore Boulevard
   League City, TX 77573

Jason Jay Jackson

   Asst. Vice President, Assistant Actuary

Jerald V. Johnson

   Asst. Vice President, Process and Data Management

Khaled Kahlouni

   Asst. Vice President, Business Intelligence and Analytics
   3030 Invincible Circle
   League City, TX 77574

David R. Keimig

   Asst. Vice President, Distributed Computing
   3030 Invincible
   League City, TX 77573

Sarah L. Klindworth

   Asst. Vice President, ITS Financial Services
   3030 Invincible
   League City, TX 77573

Bryan A. Lamb

   Asst. Vice President, Life New Business
   2525 South Shore Boulevard
   League City, TX 77573

Thomas Robert LeGrand

   Asst. Vice President, Life & Annuity Claims


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Dennis P. Leyden

   Asst. Vice President, Talent Management

Larry Edward Linares

   Asst. Vice President, Tax

Robert W. Lindemann

   Asst. Vice President, IT Operations
   3030 Invincible
   League City, TX 77573

Erika Y. Lozano

   Asst. Vice President, Financial Planning and Analytics

Thad Michael Luikart

   Asst. Vice President, Life Policy Administration

Steven J. Mahannah

   Asst. Vice President, IMG Financial Institution

Michael N. Musselman

   Asst. Vice President, Marketing & Analytics

Michael Scott Nimmons

   Asst. Vice President, Associate General Auditor
   2450 South Shore Boulevard
   League City, TX 77573

Jon R. O’Neal

   Asst. Vice President, National Director-Life Marketing Sales, Multiple Line

Judith Lynne Regini

   Asst. Vice President, Corporate Compliance, Chief Corporate Officer, Anti-Money Laundering

Walter Rudecki, Jr.

   Asst. Vice President, Advanced Sales and Priority Markets, Multiple Line

Gail Sawyer

   Asst. Vice President, Financial and HR Systems

Suzanne B. Saunders

   Asst. Vice President, Investment Accounting
   2450 South Shore Boulevard
   League City, TX 77573

James Alexander Tyra

   Asst. Vice President, IT Special Projects

Jimmy N. Watson

   Asst. Vice President, Data Communication Messaging
   3030 Invincible Circle
   League City, TX 77573

Jeanette Elizabeth Cernosek

   Assistant Secretary


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Item 26. Persons Controlled by or Under Common Control with the Depositor or the Registrant

The Registrant, American National Variable Annuity Separate Account, is a separate account of American National Insurance Company, a Texas insurance company. In addition, American National Insurance Company has three (3) other separate accounts: American National Variable Life Separate Account, American National Insurance Company Group Unregistered Annuity Separate Account, and American National Insurance Company Separate Account for Retirement Plans. The Libbie Shearn Moody Trust, a testamentary trust with both charitable and non-charitable beneficiaries, owns approximately 37% of the outstanding stock of American National Insurance Company. The Moody Foundation, a charitable trust classified as a private foundation, has an approximately 79% contingent remainder interest in the Libbie Shearn Moody Trust and owns approximately 23% of the outstanding stock of American National Insurance Company.

The Trustees of The Moody Foundation are Frances Anne Moody-Dahlberg, Ross Rankin Moody and Elizabeth Lee Moody. Robert L. Moody, Sr. is the remaining life income beneficiary of the Libbie Shearn Moody Trust and Chairman Emeritus of American National Insurance Company. Robert L. Moody, Sr. has assigned his interest in the Libbie Shearn Moody Trust to National Western Life Insurance Company, a Colorado insurance company of which he is also Chairman Emeritus, a Director and the ultimate controlling shareholder.

Moody National Bank is the trustee of the Libbie Shearn Moody Trust and various other trusts which, in the aggregate, own approximately 45% of the outstanding stock of American National Insurance Company. Moody Bank Holding Company, Inc., a Nevada corporation, owns approximately 97.8% of the outstanding shares of Moody National Bank. Moody Bank Holding Company, Inc. is a wholly owned subsidiary of Moody Bancshares, Inc., a Texas corporation. The Three R Trusts, Texas trusts created by Robert L. Moody, Sr. for the benefit of his children, are controlling stockholders of Moody Bancshares, Inc.

The Moody Foundation owns 34.0% and the Libbie Shearn Moody Trust owns 50.2% of the outstanding stock of Gal-Tex Hotel Corporation, a Texas corporation. Gal-Tex Hotel Corporation directly or indirectly wholly owns the following hospitality subsidiaries, listed in alphabetical order, with the jurisdiction of incorporation for each noted:

 

1859 Beverage Company (Texas)

  

Gal-Tex Hospitality Partners LLC (Texas)

1859 Historic Hotels, Ltd. (Texas)

  

Kentucky Landmark Hotels, L.L.C. (Kentucky)

1859 Management Partners GP, LLC (Texas)

  

Gal-Tenn Hotel Corporation (Nevada)

1859 Management Partners, LP (Texas)

  

LHH Hospitality, Inc. (Texas)

Colorado Landmark Hotels, L.L.C. (Colorado)

  

Virginia Landmark Hotels, L.L.C. (Virginia)

American National owns a direct or indirect interest in the entities listed below in alphabetical order. Unless otherwise noted with an asterisk (*), such entities are included within the consolidated financial statements of American National. For entities noted with an asterisk (*), such entities are not included within the consolidated financial statements of American National, nor are separate financial statements filed with respect to such entities. American National has more than a minor interest or influence over such entities’ operations, but American National does not have a controlling interest and is not the primary beneficiary of such entities.

Entity: 121 Village, Ltd.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 33% limited partnership interest. ANREINV, LLC owns a 0.33% general partnership interest.

Principal Business: Real estate

Entity: 121 Village Lots 2/3 Ltd*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 100% interest

Principal Business: Real estate


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Entity: 2603 Augusta Investors, LP*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.

Principal Business: Real estate

Entity: 3100 McKinnon*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns an 80% interest

Principal Business: Real estate

Entity: 9015 Partners LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 70% interest.

Principal Business: Real estate

Entity: Alternative Benefit Management, Inc.

Entity Form: a Nevada corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company.

Principal Business: Benefits management

Entity: American National Administrators, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property and Casualty Holdings, Inc.

Principal Business: Insurance administration

Entity: American National County Mutual Insurance Company

Entity Form: a Texas mutual insurance company

Ownership or Other Basis of Control: Managed by American National Insurance Company

Principal Business: Inactive

Entity: American National of Delaware Corporation

Entity Form: a Delaware corporation (inactive)

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Inactive


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Entity: American National Financial Corporation

Entity Form: a Texas corporation (inactive)

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Inactive


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Entity: American National Financial Corporation (Delaware)

Entity Form: a Delaware corporation (inactive)

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Inactive

Entity: American National Financial Corporation (Nevada)

Entity Form: a Nevada corporation (inactive)

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Inactive

Entity: American National General Insurance Company

Entity Form: a Missouri insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property and Casualty Company

Principal Business: Insurance

Entity: American National Insurance Service Company

Entity Form: a Missouri corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property and Casualty Company

Principal Business: Insurance services

Entity: American National Life Holdings, Inc.

Entity Form: a Nevada corporation

Ownership or Other Basis of Control: American National Insurance Company owns all outstanding common stock; Comprehensive Investment Services, Inc. owns all outstanding preferred stock.

Principal Business: Holding company

Entity: American National Life Insurance Company of New York

Entity Form: a New York insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Life Holdings, Inc.

Principal Business: Insurance

Entity: American National Life Insurance Company of Texas

Entity Form: a Texas insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Life Holdings, Inc.

Principal Business: Insurance


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Entity: American National Lloyds Insurance Company

Entity Form: a Texas insurance company

Ownership or Other Basis of Control: ANPAC Lloyds Insurance Management, Inc. is attorney-in-fact.

Principal Business: Insurance

Entity: American National Property and Casualty Company

Entity Form: a Missouri insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property & Casualty Holdings, Inc.

Principal Business: Insurance

Entity: American National Property & Casualty Holdings, Inc.

Entity Form: a Delaware corporation

Ownership or Other Basis of Control: American National Insurance Company owns all outstanding common stock; Comprehensive Investment Services, Inc. owns all outstanding preferred stock.

Principal Business: Holding company

Entity: American National Registered Investment Advisor, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Investment advisory services

Entity: AN/CAN Investments, Inc.*

Entity Form: a Canadian corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of ANTAC, LLC

Principal Business: Real estate

Entity: ANCAP Jasper, LLC

Entity Form: a South Carolina limited liability company

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 50% interest.

Principal Business: Real estate

Entity: ANCAP Jasper II, LLC

Entity Form: a South Carolina limited liability company

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 50% interest.

Principal Business: Real estate


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Entity: ANDV 97, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of ANTAC, LLC

Principal Business: Real estate

Entity: ANH20, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned by ANREM Corporation.

Principal Business: Real estate

Entity: ANICO Eagle, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of ANTAC, LLC

Principal Business: Real estate

Entity: ANICO Eagle 99, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of ANTAC, LLC.

Principal Business: Real estate

Entity: ANICO Financial Services, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Wholesale broker-dealer

Entity: ANIND TX, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of ANDV 97, LLC

Principal Business: Real estate

Entity: ANPAC Lloyds Insurance Management, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis for Control: Wholly owned subsidiary of American National Property and Casualty Company

Principal Business: Insurance


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Entity: ANPAC Louisiana Insurance Company

Entity Form: a Louisiana insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property and Casualty Company

Principal Business: Insurance

Entity: ANPIN, L.P.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle 99, LLC owns a 99% limited partnership interest; ANIND TX, LLC owns a 1% general partnership interest.

Principal Business: Real estate

Entity: ANREINV, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of ANDV 97, LLC

Principal Business: Real estate

Entity: ANREM Corporation

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of ANTAC, LLC

Principal Business: Real estate

Entity: ANTAC, LLC

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Real estate


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Entity: Baron Phoenix Apts., LLC*

Entity Form: an Arizona limited liability company

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 60% interest.

Principal Business: Real estate

Entity: Bayport II Mountain West Houston, LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest.

Principal Business: Real estate

Entity: Baywood JV II, Ltd*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Baywood Project, Ltd*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% limited partnership interest.

Principal Business: Real estate

Entity: Blalock Retail Associates, LLC*

Entity Form: a Texas limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Boyle at 54th LLC*

Entity Form: a Delaware limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Bridgeview Alpha LLC*

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 70% interest.


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Principal Business: Real estate

Entity: Broadway Goodyear LLC*

Entity Form: a Delaware limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 55% interest.

Principal Business: Real estate

Entity: Caffery-Saloom Retail, LLC*

Entity Form: a Louisiana limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.

Principal Business: Real estate

Entity: Canyon Crossroads Apartments, LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANTAC, LLC owns a 50% interest.

Principal Business: Real estate

Entity: CC Maple LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANICO Eagle LLC. owns a 41.32% interest.

Principal Business: Real estate

Entity: Cedar Crossing Mountain West Houston LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 60% interest.

Principal Business: Real estate

Entity: Cibolo 78108 Storage*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Cibolo Crossing, LLC*

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.


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Principal Business: Real estate

Entity: Cotton Exchange Investment Properties, LLC*

Entity Form: a Delaware limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Crestline Specialty Lending, LP*

Entity Form: a Delaware limited partnership

Ownership or Other Basis of Control: ANICO owns a 12.4% interest

Principal Business: Real estate

Entity: Comprehensive Investment Services, Inc.

Entity Form: a Nevada corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Insurance Company

Principal Business: Asset management


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Entity: Eagle AN, L.P.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle 99, LLC owns a 99% limited partnership interest. ANIND TX, LLC. owns a 1% general partnership interest.

Principal Business: Real estate

Entity: Eagle Ind., L.P.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: American National Insurance Company owns a 99% limited partnership interest; ANIND TX, LLC. owns a 1% general partnership interest.

Principal Business: Real estate

Entity: Enclave Apts, LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANTAC, LLC owns a 50% interest.

Principal Business: Real estate

Entity: Fairway Phase III Associates, LP*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.

Principal Business: Real estate

Entity: Farm Family Casualty Insurance Company

Entity Form: a New York insurance company

Ownership or Other Basis of Control: American National Property & Casualty Holdings, Inc. owns 100%.

Principal Business: Insurance

Entity: Farm Family Financial Services, Inc.

Entity Form: a New York corporation.

Ownership of Other Basis of Control: American National Property & Casualty Holdings, Inc. owns 100%.

Principal Business: Broker-dealer (inactive)


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Entity: Farm Family Life Insurance Company

Entity Form: a New York insurance company

Ownership or Other Basis of Control: American National Property & Casualty Holdings, Inc. owns 100%.

Principal Business: Insurance

Entity: Galveston Island Water Park, L.P.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANH2O, Inc. is 1% general partner; ANICO Eagle, LLC is 59% limited partner.

Principal Business: Water park investment

Entity: Garden State Life Insurance Company

Entity Form: a Texas insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Life Holdings, Inc.

Principal Business: Insurance

Entity: Germann Road Land Development, LLC

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: Wholly owned by ANICO Eagle, LLC

Principal Business: Real estate

Entity: Harbour Title Company (a/k/a Lawyers Title of Galveston)

Entity Form: a Texas corporation

Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. owns 50%.

Principal Business: Title insurance

Entity: I-10 Industrial Development LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest.

Principal Business: Real estate

Entity: IGX Burleson Park, LLC*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 65% interest


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Principal Business: Real estate

Entity: IGX Tri County, LLC*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 65 % interest

Principal Business: Real estate

Entity: iLuminate Apts, LLC*

Entity Form: a Colorado limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest

Principal Business: Real estate

Entity: J & P Keegan LP

Entity Form: a Virginia limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 99% limited partnership; ANIND TX, LLC owns a 1% general partnership interest.

Principal Business: Real estate

Entity: Jersey Industrial Capital, LLC*

Entity Form: a California limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 46.5% interest.

Principal Business: Real estate

Entity: Kearns Building Joint Venture

Entity Form: a Texas joint venture

Ownership or Other Basis of Control: American National Insurance Company owns an 85% interest.

Principal Business: Real estate

Entity: Landmark I Office Partners (Jastco, Ltd.)*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: LeSaint Venture, LLC*

Entity Form: a Delaware limited liability partnership


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Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Linear Apts, LLC*

Entity Form: a Colorado limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest

Principal Business: Real estate

Entity: M&M Hotel Venture*

Entity Form: a Texas limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 43.2% interest

Principal Business: Real estate

Entity: Maui Harbor Shops, LP*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest

Principal Business: Real estate

Entity: Montgomery Center Investors, LP*

Entity Form: a Texas Limited Partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest.

Principal Business: Real estate

Entity: MRPL Retail Partners, Ltd. (Shops at Bella Terra)

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 50% limited partnership interest.

Principal Business: Real estate

Entity: MRPL Retail Partners II, Ltd*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 50% limited partnership interest.

Principal Business: Real estate

Entity: Murphy Self Storage, Ltd*


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Entity Form: a Texas limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate


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Entity: MWBP, LLC*

Entity Form: a Colorado limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.

Principal Business: Real estate

Entity: Muir Lake, Ltd*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: 60% owned by ANTAC, LLC.

Principal Business: Real estate

Entity: Naches Venture LLC*

Entity Form: a Delaware limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 55% interest

Principal Business: Real estate

Entity: Naperville Hotel Partners, LLC*

Entity Form: a Illinois Limited Liability Company

Ownership or Other Basis of Control: ANICO Eagle LLC. owns a 50% interest

Principal Business: Real estate

Entity: One Hanover Investors, LP*

Entity Form: a Delaware limited partnership

Ownership or Other Basis of Control: ANICO Eagle LLC. owns a 50% interest

Principal Business: Real estate

Entity: Pacific City Hotel, LLC*

Entity Form: a Delaware Limited Liability Company

Ownership or Other Basis of Control: ANICO Eagle LLC. owns a 11% interest.

Principal Business: Real estate

Entity: Pacific Property and Casualty Company

Entity Form: a California corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Property and Casualty Company

Principal Business: Insurance


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Entity: Park City Center LLC*

Entity Form: A Texas limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Parmenter 220 East Las Colinas Blvd., LLC*

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: Eagle AN, L.P. owns a 50% interest.

Principal Business: Real estate

Entity: PCO Battery Brooke Parkway, LP

Entity Form: a Virginia limited partnership

Ownership or Other Basis of Control: ANPIN, LP owns a 98% interest; ANIND, TX, LLC owns 1%.

Principal Business: Real estate

Entity: Pinnacle IV, LP*

Entity Form: a Delaware limited partnership

Ownership or Other Basis of Control: ANICO owns a 24.15% interest

Principal Activity: Investment

Entity: Preston 121 Partners, Ltd.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANIND TX, LLC. owns a 2% general partnership interest; Eagle AN, L.P. owns a 98% limited partnership interest.

Principal Business: Real estate

Entity: Prospect Park Office, LLC*

Entity Form: a California limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 70% interest

Principal Business: Real estate

Entity: Rural Agency and Brokerage, Inc.

Entity Form: a New York corporation


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Ownership or Other Basis of Control: American National Property & Casualty Holdings, Inc. owns 100%.

Principal Business: Insurance brokerage services

Entity: Rutledge Partners, L.P.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: American National Insurance Company owns a 26% limited partnership interest.

Principal Business: Real estate

Entity: SC Waterford Springs Investors LLC*

Entity Form: a Florida limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest.

Principal Business: Real estate

Entity: Schaumberg Hotel Partners LLC*

Entity Form: a Illinois limited liability company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest.

Principal Business: Real estate

Entity: Shinnecock Partners*

Entity Form: a Delaware limited partnership

Ownership or Other Basis of Control: ANICO owns a 47% interest

Principal Business: Investment

Entity: South Shore Harbour Development, Ltd.

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANTAC, LLC owns a 95% limited partnership interest. ANREM Corp. owns a 5% general partnership interest.

Principal Business: Real estate

Entity: SPI Beach Resort Waterpark, LLC*

Entity Form: a Texas limited liability company

Ownership or Other Basis of Control: ANTAC, LLC owns a 50% interest.

Principal Business: Real estate

Entity: Standard Life and Accident Insurance Company


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Entity Form: a Texas insurance company

Ownership or Other Basis of Control: Wholly owned subsidiary of American National Life Holdings, Inc.

Principal Business: Insurance

Entity: Standard Plus, Inc.

Entity Form: a Texas corporation

Ownership or Other Basis of Control: Wholly owned subsidiary of Standard Life and Accident Insurance Company

Principal Business: Insurance marketing

Entity: SWBC Flower Mound, LP*

Entity Form: a Texas Limited Partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 90% interest.

Principal Business: Real estate

Entity: TC Blvd., Partners, LLC

Entity Form: a Texas Limited Liability Company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns an 88% interest.

Principal Business: Real estate

Entity: TC Blvd., Partners II, LLC

Entity Form: a Texas Limited Liability Company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns an 88% interest.

Principal Business: Real estate

Entity: Town and Country Joint Venture

Entity Form: a Texas joint venture

Ownership or Other Basis of Control: ANDV 97, LLC owns an 86.65% limited partnership interest.

Principal Business: Real estate

Entity: Town Center Partners, LTD

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns an 88% interest.

Principal Business: Real estate

Entity: TVO/MCP Vineyard Associates LLC*


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Entity Form: a Delaware Limited Liability Company

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 70% interest.

Principal Business: Real estate

Entity: United Farm Family Insurance Company

Entity Form: a New York insurance company

Ownership or Other Basis of Control: American National Property & Casualty Holdings, Inc. owns 100%.

Principal Business: Insurance

Entity: Valley Business Center LLC*

Entity Form: a Colorado limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 60% interest

Principal Business: Real estate

Entity: Via Del Oro Commercial LLC*

Entity Form: a California limited liability partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 70% interest

Principal Business: Real estate

Entity: Willowchase Retail Associates LP*

Entity Form: a Texas limited partnership

Ownership or Other Basis of Control: ANICO Eagle, LLC owns a 50% interest.

Principal Business: Real estate


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Item 27. Number of Contract Owners

As of March 31, 2016, there were 294 owners of Qualified Contracts and 183 owners of Non-Qualified Contracts covered by this registration statement.

 

Item 28. Indemnification

The following provision is in the Distribution and Selling Agreement:

Indemnification by the Company. Except as otherwise expressly provided, the Company shall indemnify, defend and hold harmless the Distributor and its officers, directors, employees, agents and representatives and each person who controls the Distributor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Distributor Indemnified Parties”) against any and all losses, costs, fees, fines, penalties, expenses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including reasonable attorney’s fees and other legal expenses), to which the Distributor Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, costs, fees, fines, penalties, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the Contracts and:

 

  a.

arise out of or are based upon any untrue statements of any material fact contained in the Disclosure Documents, the Registration Statements or the Sales Literature, or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Distributor Indemnified Party if such statement or omission was made in reliance upon and in conformity with information furnished by or on behalf of the Distributor;

 

 

  b.

arise out of or as a result of the negligent or wrongful conduct of the Company or persons under its control, with respect to the Contracts;

 

 

  c.

arise out of or as a result of the material failure of the Separate Accounts to comply with the Company Act in all material respects or the failure of the Company to comply with applicable state insurance law in the administration of the Separate Accounts;

 

 

  d.

arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement;

 

 

  e.

arise out of or result from any material breach of any representation made by the Company or the Separate Accounts in this Agreement or arise out of or result from any other material breach of this Agreement by the Company or the Separate Accounts; or

 

 

  f.

arise out of or result from the failure of the Registration Statements, the Disclosure Documents or the Sales Literature to comply in any material respect with applicable law or regulation, unless such failure is attributable to information furnished by or on behalf of the Distributor.”

 

The officers and directors of American National are indemnified by American National in the American National By-laws for liability incurred by reason of the officer and directors serving in such capacity. This indemnification would cover liability arising out of the variable annuity sales of American National.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.


Table of Contents
Item 29. Principal Underwriters

 

(a)

ANICO Financial Services, Inc. serves as principal underwriter to the American National Variable Annuity Separate Account. Securities Management and Research, Inc. served as principal underwriter to the American National Separate Account until September 4, 2012.

 

(b)

The Registrant’s principal underwriter is ANICO Financial Services, Inc. The following are the officers and directors of ANICO Financial Services, Inc.:

 

Name    Position    Principal Business Address

James E. Pozzi

   Director, Chairman of the Board    One Moody Plaza
      Galveston, Texas 77550

John J. Dunn, Jr.

   Director    One Moody Plaza
      Galveston, Texas 77550

David A. Behrens

   Director    One Moody Plaza
      Galveston, Texas 77550

E. Bruce Pavelka

   President, Chief Executive Officer    One Moody Plaza
      Galveston, Texas 77550

Dwain A. Akins

   Vice President, Chief Compliance    One Moody Plaza, Suite 1423
   Officer    Galveston, Texas 77550

Suzanne B. Saunders

   Vice President, Chief Financial    2450 South Shore Boulevard
   Officer    League City, Texas 77573

(c) Compensation from the Registrant:

 

(1)  

Name of  

Principal  

Underwriter   

       

(2)

Net Underwriting

Discounts and

Commissions

           

(3)

Compensation on

Events Occasioning the
Deduction of a Deferred
Sales Load

           

(4)

Brokerage
Commissions

           

(5)

Other
Compensation

     

ANICO

Financial

Services, Inc.    

       $1,762,901           N/A           N/A           N/A     


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Item 30. Locations of Account and Records

All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated there under will be maintained at the offices of American National Insurance Company, One Moody Plaza, Galveston, Texas 77550.

 

Item 31. Management Services

Not applicable.

 

Item 32. Undertakings

 

  (a)

Registrant undertakes to file a post-effective amendment to this registration statement as frequently to ensure that the audited financial statements in the registration statement are never more than sixteen (16) months old for so long as payments under the Variable Annuity Contracts may be accepted.

 
  (b)

Registrant undertakes to include as part of any application to purchase a Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information.

  (c)

Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this form upon written request or oral request.

  (d)

The Registrant hereby represents that it is relying upon a No Action Letter issued to the American Council of Life Insurance dated November 28, 1998 (Commission ref. IP-6-88) and that the following provisions have been complied with:

  1.

Include appropriate disclosure regarding the redemption restrictions imposed by Section 403 (b) (11) in each registration statement, including the Prospectus, used in connection with the offer of the Contract.

  2.

Include appropriate disclosure regarding the redemption restrictions imposed by Section (b) (11) in any sales literature in connection with the offer of the Contract;

  3.

Instruct sales representatives who solicit participants to purchase the Contract specifically to bring the redemption restrictions imposed by Section 403(b)(11)to the attention of the potential participants.

  4.

Obtain from each plan participant who purchases a Section 403 (b) annuity Contract, prior to or at the time of such purchase, a signed statement acknowledging the participant’s understanding of (1) the restrictions on redemption imposed by Section 403(b)(11), and (2) other investment alternatives available under the employer’s Section 403(b) arrangement to which the participant may elect to transfer his Contract value.

  (e)

Representation pursuant to Section 26(e)(2)(A). American National Insurance Company hereby represents that the fees and charges deducted under the Contracts described in the post-effective amendment are, in the aggregate, reasonable in relationship to the services rendered, the expenses expected to be incurred, and the risks assumed by American National Insurance Company.


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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant hereby files this registration statement under Rule 485(b) under the Securities Act and has caused this registration statement to be signed on its behalf by the undersigned in the City of Galveston and the State of Texas on the 29th day of April, 2016.

AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT (Registrant)

 

   By: AMERICAN NATIONAL INSURANCE COMPANY   
   By:         /s/ James E. Pozzi                                       
   James E. Pozzi, President,   
   Chief Executive Officer and Chairman of the Board   
     
   AMERICAN NATIONAL INSURANCE COMPANY   
   (Depositor)   
     
   By:             /s/ James E. Pozzi                                   
   James E. Pozzi, President,   
   Chief Executive Officer and Chairman of the Board   

Attest By:

 

/s/ J. Mark Flippin

J. Mark Flippin, Secretary

As required by the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities on the 29th day of April, 2016:

 

Signature

  

Title

/s/ John J. Dunn, Jr.

  

Executive Vice President, Corporate Chief

Financial Officer and Treasurer

John J. Dunn, Jr.

  

/s/ William F. Carlton

  

Senior Vice President and Corporate Controller

William F. Carlton

  


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Signature

  

Title

 

/s/ James E. Pozzi

  

Director, President,

Chief Executive Officer and Chairman of the Board

James E. Pozzi

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

William C. Ansell

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

Arthur O. Dummer

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

Frances Anne Moody-Dahlberg

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

James P. Payne

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

E.J. Pederson

  

s/ Dwain A. Akins by Power of

Attorney

  

Director

James D. Yarbrough

  

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘485BPOS’ Filing    Date    Other Filings
4/1/19
12/15/17
12/26/16
12/23/16
12/15/16
11/25/16
10/30/16
7/1/16
6/30/16
Effective on:5/1/16
Filed on:4/29/16497
3/31/16
2/29/16
12/31/1524F-2NT,  NSAR-U
12/15/15
12/1/15
7/1/15
4/28/15485BPOS
4/24/15
4/14/15
3/28/15
3/27/15497
1/1/15
12/31/14NSAR-U
7/1/14
6/1/14
12/31/1324F-2NT,  NSAR-U
10/31/13
4/26/13485BPOS
1/1/13
12/31/1224F-2NT,  NSAR-U,  NT-NSAR
9/4/12
4/29/11485BPOS
4/30/10485BPOS
8/7/09
7/1/07
4/27/06485BPOS
12/31/0524F-2NT,  NSAR-U
4/29/05485BPOS
5/1/04485BPOS
4/30/04485BPOS
7/26/00N-4/A
6/27/00N-4/A
2/14/00N-4
1/1/00
11/28/98
1/1/98
1/1/97
4/20/94
12/31/93
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