File Nos. 333-06709
811-05618
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 22 (X)
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. 123 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
-------------------------------
(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
5701 Golden Hills Drive, Minneapolis, MN 55416
------------------------------------------- -----
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 347-6596
Name and Address of Agent for Service
-------------------------------------
Stewart D. Gregg
Allianz Life Insurance Company of North America
5701 Golden Hills Drive
Minneapolis, MN 55416
(763)765-2913
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b) of Rule 485
__X__ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Registered:
Individual Deferred Variable Annuity Contracts
PART A - PROSPECTUS
SUPPLEMENT DATED _____________, 2002
TO THE PROSPECTUS OF
VALUEMARK(R) IV VARIABLE ANNUITY
DATED MAY 1, 2002
ISSUED BY
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
ALLIANZ LIFE VARIABLE ACCOUNT B
The Prospectus has been revised to add the following paragraphs to the end of
Section 8. "Performance and Illustrations" on page 33.
Allianz Life may also provide illustrations to customers. These illustrations
may provide hypothetical depictions of either the "payin," or accumulation
phase, or the "payout," or annuitization phase. Illustrations may be based upon
historical performance of the Investment Options, as adjusted for certain
expenses. (Any adjusted historical performance information will be accompanied
by "standardized" performance information.) In the alternative, certain
illustrations may be based upon an assumed rate of return not to exceed 12%.
"Payin" and "payout" illustrations may have various features, as follows:
o Pay in illustrations assume an initial lump sum premium payment and are
designed to show how adjusted historical performance or an assumed rate of
return would have affected Contract values, withdrawal values, or the death
benefit. Payin illustrations may also be designed to show the effect of
periodic additional premium payments and withdrawals. Payin illustrations
based upon adjusted historical performance may assume that monies are
allocated to a single Investment Option or to multiple Investment Options.
In the event that monies are hypothetically allocated to multiple
Investment Options, performance may be shown on a weighted aggregate basis.
Dollar cost averaging illustrations, which are based upon adjusted
historical performance, would compare the hypothetical effect of a lump sum
premium payment into the specified Investment Options, as contrasted with
dollar cost averaging into the Investment Options over some period.
o Payout illustrations are designed to show the hypothetical effect of
annuitizing a Contact, or receiving a stream of periodic payments. These
illustrations may depict either a variable annuitization or a fixed
annuitization. A variable payout illustration would be based upon a
combination of adjusted historical performance and an assumed interest rate
(AIR), whereas a fixed payout illustration would be based upon the
annuitant's age, the payout option selected, and the payout factor rates
currently in effect on the date of the illustration. Variable payout
illustrations may also show the portion of each payout that is subject to
income tax and the portion that is non-taxable. Where applicable, a payout
illustration will show the effect of the enhanced GMIB or GMDB that is
credited to a Contract in the event of certain annuitizations or death
benefit payouts. In addition to variable and fixed payout illustrations, an
illustration may also be prepared showing the effect of required minimum
distribution payments from qualified Contracts.
The values illustrated will be calculated reflecting the deduction of Investment
Option expenses for the specific Investment Options selected, mortality and
expense risk charges, and other Contract charges. Contract maintenance charges
may or may not be deducted from a particular illustration. For fixed payin
illustrations, where no Investment Options are selected, an arithmetic average
of Investment Option expenses will be reflected. The amount of the mortality and
expense risk charges charges shown in an illustration will vary, depending upon
the Contract features you select. For surrender values, the contingent deferred
sales charges are also reflected. Illustrations will not reflect the deduction
of any state premium tax or any Federal or state income tax or penalties.
The illustrations that are given to customers by Allianz Life are designed to
assist customers in understanding how a contract may function in different
scenarios. They are not guarantees or representations as to future performance
or any specific rate of return.
A sample format of a customer illustration is attached as Appendix A to the
Statement of Additional Information and is incorporated herein by reference.
THE VALUEMARK(R) IV VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
This prospectus describes the Valuemark IV Variable Deferred Annuity Contract
with a Fixed Account offered by Allianz Life Insurance Company of North America
(Allianz Life). All references to "we," "us" and "our" refer to Allianz Life.
The annuity offers the Investment Options listed below, and a Fixed Account of
Allianz Life. You can select up to 10 investment choices (which include any of
the Investment Options and the Fixed Account). The Fixed Account and one or more
of the Investment Options may not be available in your state.
AIM
USAZ AIM Basic Value Fund
USAZ AIM Blue Chip Fund
USAZ AIM Dent Demographic Trends Fund
USAZ AIM International Equity Fund
ALLIANCE CAPITAL
USAZ Alliance Capital Growth and Income Fund
USAZ Alliance Capital Large Cap Growth Fund
USAZ Alliance Capital Technology Fund
DAVIS
Davis VA Financial Portfolio
Davis VA Value Portfolio
DREYFUS
Dreyfus Small Cap Stock Index Fund
Dreyfus Stock Index Fund
FRANKLIN TEMPLETON
Franklin Global Communications Securities Fund
Franklin Growth and Income Securities Fund
Franklin High Income Fund
Franklin Income Securities Fund
Franklin Large Cap Growth Securities Fund
Franklin Real Estate Fund
Franklin Rising Dividends Securities Fund
Franklin Small Cap Fund
Franklin Small Cap Value Securities Fund*
Franklin U.S. Government Fund
Franklin Zero Coupon Fund 2005
Franklin Zero Coupon Fund 2010
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Developing Markets Securities Fund
Templeton Foreign Securities Fund*
Templeton Growth Securities Fund
USAZ Templeton Developed Markets Fund
JENNISON
Jennison 20/20 Focus Portfolio
SP Jennison International Growth Portfolio
SP Strategic Partners Focused Growth Portfolio
OPPENHEIMER
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
USAZ Oppenheimer Emerging Growth Fund
PIMCO
PIMCO VIT High Yield Portfolio*
PIMCO VIT StocksPLUS Growth and Income Portfolio
PIMCO VIT Total Return Portfolio*
USAZ PIMCO Growth and Income Fund
USAZ PIMCO Renaissance Fund
USAZ PIMCO Value Fund
SELIGMAN
Seligman Small-Cap Value Portfolio
USAZ
USAZ Money Market Fund*
VAN KAMPEN
USAZ Van Kampen Aggressive Growth Fund
USAZ Van Kampen Comstock Fund
USAZ Van Kampen Emerging Growth Fund*
USAZ Van Kampen Growth and Income Fund
USAZ Van Kampen Growth Fund
*The Investment Option name has changed as of the date of this prospectus as
follows:
CURRENT NAME PREVIOUS NAME
Franklin Small Cap Value Securities Fund Franklin Value Securities Fund
Templeton Foreign Securities Fund Templeton International Securities Fund
PIMCO VIT High Yield Portfolio PIMCO VIT High Yield Bond Portfolio
PIMCO VIT Total Return Portfolio PIMCO VIT Total Return Bond Portfolio
USAZ Money Market Fund AZOA Money Market Fund
USAZ Van Kampen Emerging Growth Fund USAZ American Growth Fund
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Valuemark IV Variable Annuity
Contract with a Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated May 1, 2002. The SAI
has been filed with the Securities and Exchange Commission (SEC) and is legally
a part of this prospectus. The Table of Contents of the SAI is on page 37 of
this prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at 1-800-542-5427 or write us at: 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416-1297.
THE VALUEMARK IV VARIABLE ANNUITY CONTRACTS INVOLVE CERTAIN RISKS, AND YOU MAY
LOSE MONEY. THE CONTRACTS:
O ARE NOT BANK DEPOSITS
O ARE NOT FEDERALLY INSURED
O ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY
O ARE NOT GUARANTEED AND MAY BE SUBJECT TO LOSS OF PRINCIPAL
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: May 1, 2002
TABLE OF CONTENTS
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Index of Terms 4
Summary 5
Fee Table 7
1. The Valuemark IV
Variable Annuity Contract 14
Contract Owner 14
Joint Owner 14
Annuitant 14
Beneficiary 14
Assignment 15
2. Annuity Payments
(The Payout Phase) 15
Guaranteed Minimum Income Benefits 15
Annuity Options 16
3. Purchase 17
Purchase Payments 17
Automatic Investment Plan 18
Allocation of Purchase Payments 18
Tax-Free Section 1035 Exchanges 18
Faxed Applications 18
Free Look 18
Accumulation Units 19
4. Investment Options 19
Substitution and Limitation on
Further Investments 24
Transfers 25
Excessive Trading 26
Dollar Cost Averaging Program 26
Flexible Rebalancing 26
Voting Privileges 26
Substitution 27
5. Expenses 27
Insurance Charges 27
Mortality and Expense Risk Charge 27
Administrative Charge 27
Contract Maintenance Charge 27
Contingent Deferred Sales Charge 28
Waiver of Contingent Deferred
Sales Charge Benefits 28
Reduction or Elimination of the
Contingent Deferred Sales Charge 28
Transfer Fee 29
Premium Taxes 29
Income Taxes 29
Investment Option Expenses 29
6. Taxes 29
Annuity Contracts in General 29
Qualified and Non-Qualified Contracts 29
Multiple Contracts 30
Withdrawals - Non-Qualified Contracts 30
Withdrawals - Qualified Contracts 30
Withdrawals - Tax-Sheltered Annuities 31
Death Benefits 31
Diversification 31
7. Access to Your Money 31
Systematic Withdrawal Program 32
Minimum Distribution Program 32
Suspension of Payments or Transfers 32
8. Performance and Illustrations 32
9. Death Benefit 33
Upon Your Death 33
Death of Annuitant 35
10. Other Information 35
Allianz Life 35
The Separate Account 35
Distribution 36
Additional Credits for Certain Groups 36
Administration 36
Financial Statements 36
Table of Contents of the
Statement of Additional Information 37
Privacy Notice 38
Appendix 39
INDEX OF TERMS
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This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical terms used which are capitalized in
the prospectus. The page that is indicated below is where you will find the
definition for the word or term.
Page
Accumulation Phase 14
Accumulation Unit 19
Annuitant 14
Annuity Options 16
Annuity Payments 15
Annuity Unit 19
Beneficiary 14
Contract 14
Contract Owner 14
Fixed Account 14
Income Date 15
Investment Option 19
Joint Owner 14
Non-Qualified 29
Payout Phase 15
Purchase Payment 17
Qualified 29
Tax Deferral 14
SUMMARY
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The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
THE VARIABLE ANNUITY CONTRACT:
The annuity contract offered by Allianz Life provides a means for investing on a
tax-deferred basis in Investment Options and the Allianz Life Fixed Account for
retirement savings or other long-term investment purposes. The Contract provides
two death benefit options and annuity income options.
You can purchase the Contract as a Non-Qualified Contract. You may also purchase
the Contract as a Qualified Contract of a plan or type that is currently issued
by the company with monies deemed qualified as determined by the Internal
Revenue Code. This would include but may not be limited to Roth and Traditional
Individual Retirement Accounts (IRA) and Simplified Employee Pension (SEP)
contracts.
The Contract may be used as a funding vehicle for asset-based fee arrangements
offered by brokerage firms or their associated investment advisory firms. There
may be fees and charges assessed by these firms for their asset-based programs.
These fees and charges would be in addition to the charges and other deductions
we describe elsewhere in this prospectus. Your registered representative will be
able to describe the fees assessed in connection with any such asset-based
programs.
We currently do not permit Contract owners to borrow money from us using the
Contract as security for the loan.
Some Contract features may not be available in all states.
ANNUITY PAYMENTS:
If you want to receive regular income from your annuity, you can choose an
Annuity Option. You can choose whether to have payments come from our general
account, the available Investment Options or both. If you choose to have any
part of your payments come from the Investment Options, the dollar amount of
your payments may go up or down based on the performance of the Investment
Options. At the time you purchase the Contract, you can select a guaranteed
minimum income benefit (GMIB). GMIB options became available with new Contracts
effective November 5, 2001.
PURCHASE:
You can buy the Contract with $5,000 or more under most circumstances. You can
add $250 or more any time you like during the Accumulation Phase.
INVESTMENT OPTIONS:
You can put your money in the Investment Options and/or you can invest in the
Allianz Life Fixed Account. The investment returns on the Investment Options are
not guaranteed. You can make or lose money. You can make transfers between
Investment Options.
EXPENSES:
The Contract has insurance features and investment features, and there are costs
related to each.
Each year, Allianz Life deducts a $30 contract maintenance charge from your
Contract. Allianz Life currently waives this charge if the value of your
Contract is at least $50,000.
Allianz Life deducts a mortality and expense risk charge during the Accumulation
Phase which varies depending upon the death and income benefits you choose.
During the Payout Phase the mortality and expense risk charge is equal, on an
annual basis to 1.25% regardless of the options selected. Allianz Life also
deducts an administrative charge which is equal, on an annual basis, to 0.15% of
the value of the Contract invested in an Investment Option. The table below
shows the current combinations available to you and their total insurance
charges during the Accumulation Phase. The charges are calculated as a
percentage of the average daily value of the Contract Value invested in the
Investment Options.
Separate Account Annual Expenses:
CHARGES FOR CHARGES FOR CONTRACT
STANDARD CONTRACT WITH GMIB*
Death Benefit Option 1:
5% Increase/6 Year Step Up 1.49% 1.79%
Death Benefit Option 2:
Greatest Anniversary Value 1.49% 1.79%
Death Benefit Option 3:
Earnings Protection GMDB* 1.59% 1.89%
*The GMIB and Earnings Protection GMDB may not be available in all states.
If you take money out of the Contract, Allianz Life may assess a contingent
deferred sales charge against each Purchase Payment withdrawn. The contingent
deferred sales charge starts at 6% in the first year and declines to 0% after 7
years.
You can make 12 free transfers each year. After that, Allianz Life deducts $25,
or 2% of the amount transferred, whichever is less, for each additional
transfer.
Allianz Life is responsible for paying any premium and other similar taxes
assessed by states and other governmental entities (e.g., municipalities).
Premium taxes typically range from 0% to 3% of the Purchase Payment or Contract
value, depending on the state or governmental entity. Allianz Life, when
applicable, currently withholds premium tax charges when you die, when annuity
payments begin, or when you make a complete withdrawal, whichever comes first.
Allianz Life reserves the right to change this practice in the future.
Each Investment Option deducts portfolio management fees and expenses from the
amounts you have invested in the Investment Options. Some Investment Options
also deduct 12b-1 fees from Investment Option assets. For 2001 these expenses
and fees ranged on an annual basis, from 0.51% to 1.64% of the average daily
value of the Investment Option after reimbursement.
We will pay sales commissions to broker/dealers who sell the Contracts. For a
discussion of these arrangements, see "Distribution."
TAXES:
Your earnings are generally not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty. Other tax rules and limitations may apply to
Qualified Contracts.
ACCESS TO YOUR MONEY:
You can take money out of your Contract during the Accumulation Phase.
Withdrawals during the Accumulation Phase may be subject to a contingent
deferred sales charge. You may also have to pay income tax and a tax penalty on
any money you take out. Limits on withdrawals may apply to certain Qualified
Contracts.
DEATH BENEFIT:
If you die before moving to the Payout Phase, the Beneficiary will receive a
death benefit. The amount of the death benefit depends on which death benefit
option is selected at the time that you purchase a Contract. You can choose one
of the three benefits listed below. Option 3 is available if you are age 75 or
younger. Option 3 may not be available in all states. .
o Option 1: 5% Increase/6-Year Step Up Guarantee
o Option 2: Greatest Anniversary Value Guarantee
o Option 3: Earnings Protection Guaranteed Minimum Death Benefit (GMDB)
FREE-LOOK:
You can cancel the Contract within 10 days after receiving it (or whatever
period is required in your state). Allianz Life will refund the value of your
Contract on the day it receives your request to cancel the Contract. This may be
more or less than your original payment. In certain states, or if you have
purchased the Contract as an individual retirement annuity, Allianz Life will
refund the Purchase Payment.
PRIVACY POLICY:
WE PLACE A HIGH PRIORITY ON MAINTAINING YOUR TRUST AND CONFIDENCE. A NOTICE OF
THE PRIVACY POLICY FOLLOWED BY ALLIANZ LIFE AND ITS AFFILIATED COMPANIES IS
PROVIDED IN THIS PROSPECTUS TO ENHANCE YOUR UNDERSTANDING OF HOW WE PROTECT YOUR
PRIVACY WHEN WE COLLECT AND USE INFORMATION ABOUT YOU, AND THE STEPS WE TAKE TO
SAFEGUARD THAT INFORMATION. SEE "PRIVACY NOTICE."
INQUIRIES:
If you have any questions about your Contract or need more information, please
contact us at:
USAllianz Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
1-800-624-0197
FEE TABLE
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The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Investment Options under the Contract. It
reflects expenses of the Separate Account as well as the Investment Options.
Taxes, including premium tax charges also may apply, although they do not appear
in the table.
CONTRACT OWNER TRANSACTION FEES
Contingent Deferred Sales Charge*
(as a percentage of Purchase Payments)
YEARS SINCE
PURCHASE PAYMENT CHARGE
-----------------------------------------------------------------
0-1 6%
1-2 6%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 + 0%
Transfer Fee First 12 transfers in a
Contract year are free.
Thereafter, the fee is $25
or 2% of the amount
transferred, if less. Dollar
Cost Averaging transfers and
Flexible Rebalancing
transfers are not counted.
CONTRACT MAINTENANCE CHARGE** $30 per Contract per year
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES***
(as a percentage of average account value)
<S> <C> <C> <C> <C> <C>
STANDARD CONTRACT CHARGES CHARGES FOR CONTRACT WITH GMIB
M&E Admin. TOTAL M&E Admin. TOTAL
Charge Charge CHARGE Charge Charge CHARGE
Death Benefit Option 1: 5% Increase/6 Year Step Up 1.34% .15% 1.49% 1.64% .15% 1.79%
Death Benefit Option 2: Greatest Anniversary Value 1.34% .15% 1.49% 1.64% .15% 1.79%
Death Benefit Option 3: Earnings Protection GMDB 1.44% .15% 1.59% 1.74% .15% 1.89%
</TABLE>
*Each year after the first Contract year, you may make multiple partial
withdrawals of up to a total of 15% of the value of your Contract and no
contingent deferred sales charge will be assessed. See Section 7 -- "Access
to Your Money" for additional options.
** During the Accumulation Phase, the charge is waived if the value of your
Contract is at least $50,000. If you own more than one Valuemark IV Contract
(registered with the same social security number), we will determine the
total value of all your Contracts. If the total value of all your Contracts
is at least $50,000, the charge is waived (except in New Jersey). Currently,
the charge is also waived during the Payout Phase if the value of your
Contract at the Income Date is at least $50,000 (except in New Jersey).
*** The Separate Account Annual Expenses are less during the Payout Phase and
are charged daily at an annual rate of 1.25% of the average daily account
value in the Investment Options, regardless of which benefits you selected.
The GMIB and Earnings Protection GMDB may not be available in all states.
<TABLE>
<CAPTION>
INVESTMENT OPTION ANNUAL EXPENSES NET OF WAIVERS/REIMBURSEMENTS
(as a percentage of an Investment Option's average daily net assets for the most
recent fiscal year.) See the Investment Option prospectuses for more
information.*
MANAGEMENT 12B-1 OTHER TOTAL INVESTMENT
INVESTMENT OPTION FEES FEES** EXPENSES OPTION EXPENSES
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
USAZ AIM Basic Value Fund1 .75% .25% .10% 1.10%
---------------------------------------------------------------------------------------------------------------------------
USAZ AIM Blue Chip Fund1 .80% .25% .10% 1.15%
---------------------------------------------------------------------------------------------------------------------------
USAZ AIM Dent Demographic Trends Fund1 .85% .25% .10% 1.20%
USAZ AIM International Equity Fund1 .90% .25% .10% 1.25%
USAZ Alliance Capital Growth and Income Fund1 .85% .25% -- 1.10%
---------------------------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Large Cap Growth Fund1 .85% .25% -- 1.10%
USAZ Alliance Capital Technology Fund1 1.00% .25% -- 1.25%
Davis VA Financial Portfolio2 .75% -- .25% 1.00%
---------------------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio .75% -- .12% .87%
Dreyfus Small Cap Stock Index Fund - Service Shares1 .35% .25% -- .60%
---------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund - Service Shares .25% .25% .07% .57%
---------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund - Class 14.52% -- .03% .55%
---------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund - Class 14 .48% -- .03% .51%
Franklin High Income Fund - Class 14 .57% -- .05% .62%
Franklin Income Securities Fund - Class 14 .49% -- .04% .53%
Franklin Large Cap Growth Securities Fund - Class14 .75% -- .03% .78%
Franklin Real Estate Fund - Class 14 .56% -- .03% .59%
Franklin Rising Dividends Securities Fund - Class 14/5 .74% -- .02% .76%
Franklin Small Cap Fund - Class 15 .45% -- .31% .76%
Franklin Small Cap Value Securities Fund - Class 15 .57% -- .20% .77%
Franklin U.S. Government Fund - Class 14 .51% -- .02% .53%
Franklin Zero Coupon Fund 2005 - Class 14 .63% -- .05% .68%
Franklin Zero Coupon Fund 2010 - Class 14 .63% -- .05% .68%
Mutual Discovery Securities Fund - Class 1 .80% -- .22% 1.02%
Mutual Shares Securities Fund - Class 1 .60% -- .19% .79%
Templeton Developing Markets Securities Fund - Class 11.25% -- .32% 1.57%
Templeton Foreign Securities Fund - Class 15 .68% -- .22% .90%
Templeton Growth Securities Fund - Class 14 .80% -- .05% .85%
USAZ Templeton Developed Markets Fund1 .88% .25% .12% 1.25%
---------------------------------------------------------------------------------------------------------------------------
Jennison 20/20 Focus Portfolio - Class 21 75% .25% .33% 1.33%
SP Jennison International Growth Portfolio - Class 26 .85% .25% .54% 1.64%
SP Strategic Partners Focused Growth Portfolio - Class 26.90% .25% .26% 1.41%
Oppenheimer Global Securities Fund/VA .64% -- .06% .70%
---------------------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA .74% -- .05% .79%
Oppenheimer Main Street Growth & Income Fund/VA .68% -- .05% .73%
USAZ Oppenheimer Emerging Growth Fund1 .85% .25% .15% 1.25%
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Portfolio - Admin. Class7 .25% -- .50% .75%
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio - Admin. Class 7 .40% -- .27%
..67%
PIMCO VIT Total Return Portfolio- Admin. Class 7 .25% -- .40% .65%
USAZ PIMCO Growth and Income Fund1 .75% .25% .10% 1.10%
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO Renaissance Fund1 .75% .25% .10% 1.10%
USAZ PIMCO Value Fund1 .75% .25% .10% 1.10%
Seligman Small-Cap Value Portfolio - Class 18 1.00% -- .19% 1.19%
---------------------------------------------------------------------------------------------------------------------------
USAZ Money Market Fund1 .35% .25% .30% .90%
---------------------------------------------------------------------------------------------------------------------------
USAZ Van Kampen Aggressive Growth Fund1 .80% .25% .20% 1.25%
USAZ Van Kampen Comstock Fund1 .68% .25% .27% 1.20%
USAZ Van Kampen Emerging Growth Fund1 .75% .25% .10% 1.10%
USAZ Van Kampen Growth and Income Fund1 .68% .25% .17% 1.10%
USAZ Van Kampen Growth Fund1 .75% .25% .20% 1.20%
</TABLE>
*The fee and expense information regarding the Investment Options was provided
by the investment advisers, and Allianz Life has not independently verified
such information. Some of the Investment Options may pay service fees, which
vary by Investment Option. Except for the USAZ Funds and the PIMCO VIT
Investment Options, neither the Investment Options nor their Advisers are
affiliated with Allianz Life.
**The 12b-1 fees cover certain distribution and shareholder support services
provided by the companies selling Contracts. Our principal underwriter,
USAllianz Investor Services, LLC will receive 12b-1 fees.
1. The USAZ AIM Basic Value Fund, USAZ AIM Blue Chip Fund, USAZ AIM Dent
Demographic Trends Fund, USAZ AIM International Equity Fund, Dreyfus Small
Cap Stock Index Fund, Jennison 20/20 Focus Portfolio and the USAZ
Oppenheimer Emerging Growth Fund commenced operations as of May 1, 2002.
The expenses shown above for these Investment Options are therefore
estimated for the Investment Option's current fiscal year. Certain USAZ
Fund expenses will be assumed by the Adviser and an annual expense limit
has been designated by the Adviser for each Investment Option which is
reflected in the total expense amount listed in the table above. Without
reimbursement, total Investment Option expenses would be estimated as
follows: USAZ Alliance Capital Growth and Income Fund, 3.28%, USAZ Alliance
Capital Large Cap Growth Fund, 3.36%, USAZ Alliance Capital Technology
Fund, 3.19%, USAZ Templeton Developed Markets Fund, 3.56%, USAZ PIMCO
Growth and Income Fund, 3.70%, USAZ PIMCO Renaissance Fund, 2.96%, USAZ
PIMCO Value Fund, 3.43%, USAZ Money Market Fund, 1.21%, USAZ Van Kampen
Aggressive Growth Fund, 7.59%, USAZ Van Kampen Comstock Fund, 3.01%, USAZ
Van Kampen Emerging Growth Fund, 3.81%, USAZ Van Kampen Growth and Income
Fund, 2.71%, and the USAZ Van Kampen Growth Fund, 4.46%.
2. Without reimbursement, other expenses and total operating expenses would
have been 0.29% and 1.04%, respectively for the Davis VA Financial
Portfolio.
3. For the Investment Options of Franklin Templeton Variable Insurance
Products Trust, Class 2 shares have a distribution plan which is referred
to as a rule 12b-1 plan. See "Fund Account Policies" in the Franklin
Templeton Variable Insurance Products Trust prospectus for more information
about the rule 12b-1 plan.
4. The Investment Option administration fee is paid indirectly through the
management fee.
5. For the Franklin Rising Dividends, Franklin Small Cap, Franklin Small Cap
Value Securities and Templeton Foreign Securities Funds, the managers have
agreed in advance to make estimated reductions of 0.01%, 0.08%, 0.03% and
0.01%, respectively, in their fees to reflect reduced services resulting
from the Investment Options' investment in a Franklin Templeton money fund.
The managers are required by the Investment Options' Board of Trustees and
an order of the Securities and Exchange Commission to reduce their fees if
the Investment Options invest in a Franklin Templeton money fund. Without
these reductions, the total annual Investment Options' operating expenses
are estimated to be 0.77%, 0.84%, 0.80% and 0.91%, respectively.
6. Without reimbursement, total operating expenses would have been 2.26% and
3.01%, respectively for the SP Jennison International Growth and SP
Strategic Partners Focused Growth Portfolios. These reimbursements are
voluntary and may be terminated at any time.
7. "Other Expenses" without reimbursement reflect a 0.35% administrative fee,
a 0.15% service fee and 0.01% representing pro rata Trustees' Fees for the
PIMCO VIT High Yield Portfolio; a 0.10% administrative fee, a 0.15% service
fee and 0.02% interest expense for the PIMCO VIT StocksPLUS Growth and
Income Portfolio; and a 0.25% administrative fee, a 0.15% service fee and
0.01% representing pro rata Trustees' fees for the PIMCO VIT Total Return
Portfolio. PIMCO has contractually agreed to reduce total annual Investment
Option operating expenses to the extent they would exceed, due to the
payment of organizational expenses and Trustees' fees, 0.75%, 0.65% and
0.65%, respectively, of average daily net assets for the PIMCO VIT High
Yield, StocksPLUS Growth and Income and Total Return Portfolios. Without
such reductions, Total Annual Expenses for the fiscal year ended December
31, 2001 would have been 0.76%, 0.67% and 0.66%, respectively. Under the
Expense Limitation Agreement, PIMCO may recoup these waivers and
reimbursements in future periods, not exceeding three years, provided total
expenses, including such recoupment, do not exceed the annual expense
limit. Ratio of net expenses to average net assets excluding interest
expense is 0.65% for the StocksPLUS Growth and Income Portfolio.
8. Effective March 1, 2001, J & W. Seligman & Co. Incorporated ("Seligman")
voluntarily agreed to reimburse expenses of Seligman Small-Cap Value
Portfolio, other than management and 12b-1 fees, that exceed 0.20%. Prior
to that date, Seligman reimbursed all expenses, other than management and
12b-1 fees. Without reimbursement, other expenses and total Investment
Option expenses would have been 0.22% and 1.22%, respectively. There is no
assurance that Seligman will continue this policy in the future.
EXAMPLES
The expenses for your Contract may be different than those shown in the charts
below depending upon which benefits, or combination of benefits if any, you
select. Example I illustrates your expenses if you surrender your Contract.
Example II illustrates expenses if your Contract is not surrendered.
o The examples below should not be considered a representation of past or
future expenses. Actual expenses may be greater or less that those shown.
o These examples assume that the applicable fee waiver and expense
reimbursements provided by some of the Investment Options will continue for
the periods shown.
o The $30 contract maintenance charge is included in the examples as a
prorated charge of $1. Since the average Contract size is greater than
$1,000, the contract maintenance charge is reduced accordingly.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see Section 5 -- "Expenses".
<TABLE>
<CAPTION>
Example I
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you surrender your Contract at the end of each
time period:
a) assuming you do not select the Earnings Protection GMDB or GMIB
b) assuming you select both the Earnings Protection GMDB and the GMIB
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------
USAZ AIM Basic Value Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ AIM Blue Chip Fund a) 88 a) 140 a) 183 a) 307
b) 92 b) 151 b) 202 b) 346
---------------------------------------------------------------------------------------------------------
USAZ AIM Dent Demographic Trends Fund a) 88 a) 141 a) 186 a) 312
b) 92 b) 152 b) 204 b) 350
---------------------------------------------------------------------------------------------------------
USAZ AIM International Equity Fund a) 89 a) 143 a) 188 a) 317
b) 93 b) 154 b) 207 b) 355
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Growth and Income Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Large Cap Growth Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Technology Fund a) 89 a) 143 a) 188 a) 317
b) 93 b) 154 b) 207 b) 355
---------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio a) 86 a) 135 a) 176 a) 293
b) 90 b) 147 b) 195 b) 331
---------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio a) 85 a) 132 a) 170 a) 280
b) 89 b) 143 b) 189 b) 319
---------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Stock Index Fund a) 82 a) 124 a) 157 a) 252
b) 86 b) 135 b) 176 b) 293
---------------------------------------------------------------------------------------------------------
Dreyfus Stock index Fund a) 82 a) 123 a) 155 a) 249
b) 86 b) 135 b) 175 b) 290
---------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund a) 82 a) 123 a) 154 a) 247
b) 86 b) 134 b) 174 b) 288
---------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund a) 81 a) 121 a) 152 a) 243
b) 85 b) 133 b) 172 b) 284
---------------------------------------------------------------------------------------------------------
Franklin High Income Fund a) 82 a) 125 a) 158 a) 254
b) 86 b) 136 b) 177 b) 295
---------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund a) 82 a) 122 a) 153 a) 245
b) 86 b) 134 b) 173 b) 286
---------------------------------------------------------------------------------------------------------
Franklin Large Cap Growth Securities Fund a) 84 a) 129 a) 165 a) 271
b) 88 b) 141 b) 185 b) 310
---------------------------------------------------------------------------------------------------------
Franklin Real Estate Fund a) 82 a) 124 a) 156 a) 251
b) 86 b) 135 b) 176 b) 292
---------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund a) 84 a) 129 a) 164 a) 268
b) 88 b) 140 b) 184 b) 308
---------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund a) 84 a) 129 a) 164 a) 268
b) 88 b) 140 b) 184 b) 308
---------------------------------------------------------------------------------------------------------
Franklin Small Cap Value Securities Fund a) 84 a) 129 a) 165 a) 270
b) 88 b) 140 b) 184 b) 309
---------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund a) 82 a) 122 a) 153 a) 245
b) 86 b) 134 b) 173 b) 286
---------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund 2005 a) 83 a) 126 a) 161 a) 260
b) 87 b) 138 b) 180 b) 300
---------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund 2010 a) 83 a) 126 a) 161 a) 260
b) 87 b) 138 b) 180 b) 300
---------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund a) 86 a) 136 a) 177 a) 295
b) 90 b) 147 b) 196 b) 333
---------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund a) 84 a) 130 a) 166 a) 272
b) 88 b) 141 b) 185 b) 311
---------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund a) 92 a) 152 a) 203 a) 347
b) 96 b) 163 b) 221 b) 384
---------------------------------------------------------------------------------------------------------
Templeton Foreign Securities Fund a) 85 a) 133 a) 171 a) 283
b) 89 b) 144 b) 190 b) 322
---------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund a) 85 a) 131 a) 169 a) 278
b) 89 b) 143 b) 188 b) 317
---------------------------------------------------------------------------------------------------------
USAZ Templeton Developed Markets Fund a) 89 a) 143 a) 188 a) 317
b) 93 b) 154 b) 207 b) 355
---------------------------------------------------------------------------------------------------------
Jennison 20/20 Focus Portfolio a) 90 a) 145 a) 192 a) 325
b) 93 b) 156 b) 210 b) 362
---------------------------------------------------------------------------------------------------------
SP Jennison International Growth Portfolio a) 93 a) 153 a) 206 a) 354
b) 97 b) 165 b) 225 b) 390
---------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio a) 90 a) 147 a) 196 a) 332
b) 94 b) 158 b) 214 b) 369
---------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA a) 83 a) 127 a) 162 a) 262
b) 87 b) 138 b) 181 b) 302
---------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA a) 84 a) 130 a) 166 a) 272
b) 88 b) 141 b) 185 b) 311
---------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA a) 84 a) 128 a) 163 a) 265
b) 88 b) 139 b) 182 b) 305
---------------------------------------------------------------------------------------------------------
USAZ Oppenheimer Emerging Growth Fund a) 89 a) 143 a) 188 a) 317
b) 93 b) 154 b) 207 b) 355
---------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Portfolio a) 84 a) 128 a) 164 a) 267
b) 88 b) 140 b) 183 b) 307
---------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio a) 83 a) 126 a) 160 a) 259
b) 87 b) 137 b) 179 b) 300
---------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Portfolio a) 83 a) 126 a) 159 a) 257
b) 87 b) 137 b) 178 b) 298
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Growth and Income Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Renaissance Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Value Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio a) 88 a) 141 a) 185 a) 311
b) 92 b) 152 b) 204 b) 349
---------------------------------------------------------------------------------------------------------
USAZ Money Market Fund a) 85 a) 133 a) 171 a) 283
b) 89 b) 144 b) 190 b) 322
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Aggressive Growth Fund a) 89 a) 143 a) 188 a) 317
b) 93 b) 154 b) 207 b) 355
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Comstock Fund a) 88 a) 141 a) 186 a) 312
b) 92 b) 152 b) 204 b) 350
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Emerging Growth Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Growth and Income Fund a) 87 a) 138 a) 181 a) 302
b) 91 b) 150 b) 200 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Growth Fund a) 88 a) 141 a) 186 a) 312
b) 92 b) 152 b) 204 b) 350
---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Example II
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if your Contract is not surrendered:
a) assuming you do not select the Earnings Protection GMDB or GMIB
b) assuming you select both the Earnings Protection GMDB and the GMIB
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------
USAZ AIM Basic Value Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ AIM Blue Chip Fund a) 28 a) 85 a) 145 a) 307
b) 32 b) 97 b) 165 b) 346
---------------------------------------------------------------------------------------------------------
USAZ AIM Dent Demographic Trends Fund a) 28 a) 87 a) 147 a) 312
b) 32 b) 98 b) 167 b) 350
---------------------------------------------------------------------------------------------------------
USAZ AIM International Equity Fund a) 29 a) 88 a) 150 a) 317
b) 33 b) 100 b) 169 b) 355
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Growth and Income Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Large Cap Growth Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Technology Fund a) 29 a) 88 a) 150 a) 317
b) 33 b) 100 b) 169 b) 355
---------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio a) 26 a) 81 a) 138 a) 293
b) 30 b) 92 b) 157 b) 331
---------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio a) 25 a) 77 a) 131 a) 280
b) 29 b) 89 b) 151 b) 319
---------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Stock Index Fund a) 22 a) 68 a) 117 a) 252
b) 26 b) 81 b) 138 b) 293
---------------------------------------------------------------------------------------------------------
Dreyfus Stock index Fund a) 22 a) 68 a) 116 a) 249
b) 26 b) 80 b) 136 b) 290
---------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund a) 22 a) 67 a) 115 a) 247
b) 26 b) 79 b) 135 b) 288
---------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund a) 21 a) 66 a) 113 a) 243
b) 25 b) 78 b) 133 b) 284
---------------------------------------------------------------------------------------------------------
Franklin High Income Fund a) 22 a) 69 a) 118 a) 254
b) 26 b) 81 b) 139 b) 295
---------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund a) 22 a) 66 a) 114 a) 245
b) 26 b) 78 b) 134 b) 286
---------------------------------------------------------------------------------------------------------
Franklin Large Cap Growth Securities Fund a) 24 a) 74 a) 127 a) 271
b) 28 b) 86 b) 146 b) 310
---------------------------------------------------------------------------------------------------------
Franklin Real Estate Fund a) 22 a) 68 a) 117 a) 251
b) 26 b) 80 b) 137 b) 292
---------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund a) 24 a) 73 a) 125 a) 268
b) 28 b) 85 b) 146 b) 308
---------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund a) 24 a) 73 a) 125 a) 268
b) 28 b) 85 b) 146 b) 308
---------------------------------------------------------------------------------------------------------
Franklin Small Cap Value Securities Fund a) 24 a) 74 a) 126 a) 270
b) 28 b) 86 b) 146 b) 309
----------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund a) 22 a) 66 a) 114 a) 245
b) 26 b) 78 b) 134 b) 286
----------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund 2005 a) 23 a) 71 a) 121 a) 260
b) 27 b) 83 b) 142 b) 300
---------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund 2010 a) 23 a) 71 a) 121 a) 260
b) 27 b) 83 b) 142 b) 300
---------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund a) 26 a) 81 a) 139 a) 295
b) 30 b) 93 b) 158 b) 333
---------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund a) 24 a) 74 a) 127 a) 272
b) 28 b) 86 b) 147 b) 311
---------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund a) 32 a) 98 a) 166 a) 347
b) 36 b) 109 b) 185 b) 384
---------------------------------------------------------------------------------------------------------
Templeton Foreign Securities Fund a) 25 a) 78 a) 133 a) 283
b) 29 b) 90 b) 152 b) 322
---------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund a) 25 a) 76 a) 130 a) 278
b) 29 b) 88 b) 150 b) 317
---------------------------------------------------------------------------------------------------------
USAZ Templeton Developed Markets Fund a) 29 a) 88 a) 150 a) 317
b) 33 b) 100 b) 169 b) 355
---------------------------------------------------------------------------------------------------------
Jennison 20/20 Focus Portfolio a) 30 a) 90 a) 154 a) 325
b) 33 b) 102 b) 173 b) 362
---------------------------------------------------------------------------------------------------------
SP Jennison International Growth Portfolio a) 33 a) 100 a) 169 a) 354
b) 37 b) 111 b) 188 b) 390
---------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio a) 30 a) 93 a) 158 a) 332
b) 34 b) 105 b) 177 b) 369
---------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA a) 23 a) 72 a) 122 a) 262
b) 27 b) 84 b) 143 b) 302
---------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA a) 24 a) 74 a) 127 a) 272
b) 28 b) 86 b) 147 b) 311
---------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA a) 24 a) 72 a) 124 a) 265
b) 28 b) 84 b) 144 b) 305
---------------------------------------------------------------------------------------------------------
USAZ Oppenheimer Emerging Growth Fund a) 29 a) 88 a) 150 a) 317
b) 33 b) 100 b) 169 b) 355
---------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Portfolio a) 24 a) 73 a) 125 a) 267
b) 28 b) 85 b) 145 b) 307
---------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio a) 23 a) 71 a) 121 a) 259
b) 27 b) 83 b) 141 b) 300
---------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Portfolio a) 23 a) 70 a) 120 a) 257
b) 27 b) 82 b) 140 b) 298
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Growth and Income Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Renaissance Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ PIMCO Value Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio a) 28 a) 86 a) 147 a) 311
b) 32 b) 98 b) 167 b) 349
---------------------------------------------------------------------------------------------------------
USAZ Money Market Fund a) 25 a) 78 a) 133 a) 283
b) 29 b) 90 b) 152 b) 322
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Aggressive Growth Fund a) 29 a) 88 a) 150 a) 317
b) 33 b) 100 b) 169 b) 355
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Comstock Fund a) 28 a) 87 a) 147 a) 312
b) 32 b) 98 b) 167 b) 350
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Emerging Growth Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Growth and Income Fund a) 27 a) 84 a) 143 a) 302
b) 31 b) 95 b) 162 b) 341
---------------------------------------------------------------------------------------------------------
USAZ Van Kampen Growth Fund a) 28 a) 87 a) 147 a) 312
b) 32 b) 98 b) 167 b) 350
---------------------------------------------------------------------------------------------------------
</TABLE>
SEE THE APPENDIX FOR ACCUMULATION UNIT VALUES - CONDENSED FINANCIAL INFORMATION.
1. The valuemark iv
variable annuity contract
--------------------------------------------------------------------------------
This prospectus describes a variable deferred annuity contract with a Fixed
Account offered by Allianz Life.
An annuity is a contract between you, the owner, and an insurance company (in
this case Allianz Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is at least two years in the
future. Until you decide to begin receiving Annuity Payments, your annuity is in
the Accumulation Phase. Once you begin receiving Annuity Payments, your Contract
switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
Your investment choices include Investment Options and the Fixed Account of
Allianz Life. The Contract is called a variable annuity because you can choose
among the Investment Options and, depending upon market conditions, you can make
or lose money in the Contract based on the investment performance of the
Investment Options. The Investment Options are designed to offer a better return
than the Fixed Account. However, this is not guaranteed. The amount of money you
are able to accumulate in your Contract during the Accumulation Phase depends in
large part upon the investment performance of the Investment Option(s) you
select. The amount of the Annuity Payments you receive during the Payout Phase
of the Contract also depends in large part upon the investment performance of
any Investment Options you select for the Payout Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits made within the twelve
month period. Your initial interest rate is set on the date when your money is
invested in the Fixed Account and remains effective for one year. Initial
interest rates are declared monthly. Allianz Life guarantees that the interest
credited to the Fixed Account will not be less than 3% per year. If you select
the Fixed Account, your money will be placed with the other general account
assets of Allianz Life. Allianz Life may change the terms of the Fixed Account
in the future - please contact Allianz Life for the most current terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
We will not make any changes to your Contract without your permission except as
may be required by law.
CONTRACT OWNER
You, as the Contract Owner, have all the rights under the Contract. The Contract
Owner is as designated at the time the Contract is issued, unless changed. You
may change Contract Owners for a Non-Qualified Contract at any time unless you
have selected the Earnings Protection Guaranteed Minimum Death Benefit. If this
benefit is selected, we have the right to accept the change subject to our
underwriting rules at any time. This may be a taxable event. You should consult
with your tax adviser before doing this.
JOINT OWNER
The Non-Qualified Contract can be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Contract Owner (except in Pennsylvania, Oregon and New
Jersey). Upon the death of either Joint Owner, the surviving Joint Owner will be
the designated Beneficiary. Any other Beneficiary designation at the time the
Contract was issued or as may have been later changed will be treated as a
contingent Beneficiary unless otherwise indicated.
ANNUITANT
The Annuitant is the natural person on whose life we base Annuity Payments. You
name the Annuitant. You may change the Annuitant at any time before the Income
Date unless the Contract is owned by a non-individual (for example, a
corporation). For a Qualified Contract there may be a requirement that the Owner
and the Annuitant are the same person.
BENEFICIARY
The Beneficiary is the person(s) or entity you name to receive any death
benefit. The Beneficiary is named at the time the Contract is issued unless
changed at a later date. Unless an irrevocable Beneficiary has been named, you
can change the Beneficiary or contingent Beneficiary.
ASSIGNMENT
You can transfer ownership (assign) of the Contract at any time during your
lifetime. Allianz Life will not be bound by the assignment until it receives
written notice of the assignment. Allianz Life will not be liable for any
payment or other action it takes in accordance with the Contract before it
receives notice of the assignment. Any assignment made after the death benefit
has become payable can only be done with our consent. AN ASSIGNMENT MAY BE A
TAXABLE EVENT.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
2. Annuity Payments
(The Payout Phase)
--------------------------------------------------------------------------------
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 2 years after you buy the Contract. If you select one of the
Guaranteed Minimum Income Benefits (GMIB), your Income Date must be within 30
days following a Contract anniversary beginning with the 7th Contract
Anniversary (and certain other conditions must be met).
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Annuity
Payments must begin by the Annuitant's 85th birthday or 10 years (5 years in
Pennsylvania) from the date the Contract was issued, whichever is later. This
limitation may not apply when the Contract is issued to a charitable remainder
trust.
You may elect to receive your Annuity Payments as a variable payout, a fixed
payout, or a combination of both. Under a fixed payout, all of the Annuity
Payments will be the same dollar amount (equal installments). If you choose a
variable payout, you can select from the available Investment Options. If you do
not tell us otherwise, your Annuity Payments will be based on the investment
allocations that were in place on the Income Date. Guaranteed fixed annuity
payments are based on an interest rate of 2.5% per year and, where applicable,
the 1983 (a) Individual Annuity Mortality Table with mortality improvement
projected 30 years using Mortality Protection Scale G.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Investment Option(s), the dollar amount of your
payments will depend upon three things:
1) the value of your Contract in the Investment Option(s) on the Income Date;
2) the 5% assumed investment rate used in the annuity table for the Contract;
and
3) the performance of the Investment Option(s) you selected.
If the actual performance exceeds the 5% assumed investment rate, your Annuity
Payments will increase. Similarly, if the actual rate is less than 5%, your
Annuity Payments will decrease.
You (or someone you designate) will receive the Annuity Payments. You will
receive tax reporting on those payments.
GUARANTEED MINIMUM INCOME BENEFITS
At the time you purchase the Contract, you can select a Guaranteed Minimum
Income Benefit (GMIB). Once you select a GMIB, it cannot be changed. You must be
75 years old or younger to elect a GMIB. There are two GMIB options (Option 1
and 2). Option 1 is available only with Death Benefit Options 1 or 3 and Option
2 is available only with Death Benefit Options 2 or 3 (see Section 9 - Death
Benefit). The mortality and expense risk charge is higher for Contracts with a
GMIB. GMIB options became available with new Contracts effective November 5,
2001.
THE GMIB MAY NOT BE AVAILABLE IN YOUR STATE. CHECK WITH YOUR REGISTERED
REPRESENTATIVE REGARDING AVAILABILITY.
The guaranteed minimum income benefits are described as follows and may be used
in determining the amount of each Annuity Payment you receive during the Payout
Phase. The GMIB can be used with any fixed Annuity Option provided for in the
Contract and provides for guaranteed minimum Annuity Payments during the Payout
Phase. The GMIB will apply only under the following circumstances:
o Your Income Date must be within 30 days following a Contract anniversary
beginning with the 7th Contract anniversary;
o Annuity Payments can only be made under a fixed annuity payout (regardless
of the Annuity Option you select); and
o If you choose an Annuity Option involving a period certain, the period
certain must be for at least 10 years.
If Joint Owners are named, the age of the oldest Contract Owner will be used to
determine the GMIB value. If a non-natural person owns the Contract, the
Contract Owner means the Annuitant.
GMIB OPTION 1
The guaranteed fixed annuity rates in the Contract will be applied to the GMIB
Value.
The GMIB Value is:
A. Prior to the first Contract anniversary: the GMIB value is equal to the
Purchase Payments you have made, less any adjusted partial withdrawals.
B. From the first Contract anniversary to your 81st birthday (76th birthday in
Washington, when available) and before the date of death, the GMIB Value is
the greater of (1) or (2) below:
1. 5% Increase
o Purchase Payments you have made,
o less any adjusted partial withdrawals (as defined below),
o plus 5% on the accumulated value on each Contract anniversary.
2. Highest 6th Year Anniversary Value
o highest Contract Value on any sixth year Contract anniversary, o plus any
Purchase Payments made since that Contract anniversary, and o less any adjusted
partial withdrawals since that Contract anniversary.
Contract anniversaries occurring on or after your 81st birthday (76th
birthday in Washington, when available) or date of death will not be taken
into consideration in determining this benefit.
C. After your 81st birthday (76th birthday in Washington, when available), the
GMIB Value determined as of the last Contract anniversary prior to your
81st birthday will be increased by any Purchase Payments you made since
such Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
The highest Contract Value on any sixth year Contract anniversary is the
highest Contract Value on the Contract's sixth anniversary and as of the
end of each successive six year period. If the Contract Owner dies before
the Contract reaches its 6th anniversary, the "Highest 6th Year Anniversary
Value" option is not available.
GMIB OPTION 2
The guaranteed fixed annuity rates in the Contract will be applied to the GMIB
Value. The GMIB Value is equal to the greater of:
o Purchase Payments you have made, less any adjusted partial withdrawals, or
o The greatest anniversary value. The "anniversary value" is the value of the
Contract on a Contract anniversary, increased by Purchase Payments you have
made since that anniversary and decreased by any adjusted partial withdrawals
since that anniversary. Allianz Life will not take into consideration any
Contract anniversaries which occur on or after your 81st birthday (76th
birthday in Washington, when available) or date of death in determining this
benefit.
An adjusted partial withdrawal is the withdrawal (including any Contingent
Deferred Sales Charges) multiplied by the ratio of (a) to (b), where:
(a) is the greater of (1) and (2) below on the date of (but prior to) the
withdrawal;
(1) The Contract Value; and
(2) The GMIB Value.
(b) is the Contract Value on the date of (but prior to) the withdrawal.
ANNUITY OPTIONS
You can choose among income plans. We call them Annuity Options. You can choose
one of the following Annuity Options or any other Annuity Option you want and
that Allianz Life agrees to provide. After Annuity Payments begin, you cannot
change the Annuity Option. Upon the death of the Contract Owner, if different
than the Annuitant, the Beneficiary will receive the Annuity Payments.
If you do not choose an Annuity Option prior to the Income Date, we will assume
that you selected Option 2 which provides a life annuity with 5 years (10 years
if you select the GMIB) of guaranteed payments.
OPTION 1. LIFE ANNUITY. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
OPTION 2. LIFE ANNUITY WITH 5, 10, 15 OR 20 YEAR PAYMENTS GUARANTEED. Under this
option, we will make monthly Annuity Payments so long as the Annuitant is alive.
However, if the Annuitant dies before the end of the selected guaranteed period,
we will continue to make Annuity Payments to you or any person you choose for
the rest of the guaranteed period. If you do not want to receive Annuity
Payments after the Annuitant's death, you can ask for a single lump sum equal to
the present value of the guaranteed monthly Annuity Payments remaining, as of
the date Allianz Life receives proof of the death of the Annuitant and a payment
election form, commuted as set forth in the Contract.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make to you can be
equal to 100%, 75% or 50% of the amount that was being paid when both Annuitants
were alive. The monthly Annuity Payments will end when the last surviving
Annuitant dies.
OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH 5, 10, 15 OR 20 YEAR PAYMENTS
GUARANTEED. Under this option, we will make monthly Annuity Payments during the
joint lifetime of the Annuitant and the joint Annuitant. When the Annuitant
dies, if the joint Annuitant is still alive, we will continue to make Annuity
Payments, so long as the surviving Annuitant continues to live, at 100% of the
amount that was being paid when both were alive. If, when the last death occurs,
we have made Annuity Payments for less than the selected guaranteed period, we
will continue to make Annuity Payments to you or any person you choose for the
rest of the guaranteed period. If you do not want to receive Annuity Payments
after the Annuitant's death, you can ask for a single lump sum equal to the
present value of the guaranteed monthly Annuity Payments remaining, as of the
date Allianz Life receives proof of the death of the Annuitant and a payment
election form, commuted as set forth in the Contract.
OPTION 5. REFUND LIFE ANNUITY. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund as
set forth in the Contract.
ADDITIONAL OPTION. Allianz Life also currently offers a fixed period certain
annuity option. Under this option, Allianz Life will make monthly Annuity
Payments for a specified period of time. The Owner must elect the specified
period which must be a whole number of years from 10 to 30. Payments under this
option are only available as a fixed payout. If at the time of the death of the
last Annuitant and any joint Annuitant, Annuity Payments have been made for less
that the specified period certain, then Allianz Life will continue to make
Annuity Payments to the Owner for the rest of the period certain.
3. PURCHASE
--------------------------------------------------------------------------------
PURCHASE PAYMENTS
A Purchase Payment is the money you invest in the Contract. The minimum payment
Allianz Life will accept is $5,000 when the Contract is bought as a
Non-Qualified Contract. If you enroll in the Automatic Investment Plan (which is
described below), your Purchase Payment can be $2,000. If you are buying the
Contract as part of an IRA (Individual Retirement Annuity), 401(k) or other
Qualified plan, the minimum amount we will accept is $2,000. The maximum amount
we will accept without our prior approval is $1 million. You can make additional
Purchase Payments of $250 (or as low as $100 if you have selected the Automatic
Investment Plan) or more to either type of Contract. Allianz Life may, at its
sole discretion, waive the minimum payment requirements. We reserve the right to
decline any Purchase Payments. At the time you buy the Contract, you and the
Annuitant cannot be older than 85 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
The Contract may be used in connection with certain tax qualified retirement
plans. The Contract includes attributes such as tax deferral on accumulated
earnings. Qualified retirement plans provide their own tax deferral benefit; the
purchase of this Contract does not provide additional tax deferral benefits
beyond those provided in the qualified plan. Accordingly, if you are purchasing
the Contract through a qualified plan, you should consider purchasing this
Contract for its Death Benefit, annuity benefits, and other non-tax deferral
related benefits. Please consult a tax advisor for information specific to your
circumstances to determine whether the Contract is an appropriate investment for
you.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings or checking account. You may
participate in this program by completing the appropriate form. We must receive
your form by the first of the month in order for AIP to begin that same month.
Investments will take place on the 20th of the month, or the next business day.
The minimum investment that can be made by AIP is $100. You may stop AIP at any
time you want. We need to be notified by the first of the month in order to stop
or change AIP that month. If AIP is used for a Qualified Contract, you should
consult your tax adviser for advice regarding maximum contributions.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Investment Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
The Fixed Account may not be available in your state (check with your registered
representative). Transfers do not change the allocation instructions for
payments. You can instruct us how to allocate additional Purchase Payments you
make. If you do not instruct us, we will allocate them in the same way as your
previous instructions to us. You may change the allocation of future payments
without fee, penalty or other charge upon written notice or telephone
instructions to the USAllianz Service Center.
A change will be effective for payments received on or after we receive your
notice or instructions. Allianz Life reserves the right to limit the number of
Investment Options that you may invest in at one time. Currently, you may invest
in 10 investment choices at any one time (which includes any of the Investment
Options listed in Section 4 and the Allianz Life Fixed Account). We may change
this in the future. However, we will always allow you to invest in at least five
Investment Options.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
TAX-FREE SECTION 1035 EXCHANGES
You generally can exchange one annuity contract, or a life insurance policy, for
another annuity contract in a "tax-free" exchange under Section 1035 of the
Internal Revenue Code. Before making an exchange, you should compare both
contracts carefully. Remember that if you exchange another annuity contract for
the one described in this prospectus: you might have to pay a surrender charge
on your old contract; there will be a new surrender charge period for the new
contract; other charges under the new contract may be higher (or lower); and the
benefits may be different. If the exchange does not qualify for Section 1035
treatment, you also may have to pay federal income tax on the exchange. You
should not exchange another annuity contract for this one unless you determine
that the exchange is in your best interest.
FAXED APPLICATIONS
Allianz Life will accept Contract applications delivered in writing, as well as
via fax. A manually signed faxed application will be treated as an application
delivered in writing. We do not currently accept applications delivered via
e-mail or Web site, or other electronic communications.
FREE LOOK
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the Contract within this time period, Allianz Life will not assess a contingent
deferred sales charge. You will receive back whatever your Contract is worth on
the day we receive your request. In certain states, or if you have purchased the
Contract as an IRA, we may be required to give you back your Purchase Payment if
you decide to cancel your Contract within 10 days after receiving it (or
whatever period is required in your state). If that is the case, we reserve the
right to allocate your initial Purchase Payment to the USAZ Money Market Fund
for 15 days after we receive it. (In some states, the period may be longer.) At
the end of that period, we will re-allocate your money as you selected.
Currently, however, we will directly allocate your money to the Investment
Options and/or the Fixed Account as you have selected.
ACCUMULATION UNITS
The value of the portion of your Contract allocated to the Investment Options
will go up or down based upon the investment performance of the Investment
Option(s) you choose. The value of your Contract will also depend on the
expenses of the Contract. In order to keep track of the value of your Contract,
we use a measurement called an Accumulation Unit (which is like a share of a
mutual fund). During the Payout Phase of the Contract we call it an Annuity
Unit.
Every business day we determine the value of an Accumulation Unit for each
Investment Option by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1) dividing the value of an Investment Option at the end of the current period
by the value of an Investment Option
for the previous period; and
2) multiplying it by one minus the daily amount of the insurance charges and
any charges for taxes.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to an Investment
Option. The number of Accumulation Units we credit your Contract with is
determined by dividing the amount of the Purchase Payment allocated to an
Investment Option by the value of the corresponding Accumulation Unit.
We calculate the value of each Accumulation Unit after regular trading on the
New York Stock Exchange closes each day, and then credit your Contract.
EXAMPLE:
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Franklin Growth and Income Securities
Fund. When the New York Stock Exchange closes on that Wednesday, we determine
that the value of an Accumulation Unit based on an investment in the Franklin
Growth and Income Securities Fund is $12.50. We then divide $3,000 by $12.50 and
credit your Contract on Wednesday night with 240 Accumulation Units.
4. INVESTMENT OPTIONS
--------------------------------------------------------------------------------
The Contract offers the Investment Options listed in the following table. Each
Investment Option has its own investment objective. The Contract also offers a
Fixed Account of Allianz Life. Additional Investment Options may be available in
the future. In the future, we also may eliminate Investment Options.
You should read the Investment Option prospectuses carefully. The Investment
Options invest in different types of securities, and following varying
investment strategies. There are potential risks associated with each of these
types of securities and investment strategies. For example, an Investment
Option's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on an Investment Option with a small
asset base. An Investment Option may not experience similar performance as its
assets grow. The operation of the Investment Options and the various risks
associated with the Investment Options are described in the Investment Option
prospectuses. To obtain a current prospectus for any of the Investment Options
call your Financial Adviser or USAllianz at 1-800-542-5427. Copies of the
Investment Option prospectuses will be sent to you with your Contract.
Franklin Templeton Variable Insurance Products Trust issues two classes of
shares which are described in the prospectus for Franklin Templeton Variable
Insurance Products Trust. Only Class 1 shares are available in connection with
your Contract.
The investment objectives and policies of certain Investment Options are similar
to the investment objectives and policies of other portfolios that the same
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the Investment Options may be higher or lower than the
results of such portfolios. The investment advisers cannot guarantee, and make
no representation, that the investment results of similar Investment Options
will be comparable even though the Investment Options have the same investment
advisers and objectives.
We offer other variable annuity Contracts that may invest in the same Investment
Options. These Contracts may have different charges and may offer different
benefits more suitable to your needs. For more information about these
Contracts, please contact us at the USAllianz Service Center.
The following is a list of the Investment Options available under the Contract,
the investment advisers and sub-advisers for each Investment Option, the
investment objectives for each Investment Option and the primary investments of
each Investment Option.
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------------------------------------------------------------------------------------------------------------------------
ASSET CATEGORIES
-----------------------------------
<S> <C> <C> <C><C> <C> <C> <C> <C><C><C><C> <C> <C>
Investment Management Investment SB S CE IT HB IE L L S M Objective(s) Primary Investments
Company Option ho p aq ne io nq a a m i
---------------------- on e su tr gn tu r r a d
rd c hi em hd ei g g l
Adviser/Sub-Adviser ts i v r s rt e e l C
- a a mB Y ny a
T l l eo i a V G C p
e t e dn e t a r a
r y n id l i l o p
m t as d o u w
t n e t
e a h
l
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
AIM USAZ AIM Basic Value X Long-term growth of At least 65% of total assets
o managed by Fund capital in equity securities of U.S.
USAllianz Advisers, issuers that have market
LLC/ A I M Advisors, capitalizations of greater
Inc. than $500 million and that
the portfolio managers
believe to be undervalued
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ AIM Blue Chip X Long-term growth of At least 65% of total assets
Fund capital with a in the common stocks of blue
secondary objective chip companies
of current income
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ AIM Dent X Long-term growth of Investment in securities of
Demographic Trends capital companies that are likely to
Fund benefit from changing
demographic, economic and
lifestyle trends. May invest
up to 25% of total assets in
foreign securities of which
no more than 15% of its
total assets may be invested
in securities of companies
domiciled in developing
countries.
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ AIM X Long-term growth of At least 70% of net assets
International Equity capital in marketable equity
Fund securities of foreign
companies that are listed on
a recognized foreign
securities exchange or
traded in a foreign
over-the-counter market
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
ALLIANCE CAPITAL USAZ Alliance Capital X Income and long-term At least 65% in dividend
o managed by USAllianz Growth and Income growth of capital paying stocks of large
Advisers, LLC/ Fund well-established "blue
Alliance Capital chip" companies
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ Alliance Capital X Long-term growth of At least 80% of net assets
Large Cap Growth Fund capital in equity securities of U.S.
companies judged by adviser
likely to achieve superior
earnings growth.
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ Alliance Capital X Superior long-term At least 80% of assets in
Technology Fund growth of capital securities of companies
involved with innovative
technologies
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
DAVIS Davis VA Financial X Growth of capital At least 65% in common stock
o managed by Davis Portfolio of companies "principally
Advisors engaged" in financial
services
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Davis VA Value X Growth of capital Common stock of U.S.
Portfolio companies with market
capitalizations of at
least $5 billion, which
adviser believes are of
high quality and whose
shares are selling at
attractive prices, stocks
are selected with the
intention of holding them
for the long term
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
DREYFUS Dreyfus Small Cap X Match performance Invests in a representative
o managed by The Stock Index Fund of the Standard & sample of stocks included in
Dreyfus Corporation Poor's Small Cap the S&P Small Cap 600 Index,
600 Index and in futures whose
performance is related to
the index, rather than
attempt to replicate the
index
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Dreyfus Stock Index X Match total return Invests in all 500 stocks in
Fund of the S&P 500 the S&P 500 in proportion to
Composite Stock their weighting in the index
Price Index
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
FRANKLIN TEMPLETON Franklin Global X Capital At least 80% of net assets
o managed by Communications appreciation and in investments of
Franklin Securities Fund current income communications companies
Advisers, Inc.
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Growth and X Capital At least 65% of total assets
Income Securities Fund appreciation, with in broadly diversified
current income as a portfolio of equity
secondary goal securities the adviser
considers financially
strong, but undervalued by
the market
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin High Income X High level of At least 65% of total assets
Fund current income; in debt securities offering
secondary goal is high yield and expected
capital appreciation total return
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Income X Maximize income Investment in debt and
Securities Fund while maintaining equity securities, including
prospects for high yield, lower-rated
capital appreciation bonds
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Large Cap X Capital appreciation At least 80% of net assets
Growth Securities Fund in investments of large
capitalization companies.
For this Fund, large
capitalization companies are
those with market
capitalization values within
the top 50% of market
capitalization values in the
Russell 1000 Index at the
time of purchase
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Real Estate X Capital At least 80% of net assets
Fund appreciation; in investment of companies
secondary emphasis operating in the real estate
on current income sector
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Franklin Franklin Rising X Long-term capital At least 80% of net assets
Advisory Dividends Securities appreciation; while in investments of companies
Services, LLC Fund not a goal, capital that have paid rising
preservation is a dividends
secondary
consideration
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Franklin Small Cap X Long-term capital At least 80% of net assets
Franklin Fund growth in investments of small
Advisers, Inc. capitalization companies.
For this Fund, small
capitalization companies are
those with market
capitalization values not
exceeding (i) $1.5 billion;
or (ii) the highest market
capitalization values in the
Russell 2000 Index;
whichever is greater at the
time of purchase
---------------------- -------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Franklin Franklin Small Cap X Long term total At least 80% of net assets
Advisory Value Securities Fund return in investments of small
Services, LLC capitalization companies.
For this Fund, small
capitalization companies are
those with market
capitalization values not
exceeding $2.5 billion in
assets. The Fund invests in
equity securities of
companies the adviser
believes are undervalued
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Franklin Franklin U.S. X Income At least 80% of its net
Advisers, Inc. Government Fund assets in U.S. government
securities. The Fund
currently invests primarily
in fixed and variable rate
mortgage-backed securities
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Zero Coupon X As high an At least 80% of net assets
Fund 2005 investment return in zero coupon debt
as is consistent securities. The Fund invests
with capital primarily in U.S. Treasury
preservation issued stripped securities
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Franklin Zero Coupon X As high an At least 80% of net assets
Fund 2010 investment return in zero coupon debt
as is consistent securities. The Fund invests
with capital primarily in U.S. Treasury
preservation issued stripped securities
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Franklin Mutual Discovery X Capital appreciation At least 65% of total assets
Mutual Securities Fund in equity securities of
Advisers, LLC companies of any nation the
adviser believes are
available at market prices
less than their value, based
on certain recognized or
objective criteria
(intrinsic value)
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Mutual Shares X Capital At least 65% of total assets
Securities Fund appreciation, with in equity securities of
income as a companies the adviser
secondary goal believes are available at
market prices less than
their value, based on
certain recognized or
objective criteria
(intrinsic value)
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Templeton Developing X Long-term capital At least 80% of net assets
Templeton Asset Markets Securities appreciation in emerging market
Management, Ltd. Fund investments, typically
located in the Asia-Pacific
region, Eastern Europe,
Central and South America,
and Africa
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Templeton Templeton Foreign X Long-term capital At least 80% of net asets in
Investment Securities Fund growth investments of issuers
Counsel, LLC outside the U.S., including
emerging markets
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by Templeton Growth X Long-term capital At least 65% of total assets
Templeton Securities Fund growth in the equity securities of
Global Advisors companies located anywhere
Limited in the world, including
those in the U.S. and
emerging markets
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by USAZ Templeton X Long-term capital At least 80% of net assets
USAllianz Developed Markets Fund appreciation in equity securities of
Advisers, LLC/ companies located in any
Templeton developed country outside
Investment the U.S., with particular
Counsel, LLC areas of interest in Western
Europe, Australia, Canada
New Zealand, Hong Kong,
Japan, Bermuda and Singapore
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
JENNISON Jennison 20/20 Focus X Long-term growth of Invests in up to 20 value
o managed by Portfolio capital stocks and 20 growth stocks
Prudential of mid-to-large size U.S.
Investments Fund companies
Management
LLC/Jennison
Associates, LLC
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
SP Jennison X Long-term growth of Equity-related securities of
International Growth capital foreign issuers
Portfolio
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
SP Strategic Partners X Long-term growth of At least 65% of total assets
Focused Growth capital in equity-related securities
Portfolio of U.S. companies that the
adviser believes to have
strong capital appreciation
potential
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
OPPENHEIMER Oppenheimer Global X Long-term capital Securities - mainly common
o managed by Securities Fund/VA appreciation stocks, but also other
Oppenheimer Funds, equity securities including
Inc. preferred stocks and
securities convertible
into common stock-of
foreign issuers,
"growth-type" companies,
cyclical industries and
special situations the
adviser believes offer
appreciation possibilities
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Oppenheimer High X High level of High-yield fixed-income
Income Fund/VA current income securities of domestic and
foreign issuers
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
Oppenheimer Main X High total return Common stocks of U.S.
Street Growth & (which includes companies; other equity
Income Fund/VA growth in the value securities -- such as
of its shares as preferred stocks and
well as current securities convertible into
income) common stocks; debt
securities
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by USAZ Oppenheimer X Capital appreciation Invests in companies that
USAllianz Advisers, Emerging Growth Fund have the potential to become
LLC/Oppenheimer leaders in new emerging
Funds, Inc. markets
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
PIMCO PIMCO VIT High Yield X Maximum total At least 80% of assets in
o managed by Pacific Portfolio return, consistent high-yield securities ("junk
Investment with preservation bonds") rated below
Management Company of capital and investment grade, but at
LLC prudent investment least "B" by Moody's or S&P
management
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
PIMCO VIT StocksPLUS X Total return Substantially in S&P 500
Growth and Income exceeding that of derivatives, backed by a
Portfolio the S&P 500 portfolio of fixed income
instruments
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
PIMCO VIT Total X Maximum total At least 65% of assets in
Return Portfolio return, consistent fixed income instruments of
with preservation varying maturities
of capital and
prudent investment
management
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by USAZ PIMCO Growth & X Long-term growth of At least 65% of its total
USAllianz Advisers, Income Fund capital ; secondary assets in common stocks of
LLC/ Allianz emphasis on income companies with market
Dresdner Asset capitalizations of more than
Management of $1 billion at the time of
America L.P. investment
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ PIMCO X Long-term growth of At least 65% of total assets
Renaissance Fund capital and income in common stocks of
companies with below-average
valuations whose business
fundamentals are expected to
improve
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ PIMCO Value Fund X Long-term growth of At least 65% of its total
capital and income assets in common stocks of
companies with market
capitalizations of more than
$5 billion at the time of
investment
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
SELIGMAN Seligman Small-Cap X Long-term capital At least 80% of net assets
o managed by J. & W. Value Portfolio appreciation in common stocks of "value"
Seligman & Co. companies with small market
Incorporated capitalization (up to $2
billion) at the time of
purchase by the portfolio
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ USAZ Money Market Fund X Current income At least 80% of total assets
o managed by USAllianz consistent with in portfolio of high
Advisers, LLC/ stability of quality, money market
Allianz of America, principal investments
Inc.
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
VAN KAMPEN USAZ Van Kampen X Capital growth At least 65% of total assets
o managed by USAllianz Aggressive Growth Fund in common stocks and other
Advisers, LLC/Van equity securities the
Kampen Investment adviser believes have an
Advisory Corp. above-average potential for
capital growth
---------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by USAllianz USAZ Van Kampen X Capital growth and Invests primarily
Advisers, LLC/Van Comstock Fund income in common stocks
Kampen Asset
Management Inc.
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ Van Kampen X Capital Invests primarily
Emerging Growth Fund appreciation in portfolios of common
stocks of emerging growth
companies
--------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
USAZ Van Kampen X Income and Invests primarily
Growth and Income Fund long-term growth of in income-producing
capital equity securities, including
common stocks and
convertible securities; also
in non-convertible preferred
stocks and debt securities
rated "investment grade"
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
o managed by USAllianz USAZ Van Kampen X Capital growth Invests primarily
Advisers, LLC/Van Growth Fund in common stocks and other
Kampen Investment equity securities of growth
Advisory Corp. companies; also in preferred
stocks and securities
convertible into common
stocks or other equity
securities
---------------------- --------------------- --- -- --- --- --- --- -- -- -- -- ------------------- ------------------------------
</TABLE>
Shares of the Investment Options may be offered in connection with certain
variable annuity contracts and variable life insurance policies of various
insurance companies which may or may not be affiliated with Allianz Life.
Certain Investment Options may also be sold directly to pension and retirement
plans that qualify under Section 401 of the Internal Revenue Code. As a result,
a material conflict of interest may arise between insurance companies, owners of
different types of contracts and retirement plans or their participants. Each
Investment Option's Board of Directors will monitor for the existence of any
material conflicts, and determine what action, if any, should be taken.
Allianz Life may enter into certain arrangements under which it is compensated
by the Investment Options' advisers, distributors and/or affiliates for the
administrative services which it provides to the Investment Options. The amount
of the compensation usually is based on the aggregate assets of the Investment
Options or other investment portfolios from Contracts that we issue or
administer. Some advisers may pay us more or less than others. The amounts we
receive under these arrangements may be significant. In addition, our affiliate
USAllianz Investor Services, LLC, the principal underwriter for the Contracts,
will receive 12b-1 fees deducted from certain Investment Option assets
attributable to the Contract for providing distribution and shareholder support
services to some Investment Options. Because 12b-1 fees are paid out of an
Investment Options' assets on an ongoing basis, over time they will increase the
cost of an investment in Investment Option shares.
SUBSTITUTION AND LIMITATION ON FURTHER INVESTMENTS
We may substitute another Investment Option for one of the Investment Options
you have selected. Substitutions may be made with respect to existing
investments, the investment of future Purchase Payments, or both. New or
substitute Investment Options may have different fees and expenses, and their
availability may be limited to certain classes of purchasers. We may limit
further investment in or transfers to an Investment Option if marketing or tax
considerations or investment considerations warrant. We also may close
Investment Options to allocations of Purchase Payments or Contract value, or
both, at any time and at our sole discretion. The Investment Options which sell
shares of the Investment Options to us pursuant to participation agreements may
terminate those agreements and discontinue offering their shares to us. We may
not substitute any shares without notice to you and prior approval of the SEC,
to the extent required by the Investment Company Act of 1940 or other applicable
law.
TRANSFERS
You can transfer money among the Investment Options and/or the Fixed Account.
Allianz Life currently allows you to make as many transfers as you want to each
year. Allianz Life may change this practice in the future. However, this product
is not designed for professional market timing organizations or other persons
using programmed, large, or frequent transfers. Such activity may be disruptive
to an Investment Option. We reserve the right to reject any specific Purchase
Payment allocation or transfer request from any person, if in the Investment
Option manager's judgment, an Investment Option would be unable to invest
effectively in accordance with its investment objectives and policies, or would
otherwise potentially be adversely affected.
Your Contract provides that you can make 3 transfers every year without charge.
However, currently Allianz Life permits you to make 12 transfers every year
without charge. We measure a year from the anniversary of the day we issued your
Contract. You can make a transfer to or from the Fixed Account and to or from
any Investment Option. If you make more than 12 transfers in a year, there is a
transfer fee deducted. The fee is $25 per transfer or, if less, 2% of the amount
transferred. The following applies to any transfer:
1) The minimum amount which you can transfer is $1,000 ($500 in New Jersey) or
your entire value in the Investment Option or Fixed Account, if less. This
requirement is waived if the transfer is in connection with the Dollar Cost
Averaging Program or Flexible Rebalancing (which are described below).
2) We may not allow you to make transfers during the free look period.
3) Your request for a transfer must clearly state which Investment Option(s)
or the Fixed Account is involved in the transfer.
4) Your request for a transfer must clearly state how much the transfer is
for.
5) You cannot make any transfers within 7 calendar days prior to the date your
first Annuity Payment is due.
6) During the Payout Phase, you may not make a transfer from a fixed Annuity
Option to a variable Annuity Option.
7) During the Payout Phase, you can make at least one transfer from a variable
Annuity Option to a fixed Annuity Option.
If a transfer request is rejected, we will call your registered representative
to request alternate instructions. If we are unable to contact your registered
representative, we will contact you directly. If the transfer is rejected, we
will send you a written notification within 5 business days.
Allianz Life has reserved the right to modify the transfer provisions subject to
the guarantees described above and subject to applicable state law.
You can make transfers by telephone or by fax. We may allow you to authorize
someone else to make transfers by telephone or fax on your behalf. If you own
the Contract with a Joint Owner, unless you instruct Allianz Life otherwise, we
will accept instructions from either one of you. Allianz Life will use
reasonable procedures to confirm that instructions given to us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. Allianz Life tape records all
telephone instructions. We reserve the right to discontinue or modify the
telephone/fax transfer privilege at any time and for any reason.
We do not currently accept transfer instructions via e-mail, Web site, or other
electronic communications. This service may be available in the future.
Please note that telephone, fax and/or electronic communications may not always
be available. Any telephone, fax and/or computer system, whether it is yours,
your service provider's, or your registered representative's, can experience
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
should make your transfer by writing to our service center.
EXCESSIVE TRADING
We may allow you to give third parties the right to effect transfers on your
behalf. However, when the same third party makes transfers for Contract Owners,
the result can be simultaneous transfers involving large amounts of Contract
value. Such transfers can disrupt the orderly management of the Investment
Options, can result in higher costs to Contract Owners, and generally are not
compatible with the long-range goals of Contract Owners. We believe that such
simultaneous transfers effected by such third parties may not be in the best
interests of all shareholders of the Investment Options and the management of
the Investment Options share this position. Therefore, we may place restrictions
designed to prevent any use of a transfer right which we to be to the
disadvantage of the Contract Owners.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Investment Option or the
Fixed Account to other Investment Options.
The Investment Option(s) you transfer from may not be the Investment Option(s)
you transfer to in this program. By allocating amounts on a regularly scheduled
basis, as opposed to allocating the total amount at one particular time, you may
be less susceptible to the impact of market fluctuations. You may only
participate in this program during the Accumulation Phase.
You must participate in the program for at least six months (or two quarters)
and must transfer at least $500 each time (or $1,500 each quarter). Your
allocations can be in whole percentages or dollar amounts. You may elect this
program by properly completing the Dollar Cost Averaging forms provided by
Allianz Life.
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day.
Your participation in the program will end when any of the following occurs:
1) the number of desired transfers have been made;
2) you do not have enough money in the Investment Option(s) or the Fixed
Account to make the transfer (if less money is available, that amount will
be dollar cost averaged and the program will end);
3) you request to terminate the program (your request must be received by us
by the first of the month to terminate that month); or
4) the Contract is terminated.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not currently taken into account in determining any
transfer fee. We reserve the right to discontinue or modify the Dollar Cost
Averaging program at any time and for any reason.
FLEXIBLE REBALANCING
Once your money has been invested, the performance of the Investment Options may
cause your chosen allocation to shift. Flexible Rebalancing is designed to help
you maintain your specified allocation mix among the different Investment
Options. You can direct us to readjust your Contract value on a quarterly,
semi-annual or annual basis to return to your original Investment Option
allocations. Flexible Rebalancing transfers will be made on the 20th day of the
month unless that day is not a business day. If it is not, then the transfer
will be made on the previous day. If you participate in Flexible Rebalancing,
the transfers made under the program are not currently taken into account in
determining any transfer fee. We reserve the right to discontinue or modify the
Flexible Rebalancing program at any time and for any reason. The Fixed Account
is not permitted to be part of Flexible Rebalancing.
VOTING PRIVILEGES
Allianz Life is the legal owner of the Investment Option shares. However, when
an Investment Option solicits proxies in conjunction with a shareholder vote
which affects your investment, Allianz Life will obtain from you and other
affected Contract Owners instructions as to how to vote those shares. When we
receive those instructions, we will vote all of the shares we own in proportion
to those instructions. This will also include any shares that Allianz Life owns
on its own behalf. Should Allianz Life determine that it is no longer required
to comply with the above, we will vote the shares in our own right.
SUBSTITUTION
Allianz Life may substitute one of the Investment Options you have selected with
another Investment Option. We would not do this without the prior approval of
the Securities and Exchange Commission, to the extent legally required. We will
give you notice of our intention to do this. We may also limit further
investment in or transfers to an Investment Option if marketing or tax
considerations or investment considerations warrant.
5. EXPENSES
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There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
INSURANCE CHARGES
Each day, Allianz Life makes a deduction for its insurance charges. Allianz Life
does this as part of its calculation of the value of the Accumulation Units and
the Annuity Units. The insurance charge has two parts:
1) the mortality and expense risk charge, and
2) the administrative charge.
The total insurance charges are reflected in the table below as a percentage of
average annual account value.
CHARGES FOR CHARGES FOR CONTRACT
STANDARD CONTRACT WITH GMIB*
Death Benefit Option 1:
5% Increase/6 Year Step Up 1.49% 1.79%
Death Benefit Option 2:
Greatest Anniversary Value 1.49% 1.79%
Death Benefit Option 3:
Earnings Protection GMDB* 1.59% 1.89%
*The GMIB and Earnings Protection GMDB may not be available in all states.
MORTALITY AND EXPENSE RISK CHARGE. Allianz Life deducts a mortality and expense
risk charge which varies depending upon the death and income benefits you
choose. This charge compensates us for all the insurance benefits provided by
your Contract (for example, our contractual obligation to make Annuity Payments,
the death benefits, certain expenses related to the Contract, and for assuming
the risk (expense risk) that the current charges will be insufficient in the
future to cover the cost of administering the Contract). The amount of the
mortality and expense risk charge is less during the Payout Phase because
Allianz Life does not pay a death benefit separate from benefits under the
Annuity Option if you die during the Payout Phase. During the Payout Phase, the
charge is equal, on an annual basis, to 1.25% of the average daily value of the
Contract invested in an Investment Option.
If the mortality and expense risk charges are sufficient to cover such costs and
risks, any excess will be profit to us. We anticipate making such a profit and
using it to cover distribution expenses as well as the cost of providing certain
features under the Contract.
ADMINISTRATIVE CHARGE. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in an Investment Option. This
charge, together with the contract maintenance charge (which is explained
below), is for all the expenses associated with the administration of the
Contract. Some of these expenses include: preparation of the Contract,
confirmations, annual statements, maintenance of Contract records, personnel
costs, legal and accounting fees, filing fees, and computer and systems costs.
CONTRACT MAINTENANCE CHARGE
On each Contract anniversary, Allianz Life deducts $30 from your Contract as a
contract maintenance charge. The fee is assessed on the last day of each
Contract year. (In South Carolina, if your Contract is in force on the 20th
Contract anniversary, we will waive the contract maintenance charge that is to
be deducted after the 20th Contract anniversary.) This charge is for
administrative expenses (see above). This charge cannot be increased.
However, during the Accumulation Phase, if the value of your Contract is at
least $50,000 when the deduction for the charge is to be made, Allianz Life will
not deduct this charge. If you own more than one Valuemark IV Contract, Allianz
Life will determine the total value of all your Valuemark IV Contracts. If the
total value of all Valuemark IV Contracts registered under the same social
security number is at least $50,000, Allianz Life will not assess the contract
maintenance charge (except in New Jersey). Currently, the charge is also waived
during the Payout Phase if the value of your Contract at the Income Date is at
least $50,000. If the Contract is owned by a non-natural person (e.g., a
corporation), Allianz Life will look to the Annuitant to determine if it will
assess the charge.
If you make a complete withdrawal from your Contract, the contract maintenance
charge will also be deducted. During the Payout Phase, if the contract
maintenance charge is deducted, the charge will be collected monthly out of each
Annuity Payment.
CONTINGENT DEFERRED SALES CHARGE
Withdrawals may be subject to a contingent deferred sales charge. During the
Accumulation Phase, you can make withdrawals from your Contract. Allianz Life
keeps track of each Purchase Payment you make. The amount of the contingent
deferred sales charge depends upon the length of time since you made your
Purchase Payment. The charge is:
YEARS SINCE CONTINGENT DEFERRAL
PURCHASE SALES CHARGE
PAYMENTS (AS A % OF PURCHASE PAYMENTS)
-----------------------------------------------------
0-1 6%
1-2 6%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7+ 0%
However, after Allianz Life has had a Purchase Payment for 7 full years, there
is no charge when you withdraw that Purchase Payment. For purposes of the
contingent deferred sales charge, Allianz Life treats withdrawals as coming from
the oldest Purchase Payments first. Allianz Life does not assess the contingent
deferred sales charge on any payments paid out as Annuity Payments or as death
benefits.
In the state of Washington, the contingent deferred sales charge will be waived
beginning with the later of the first Contract anniversary after you attain age
70 or the 10th Contract anniversary.
NOTE:For tax purposes, withdrawals are considered to have come from the last
money you put into the Contract. Thus, for tax purposes, earnings are
considered to come out first.
Free Withdrawal Amount (referred to in sales literature as "15% Withdrawal
Privilege"). Each year after the first Contract year, you can make multiple
withdrawals up to 15% of the value of your Contract and no contingent deferred
sales charge will be deducted from the 15% you take out. (This amount may be
increased when the Contract is issued to a charitable remainder trust.) If you
make a withdrawal of more than the free amount, it will be subject to the
contingent deferred sales charge. If you do not withdraw the full 15% in any one
Contract year, you may not carry over the remaining percentage amount to another
year.
You may also elect to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program. These programs allow you to make withdrawals
without the deduction of the contingent deferred sales charge under certain
circumstances. See Section 7 -- "Access to Your Money" for a description of the
Systematic Withdrawal Program and the Minimum Distribution Program.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE BENEFITS
Under certain circumstances, after the first year, Allianz Life will permit you
to take your money out of the Contract without deducting a contingent deferred
sales charge:
1) if you become confined to a nursing home for at least 90 days;
2) if you become terminally ill, which is defined as life expectancy of 12
months or less (a full withdrawal of the Contract will be required); or
3) if you become totally disabled for at least 90 consecutive days.
The waiver will not apply if any of the above conditions existed on the date
your Contract was issued.
Also, after the first year, if you become unemployed for at least 90 consecutive
days, you can take up to 50% of your Contract value out of the Contract without
incurring a contingent deferred sales charge. This benefit is available only
once during the life of the Contract. You may not use both this benefit and the
15% free withdrawal amount in the same Contract year.
These benefits vary from state to state or may not be available in your state.
(Check with your registered representative.)
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
Allianz Life will reduce or eliminate the amount of the contingent deferred
sales charge when the Contract is sold under circumstances which reduce its
sales expenses. Some examples are: if there is a large group of individuals that
will be purchasing the Contract or a prospective purchaser already had a
relationship with Allianz Life. Allianz Life may choose not to deduct a
contingent deferred sales charge under a Contract issued to an officer, director
or employee of Allianz Life or any of its affiliates. Also, Allianz Life may
reduce or not deduct a contingent deferred sales charge when a Contract is sold
by an agent of Allianz Life to any members of his or her immediate family and
the commission is waived. We require our prior approval for any reduction or
elimination of the contingent deferred sales charge.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25, or 2% of the amount that is transferred, whichever is less,
for each additional transfer. If the transfer is part of the Dollar Cost
Averaging Program or Flexible Rebalancing, it will not currently count in
determining the transfer fee.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Allianz Life is responsible for the payment of
these taxes. We will make a deduction from the value of the Contract for them.
Some of these taxes are due when the Contract is issued, others are due when
Annuity Payments begin. It is Allianz Life's current practice to not charge you
for these taxes until you die, Annuity Payments begin or you make a complete
withdrawal. Allianz Life may discontinue this practice in the future and assess
the charge when the tax is due. Premium taxes generally range from 0% to 3.5% of
the Purchase Payment, depending on the state.
INCOME TAXES
Allianz Life reserves the right to deduct from the Contract any income taxes
which it may incur because of the Contract. Currently, Allianz Life is not
making any such deductions.
INVESTMENT OPTION EXPENSES
There are deductions from the assets of the various Investment Options for
operating expenses (including management fees), which are described in the Fee
Table in this prospectus and the Investment Option prospectuses.
6. TAXES
--------------------------------------------------------------------------------
NOTE: Allianz Life has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice. You should consult
your own tax adviser about your own circumstances. Allianz Life has included
additional information regarding taxes in the Statement of Additional
Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on any earnings on the
money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract -
Qualified or Non-Qualified (see following sections).
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts), and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. Qualified Contracts are subject to special tax rules
and the terms of the retirement plan itself. Adverse tax consequences may result
if contributions, distributions and transactions in connection with the
Qualified Contracts do not comply with the law. If you do not purchase the
Contract under a Qualified plan, your Contract is referred to as a Non-Qualified
Contract.
A Qualified Contract will not provide any necessary or additional Tax Deferral
if it is used to fund a Qualified plan that is Tax Deferred. However, the
Contract has features and benefits other than Tax Deferral that may make it an
appropriate investment for a Qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a Qualified Contract.
MULTIPLE CONTRACTS
The Code provides that multiple Non-Qualified deferred annuity contracts which
are issued within a calendar year period to the same Contract Owner by one
company or its affiliates are treated as one annuity contract for purposes of
determining the tax consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation of the distributed
amounts from such combination of contracts. For purposes of this rule, contracts
received in a Section 1035 exchange will be considered issued in the year of the
exchange. You should consult a tax adviser prior to purchasing more than one
Non-Qualified annuity contract in any calendar year period.
WITHDRAWALS -- NON-QUALIFIED CONTRACTS
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs either as a withdrawal or as Annuity
Payments. When you make a withdrawal from your Contract, the Code treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
You will be taxed on the amount of the withdrawal that is earnings. In most
cases, such withdrawn earnings are included in income. For Annuity Payments,
different rules apply. A portion of each Annuity Payment you receive will be
treated as a partial return of your Purchase Payments and will not be taxed. The
remaining portion of the Annuity Payment will be treated as ordinary income. How
the Annuity Payment is divided between taxable and non-taxable portions depends
upon the period over which the Annuity Payments are expected to be made. Annuity
Payments received after you have received all of your Purchase Payments are
fully includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
1) paid on or after the taxpayer reaches age 59 1/2;
2) paid after you die;
3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
5) paid under an immediate annuity; or
6) which come from purchase payments made prior to August 14, 1982.
WITHDRAWALS --QUALIFIED CONTRACTS
If you make a withdrawal from your Qualified Contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax Purchase Payments to the after-tax Purchase Payments in your Contract.
If all of your Purchase Payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of Qualified Contracts, including Roth
IRAs.
The Code also provides that any amount received under a Qualified Contract,
which is included in income, may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
1) paid on or after you reach age 59 1/2;
2) paid after you die;
3) paid if you become totally disabled (as that term is defined in the Code);
4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a lifetime
annuity;
5) paid to you after you have attained age 55 and you have left your
employment;
6) paid for certain allowable medical expenses (as defined in the Code);
7) paid pursuant to a qualified domestic relations order;
8) paid on account of an IRS levy upon the Qualified Contract;
9) paid from an IRA for medical insurance (as defined in the Code);
10) paid from an IRA for qualified higher education expenses; or
11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in 5) and 7) above do not apply to IRAs. The exception in 4)
above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
WITHDRAWALS -- TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of amounts attributable to Purchase Payments made
under a salary reduction agreement by Contract Owners from Tax-Sheltered
Annuities. Withdrawals can only be made when a Contract Owner:
1) reaches age 59 1/2;
2) leaves his/her job;
3) dies;
4) becomes disabled (as that term is defined in the Code); or
5) in the case of hardship. However, in the case of hardship, the Contract
Owner can only withdraw the Purchase Payments and not any earnings.
DEATH BENEFITS
If an enhanced death benefit is selected for a Qualified Contract, such death
benefits may be considered by the Internal Revenue Service as "incidental death
benefits." The Code imposes limits on the amount of incidental death benefits
allowable for Qualified Contracts, and if the death benefits selected by you are
considered to exceed such limits, the provisions of such benefits could result
in currently taxable income to the owners of the Qualified Contracts.
Furthermore, the Code provides that the assets of an IRA may be not invested in
life insurance, but may provide in the case of death during the Accumulation
Phase for a death benefit payment equal to the greater of purchase payments or
contract value. The Contract offers death benefits which may exceed the greater
of Purchase Payments or Contract Value. If these death benefits are determined
by the Internal Revenue Service as providing life insurance, the Contract may
not qualify as an IRA (including Roth IRAs), resulting in the individual
taxation of amounts held in the Contract and the imposition of penalty taxes.
You should consult your tax adviser regarding these features and benefits prior
to purchasing a Contract.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Investment Options are being
managed so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Allianz Life,
would be considered the owner of the shares of the Investment Options. If you
are considered the owner of the shares, it will result in the loss of the
favorable tax treatment for the Contract. It is unknown to what extent under
federal tax law Contract Owners are permitted to select Investment Options, to
make transfers among the Investment Options or the number and type of Investment
Options Contract Owners may select from without being considered the owner of
the shares. If any guidance is provided which is considered a new position, then
the guidance would generally be applied prospectively. However, if such guidance
is considered not to be a new position, it may be applied retroactively. This
would mean that you, as the Owner of the Contract, could be treated as the owner
of the Investment Options.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------
You can have access to the money in your Contract:
1) by making a withdrawal (either a partial or a total withdrawal);
2) by receiving Annuity Payments; or
3) when a death benefit is paid to your Beneficiary.
Withdrawals can only be made during the Accumulation Phase.
When you make a complete withdrawal you will receive the value of the Contract
on the day you make the withdrawal, less any applicable contingent deferred
sales charge, less any premium tax and less any contract maintenance charge.
(See Section 5 -- "Expenses" for a discussion of the charges.)
Any partial withdrawal must be for at least $500. Unless you instruct Allianz
Life otherwise, a partial withdrawal will be made pro-rata from all the
Investment Options and the Fixed Account you selected. After you make a partial
withdrawal, the value of your Contract must be at least $2,000.
We will pay the amount of any withdrawal from the Investment Options within
seven (7) days of when we receive your request in good order unless the
Suspension of Payments or Transfers provision is in effect (see below).
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limits on withdrawals from a Qualified plan referred to as a 403(b)
plan. For a more complete explanation see Section 6 -- "Taxes" and the
discussion in the SAI.
SYSTEMATIC WITHDRAWAL PROGRAM
If the value of your Contract is at least $25,000, Allianz Life offers a program
which provides automatic monthly or quarterly payments to you each year. The
total systematic withdrawals which you can make each year without Allianz Life
deducting a contingent deferred sales charge are limited to 15% of the value of
your Contract. This is determined on the last business day prior to the day your
request is received. You may withdraw any amount you want under this program if
your payments are no longer subject to the contingent deferred sales charge. If
you make withdrawals under this program, you may not also use the 15% free
withdrawal amount that year. For a discussion of the contingent deferred sales
charge and the 15% free withdrawal amount, see Section 5 -- "Expenses." All
systematic withdrawals will be made on the 9th day of the month unless that day
is not a business day. If it is not, then the withdrawal will be made the
previous business day.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO SYSTEMATIC
WITHDRAWALS.
MINIMUM DISTRIBUTION PROGRAM
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Allianz Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. If the value of
your Contract is at least $25,000, Allianz Life will make payments to you on a
monthly or quarterly basis. The payments will not be subject to the contingent
deferred sales charge and will be instead of the 15% free withdrawal amount.
SUSPENSION OF PAYMENTS OR TRANSFERS
Allianz Life may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1) the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2) trading on the New York Stock Exchange is restricted;
3) an emergency exists as a result of which disposal of the Investment Option
shares is not reasonably practicable or Allianz Life cannot reasonably
value the Investment Option shares;
4) during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
8. PERFORMANCE and ILLUSTRATIONS
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Allianz Life periodically advertises performance of the divisions of the
Separate Account (also known as sub-accounts). Allianz Life will calculate
performance by determining the percentage change in the value of an Accumulation
Unit by dividing the increase (decrease) for that unit by the value of the
Accumulation Unit at the beginning of the period. This performance number
reflects the deduction of the insurance charges and the Investment Option
expenses. It may not reflect the deduction of any applicable contingent deferred
sales charges and contract maintenance charge. The deduction of any applicable
contract maintenance charge and contingent deferred sales charges would reduce
the percentage increase or make greater any percentage decrease. Any
advertisement will also include average annual total return figures which
reflect the deduction of the insurance charges, contract maintenance charge,
contingent deferred sales charges and the expenses of the Investment Options.
Allianz Life may also advertise cumulative total return information. Cumulative
total return is determined the same way except that the results are not
annualized. Performance information for the Investment Options may also be
advertised; see the Investment Option prospectuses for more information.
Certain Investment Options have been in existence for some time and have
investment performance history. In order to demonstrate how the actual
investment experience of the Investment Options may affect your Accumulation
Unit values, Allianz Life has prepared performance information which can be
found in the SAI. There is performance shown which is based on the historical
performance of the Investment Options, modified to reflect the current charges
and expenses of your Contract as if the Contract had been in existence for the
time periods shown. The information is based upon the historical experience of
the Investment Options and does not represent past performance or predict future
performance.
Allianz Life may in the future also advertise yield information. If it does, it
will provide you with information regarding how yield is calculated. More
detailed information regarding how performance is calculated is found in the
SAI.
Any performance advertised will be based on historical data. It does not
guarantee future results of the Investment Options.
Allianz Life may also provide illustrations to customers. These illustrations
may provide hypothetical depictions of either the "payin," or accumulation
phase, or the "payout," or annuitization phase. Illustrations may be based upon
historical performance of the Investment Options, as adjusted for certain
expenses. (Any adjusted historical performance information will be accompanied
by "standardized" performance information.) In the alternative, certain
illustrations may be based upon an assumed rate of return not to exceed 12%.
"Payin" and "payout" illustrations may have various features, as follows:
o Pay in illustrations assume an initial lump sum premium payment and are
designed to show how adjusted historical performance or an assumed rate of
return would have affected Contract values, withdrawal values, or the death
benefit. Payin illustrations may also be designed to show the effect of
periodic additional premium payments and withdrawals. Payin illustrations
based upon adjusted historical performance may assume that monies are
allocated to a single Investment Option or to multiple Investment Options.
In the event that monies are hypothetically allocated to multiple
Investment Options, performance may be shown on a weighted aggregate basis.
Dollar cost averaging illustrations, which are based upon adjusted
historical performance, would compare the hypothetical effect of a lump sum
premium payment into the specified Investment Options, as contrasted with
dollar cost averaging into the Investment Options over some period.
o Payout illustrations are designed to show the hypothetical effect of
annuitizing a Contact, or receiving a stream of periodic payments. These
illustrations may depict either a variable annuitization or a fixed
annuitization. A variable payout illustration would be based upon a
combination of adjusted historical performance and an assumed interest rate
(AIR), whereas a fixed payout illustration would be based upon the
annuitant's age, the payout option selected, and the payout factor rates
currently in effect on the date of the illustration. Variable payout
illustrations may also show the portion of each payout that is subject to
income tax and the portion that is non-taxable. Where applicable, a payout
illustration will show the effect of the enhanced GMIB or GMDB that is
credited to a Contract in the event of certain annuitizations or death
benefit payouts. In addition to variable and fixed payout illustrations, an
illustration may also be prepared showing the effect of required minimum
distribution payments from qualified Contracts.
The values illustrated will be calculated reflecting the deduction of Investment
Option expenses for the specific Investment Options selected, mortality and
expense risk charges, and other Contract charges. Contract maintenance charges
may or may not be deducted from a particular illustration. For fixed payin
illustrations, where no Investment Options are selected, an arithmetic average
of Investment Option expenses will be reflected. The amount of the mortality and
expense risk charges charges shown in an illustration will vary, depending upon
the Contract features you select. For surrender values, the contingent deferred
sales charges are also reflected. Illustrations will not reflect the deduction
of any state premium tax or any Federal or state income tax or penalties.
The illustrations that are given to customers by Allianz Life are designed to
assist customers in understanding how a contract may function in different
scenarios. They are not guarantees or representations as to future performance
or any specific rate of return.
A sample format of a customer illustration is attached as Appendix A to the
Statement of Additional Information and is incorporated herein by reference.
9. DEATH BENEFIT
--------------------------------------------------------------------------------
UPON YOUR DEATH
If you die during the Accumulation Phase, Allianz Life will pay a death benefit
to your Beneficiary (see below). If you die during the Payout Phase, any benefit
will be as provided for in the Annuity Option selected. If you purchase the
Contract on or after July 6, 1999, you may choose Death Benefit Option 1 or
Death Benefit Option 2 at the time of application. If you purchased the Contract
before July 6, 1999, Death Benefit Option 2 is not available. Option 3 is
available if you purchase the contract on or after November 5, 2001 and if you
are age 75 or younger. OPTION 3 MAY NOT BE AVAILABLE IN YOUR STATE. CHECK WITH
YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY. Once you make the death
benefit selection, you may not change it.
I. CONTRACTS THAT RECEIVE AN ENHANCED DEATH BENEFIT ENDORSEMENT
Contracts that are owned individually, or jointly with another person, or
as agent for an individual person, will receive an enhanced death benefit
endorsement for Death Benefit Option 1 or Death Benefit Option 2. For
these Contracts, the death benefit options are:
DEATH BENEFIT OPTION 1:
5% INCREASE/6-YEAR STEP UP GUARANTEE
The death benefit will be the greater of 1) or 2) below:
1) The current value of your Contract, less any premium taxes owed. This
amount is determined as of the day that all claim proofs and payment
election forms are received at the USAllianz Service Center.
2) The guaranteed minimum death benefit (as explained below and in the
enhanced death benefit endorsement to your Contract), as of the day you
die.
A. During the first year of all such Contracts and if you are age 81 or
older (76 or older for deaths occurring in Washington, or in most other
states before 11/1/98) at the time of purchase, the following
guaranteed minimum death benefit will apply:
o payments you have made,
o less any money you have taken out,
o less any applicable charges paid on money taken out,
o less any premium taxes owed.
B. After the first Contract year, for Contracts issued before your 81st
birthday (76th birthday for deaths occurring before 11/1/98), and until
you reach age 81 (age 76 for deaths occurring before 11/1/98), the
greater of (a) or (b) below will be your guaranteed minimum death
benefit:
(a) 5% Increase
o payments you have made,
o less any money you have taken out,
o less any applicable charges paid on money taken out,
o plus 5% on each Contract anniversary, o less any premium taxes
owed.
(b) Highest 6th Year Contract Value
o highest Contract value on any six year Contract anniversary,
o plus any payments made since that Contract anniversary,
o less any money you have taken out since that anniversary,
o less any applicable charges paid on money taken out since that
anniversary,
o less any premium taxes owed.
C. After your 81st birthday (76th birthday for deaths occurring before
11/1/98), the following guaranteed minimum death benefit will apply:
oyour guaranteed minimum death benefit on the Contract anniversary
prior to your 81st birthday (76th birthday for deaths occurring before
11/1/98),
o plus any payments you have made since then,
o less any money you have taken out since then,
o less any applicable charges paid on money taken out since then,
o less any premium taxes owed.
DEATH BENEFIT OPTION 2:
-----------------------
GREATEST ANNIVERSARY VALUE GUARANTEE
------------------------------------
The death benefit will be the greater of:
1) the current value of your Contract, less any taxes, on the day all claim
proofs and payment election forms are received by Allianz Life at the
USAllianz Service Center; or
2) (if applicable) the guaranteed minimum death benefit, less any taxes, on
the day all claim proofs and payment election forms are received by Allianz
Life at the USAllianz Service Center.
The guaranteed minimum death benefit is the greater of:
o payments you have made, less any money you have taken out and any charges paid
on the money you have taken out.
o the greatest Contract "anniversary value." The Contract "anniversary value"
is the value of the Contract on a Contract anniversary, increased by
payments you have made since that anniversary and decreased by any money
you have taken out and any charges paid on the money you have taken out
since that anniversary. Allianz Life will not take into consideration any
Contract anniversaries which occur on or after your 81st birthday or date
of death in determining this benefit.
In certain states, the above death benefit may not be available. Check your
Contract and Endorsement for your applicable death benefit.
DEATH BENEFIT OPTION 3:
EARNINGS PROTECTION GUARANTEED
MINIMUM DEATH BENEFIT
If you select the Earnings Protection GMDB, we will pay your Beneficiary the
greater of the following amounts, less any applicable premium tax and any
applicable charges.
1) The Contract Value at the end of the business day when the service center
receives both due proof of death and an election for the payment method.
2) The total Purchase Payments reduced by adjusted partial withdrawals.
3) The result of (a) plus (b), where:
(a) is the Contract Value at the end of the business day when the service
center receives both due proof of death and an election for the payment
method.
(b) is 40% (or 25% if you are age 70 or older at issue) of the lesser of (i) or
(ii), where
(i) is the Contract Value as described in (a) minus total Purchase Payments;
and
(ii) is the total Purchase Payments.
An "adjusted partial withdrawal" is the withdrawal (including any contingent
deferred sales charges) multiplied by the ratio of (a) to (b), where
(a) is the death benefit on the date of (but prior to) the withdrawal; and
(b) is the Contract value on the date of (but prior to) the withdrawal.
II. CONTRACTS THAT DO NOT RECEIVE AN ENHANCED DEATH BENEFIT ENDORSEMENT
For all Contracts that do not receive an enhanced death benefit endorsement, the
death benefit will be:
The current value of your Contract, less any taxes owed. This amount is
determined as of the day that all claim proofs and payment election
forms are received at the USAllianz Service Center.
III. ADDITIONAL PROVISIONS
If you have a Joint Owner, the age of the older Contract Owner will be used to
determine the guaranteed minimum death benefit. The guaranteed minimum death
benefit will be reduced by any amounts withdrawn after the date of death. If the
Contract is owned by a non-natural person, then all references to "you" mean the
Annuitant.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be the Beneficiary. Joint Owners must be spouses (except in Pennsylvania,
Oregon and New Jersey).
A Beneficiary may request that the death benefit be paid in one of the following
ways: (1) Payment of the entire death benefit within 5 years of the date of
death, or (2) Payment of the death benefit under an Annuity Option. The death
benefit payable under an Annuity Option must be paid over the Beneficiary's
lifetime or for a period not extending beyond the Beneficiary's life expectancy.
Payment must begin within one year of the date of death, or (3) If the
Beneficiary is the spouse of the Contract Owner, he/she can choose to continue
the Contract in his/her own name at the then current value, or if greater, the
death benefit value. If the Earnings Protection GMDB has been selected, the
Contract Value is treated as the total Purchase Payments in the calculation of
the death benefit for the Contract continued by the spouse, or (4) If a lump sum
payment is elected and all the necessary requirements, including any required
tax consent from some states, are met, the payment will be made within 7 days.
Payment of the death benefit may be delayed pending receipt of any applicable
tax consents and/or forms from a state. If the Beneficiary wants to receive the
payment other than in a lump sum, he/she may only make such an election during
the 60 day period after the day that the lump sum first became payable by
Allianz Life.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Contract Owner.
DEATH OF ANNUITANT
If the Annuitant, who is not a Contract Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If you do not name a new
Annuitant within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Contract Owner is a non-natural person (e.g., a
corporation), then the death of the Annuitant will be treated as the death of
the Contract Owner, and a new Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
10. OTHER INFORMATION
--------------------------------------------------------------------------------
ALLIANZ LIFE
Allianz Life Insurance Company of North America (Allianz Life), 5701 Golden
Hills Drive, Minneapolis, Minnesota 55416, was organized under the laws of the
state of Minnesota in 1896. Allianz Life offers fixed and variable life
insurance and annuities and group life, accident and health insurance. Allianz
Life is licensed to do direct business in 49 states and the District of
Columbia. Allianz Life is a wholly-owned subsidiary of Allianz Versicherungs-AG
Holding.
THE SEPARATE ACCOUNT
Allianz Life established Allianz Life Variable Account B (Separate Account)
under Minnesota insurance law on May 31, 1985. The Separate Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. The SEC does not supervise our
management of the Separate Account.
The Separate Account holds the assets that underlie the Contracts, except assets
allocated to the Fixed Account. We keep the Separate Account assets separate
from the assets of our general account and other separate accounts. The Separate
Account is divided into subaccounts, each of which invests exclusively in a
single Investment Option.
Allianz Life owns the assets of the Separate Account. We credit gains to or
charge losses against the Separate Account without regard to the performance of
other investment accounts. The Separate Account's assets may not be used to pay
any of our liabilities other than those arising from the Contracts. If the
Separate Account's assets exceed the required reserves and other liabilities, we
may transfer the excess to our general account.
DISTRIBUTION
Our wholly owned subsidiary, USAllianz Investor Services, LLC (USAllianz),
serves as principal underwriter for the Contracts. USAllianz, a limited
liability company, organized in Minnesota, is located at 5701 Golden Hills
Drive, Minneapolis, Minnesota 55416. USAllianz is registered as a broker/dealer
with the Securities and Exchange Commission under the Securities Exchange Act of
1934 as well as with the securities commissions in the states in which it
operates, and is a member of the National Association of Securities Dealers,
Inc. (NASD). More Information about USAllianz is available at
http://www.nasdr.com or by calling 1-800-289-9999. You also can obtain an
investor brochure form NASD Regulation describing its Public Disclosure Program.
Commissions will be paid to broker/dealers who sell the Contracts.
Broker/dealers will be paid commissions up to 7.5% of Purchase Payments.
Sometimes, Allianz Life enters into an agreement with the broker/dealer to pay
the broker/dealer commissions as a combination of a certain amount of the
commission at the time of sale and a trail commission (which when totaled could
exceed 7.5% of Purchase Payments).
Other compensation options also may be made available. USAllianz may enter into
selling agreements with other broker/dealers registered under the Securities
Exchange Act of 1934. Under the agreements with those broker/dealers, the
commission paid to the broker/dealer on behalf of the registered representative
will not exceed those described above; selling firms may retain a portion of
commissions. We may pay additional expenses. The registered representative may
receive a portion of the expense reimbursement allowance paid to the
broker/dealer.
In addition, Allianz Life may pay certain sellers for other services not
directly related to the sale of the Contracts (such as special marketing support
allowances). Allianz Life may also periodically pay certain sellers a commission
bonus on aggregate sales for special promotional programs. Commissions may be
recovered from a broker/dealer if a withdrawal occurs within 12 months of a
Purchase Payment or there is a recission of the Contract within the Free-Look
period.
We intend to recoup commissions and other sales expenses through fees and
charges imposed under the Contract. Commissions paid on the Contract, including
other incentives or payments, are not charged directly to the Contract owners or
the Separate Account.
We offer the Contracts to the public on a continuous basis. We anticipate
continuing to offer the Contracts, but reserve the right to discontinue the
offering.
ADDITIONAL CREDITS FOR CERTAIN GROUPS
Allianz Life may credit additional amounts to a Contract instead of modifying
charges because of special circumstances that result in lower sales or
administrative expenses or better than expected mortality or persistency
experience.
ADMINISTRATION
Allianz Life has hired Delaware Valley Financial Services, Inc. (DVFS), 300
Berwyn Park, Berwyn, Pennsylvania, to perform certain administrative services
regarding the Contracts. The administrative services include issuance of the
Contracts and maintenance of Contract Owner's records.
To reduce expenses, only one copy of most financial reports and prospectuses,
including reports and prospectuses for the Investment Options, will be mailed to
your household, even if you or other persons in your household have more than
one contract issued by Allianz or an affiliate. Call (800)-542-5427 if you need
additional copies of financial reports, prospectuses, or annual and semiannual
reports, or if you would like to receive one copy for each contract in future
mailings.
FINANCIAL STATEMENTS
The consolidated financial statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.
TABLE OF CONTENTS
OF THE STATEMENT OF
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Insurance Company 2
Experts 2
Legal Opinions 2
Distributor 2
Reduction or Elimination of the
Contingent Deferred Sales Charge 2
Calculation of Performance Data 2
Federal Tax Status 10
Annuity Provisions 16
Mortality and Expense Risk Guarantee 16
Financial Statements 16
Appendix A - Illustrations 17
Appendix B - Condensed Financial Information 32
PRIVACY NOTICE
WE CARE ABOUT YOUR PRIVACY!
In compliance with Gramm-Leach-Bliley (GLB), this notice describes the privacy
policy and practices followed by Allianz Life Insurance Company of North
America, and their affiliated companies (herein referred to as "Allianz").
Your privacy is a high priority for us and it will be treated with the highest
degree of confidentiality. In order for us to be able to provide these insurance
products and services, we need to collect certain information from you. However,
we want to emphasize that we are committed to maintaining the privacy of this
information in accordance with law. All individuals with access to personal
information about our customers are required to follow this policy.
NON-PUBLIC INFORMATION COLLECTED.
o Information we receive from you on insurance and annuity applications, claim
forms or other forms such as your name, address, date and location of birth,
marital status, sex, social security number, medical information,
beneficiary information, etc.
o Information about your transactions with us, our affiliates or others such
as premium payment history, tax information, investment information, and
accounting information; and
o Information we receive from consumer reporting agencies, such as your credit
history.
NON-PUBLIC INFORMATION DISCLOSED.
o We may provide the non-public information that we collect to affiliated or
nonaffiliated persons or entities involved in the underwriting, processing,
servicing and marketing of your Allianz insurance products. We will not
provide this information to a nonaffiliated third party unless we have a
written agreement that requires the third party to protect the
confidentiality of this information.
o We may have to provide the above described non-public information that we
collect to authorized persons or entities to comply with a subpoena or
summons by federal, state or local authorities and to respond to judicial
process or regulatory authorities having jurisdiction over our company for
examination, compliance or other purposes as required by law.
o We do not disclose any non-public personal information about our customers
to anyone except as permitted or required by law.
CONFIDENTIALITY AND SECURITY OF YOUR NON-PUBLIC PERSONAL INFORMATION.
o We restrict access of non-public personal information about you to only
those persons who need to know about that information to underwrite,
process, service or market Allianz insurance products and services.
o We maintain physical, electronic, and procedural safeguards that comply with
state and federal standards to guard your non-public personal information.
o If we become aware that an item of personal information may be materially
inaccurate, we will make reasonable effort to re-verify its accuracy and
correct any error as appropriate.
INFORMATION ABOUT FORMER CUSTOMERS.
Non-public information about our former customers is maintained by Allianz on a
confidential and secure basis. If any such disclosure is made, it would be for
reasons and under the conditions described in this notice. We do not disclose
any non-public personal information about our former customers to anyone except
as permitted or required by law.
FURTHER INFORMATION.
o You have a right to access and request correction of your personal information
that is recorded with Allianz.
o Information obtained from a report prepared by an insurance support
organization may be retained by the insurance support organization and
disclosed to other persons.
* You are entitled to receive, upon request to Allianz, a record of any
subsequent disclosures of medical record information made by Allianz
including the following:
1. the name, address and institutional affiliation, if any, of each person
receiving or examining the medical information during the preceding three
years prior to your receipt of this privacy notice;
2. the date of the receipt or examination; and
3. to the extent practicable, a description of the information disclosed.
*FOR MONTANA RESIDENTS ONLY
If you have any questions about our privacy policy, please write, call, or
email:
Allianz Life Insurance Company of North America
PO Box 1344, Minneapolis, MN 55440-1344
800/328-5600, www.allianzlife.com
APPENDIX
--------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
The consolidated financial statements of Allianz Life Insurance Company of North
America and the financial statements of Allianz Life Variable Account B may be
found in the Statement of Additional Information.
Accumulation Unit Value (AUV) information corresponding to the highest and
lowest combination of charges is reflected in the tables below. AUV information
reflecting the additional combination of charges is disclosed in the Appendix to
the Statement of Additional Information.
This information should be read in conjunction with the financial statements and
related notes of the Separate Account included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
(NUMBER OF UNITS IN THOUSANDS) CONTRACT WITH GMIB AND
EARNINGS PROTECTION STANDARD CONTRACT
1.89% 1.49%
------------------ -------------------------------------------------------------------
INCEPTION YEAR OR PERIODYEAR OR PERIODYEAR OR PERIODYEAR OR PERIODINCEPTION
(11/05/01) TO ENDED ENDED ENDED ENDED (2/3/97) TO
INVESTMENT OPTIONS: DEC. 31, 2001 DEC 31, 2001 DEC. 31, 2000DEC. 31, 1999DEC. 31, 1998DEC. 31, 1997
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL GROWTH AND INCOME
<S> <C> <C> <C> <C> <C> <C>
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.435 $10.441 NA NA NA NA
Number of units outstanding at end of period 0 80 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL LARGE CAP GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.518 $10.525 NA NA NA NA
Number of units outstanding at end of period 0 51 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL TECHNOLOGY
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.737 $10.744 NA NA NA NA
Number of units outstanding at end of period 0 149 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN GLOBAL COMMUNICATIONS SECURITIES
Unit value at beginning of period NA $25.518 $38.572 $28.082 $25.635 $20.526
Unit value at end of period $16.888 $17.788 $25.518 $38.572 $28.082 $25.635
Number of units outstanding at end of period 0 1,314 1,588 1,418 1,006 310
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN GROWTH AND INCOME SECURITIES
Unit value at beginning of period NA $30.099 $25.891 $25.993 $24.354 $19.351
Unit value at end of period $27.609 $29.053 $30.099 $25.891 $25.993 $24.354
Number of units outstanding at end of period 0 4,359 4,691 5,570 5,185 2,376
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN HIGH INCOME
Unit value at beginning of period NA $17.739 $20.695 $21.020 $21.141 $19.237
Unit value at end of period $17.315 $18.220 $17.739 $20.695 $21.020 $21.141
Number of units outstanding at end of period 0 2,807 3,269 4,118 4,191 2,202
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN INCOME SECURITIES
Unit value at beginning of period NA $28.421 $24.084 $24.898 $24.864 $21.554
Unit value at end of period $26.869 $28.273 $28.421 $24.084 $24.898 $24.864
Number of units outstanding at end of period 0 3,485 3,577 4,380 4,239 2,094
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN LARGE CAP GROWTH SECURITIES
Unit value at beginning of period NA $20.997 $20.152 $15.537 $13.110 $11.247
Unit value at end of period $17.944 $18.356 $20.997 $20.152 $15.537 $13.110
Number of units outstanding at end of period 0 6,822 7,938 7,521 4,502 1,957
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN REAL ESTATE
Unit value at beginning of period NA $27.529 $21.176 $22.901 $27.944 $23.499
Unit value at end of period $27.883 $29.340 $27.529 $21.176 $22.901 $27.944
Number of units outstanding at end of period 0 1,185 1,336 1,490 1,823 1,217
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS SECURITIES
Unit value at beginning of period NA $22.317 $18.712 $21.034 $19.968 $15.235
Unit value at end of period $24.073 $25.041 $22.317 $18.712 $21.034 $19.968
Number of units outstanding at end of period 0 3,084 3,128 4,137 4,428 1,991
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN SMALL CAP
Unit value at beginning of period NA $23.767 $28.247 $14.558 $14.923 $12.899
Unit value at end of period $19.412 $19.898 $23.767 $28.247 $14.558 $14.923
Number of units outstanding at end of period 0 5,025 5,728 5,460 5,492 2,965
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN SMALL CAP VALUE SECURITIES
Unit value at beginning of period NA $9.530 $7.724 $7.713 $10.000 NA
Unit value at end of period $10.566 $10.722 $9.530 $7.724 $7.713 NA
Number of units outstanding at end of period 0 1,364 867 603 367 NA
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN U.S. GOVERNMENT
Unit value at beginning of period NA $20.264 $18.394 $18.847 $17.805 $16.533
Unit value at end of period $20.414 $21.483 $20.264 $18.394 $18.847 $17.805
Number of units outstanding at end of period 0 3,480 3,294 3,857 3,040 1,359
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN ZERO COUPON 2005
Unit value at beginning of period NA $25.489 $22.983 $24.786 $22.357 $20.375
Unit value at end of period $25.988 $27.353 $25.489 $22.983 $24.786 $22.357
Number of units outstanding at end of period 0 515 508 555 380 161
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN ZERO COUPON 2010
Unit value at beginning of period NA $27.989 $23.929 $27.674 $24.544 $21.371
Unit value at end of period $27.674 $29.123 $27.989 $23.929 $27.674 $24.544
Number of units outstanding at end of period 3 462 575 668 478 150
---------------------------------------------------------------------------------------------------------------------------
MUTUAL DISCOVERY SECURITIES
Unit value at beginning of period NA $14.867 $13.662 $11.205 $11.971 $10.179
Unit value at end of period $14.404 $14.703 $14.867 $13.662 $11.205 $11.971
Number of units outstanding at end of period 0 6,442 7,118 7,820 8,822 5,461
---------------------------------------------------------------------------------------------------------------------------
MUTUAL SHARES SECURITIES
Unit value at beginning of period NA $14.776 $13.199 $11.814 $11.981 $10.329
Unit value at end of period $15.302 $15.620 $14.776 $13.199 $11.814 $11.981
Number of units outstanding at end of period 0 14,838 15,886 18,924 19,834 11,394
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON DEVELOPING MARKETS SECURITIES
Unit value at beginning of period NA $8.421 $12.125 $7.958 $10.305 $11.458
Unit value at end of period $7.391 $7.626 $8.421 $12.125 $7.958 $10.305
Number of units outstanding at end of period 0 2,441 3,047 3,389 3,425 2,663
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON FOREIGN SECURITIES
Unit value at beginning of period NA $21.413 $22.858 $18.322 $17.617 $16.010
Unit value at end of period $17.085 $17.772 $21.413 $22.858 $18.322 $17.617
Number of units outstanding at end of period 0 3,729 4,027 4,164 4,427 3,122
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON GROWTH SECURITIES
Unit value at beginning of period NA $19.410 $19.364 $16.238 $15.124 $13.525
Unit value at end of period $18.351 $18.933 $19.410 $19.364 $16.238 $15.124
Number of units outstanding at end of period 0 7,387 8,239 9,008 8,864 5,525
---------------------------------------------------------------------------------------------------------------------------
USAZ TEMPLETON DEVELOPED MARKETS
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.219 $10.225 NA NA NA NA
Number of units outstanding at end of period 0 12 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
SP JENNISON INTERNATIONAL GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $5.334 $5.356 NA NA NA NA
Number of units outstanding at end of period 0 23 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
SP JENNISON STRATEGIC PARTNERS FOCUSED GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $6.572 $6.599 NA NA NA NA
Number of units outstanding at end of period 0 46 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT HIGH YIELD
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $9.848 $9.923 NA NA NA NA
Number of units outstanding at end of period 0 103 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT STOCKSPLUS GROWTH AND INCOME
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $8.189 $8.252 NA NA NA NA
Number of units outstanding at end of period 0 14 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT TOTAL RETURN
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $11.610 $11.699 NA NA NA NA
Number of units outstanding at end of period 0 159 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO GROWTH AND INCOME
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.132 $10.139 NA NA NA NA
Number of units outstanding at end of period 0 43 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO RENAISSANCE
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.987 $10.994 NA NA NA NA
Number of units outstanding at end of period 2 287 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO VALUE
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.929 $10.936 NA NA NA NA
Number of units outstanding at end of period 0 108 NA NA NA NA
------------------------------------------------------------------------------------------------------------------------------
USAZ MONEY MARKET
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $10.481 $10.561 NA NA NA NA
Number of units outstanding at end of period 1 659 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN AGGRESSIVE GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $7.998 $8.019 NA NA NA NA
Number of units outstanding at end of period 0 53 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN COMSTOCK
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $9.300 $9.325 NA NA NA NA
Number of units outstanding at end of period 0 254 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN EMERGING GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $9.104 $9.128 NA NA NA NA
Number of units outstanding at end of period 0 81 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN GROWTH AND INCOME
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $9.636 $9.662 NA NA NA NA
Number of units outstanding at end of period 0 116 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN GROWTH
Unit value at beginning of period NA NA NA NA NA NA
Unit value at end of period $9.489 $9.514 NA NA NA NA
Number of units outstanding at end of period 0 58 NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
There are no accumulation units shown for the USAZ AIM Basic Value Fund, USAZ
AIM Blue Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM
International Equity Fund, Davis VA Financial Portfolio, Davis VA Value
Portfolio, Dreyfus Small Cap Stock Index Fund, Dreyfus Stock Index Fund,
Jennison 20/20 Focus Portfolio, Oppenheimer Global Securities Fund/VA,
Oppenheimer High Income Fund/VA, Oppenheimer Main Street Growth & Income
Fund/VA, USAZ Oppenheimer Emerging Growth Fund and the Seligman Small-Cap Value
Portfolio because they commenced operations under this Contract as of May 1,
2002.
PART B - STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION
VALUEMARK(R) IV
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
ISSUED BY
ALLIANZ LIFE VARIABLE ACCOUNT B
AND
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
MAY 1, 2002
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN. THE PROSPECTUS
CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE INSURANCE
COMPANY AT:
5701 GOLDEN HILLS DRIVE, MINNEAPOLIS, MN 55416 , (800) 542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED May 1,
2002 , AND AS MAY BE AMENDED FROM TIME TO TIME.
TABLE OF CONTENTS
PAGE
Insurance Company ............................... 2
Experts ......................................... 2
Legal Opinions .................................. 2
Distributor ..................................... 2
Reduction or Elimination of the
Contingent Deferred Sales Charge ............... 2
Calculation of Performance Data ................. 3
Federal Tax Status .............................. 10
Annuity Provisions .............................. 15
Mortality and Expense Risk Guarantee ............ 16
Financial Statements ............................ 16
Appendix A - Illustrations....................... 17
Appendix B - Condensed Financial Information..... 32
V4SAI-0502
INSURANCE COMPANY
--------------------------------------------------------------------------------
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. The Insurance Company
offers fixed and variable life insurance and annuities, and group life, accident
and health insurance.
The Insurance Company is rated A++ by A.M. BEST, an independent analyst of the
insurance industry. The financial strength of an insurance company may be
relevant in that it may be a reflection as to the ability of a company to make
fixed annuity payments from its general account.
EXPERTS
--------------------------------------------------------------------------------
The financial statements of Allianz Life Variable Account B as of and for the
year ended December 31, 2001 and the consolidated financial statements of the
Insurance Company as of December 31, 2001 and 2000 and for each of the years in
the three years ended December 31, 2001 have been included in this Statement of
Additional Information in reliance upon the reports of KPMG LLP, independent
accountants, included in this Statement of Additional Information and upon the
authority of said firm as experts in accounting and auditing.
The Insurance Company audit report refers to a change in its method of
accounting for derivative instruments in 2001 and a change in its method of
calculating deferred acquisition costs and future benefit reserves for
two-tiered annuities in 1999. The principal business address of KPMG LLP is 4200
Wells Fargo Center, Minneapolis, MN.
LEGAL OPINIONS
--------------------------------------------------------------------------------
Leonard, Street and Deinard Professional Association, Minneapolis, MN has
provided legal advice on certain matters in connection with the issuance of the
Contracts.
DISTRIBUTOR
--------------------------------------------------------------------------------
USAllianz Investor Services, LLC, a subsidiary of the Insurance Company, acts as
the distributor. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE
CONTINGENT DEFERRED SALES CHARGE
--------------------------------------------------------------------------------
The amount of the contingent deferred sales charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the contingent deferred sales charge will be
determined by the Insurance Company after examination of the following factors:
1) the size of the group; 2) the total amount of purchase payments expected to
be received from the group; 3) the nature of the group for which the Contracts
are purchased, and the persistency expected in that group; 4) the purpose for
which the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and 5) any other circumstances which the Insurance
Company believes to be relevant to determining whether reduced sales or
administrative expenses may be expected. None of the reductions in charges for
sales is contractually guaranteed.
The contingent deferred sales charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Insurance Company or any of
its affiliates. The contingent deferred sales charge may be reduced or
eliminated when the Contract is sold by an agent of the Insurance Company to any
members of his or her immediate family and the commission is waived. In no event
will any reduction or elimination of the contingent deferred sales charge be
permitted where the reduction or elimination will be unfairly discriminatory to
any person.
CALCULATION OF PERFORMANCE DATA
--------------------------------------------------------------------------------
TOTAL RETURN
From time to time, the Insurance Company may advertise the performance data for
the divisions of the separate account (also known as subaccounts), in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications. Such data will show the percentage change in the
value of an Accumulation Unit based on the performance of a subaccount over a
stated period of time which is determined by dividing the increase (or decrease)
in value for that unit by the Accumulation Unit value at the beginning of the
period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of a 1.34% mortality and expense risk charge,
a 0.15% administrative charge, the operating expenses of the Investment Options
and any applicable contingent deferred sales charge and contract maintenance
charge ("Standardized Total Return"). The contingent deferred sales charge and
contract maintenance charge deductions are calculated assuming a Contract is
surrendered at the end of the reporting period.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual Accumulation Unit values for an initial
$1,000 purchase payment, and deducting any applicable contract maintenance
charges and any applicable contingent deferred sales charges to arrive at the
ending hypothetical value. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:
P(1+T)n = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the time periods used at the end of such time periods (or
fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the contingent deferred sales charge and the contract maintenance
charge. The Insurance Company may also advertise cumulative and average total
return information over different periods of time. The Company may also present
performance information computed on a different basis ("Non-Standardized Total
Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Investment Options and assumes that the income earned by the investment in the
Investment Option is reinvested.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered as
a representation of what an investment may earn or what a Contract Owner's total
return may be in any future period.
YIELD The USAZ Money Market Fund. The Insurance Company may advertise yield
information for the USAZ Money Market Fund. The USAZ Money Market Fund's current
yield may vary each day, depending upon, among other things, the average
maturity of the Investment Option's investment securities and changes in
interest rates, operating expenses, the deduction of the mortality and expense
risk charge, the administrative charge and the contract maintenance charge and,
in certain instances, the value of the Investment Option's investment
securities. The fact that the subaccount's current yield will fluctuate and that
the principal is not guaranteed should be taken into consideration when using
the subaccount's current yield as a basis for comparison with savings accounts
or other fixed-yield investments. The yield at any particular time is not
indicative of what the yield may be at any other time.
The USAZ Money Market Fund's current yield is computed on a base period return
of a hypothetical Contract having a beginning balance of one Accumulation Unit
for a particular period of time (generally seven days). The return is determined
by dividing the net change (exclusive of any capital changes) in such
Accumulation Unit by its beginning value, and then multiplying it by 365/7 to
get the annualized current yield. The calculation of net change reflects the
value of additional shares purchased with the dividends paid by the Investment
Option, and the deduction of the mortality and expense risk charge, the
administrative charge and contract maintenance charge. The effective yield
reflects the effects of compounding and represents an annualization of the
current return with all dividends reinvested.
(Effective yield = [(Base Period Return + 1)365/7] - 1.)
For the seven-day period ending on December 31, 2001, the USAZ Money Market
Investment Option had a current yield of -0.51% and an effective yield of
-0.51%. The yield information assumes that the Contract Investment Option was
invested in the USAZ Money Market Fund for the time period shown.
Other Investment Options. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications for the other Investment Options. Each Investment
Options (other than the USAZ Money Market Fund) will publish standardized total
return information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
Accumulation Unit earned during the period (minus the deduction for the
mortality and expense risk charge, administrative charge and contract
maintenance charge) by the Accumulation Unit value on the last day of the period
and annualizing the resulting figure, according to the following formula:
Yield = 2 [((a-b) + 1)6 - 1]
-------
cd
where:
a = net investment income earned during the period by the Investment Options
attributable to shares owned by the subaccount;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of Accumulation Units outstanding during the
period;
d = the maximum offering price per Accumulation Unit on the last day of the
period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
subaccount (other than the USAZ Money Market Fund).
PERFORMANCE RANKING
Total return may be compared to relevant indices, including U.S. domestic and
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R). From time to time, evaluation of performance by
independent sources may also be used.
PERFORMANCE INFORMATION
The performance figures in Charts A and B reflect Accumulation Unit performance
from Separate Account inception or, if later, the date that a particular
Investment Option was added to the Separate Account. Chart A reflects
performance for the Standard Contract where no benefits are selected (no
Earnings Protection GMDB and no GMIB), (M&E of 1.49%). Chart B reflects
performance for the Contract where all benefits are selected (Earnings
Protection GMDB and GMIB), (M&E of 1.89%).
The performance figures in Charts C and D reflect Accumulation Unit performance
from portfolio inception which may pre-date Separate Account inception and
assumes the Accumulation Units were invested in each of the Investment Options
from the Investment Option inception dates as listed on the table. Chart C
reflects performance for the Standard Contract where no benefits are selected
(no Earnings Protection GMDB and no GMIB), (M&E of 1.49%). Chart D reflects
performance for the Contract where all benefits are selected (Earnings
Protection GMDB and GMIB), (M&E of 1.89%).
Chart E reflects performance information for the Investment Options which does
not include any Contract fees, expenses or sales charges.
The performance figures in Column I of each table represent performance figures
for the Accumulation Units which reflects the mortality and expense risk charge,
administrative charge and the operating expenses of the Investment Options, but
not the contract maintenance charge. Column II represents performance figures
for the Accumulation Units which reflects the deduction of the mortality and
expense risk charge, administrative charge, the operating expenses of the
Investment Options and the contract maintenance charge.
<TABLE>
<CAPTION>
CHART A-STANDARD CONTRACT AND DEATH BENEFIT OPTION 1 OR 2 (1.49%)
------------------------------------------------------------------------------------------------------------------------------------
Total Return for the periods ended December 31, 2001: ACTUAL
COLUMN I (WITHOUT CHARGES) COLUMN II (WITH CHARGES)
------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
INCEPTION ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
INVESTMENT OPTION DATE YEAR YEAR YEAR YEAR INCEPTION YEAR YEAR YEAR YEAR INCEPTION
IN INVESTMENT OPTION
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
USAZ Alliance Capital Growth and 11/5/2001 N/A N/A N/A N/A 4.43 N/A N/A N/A N/A -1.67
Income
USAZ Alliance Capital Large Cap 11/5/2001 N/A N/A N/A N/A 5.26 N/A N/A N/A N/A -0.84
Growth
USAZ Alliance Capital Technology 11/5/2001 N/A N/A N/A N/A 7.45 N/A N/A N/A N/A 1.35
Franklin Global Communications 1/24/1989 -30.29 -14.12 -2.82 1.87 4.55 -36.39 -16.59 -3.68 1.79 4.49
Securities - Class 11
Franklin Growth and Income 1/24/1989 -3.48 3.78 8.47 9.32 8.59 -9.58 2.08 7.89 9.25 8.52
Securities-Class 11
Franklin High Income - Class 1 1/24/1989 2.71 -4.65 -1.08 4.66 4.74 -3.39 -6.67 -1.90 4.59 4.67
Franklin Income Securities - Class 1/24/1989 -0.52 4.33 5.58 7.64 8.36 -6.62 2.64 4.93 7.57 8.30
11
Franklin Large Cap Growth 5/1/1996 -12.58 5.71 10.29 N/A 11.30 -18.68 4.09 9.75 N/A 10.96
Securities - Class 11
Franklin Real Estate - Class 11,2 1/24/1989 6.58 8.61 4.54 9.52 8.67 0.48 7.05 3.87 9.46 8.61
Franklin Rising Dividends 1/27/1992 12.21 5.98 10.45 N/A 9.68 6.11 4.34 9.91 N/A 9.61
Securities - Class 11
Franklin Small Cap - Class 11 11/1/1995 -16.28 10.98 9.06 N/A 11.80 -22.38 9.51 8.50 N/A 11.56
Franklin Small Cap Value 5/1/1998 12.51 11.61 N/A N/A 1.92 6.41 10.13 N/A N/A 0.68
Securities - Class 11
Franklin U.S. Government - Class 1 3/14/1989 6.02 4.46 5.38 5.34 6.15 -0.08 2.78 4.73 5.26 6.08
Franklin Zero Coupon 2005 - Class 1 3/14/1989 7.31 3.34 6.07 7.18 8.17 1.21 1.62 5.43 7.11 8.11
Franklin Zero Coupon 2010 - Class 1 3/14/1989 4.05 1.72 6.39 8.03 8.70 -2.05 -0.06 5.76 7.97 8.64
Mutual Discovery Securities - 11/8/1996 -1.10 9.48 7.63 N/A 7.78 -7.20 7.96 7.03 N/A 7.31
Class 11
Mutual Shares Securities - Class 11 11/8/1996 5.71 9.75 8.62 N/A 9.05 -0.39 8.23 8.04 N/A 8.60
Templeton Developing Markets 3/4/1996 -9.45 -1.41 -7.82 N/A -3.41 -15.55 -3.28 -8.91 N/A -3.52
Securities - Class 11,3
Templeton Foreign Securities - 5/1/1992 -17.00 -1.01 2.11 N/A 5.96 -23.10 -2.87 1.39 N/A 5.89
Class 11,3,4
Templeton Growth Securities - 3/15/1994 -2.46 5.25 6.96 N/A 8.52 -8.56 3.60 6.35 N/A 8.45
Class 11
USAZ Templeton Developed Markets - 11/5/2001 N/A N/A N/A N/A 2.27 N/A N/A N/A N/A -3.83
Class 1
SP Jennison International Growth 12/15/2000 -36.88 N/A N/A N/A -35.90 -42.98 N/A N/A N/A -41.09
SP Strategic Partners Focused 12/15/2000 -16.98 N/A N/A N/A -20.45 -23.08 N/A N/A N/A -25.59
Growth
PIMCO VIT High Yield 2/1/2000 0.84 N/A N/A N/A -0.41 -5.26 N/A N/A N/A -3.22
PIMCO VIT StocksPLUS Growth & 2/1/2000 -12.75 N/A N/A N/A -10.13 -18.85 N/A N/A N/A -13.22
Income
PIMCO VIT Total Return 2/1/2000 6.78 N/A N/A N/A 8.90 0.68 N/A N/A N/A 6.31
USAZ PIMCO Growth and Income 11/5/2001 N/A N/A N/A N/A 1.40 N/A N/A N/A N/A -4.70
USAZ PIMCO Renaissance 11/5/2001 N/A N/A N/A N/A 9.95 N/A N/A N/A N/A 3.85
USAZ PIMCO Value 11/5/2001 N/A N/A N/A N/A 9.38 N/A N/A N/A N/A 3.28
USAZ Money Market 2/1/2000 1.74 N/A N/A N/A 2.89 -4.36 N/A N/A N/A 0.16
USAZ Van Kampen Aggressive Growth 5/1/2001 N/A N/A N/A N/A -19.80 N/A N/A N/A N/A -25.90
USAZ Van Kampen Comstock 5/1/2001 N/A N/A N/A N/A -6.56 N/A N/A N/A N/A -12.66
USAZ Van Kampen Emerging Growth 5/1/2001 N/A N/A N/A N/A -8.22 N/A N/A N/A N/A -14.32
USAZ Van Kampen Growth and Income 5/1/2001 N/A N/A N/A N/A -3.38 N/A N/A N/A N/A -9.48
USAZ Van Kampen Growth 5/1/2001 N/A N/A N/A N/A -4.85 N/A N/A N/A N/A -10.95
------------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Ongoing stock market volatility can dramatically change the Investment
Options' short-term performance; current results may differ.
2. These returns reflect periods of rapidly rising stock markets and such
gains may not continue.
3. Performance prior to the 5/1/00 merger reflects the historical performance
of the Templeton Developing Markets and Foreign Securities Investment
Options.
4. For Templeton Foreign Securities Fund, performance prior to the 5/1/00
merger reflects the historical performance of Templeton International Fund.
There is no performance shown for the USAZ AIM Basic Value Fund, USAZ AIM Blue
Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM International Equity
Fund, Davis VA Financial Portfolio, Davis VA Value Portfolio, Dreyfus Small Cap
Stock Index Fund, Dreyfus Stock Index Fund, Jennison 20/20 Focus Portfolio,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CHART B-CONTRACT WITH EARNINGS PROTECTION GMDB AND GMIB (1.89%)
------------------------------------------------------------------------------------------------------------------------------------
Total Return for the periods ended December 31, 2001: ACTUAL
COLUMN I (WITHOUT CHARGES) COLUMN II (WITH CHARGES)
------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
INCEPTION ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
INVESTMENT OPTION DATE YEAR YEAR YEAR YEAR INCEPTION YEAR YEAR YEAR YEAR INCEPTION
IN INVESTMENT OPTION
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
USAZ Alliance Capital Growth and 11/5/2001 N/A N/A N/A N/A 4.36 N/A N/A N/A N/A -1.74
Income
USAZ Alliance Capital Large Cap 11/5/2001 N/A N/A N/A N/A 5.19 N/A N/A N/A N/A -0.91
Growth
USAZ Alliance Capital Technology 11/5/2001 N/A N/A N/A N/A 7.39 N/A N/A N/A N/A 1.29
Franklin Global Communications 1/24/1989 -30.57 -14.46 -3.21 1.45 4.13 -36.67 -16.96 -4.08 1.38 4.07
Securities - Class 11
Franklin Growth and Income 1/24/1989 -3.86 3.36 8.03 8.88 8.16 -9.96 1.65 7.45 8.81 8.09
Securities - Class 11
Franklin High Income - Class 1 1/24/1989 2.30 -5.03 -1.48 4.24 4.33 -3.80 -7.07 -2.31 4.17 4.26
Franklin Income Securities - 1/24/1989 -0.92 3.91 5.16 7.21 7.94 -7.02 2.21 4.50 7.14 7.87
Class 11
Franklin Large Cap Growth 5/1/1996 -12.93 5.29 9.85 N/A 10.86 -19.03 3.65 9.31 N/A 10.51
Securities - Class 11
Franklin Real Estate - Class 11,2 1/24/1989 6.15 8.18 4.12 9.08 8.25 0.05 6.60 3.44 9.02 8.18
Franklin Rising Dividends 1/27/1992 11.76 5.56 10.01 N/A 9.25 5.66 3.91 9.46 N/A 9.17
Securities - Class 11
Franklin Small Cap - Class 11 11/1/1995 -16.61 10.53 8.62 N/A 11.35 -22.71 9.05 8.05 N/A 11.11
Franklin Small Cap Value 5/1/1998 12.06 11.16 N/A N/A 1.51 5.96 9.67 N/A N/A 0.26
Securities - Class 11
Franklin U.S. Government - Class 1 3/14/1989 5.59 4.04 4.96 4.92 5.73 -0.51 2.35 4.30 4.84 5.66
Franklin Zero Coupon 2005 - Class 3/14/1989 6.88 2.93 5.64 6.75 7.74 0.78 1.19 5.00 6.68 7.68
1
Franklin Zero Coupon 2010 - Class 3/14/1989 3.64 1.31 5.96 7.60 8.27 -2.46 -0.48 5.33 7.53 8.21
1
Mutual Discovery Securities - 11/8/1996 -1.50 9.04 7.20 N/A 7.35 -7.60 7.51 6.60 N/A 6.87
Class 11
Mutual Shares Securities - Class 11/8/1996 5.29 9.32 8.19 N/A 8.61 -0.81 7.78 7.60 N/A 8.16
11
Templeton Developing Markets 3/4/1996 -9.81 -1.81 -8.19 N/A -3.80 -15.91 -3.69 -9.29 N/A -3.91
Securities - Class 11,3
Templeton Foreign Securities - 5/1/1992 -17.34 -1.41 1.70 N/A 5.54 -23.44 -3.28 0.97 N/A 5.47
Class 11,3,4
Templeton Growth Securities - 3/15/1994 -2.85 4.83 6.53 N/A 8.09 -8.95 3.17 5.91 N/A 8.02
Class 11
USAZ Templeton Developed Markets 11/5/2001 N/A N/A N/A N/A 2.20 N/A N/A N/A N/A -3.90
- Class 1
SP Jennison International Growth 12/15/2000 -37.13 N/A N/A N/A -36.15 -43.23 N/A N/A N/A -41.34
SP Strategic Partners Focused 12/15/2000 -17.31 N/A N/A N/A -20.77 -23.41 N/A N/A N/A -25.91
Growth
PIMCO VIT High Yield 2/1/2000 0.43 N/A N/A N/A -0.81 -5.67 N/A N/A N/A -3.63
PIMCO VIT StocksPLUS Growth & 2/1/2000 -13.10 N/A N/A N/A -10.49 -19.20 N/A N/A N/A -13.59
Income
PIMCO VIT Total Return 2/1/2000 6.35 N/A N/A N/A 8.46 0.25 N/A N/A N/A 5.86
USAZ PIMCO Growth and Income 11/5/2001 N/A N/A N/A N/A 1.34 N/A N/A N/A N/A -4.76
USAZ PIMCO Renaissance 11/5/2001 N/A N/A N/A N/A 9.88 N/A N/A N/A N/A 3.78
USAZ PIMCO Value 11/5/2001 N/A N/A N/A N/A 9.31 N/A N/A N/A N/A 3.21
USAZ Money Market 2/1/2000 1.33 N/A N/A N/A 2.48 -4.77 N/A N/A N/A -0.26
USAZ Van Kampen Aggressive Growth 5/1/2001 N/A N/A N/A N/A -20.02 N/A N/A N/A N/A -26.12
USAZ Van Kampen Comstock 5/1/2001 N/A N/A N/A N/A -6.81 N/A N/A N/A N/A -12.91
USAZ Van Kampen Emerging Growth 5/1/2001 N/A N/A N/A N/A -8.46 N/A N/A N/A N/A -14.56
USAZ Van Kampen Growth and Income 5/1/2001 N/A N/A N/A N/A -3.64 N/A N/A N/A N/A -9.74
USAZ Van Kampen Growth 5/1/2001 N/A N/A N/A N/A -5.11 N/A N/A N/A N/A -11.21
----------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Ongoing stock market volatility can dramatically change the Investment
Options' short-term performance; current results may differ.
2. These returns reflect periods of rapidly rising stock markets and such
gains may not continue.
3. Performance prior to the 5/1/00 merger reflects the historical performance
of the Templeton Developing Markets and Foreign Securities Investment
Options.
4. For Templeton Foreign Securities Fund, performance prior to the 5/1/00
merger reflects the historical performance of Templeton International Fund.
There is no performance shown for the USAZ AIM Basic Value Fund, USAZ AIM Blue
Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM International Equity
Fund, Davis VA Financial Portfolio, Davis VA Value Portfolio, Dreyfus Small Cap
Stock Index Fund, Dreyfus Stock Index Fund, Jennison 20/20 Focus Portfolio,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CHART C- STANDARD CONTRACT AND DEATH BENEFIT OPTION 1 OR 2 (1.49%)
------------------------------------------------------------------------------------------------------------------------------------
Total Return for the periods ended December 31, 2001: HYPOTHETICAL
COLUMN I (WITHOUT CHARGES) COLUMN II (WITH CHARGES)
------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
INCEPTION ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
INVESTMENT OPTION DATE YEAR YEAR YEAR YEAR INCEPTION YEAR YEAR YEAR YEAR INCEPTION
IN INVESTMENT OPTION
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
USAZ Alliance Capital Growth and
Income 11/5/2001 N/A N/A N/A N/A 4.43 N/A N/A N/A N/A -1.67
USAZ Alliance Capital Large Cap
Growth 11/5/2001 N/A N/A N/A N/A 5.26 N/A N/A N/A N/A -0.84
USAZ Alliance Capital Technology 11/5/2001 N/A N/A N/A N/A 7.45 N/A N/A N/A N/A 1.35
Franklin Global Communications 1/24/1989 -30.29 -14.12 -2.82 1.87 4.55 -36.39 -16.59 -3.68 1.79 4.49
Securities - Class 11
Franklin Growth and Income 1/24/1989 -3.48 3.78 8.47 9.32 8.59 -9.58 2.08 7.89 9.25 8.52
Securities - Class 11
Franklin High Income - Class 1 1/24/1989 2.71 -4.65 -1.08 4.66 4.74 -3.39 -6.67 -1.90 4.59 4.67
Franklin Income Securities - 1/24/1989 -0.52 4.33 5.58 7.64 8.36 -6.62 2.64 4.93 7.57 8.30
Class 11
Franklin Large Cap Growth 5/1/1996 -12.58 5.71 10.29 N/A 11.30 -18.68 4.09 9.75 N/A 10.96
Securities - Class 11
Franklin Real Estate - Class 11,2 1/24/1989 6.58 8.61 4.54 9.52 8.67 0.48 7.05 3.87 9.46 8.61
Franklin Rising Dividends 1/27/1992 12.21 5.98 10.45 N/A 9.68 6.11 4.34 9.91 N/A 9.61
Securities - Class 11
Franklin Small Cap - Class 11 11/1/1995 -16.28 10.98 9.06 N/A 11.80 -22.38 9.51 8.50 N/A 11.56
Franklin Small Cap Value 5/1/1998 12.51 11.61 N/A N/A 1.92 6.41 10.13 N/A N/A 0.68
Securities - Class 11
Franklin U.S. Government - Class 1 3/14/1989 6.02 4.46 5.38 5.34 6.15 -0.08 2.78 4.73 5.26 6.08
Franklin Zero Coupon 2005 - Class 3/14/1989 7.31 3.34 6.07 7.18 8.17 1.21 1.62 5.43 7.11 8.11
1
Franklin Zero Coupon 2010 - Class 3/14/1989 4.05 1.72 6.39 8.03 8.70 -2.05 -0.06 5.76 7.97 8.64
1
Mutual Discovery Securities - 11/8/1996 -1.10 9.48 7.63 N/A 7.78 -7.20 7.96 7.03 N/A 7.31
Class 11
Mutual Shares Securities - Class 11/8/1996 5.71 9.75 8.62 N/A 9.05 -0.39 8.23 8.04 N/A 8.60
11
Templeton Developing Markets 3/4/1996 -9.45 -1.41 -7.82 N/A -3.41 -15.55 -3.28 -8.91 N/A -3.52
Securities - Class 11,3
Templeton Foreign Securities - 5/1/1992 -17.00 -1.01 2.11 N/A 5.96 -23.10 -2.87 1.39 N/A 5.89
Class 11,3,4
Templeton Growth Securities - 3/15/1994 -2.46 5.25 6.96 N/A 8.52 -8.56 3.60 6.35 N/A 8.45
Class 11
USAZ Templeton Developed Markets 11/5/2001 N/A N/A N/A N/A 2.27 N/A N/A N/A N/A -3.83
- Class 1
SP Jennison International Growth 12/15/2000 -36.88 N/A N/A N/A -35.90 -42.98 N/A N/A N/A -41.09
SP Strategic Partners Focused 12/15/2000 -16.98 N/A N/A N/A -20.45 -23.08 N/A N/A N/A -25.59
Growth
PIMCO VIT High Yield 4/30/1998 0.84 -0.02 N/A N/A 0.20 -5.26 -1.85 N/A N/A -1.08
PIMCO VIT StocksPLUS Growth & 12/31/1997 -12.75 -2.79 N/A N/A 4.17 -18.85 -4.72 N/A N/A 3.13
Income
PIMCO VIT Total Return 12/31/1997 6.78 4.32 N/A N/A 4.99 0.68 2.64 N/A N/A 3.96
USAZ PIMCO Growth and Income 11/5/2001 N/A N/A N/A N/A 1.40 N/A N/A N/A N/A -4.70
USAZ PIMCO Renaissance 11/5/2001 N/A N/A N/A N/A 9.95 N/A N/A N/A N/A 3.85
USAZ PIMCO Value 11/5/2001 N/A N/A N/A N/A 9.38 N/A N/A N/A N/A 3.28
USAZ Money Market 2/1/2000 1.74 N/A N/A N/A 2.89 -4.36 N/A N/A N/A 0.16
USAZ Van Kampen Aggressive Growth 5/1/2001 N/A N/A N/A N/A -19.80 N/A N/A N/A N/A -25.90
USAZ Van Kampen Comstock 5/1/2001 N/A N/A N/A N/A -6.56 N/A N/A N/A N/A -12.66
USAZ Van Kampen Emerging Growth 5/1/2001 N/A N/A N/A N/A -8.22 N/A N/A N/A N/A -14.32
USAZ Van Kampen Growth and Income 5/1/2001 N/A N/A N/A N/A -3.38 N/A N/A N/A N/A -9.48
USAZ Van Kampen Growth 5/1/2001 N/A N/A N/A N/A -4.85 N/A N/A N/A N/A -10.95
------------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Ongoing stock market volatility can dramatically change the Investment
Options' short-term performance; current results may differ.
2. These returns reflect periods of rapidly rising stock markets and such
gains may not continue.
3. Performance prior to the 5/1/00 merger reflects the historical performance
of the Templeton Developing Markets and Foreign Securities Investment
Options.
4. For Templeton Foreign Securities Fund, performance prior to the 5/1/00
merger reflects the historical performance of Templeton International Fund.
There is no performance shown for the USAZ AIM Basic Value Fund, USAZ AIM Blue
Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM International Equity
Fund, Davis VA Financial Portfolio, Davis VA Value Portfolio, Dreyfus Small Cap
Stock Index Fund, Dreyfus Stock Index Fund, Jennison 20/20 Focus Portfolio,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CHART D-CONTRACT WITH EARNINGS PROTECTION GMDB AND GMIB (1.89%)
------------------------------------------------------------------------------------------------------------------------------------
Total Return for the periods ended December 31, 2001: HYPOTHETICAL
COLUMN I (WITHOUT CHARGES) COLUMN II (WITH CHARGES)
------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
INCEPTION ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
INVESTMENT OPTION DATE YEAR YEAR YEAR YEAR INCEPTION YEAR YEAR YEAR YEAR INCEPTION
IN INVESTMENT OPTION
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
USAZ Alliance Capital Growth and
Income 11/5/2001 N/A N/A N/A N/A 4.36 N/A N/A N/A N/A -1.74
USAZ Alliance Capital Large Cap
Growth 11/5/2001 N/A N/A N/A N/A 5.19 N/A N/A N/A N/A -0.91
USAZ Alliance Capital Technology 11/5/2001 N/A N/A N/A N/A 7.39 N/A N/A N/A N/A 1.29
Franklin Global Communications 1/24/1989 -30.57 -14.46 -3.21 1.45 4.13 -36.67 -16.96 -4.08 1.38 4.07
Securities - Class 11
Franklin Growth and Income 1/24/1989 -3.86 3.36 8.03 8.88 8.16 -9.96 1.65 7.45 8.81 8.09
Securities - Class 11
Franklin High Income - Class 1 1/24/1989 2.30 -5.03 -1.48 4.24 4.33 -3.80 -7.07 -2.31 4.17 4.26
Franklin Income Securities - 1/24/1989 -0.92 3.91 5.16 7.21 7.94 -7.02 2.21 4.50 7.14 7.87
Class 11
Franklin Large Cap Growth 5/1/1996 -12.93 5.29 9.85 N/A 10.86 -19.03 3.65 9.31 N/A 10.51
Securities - Class 11
Franklin Real Estate - Class 11,2 1/24/1989 6.15 8.18 4.12 9.08 8.25 0.05 6.60 3.44 9.02 8.18
Franklin Rising Dividends 1/27/1992 11.76 5.56 10.01 N/A 9.25 5.66 3.91 9.46 N/A 9.17
Securities - Class 11
Franklin Small Cap - Class 11 11/1/1995 -16.61 10.53 8.62 N/A 11.35 -22.71 9.05 8.05 N/A 11.11
Franklin Small Cap Value 5/1/1998 12.06 11.16 N/A N/A 1.51 5.96 9.67 N/A N/A 0.26
Securities - Class 11
Franklin U.S. Government - Class 1 3/14/1989 5.59 4.04 4.96 4.92 5.73 -0.51 2.35 4.30 4.84 5.66
Franklin Zero Coupon 2005 - Class 3/14/1989 6.88 2.93 5.64 6.75 7.74 0.78 1.19 5.00 6.68 7.68
1
Franklin Zero Coupon 2010 - Class 3/14/1989 3.64 1.31 5.96 7.60 8.27 -2.46 -0.48 5.33 7.53 8.21
1
Mutual Discovery Securities - 11/8/1996 -1.50 9.04 7.20 N/A 7.35 -7.60 7.51 6.60 N/A 6.87
Class 11
Mutual Shares Securities - Class 11/8/1996 5.29 9.32 8.19 N/A 8.61 -0.81 7.78 7.60 N/A 8.16
11
Templeton Developing Markets 3/4/1996 -9.81 -1.81 -8.19 N/A -3.80 -15.91 -3.69 -9.29 N/A -3.91
Securities - Class 11,3
Templeton Foreign Securities - 5/1/1992 -17.34 -1.41 1.70 N/A 5.54 -23.44 -3.28 0.97 N/A 5.47
Class 11,3,4
Templeton Growth Securities - 3/15/1994 -2.85 4.83 6.53 N/A 8.09 -8.95 3.17 5.91 N/A 8.02
Class 11
USAZ Templeton Developed Markets 11/5/2001 N/A N/A N/A N/A 2.20 N/A N/A N/A N/A -3.90
- Class 1
SP Jennison International Growth 12/15/2000 -37.13 N/A N/A N/A -36.15 -43.23 N/A N/A N/A -41.34
SP Strategic Partners Focused 12/15/2000 -17.31 N/A N/A N/A -20.77 -23.41 N/A N/A N/A -25.91
Growth
PIMCO VIT High Yield 4/30/1998 0.43 -0.42 N/A N/A -0.20 -5.67 -2.27 N/A N/A -1.50
PIMCO VIT StocksPLUS Growth & 12/31/1997 -13.10 -3.18 N/A N/A 3.75 -19.20 -5.13 N/A N/A 2.70
Income
PIMCO VIT Total Return 12/31/1997 6.35 3.91 N/A N/A 4.57 0.25 2.21 N/A N/A 3.53
USAZ PIMCO Growth and Income 11/5/2001 N/A N/A N/A N/A 1.34 N/A N/A N/A N/A -4.76
USAZ PIMCO Renaissance 11/5/2001 N/A N/A N/A N/A 9.88 N/A N/A N/A N/A 3.78
USAZ PIMCO Value 11/5/2001 N/A N/A N/A N/A 9.31 N/A N/A N/A N/A 3.21
USAZ Money Market 2/1/2000 1.33 N/A N/A N/A 2.48 -4.77 N/A N/A N/A -0.26
USAZ Van Kampen Aggressive Growth 5/1/2001 N/A N/A N/A N/A -20.02 N/A N/A N/A N/A -26.12
USAZ Van Kampen Comstock 5/1/2001 N/A N/A N/A N/A -6.81 N/A N/A N/A N/A -12.91
USAZ Van Kampen Emerging Growth 5/1/2001 N/A N/A N/A N/A -8.46 N/A N/A N/A N/A -14.56
USAZ Van Kampen Growth and Income 5/1/2001 N/A N/A N/A N/A -3.64 N/A N/A N/A N/A -9.74
USAZ Van Kampen Growth 5/1/2001 N/A N/A N/A N/A -5.11 N/A N/A N/A N/A -11.21
----------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Ongoing stock market volatility can dramatically change the Investment
Options' short-term performance; current results may differ.
2. These returns reflect periods of rapidly rising stock markets and such
gains may not continue.
3. Performance prior to the 5/1/00 merger reflects the historical performance
of the Templeton Developing Markets and Foreign Securities Investment
Options.
4. For Templeton Foreign Securities Fund, performance prior to the 5/1/00
merger reflects the historical performance of Templeton International Fund.
There is no performance shown for the USAZ AIM Basic Value Fund, USAZ AIM Blue
Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM International Equity
Fund, Davis VA Financial Portfolio, Davis VA Value Portfolio, Dreyfus Small Cap
Stock Index Fund, Dreyfus Stock Index Fund, Jennison 20/20 Focus Portfolio,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CHART E- INVESTMENT OPTION PERFORMANCE (NO CONTRACT CHARGES)
Total Return for the periods ended December 31, 2001
----------------------------------------------------------------------------------------------
ONE FIVE TEN SINCE
INVESTMENT OPTION YEAR YEAR YEAR INCEPTION
% % % %
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
USAZ Alliance Capital Growth and Income N/A N/A N/A 4.67
USAZ Alliance Capital Large Cap Growth N/A N/A N/A 5.50
USAZ Alliance Capital Technology N/A N/A N/A 7.70
Franklin Global Communications Securities - Class -29.24 -1.36 3.47 6.09
11
Franklin Growth and Income Securities - Class 11 -2.02 10.10 11.30 10.21
Franklin High Income - Class 1 4.26 0.41 6.26 6.30
Franklin Income Securities - Class 11 0.98 7.16 9.34 9.97
Franklin Large Cap Growth Securities - Class 11 -11.26 11.95 N/A 12.97
Franklin Real Estate - Class 11,2 8.19 6.11 11.54 10.29
Franklin Rising Dividends Securities - Class 11 13.90 12.11 N/A 11.32
Franklin Small Cap - Class 11 -15.02 10.69 N/A 13.59
Franklin Small Cap Value Securities - Class 11 14.21 N/A N/A 3.45
Franklin U.S. Government - Class 1 7.62 6.96 6.99 7.75
Franklin Zero Coupon 2005 - Class 1 8.93 7.66 8.93 9.80
Franklin Zero Coupon 2010 - Class 1 5.62 7.98 9.87 10.34
Mutual Discovery Securities - Class 11 0.39 9.25 N/A 9.40
Mutual Shares Securities - Class 11 7.31 10.25 N/A 10.69
Templeton Developing Markets Securities - Class -8.08 -11.59 N/A -10.94
11,3
Templeton Foreign Securities - Class 11,3,4 -15.75 4.88 N/A 9.78
Templeton Growth Securities - Class 11 -0.98 8.56 N/A 10.16
USAZ Templeton Developed Markets - Class 1 N/A N/A N/A 2.50
SP Jennison International Growth -35.92 N/A N/A -37.67
SP Strategic Partners Focused Growth -20.80 N/A N/A -19.93
PIMCO VIT High Yield - Admin. Class 2.35 N/A N/A 1.70
PIMCO VIT StocksPLUS Growth & Income - Admin. Class -11.43 N/A N/A 5.73
PIMCO VIT Total Return - Admin. Class 8.37 N/A N/A 6.55
USAZ PIMCO Growth and Income N/A N/A N/A 1.63
USAZ PIMCO Renaissance N/A N/A N/A 10.20
USAZ PIMCO Value N/A N/A N/A 9.63
USAZ Money Market 3.27 N/A N/A 4.24
USAZ Van Kampen Aggressive Growth N/A N/A N/A -19.00
USAZ Van Kampen Comstock N/A N/A N/A -5.63
USAZ Van Kampen Emerging Growth N/A N/A N/A -7.80
USAZ Van Kampen Growth and Income N/A N/A N/A -2.41
USAZ Van Kampen Growth N/A N/A N/A -3.90
----------------------------------------------------------------------------------------------
<FN>
1. Ongoing stock market volatility can dramatically change the Investment
Options' short-term performance; current results may differ.
2. These returns reflect periods of rapidly rising stock markets and such
gains may not continue.
3. Performance prior to the 5/1/00 merger reflects the historical performance
of the Templeton Developing Markets and Foreign Securities Investment
Options.
4. For Templeton Foreign Securities Fund, performance prior to the 5/1/00
merger reflects the historical performance of Templeton International Fund.
There is no performance shown for the USAZ AIM Basic Value Fund, USAZ AIM Blue
Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM International Equity
Fund, Davis VA Financial Portfolio, Davis VA Value Portfolio, Dreyfus Small Cap
Stock Index Fund, Dreyfus Stock Index Fund, Jennison 20/20 Focus Portfolio,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
The Investment Option name listed on the previous tables, has changed as of the
date of this Statement of Additional Information as follows:
CURRENT NAME PREVIOUS NAME
Franklin Small Cap Value Securities Fund Franklin Value Securities Fund
Templeton Foreign Securities Fund Templeton International Securities Fund
PIMCO VIT High Yield Portfolio PIMCO VIT High Yield Bond Portfolio
PIMCO VIT Total Return Portfolio PIMCO VIT Total Return Bond Portfolio
USAZ Money Market Fund AZOA Money Market Fund
USAZ Van Kampen Emerging Growth Fund USAZ American Growth Fund
</FN>
</TABLE>
ILLUSTRATIONS
--------------------------------------------------------------------------------
Allianz Life may also provide illustrations to customers. These illustrations
may provide hypothetical depictions of either the "payin," or accumulation
phase, or the "payout," or annuitization phase. Illustrations may be based upon
historical performance of the Investment Options, as adjusted for certain
expenses. (Any adjusted historical performance information will be accompanied
by "standardized" performance information.) In the alternative, certain
illustrations may be based upon an assumed rate of return not to exceed 12%.
"Payin" and "payout" illustrations may have various features, as follows:
o Pay in illustrations assume an initial lump sum premium payment and are
designed to show how adjusted historical performance or an assumed rate of
return would have affected Contract values, withdrawal values, or the death
benefit. Payin illustrations may also be designed to show the effect of
periodic additional premium payments and withdrawals. Payin illustrations
based upon adjusted historical performance may assume that monies are
allocated to a single Investment Option or to multiple Investment Options.
In the event that monies are hypothetically allocated to multiple
Investment Options, performance may be shown on a weighted aggregate basis.
Dollar cost averaging illustrations, which are based upon adjusted
historical performance, would compare the hypothetical effect of a lump sum
premium payment into the specified Investment Options, as contrasted with
dollar cost averaging into the Investment Options over some period.
o Payout illustrations are designed to show the hypothetical effect of
annuitizing a Contact, or receiving a stream of periodic payments. These
illustrations may depict either a variable annuitization or a fixed
annuitization. A variable payout illustration would be based upon a
combination of adjusted historical performance and an assumed interest rate
(AIR), whereas a fixed payout illustration would be based upon the
annuitant's age, the payout option selected, and the payout factor rates
currently in effect on the date of the illustration. Variable payout
illustrations may also show the portion of each payout that is subject to
income tax and the portion that is non-taxable. Where applicable, a payout
illustration will show the effect of the enhanced GMIB or GMDB that is
credited to a Contract in the event of certain annuitizations or death
benefit payouts. In addition to variable and fixed payout illustrations, an
illustration may also be prepared showing the effect of required minimum
distribution payments from qualified Contracts.
The values illustrated will be calculated reflecting the deduction of Investment
Option expenses for the specific Investment Options selected, mortality and
expense risk charges, and other Contract charges. Contract maintenance charges
may or may not be deducted from a particular illustration. For fixed payin
illustrations, where no Investment Options are selected, an arithmetic average
of Investment Option expenses will be reflected. The amount of the mortality and
expense risk charges charges shown in an illustration will vary, depending upon
the Contract features you select. For surrender values, the contingent deferred
sales charges are also reflected. Illustrations will not reflect the deduction
of any state premium tax or any Federal or state income tax or penalties.
The illustrations that are given to customers by Allianz Life are designed to
assist customers in understanding how a Contract may function in different
scenarios. They are not guarantees or representations as to future performance
or any specific rate of return.
A sample format of a customer illustration is attached as Appendix A to the
Statement of Additional Information and is incorporated herein by reference.
--------------------------------------------------------------------------------
FEDERAL TAX STATUS
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax advice
regarding the possibility of such changes. The Insurance Company does not
guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws. It should be further understood that the following discussion
is not exhaustive and that special rules not described herein may be applicable
in certain situations. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total surrender (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, annuitants and beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Insurance Company, and its operations form a part of the Insurance Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the Investment
Options underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an Investment Option will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
Investment Option is represented by any one investment; (2) no more than 70% of
the value of the total assets of the Investment Option is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
Investment Option is represented by any three investments; and (4) no more than
90% of the value of the total assets of the Investment Option is represented by
any four investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Investment Options underlying the
Contracts will be managed by the investment advisers in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance is not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified deferred annuity contracts which
are issued within a calendar year period to the same contract owner by one
company or its affiliates are treated as one annuity contract for purposes of
determining the tax consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation of the distributed
amounts from such combination of contracts. For purposes of this rule, contracts
received in a Section 1035 exchange will be considered issued in the year of the
exchange. Contract Owners should consult a tax adviser prior to purchasing more
than one non-qualified annuity contract in any calendar year period.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. Historically, it was presumed
that only the exchange of an entire contract, as opposed to a partial exchange,
would be accorded tax-free status. In 1998 in CONWAY VS. COMMISSIONER, the Tax
Court held that the direct transfer of a portion of an annuity contract into
another annuity contract qualified as a non-taxable exchange. On November 22,
1999, the Internal Revenue Service filed an Action on Decision which indicated
that it acquiesced in the Tax Court decision in CONWAY. However, in its
acquiescence with the decision of the Tax Court, the Internal Revenue Service
stated that it will challenge transactions where taxpayers enter into a series
of partial exchanges and annuitizations as part of a design to avoid application
of the 10% premature distribution penalty or other limitations imposed on
annuity contracts under the Code. In the absence of further guidance from the
Internal Revenue Service it is unclear what specific types of partial exchange
designs and transactions will be challenged by the Internal Revenue Service. Due
to the uncertainty in this area owners should consult their own tax advisers
prior to entering into a partial exchange of an annuity contract.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
ASSIGNMENTS, PLEDGES AND GRATUITOUS TRANSFERS
Other than in the case of Qualified Contracts (which generally cannot be
assigned or pledged), any assignment or pledge of (or agreement to assign or
pledge) any portion of the Accumulation Value is treated for federal income tax
purposes as a surrender of such amount or portion. The investment in the
Contract is increased by the amount includible as income with respect to such
amount or portion, though it is not affected by any other aspect of the
assignment or pledge (including its release). If a Contract Owner transfers a
Contract without adequate consideration to a person other than the Contract
Owner's spouse (or to a former spouse incident to divorce), the Contract Owner
will be taxed on the difference between his or her Accumulation Value and the
investment in the Contract at the time of transfer. In such case, the
transferee's investment in the Contract will be increased to reflect the
increase in the transferor's income.
The transfer or assignment of ownership of the Contract, the designation of an
Annuitant, the selection of certain annuity starting dates, or the exchange of
the Contract may result in certain other tax consequences that are not discussed
herein. A Contract Owner contemplating any such transfer, assignment, or
exchange should consult a tax advisor as to the tax consequences.
DEATH BENEFITS
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: (a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary, or for a specified period of 10 years
or more; or (b) distributions which are required minimum distributions; or (c)
the portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions); or (d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax purposes,
Section 72(s) of the Code requires any Non-Qualified Contract to contain certain
provisions specifying how your interest in the Contract will be distributed in
the event of the death of an owner of the Contract. Specifically, section 72(s)
requires that (a) if any owner dies on or after the annuity starting date, but
prior to the time the entire interest in the contract has been distributed, the
entire interest in the contract will be distributed at least as rapidly as under
the method of distribution being used as of the date of such owner's death; and
(b) if any owner dies prior to the annuity starting date, the entire interest in
the contract will be distributed within five years after the date of such
owner's death. These requirements will be considered satisfied as to any portion
of an owner's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
owner's death. The designated beneficiary refers to a natural person designated
by the owner as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased owner, the contract may be continued with the surviving spouse
as the new owner. If the owner of the contract is a non-natural person, then the
death or change of an annuitant is treated as the death of the owner.
The Non-Qualified Contracts contain provisions that are intended to comply with
these Code requirements, although no regulations interpreting these requirements
have yet been issued. We intend to review such provisions and modify them if
necessary to assure that they comply with the applicable requirements when such
requirements are clarified by regulation or otherwise.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount surrendered will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2 ; (b) after the death of the Contract
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals"- Qualified Contracts.")
QUALIFIED PLANS
The
Contracts offered by the Prospectus are designed to be suitable for use under
various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, Annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. The Company
is not bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Contract Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a Qualified Plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a Qualified Plan. Following are general descriptions
of the types of Qualified Plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon surrender or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to withdrawals from Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
A. TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
B. INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.") Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
ROTH IRAS
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum amount each year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall annual limitation continues to apply to all of a
taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year periods beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
C. PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from the
Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places limitations and restrictions on
all Plans, including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions and withdrawals.
Participant loans are not allowed under the Contracts purchased in connection
with these Plans. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with Pension or Profit-Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly rolled over to an IRA or to another eligible Qualified
Plan, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) if distribution is made on or after the date on
which the Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions made on account of an
IRS levy upon the Qualified Contract; (h) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (i) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the Owner or
Annuitant (as applicable) for the taxable year; and (j) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service. With respect to (c) above, if the
series of substantially equal periodic payments is modified before the later of
your attaining age 59 1/2 or 5 years from the date of the first periodic
payment, then the tax for the year of the modification is increased by an amount
equal to the tax which would have been imposed (the 10% penalty tax) but for the
exception, plus interest for the tax years in which the exception was used.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity or to a "5% owner" (as defined in the Code). Required distributions must
be over a period not exceeding the life expectancy of the individual or the
joint lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed.
Many withdrawals from Qualified Contracts can be rolled over to an IRA or
another qualified retirement plan. If you receive a withdrawal from a Qualified
Contract that could be rolled over and you do not elect to make a direct
rollover of that amount to an IRA or qualified plan, 20% of the taxable amount
must by law be withheld by us for taxes. In situations where this mandatory tax
withholding does not apply, other tax amounts may be withheld unless you elect
out of the withholding. You may request more detailed information about income
tax withholding at the time of a withdrawal.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989, and apply only to salary reduction contributions made after
December 31, 1988, and to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Although the likelihood of legislative changes is uncertain, there is always the
possibility that the tax treatment of the Contract could change by legislation
or otherwise. Consult a tax adviser with respect to legislative developments and
their effect on the Contract.
We have the right to modify the Contract in response to legislative changes that
could otherwise diminish the favorable tax treatment that annuity Contract
Owners currently receive. We make no guarantee regarding the tax status of any
Contract and do not intend the above discussion as tax advice.
ANNUITY PROVISIONS
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FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of an Investment Option. The Fixed Account value on the day immediately
preceding the Income Date will be used to determine the Fixed Annuity monthly
payment. The monthly Annuity Payment will be based upon the Contract Value at
the time of annuitization, the Annuity Option selected, the age of the Annuitant
and any joint Annuitant and the sex of the Annuitant and joint Annuitant where
allowed.
VARIABLE ANNUITY PAYOUT
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Investment Option(s).
ANNUITY UNIT VALUE
On the Income Date, a fixed number of Annuity Units will be purchased as
follows: The first Annuity Payment is equal to the Adjusted Contract Value,
divided first by $1,000 and then multiplied by the appropriate Annuity Payment
amount for each $1,000 of value for the Annuity Option selected. In each
subaccount the fixed number of Annuity Units is determined by dividing the
amount of the initial Annuity Payment determined for each subaccount by the
Annuity Unit value on the Income Date. Thereafter, the number of Annuity Units
in each subaccount remains unchanged unless the Contract Owner elects to
transfer between Investment Options. All calculations will appropriately reflect
the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each subaccount. The Annuity Payment in each subaccount
is determined by multiplying the number of Annuity Units then allocated to such
subaccount by the Annuity Unit value for that subaccount.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period.
b. multiplied by the Net Investment Factor for the current Valuation Period;
c. divided by the Assumed Net Investment Factor (see below) for the Valuation
Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that the Insurance Company will use is 5%. However, the Insurance Company
may agree to use a different value.
MORTALITY AND EXPENSE RISK GUARANTEE
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The Insurance Company guarantees that the dollar amount of each Annuity Payment
after the first Annuity Payment will not be affected by variations in mortality
and expense experience.
FINANCIAL STATEMENTS
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The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 2001, included herein should be considered only
as bearing upon the ability of the Insurance Company to meet its obligations
under the Contracts. The audited financial statements of the Separate Account as
of and for the year ended December 31, 2001, are also included herein.
A-1
APPENDIX A - ILLUSTRATIONS
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IMPORTANT DISCLOSURES
HYPOTHETICAL VARIABLE AND/OR FIXED PAYOUT ILLUSTRATION
This illustration depicts how a payment option may work when you annuitize your
contract. THIS ILLUSTRATION IS NOT A CONTRACT, AND IT IS NOT A REPRESENTATION OR
GUARANTEE OF FUTURE RETURNS OR OF ANY SPECIFIC PAYOUT AMOUNT.
If you want to receive regular income from your annuity, you can choose an
Annuity Option at any time after the 2nd Contract anniversary. You may elect to
receive your Annuity Payments as a variable payout, a fixed payout, or a
combination of both. If you choose to have any part of your payments come from
the Variable Investment Options, the dollar amount of your payments may go up
or down based on the performance of the investment options.
The Contract provides that the Contract cannot be annuitized prior to 2 years
after the contract issue date. For this reason, illustrations that you receive
will be based upon an annuity start date that is at least 2 years after the
issue date.
You can elect to have illustrated either a "variable" payout option or a "fixed"
payout option, or, you may elect to receive both a variable payout illustration
and a fixed payout illustration. THE "VARIABLE" PAYOUT OPTION ILLUSTRATION is
based upon actual historical performance of one or more investment options over
the specified period, as adjusted for all applicable investment option expenses
and applicable contract expenses. The principal purpose of the variable payout
illustration is to demonstrate how the performance of the underlying investment
options could affect contract values and payout amounts when the contract is
annuitized. Past performance is not a guarantee of future results. Investment
returns and principal value will fluctuate with market conditions so that units,
when redeemed may be with more or less than the original cost.
The illustration has not been adjusted for state or federal income tax
liability, 10% federal penalty tax for withdrawals prior to age 59 1/2, or any
applicable state premium taxes; values would be lower if such adjustments had
been made.
This illustration may illustrate adjusted historical performance for one or
more investment options. If more than one investment option is illustrated,
performance may be shown as aggregate performance for all investment options
selected. In addition, if you elect to illustrate more than one investment
option and to hypothetically allocate more money to one option than to other
investment options (for example, 50% to one investment option, 30% to a second
investment option, and 20% to a third investment option), performance may be
shown as weighted aggregate performance.
THE "FIXED" PAYOUT OPTION ILLUSTRATION is not based upon any sort of historical
performance, but rather is based upon fixed payout factors that are in effect on
the date of the illustration. These factors can change, up until the date you
annuitize your contract.
VARIABLE PAYOUT ANNUITY- Variable Annuity payouts depend on a variety of
factors, including the amount annuitized, annuity payout option selected,
assumed investment rate (AIR), and will vary with the performance of the
investment option(s) selected. The variable income can increase or decrease
from the initial monthly payment and no minimum dollar amount of variable
income is guaranteed. Actual performance results may be more or less than those
reflected in the hypothetical rates of return.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R)IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-2
The AIR was selected by your registered representative. The 3% AIR payments
start at a lower level than the 5% or 7% AIR, with the potential for more rapid
increase in payments during later years. Conversely if a 7% AIR is chosen there
is a potential for a more rapid decrease in payments during the later years. The
7% AIR is not available in the states of Oregon, Texas and New Jersey.
The value of a variable annuity will fluctuate, based on the performance of the
underlying investment options, and the contract owner may experience a gain or
loss. Actual performance results may be more or less than those shown on this
illustration.
STANDARDIZED AVERAGE ANNUAL RETURN: Any adjusted historical performance
illustration is accompanied by Standardized Average Annual Return for each
investment option depicted in the illustration. Standardized return is
calculated using uniform guidelines as mandated by the Securities and Exchange
Commission. Standardized return figures assume a one-time lump sum purchase
amount, and do not reflect the effect of taxation. Standardized return is shown
for the most recent 1, 5, and 10 year periods, or from the inception date of
the investment option, if later. In contrast, illustration material may depict
returns from the inception date of the applicable portfolio, if earlier than
the inception date of the investment option. Standardized return includes the
effect of all portfolio expenses and all contract expenses. If contract
expenses vary depending upon which features are selected, standardized return
will reflect the highest potential expenses. In contrast, an illustration may
reflect only certain expenses. Standardized return also assumes the assessment
of a CDSC at the end of each applicable period. Standardized return is computed
as of the most recent calendar quarter.
FIXED PAYOUT ANNUITY- Fixed payments will depend on a variety of factors,
including the amount annuitized, payout factor rates when the contract is
annuitized, date of birth, and annuity payout option selected. Fixed Annuity
payouts, once commenced, will not vary.
COSTS AND EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each. Each year, Allianz Life deducts a $30
contract maintenance charge from your Contract. Allianz Life currently waives
this charge if your Contract value is at least $50,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the Guaranteed Income and Death Benefit Options you choose. Allianz Life
also deducts an administration charge. This charge, together with the contract
maintenance charge, is for all the expenses associated with the administration
of the Contract. The table below shows the combinations available to you and
their charges during the Accumulation Phase, as a percentage of the average
daily value of the Contract value allocated to the Variable Investment Options.
<TABLE>
<CAPTION>
EARNINGS PROTECTION
DEATH BENEFIT AND
DEATH BENEFIT INCOME & DEATH EARNINGS PROTECTION ENHANCED INCOME
OPTION 1 OR 2 BENEFIT OPTION 1 OR 2 DEATH BENEFIT ONLY BENEFIT OPTION 1 OR 2
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MORTALITY & EXPENSE 1.34% 1.64% 1.44% 1.74%
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
TOTAL 1.49% 1.79% 1.59% 1.89%
</TABLE>
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark (R)IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-3
The selection of the Guaranteed Income and Death Benefit Options must be made at
the time of initial Purchase Payment.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB):
The GMIB guarantees that your Annuity Payments will be equal to the greater of:
1) current fixed payout rates applied to the current Contract Value (less any
applicable premium tax); or 2) guaranteed fixed payout rates applied to the GMIB
value. The GMIB is subject to a 7-year waiting period and must be annuitized
under a fixed annuity option, if a period certain annuity option is chosen, the
period must be a minimum of 10 years. The GMIB is only beneficial if the Owner
annuitizes the contract.
The GMIB Option 1 guarantees the greater of 1) purchase payments made less any
adjusted partial withdrawals, plus 5% on the accumulated value on each Contract
anniversary or 2) highest Contract Value on any sixth year Contract anniversary,
plus any purchase payments made since that contract anniversary, and less any
adjusted partial withdrawals since that Contract anniversary. Contract
anniversaries occurring on or after the 81st birthday or date of death will not
be taken into consideration in determining this benefit. After the 81st
birthday, the GMIB Value determined as of the last Contract anniversary prior to
your 81st birthday will be increased by any purchase payments made since such
Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
The GMIB Option 2 guarantees the greater of 1) purchase payment made, less any
adjusted partial withdrawals, or 2) the greatest anniversary value, increased by
purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB):
The Guaranteed Minimum Death Benefits (GMDB) are optional at the purchase of
your contract. These benefits are only payable to the beneficiary while the
contract is in the accumulation phase prior to annuitization. If you have
annuitized your contract, these benefits are no longer in effect.
The GMDB Option 1 guarantees the greater of 1) the current value of the contract
less any premium taxes owed, or 2) during first contract year and if under age
81 (depending on applicable state regulations), the payments made less any money
taken out, applicable charges, and premium taxes owed. After the first contract
year and prior to age 81, the greater of payments made, less any money taken
out, applicable charges and premium taxes plus 5% on each contract anniversary
or the highest contract value on any six year contract anniversary plus any
payments made since the anniversary less any money taken out, applicable charge
or premiums taxes. After age 81 the GMDB is based upon the GMDB on the contract
anniversary prior to the 81st birthday plus any payments since then less any
money taken out, applicable charges or premium taxes owed.
The GMDB Option 2 guaranteed the greater of 1) the current value of the contract
less any premium taxes owed, or 2) payments made less money taken out and any
charges paid on the money taken out or the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
The Earnings Protection Guaranteed Minimum Death Benefit Option 3 guarantees the
greater of 1) purchase payments adjusted for withdrawals, 2) contract value; or
3) contract value + 40% (25% if issue age >70) of the lesser of total purchase
payments or contract value minus total purchase payments.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark (R)IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-4
If you take money out of the Contract, Allianz Life may assess a Contingent
Deferred Sales Charge (CDSC). The CDSC starts at 6% in the first year and
declines to 0% after 7 years from receipt of each purchase payment.. A different
charge applies to liquidations from the Period Certain Only annuity option
during the payout phase called a commutation fee.
There are also daily investment charges which currently range, on an annual
basis, from 0.57% to 1.81% of the average daily value of the Portfolio,
depending upon the Portfolio.
This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns. Some
optional features must be selected at the issue date, and cannot be added once
the contract is issued.
The "CONTRACT VALUE" for any point in time is an amount equal to the sum of each
Accumulation Unit Value multiplied by the number of Units allocated to the
Contract for each investment option. This value will fluctuate due to the
performance of the selected investment options. The Contract Value reflects all
contract charges, and portfolio expenses for the contract features selected but
does not reflect the CDSC. It does not reflect the impact of premium taxes,
income taxes or the 10% federal penalty tax for withdrawals prior to age 59 1/2.
The "CASH SURRENDER VALUE" reflects all of the expenses and charges assessed
against "contract value", and also reflects any CDSC if applicable. It does not
reflect the impact of premium taxes, income taxes or the 10% federal penalty tax
for withdrawals prior to age 59 1/2.
IMPORTANT CONSIDERATIONS: Past performance is not a guarantee of future results.
Investment returns and principal value will fluctuate with market conditions so
that units, when redeemed may be worth more or less than the original cost.
Product and features may not be available in all states. All product guarantees
are based on the claims paying ability of Allianz Life Insurance Company of
North America.
High yield securities inherently have a high degree of market risk in addition
to credit risk and potential illiquidity.
Index investment options seek to match the performance of specified market
indexes. Investors cannot invest directly into indexes.
Money invested in a specific sector or industry is subject to a higher degree of
risk than money that is diversified.
Small cap stocks may be more volatile than large cap or more established
companies' securities.
International investing involves some risks not presented with U.S. investments,
such as currency fluctuation and political volatility.
An investment in the Money Market fund is neither insured nor guaranteed by the
FDIC or any other governmental agency. Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.
--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark (R)IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-5
USALLIANZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe
Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
Guaranteed Minimum Death Benefit (GMDB:
HYPOTHETICAL FIXED PAYOUT ANNUITIZATION
Annuitization Age: 65, Male Annuity Value: 520,097.92
Federal Tax Rate:
Annuitization Date: Cost Basis: 500,000.00
<TABLE>
<CAPTION>
Monthly Exclusion Taxable
Payout Amount Amount
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
xxxxx.xx xxxxx.xx xxxxx.xx
</TABLE>
This hypothetical illustration is based upon payout factor rates currently in
effect. These are subject to change, and may be higher or lower when you
annuitize your contract.
This illustration is for illustrative purposes only and is no guarantee of
return of future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark (R)IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-6
IMPORTANT DISCLOSURES
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
THIS IS AN ILLUSTRATION NOT A CONTRACT. The purpose of this illustration is to
demonstrate how a varying rate of return may affect contract values, death
benefits, and income benefits over an extended period of time. This illustration
is based upon hypothetical fixed returns during the period indicated. This
illustration is for illustrative purposed only and is no guarantee of return or
future performance. It illustrates how much the contract would hypothetically be
worth, and how much the guaranteed death benefit and guaranteed income benefit
would be, based on the hypothetical rate of return illustrated. No
representations are made that these hypothetical rates of return can be achieved
for any one year or sustained over any period of time.
The value of a variable annuity will fluctuate, based on the performance of the
underlying investment options, and the Contract Owner may experience a gain or
loss. Actual performance results may be more or less than those reflected in the
hypothetical rates of return and will depend on a number of factors, including
the choice and investment experience of the variable investment options.
This illustration, including any accompanying reports and graphs, must be
preceded or accompanied by the current prospectus. For complete information
about USAllianz Valuemark IV, a flexible premium variable annuity, including
fees and expenses, refer to the prospectus from USAllianz Investor Services,
LLC. Read it carefully before sending money.
TAXES: The effects of income, penalty and state premium taxes have not been
reflected in the illustration. While withdrawals may or may not be depicted
within this illustration, withdrawals from the contract will be subject to
ordinary income tax to the extent that the contract value immediately before the
withdrawal exceeds the total amount of after-tax money paid into the contract. A
withdrawal in excess of the taxable amount will constitute a nontaxable return
of principal. Withdrawals may be subject to a surrender charge, included in
taxable income, and prior to age 59 1/2 may be subject to a 10% federal tax
penalty.
For any tax-qualified account, e.g., IRA or TSA, the tax deferred growth feature
is already provided by the tax qualified retirement plan. Therefore, product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a qualified retirement plan. If the contract is an individual
retirement annuity or other qualified contract, the Contract Owner will
generally be taxed on all amounts withdrawn, or received on withdrawal. The tax
consequences will be different, however, if the contract is a Roth IRA, or a
traditional non-deductible IRA.
The tax treatment of death benefit proceeds of an annuity contract differs from
the tax treatment of a life insurance policy. This section is designed to
provide information on the subjects covered. It is not, however, intended to
provide specific legal, tax or other professional advice. For complete details,
consult with your tax advisor or attorney and refer to the prospectus.
COSTS AND EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each.
Each year, Allianz Life deducts a $30 contract maintenance charge from your
Contract. Allianz Life currently waives this charge if your Contract value is at
least $50,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the Guaranteed Income and Death Benefit Options you choose. Allianz Life
also deducts an administration charge. This charge, together with the contract
maintenance charge, is for all the expenses associated with the administration
of the Contract. The table below shows the combinations available to you and
their charges during the Accumulation Phase, as a percentage of the average
daily value of the Contract value allocated to the Variable Investment Options.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses, and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-7
<TABLE>
<CAPTION>
EARNINGS PROTECTION
DEATH BENEFIT AND
DEATH BENEFIT INCOME & DEATH EARNINGS PROTECTION ENHANCED INCOME
OPTION 1 OR 2 BENEFIT OPTION 1 OR 2 DEATH BENEFIT ONLY BENEFIT OPTION 1 OR 2
<S> <C> <C> <C> <C>
MORTALITY & EXPENSE 1.34% 1.64% 1.44% 1.74%
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
TOTAL 1.49% 1.79% 1.59% 1.89%
</TABLE>
The selection of the Guaranteed Income and Death Benefit Options must be made at
the time of initial Purchase Payment.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB):
The GMIB guarantees that your Annuity Payments will be equal to the greater of:
1) current fixed payout rates applied to the current Contract Value (less any
applicable premium tax); or 2) guaranteed fixed payout rates applied to the GMIB
value. The GMIB is subject to a 7-year waiting period and must be annuitized
under a fixed annuity option, if a period certain annuity option is chosen, the
period must be a minimum of 10 years. The GMIB is only beneficial if the Owner
annuitizes the contract.
The GMIB Option 1 guarantees the greater of 1) purchase payments made less any
adjusted partial withdrawals, plus 5% on the accumulated value on each Contract
anniversary or 2) highest Contract Value on any sixth year Contract anniversary,
plus any purchase payments made since that contract anniversary, and less any
adjusted partial withdrawals since that Contract anniversary. Contract
anniversaries occurring on or after the 81st birthday or date of death will not
be taken into consideration in determining this benefit. After the 81st
birthday, the GMIB Value determined as of the last Contract anniversary prior to
your 81st birthday will be increased by any purchase payments made since such
Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
The GMIB Option 2 guarantees the greater of 1) purchase payment made, less any
adjusted partial withdrawals, or 2) the greatest anniversary value, increased by
purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB):
The Guaranteed Minimum Death Benefits (GMDB) are optional at the purchase of
your contract. These benefits are only payable to the beneficiary while the
contract is in the accumulation phase prior to annuitization. If you have
annuitized your contract, these benefits are no longer in effect.
The GMDB Option 1 guarantees the greater of 1) the current value of the contract
less any premium taxes owed, or 2) during first contract year and if under age
81 (depending on applicable state regulations), the payments made less any money
taken out, applicable charges, and premium taxes owed. After the first contract
year and prior to age 81, the greater of payments made, less any money taken
out, applicable charges and premium taxes plus 5% on each contract anniversary
or the highest contract value on any six year contract anniversary plus any
payments made since the anniversary less any money taken out, applicable charge
or premiums taxes. After age 81 the GMDB is based upon the GMDB on the contract
anniversary prior to the 81st birthday plus any payments since then less any
money taken out, applicable charges or premium taxes owed.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-8
The GMDB Option 2 guaranteed the greater of 1) the current value of the contract
less any premium taxes owed, or 2) payments made less money taken out and any
charges paid on the money taken out or the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
The Earnings Protection Guaranteed Minimum Death Benefit Option 3 guarantees the
greater of 1) purchase payments adjusted for withdrawals, 2) contract value; or
3) contract value + 40% (25% if issue age >70) of the lesser of total purchase
payments or contract value minus total purchase payments.
If you take money out of the Contract, Allianz Life may assess a Contingent
Deferred Sales Charge (CDSC). The CDSC starts at 6% in the first year and
declines to 0% after 7 years from receipt of each purchase payment.. A different
charge applies to liquidations from the Period Certain Only annuity option
during the payout phase called a commutation fee.
There are also daily investment charges which currently range, on an annual
basis, from 0.57% to 1.81% of the average daily value of the Portfolio,
depending upon the Portfolio.
This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns. Some
optional features must be selected at the issue date, and cannot be added once
the contract is issued.
The "CONTRACT VALUE" for any point in time is an amount equal to the sum of each
Accumulation Unit Value multiplied by the number of Units allocated to the
Contract for each investment option. This value will fluctuate due to the
performance of the selected investment options. The Contract Value reflects all
contract charges, and portfolio expenses for the contract features selected but
does not reflect the CDSC. It does not reflect the impact of premium taxes,
income taxes or the 10% federal penalty tax for withdrawals prior to age 59 1/2.
The "CASH SURRENDER VALUE" reflects all of the expenses and charges assessed
against "contract value", and also reflects any CDSC if applicable. It does not
reflect the impact of premium taxes, income taxes or the 10% federal penalty tax
for withdrawals prior to age 59 1/2.
IMPORTANT CONSIDERATIONS: Past performance is not a guarantee of future results.
Investment returns and principal value will fluctuate with market conditions so
that units, when redeemed may be worth more or less than the original cost.
Product and features may not be available in all states. All product guarantees
are based on the claims paying ability of Allianz Life Insurance Company of
North America.
High yield securities inherently have a high degree of market risk in addition
to credit risk and potential illiquidity.
Index investment options seek to match the performance of specified market
indexes. Investors cannot invest directly into indexes.
Money invested in a specific sector or industry is subject to a higher degree of
risk than money that is diversified.
Small cap stocks may be more volatile than large cap or more established
companies' securities.
International investing involves some risks not presented with U.S. investments,
such as currency fluctuation and political volatility.
An investment in the Money Market fund is neither insured nor guaranteed by the
FDIC or any other governmental agency. Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.
--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-9
USALLIANZ VAULEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
------------ ------------------------------------------
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
HYPOTHETICAL FIXED RETURN ILLUSTRATION
GROSS RATE OF RETURN X.XX%
------------ -------- -------------------- --------------- -------------- ---------------- ------------- ------------ --------
END OF YEAR AGE HYPOTHETICAL GROSS PURCHASE WITHDRAWALS CONTRACT VALUE CASH GMIB GMDB
RATE OF RETURN PAYMENTS SURRENDER
(NOT TO EXCEED 12%) VALUE
------------ -------- -------------------- --------------- -------------- ---------------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 45 xx.xx% $x,xxx.00 ($xxx.00) $x,xxxx.00 $x,xxxx.00 $x,xxx.00
------------ -------- -------------------- --------------- -------------- ---------------- ------------- ------------ --------
</TABLE>
This hypothetical is based on the selected gross rate of return and calculates
the change in contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M&E charge, administration charge and average
portfolio fee of .xxxx%.
This illustration is not intended to serve as a projection or prediction of
future returns.
An illustration showing a hypothetical 0% gross rate of return is contained on
the following page.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
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USALLIANZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
GROSS RATE OF RETURN 0.00%
<TABLE>
<CAPTION>
------------ ------ ------------------ -------------- ---------------- -------------- --------------- ------------- --------------
END OF YEAR AGE HYPOTHETICAL PURCHASE WITHDRAWALS CONTRACT CASH GMIB GMDB
GROSS RATE OF PAYMENTS VALUE SURRENDER
RETURN VALUE
------------ ------ ------------------ -------------- ---------------- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 45 xx.xx% $x,xxx.00 ($xxx.00) $x,xxxx.00 $x,xxxx.00 $x,xxx.00 $x,xxx.00
------------ ------ ------------------ -------------- ---------------- -------------- --------------- ------------- --------------
</TABLE>
This hypothetical is based on the selected gross rate of return and calculates
the change in contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M & E charge, administration charge and
average portfolio fee of .xxxx%.
[This page must accompany any fixed return illustration showing a gross rate of
return in excess of 0%.]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-11
USALLIANZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
GUARANTEED MINIMUM DEATH BENEFIT REPORT
------------------- ----- ----------------------- ---------------- -------------------- -------------------- ---------------------
ANNIVERSARY YEAR AGE HYPOTHETICAL GROSS PURCHASE WITHDRAWALS CONTRACT VALUE GMDB
RATE OF RETURN PAYMENTS
(NOT TO EXCEED 12%)
------------------- ----- ----------------------- ---------------- -------------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $xxx.00 ($x,xxxx.00) $x,xxxx.00 $x,xxx.00
------------------- ----- ----------------------- ---------------- -------------------- -------------------- ---------------------
</TABLE>
This hypothetical is based on the selected gross rate of return and calculates
the change in contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M & E charge, administration charge and
average portfolio fee of .xxxx% .
An illustration showing a hypothetical 0% gross rate of return is contained on
the following page. This illustration is for illustrative purposes only and is
no guarantee of return or future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-12
USALLIANZ VALUEMARK(R) IV
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
GUARANTEED MINIMUM DEATH BENEFIT REPORT
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
------------------- ------ ------------------- ------------- --------------- ---------------- ---------------
ANNIVERSARY YEAR AGE HYPOTHETICAL PURCHASE WITHDRAWALS CONTRACT VALUE GMDB
GROSS RATE OF PAYMENTS
RETURN
( 0.00%)
------------------- ------ ------------------- ------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% ($xxx.00) $x,xxxx.00 $x,xxxx.00 $x,xxx.00
------------------- ------ ------------------- ------------- --------------- ---------------- ---------------
</TABLE>
This hypothetical is based on the selected gross rate of return and calculates
the change in Contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M & E charge, administration charge and
average portfolio fee of .xxxx% .
This illustration is for illustrative purposes only and is no guarantee of
return or future performance.
[This page must accompany any fixed return illustration showing a gross rate of
return in excess of 0%.]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses, and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-13
USALLIANZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
------------ ------------------------------------------
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
GUARANTEED MINIMUM INCOME BENEFIT REPORT
ACCUMULATION PHASE PAYOUT PHASE
---------------- ----- ---------------- ------------- ----------- ----------- ------------- ---------- -- ---------- ---------------
ANNIVERSARY AGE HYPOTHETICAL NET PURCHASE CONTRACT
YEAR GROSS RATE OF PAYMENTS* VALUE 5% ANNUAL GREATEST GMIB MONTHLY ANNUAL
RETURN INCREASE ANNIVERSARY
(NOT TO EXCEED AMOUNT VALUE
12%)
---------------- ----- ---------------- ------------- ----------- ----------- ------------- ---------- -- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $xxx.00 $x,xxxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00
---------------- ------ --------------- -------------- ----------- ----------- ------------- ---------- -- ---------- -------------
</TABLE>
*The Net Purchase Payment column represents purchase payments minus withdrawals
in the accumulation phase.
This hypothetical is based on the selected gross rate of return and calculates
the change in contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M & E charge, administration charge and
average portfolio fee of .xxxx%.
An illustration showing a hypothetical 0% gross rate of return is contained on
the following page. This illustration is for illustrative purposes only and is
no guarantee of return or future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-14
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
HYPOTHETICAL FIXED RATE OF RETURN ILLUSTRATION
GUARANTEED MINIMUM INCOME BENEFIT REPORT
ACCUMULATION PHASE PAYOUT PHASE
---------------- ------ -------------- ------------ ----------- ---------- -------------- ---------- -- ---------- ---------
ANNIVERSARY AGE HYPOTHETICAL NET CONTRACT 5% GREATEST GMIB MONTHLY ANNUAL
YEAR GROSS RATE PURCHASE VALUE ANNUAL ANNIVERSARY
OF RETURN PAYMENTS* INCREASE VALUE
AMOUNT
(0.00%)
---------------- ------ -------------- ------------ ----------- ---------- -------------- ---------- -- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $xxx.00 $x,xxxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00
---------------- ----- --------------- ------------ ----------- ---------- ------------- ---------- --- ---------- ---------
</TABLE>
*The Net Purchase Payment column represents purchase payments minus withdrawals
in the accumulation phase.
This hypothetical is based on the selected gross rate of return and calculates
the change in contract value from the beginning period to the ending period,
adjusted for subsequent purchase payments and any withdrawals. Hypothetical
gross rate of return does not include any expenses and charges. However, all
values reflect the contract maintenance charge, net rate of return, which takes
into consideration the applicable M & E charge, administration charge and
average portfolio fee of .xxxx% .
This illustration is for illustrative purposes only and is no guarantee of
return or future performance.
[THIS PAGE MUST ACCOMPANY ANY FIXED RETURN ILLUSTRATION SHOWING A GROSS
RATE OF RETURN IN EXCESS OF 0.00%.]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-15
IMPORTANT DISCLOSURES
REQUIRED MINIMUM DISTRIBUTION ILLUSTRATION
THIS IS AN ILLUSTRATION NOT A CONTRACT. The purpose of this illustration is to
demonstrate how much an individual (or the beneficiary) MUST receive from the
individual's qualified retirement plan and/or Individual Retirement Account
(IRA). It illustrates the amount that must be distributed in accordance with
IRS regulations, based upon the inputs provided and the assumptions underlying
this illustration. No representations are made that these rates of return can
be achieved for any one year or sustained over any period of time.
The value of a variable annuity will fluctuate, based on the performance of the
underlying investment options, and the Contract Owner may experience a gain or
loss. Actual performance results may be more or less than those reflected in
the hypothetical rates of return. The amount which will actually have to be
withdrawn from an individual's qualified retirement plan or IRA upon reaching
the required beginning date (see below) will depend upon actual investment
option performance.
This illustration may illustrate adjusted historical performance for one or
more investment options. If more than one investment option is illustrated,
performance may be shown as aggregate performance for all investment options
selected. In addition, if you elect to illustrate more than one investment
option and to hypothetically allocate more money to one option than to other
options (for example, 50% to one investment option, 30% to a second investment
option, and 20% to a third investment option), performance may be shown as
weighted aggregate performance.
This illustration, including any accompanying reports and graphs, must be
preceded or accompanied by the variable annuity's current prospectus. The
figures reflect the deduction of the applicable contingent deferred sales
charge (CDSC). For complete information about USAllianz Valuemark IV, a
flexible premium variable annuity, including fees and expenses, refer to the
prospectus from USAllianz Investor Services, LLC. Read it carefully before
sending money.
STANDARDIZED AVERAGE ANNUAL RETURN: Any adjusted historical performance
illustration is accompanied by Standardized Average Annual Return for each
investment option depicted in the illustration. Standardized return is
calculated using uniform guidelines as mandated by the Securities and Exchange
Commission. Standardized return figures assume a one-time lump sum purchase
payment, and do not reflect the effect of taxation. Standardized return is
shown for the most recent 1, 5, and 10 year periods, or from the inception date
of the investment option, if later. In contrast, illustration material may
depict returns from the inception date of the applicable portfolio, if earlier
than the inception date of the investment option. Standardized return includes
the effect of all portfolio expenses and all contract expenses. If contract
expenses vary depending upon which features are selected, standardized return
will reflect the highest potential expenses. In contrast, an illustration may
reflect only certain expenses. Standardized return also assumes the assessment
of a CDSC at the end of each applicable period. Standardized return is computed
as of the most recent calendar quarter.
The ADJUSTED HISTORICAL AVERAGE ANNUAL RETURN is based upon the weighted
aggregate historical rate of return on the investment options selected,
commencing on the hypothetical purchase date, and calculates the change in
contract value from the beginning of the hypothetical period to the end of the
period, adjusted for additional purchase payments and any withdrawals. The
adjusted historical average annual return commences on the inception date of the
investment option and includes mortality and expense charges, administration
charges, and investment option fees, but does not include CDSC.
Weighted aggregate return for the portfolios selected for the total period shown
is: xx.xx%. Average annual returns for each of the investment options selected
for the most recent 1, 5, and 10 year periods (computed as of the most recent
calendar quarter) are shown on another page of this illustration
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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A-16
REQUIRED BEGINNING DATE FOR PAYMENTS
Internal Revenue Code 401(a)(9) requires that distributions from a qualified
contract start by the required beginning date. For IRA contracts, the required
beginning date is April 1 following the calendar year in which age 70 1/2 is
reached. For TSA contracts or 401 plan benefits, the required beginning date is
April 1 following the calendar year in which age 70 1/2 is reached, or
following the calendar year in which separation from service occurs, whichever
is later. For 401 plan benefits of a 5% owner of the employer, the required
beginning date is the same as that for an IRA contract.
AMOUNT OF PAYMENTS
Payments after the required beginning date must be made on a schedule that will
pay out the entire value of the contract over the life or life expectancy of
the contractholder and an individual 10 years younger than the contractholder,
regardless of the actual age of any designated beneficiary, except when
distributions can be reduced by taking into account the life expectancy of a
beneficiary who is a spouse more than 10 years younger than the contractholder.
If the required minimum distribution is met other than through the
annuitization of the contract, then by the required beginning date the
distribution for the calendar year preceding the required beginning date will
need to be taken. A distribution will need to be taken for each subsequent
calendar year (including the year in which the required beginning date occurs)
by December 31 of that calendar year.
If the required minimum distribution is met through the annuitization of the
contract, then substantially equal payments must be made at least annually
starting by the required beginning date.
CONTRACT AGGREGATION
The IRS allows the contractholder to take a distribution from one IRA to meet
the distribution requirements for all IRAs, and to take a distribution from one
TSA for all TSAs that the contractholder owns.
PENALTIES
Failure to receive such a distribution can subject the contractholder to a 50%
excise tax on the amount by which distributions fall short of the Internal
Revenue Service (IRS) requirement. For example, if the RMD for a given year is
$2,000.00, and $1,500.00 is withdrawn, the $500.00 shortfall may be subject to
a 50% excise tax imposed by the IRS.
DIRECT ROLLOVERS LIMITED
In addition, direct rollovers of distribution from a TSA or 401 plan are
restricted beginning January 1 of the year age 70 1/2 will be reached. From
that point forward, a direct rollover is permitted only if the amount is not an
annuitization payment, and the contractholder has already withdrawn from the
contract during the current year an amount equal to the required minimum
distribution for the year calculated based on that contract alone and their
single life expectancy. For assistance in determining how the required minimum
distribution rules apply to the contractholder and the alternative best suited
to their needs, please consult a qualified tax advisor.
TAXES: The effects of income, penalty and state premium taxes have not been
reflected in the illustration. While withdrawals may or may not be depicted
within this illustration, withdrawals from the contract will be subject to
ordinary income tax to the extent that the contract value immediately before the
withdrawal exceeds the total amount of after-tax money paid into the contract. A
withdrawal in excess of the taxable amount will constitute a nontaxable return
of principal. Withdrawals may be subject to a surrender charge, included in
taxable income, and prior to age 59 1/2 may be subject to a 10% federal tax
penalty. A withdrawal in excess of the contact's free withdrawal amount may be
subject to a maximum CDSC of 7%. The amount of the CDSC declines to 0% over
time.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
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For any tax-qualified account, e.g., IRA or TSA, the tax deferred growth feature
is already provided by the tax qualified retirement plan. Therefore, product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a qualified retirement plan. . If the contract is an individual
retirement annuity or other qualified contract, the Contract Owner will
generally be taxed on all amounts withdrawn, or received on withdrawal. The tax
consequences will be different, however, if the contract is a Roth IRA, or a
traditional non-deductible IRA. See your tax advisor and read the prospectus for
additional information.
The tax treatment of death benefit proceeds of an annuity contract differs from
the tax treatment of a life insurance policy. This section is designed to
provide information on the subjects covered. It is not, however, intended to
provide specific legal, tax, or other professional advice. For complete details,
consult with your tax advisor or attorney and refer to the prospectus.
COSTS AND EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each.
Each year, Allianz Life deducts a $30 contract maintenance charge from your
Contract. Allianz Life currently waives this charge if your Contract value is at
least $50,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the Guaranteed Income and Death Benefit Options you choose. Allianz Life
also deducts an administration charge. This charge, together with the contract
maintenance charge, is for all the expenses associated with the administration
of the Contract. The table below shows the combinations available to you and
their charges during the Accumulation Phase, as a percentage of the average
daily value of the Contract value allocated to the Variable Investment Options.
<TABLE>
<CAPTION>
EARNINGS PROTECTION
DEATH BENEFIT AND
DEATH BENEFIT INCOME & DEATH EARNINGS PROTECTION ENHANCED INCOME
OPTION 1 OR 2BENEFIT OPTION 1 OR 2DEATH BENEFIT ONLY BENEFIT OPTION 1 OR 2
<S> <C> <C> <C> <C>
MORTALITY & EXPENSE 1.34% 1.64% 1.44% 1.74%
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
TOTAL 1.49% 1.79% 1.59% 1.89%
</TABLE>
The selection of the Guaranteed Income and Death Benefit Options must be made at
the time of initial Purchase Payment. GUARANTEED MINIMUM INCOME BENEFIT (GMIB):
The GMIB guarantees that your Annuity Payments will be equal to the greater of:
1) current fixed payout rates applied to the current Contract Value (less any
applicable premium tax); or 2) guaranteed fixed payout rates applied to the GMIB
value. The GMIB is subject to a 7-year waiting period and must be annuitized
under a fixed annuity option, if a period certain annuity option is chosen, the
period must be a minimum of 10 years. The GMIB is only beneficial if the Owner
annuitizes the contract.
The GMIB Option 1 guarantees the greater of 1) purchase payments made less any
adjusted partial withdrawals, plus 5% on the accumulated value on each Contract
anniversary or 2) highest Contract Value on any sixth year Contract anniversary,
plus any purchase payments made since that contract anniversary, and less any
adjusted partial withdrawals since that Contract anniversary. Contract
anniversaries occurring on or after the 81st birthday or date of death will not
be taken into consideration in determining this benefit. After the 81st
birthday, the GMIB Value determined as of the last Contract anniversary prior to
your 81st birthday will be increased by any purchase payments made since such
Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
The GMIB Option 2 guarantees the greater of 1) purchase payment made, less any
adjusted partial withdrawals, or 2) the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-18
GUARANTEED MINIMUM DEATH BENEFIT (GMDB):
The Guaranteed Minimum Death Benefits (GMDB) are optional at the purchase of
your contract. These benefits are only payable to the beneficiary while the
contract is in the accumulation phase prior to annuitization. If you have
annuitized your contract, these benefits are no longer in effect.
The GMDB Option 1 guarantees the greater of 1) the current value of the contract
less any premium taxes owed, or 2) during first contract year and if under age
81 (depending on applicable state regulations), the payments made less any money
taken out, applicable charges, and premium taxes owed. After the first contract
year and prior to age 81, the greater of payments made, less any money taken
out, applicable charges and premium taxes plus 5% on each contract anniversary
or the highest contract value on any six year contract anniversary plus any
payments made since the anniversary less any money taken out, applicable charge
or premiums taxes. After age 81 the GMDB is based upon the GMDB on the contract
anniversary prior to the 81st birthday plus any payments since then less any
money taken out, applicable charges or premium taxes owed.
The GMDB Option 2 guaranteed the greater of 1) the current value of the contract
less any premium taxes owed, or 2) payments made less money taken out and any
charges paid on the money taken out or the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
The Earnings Protection Guaranteed Minimum Death Benefit Option 3 guarantees the
greater of 1) purchase payments adjusted for withdrawals, 2) contract value; or
3) contract value + 40% (25% if issue age >70) of the lesser of total purchase
payments or contract value minus total purchase payments.
If you take money out of the Contract, Allianz Life may assess a Contingent
Deferred Sales Charge (CDSC). The CDSC starts at 6% in the first year and
declines to 0% after 7 years from receipt of each purchase payment.. A different
charge applies to liquidations from the Period Certain Only annuity option
during the payout phase called a commutation fee. There are also daily
investment charges which currently range, on an annual basis, from 0.57% to
1.81% of the average daily value of the Portfolio, depending upon the Portfolio.
This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns. Some
optional features must be selected at the issue date, and cannot be added once
the contract is issued.
The "CONTRACT VALUE" for any point in time is an amount equal to the sum of each
Accumulation Unit Value multiplied by the number of Units allocated to the
Contract for each investment option. This value will fluctuate due to the
performance of the selected investment options. The Contract Value reflects all
contract charges, and portfolio expenses for the contract features selected but
does not reflect the CDSC. It does not reflect the impact of premium taxes,
income taxes or the 10% federal penalty tax for withdrawals prior to age 59 1/2.
The "CASH SURRENDER VALUE" reflects all of the expenses and charges assessed
against "contract value", and also reflects any CDSC if applicable. It does not
reflect the impact of premium taxes, income taxes or the 10% federal penalty tax
for withdrawals prior to age 59 1/2.
IMPORTANT CONSIDERATIONS: Past performance is not a guarantee of future results.
Investment returns and principal value will fluctuate with market conditions so
that units, when redeemed may be worth more or less than the original cost.
Product and features may not be available in all states. All product guarantees
are based on the claims paying ability of Allianz Life Insurance Company of
North America.
High yield securities inherently have a high degree of market risk in addition
to credit risk and potential illiquidity. Index investment options seek to match
the performance of specified market indexes. Investors cannot invest directly
into indexes. Money invested in a specific sector or industry is subject to a
higher degree of risk than money that is diversified. Small cap stocks may be
more volatile than large cap or more established companies' securities.
International investing involves some risks not presented with U.S. investments,
such as currency fluctuation and political volatility. An investment in the
Money Market fund is neither insured nor guaranteed by the FDIC or any other
governmental agency. Although the fund seeks to preserve your $1.00 per share,
it is possible to lose money in the fund.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal. USAllianz products are issued
by Allianz Life Insurance Company of North America and distributed by its
affiliate, USAllianz Investor Services, LLC, 5701 Golden Hills Drive,
Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-19
STANDARDIZED AVERAGE ANNUAL RETURN
AND ADJUSTED PORTFOLIO RETURN
As of [12/31/2000], a one time purchase payment of $1,000 if withdrawn would
have generated the following Standardized Average Annual Return, taking into
consideration all contract charges but without regard to taxes:
<TABLE>
<CAPTION>
SINCE DATE OF SINCE DATE OF
PORTFOLIO INCEPTION PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT
INVESTMENT OPTION 1 YEAR 5 YEAR 10 YEARS INCEPTION INCEPTION INCEPTION INCEPTION
----------------- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Growth Fund * * * * 1/22/2001
USAllianz Strategic Growth Fund (24.76%) 7.29% * 11.02% 4/19/1995
</TABLE>
Standardized average annual return figures are calculated from the inception
date of the applicable Allianz Life Sub-Account. Figures reflect the deduction
of all contract and investment option charges. Where there is a varying charge
depending upon which feature selected, the highest potential charge is shown.
The effect of the CDSC is reflected at the end of each period shown. Portfolio
returns prior to Sub-Account inception have been adjusted for contract expenses.
Past performance is not a guarantee of future results.
[THIS PAGE MUST ACCOMPANY ANY PAYOUT ILLUSTRATION CONTAINING ADJUSTED HISTORICAL
INFORMATION]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-20
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
REQUIRED MINIMUM DISTRIBUTION
BASED UPON ADJUSTED HISTORICAL PERFORMANCE
Age Adjusted Historical Applicable Contract Annual Cumulative
Average Annual Return Divisor Value Payout Payout
<S> <C> <C> <C> <C> <C> <C>
51 xx.xx% 33.1 10,000 302 302
52 32.2 10,183 316 618
53 31.3 10,360 331 949
54 30.4 10,530 346 1,296
55 29.5 10,693 362 1,658
56 28.6 10,847 379 2,037
57 27.7 10,991 397 2,434
58 26.8 11,124 415 2,849
59 25.9 11,245 434 3,284
60 25.0 11,351 454 3,738
61 24.2 11,442 473 4,210
62 23.3 11,517 494 4,705
63 22.5 11,574 514 5,219
64 21.6 11,613 538 5,757
65 20.8 11,629 559 6,316
66 20.0 11,623 581 6,897
67 19.2 11,594 604 7,501
68 18.4 11,540 627 8,128
69 17.6 11,458 651 8,779
70 16.8 11,348 675 9,455
</TABLE>
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-21
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
<TABLE>
<CAPTION>
REQUIRED MINIMUM DISTRIBUTION
BASED UPON ADJUSTED HISTORICAL PERFORMANCE
Adjusted Historical
Age Average Annual Applicable Contract Annual Cumulative
Return Divisor Value Payout Payout
<S> <C> <C> <C> <C> <C>
71 16.0 11,206 700 10,155
72 15.3 11,031 721 10,876
73 14.6 10,825 741 11,617
74 13.9 10,588 762 12,379
75 13.2 10,318 782 13,161
76 12.5 10,013 801 13,962
77 11.9 9,672 813 14,775
78 11.2 9,303 831 15,605
79 10.6 8,896 839 16,444
80 10.0 8,459 846 17,290
81 9.5 7,994 841 18,132
82 8.9 7,510 844 18,976
83 8.4 7,000 833 19,809
84 7.9 6,475 820 20,628
85 7.4 5,938 802 21,431
86 6.9 5,392 781 22,212
87 6.5 4,841 745 22,957
88 6.1 4,301 705 23,662
89 5.7 3,776 662 24,325
90 5.3 3,269 617 24,941
</TABLE>
Annual Payout is the contract value divided by the applicable divisor.
This illustration is based upon weighted aggregate historical returns during the
period indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
Average annual returns for each of the investment options selected for the most
recent 1, 5, and 10 year periods (computed as of the most recent calendar
quarter) are shown on another page of this illustration.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-22
IMPORTANT DISCLOSURES
ADJUSTED HISTORICAL ILLUSTRATION
THIS IS AN ILLUSTRATION NOT A CONTRACT. The purpose of this illustration is to
demonstrate how the performance of the underlying investment options offered
through the contract may affect contract values, death benefits, and income
benefits over an extended period of time. This illustration is based on
historical rates of return and is not intended to serve as a projection or
prediction of future investment returns. It illustrates how much the contract
would hypothetically be worth, and how much the guaranteed death benefit and
guaranteed income benefit would be, at the end of each year if: (1) the product
were offered and the customer purchased the variable annuity on the
hypothetical contract date; (2) the customer had made the purchase payments
shown; and (3) the customer had allocated the purchase payments to the
investment options indicated.
To assist you in understanding this illustration, mathematical depictions of
hypothetical performance may be accompanied by visual depictions, including pie
charts, graphs, and other types of charts. The value of a variable annuity will
fluctuate, based on the performance of the underlying investment options, and
the Contract Owner may experience a gain or loss. Actual performance results
may be more or less than those shown on this illustration and will depend on a
number of factors, including the choice and investment experience of the
variable investment options.
This illustration may illustrate adjusted historical performance for one or
more investment options. If more than one investment option is illustrated,
performance may be shown as aggregate performance for all investment options
selected. In addition, if you elect to illustrate more than one investment
option and to hypothetically allocate more money to one option than to other
options (for example, 50% to one investment option, 30% to a second investment
option, and 20% to a third investment option), performance may be shown as
weighted aggregate performance.
Performance data for the investment options illustrated in this illustration
reflects the deduction of the contract mortality and expense risk charge,
administration charge and contract maintenance charge. The fees and expenses of
the underlying investment options which serve as funding vehicles are also
reflected. The contingent deferred sales charge (CDSC) may or may not be
reflected, depending upon what is being illustrated. For example, the CDSC
would be deducted from cash surrender value figures that are illustrated, but
not contract value figures. For complete information about USAllianz Valuemark
IV, a flexible premium variable annuity, including fees and expenses, refer to
the prospectus from USAllianz Investor Services, LLC. Read it carefully before
sending money.
STANDARDIZED AVERAGE ANNUAL RETURN: Any adjusted historical performance
illustration is accompanied by Standardized Average Annual Return for each
investment option depicted in the illustration. Standardized return is
calculated using uniform guidelines as mandated by the Securities and Exchange
Commission. Standardized return figures assume a one-time lump sum purchase
payment, and do not reflect the effect of taxation. Standardized return is
shown for the most recent 1, 5, and 10 year periods, or from the inception date
of the investment option, if later. In contrast, illustration material may
depict returns from the inception date of the applicable portfolio, if earlier
than the inception date of the investment option. Standardized return includes
the effect of all portfolio expenses and all contract expenses. If contract
expenses vary depending upon which features are selected, standardized return
will reflect the highest potential expenses. In contrast, an illustration may
reflect only certain expenses. Standardized return also assumes the assessment
of a CDSC at the end of each applicable period. Standardized return is computed
as of the most recent calendar quarter.
The ADJUSTED HISTORICAL AVERAGE ANNUAL RETURN is based upon the weighted
aggregate historical rate of return on the investment options selected,
commencing on the hypothetical purchase date, and calculates the change in
contract value from the beginning of the hypothetical period to the end of the
period, adjusted for additional purchase payments and any withdrawals. The
adjusted historical average annual return commences on the inception date of the
investment option and includes mortality and expense charges, administration
charges, and investment option fees, but does not include CDSC.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-23
Weighted aggregate return for the portfolios selected for the total period shown
is: xx.xx%. Average annual returns for each of the investment options selected
for the most recent 1, 5, and 10 year periods (computed as of the most recent
calendar quarter) are shown on another page of this illustration.
TAXES: The effect of income, penalty, and state premium taxes have not been
reflected in this illustration. While withdrawals may or may not be depicted
within this illustration, withdrawals from the contract will be subject to
ordinary income tax to the extent that the contract value immediately before the
withdrawal exceeds the total amount of after-tax money paid into the contract. A
withdrawal in excess of the taxable amount will constitute a nontaxable return
of principal. Withdrawals may be subject to a surrender charge, included in
taxable income, and prior to age 59 1/2 may be subject to a 10% federal tax
penalty.
For any tax-qualified account, e.g., IRA or TSA, the tax deferred growth feature
is already provided by the tax qualified retirement plan. Therefore, product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a qualified retirement plan. If the contract is an individual
retirement annuity or other qualified contract, the Contract Owner will
generally be taxed on all amounts withdrawn, or received on withdrawal. The tax
consequences will be different, however, if the contract is a Roth IRA, or a
traditional non-deductible IRA.
The tax treatment of death benefit proceeds of an annuity contract differs from
the tax treatment of a life insurance policy. It is not, however, intended to
provide specific legal, tax or other professional advice. For complete details,
consult with your tax advisor or attorney and refer to the prospectus.
Please read the prospectus for further information.
COSTS AND EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each.
Each year, Allianz Life deducts a $30 contract maintenance charge from your
Contract. Allianz Life currently waives this charge if your Contract value is at
least $50,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the Guaranteed Income and Death Benefit Options you choose. Allianz Life
also deducts an administration charge. This charge, together with the contract
maintenance charge, is for all the expenses associated with the administration
of the Contract. The table below shows the combinations available to you and
their charges during the Accumulation Phase, as a percentage of the average
daily value of the Contract value allocated to the Variable Investment Options.
<TABLE>
<CAPTION>
EARNINGS PROTECTION
DEATH BENEFIT AND
DEATH BENEFIT INCOME & DEATH EARNINGS PROTECTION ENHANCED INCOME
OPTION 1 OR 2 BENEFIT OPTION 1 OR 2 DEATH BENEFIT ONLY BENEFIT OPTION 1 OR 2
<S> <C> <C> <C> <C>
MORTALITY & EXPENSE 1.34% 1.64% 1.44% 1.74%
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
TOTAL 1.49% 1.79% 1.59% 1.89%
</TABLE>
The selection of the Guaranteed Income and Death Benefit Options must be made at
the time of initial Purchase Payment.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB):
The GMIB guarantees that your Annuity Payments will be equal to the greater of:
1) current fixed payout rates applied to the current Contract Value (less any
applicable premium tax); or 2) guaranteed fixed payout rates applied to the GMIB
value. The GMIB is subject to a 7-year waiting period and must be annuitized
under a fixed annuity option, if a period certain annuity option is chosen, the
period must be a minimum of 10 years. The GMIB is only beneficial if the Owner
annuitizes the contract.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-24
The GMIB Option 1 guarantees the greater of 1) purchase payments made less any
adjusted partial withdrawals, plus 5% on the accumulated value on each Contract
anniversary or 2) highest Contract Value on any sixth year Contract anniversary,
plus any purchase payments made since that contract anniversary, and less any
adjusted partial withdrawals since that Contract anniversary. Contract
anniversaries occurring on or after the 81st birthday or date of death will not
be taken into consideration in determining this beneift. After the 81st
birthday, the GMIB Value determined as of the last Contract anniversary prior to
your 81st birthday will be increased by any purchase payments made since such
Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
The GMIB Option 2 guarantees the greater of 1) purchase payment made, less any
adjusted partial withdrawals, or 2) the greatest anniversary value, increased by
purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB):
The Guaranteed Minimum Death Benefits (GMDB) are optional at the purchase of
your contract. These benefits are only payable to the beneficiary while the
contract is in the accumulation phase prior to annuitization. If you have
annuitized your contract, these benefits are no longer in effect.
The GMDB Option 1 guarantees the greater of 1) the current value of the contract
less any premium taxes owed, or 2) during first contract year and if under age
81 (depending on applicable state regulations), the payments made less any money
taken out, applicable charges, and premium taxes owed. After the first contract
year and prior to age 81, the greater of payments made, less any money taken
out, applicable charges and premium taxes plus 5% on each contract anniversary
or the highest contract value on any six year contract anniversary plus any
payments made since the anniversary less any money taken out, applicable charge
or premiums taxes. After age 81 the GMDB is based upon the GMDB on the contract
anniversary prior to the 81st birthday plus any payments since then less any
money taken out, applicable charges or premium taxes owed.
The GMDB Option 2 guaranteed the greater of 1) the current value of the contract
less any premium taxes owed, or 2) payments made less money taken out and any
charges paid on the money taken out or the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
The Earnings Protection Guaranteed Minimum Death Benefit Option 3 guarantees the
greater of 1) purchase payments adjusted for withdrawals, 2) contract value; or
3) contract value + 40% (25% if issue age >70) of the lesser of total purchase
payments or contract value minus total purchase payments.
If you take money out of the Contract, Allianz Life may assess a Contingent
Deferred Sales Charge (CDSC). The CDSC starts at 6% in the first year and
declines to 0% after 7 years from receipt of each purchase payment.. A different
charge applies to liquidations from the Period Certain Only annuity option
during the payout phase called a commutation fee. There are also daily
investment charges which currently range, on an annual basis, from 0.57% to
1.81% of the average daily value of the Portfolio, depending upon the Portfolio.
This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns. Some
optional features must be selected at the issue date, and cannot be added once
the contract is issued.
The "CONTRACT VALUE" for any point in time is an amount equal to the sum of each
Accumulation Unit Value multiplied by the number of Units allocated to the
Contract for each investment option. This value will fluctuate due to the
performance of the selected investment options. The Contract Value reflects all
contract charges, and portfolio expenses for the contract features selected but
does not reflect the CDSC. It does not reflect the impact of premium taxes,
income taxes or the 10% federal penalty tax for withdrawals prior to age 59 1/2.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-25
The "CASH SURRENDER VALUE" reflects all of the expenses and charges assessed
against "contract value", and also reflects any CDSC if applicable. It does not
reflect the impact of premium taxes, income taxes or the 10% federal penalty tax
for withdrawals prior to age 59 1/2.
IMPORTANT CONSIDERATIONS: Past performance is not a guarantee of future results.
Investment returns and principal value will fluctuate with market conditions so
that units, when redeemed may be worth more or less than the original cost.
Product and features may not be available in all states. All product guarantees
are based on the claims paying ability of Allianz Life Insurance Company of
North America.
High yield securities inherently have a high degree of market risk in addition
to credit risk and potential illiquidity.
Index investment options seek to match the performance of specified market
indexes. Investors cannot invest directly into indexes.
Money invested in a specific sector or industry is subject to a higher degree of
risk than money that is diversified.
Small cap stocks may be more volatile than large cap or more established
companies' securities.
International investing involves some risks not presented with U.S. investments,
such as currency fluctuation and political volatility.
An investment in the Money Market fund is neither insured nor guaranteed by the
FDIC or any other governmental agency. Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.
--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-26
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING:
Guaranteed Minimum Death Benefit (GMDB):
STANDARDIZED AVERAGE ANNUAL RETURN AND
ADJUSTED PORTFOLIO RETURN
As of [12/31/2000], a one-time purchase payment of $1,000 if withdrawn would
have generated the following Standardized Average Annual Return, without regard
to taxes:
<TABLE>
<CAPTION>
SINCE DATE OF SINCE DATE OF
PORTFOLIO INCEPTION PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT
INVESTMENT OPTION 1 YEAR 5 YEAR 10 YEAR INCEPTION INCEPTION INCEPTION INCEPTION
----------------- ------ ----------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USALLIANZ VIP MONEY MARKET FUND * * * * 5/1/2001
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO * * * * 5/1/2001
DAVIS VA FINANCIAL PORTFOLIO * * * * 5/1/2001
DAVIS VA VALUE PORTFOLIO 15.47% 5.38% 6.28% 8.65% 4/19/1995
AIM V.I. GROWTH FUND * * * *
AIM V.I. VALUE FUND (0.57%) 2.94% 4.56% 3.76% 4/19/1995
OPPENHEIMER HIGH INCOME FUND
</TABLE>
Standardized average annual return figures are calculated from the
inception date of the applicable Allianz Life Sub-Account. Figures reflect the
deduction of all contract and investment option charges. Where there is a
varying charge depending upon which feature selected, the highest potential
charge is shown. The effect of the CDSC is reflected at the end of each period
shown. Portfolio returns prior to Sub-Account inception have been adjusted for
contract expenses.
Past performance is not a guarantee of future results.
[THIS PAGE MUST ACCOMPANY ANY ACCUMULATION ILLUSTRATION CONTAINING
ADJUSTED HISTORICAL PERFORMANCE.]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-27
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
INVESTMENT OPTIONS SELECTED
____ Portfolio (___%)
____ Portfolio (___%)
EFFECT OF ADJUSTED HISTORICAL
RETURNS ON ILLUSTRATED CONTRACT VALUES
<TABLE>
<CAPTION>
---------------- ------ ---------------------- ---------- --------------- ------------- --------------- ----------- ---------
END OF AGE ADJUSTED HISTORICAL PURCHASEPAYWITHDRAWALS CONTRACT CASH GMIB GMDB
YEAR AVERAGE ANNUAL RETURN VALUE SURRENDER
VALUE
---------------- ------ ---------------------- ---------- --------------- ------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 Xx.xx% $x,xxx.00 $(xxx.00) $x,xxxx.00 $x,xxxx.00 $x,xxx.00
---------------- ------ --------------------- ----------- --------------- ------------- --------------- ----------- ---------
</TABLE>
This illustration is based upon adjusted historical returns during the period
indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-28
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
INVESTMENT OPTIONS SELECTED
____ Portfolio (___%)
____ Portfolio (___%)
ADJUSTED HISTORICAL INVESTMENT OPTION REPORT
FOR INVESTMENT OPTION NAME
<TABLE>
<CAPTION>
-------------------- ------- ---------------- -------------- ----------------- --------------- -------------------
END OF YEAR AGE ADJUSTED PURCHASE WITHDRAWALS INVESTMENT
HISTORICAL PAYMENTS OPTION VALUE*
AVERAGE ANNUAL
RETURN
-------------------- ------- ---------------- -------------- ----------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $x,xxx.00 ($xxx.00) $x,xxxx.00
-------------------- ------- ---------------- -------------- ----------------- --------------- -------------------
</TABLE>
*The term "investment option value" is an amount equal to the sum of each
Accumulation unit value multiplied by the number of investment option units.
This illustration is based upon adjusted historical returns during the period
indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-29
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
INVESTMENT OPTIONS SELECTED
____ Portfolio (___%)
____ Portfolio (___%)
GUARANTEED MINIMUM DEATH BENEFIT REPORT
<TABLE>
<CAPTION>
------------------- ------ --------------------- ------------------ ------------------- ------------------ -----------------
ANNIVERSARY YEAR AGE ADJUSTED HISTORICAL PURCHASE PAYMENTS WITHDRAWALS CONTRACT VALUE GMDB
AVERAGE ANNUAL
RETURN
------------------- ------ --------------------- ------------------ ------------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $xxx.00 ($x,xxxx.00) $x,xxxx.00 $x,xxx.00
------------------- ------ --------------------- ------------------ ------------------- ------------------ -----------------
</TABLE>
This illustration is based upon adjusted historical returns during the period
indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-30
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
Annuity Option:
INVESTMENT OPTIONS SELECTED
____ Portfolio (___%)
____ Portfolio (___%)
GUARANTEED MINIMUM INCOME BENEFIT REPORT
<TABLE>
<CAPTION>
ACCUMULATION PHASE PAYOUT PHASE
----------------- ------ ----------- ------------ ------------ ----------- -------------- ----------- -- ----------- -----------
ANNIVERSARY YEAR AGE ADJUSTED NET CONTRACT
HISTORICAL PURCHASE VALUE 5% ANNUAL 6TH YEAR GMIB MONTHLY ANNUAL
AVERAGE PAYMENTS* INCREASE ANNIVERSARY
ANNUAL AMOUNT VALUE
RETURN
----------------- ------ ----------- ------------ ------------ ----------- -------------- ----------- -- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mm/dd/yyyy 45 xx.xx% $xxx.00 $x,xxxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00 $x,xxx.00
----------------- ------ ----------- ------------ ------------ ----------- ------------- ------------ -- ----------- -----------
</TABLE>
*The Net Purchase Payment column represents purchase payments minus withdrawals
in the accumulation phase.
This illustration is based upon adjusted historical returns during the period
indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-31
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
<TABLE>
<CAPTION>
ADJUSTED HISTORICAL DOLLAR COST AVERAGING
PERIOD
INITIAL MONTHLY INITIAL ENDING ENDING
PURCHASE TRANSFER TRANSFER TRANSFER VALUE
PAYMENT PERIODS DATE DATE DATE
------- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$50,000.00 20 05/01/1993 12/01/1994 03/31/2001
</TABLE>
<TABLE>
<CAPTION>
WITHOUT
DOLLAR COST DOLLAR COST
ALLOCATION ALLOCATION MONTHLY AVERAGING AVERAGING
INVESTMENT OPTIONS PERCENTAGE AMOUNT TRANSFER ENDING VALUE ENDING VALUE
FROM:
<S> <C> <C> <C> <C> <C>
USALLIANZ VIP MONEY MARKET FUND 100% (Initial) 1,188
TO:
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO 10% 5,000 250 6,522 6,609
DAVIS VA FINANCIAL PORTFOLIO 10% 5,000 250 16,397 18,135
DAVIS VA VALUE PORTFOLIO 10% 5,000 250 12,528 13,196
AIM V.I. VALUE FUND 30% 15,000 750 31,113 33,695
AIM V.I. GROWTH FUND 20% 10,000 500 22,232 23,964
OPPENHEIMER HIGH INCOME FUND 20% 10,000 500 22,911 24,920
TOTAL 100% 50,000 2,500 112,893 120,519
</TABLE>
Dollar Cost Averaging involves continuous investing regardless of fluctuating
prices. The investor should consider his or her financial ability to continue
purchases through periods of low price levels. Dollar Cost Averaging does not
ensure a profit.
This report is based off your initial lump-sum purchase payment only, as
illustrated above. Future purchase payments are not taken into consideration.
Average annual returns for the investment options selected for the most recent
1, 5, and 10 year periods (computed as of the most recent calendar quarter) are
shown on another page of this illustration.
The investment options illustrated are based upon adjusted historical returns
during the period indicated. Any fixed rate returns illustrated are based upon
current returns.
This illustration is based upon adjusted historical returns during the period
indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-32
IMPORTANT DISCLOSURES
HYPOTHETICAL VARIABLE AND/OR FIXED PAYOUT ILLUSTRATION
This illustration depicts how a payment option may work when you annuitize your
contract. THIS ILLUSTRATION IS NOT A CONTRACT, AND IT IS NOT A REPRESENTATION OR
GUARANTEE OF FUTURE RETURNS OR OF ANY SPECIFIC PAYOUT AMOUNT.
If you want to receive regular income from your annuity, you can choose an
Annuity Option at any time after the 2nd Contract anniversary. You may elect to
receive your Annuity Payments as a variable payout, a fixed payout, or a
combination of both. If you choose to have any part of your payments come from
the Variable Options, the dollar amount of your payments may go up or down
based on the performance of the investment options.
The Contract provides that the Contract cannot be annuitized prior to 2 years
after the contract issue date. For this reason, illustrations that you receive
will be based upon an annuity start date that is at least 2 years after the
issue date.
You can elect to have illustrated either a "variable" payout option or a "fixed"
payout option, or, you may elect to receive both a variable payout illustration
and a fixed payout illustration. THE "VARIABLE" PAYOUT OPTION ILLUSTRATION is
based upon actual historical performance of one or more investment options over
the specified period, as adjusted for all applicable investment option expenses
and applicable contract expenses. The principal purpose of the variable payout
illustration is to demonstrate how the performance of the underlying investment
options could affect contract values and payout amounts when the contract is
annuitized. Investment returns and principal value will fluctuate with market
conditions so that units, when redeemed may be with more or less than the
original cost. The illustration has not been adjusted for state or federal
income tax liability, 10% federal penalty tax for withdrawals prior to age 59
1/2, or any applicable state premium taxes; values would be lower if such
adjustments had been made.
This illustration may illustrate adjusted historical performance for one or
more investment options. If more than one option is illustrated, performance
may be shown as aggregate performance for all investment options selected. In
addition, if you elect to illustrate more than one investment option and to
hypothetically allocate more money to one option than to other options (for
example, 50% to one option, 30% to a second option, and 20% to a third option),
performance may be shown as weighted aggregate performance.
THE "FIXED" PAYOUT OPTION ILLUSTRATION is not based upon any sort of historical
performance, but rather is based upon fixed payout factors that are in effect on
the date of the illustration. These factors can change, up until the date you
annuitize your contract.
VARIABLE PAYOUT ANNUITY- Variable Annuity payouts depend on a variety of
factors, including the amount annuitized, annuity payout option selected,
assumed investment rate (AIR), and will vary with the investment performance of
the portfolio(s) selected. The variable income can increase or decrease from
the initial monthly payment and no minimum dollar amount of variable income is
guaranteed. Actual investment results may be more or less than those reflected
in the hypothetical rates of return and will depend on a number of factors,
including the choice and investment experience of the eligible variable
investment options.
The AIR was selected by your investment representative. The 3% AIR payments
start at a lower level than the 5% or 7% AIR, with the potential for more rapid
increase in payments during later years. Conversely if a 7% AIR is chosen there
is a potential for a more rapid decrease in payments during the later years. The
7% AIR is not available in the states of Oregon, Texas and New Jersey.
The value of a variable annuity will fluctuate up and down, based on the
performance of the underlying investment options, and the investor may
experience a gain or loss. Actual investment results may be more or less than
those shown on this illustration and will depend on a number of factors,
including the choice and investment experience of the variable investment
options.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-33
STANDARDIZED AVERAGE ANNUAL RETURN: Any variable payout illustration that is
based upon adjusted historical performance is accompanied by Standardized
Average Annual Return for each investment option depicted in the illustration.
Standardized return is calculated using uniform guidelines as mandated by the
Securities and Exchange Commission. Standardized return figures assume a
one-time lump sum investment, and do not reflect the effect of taxation.
Standardized return is shown for the most recent 1, 5, and 10 year periods, or
from the inception date of the sub-account, if later. In contrast, illustration
material may depict returns from the inception date of the applicable
portfolio, if earlier than the inception date of the sub-account. Standardized
return includes the effect of all portfolio expenses and all contract expenses.
If contract expenses vary depending upon which features are selected,
standardized return will reflect the highest potential expenses. In contrast,
an illustration may reflect only certain expenses. Standardized return also
assumes the assessment of a contingent deferred sales charge (CDSC) at the end
of each applicable period. Standardized return is computed as of the most
recent calendar quarter.
FIXED PAYOUT ANNUITY- Fixed payments will depend on a variety of factors,
including the amount annuitized, payout factor rates when the contract is
annuitized, date of birth, and annuity payout option selected. Fixed Annuity
payouts, once commenced, will not vary.
COSTS AND EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each. Each year, Allianz Life deducts a $30
contract maintenance charge from your Contract. Allianz Life currently waives
this charge if your Contract value is at least $50,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the Guaranteed Income and Death Benefit Options you choose. Allianz Life
also deducts an administration charge. This charge, together with the contract
maintenance charge, is for all the expenses associated with the administration
of the Contract. The table below shows the combinations available to you and
their charges during the Accumulation Phase, as a percentage of the average
daily value of the Contract value allocated to the Variable Investment Options.
<TABLE>
<CAPTION>
EARNINGS PROTECTION
DEATH BENEFIT AND
DEATH BENEFIT INCOME & DEATH EARNINGS PROTECTION ENHANCED INCOME
OPTION 1 OR 2 BENEFIT OPTION 1 OR 2 DEATH BENEFIT ONLY BENEFIT OPTION 1 OR 2
<S> <C> <C> <C> <C>
MORTALITY & EXPENSE 1.34% 1.64% 1.44% 1.74%
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
TOTAL 1.49% 1.79% 1.59% 1.89%
</TABLE>
The selection of the Guaranteed Income and Death Benefit Options must be made at
the time of initial Purchase Payment.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB): The GMIB guarantees that your Annuity
Payments will be equal to the greater of: 1) current fixed payout rates applied
to the current Contract Value (less any applicable premium tax); or 2)
guaranteed fixed payout rates applied to the GMIB value. The GMIB is subject to
a 7-year waiting period and must be annuitized under a fixed annuity option, if
a period certain annuity option is chosen, the period must be a minimum of 10
years. The GMIB is only beneficial if the Owner annuitizes the contract.
The GMIB Option 1 guarantees the greater of 1) purchase payments made less any
adjusted partial withdrawals, plus 5% on the accumulated value on each Contract
anniversary or 2) highest Contract Value on any sixth year Contract anniversary,
plus any purchase payments made since that contract anniversary, and less any
adjusted partial withdrawals since that Contract anniversary. Contract
anniversaries occurring on or after the 81st birthday or date of death will not
be taken into consideration in determining this benefit. After the 81st
birthday, the GMIB Value determined as of the last Contract anniversary prior to
your 81st birthday will be increased by any purchase payments made since such
Contract anniversary, less any adjusted partial withdrawals since such
anniversary.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-34
The GMIB Option 2 guarantees the greater of 1) purchase payment made, less any
adjusted partial withdrawals, or 2) the greatest anniversary value, increased by
purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB):
The Guaranteed Minimum Death Benefits (GMDB) are optional at the purchase of
your contract. These benefits are only payable to the beneficiary while the
contract is in the accumulation phase prior to annuitization. If you have
annuitized your contract, these benefits are no longer in effect.
The GMDB Option 1 guarantees the greater of 1) the current value of the contract
less any premium taxes owed, or 2) during first contract year and if under age
81 (depending on applicable state regulations), the payments made less any money
taken out, applicable charges, and premium taxes owed. After the first contract
year and prior to age 81, the greater of payments made, less any money taken
out, applicable charges and premium taxes plus 5% on each contract anniversary
or the highest contract value on any six year contract anniversary plus any
payments made since the anniversary less any money taken out, applicable charge
or premiums taxes. After age 81 the GMDB is based upon the GMDB on the contract
anniversary prior to the 81st birthday plus any payments since then less any
money taken out, applicable charges or premium taxes owed.
The GMDB Option 2 guaranteed the greater of 1) the current value of the contract
less any premium taxes owed, or 2) payments made less money taken out and any
charges paid on the money taken out or the greatest anniversary value, increased
by purchase payments made since that anniversary and decreased by any adjusted
partial withdrawals since that anniversary. Any Contract anniversaries which
occur on or after age 81 will not be taken into consideration for determining
this benefit.
The Earnings Protection Guaranteed Minimum Death Benefit Option 3 guarantees the
greater of 1) purchase payments adjusted for withdrawals, 2) contract value; or
3) contract value + 40% (25% if issue age >70) of the lesser of total purchase
payments or contract value minus total purchase payments.
If you take money out of the Contract, Allianz Life may assess a Contingent
Deferred Sales Charge (CDSC). The CDSC starts at 6% in the first year and
declines to 0% after 7 years from receipt of each purchase payment.. A different
charge applies to liquidations from the Period Certain Only annuity option
during the payout phase called a commutation fee.
There are also daily investment charges which currently range, on an annual
basis, from 0.57% to 1.81% of the average daily value of the Portfolio,
depending upon the Portfolio.
This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns. Some
optional features must be selected at the issue date, and cannot be added once
the contract is issued.
The "CONTRACT VALUE" for any point in time is an amount equal to the sum of each
Accumulation Unit Value multiplied by the number of Units allocated to the
Contract for each investment option. This value will fluctuate due to the
performance of the selected investment options. The Contract Value reflects all
contract charges, and portfolio expenses for the contract features selected but
does not reflect the CDSC. It does not reflect the impact of premium taxes,
income taxes or the 10% federal penalty tax for withdrawals prior to age 59 1/2.
The "CASH SURRENDER VALUE" reflects all of the expenses and charges assessed
against "contract value", and also reflects any CDSC if applicable. It does not
reflect the impact of premium taxes, income taxes or the 10% federal penalty tax
for withdrawals prior to age 59 1/2.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-35
IMPORTANT CONSIDERATIONS: Past performance is not a guarantee of future results.
Investment returns and principal value will fluctuate with market conditions so
that units, when redeemed may be worth more or less than the original cost.
Product and features may not be available in all states. All product guarantees
are based on the claims paying ability of Allianz Life Insurance Company of
North America.
High yield securities inherently have a high degree of market risk in addition
to credit risk and potential illiquidity.
Index investment options seek to match the performance of specified market
indexes. Investors cannot invest directly into indexes.
Money invested in a specific sector or industry is subject to a higher degree of
risk than money that is diversified.
Small cap stocks may be more volatile than large cap or more established
companies' securities.
International investing involves some risks not presented with U.S. investments,
such as currency fluctuation and political volatility.
An investment in the Money Market fund is neither insured nor guaranteed by the
FDIC or any other governmental agency. Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.
--------------------------------------------------------------------------------
STANDARDIZED AVERAGE ANNUAL RETURN
AND ADJUSTED PORTFOLIO RETURN
As of [12/31/2000], a one time purchase payment of $1,000 if withdrawn would
have generated the following Standardized Average Annual Return, taking into
consideration all contract charges but without regard to taxes:
<TABLE>
<CAPTION>
SINCE DATE OF SINCE DATE OF
PORTFOLIO INCEPTION PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT
INVESTMENT OPTION 1 YEAR 5 YEAR 10 YEARS INCEPTION INCEPTION INCEPTION INCEPTION
----------------- ------ ------ -------- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Growth Fund * * * * 1/22/2001
USAllianz Strategic Growth Fund (24.76%) 7.29% * 11.02% 4/19/1995
</TABLE>
Standardized average annual return figures are calculated from the inception
date of the applicable Allianz Life Sub-Account. Figures reflect the deduction
of all contract and investment option charges. Where there is a varying charge
depending upon which feature selected, the highest potential charge is shown.
The effect of the CDSC is reflected at the end of each period shown. Portfolio
returns prior to Sub-Account inception have been adjusted for contract expenses.
Past performance is not a guarantee of future results.
[THIS PAGE MUST ACCOMPANY ANY PAYOUT ILLUSTRATION CONTAINING
ADJUSTED HISTORICAL INFORMATION.]
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
A-36
USALLIAZ VALUEMARK(R) IV
PREPARED FOR CONTRACT INFORMATION FOR FEATURES SELECTED
John Doe Contract Type: Non-Qualified
Guaranteed Minimum Income Benefit (GMIB):
PERIOD BEGINNING: Guaranteed Minimum Death Benefit (GMDB):
-----------------
HYPOTHETICAL VARIABLE PAYOUT ILLUSTRATION
BASED UPON ADJUSTED HISTORICAL RETURNS
<TABLE>
<CAPTION>
ANNUITY OPTION: {NAME OF OPTION CHOSEN AND OTHER INFO IN THE GUI HERE}
Annuitization Age: 65, Male Annuity Value: 520,097.92
Federal Tax Rate: 28%
Assumed Interest Rate (AIR): 3.5%
Annuitization Date: Cost Basis: 500,000.00
INVESTMENT OPTION ALLOCATION INVESTMENT OPTION
ALLOCATION
ALGER AMERICAN GROWTH FUND 90% USALLIANZ STRATEGIC GROWTH FUND 10%
------------------ ------------------ ----------------------- ------------------------ -------------------- ------------------
PERIOD ENDING PAYOUT AGE MONTHLY PAYOUT EXCLUSION AMOUNT TAXABLE AMOUNT CUMULATIVE PAYOUT
DATE
------------------ ------------------ ----------------------- ------------------------ -------------------- ------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This illustration is based upon weighted aggregate historical returns during the
period indicated. Past performance is not a guarantee of future results. This
illustration is for illustrative purposes only and is no guarantee of return or
future performance.
Average annual returns for each of the investment options selected for the most
recent 1, 5, and 10 year periods (computed as of the most recent calendar
quarter) are shown on another page of this illustration.
This is a hypothetical variable annuity illustration, not a contract, and is not
complete without all pages. The illustration can only be used when accompanied
or preceded by the Contract prospectus for the Valuemark(R) IV, a flexible
premium variable annuity. The prospectus contains more information, including
fees, expenses and risk factors, and should be read carefully before sending
money. All product guarantees are based on the claims paying ability of Allianz
Life Insurance Company of North America. Variable annuities are: not insured by
the FDIC or any other governmental agency; not deposits or obligations of, or
guarantees by, any bank or deposit or institution; and subject to investment
risks, including the possible loss of principal.
USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate, USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.
Page x of y
9/10/01 L30570
APPENDIX-B
--------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
The consolidated financial statements of Allianz Life Insurance Company of North
America and the financial statements of Allianz Life Variable Account B are
found in this Statement of Additional Information.
Accumulation Unit Value (AUV) information corresponding to the highest and
lowest combination of charges is reflected in the Appendix to the Prospectus.
AUV information reflecting the additional combination of charges is listed
below.
This information should be read in conjunction with the financial statements and
related notes of the Separate Account included in this Statement of Additional
Information.
<TABLE>
<CAPTION>
(NUMBER OF UNITS IN THOUSANDS) CONTRACT WITH GMIB AND
STANDARD CONTRACT AND 5% INCREASE/6 YEAR STEP UP OR
EARNINGS PROTECTION GMDB GREATEST ANNIVERSARY VALUE
1.59% 1.79%
---------------------------- ----------------------------
INVESTMENT OPTIONS: INCEPTION (11/05/01) TO DEC. 31, 2001 INCEPTION (11/05/01) TO DEC. 31, 2001
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL GROWTH AND INCOME
<S> <C> <C>
Unit value at beginning of period NA NA
Unit value at end of period $10.440 $10.436
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL LARGE CAP GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $10.523 $10.520
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ ALLIANCE CAPITAL TECHNOLOGY
Unit value at beginning of period NA NA
Unit value at end of period $10.742 $10.739
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN GLOBAL COMMUNICATIONS SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $17.548 $17.105
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN GROWTH AND INCOME SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $28.688 $27.964
Number of units outstanding at end of period 0 2
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN HIGH INCOME
Unit value at beginning of period NA NA
Unit value at end of period $17.991 $17.537
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN INCOME SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $27.918 $27.214
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN LARGE CAP GROWTH SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $18.252 $18.046
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN REAL ESTATE
Unit value at beginning of period NA NA
Unit value at end of period $28.972 $28.241
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $24.796 $24.312
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN SMALL CAP
Unit value at beginning of period NA NA
Unit value at end of period $19.775 $19.533
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN SMALL CAP VALUE SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $10.683 $10.605
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN U.S. GOVERNMENT
Unit value at beginning of period NA NA
Unit value at end of period $21.212 $20.676
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN ZERO COUPON 2005
Unit value at beginning of period NA NA
Unit value at end of period $27.004 $26.322
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
FRANKLIN ZERO COUPON 2010
Unit value at beginning of period NA NA
Unit value at end of period $28.756 $28.030
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
MUTUAL DISCOVERY SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $14.627 $14.478
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
MUTUAL SHARES SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $15.539 $15.380
Number of units outstanding at end of period 0 4
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON DEVELOPING MARKETS SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $7.566 $7.449
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON FOREIGN SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $17.599 $17.255
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
TEMPLETON GROWTH SECURITIES
Unit value at beginning of period NA NA
Unit value at end of period $18.786 $18.495
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
USAZ TEMPLETON DEVELOPED MARKETS
Unit value at beginning of period NA NA
Unit value at end of period $10.224 $10.220
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
SP JENNISON INTERNATIONAL GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $5.350 $5.339
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
SP JENNISON STRATEGIC PARTNERS FOCUSED GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $6.592 $6.579
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT HIGH YIELD BOND
Unit value at beginning of period NA NA
Unit value at end of period $9.904 $9.867
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT STOCKSPLUS GROWTH AND INCOME
Unit value at beginning of period NA NA
Unit value at end of period $8.236 $8.205
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT TOTAL RETURN BOND
Unit value at beginning of period NA NA
Unit value at end of period $11.677 $11.632
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO GROWTH AND INCOME
Unit value at beginning of period NA NA
Unit value at end of period $10.137 $10.134
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO RENAISSANCE
Unit value at beginning of period NA NA
Unit value at end of period $10.992 $10.988
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO VALUE
Unit value at beginning of period NA NA
Unit value at end of period $10.935 $10.931
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ MONEY MARKET
Unit value at beginning of period NA NA
Unit value at end of period $10.541 $10.501
Number of units outstanding at end of period 0 1
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN AGGRESSIVE GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $8.014 $8.003
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN COMSTOCK
Unit value at beginning of period NA NA
Unit value at end of period $9.318 $9.306
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN EMERGING GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $9.122 $9.110
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN GROWTH AND INCOME
Unit value at beginning of period NA NA
Unit value at end of period $9.655 $9.642
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
USAZ VAN KAMPEN GROWTH
Unit value at beginning of period NA NA
Unit value at end of period $9.508 $9.495
Number of units outstanding at end of period 0 0
---------------------------------------------------------------------------------------------------------------------------
<FN>
There are no accumulation units shown for the USAZ AIM Basic Value Fund, USAZ
AIM Blue Chip Fund, USAZ AIM Dent Demographic Trends Fund, USAZ AIM
International Equity Fund, Davis VA Financial Portfolio, Davis VA Value
Portfolio, Dreyfus Small Cap Stock Index Fund, Dreyfus Stock Index Fund,
Oppenheimer Global Securities Fund/VA, Oppenheimer High Income Fund/VA,
Oppenheimer Main Street Growth & Income Fund/VA, USAZ Oppenheimer Emerging
Growth Fund and the Seligman Small-Cap Value Portfolio because they commenced
operations under this Contract as of May 1, 2002.
</FN>
</TABLE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
December 31, 2001
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Independent Auditors' Report
The Board of Directors of Allianz Life Insurance Company of North America and
Contract Owners of Allianz Life Variable Account B:
We have audited the accompanying statements of assets and liabilities of the
sub-accounts of Allianz Life Variable Account B as of December 31, 2001, the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-years then ended and the
financial highlights for the period then ended. These financial statements and
financial highlights are the responsibility of the Variable 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Investment
securities held in custody for the benefit of the Variable Account were
confirmed to us by the transfer agent of the underlying mutual funds. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement and
financial highlights presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of Allianz
Life Variable Account B at December 31, 2001, and the results of their
operations, changes in their net assets and financial highlights for each of the
periods stated above, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
March 22, 2002
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2001
(IN THOUSANDS)
ALGER ALGER
AIM V.I. AIM V.I. ALGER AMERICAN AMERICAN
CAPITAL INTERNATIONAL AMERICAN LEVERAGED MIDCAP
APPRECIATION AIM V.I. EQUITY AIM V.I. GROWTH ALLCAP GROWTH
FUND GROWTH FUND FUND VALUE FUND PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $ 9,737 25,577 3,758 13,789 25,102 12,297 14,988
-------------------------------------------------------------------------------------------------------------------------
Total Assets 9,737 25,577 3,758 13,789 25,102 12,297 14,988
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges: 7 8 5 9 2 1 9
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 7 8 5 9 2 1 9
-------------------------------------------------------------------------------------------------------------------------
Net Assets $ 9,730 25,569 3,753 13,780 25,100 12,296 14,979
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 1,084 1,245 475 1,801 648 472 1,800
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 1,974 1,138 691 2,643 467 479 2,316
Alterity Optional - Option 1 1,313 1,152 739 2,611 452 353 4,124
Alterity Optional - Option 2 68 - 11 39 - - 30
Dimensions - Option 1 5 - - 9 - - 7
Dimensions - Option 2 12 4 2 2 - - 2
Dimensions - Option 3 17 217 - 281 - - 112
Dimensions - Option 4 2 3 55 75 - - 84
Dimensions - Option 5 - - - 27 - - 7
Dimensions - Option 6 - - - 3 - - -
Rewards Traditional 2,635 2,105 1,334 3,638 2,679 1,311 2,997
Rewards Enhanced 2,615 1,315 313 2,059 1,495 507 3,045
Valuemark II and III - 8,799 - - 9,806 4,705 -
Valuemark IV - Option 1 & 2
with standard contract charges - 9,355 - - 9,367 4,437 -
Valuemark IV - Option 1 & 2
with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 4 124 133 289 66 - 164
Charter Enhanced 1 18 - 303 - 1 291
Contracts in annuity payment period - 94 - - 120 31 -
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $ 9,730 25,569 3,753 13,780 25,100 12,296 14,979
=========================================================================================================================
* Investment shares 448 1,562 252 591 683 390 848
Investments at cost $13,007 45,348 4,786 15,189 37,999 20,558 17,817
See accompanying notes to financial statements.
1
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN
ALGER AGGRESSIVE GLOBAL GLOBAL HEALTH
AMERICAN SMALL DAVIS VA DAVIS VA DAVIS VA GROWTH COMMUNICATIONS CARE
CAPITALIZATION FINANCIAL REAL ESTATE VALUE SECURITIES SECURITIES SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND FUND
--------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $1,826 7,685 4,437 15,927 6,419 242,055 24,912
--------------------------------------------------------------------------------------------------------------------------
Total Assets 1,826 7,685 4,437 15,927 6,419 242,055 24,912
--------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 2 3 3 9 - 5 -
--------------------------------------------------------------------------------------------------------------------------
Total Liabilities 2 3 3 9 - 5 -
--------------------------------------------------------------------------------------------------------------------------
Net Assets $1,824 7,682 4,434 15,918 6,419 242,050 24,912
==========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 135 1,032 301 2,473 - - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 564 1,511 553 2,306 - 1 -
Alterity Optional - Option 1 388 1,137 1,842 3,613 - 18 -
Alterity Optional - Option 2 - 24 - 17 - - -
Dimensions - Option 1 3 3 2 38 - - -
Dimensions - Option 2 - 12 11 21 - - -
Dimensions - Option 3 - 21 11 54 - - -
Dimensions - Option 4 - 6 7 90 - - -
Dimensions - Option 5 - - - 35 - - -
Dimensions - Option 6 - 7 - - - - -
Rewards Traditional 397 2,245 1,238 4,239 - - -
Rewards Enhanced 291 1,564 466 2,169 - 11 -
Valuemark II and III - - - - 3,228 216,998 14,191
Valuemark IV - Option 1 & 2
with standard contract charges - - - - 3,180 23,372 10,366
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 45 80 3 317 - 197 235
Charter Enhanced 1 40 - 546 - 71 116
Contracts in annuity payment period - - - - 11 1,382 4
--------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $1,824 7,682 4,434 15,918 6,419 242,050 24,912
==========================================================================================================================
* Investment shares 110 720 429 1,614 1,095 35,234 1,922
Investments at cost $2,134 7,781 4,362 16,153 8,749 520,516 25,191
See accompanying notes to financial statements.
2
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN
GROWTH AND FRANKLIN LARGE FRANKLIN NATURAL FRANKLIN
INCOME FRANKLIN INCOME CAP GROWTH MONEY RESOURCES REAL
SECURITIES HIGH INCOME SECURITIES SECURITIES MARKET SECURITIES ESTATE
FUND FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $600,709 139,810 493,438 270,650 183,013 24,319 126,665
-------------------------------------------------------------------------------------------------------------------------
Total Assets 600,709 139,810 493,438 270,650 183,013 24,319 126,665
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 48 9 34 18 12 - 6
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 48 9 34 18 12 - 6
-------------------------------------------------------------------------------------------------------------------------
Net Assets $600,661 139,801 493,404 270,632 183,001 24,319 126,659
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 1,973 14 22 93 - - 97
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 1,915 29 6 72 - - 123
Alterity Optional - Option 1 2,274 11 13 40 - - 135
Alterity Optional - Option 2 7 - 9 13 - - 7
Dimensions - Option 1 13 - - - - - -
Dimensions - Option 2 6 - - - - - 3
Dimensions - Option 3 333 51 - 43 - - 3
Dimensions - Option 4 38 - - - - - -
Dimensions - Option 5 1 - - - - - -
Dimensions - Option 6 3 - - - - - -
Rewards Traditional 2,269 3 178 101 - - 204
Rewards Enhanced 1,832 6 - 64 - - 141
Valuemark II and III 451,632 86,787 386,556 137,759 130,255 18,771 89,204
Valuemark IV - Option 1 & 2
with standard contract charges 126,641 51,140 98,522 125,229 50,329 5,463 34,764
Valuemark IV - Option 1 & 2 with GMIB 50 9 26 - - - 6
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 762 329 1,693 659 624 45 905
Charter Enhanced 213 385 582 271 172 28 166
Contracts in annuity payment period 10,699 1,037 5,797 6,288 1,621 12 901
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $600,661 139,801 493,404 270,632 183,001 24,319 126,659
=========================================================================================================================
* Investment shares 39,343 18,792 38,075 18,640 183,013 2,045 6,983
Investments at cost $628,201 184,697 561,041 301,156 182,970 24,087 121,373
See accompanying notes to financial statements.
3
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
<CAPTION>
FRANKLIN
RISING FRANKLIN FRANKLIN U.S.FRANKLIN FRANKLIN
DIVIDENDS S&P 500 FRANKLIN TECHNOLOGY FRANKLIN VALUE ZERO COUPON
SECURITIES INDEX SMALL CAP SECURITIES GOVERNMENT SECURITIES FUND
FUND FUND FUND FUND FUND FUND 2005
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $324,217 41,520 252,279 4,820 369,778 31,569 54,431
-------------------------------------------------------------------------------------------------------------------------
Total Assets 324,217 41,520 252,279 4,820 369,778 31,569 54,431
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 25 7 25 - 10 11 -
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 25 7 25 - 10 11 -
-------------------------------------------------------------------------------------------------------------------------
Net Assets $324,192 41,513 252,254 4,820 369,768 31,558 54,431
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 1,363 147 1,708 - 1,933 10 1,258
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 1,737 335 1,560 - 1,571 3 16
Alterity Optional - Option 1 1,782 482 1,843 - 1,812 23 1
Alterity Optional - Option 2 33 30 - - 31 6 -
Dimensions - Option 1 21 - 5 - 58 - -
Dimensions - Option 2 14 - 1 - 7 - -
Dimensions - Option 3 34 31 44 - 151 - -
Dimensions - Option 4 19 - - - 120 - -
Dimensions - Option 5 1 1 - - - - -
Dimensions - Option 6 - - - - 8 - -
Rewards Traditional 3,411 307 2,841 - 5,330 200 25
Rewards Enhanced 2,256 95 1,447 - 2,463 4 -
Valuemark II and III 231,253 21,476 137,781 2,459 278,297 15,735 38,850
Valuemark IV - Option 1 & 2
with standard contract charges 77,229 17,479 99,996 2,334 74,771 14,624 14,075
Valuemark IV - Option 1 & 2 with GMIB - - 11 - 17 1 -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - 1 - - - 2 -
Charter Traditional 570 63 493 - 1,923 292 181
Charter Enhanced 283 - 257 14 749 48 7
Contracts in annuity payment period 4,186 1,066 4,267 13 527 610 18
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $324,192 41,513 252,254 4,820 369,768 31,558 54,431
=========================================================================================================================
* Investment shares 22,854 4,949 14,043 901 28,106 2,878 3,398
Investments at cost $307,460 46,642 248,123 7,615 365,672 27,819 52,432
See accompanying notes to financial statements.
4
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
<CAPTION>
FRANKLIN J.P. MORGAN
ZERO J.P. MORGAN U.S. MUTUAL MUTUAL OPPENHEIMER
COUPON INTERNATIONAL DISCIPLINED DISCOVERY SHARES GLOBAL OPPENHEIMER
FUND OPPORTUNITIES EQUITY SECURITIES SECURITIES SECURITIES HIGH INCOME
2010 PORTFOLIO PORTFOLIO FUND FUND FUND/VA FUND/VA
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $46,529 873 1,745 160,153 379,807 12,075 4,334
-------------------------------------------------------------------------------------------------------------------------
Total Assets 46,529 873 1,745 160,153 379,807 12,075 4,334
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 1 2 - 22 39 8 2
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 1 2 - 22 39 8 2
-------------------------------------------------------------------------------------------------------------------------
Net Assets $46,528 871 1,745 160,131 379,768 12,067 4,332
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 1,287 283 373 788 2,079 1,512 880
Alterity Traditional - Option 2 - - - 74 - - -
Alterity Enhanced 17 24 372 521 2,273 2,122 536
Alterity Optional - Option 1 1 138 331 1,366 3,289 4,118 710
Alterity Optional - Option 2 - - - 37 41 6 14
Dimensions - Option 1 - - - 11 20 56 16
Dimensions - Option 2 - - 10 - 2 - 2
Dimensions - Option 3 - - - 29 155 15 -
Dimensions - Option 4 - - - 23 2 21 12
Dimensions - Option 5 - - - 1 - 7 -
Dimensions - Option 6 - - - - 13 - -
Rewards Traditional 55 257 294 1,459 3,745 2,785 1,493
Rewards Enhanced - 169 359 599 2,542 1,106 598
Valuemark II and III 31,548 - - 55,171 123,739 - -
Valuemark IV - Option 1 & 2
with standard contract charges 13,463 - - 94,712 231,762 - -
Valuemark IV - Option 1 & 2 with GMIB - - - - 57 - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB 94 - - - - - -
Charter Traditional 49 - 6 392 1,699 245 59
Charter Enhanced 7 - - 366 499 74 12
Contracts in annuity payment period 7 - - 4,582 7,851 - -
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $46,528 871 1,745 160,131 379,768 12,067 4,332
=========================================================================================================================
* Investment shares 3,033 99 134 12,753 26,979 529 508
Investments at cost $48,272 1,050 1,879 154,802 328,313 12,891 4,464
See accompanying notes to financial statements.
</TABLE>
5
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
OPPENHEIMER
MAIN PIMCO VIT PIMCO VIT SP STRATEGIC
STREET PIMCO VIT STOCKSPLUS TOTAL SP JENNISON PARTNERS SELIGMAN
GROWTH & HIGH YIELD GROWTH AND RETURN INTERNATIONAL FOCUSED GLOBAL
INCOME BOND INCOME BOND GROWTH GROWTH TECHNOLOGY
FUND/VA PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $17,193 7,382 4,287 27,851 848 1,767 7,239
-------------------------------------------------------------------------------------------------------------------------
Total Assets 17,193 7,382 4,287 27,851 848 1,767 7,239
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 10 18 3 224 2 1 3
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 10 18 3 224 2 1 3
-------------------------------------------------------------------------------------------------------------------------
Net Assets $17,183 7,364 4,284 27,627 846 1,766 7,236
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 2,822 527 330 2,754 25 183 1,116
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 2,976 1,980 597 2,705 63 298 1,165
Alterity Optional - Option 1 3,021 800 796 3,353 87 47 1,345
Alterity Optional - Option 2 30 22 - 41 16 - 11
Dimensions - Option 1 99 2 42 198 1 - 6
Dimensions - Option 2 6 1 1 26 - - 11
Dimensions - Option 3 98 13 - 636 - - 44
Dimensions - Option 4 - 7 15 76 10 - -
Dimensions - Option 5 1 - - 56 - - -
Dimensions - Option 6 6 - - - - - 5
Rewards Traditional 3,836 734 1,041 6,451 217 195 2,279
Rewards Enhanced 3,913 432 645 3,508 10 351 1,141
Valuemark II and III - 1,588 633 4,240 289 333 -
Valuemark IV - Option 1 & 2
with standard contract charges - 1,027 112 1,855 123 303 -
Valuemark IV - Option 1 & 2 with GMIB - - - 1 3 - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 286 62 44 1,047 2 - 50
Charter Enhanced 89 169 28 596 - 56 63
Contracts in annuity payment period - - - 84 - - -
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $17,183 7,364 4,284 27,627 846 1,766 7,236
=========================================================================================================================
* Investment shares 905 937 459 2,816 156 264 559
Investments at cost $18,175 7,443 4,518 28,248 852 1,797 10,512
See accompanying notes to financial statements.
</TABLE>
6
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
TEMPLETON TEMPLETON TEMPLETON
SELIGMAN TEMPLETON DEVELOPING GLOBAL TEMPLETON TEMPLETON INTERNATIONAL
SMALL-CAP ASSET MARKETS INCOME GROWTH INTERNATIONAL SMALLER
VALUE STRATEGY SECURITIES SECURITIES SECURITIES SECURITIES COMPANIES
PORTFOLIO FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $13,942 27,300 63,536 43,947 410,261 354,548 12,751
-------------------------------------------------------------------------------------------------------------------------
Total Assets 13,942 27,300 63,536 43,947 410,261 354,548 12,751
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 6 4 10 1 36 10 3
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 6 4 10 1 36 10 3
-------------------------------------------------------------------------------------------------------------------------
Net Assets $13,936 27,296 63,526 43,946 410,225 354,538 12,748
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 1,304 - 79 - 969 11 -
Alterity Traditional - Option 2 37 - - - - - -
Alterity Enhanced 2,275 - 55 - 1,422 9 -
Alterity Optional - Option 1 1,791 - 208 - 1,178 54 -
Alterity Optional - Option 2 43 - - - 16 13 -
Dimensions - Option 1 19 - - - 4 1 -
Dimensions - Option 2 1 - - - 9 - -
Dimensions - Option 3 82 - 89 - 157 - -
Dimensions - Option 4 102 - - - 9 - -
Dimensions - Option 5 1 - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 5,435 - 256 - 1,224 66 -
Rewards Enhanced 2,458 - 224 - 933 15 -
Valuemark II and III - 15,628 41,950 33,404 255,638 282,479 5,581
Valuemark IV - Option 1 & 2
with standard contract charges - 10,598 18,612 10,098 139,856 66,280 6,578
Valuemark IV - Option 1 & 2 with GMIB - - 1 - 16 9 -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 162 24 1,470 305 1,427 2,587 11
Charter Enhanced 226 26 82 13 528 380 67
Contracts in annuity payment period - 1,020 500 126 6,839 2,634 511
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $13,936 27,296 63,526 43,946 410,225 354,538 12,748
=========================================================================================================================
* Investment shares 1,069 1,760 13,294 3,858 36,999 29,922 1,256
Investments at cost $12,203 34,458 73,236 47,686 464,196 476,551 13,196
See accompanying notes to financial statements.
</TABLE>
7
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
TEMPLETON
PACIFIC VAN KAMPEN VAN KAMPEN VAN KAMPEN USAZ ALGER USAZ
GROWTH LIT LIT GROWTH EMERGING AMERICAN USAZ ALGER VAN KAMPEN
SECURITIES ENTERPRISE AND INCOME GROWTH GROWTH GROWTH GROWTH
FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND FUND
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $ - 652 2,264 10,024 6,178 2,855 5,457
-------------------------------------------------------------------------------------------------------------------------
Total Assets - 652 2,264 10,024 6,178 2,855 5,457
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: - 1 1 5 5 2 2
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities - 1 1 5 5 2 2
-------------------------------------------------------------------------------------------------------------------------
Net Assets $ - 651 2,263 10,019 6,173 2,853 5,455
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 - 93 288 409 389 61 49
Alterity Traditional - Option 2 - - - - 73 - -
Alterity Enhanced - 170 138 2,154 1,068 327 187
Alterity Optional - Option 1 - 37 661 1,318 932 621 566
Alterity Optional - Option 2 - - - 26 13 - 4
Dimensions - Option 1 - - - 47 45 - 22
Dimensions - Option 2 - - - 3 6 1 8
Dimensions - Option 3 - - - 24 8 5 -
Dimensions - Option 4 - - - 8 2 - 2
Dimensions - Option 5 - - - - - - 1
Dimensions - Option 6 - - - 3 - - -
Rewards Traditional - 250 947 1,036 932 612 350
Rewards Enhanced - 101 212 2,901 630 158 3,176
Valuemark II and III - - - 882 1,126 468 493
Valuemark IV - Option 1 & 2
with standard contract charges - - - 927 740 516 553
Valuemark IV - Option 1 & 2 with GMIB - - - 4 - 32 -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - 17 101 85 27 1
Charter Enhanced - - - 176 93 - 19
Contracts in annuity payment period - - - - 31 25 24
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $ - 651 2,263 10,019 6,173 2,853 5,455
=========================================================================================================================
* Investment shares - 44 142 354 670 308 568
Investments at cost $ - 885 2,340 10,283 6,283 2,880 5,431
See accompanying notes to financial statements.
</TABLE>
8
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
USAZ
USAZ ALLIANCE
USAZ USAZ USAZ ALLIANCE CAPITAL USAZ ALLIANCE USAZ
VAN KAMPEN VAN KAMPEN VAN KAMPEN CAPITAL LARGE CAP CAPITAL PIMCO
GROWTH AND AGGRESSIVE COMSTOCK TECHNOLOGY GROWTH GROWTH AND VALUE
INCOME FUND GROWTH FUND FUND FUND FUND INCOME FUND FUND
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $15,845 2,157 17,094 4,380 2,536 3,369 3,684
-------------------------------------------------------------------------------------------------------------------------
Total Assets 15,845 2,157 17,094 4,380 2,536 3,369 3,684
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 9 3 41 - - 1 1
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 9 3 41 - - 1 1
-------------------------------------------------------------------------------------------------------------------------
Net Assets $15,836 2,154 17,053 4,380 2,536 3,368 3,683
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 411 53 343 - 44 21 36
Alterity Traditional - Option 2 - - 92 - - - -
Alterity Enhanced 2,122 545 4,108 141 168 95 153
Alterity Optional - Option 1 1,729 221 1,426 36 218 83 16
Alterity Optional - Option 2 8 1 24 - 26 2 5
Dimensions - Option 1 11 3 1 - - - -
Dimensions - Option 2 7 - 7 - - - -
Dimensions - Option 3 57 - 31 - - 39 31
Dimensions - Option 4 21 2 87 11 - 21 -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - 34 - - - -
Rewards Traditional 1,329 308 1,500 62 348 191 16
Rewards Enhanced 7,162 164 4,151 7 119 104 55
Valuemark II and III 1,407 421 2,484 2,519 1,078 1,871 2,089
Valuemark IV - Option 1 & 2
with standard contract charges 1,125 427 2,370 1,602 533 834 1,180
Valuemark IV - Option 1 & 2 with GMIB - - 3 - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - 2 - - 1
Charter Traditional 218 9 177 - 2 - -
Charter Enhanced 87 - 143 - - 7 3
Contracts in annuity payment period 142 - 72 - - 100 98
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $15,836 2,154 17,053 4,380 2,536 3,368 3,683
=========================================================================================================================
* Investment shares 1,634 266 1,820 407 240 322 336
Investments at cost $15,935 2,163 17,288 4,295 2,483 3,285 3,466
See accompanying notes to financial statements.
</TABLE>
9
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
USAZ
USAZ USAZ TEMPLETON AZOA VIP AZOA VIP AZOA VIP
PIMCO PIMCO DEVELOPED DIVERSIFIED FIXED GLOBAL AZOA VIP
RENAISSANCE GROWTH AND MARKETS ASSETS INCOME OPPORTUNITIES GROWTH
FUND INCOME FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value* $7,712 2,095 197 4,921 9,662 565 3,334
-------------------------------------------------------------------------------------------------------------------------
Total Assets 7,712 2,095 197 4,921 9,662 565 3,334
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense
risk and administrative charges: 1 - 1 2 67 - 1
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 1 - 1 2 67 - 1
-------------------------------------------------------------------------------------------------------------------------
Net Assets $7,711 2,095 196 4,919 9,595 565 3,333
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 56 21 - 793 1,389 58 154
Alterity Traditional - Option 2 55 - - - - - -
Alterity Enhanced 500 37 - 805 341 59 295
Alterity Optional - Option 1 135 59 - 380 658 82 354
Alterity Optional - Option 2 10 4 - 100 9 3 -
Dimensions - Option 1 21 - - - 17 14 -
Dimensions - Option 2 - - - 10 3 - -
Dimensions - Option 3 17 30 - - 3 - 1
Dimensions - Option 4 - - - - 8 40 108
Dimensions - Option 5 - - - - 50 - 1
Dimensions - Option 6 - - - - - - -
Rewards Traditional 346 45 - 591 920 42 618
Rewards Enhanced 293 - - 586 840 66 831
Valuemark II and III 3,009 1,253 77 518 2,746 87 361
Valuemark IV - Option 1 & 2
with standard contract charges 3,155 437 119 1,071 2,004 102 610
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB 22 - - - - - -
Charter Traditional - 50 - 10 49 - -
Charter Enhanced - 131 - 6 173 - -
Contracts in annuity payment period 92 28 - 49 385 12 -
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $7,711 2,095 196 4,919 9,595 565 3,333
=========================================================================================================================
* Investment shares 700 206 19 509 933 87 435
Investments at cost $7,204 2,074 194 5,063 9,823 604 3,598
See accompanying notes to financial statements.
</TABLE>
10
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
DECEMBER 31, 2001
(IN THOUSANDS)
AZOA VIP
MONEY TOTAL
MARKET ALL
FUND FUNDS
-------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C>
Investments at net asset value* $120,702 5,149,778
-------------------------------------------------------------------------------------------------------------------------
Total Assets 120,702 5,149,778
-------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges: 481 1,297
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 481 1,297
-------------------------------------------------------------------------------------------------------------------------
Net Assets $120,221 5,148,481
=========================================================================================================================
Contract Owners' Equity: (note 6)
Contracts in accumulation period:
Alterity Traditional - Option 1 3,161 45,235
Alterity Traditional - Option 2 - 331
Alterity Enhanced 3,932 58,765
Alterity Optional - Option 1 4,061 62,384
Alterity Optional - Option 2 29 879
Dimensions - Option 1 14 834
Dimensions - Option 2 - 211
Dimensions - Option 3 119 3,086
Dimensions - Option 4 25 1,111
Dimensions - Option 5 52 242
Dimensions - Option 6 - 82
Rewards Traditional 15,943 97,895
Rewards Enhanced 8,290 73,007
Valuemark II and III 11,940 3,171,592
Valuemark IV - Option 1 & 2 with standard contract charges 6,965 1,473,322
Valuemark IV - Option 1 & 2 with GMIB 6 252
Valuemark IV - Option 3 with standard contract charges - -
Valuemark IV - Option 3 with GMIB 6 128
Charter Traditional 64,956 85,825
Charter Enhanced 639 9,321
Contracts in annuity payment period 83 63,979
-------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $120,221 5,148,481
=========================================================================================================================
* Investment shares 120,702 698,911
Investments at cost $120,702 5,769,899
See accompanying notes to financial statements.
</TABLE>
11
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
ALGER ALGER
AIM V.I. AIM V.I. ALGER AMERICAN AMERICAN
CAPITAL AIM INTERNATIONAL AIM V.I. AMERICAN LEVERAGED MIDCAP
APPRECIATION V.I. GROWTH EQUITY VALUE GROWTH ALLCAP GROWTH
FUND FUND FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ - 62 15 18 85 - -
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk
and administrative charges:
Alterity Traditional - Option 1 10 13 4 15 9 6 17
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 18 15 5 19 9 9 20
Alterity Optional - Option 1 13 15 7 22 7 6 26
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - 2 - 2 - - 1
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 43 33 19 42 55 27 44
Rewards Enhanced 42 26 5 29 29 9 44
Valuemark II and III - 200 - - 200 90 -
Valuemark IV - Option 1 & 2
with standard contract charges - 186 - - 178 88 -
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - 2 15 1 1 - 1
Charter Enhanced - - - 2 - - 1
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 126 492 55 132 488 235 154
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (126) (430) (40) (114) (403) (235) (154)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds 767 - 118 268 4,608 595 3,369
Realized gains (losses) on sales
of investments, net (925) (11,580) 648 (425) (6,548) (5,107) (1,053)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net (158) (11,580) 766 (157) (1,940) (4,512) 2,316
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (2,002) (4,755) (572) (779) (2,799) 1,010 (2,609)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains(loss) & unrealized
appreciation (depreciation)
on investments, net (2,160) (16,335) 194 (936) (4,739) (3,502) (293)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations $(2,286) (16,765) 154 (1,050) (5,142) (3,737) (447)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
12
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
ALGER FRANKLIN FRANKLIN FRANKLIN
AMERICAN AGGRESSIVE GLOBAL GLOBAL
SMALL DAVIS VA DAVIS VA DAVIS VA GROWTH COMMUNICATIONS HEALTH CARE
CAPITALIZATION FINANCIAL REAL ESTATE VALUE SECURITIES SECURITIES SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 1 3 161 65 17 260 54
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk
and administrative charges:
Alterity Traditional - Option 1 2 8 1 18 - - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 6 11 3 17 - - -
Alterity Optional - Option 1 4 9 10 31 - - -
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 6 25 11 39 - - -
Rewards Enhanced 3 19 2 21 - - -
Valuemark II and III - - - - 65 4,218 265
Valuemark IV - Option 1 & 2
with standard contract charges - - - - 59 446 194
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - - - 1 - 1 3
Charter Enhanced - - - 2 - - 2
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 21 72 27 129 124 4,665 464
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (20) (69) 134 (64) (107) (4,405) (410)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds - - 47 - - 79,107 4,294
Realized gains (losses) on
sales of investments, net (227) (74) (4) (70) (4,259) (85,470) 282
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net (227) (74) 43 (70) (4,259) (6,363) 4,576
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (114) (286) 20 (270) 1,900 (119,304) (10,597)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (341) (360) 63 (340) (2,359) (125,667) (6,021)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $(361) (429) 197 (404) (2,466) (130,072) (6,431)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
13
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN
GROWTH FRANKLIN LARGE CAP FRANKLIN NATURAL
AND INCOME FRANKLIN INCOME GROWTH MONEY RESOURCES FRANKLIN
SECURITIES HIGH INCOME SECURITIES SECURITIES MARKET SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 2,028 26,335 38,238 1,821 10,073 324 5,354
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk
and administrative charges:
Alterity Traditional - Option 1 13 - - - - - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 13 - - - - - -
Alterity Optional - Option 1 16 - - - - - -
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 2 - - - - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 25 - - - - - -
Rewards Enhanced 16 - - - - - -
Valuemark II and III 7,135 1,438 6,188 2,643 2,440 383 1,361
Valuemark IV - Option 1 & 2
with standard contract charges 1,985 860 1,506 2,151 940 111 528
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 8 5 18 6 343 1 9
Charter Enhanced 5 2 5 5 1 - 2
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 9,218 2,305 7,717 4,805 3,724 495 1,900
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (7,190) 24,030 30,521 (2,984) 6,349 (171) 3,454
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds 59,914 - 32,778 73,610 - - -
Realized gains (losses)
on sales of investments, net (1,289) (38,534) (9,546) 2,742 - 1,144 94
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net 58,625 (38,534) 23,232 76,352 - 1,144 94
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (76,740) 20,820 (55,882) (120,282) - (9,642) 4,535
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (18,115) (17,714) (32,650) (43,930) - (8,498) 4,629
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $(25,305) 6,316 (2,129) (46,914) 6,349 (8,669) 8,083
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
14
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
FRANKLIN FRANKLIN
RISING FRANKLIN FRANKLIN FRANKLIN FRANKLIN ZERO
DIVIDENDS S&P 500 FRANKLIN TECHNOLOGY U.S. VALUE COUPON
SECURITIES INDEX SMALL CAP SECURITIES GOVERNMENT SECURITIES FUND
FUND FUND FUND FUND FUND FUND 2005
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 261 358 1,404 - 26,604 134 3,354
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk
and administrative charges:
Alterity Traditional - Option 1 8 - 15 - 11 - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 10 - 13 - 10 - -
Alterity Optional - Option 1 8 - 14 - 15 - -
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - 1 - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 22 - 37 - 52 - -
Rewards Enhanced 19 - 14 - 26 - -
Valuemark II and III 3,348 304 2,187 45 4,183 206 577
Valuemark IV - Option 1 & 2
with standard contract charges 1,084 248 1,618 44 1,069 188 204
Valuemark IV - Option 1 & 2 with GMIB - - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 7 - 12 - 29 3 -
Charter Enhanced 3 - 2 - 8 2 -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 4,509 552 3,912 89 5,404 399 781
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (4,248) (194) (2,508) (89) 21,200 (265) 2,573
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds 18,577 8 - - - 673 591
Realized gains (losses)
on sales of investments, net (363) (3,450) (628) (3,573) 1,025 1,294 523
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net 18,214 (3,442) (628) (3,573) 1,025 1,967 1,114
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation (depreciation) on investments 22,499 (2,014) (55,682) 910 (55) 637 211
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net 40,713 (5,456) (56,310) (2,663) 970 2,604 1,325
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $36,465 (5,650) (58,818) (2,752) 22,170 2,339 3,898
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
15
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
FRANKLIN J.P. MORGAN
ZERO J.P. MORGAN U.S. MUTUAL MUTUAL OPPENHEIMER
COUPON INTERNATIONAL DISCIPLINED DISCOVERY SHARES GLOBAL OPPENHEIMER
FUND OPPORTUNITIES EQUITY SECURITIES SECURITIES SECURITIES HIGH INCOME
2010 PORTFOLIO PORTFOLIO FUND FUND FUND/VA FUND/VA
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 3,267 10 8 3,508 7,311 29 152
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 - 3 4 6 16 6 4
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced - 1 5 3 13 6 3
Alterity Optional - Option 1 - 2 4 8 22 11 4
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - 1 - 1
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional - 2 5 14 25 19 11
Rewards Enhanced - 2 5 3 20 6 2
Valuemark II and III 484 - - 888 1,928 - -
Valuemark IV - Option 1 & 2
with standard contract charges 206 - - 1,529 3,581 - -
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - 76 - 12 18 4 -
Charter Enhanced - - - 4 8 - -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 690 86 23 2,467 5,632 52 25
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 2,577 (76) (15) 1,041 1,679 (23) 127
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds 2,218 133 - 21,688 23,946 540 -
Realized gains (losses)
on sales of investments, net 396 (78) (84) 3,467 9,796 16 (60)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net 2,614 55 (84) 25,155 33,742 556 (60)
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (3,222) (131) (68) (27,616) (14,287) (669) (94)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (608) (76) (152) (2,461) 19,455 (113) (154)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $ 1,969 (152) (167) (1,420) 21,134 (136) (27)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
16
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
OPPENHEIMER PIMCO PIMCO VIT SP STRATEGIC
MAIN STREET VIT HIGH STOCKSPLUS PIMCO SP JENNISON PARTNERS SELIGMAN
GROWTH & YIELD GROWTH AND VIT TOTAL INTERNATIONAL FOCUSED GLOBAL
INCOME BOND INCOME RETURN BOND GROWTH GROWTH TECHNOLOGY
FUND/VA PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 38 162 98 404 2 - -
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 14 4 3 17 - 1 13
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 12 8 2 13 - 1 13
Alterity Optional - Option 1 2 7 4 21 - - 14
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - 1 - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 1 - - 5 - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 31 6 2 55 1 1 30
Rewards Enhanced 27 3 3 19 - 2 16
Valuemark II and III - 2 1 8 - - -
Valuemark IV - Option 1 & 2
with standard contract charges - 3 - 4 - 1 -
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 1 - - 3 5 - -
Charter Enhanced - - - 2 - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 88 33 15 148 6 6 86
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (50) 129 83 256 (4) (6) (86)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - 493 - - 1,166
Realized gains (losses)
on sales of investments, net (481) (24) (130) (19) 504 (40) (841)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net (481) (24) (130) 474 504 (40) 325
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (424) (41) (101) (431) (4) (30) (1,829)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (905) (65) (231) 43 500 (70) (1,504)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $(955) 64 (148) 299 496 (76) (1,590)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
17
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
TEMPLETON TEMPLETON TEMPLETON
SELIGMAN TEMPLETON DEVELOPING GLOBAL TEMPLETON TEMPLETON INTERNATIONAL
SMALL-CAP ASSET MARKETS INCOME GROWTH INTERNATIONAL SMALLER
VALUE STRATEGY SECURITIES SECURITIES SECURITIES SECURITIES COMPANIES
PORTFOLIO FUND FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ - 514 756 1,843 9,373 13,420 563
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 9 - 1 - 6 - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 11 - 1 - 8 - -
Alterity Optional - Option 1 11 - 2 - 11 - -
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 1 - - - 1 - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 39 - 1 - 9 - -
Rewards Enhanced 19 - 2 - 9 - -
Valuemark II and III - 266 719 584 4,299 4,880 109
Valuemark IV - Option 1 & 2
with standard contract charges - 194 326 138 2,203 1,136 120
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 1 - 49 4 25 105 11
Charter Enhanced 1 1 2 - 6 5 1
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 92 461 1,103 726 6,577 6,126 241
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (92) 53 (347) 1,117 2,796 7,294 322
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds 25 3,348 - - 78,164 100,569 -
Realized gains (losses)
on sales of investments, net 22 (2,556) (20,050) (1,870) (6,848) (113,359) (682)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net 47 792 (20,050) (1,870) 71,316 (12,790) (682)
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 1,597 (5,397) 15,899 1,227 (87,499) (72,175) (199)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net 1,644 (4,605) (4,151) (643) (16,183) (84,965) (881)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $1,552 (4,552) (4,498) 474 (13,387) (77,671) (559)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
18
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
TEMPLETON
PACIFIC VAN KAMPEN VAN KAMPEN VAN KAMPEN USAZ ALGER USAZ
GROWTH LIT LIT GROWTH EMERGING AMERICAN USAZ ALGER VAN KAMPEN
SECURITIES ENTERPRISE AND INCOME GROWTH GROWTH GROWTH GROWTH
FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 1,025 2 1 - - - -
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 - 2 3 1 2 - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced - 3 3 8 8 1 1
Alterity Optional - Option 1 - 1 9 4 6 4 2
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional - 7 20 4 7 4 2
Rewards Enhanced - 2 5 26 3 1 21
Valuemark II and III 91 - - 3 5 2 1
Valuemark IV - Option 1 & 2
with standard contract charges 25 - - 4 4 4 2
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - - - - - - -
Charter Enhanced - - - - 1 - -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 116 15 40 50 36 16 29
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 909 (13) (39) (50) (36) (16) (29)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds - 71 15 - - - -
Realized gains (losses)
on sales of investments, net (8,572) (179) (8) (41) (51) (18) (19)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net (8,572) (179) (8) (41) (51) (18) (19)
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 3,796 (52) (74) (259) (105) (25) 26
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (4,776) (231) (82) (300) (156) (43) 7
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $(3,867) (244) (121) (350) (192) (59) (22)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
19
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
USAZ
USAZ ALLIANCE USAZ
USAZ USAZ USAZ ALLIANCE CAPITAL ALLIANCE USAZ
VAN KAMPEN VAN KAMPEN VAN KAMPEN CAPITAL LARGE CAP CAPITAL PIMCO
GROWTH AND AGGRESSIVE COMSTOCK TECHNOLOGY GROWTH GROWTH AND VALUE
INCOME FUND GROWTH FUND FUND FUND FUND INCOME FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 63 - 51 - - 5 1
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 2 - 2 - - - -
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced 8 2 22 - - - -
Alterity Optional - Option 1 8 1 9 - - - -
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional 11 2 11 - - - -
Rewards Enhanced 86 1 40 - - - -
Valuemark II and III 5 1 13 4 2 11 4
Valuemark IV - Option 1 & 2
with standard contract charges 4 1 13 3 1 1 2
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional 1 - - - - - -
Charter Enhanced - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 125 8 110 7 3 12 6
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (62) (8) (59) (7) (3) (7) (5)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - 34 - - - -
Realized gains (losses)
on sales of investments, net (31) (5) (47) - - 1 3
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net (31) (5) (13) - - 1 3
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (90) (6) (194) 85 53 84 218
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net (121) (11) (207) 85 53 85 221
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $(183) (19) (266) 78 50 78 216
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
20
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
USAZ
USAZ USAZ TEMPLETON AZOA VIP AZOA VIP AZOA VIP
PIMCO PIMCO DEVELOPED DIVERSIFIED FIXED GLOBAL AZOA VIP
RENAISSANCE GROWTH AND MARKETS ASSETS INCOME OPPORTUNITIES GROWTH
FUND INCOME FUND FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ - 5 - 100 295 - 9
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 - - - 6 16 1 2
Alterity Traditional - Option 2 - - - - - - -
Alterity Enhanced - - - 5 3 - 2
Alterity Optional - Option 1 - - - 2 8 1 1
Alterity Optional - Option 2 - - - - - - -
Dimensions - Option 1 - - - - - - -
Dimensions - Option 2 - - - - - - -
Dimensions - Option 3 - - - - - - -
Dimensions - Option 4 - - - - - - -
Dimensions - Option 5 - - - - - - -
Dimensions - Option 6 - - - - - - -
Rewards Traditional - - - 3 14 1 4
Rewards Enhanced - - - 1 14 1 3
Valuemark II and III 5 8 - 10 26 - 5
Valuemark IV - Option 1 & 2
with standard contract charges 6 1 - 7 33 - 6
Valuemark IV - Option 1 & 2 with GMIB - - - - - - -
Valuemark IV - Option 3
with standard contract charges - - - - - - -
Valuemark IV - Option 3 with GMIB - - - - - - -
Charter Traditional - - - - - - -
Charter Enhanced - - - - 2 - -
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 11 9 - 34 116 4 23
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (11) (4) - 66 179 (4) (14)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain
distributions on mutual funds - - - - 59 - -
Realized gains (losses)
on sales of investments, net 6 - 4 (64) 50 (13) (137)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net 6 - 4 (64) 109 (13) (137)
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 508 20 3 (33) (189) (25) (97)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains (loss) & unrealized
appreciation (depreciation)
on investments, net 514 20 7 (97) (80) (38) (234)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from operations $503 16 7 (31) 99 (42) (248)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
21
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONT.)
FOR THE PERIOD ENDED DECEMBER 31, 2001
(IN THOUSANDS)
AZOA VIP
MONEY TOTAL
MARKET ALL
FUND FUNDS
----------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C>
Dividends reinvested in fund shares $795 160,839
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk and administrative charges:
Alterity Traditional - Option 1 27 321
Alterity Traditional - Option 2 - -
Alterity Enhanced 35 379
Alterity Optional - Option 1 39 421
Alterity Optional - Option 2 - -
Dimensions - Option 1 - 1
Dimensions - Option 2 - -
Dimensions - Option 3 1 19
Dimensions - Option 4 - -
Dimensions - Option 5 - -
Dimensions - Option 6 - -
Rewards Traditional 229 1,050
Rewards Enhanced 76 722
Valuemark II and III 19 51,859
Valuemark IV - Option 1 & 2 with standard contract charges 13 23,258
Valuemark IV - Option 1 & 2 with GMIB - -
Valuemark IV - Option 3 with standard contract charges - -
Valuemark IV - Option 3 with GMIB - -
Charter Traditional 79 860
Charter Enhanced - 75
----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 518 78,965
----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 277 (81,874)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized appreciation (depreciation) on
investments:
Realized capital gain distributions on mutual funds - 511,793
Realized gains (losses) on sales of investments, net - (307,501)
----------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
on investments, net - 204,292
----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments - (603,692)
----------------------------------------------------------------------------------------------------------------------------------
Total realized gains(loss) & unrealized
appreciation (depreciation) on investments, net - (399,400)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $277 (317,526)
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
22
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
AIM V.I. AIM V.I.
CAPITAL APPRECIATION AIM V.I. INTERNATIONAL EQUITY AIM V.I.
FUND GROWTH FUND FUND VALUE FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (126) (26) (430) (623) (40) (6) (114) (16)
Realized gains (losses)
on investments, net (158) 167 (11,580) 1,174 766 123 (157) 154
Net change in unrealized appreciation
(depreciation) on investments (2,002) (1,267) (4,755)(15,376) (572) (456) (779) (621)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (2,286) (1,126) (16,765)(14,825) 154 (339) (1,050) (483)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 5,017 6,777 6,179 8,833 2,451 2,084 9,630 3,741
Transfers between funds 570 856 (6,303) 50,074 (846) 283 1,873 862
Surrenders and terminations (281) (58) (5,257) (6,181) (83) (20) (271) (39)
Rescissions (175) (37) (92) (262) (69) (5) (731) (70)
Bonus 128 346 125 211 48 95 193 126
Other transactions (note 2) (1) - (15) (12) - - (1) -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from contract transactions 5,258 7,884 (5,363) 52,663 1,501 2,437 10,693 4,620
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 2,972 6,758 (22,128) 37,838 1,655 2,098 9,643 4,137
Net assets at beginning of period 6,758 - 47,697 9,859 2,098 - 4,137 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 9,730 6,758 25,569 47,697 3,753 2,098 13,780 4,137
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
23
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
ALGER AMERICAN ALGER AMERICAN ALGER AMERICAN SMALL
ALGER AMERICAN LEVERAGED MIDCAP GROWTH CAPITALIZATION
GROWTH PORTFOLIO ALLCAP PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (403) (455) (235) (327) (154) (20) (20) (1)
Realized gains (losses)
on investments, net (1,940) 3,635 (4,512) 1,250 2,316 11 (227) 52
Net change in unrealized
appreciation (depreciation)
on investments (2,799) (10,582) 1,010 (9,927) (2,609) (219) (114) (194)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (5,142) (7,402) (3,737) (9,004) (447) (228) (361) (143)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 2,409 6,148 1,508 4,399 7,374 5,154 1,742 747
Transfers between funds (5,221) 32,769 (4,008) 21,150 2,939 725 (162) 153
Surrenders and terminations (4,461) (4,525) (2,260) (3,297) (299) (54) (24) (7)
Rescissions (99) (103) (73) (61) (509) (53) (182) -
Bonus 79 235 55 137 160 218 36 25
Other transactions (note 2) (11) (9) (7) (7) (1) - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (7,304) 34,515 (4,785) 22,321 9,664 5,990 1,410 918
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (12,446) 27,113 (8,522) 13,317 9,217 5,762 1,049 775
Net assets at beginning of period 37,546 10,433 20,818 7,501 5,762 - 775 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 25,100 37,546 12,296 20,818 14,979 5,762 1,824 775
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
24
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
DAVIS VA FRANKLIN
DAVIS VA REAL ESTATE DAVIS VA AGGRESSIVE GROWTH
FINANCIAL PORTFOLIO PORTFOLIO VALUE PORTFOLIO SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (69) (3) 134 6 (64) (8) (107) (60)
Realized gains (losses)
on investments, net (74) 48 43 18 (70) 28 (4,259) (473)
Net change in unrealized appreciation
(depreciation) on investments (286) 191 20 48 (270) 43 1,900 (4,235)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (429) 236 197 72 (404) 63 (2,466) (4,768)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 4,012 1,283 2,520 1,692 8,745 2,697 399 465
Transfers between funds 1,478 1,283 179 44 4,251 727 (2,617) 16,960
Surrenders and terminations (212) (24) (103) (27) (201) (16) (1,245) (306)
Rescissions (46) (39) (13) (242) (93) (66) - -
Bonus 95 45 66 49 129 86 - -
Other transactions (note 2) - - - - - - (3) -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 5,327 2,548 2,649 1,516 12,831 3,428 (3,466) 17,119
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 4,898 2,784 2,846 1,588 12,427 3,491 (5,932) 12,351
Net assets at beginning of period 2,784 - 1,588 - 3,491 - 12,351 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $7,682 2,784 4,434 1,588 15,918 3,491 6,419 12,351
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
25
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
FRANKLIN FRANKLIN GLOBAL FRANKLIN GROWTH
GLOBAL COMMUNICATIONS HEALTH CARE AND INCOME FRANKLIN
SECURITIES FUND SECURITIES FUND SECURITIES FUND HIGH INCOME FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (4,405) 6,285 (410) (391) (7,190) 38,818 24,030 (2,100)
Realized gains (losses)
on investments, net (6,363) 184,430 4,576 1,909 58,625 98,723 (38,534) (38,973)
Net change in unrealized
appreciation (depreciation)
on investments (119,304)(452,896) (10,597) 9,915 (76,740) (31,093) 20,820 11,375
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (130,072)(262,181) (6,431) 11,433 (25,305) 106,448 6,316 (29,698)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 1,023 4,766 729 1,118 12,275 6,516 3,030 2,301
Transfers between funds (35,224) 11,165 (4,923) 22,546 (46) (46,211) (7,353) (19,980)
Surrenders and terminations (72,181)(177,607) (6,103) (4,060) (125,512)(203,679) (34,962) (64,551)
Rescissions (6) (461) (11) (47) (279) (238) (48) (215)
Bonus 1 - - - 179 31 - -
Other transactions (note 2) (234) (351) (13) (9) (297) (324) (67) (87)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (106,621)(162,488) (10,321) 19,548 (113,680)(243,905) (39,400) (82,532)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (236,693)(424,669) (16,752) 30,981 (138,985)(137,457) (33,084)(112,230)
Net assets at beginning of period 478,743 903,412 41,664 10,683 739,646 877,103 172,885 285,115
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $242,050 478,743 24,912 41,664 600,661 739,646 139,801 172,885
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
26
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
FRANKLIN FRANKLIN
FRANKLIN LARGE CAP GROWTH FRANKLIN NATURAL RESOURCES
INCOME SECURITIES FUND SECURITIES FUND MONEY MARKET FUND SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 30,521 68,097 (2,984) (3,912) 6,349 12,226 (171) (320)
Realized gains (losses)
on investments, net 23,232 16,322 76,352 39,748 - - 1,144 1,997
Net change in unrealized
appreciation (depreciation)
on investments (55,882) 18,797 (120,282) (19,040) - - (9,642) 10,450
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (2,129) 103,216 (46,914) 16,796 6,349 12,226 (8,669) 12,127
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 5,278 4,199 2,866 6,594 63,044 20,974 246 558
Transfers between funds (2,188) (46,170) (28,336) 64,766 (25,523) 42,276 (5,765) 1,652
Surrenders and terminations (109,810) (176,655) (51,149) (72,326) (132,677) (148,303) (6,337) (8,899)
Rescissions (160) (546) (26) (265) (1) (1,070) (3) -
Bonus 2 - - - - - - -
Other transactions (note 2) (256) (286) (121) (129) (77) (82) (19) (22)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (107,134) (219,458) (76,766) (1,360) (95,234) (86,205) (11,878) (6,711)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (109,263) (116,242) (123,680) 15,436 (88,885) (73,979) (20,547) 5,416
Net assets at beginning of period 602,667 718,909 394,312 378,876 271,886 345,865 44,866 39,450
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $493,404 602,667 270,632 394,312 183,001 271,886 24,319 44,866
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
27
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
FRANKLIN
FRANKLIN RISING DIVIDENDS FRANKLIN S&P 500 FRANKLIN
REAL ESTATE FUND SECURITIES FUND INDEX FUND SMALL CAP FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 3,454 7,775 (4,248) 7,620 (194) (510) (2,508) (6,570)
Realized gains (losses)
on investments, net 94 (864) 18,214 41,052 (3,442) (62) (628) 96,703
Net change in unrealized appreciation
(depreciation) on investments 4,535 29,768 22,499 4,876 (2,014) (3,493) (55,682)(159,623)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 8,083 36,679 36,465 53,548 (5,650) (4,065) (58,818) (69,490)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 1,410 2,404 8,657 2,390 1,309 2,110 7,862 11,337
Transfers between funds (3,227) (8,782) 10,470 (38,780) 10,995 36,340 (12,603) 36,962
Surrenders and terminations (22,772) (35,211) (59,330) (95,725) (7,293) (6,331) (48,626) (78,307)
Rescissions (11) (106) (179) (215) (1) (45) (127) (260)
Bonus 1 - 173 15 2 - 100 196
Other transactions (note 2) (60) (62) (131) (136) (15) (11) (114) (141)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (24,659) (41,757) (40,340)(132,451) 4,997 32,063 (53,508) (30,213)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (16,576) (5,078) (3,875) (78,903) (653) 27,998 (112,326) (99,703)
Net assets at beginning of period 143,235 148,313 328,067 406,970 42,166 14,168 364,580 464,283
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $126,659 143,235 324,192 328,067 41,513 42,166 252,254 364,580
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
28
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
FRANKLIN TECHNOLOGY FRANKLIN U.S. FRANKLIN VALUE FRANKLIN ZERO COUPON
SECURITIES FUND GOVERNMENT FUND SECURITIES FUND FUND 2000
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (89) (53) 21,200 (5,399) (265) (136) - 2,962
Realized gains (losses)
on investments, net (3,573) (254) 1,025 (9,520) 1,967 386 - (7,321)
Net change in unrealized
appreciation (depreciation)
on investments 910 (3,705) (55) 53,735 637 3,212 - 6,377
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (2,752) (4,012) 22,170 38,816 2,339 3,462 - 2,018
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 231 453 15,516 4,621 1,507 465 - 160
Transfers between funds 196 12,281 20,054 (19,493) 14,520 7,043 - (44,460)
Surrenders and terminations (1,023) (468) (71,435) (101,827) (5,254) (3,180) - (17,061)
Rescissions - (83) (372) (472) (83) (1) - -
Bonus - - 226 112 10 - - -
Other transactions (note 2) (3) - (146) (154) (9) (4) - (20)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (599) 12,183 (36,157) (117,213) 10,691 4,323 - (61,387)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (3,351) 8,171 (13,987) (78,397) 13,030 7,785 - (59,369)
Net assets at beginning of period 8,171 - 383,755 462,152 18,528 10,743 - 59,369
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 4,820 8,171 369,768 383,755 31,558 18,528 - -
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
29
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
J.P. MORGAN
FRANKLIN FRANKLIN INTERNATIONAL J.P. MORGAN
ZERO COUPON ZERO COUPON OPPORTUNITIES U.S. DISCIPLINED
FUND 2005 FUND 2010 PORTFOLIO EQUITY PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 2,573 (708) 2,577 (696) (76) (2) (15) -
Realized gains (losses)
on investments, net 1,114 741 2,614 (3,028) 55 10 (84) -
Net change in unrealized appreciation
(depreciation) on investments 211 5,482 (3,222) 11,831 (131) (46) (68) (67)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 3,898 5,515 1,969 8,107 (152) (38) (167) (67)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 1,570 106 2,037 472 644 540 1,444 626
Transfers between funds 2,305 1,357 (2,141) (4,809) (180) 77 (133) 55
Surrenders and terminations (9,172) (10,527) (7,568)(12,224) 2 (1) (44) (6)
Rescissions (12) (2) (4) (2) (23) (28) (3) (10)
Bonus - - - - 15 15 22 28
Other transactions (note 2) (18) (18) (17) (19) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (5,327) (9,084) (7,693)(16,582) 458 603 1,286 693
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,429) (3,569) (5,724) (8,475) 306 565 1,119 626
Net assets at beginning of period 55,860 59,429 52,252 60,727 565 - 626 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $54,431 55,860 46,528 52,252 871 565 1,745 626
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
30
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
MUTUAL DISCOVERY MUTUAL SHARES OPPENHEIMER GLOBAL OPPENHEIMER
SECURITIES FUND SECURITIES FUND SECURITIES FUND/VA HIGH INCOME FUND/VA
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 1,041 2,816 1,679 5,197 (23) (20) 127 (5)
Realized gains (losses)
on investments, net 25,155 6,320 33,742 20,181 556 13 (60) -
Net change in unrealized appreciation
(depreciation) on investments (27,616) 6,943 (14,287) 15,515 (669) (147) (94) (37)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (1,420) 16,079 21,134 40,893 (136) (154) (27) (42)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 4,918 2,097 16,077 4,741 6,266 3,256 3,304 1,035
Transfers between funds (892) 3,092 13,945 (24,409) 2,625 550 580 22
Surrenders and terminations (22,808) (31,654) (47,841)(64,011) (393) (23) (283) (25)
Rescissions (116) (36) (262) (1,869) (66) (80) (343) (6)
Bonus 70 12 248 4 89 133 66 51
Other transactions (note 2) (56) (60) (121) (123) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (18,884) (26,549) (17,954)(85,667) 8,521 3,836 3,324 1,077
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (20,304) (10,470) 3,180 (44,774) 8,385 3,682 3,297 1,035
Net assets at beginning of period 180,435 190,905 376,588 421,362 3,682 - 1,035 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $160,131 180,435 379,768 376,588 12,067 3,682 4,332 1,035
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
31
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
OPPENHEIMER PIMCO VIT PIMCO VIT PIMCO VIT
MAIN STREET GROWTH & HIGH YIELD BOND STOCKSPLUS GROWTH TOTAL RETURN BOND
INCOME FUND/VA PORTFOLIO AND INCOME PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (50) (28) 129 17 83 24 256 26
Realized gains (losses)
on investments, net (481) 3 (24) 1 (130) - 474 4
Net change in unrealized appreciation
(depreciation) on investments (424) (557) (41) (25) (101) (138) (431) 35
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (955) (582) 64 (7) (148) (114) 299 65
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 10,691 4,651 3,621 579 2,269 755 14,127 1,553
Transfers between funds 2,729 1,534 3,282 20 1,465 119 11,623 86
Surrenders and terminations (532) (45) (209) - (86) (8) (334) (15)
Rescissions (710) (39) (37) - (20) (28) (237) -
Bonus 224 218 41 10 48 32 370 90
Other transactions (note 2) (1) - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 12,401 6,319 6,698 609 3,676 870 25,549 1,714
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 11,446 5,737 6,762 602 3,528 756 25,848 1,779
Net assets at beginning of period 5,737 - 602 - 756 - 1,779 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $17,183 5,737 7,364 602 4,284 756 27,627 1,779
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
32
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
SP STRATEGIC PARTNERS
SP JENNISON FOCUSED SELIGMAN GLOBAL SELIGMAN SMALL-CAP
INTERNATIONAL GROWTH GROWTH PORTFOLIO TECHNOLOGY PORTFOLIO VALUE PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (4) - (6) - (86) (24) (92) (8)
Realized gains (losses)
on investments, net 504 - (40) - 325 114 47 22
Net change in unrealized appreciation
(depreciation) on investments (4) - (30) - (1,829) (1,443) 1,597 142
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 496 - (76) - (1,590) (1,353) 1,552 156
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 284 - 860 - 3,450 5,208 6,937 1,294
Transfers between funds 286 - 966 - 771 924 4,001 171
Surrenders and terminations (228) - (2) - (173) (45) (218) (20)
Rescissions - - (2) - (129) (79) (176) (8)
Bonus 8 - 20 - 84 169 180 67
Other transactions (note 2) - - - - (1) - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 350 - 1,842 - 4,002 6,177 10,724 1,504
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 846 - 1,766 - 2,412 4,824 12,276 1,660
Net assets at beginning of period - - - - 4,824 - 1,660 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 846 - 1,766 - 7,236 4,824 13,936 1,660
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
33
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
TEMPLETON TEMPLETON
TEMPLETON ASSET DEVELOPING MARKETS GLOBAL INCOME TEMPLETON GROWTH
STRATEGY FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 53 (612) (347) (634) 1,117 (823) 2,796 2,320
Realized gains (losses)
on investments, net 792 (754) (20,050)(10,051) (1,870) (4,123) 71,316 79,505
Net change in unrealized appreciation
(depreciation) on investments (5,397) (147) 15,899 (36,805) 1,227 6,052 (87,499) (86,038)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (4,552) (1,513) (4,498)(47,490) 474 1,106 (13,387) (4,213)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 150 923 1,321 2,112 254 480 8,605 6,583
Transfers between funds (4,198) (4,875) (8,045)(10,061) (3,639) (5,518) (18,884) (11,363)
Surrenders and terminations (6,875) (9,633) (16,910)(32,079) (11,648) (19,031) (87,372) (137,782)
Rescissions - (40) (6) (172) - (140) (154) (154)
Bonus - - 21 5 - - 85 16
Other transactions (note 2) (15) (20) (46) (65) (26) (31) (199) (232)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (10,938) (13,645) (23,665)(40,260) (15,059) (24,240) (97,919) (142,932)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (15,490) (15,158) (28,163)(87,750) (14,585) (23,134) (111,306) (147,145)
Net assets at beginning of period 42,786 57,944 91,689 179,439 58,531 81,665 521,531 668,676
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 27,296 42,786 63,526 91,689 43,946 58,531 410,225 521,531
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
34
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
TEMPLETON TEMPLETON TEMPLETON PACIFIC
INTERNATIONAL INTERNATIONAL GROWTH VAN KAMPEN LIT
SECURITIES FUND SMALLER COMPANIES FUND SECURITIES FUND ENTERPRISE PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 7,294 (8,052) 322 83 909 (866) (13) (4)
Realized gains (losses)
on investments, net (12,790) 161,623 (682) 537 (8,572) (9,301) (179) (3)
Net change in unrealized
appreciation (depreciation)
on investments (72,175)(197,938) (199) (752) 3,796 (8,300) (52) (182)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (77,671) (44,367) (559) (132) (3,867) (18,467) (244) (189)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 5,311 5,236 525 543 100 858 602 974
Transfers between funds 741 (13,352) (3,710) 1,101 (40,099) (6,184) (545) 110
Surrenders and terminations (90,925)(160,091) (2,642) (4,661) (2,729) (18,580) (75) (15)
Rescissions (23) (459) - (38) (1) (39) (36) -
Bonus 4 - - - - 1 24 45
Other transactions (note 2) (223) (263) (6) (7) (9) (40) - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions (85,115)(168,929) (5,833) (3,062) (42,738) (23,984) (30) 1,114
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (162,786)(213,296) (6,392) (3,194) (46,605) (42,451) (274) 925
Net assets at beginning of period 517,324 730,620 19,140 22,334 46,605 89,056 925 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 354,538 517,324 12,748 19,140 - 46,605 651 925
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
35
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
VAN KAMPEN LIT
GROWTH AND INCOME VAN KAMPEN EMERGING USAZ ALGER USAZ ALGER
PORTFOLIO GROWTH PORTFOLIO AMERICAN GROWTH FUND GROWTH FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (39) 13 (50) - (36) - (16) -
Realized gains (losses)
on investments, net (8) 77 (41) - (51) - (18) -
Net change in unrealized appreciation
(depreciation) on investments (74) - (259) - (105) - (25) -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (121) 90 (350) - (192) - (59) -
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 2,014 1,268 5,947 - 3,079 - 1,179 -
Transfers between funds (1,396) 347 4,572 - 3,336 - 1,821 -
Surrenders and terminations (57) (12) (163) - (93) - (95) -
Rescissions (22) (17) (133) - (17) - (19) -
Bonus 108 61 146 - 60 - 26 -
Other transactions (note 2) - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 647 1,647 10,369 - 6,365 - 2,912 -
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 526 1,737 10,019 - 6,173 - 2,853 -
Net assets at beginning of period 1,737 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,263 1,737 10,019 - 6,173 - 2,853 -
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
36
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
USAZ VAN KAMPEN USAZ VAN KAMPEN
USAZ VAN KAMPEN GROWTH AND AGGRESSIVE USAZ VAN KAMPEN
GROWTH FUND INCOME FUND GROWTH FUND COMSTOCK FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (29) - (62) - (8) - (59) -
Realized gains (losses)
on investments, net (19) - (31) - (5) - (13) -
Net change in unrealized appreciation
(depreciation) on investments 26 - (90) - (6) - (194) -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations (22) - (183) - (19) - (266) -
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 3,114 - 9,996 - 1,181 - 9,923 -
Transfers between funds 2,399 - 6,225 - 1,041 - 7,599 -
Surrenders and terminations (126) - (395) - (24) - (268) -
Rescissions (40) - (132) - (49) - (176) -
Bonus 130 - 325 - 24 - 241 -
Other transactions (note 2) - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 5,477 - 16,019 - 2,173 - 17,319 -
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 5,455 - 15,836 - 2,154 - 17,053 -
Net assets at beginning of period - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $5,455 - 15,836 - 2,154 - 17,053 -
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
37
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
USAZ ALLIANCE USAZ ALLIANCE
USAZ ALLIANCE CAPITAL CAPITAL LARGE CAP CAPITAL GROWTH USAZ PIMCO
TECHNOLOGY FUND GROWTH FUND AND INCOME FUND VALUE FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (7) - (3) - (7) - (5) -
Realized gains (losses)
on investments, net - - - - 1 - 3 -
Net change in unrealized appreciation
(depreciation) on investments 85 - 53 - 84 - 218 -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 78 - 50 - 78 - 216 -
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 195 - 462 - 273 - 224 -
Transfers between funds 4,116 - 2,023 - 3,046 - 3,346 -
Surrenders and terminations (9) - (11) - (35) - (90) -
Rescissions - - - - (2) - (13) -
Bonus - - 12 - 8 - - -
Other transactions (note 2) - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 4,302 - 2,486 - 3,290 - 3,467 -
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 4,380 - 2,536 - 3,368 - 3,683 -
Net assets at beginning of period - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $4,380 - 2,536 - 3,368 - 3,683 -
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
38
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
USAZ PIMCO
USAZ PIMCO GROWTH AND INCOME USAZ TEMPLETON AZOA VIP DIVERSIFIED
RENAISSANCE FUND FUND DEVELOPED MARKETS FUND ASSETS FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (11) - (4) - - - 66 45
Realized gains (losses)
on investments, net 6 - - - 4 - (64) 102
Net change in unrealized appreciation
(depreciation) on investments 508 - 20 - 3 - (33) (111)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 503 - 16 - 7 - (31) 36
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 1,006 - 116 - - - 2,396 349
Transfers between funds 6,368 - 1,965 - 189 - 888 1,675
Surrenders and terminations (169) - (4) - - - (385) (155)
Rescissions (13) - - - - - (3) -
Bonus 16 - 2 - - - 44 2
Other transactions (note 2) - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 7,208 - 2,079 - 189 - 2,940 1,871
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 7,711 - 2,095 - 196 - 2,909 1,907
Net assets at beginning of period - - - - - - 2,010 103
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $7,711 - 2,095 - 196 - 4,919 2,010
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
39
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
AZOA VIP FIXED AZOA VIP GLOBAL AZOA VIP AZOA VIP
INCOME FUND OPPORTUNITIES FUND GROWTH FUND MONEY MARKET FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 179 36 (4) - (14) (8) 277 76
Realized gains (losses)
on investments, net 109 43 (13) - (137) 21 - -
Net change in unrealized appreciation
(depreciation) on investments (189) 28 (25) (16) (97) (182) - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 99 107 (42) (16) (248) (169) 277 76
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-
All Products (note 5)
Purchase payments 3,999 395 231 103 1,840 337 41,862 19,581
Transfers between funds 5,128 1,045 277 (1) 582 912 70,277 (8,475)
Surrenders and terminations (1,206) (119) 8 - (166) (125) (3,344) (72)
Rescissions (78) - - - - (32) (2,367) (406)
Bonus 82 14 3 2 65 6 1,727 1,085
Other transactions (note 2) - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from contract transactions 7,925 1,335 519 104 2,321 1,098 108,155 11,713
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 8,024 1,442 477 88 2,073 929 108,432 11,789
Net assets at beginning of period 1,571 129 88 - 1,260 331 11,789 -
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $9,595 1,571 565 88 3,333 1,260 120,221 11,789
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
40
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (continued)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(IN THOUSANDS)
TOTAL ALL FUNDS
----------------------------------------------------------------------------------------------------------------------------------
2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Investment income (loss), net $ 81,874 121,016
Realized gains (losses)
on investments, net 204,292 672,520
Net change in unrealized appreciation
(depreciation) on investments (603,692) (850,843)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (317,526) (57,307)
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions-All Products (note 5)
Purchase payments 361,261 181,481
Transfers between funds 9,947 61,185
Surrenders and terminations (1,084,858) (1,709,703)
Rescissions (8,813) (8,646)
Bonus 6,446 3,993
Other transactions (note 2) (2,339) (2,724)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (718,356) (1,474,254)
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,035,882) (1,531,561)
Net assets at beginning of period 6,184,363 7,715,924
----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 5,148,481 6,184,363
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
41
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements
December 31, 2001
1. ORGANIZATION
Allianz Life Variable Account B (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz Life) and is
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940 (as
amended). The Variable Account was established on May 31, 1985 and commenced
operations January 24, 1989. Accordingly, it is an accounting entity wherein all
segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz Life and are held for
the benefit of the owners and other persons entitled to payments under variable
annuity contracts issued through the Variable Account and underwritten by
Allianz Life. The assets of the Variable Account, equal to the reserves and
other liabilities of the Variable Account, are not chargeable with liabilities
that arise from any other business which Allianz Life may conduct.
The Variable Account's sub-accounts invest, at net asset values, in one or more
of select portfolios of AIM Variable Insurance Funds, Inc., The Alger American
Fund, Allianz of America Inc., Davis Variable Account Fund, Inc., Franklin
Templeton Variable Insurance Products Trust (formerly, Franklin Valuemark
Funds), J.P. Morgan Series Trust II, Oppenheimer Variable Account Funds, Pacific
Investment Management Company, Prudential Investments Fund Management, LLC,
Seligman Portfolios, Inc., USAllianz Advisers, LLC., and Van Kampen Life
Investment Trust, in accordance with the selection made by the contract owner.
Not all portfolios are available as investment options for the products which
comprise the Variable Account. The investment advisers and Specialist Manager
for each portfolio are listed in the following table.
<TABLE>
<CAPTION>
Portfolio Investment Adviser Specialist Manager\Adviser
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund AIM Advisors, Inc. N\A
AIM V.I. Growth Fund AIM Advisors, Inc. N\A
AIM V.I. International Equity Fund AIM Advisors, Inc. N\A
AIM V.I. Value Fund AIM Advisors, Inc. N\A
Alger American Growth Portfolio Fred Alger Management, Inc. N\A
Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc. N\A
Alger American MidCap Growth Portfolio Fred Alger Management, Inc. N\A
Alger American Small Capitalization Portfolio Fred Alger Management, Inc. N\A
Davis VA Financial Portfolio Davis Selected Advisers, LP N\A
Davis VA Real Estate Portfolio Davis Selected Advisers, LP N\A
Davis VA Value Portfolio Davis Selected Advisers, LP N\A
Franklin Aggressive Growth Securities Fund* Franklin Advisory Services, LLC N\A
Franklin Global Communications
Securities Fund* Franklin Advisers, Inc. N\A
Franklin Global Health Care Securities Fund* Franklin Advisers, Inc. N\A
Franklin Growth and Income Securites Fund * Franklin Advisers, Inc. N\A
Franklin High Income Fund* Franklin Advisers, Inc. N\A
Franklin Income Securities Fund* Franklin Advisers, Inc. N\A
Franklin Large Cap Growth Securities Fund* Franklin Advisers, Inc. N\A
Franklin Money Market Fund* Franklin Advisers, Inc. N\A
Franklin Natural Resources Securities Fund* Franklin Advisers, Inc. N\A
Franklin Real Estate Fund* Franklin Advisers, Inc. N\A
Franklin Rising Dividends Securities Fund * Franklin Advisory Services, LLC N\A
Franklin S&P 500 Index Fund* Franklin Advisers, Inc. N\A
Franklin Small Cap Fund * Franklin Advisers, Inc. N\A
Technology Securities Fund* Franklin Advisers, Inc. N\A
Franklin U.S. Government Fund * Franklin Advisory Services, LLC N\A
Franklin Value Securities Fund* Franklin Advisory Services, LLC N\A
</TABLE>
42
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
1. ORGANIZATION (CONTINUED)
Portfolio (Continued) Investment Adviser (Continued) Specialist Manager \ Adviser (Cont.)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Franklin Zero Coupon 2005 Fund Franklin Advisers, Inc. N\A
Franklin Zero Coupon 2010 Fund Franklin Advisers, Inc. N\A
J.P. Morgan International
Opportunities Portfolio J.P. Morgan Investment Management Inc. N\A
J.P. Morgan US Disciplined Equity Portfolio J.P. Morgan Investment Management Inc. N\A
Mutual Discovery Securities Fund * Franklin Mutual Advisers, LLC N\A
Mutual Shares Securities Fund * Franklin Mutual Advisers, LLC N\A
Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc. N\A
Oppenheimer High Income Fund/VA OppenheimerFunds, Inc. N\A
Oppenheimer Main Street Growth &
Income Fund/VA OppenheimerFunds, Inc. N\A
PIMCO VIT High Yield Bond Portfolio Pacific Investment Management Company N\A
PIMCO VIT StocksPLUS Growth and
Income Portfolio Pacific Investment Management Company N\A
PIMCO VIT Total Return Bond Portfolio Pacific Investment Management Company N\A
SP Jennison International Growth Portfolio * Prudential Investments Fund
Management, LLC N\A
SP Strategic Partners Focused Growth
Portfolio * Investments Fund Management , LLC N\A
Seligman Global Technology Portfolio J & W Seligman & Co. Inc. N\A
Seligman Small Cap Value Portfolio J & W Seligman & Co. Inc. N\A
Templeton Asset Strategy Fund* Templeton Global Advisors Limited N\A
Templeton Developing Markets Securities Fund * Templeton Asset Management Ltd. N\A
Templeton Global Income Securities Fund* Franklin Advisers, Inc. N\A
Templeton Growth Securities Fund * Templeton Global Advisors Limited N\A
Templeton International Securities Fund* Franklin Advisers, Inc. N\A
Templeton International Smaller
Companies Fund* Templeton Investment Counsel, Inc. N\A
Van Kampen LIT Enterprise Portfolio Van Kampen Asset Management, Inc. N\A
Van Kampen LIT Growth and Income Portfolio Van Kampen Asset Management, Inc. N\A
Van Kampen LIT Emerging Growth Portfolio * Van Kampen Asset Management, Inc. N\A
USAZ Alger American Growth Fund * USAllianz Advisers, LLC Van Kampen Asset Management, Inc
USAZ Alger Growth Fund * USAllianz Advisers, LLC Van Kampen Asset Management, Inc
USAZ Van Kampen Growth Fund * USAllianz Advisers, LLC Van Kampen Investment Advisory Corp.
USAZ Van Kampen Growth and Income Fund * USAllianz Advisers, LLC Van Kampen Asset Management, Inc.
USAZ Van Kampen Aggressive Growth Fund * USAllianz Advisers, LLC Van Kampen Investment Advisory Corp.
USAZ Van Kampen Comstock Fund * USAllianz Advisers, LLC Van Kampen Asset Management, Inc.
USAZ Alliance Capital Technology Fund * USAllianz Advisers, LLC Alliance Capital Management L.P.
USAZ Alliance Capital Large Cap Growth Fund * USAllianz Advisers, LLC Alliance Capital Management L.P.
USAZ Alliance Capital Growth and Income Fund * USAllianz Advisers, LLC Alliance Capital Management L.P.
USAZ PIMCO Value Fund * USAllianz Advisers, LLC PIMCO Advisors L.P.
USAZ PIMCO Renaissance Fund * USAllianz Advisers, LLC PIMCO Advisors L.P.
USAZ PIMCO Growth & Income Fund * USAllianz Advisers, LLC PIMCO Advisors L.P.
USAZ Templeton Developed Markets Fund * USAllianz Advisers, LLC Templeton Investment Counsel, LLC.
AZOA VIP Diversified Assets Fund * Allianz of America, Inc. N\A
AZOA VIP Fixed Income Fund * Allianz of America, Inc. N\A
AZOA VIP Global Opportunities Fund * Allianz of America, Inc. N\A
AZOA VIP Growth Fund * Allianz of America, Inc. N\A
AZOA VIP Money Market Fund * Allianz of America, Inc. N\A
* Portfolio contains class 2 shares which assess 12b-1 fees.
</TABLE>
43
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENTS
Investments of the Variable Account are valued daily at market value using net
asset values provided by the investment advisers of the portfolios.
Realized investment gains include realized gain distributions received from the
respective portfolios and gains on the sale of portfolio shares as determined by
the average cost method. Realized gain distributions are reinvested in the
respective portfolios. Dividend distributions received from the portfolios are
reinvested in additional shares of the portfolios and are recorded as income to
the Variable Account on the ex-dividend date.
Two Fixed Account investment options are available to deferred annuity contract
owners. A Flexible Fixed Option is available to all deferred annuity contract
owners and a Dollar Cost Averaging Option is available to Valuemark II,
Valuemark III, USAllianz Valuemark IV, USAllianz Rewards, and USAllianz Alterity
deferred annuity contract owners. These accounts are comprised of equity and
fixed income investments which are part of the general assets of Allianz Life.
The liabilities of the Fixed Accounts are part of the general obligations of
Allianz Life and are not included in the Variable Account. The guaranteed
minimum rate of return on the Fixed Accounts is 3%.
Available investment options, inlcuding the date the investment option was
available for each product, as of December 31, 2001 are listed in the following
table.
<TABLE>
<CAPTION>
USAllianz USAllianz USAllianz USAllianz Valuemark USAllianz Valuemark
Portfolio Alterity Charter Dimensions Rewards II and III Valuemark IV Income Plus
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000
AIM V.I. International Equity Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000
AIM V.I. Value Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000
AZOA VIP Diversified Assets Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/11/1999 11/11/1999 11/11/1999
AZOA VIP Fixed Income Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/11/1999 11/11/1999 11/11/1999
AZOA VIP Global Opportunities Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/5/2001 11/5/2001 11/5/2001
AZOA VIP Growth Fund 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/11/1999 11/11/1999 11/11/1999
AZOA VIP Money Market Fund 2/1/2000 11/5/2001 3/5/2001 5/5/2000 11/5/2001 11/5/2001 11/5/2001
Alger American MidCap Growth Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Davis VA Financial Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Davis VA Value Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Franklin Global Communications
Securities Fund 11/5/200 11/6/1999 11/5/2001 11/5/2001 1/24/1989 2/3/1997 7/1/1994
Franklin Growth and Income
Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 1/24/1989 2/3/1997 7/1/1994
Franklin High Income Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 1/24/1989 2/3/1997 7/1/1994
Franklin Income Securities Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 1/24/1989 2/3/1997 7/1/1994
Franklin Large Cap Growth
Securities Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 5/1/1996 2/3/1997 5/1/1996
Franklin Real Estate Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 1/24/1989 2/3/1997 7/1/1994
Franklin Rising Dividends
Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 1/27/1992 2/3/1997 7/1/1994
Franklin S&P 500 Index Fund 11/5/2001 5/1/2001 11/5/2001 11/5/2001 11/11/1999 11/11/1999 11/11/1999
Franklin Small Cap Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 11/1/1995 2/3/1997 11/1/1995
Franklin U.S. Government Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 3/14/1989 2/3/1997 5/1/2001
Franklin Value Securities Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 5/1/1998 5/1/1998 5/1/1998
Franklin Zero Coupon Fund 2005 11/5/2001 11/5/2001 11/5/2001 11/5/2001 3/14/1989 2/3/1997 5/1/2001
</TABLE>
44
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
<TABLE>
<CAPTION>
INVESTMENTS (CONTINUED)
USAllianz USAllianz USAllianz USAllianz Valuemark USAllianz Valuemark
Portfolio Alterity Charter Dimensions Rewards II and III Valuemark IV Income Plus
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Franklin Zero Coupon Fund 2010 11/5/2001 11/5/2001 11/5/2001 11/5/2001 3/14/1989 2/3/1997 5/1/2001
Mutual Discovery Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 11/8/1996 2/3/1997 11/8/1996
Mutual Shares Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 11/8/1996 2/3/1997 11/8/1996
Oppenheimer Global
Securities Fund/VA 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Oppenheimer High
Income Fund/VA 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Oppenheimer Main Street
Growth & Income Fund/VA 2/1/2000 1/26/2001 3/5/2001 /5/2000
PIMCO VIT High Yield Bond Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/5/2001 11/5/2001 11/5/2001
PIMCO VIT StocksPLUS
Growth and Income Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/5/2001 11/5/2001 11/5/2001
PIMCO VIT Total Return
Bond Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000 11/5/2001 11/5/2001 11/5/2001
SP Jennison International
Growth Portfolio 12/15/2000 12/15/2000 3/5/2001 12/15/2000 12/15/2000 12/15/2000 5/1/2001
SP Strategic Partners Focused
Growth Portfolio 12/15/2000 12/15/2000 3/5/2001 12/15/2000 12/15/2000 12/15/2000 5/1/2001
Seligman Global Technology Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Seligman Small-Cap Value Portfolio 2/1/2000 1/26/2001 3/5/2001 5/5/2000
Templeton Developing Markets
Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 3/15/1994 2/3/1997 7/1/1994
Templeton Growth Securities Fund 2/1/2000 1/6/1999 3/5/2001 5/5/2000 3/15/1994 2/3/1997 7/1/1994
Templeton International
Securities Fund 11/5/2001 1/6/1999 11/5/2001 11/5/2001 1/27/1992 2/3/1997 7/1/1994
USAZ Alliance Capital Growth
and Income Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ Alliance Capital Large
Cap Growth Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ Alliance Capital Technology Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ American Growth Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
USAZ Growth Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
USAZ PIMCO Growth and Income Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ PIMCO Renaissance Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ PIMCO Value Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ Templeton Developed
Markets Fund 11/6/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001 11/5/2001
USAZ Van Kampen Aggressive Growth Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
USAZ Van Kampen Comstock Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
USAZ Van Kampen Growth Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
USAZ Van Kampen Growth and Income Fund 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
Van Kampen LIT Emerging Growth 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001 5/1/2001
<CAPTION>
During the period ended December 31, 2001 and the year ended December 31, 2000,
several portfolios changed their name as summarized, with the effective date of
the change, in the following table.
Current Portfolio Name Prior Portfolio Name Effective Date
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Franklin Growth and Income Securities Fund Franklin Growth and Income Fund May 1, 2000
Seligman Technology Fund Seligman Henderson Technology Fund May 1, 2000
Templeton Asset Strategy Fund Templeton Global Asset Allocation Fund May 1, 2000
Templeton Developing Markets Securities Fund Templeton Developing Markets Equity Fund May 1, 2000
Templeton Growth Securities Fund Templeton Global Growth Fund May 1, 2000
Templeton International Securities Fund Templeton International Equity Fund May 1, 2000
Templeton Pacific Growth Securities Fund Templeton Pacific Growth Fund May 1, 2000
Seligman Global Technology Portfolio Seligman Global Technology Fund May 1, 2001
Seligman Small Cap Value Portfolio Seligman Small Cap Value Fund May 1, 2001
SP Jennison International Growth Portfolio SP Jennison International Growth Fund May 1, 2001
SP Strategic Partners Focused Growth Portfolio SP Strategic Partners Focused Growth Fund May 1, 2001
</TABLE>
45
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
<TABLE>
<CAPTION>
INVESTMENTS (CONTINUED)
Current Portfolio Name Prior Portfolio Name Effective Date
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AZOA VIP Diversified Assets Fund USAllianz VIP Diversified Assets Fund November 5, 2001
AZOA VIP Fixed Income Fund USAllianz VIP Fixed Income Fund November 5, 2001
AZOA VIP Global Opportunities Fund USAllianz VIP Global Opportunities Fund November 5, 2001
VIP Growth Fund USAllianz VIP Growth Fund November 5, 2001
AZOA VIP Money Market Fund USAllianz VIP Money Market Fund November 5, 2001
USAZ Alger American Growth Fund USAllianz American Growth Fund November 5, 2001
USAZ Alger Growth Fund USAllianz Strategic Growth Fund November 5, 2001
USAZ Van Kampen Growth Fund USAllianz Capital Growth Fund November 5, 2001
USAZ Van Kampen Growth and Income Fund USAllianz Growth and Income Fund November 5, 2001
USAZ Van Kampen Aggressive Growth Fund USAllianz Aggressive Growth Fund November 5, 2001
USAZ Van Kampen Comstock Fund USAllianz Comstock Fund November 5, 2001
Van Kampen LIT Emerging Growth Portfolio Van Kampen LIT Emerging Growth November 5, 2001
</TABLE>
During the period ended December 31, 2001 and the year ended December 31, 2000,
several portfolios were closed to new money. The portfolio name and effective
date of the closure are summarized in the following table.
Portfolio Date Closed
----------------------------------------------------------------
Alger American Growth Portfolio May 1,2001
Alger American Leveraged AllCap Portfolio May 1,2001
Van Kampen LIT Enterprise Portfolio May 1,2001
Van Kampen LIT Growth and Income Portfolio May 1,2001
AIM V.I. Growth Fund November 5, 2001
Alger American Small Capitalization Portfolio November 5, 2001
Davis VA Real Estate Portfolio November 5, 2001
Franklin Aggressive Growth Securities Fund November 5, 2001
Franklin Global Health Care Securities Fund November 5, 2001
Franklin Money Market Fund November 5, 2001
Franklin Natural Resources Securities Fund November 5, 2001
Franklin Technology Securities Fund November 5, 2001
J.P. Morgan International Opportunities Portfolio November 5, 2001
J.P. Morgan US Disciplined Equity Portfolio November 5, 2001
Templeton Asset Strategy Fund November 5, 2001
Templeton Global Income Securities Fund November 5, 2001
Templeton International Smaller Companies Fund November 5, 2001
The Franklin Zero Coupon Fund 2000 and the Templeton Pacific Growth Fund were
closed on December 15, 2000 and March 29, 2001, respectively.
CONTRACTS IN ANNUITY PAYMENT PERIOD
Annuity reserves are computed for currently payable contracts according to the
1983 Individual Annuity Mortality Table, using an assumed investment return
(AIR) equal to the AIR of the specific contracts, either 3%, 5%, or 7%. Charges
to annuity reserves for mortality and risk expense are reimbursed to Allianz
Life if the reserves required are less than originally estimated. If additional
reserves are required, Allianz Life reimburses the account.
46
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREMIUM BONUS
A premium bonus is awarded to the contract owner of the USAllianz Rewards
product at the time of deposit. The bonus paid is based on the following
schedule.
Net Deposit Bonus Paid
-------------------------------------------
$15,000 to 24,999 4%
$25,000 to 99,999 5%
$100,000 to 999,999 6%
$1,000,000 to 4.999 million 7%
$5,000,000 or more 8%
The bonus is vested over three years, therefore if the contract owner surrenders
the policy before the full vesting period a portion of the bonus can be lost.
The accumulated gain/loss on the bonus is 100% vested as it is earned. The
vesting rates are presented in the following schedule.
Months following Deposit Amount Vested
---------------------------------------------
0 to 12 0%
13 to 24 35%
25 to 36 70%
37+ 100%
EXPENSES
ASSET BASED EXPENSES
A mortality and expense risk charge and an administrative charge are deducted
from the Variable Account on a daily basis. The charges, on an annual basis, are
summarized in the following table.
<TABLE>
<CAPTION>
Mortality and Expense Administrative
Contract Risk Charge Charge
-------------------------------------------------------------------------------------
<S> <C> <C>
USAllianz Alterity Traditional - Option 1 1.25% 0.15%
USAllianz Alterity Traditional - Option 2 1.45% 0.15%
USAllianz Alterity - Enhanced 1.75% 0.15%
USAllianz Alterity Optional - Option 1 1.55% 0.15%
USAllianz Alterity Optional - Option 2 1.75% 0.15%
USAllianz Charter - Traditional 1.00% 0.15%
USAllianz Charter - Enhanced 1.20% 0.15%
USAllianz Dimensions - Plan 1 1.35% 0.15%
USAllianz Dimensions - Plan 2 1.55% 0.15%
USAllianz Dimensions - Plan 3 1.65% 0.15%
USAllianz Dimensions - Plan 4 1.85% 0.15%
USAllianz Dimensions - Plan 5 1.65% 0.15%
USAllianz Dimensions - Plan 6 1.75% 0.15%
USAllianz Rewards - Traditional 1.50% 0.15%
USAllianz Rewards - Enhanced 1.70% 0.15%
Valuemark II & III 1.25% 0.15%
USAllianz Valuemark IV -
Death Benefit Option 1 & 2 with
standard contract charges. 1.34% 0.15%
USAllianz Valuemark IV -
Death Benefit Option 3
with standard contract charges. 1.44% 0.15%
USAllianz Valuemark IV -
Death Benefit Option 1 & 2 with GMIB 1.64% 0.15%
USAllianz Valuemark IV - Death Benefit Option 3 with GMIB. 1.74% 0.15%
Valuemark Income Plus 1.25% 0.15%
</TABLE>
47
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES (CONTINUED)
USAllianz Alterity provides a Traditional Guaranteed Minimum Protection Benefit
(Traditional GMPB). The contract holder can elect the Enhanced Guaranteed
Minimum Death Benefit (Enhanced GMDB), the Enhanced Guaranteed Minimum Income
Benefit (Enhanced GMIB) or both (together, Enhanced Guaranteed Minimum
Protection Benefit (Enhanced GMPB)). These features provide for a guaranteed
death benefit and a guaranteed annuity income benefit (which provides for
guaranteed minimum payments during the Payout Phase.)
The M&E charge and administrative charge for USAllianz Alterity can be
summarized as follows:
Charges for Charges for
Contract with Contract with
Traditional Enhanced
(includes 0.15% of administration charge) GMIB GMIB
------------- -------------
Traditional Guaranteed
Minimum Death Benefit 1.40% 1.70%
(Traditional - Option 1) (Optional - Option 1)
Earnings Protection Guaranteed
Minimum Death Benefit 1.60% 1.90%
(Traditional - Option 2) (Optional - Option 2)
Enhanced Guaranteed
Minimum Death Benefit 1.70% 1.90%
(Optional - Option 1) (Enhanced)
USAllianz Dimensions offers guaranteed value protection (GVP). The base option
of the GVP is the guaranteed principal protector (GPP) which will guarantee the
return of principal adjusted for withdrawals. The second option includes the GPP
as well as a guaranteed performance accumulator (GPA) which will guarantee
locked in gains every ten years, with the minimum guarantee of two times the
principal adjusted for withdrawals, at the 20th anniversary.
Along with the guaranteed value protection, USAllianz Dimensions offers three
different types of guaranteed minimum death benefits (GMDB). The base coverage
GMDB is the return of principal (ROP) which will guarantee the greater of the
contract value or principal adjusted for withdrawals. The double principal GMDB
guarantees the greater of ROP or highest contract anniversary value through age
80 in contract years one to five. After the fifth contract year, it will
guarantee two times the principal adjusted for withdrawals.
The last option is the earnings protection GMDB which will guarantee the greater
of the ROP, or the contract value plus an additional 40% (25%, if issue age is
greater than 70) of gain on the contract, this amount will be limited to the
amount of principal adjusted for withdrawals.
48
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES (CONTINUED)
The mortality and expense charge and administration charge for USAllianz
Dimensions can be summarized as follows:
Return of Double Earnings
(includes 0.15% of Principal Principal Protection
administration charge) GMDB GMDB GMDB
---- ---- ----
Guaranteed Principal 1.50% 1.80% 1.70%
Protector (GPP) (Plan 1) (Plan 3) (Plan 5)
Guaranteed Principal 1.70% 2.00% 1.90%
Accumulator (GPA) (Plan 2) (Plan 4) (Plan 6)
USAllianz Dimensions also includes a pay only with performance provision. If the
contract earns less than a 10% gross return (prior to the mortality and expense
charge and administration charge) in one year, the contract owner does not have
to pay a GVP charge.
If the contract earns greater than a 10% gross return in one year, the contract
owner will pay an additional 2% to 3% GVP charge.
USAllianz Valuemark IV offers the following Guaranteed Income and Death Benefit
Options:
<TABLE>
<CAPTION>
Guaranteed Income and Annual
Death Benefit Options Expenses Benefit
---------------------- -------- --------
<S> <C> <C>
Death Benefit Option 1 with 1.49% The Death Benefit Option 1 provides the greater of the highest 6th year contract
standard contract charges. anniversary value up to age 80; 5% annual increasing death benefit up to age 80;
contract value; or purchase payments less withdrawals for contracts in the accumulation
phase.
Death Benefit Option 2 with 1.49% The Death Benefit Option 2 provides the greatest of the highest contract
standard contract charges. anniversary value up to age 80; contract value; or purchase payments less withdrawals
for contracts in the accumulation phase.
Death Benefit Option 3 with 1.59% The Earnings Protection Death Benefit Option 3 guarantees the greater of purchase
standard contract charges. payments less withdrawals or contract value +40% of gains (25% if issue age is 70
or older), for contracts in the accumulation phase. (Gains are capped at total
purchase payments.)
Death Benefit Option 1 1.79% The Income and Death Benefit Option 1 provides the greater of the highest 6th year
with GMIB contract anniversary up to age 80; 5% annual increasing death benefit up to age 80;
contract value; or purchase payments less withdrawals for contracts in the
accumulation or payout phase.
Death Benefit Option 2 1.79% The Income and Death Benefit Option 2 provides the greatest of the highest contract
with GMIB anniversary value up to age 80; contract value; or purchase payments less withdrawals
for contracts in the accumulation or payout phase.
Death Benefit Option 3 1.89% The Earnings Protection Death Benefit and Enhanced Income Benefit Option 3
with GMIB guarantees the greater of purchase payments less withdrawals or contract value +40%
of gains (25% if issue age is 70 or older), for contracts in the accumulation or payout
phase. (Gains are capped at total purchase payments.)
</TABLE>
49
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES (CONTINUED)
CONTRACT BASED EXPENSES
A contract maintenance charge is paid by the contract owner annually from each
deferred annuity contract by liquidating contract units at the end of the
contract year and at the time of full surrender. The amount of the charge is $30
each year for Valuemark II, Valuemark III, and USAllianz Valuemark IV contracts
and $40 for USAllianz Alterity, USAllianz Charter, USAllianz Dimensions, and
USAllianz Rewards contracts. Contract maintenance charges paid by the contract
owners during the period ended December 31, 2001 and the year ended December 31,
2000 were $2,715,176 and $3,276,916 respectively. These contract charges are
reflected in the Statements of Changes in Net Assets as other transactions.
A contingent deferred sales charge is deducted from the contract value at the
time of surrender on Valuemark II, Valuemark III, USAllianz Valuemark IV,
USAllianz Alterity, USAllianz Dimensions and USAllianz Rewards deferred annuity
contracts. USAllianz Dimensions includes a nursing home waiver for withdrawal
charges. The amount of the contingent deferred sales charge is shown below.
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
----------------------------------------------------------------------------------------------------------
Years Since Payment Valuemark II Valuemark III Valuemark IV USAllianz Alterity USAllianz Dimensions USAllianz Rewards
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0-1 5% 6% 6% 7% 8% 8.5%
1-2 5% 5% 6% 6% 7% 8.5%
2-3 4% 4% 6% 5% 7% 8.5%
3-4 3% 3% 5% 4% 6% 8.5%
4-5 1.5% 1.5% 4% 3% 5% 8%
5-6 0% 0% 3% 0% 4% 7%
6-7 - - 2% - 3% 6%
7-8 - - 0% - 0% 5%
8-9 - - - - - 4%
9-10 - - - - - 3%
10 + 0%
</TABLE>
Total contingent deferred sales charges paid by the contract owners during the
period ended December 31, 2001 and the year ended December 31, 2000 were
$4,968,678 and $9,784,497, respectively.
A systematic withdrawal plan is available to Valuemark II, Valuemark III,
USAllianz Valuemark IV, USAllianz Alterity, USAllianz Dimensions, and USAllianz
Rewards deferred annuity contract owners which allows a portion of the contract
value to be withdrawn without incurring a contingent deferred sales charge. The
exercise of the systematic withdrawal plan in any contract year replaces the
penalty free privilege for that year. USAllianz Dimensions allows 10% of
purchase payments to be withdrawn in contract years one to five and 20% of the
purchase payments to be withdrawn after contract year five without penalty.
Currently, twelve transfers are permitted each contract year. Thereafter, the
fee is $25 per transfer for all products, or 2% of the amount transferred, if
less, for Valuemark II, Valuemark III, and USAllianz Valuemark IV. Currently,
transfers associated with any dollar cost averaging program are not counted.
Total transfer charges paid by the contract owners during the period ended
December 31, 2001 and the year ended December 31, 2000 were $109,509 and
$135,934, respectively. Transfer charges are reflected in the Statements of
Changes in Net Assets as other transactions. Net transfers from the Fixed
Accounts for the period ended December 31, 2001 and the year ended December 31,
2000 were $9,947,289 and $61,184,108, respectively.
50
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES (CONTINUED)
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the contract values. Allianz Life may, in its sole
discretion, pay taxes when due and deduct that amount from the contract value at
a later date. Payment at an earlier date does not waive any right Allianz Life
may have to deduct such amounts at a later date.
A rescission is defined as a contract that is returned to the Company by the
Contract Owner and canceled within the free-look period, generally within 10
days.
CAPITALIZATION
Allianz Life may provide capital for the establishment of new portfolios as
investment options of the Variable Account. The capitalization transactions were
as follows during the period ended December 31, 2001.
Capitalization Date of
Portfolio Amount Capitalization
--------------------------------------------------------------------------------
USAZ Alger American Growth Fund 1,000,000 5/1/2001
USAZ Alger Growth Fund 1,000,000 5/1/2001
USAZ Van Kampen Growth Fund 1,000,000 5/1/2001
USAZ Van Kampen Growth and Income Fund 1,000,000 5/1/2001
USAZ Van Kampen Aggressive Growth Fund 1,000,000 5/1/2001
USAZ Van Kampen Comstock Fund 1,000,000 5/1/2001
USAZ Alliance Capital Technology Fund 5,000,000 11/5/2001
USAZ Alliance Capital Large Cap Fund 5,000,000 11/5/2001
USAZ Alliance Capital Growth and Income Fund 5,000,000 11/5/2001
USAZ PIMCO Value Fund 3,000,000 11/5/2001
USAZ PIMCO Renaissance Fund 3,000,000 11/5/2001
USAZ PIMCO Growth & Income Fund 3,000,000 11/5/2001
USAZ Templeton Developed Markets 5,000,000 11/5/2001
Allianz Life will begin to recapture seed capital after the investment option
reaches $3,000,000 in market value, excluding seed money. No more than 50,000
shares for every million dollars of market value that exceeds the $3,000,000
will be recaptured, so long as the trade activity for the day is in a buy
position. The seed capital recapture activity for the period ending December 31,
2001 is summarized in the table below.
<TABLE>
<CAPTION>
Seed Realized Seed Unrealized
Capital Gain\Loss on Remaining Capital Gain\Loss as of
Portfolio Recaptured Recapture Seed Capital Market Value 12/31/2001
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USAZ Alger American Growth Fund $1,000,000 (69,000) 0 0 0
USAZ Alger Growth Fund 0 0 1,000,000 927,000 (73,000)
USAZ Van Kampen Growth Fund 1,000,000 (43,200) 0 0 0
USAZ Van Kampen Growth and Income Fund 1,000,000 6,327 0 0 0
USAZ Van Kampen Aggressive Growth Fund 0 0 1,000,000 810,000 (190,000)
USAZ Van Kampen Comstock Fund 1,000,000 (7,750) 0 0 0
USAZ Allianz Capital Technology Fund 1,000,000 101,000 4,000,000 4,308,000 308,000
USAZ Allianz Capital Large Cap Fund 0 0 5,000,000 5,275,000 275,000
USAZ Alliance Capital Growth and Income Fund 300,000 10,500 4,700,000 4,919,326 219,326
USAZ PIMCO Value Fund 500,000 36,000 2,500,000 2,740,684 240,684
USAZ PIMCO Renaissance Fund 1,900,000 166,600 1,100,000 1,212,222 112,222
USAZ PIMCO Growth & Income Fund 0 0 3,000,000 3,048,930 48,930
USAZ Templeton Developed Markets 0 0 5,000,000 5,125,000 125,000
-------------------------------------------------------------------------------------------------------------------------
Total $7,700,000 200,477 27,300,000 28,366,162 1,066,162
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
3. FEDERAL INCOME TAXES
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life.
Allianz Life does not expect to incur any federal income taxes in the operation
of the Variable Account. If, in the future, Allianz Life determines that the
Variable Account may incur federal income taxes, it may then assess a charge
against the Variable Account for such taxes.
4. PURCHASES AND SALES OF INVESTMENTS (IN THOUSANDS)
The cost of purchases and proceeds from sales of investments for year ended
December 31, 2001 are as follows.
Cost of Proceeds
Purchases from Sales
------------ ------------
AIM V.I. Capital Appreciation Fund $ 7,640 $ 1,760
AIM V.I. Growth Fund 10,562 16,389
AIM V.I. International Equity Fund 139,605 138,032
AIM V.I. Value Fund 13,740 2,906
Alger American Growth Portfolio 11,729 14,841
Alger American Leveraged AllCap Portfolio 2,965 7,418
Alger American MidCap Growth Portfolio 18,365 5,496
Alger American Small Capitalization Portfolio 2,667 1,275
Davis VA Financial Portfolio 13,987 1,230
Davis VA Real Estate Portfolio 3,980 1,169
Davis VA Value Portfolio 7,038 1,783
Franklin Aggressive Growth Securities Fund 6,768 10,356
Franklin Global Communications Securities Fund 82,928 114,996
Franklin Global Health Care Securities Fund 11,902 18,356
Franklin Growth and Income Securities Fund 99,474 160,773
Franklin High Income Fund 152,402 167,817
Franklin Income Securities Fund 81,628 125,816
Franklin Large Cap Growth Securities Fund 100,216 106,444
Franklin Money Market Fund 2,270,327 2,358,987
Franklin Natural Resources Securities Fund 6,422 18,486
Franklin Real Estate Fund 11,655 32,891
Franklin Rising Dividends Securities Fund 60,054 86,266
Franklin S&P 500 Index Fund 27,220 22,414
Franklin Small Cap Fund 188,302 244,580
Franklin Technology Securities Fund 5,626 6,326
Franklin U.S. Government Fund 133,548 148,568
Franklin Value Securities Fund 29,605 18,557
Franklin Zero Coupon Fund 2005 9,405 11,579
Franklin Zero Coupon Fund 2010 16,953 19,863
J.P. Morgan International Opportunities Portfolio 24,044 23,528
J.P. Morgan U.S. Disciplined Equity Portfolio 1,860 592
Mutual Discovery Securities Fund 148,755 145,145
Mutual Shares Securities Fund 67,145 59,785
52
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
4. PURCHASES AND SALES OF INVESTMENTS (IN THOUSANDS) (CONTINUED)
Cost of Proceeds
Purchases from Sales
----------- ------------
Oppenheimer Global Securities Fund/VA $ 41,833 $ 32,807
Oppenheimer High Income Fund/VA 4,653 1,206
Oppenheimer Main Street Growth & Income Fund/VA 15,419 3,087
PIMCO VIT High Yield Bond Portfolio 29,936 3,426
PIMCO VIT StocksPLUS Growth and Income Portfolio 4,715 998
PIMCO VIT Total Return Bond Portfolio 11,108 4,276
SP Jennison International Growth Portfolio 73,134 72,787
SP Strategic Partners Focused Growth Portfolio 2,488 651
Seligman Global Technology Portfolio 6,863 1,803
Seligman Small-Cap Value Portfolio 11,776 1,122
Templeton Asset Strategy Fund 4,445 12,089
Templeton Developing Markets Securities Fund 592,253 616,339
Templeton Global Income Securities Fund 20,450 34,411
Templeton Growth Securities Fund 243,276 260,659
Templeton International Securities Fund 1,544,515 1,522,104
Templeton International Smaller Companies Fund 165,938 171,488
Templeton Pacific Growth Securities Fund 68,564 110,450
Van Kampen LIT Enterprise Portfolio 793 768
Van Kampen LIT Growth and Income Portfolio 2,750 2,126
Van Kampen Emerging Growth Portfolio 10,890 565
USAZ Alger American Growth Fund 6,918 584
USAZ Alger Growth Fund 3,187 288
USAZ Van Kampen Growth Fund 5,688 238
USAZ Van Kampen Growth and Income Fund 17,730 1,763
USAZ Van Kampen Aggressive Growth Fund 2,277 109
USAZ Van Kampen Comstock Fund 18,580 1,245
USAZ Alliance Capital Technology Fund 4,599 304
USAZ Alliance Capital Large Cap Growth Fund 2,500 17
USAZ Alliance Capital Growth and Income Fund 3,428 145
USAZ PIMCO Value Fund 3,552 89
USAZ PIMCO Renaissance Fund 7,383 185
USAZ PIMCO Growth and Income Fund 2,120 46
USAZ Templeton Developed Markets Fund 963 773
AZOA VIP Diversified Assets Fund 3,848 851
AZOA VIP Fixed Income Fund 12,920 4,702
AZOA VIP Global Opportunities Fund 566 53
AZOA VIP Growth Fund 2,870 573
AZOA VIP Money Market Fund 521,170 412,313
53
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS)
<TABLE>
<CAPTION>
Transactions in units for each fund for the years ended December 31, 2001 and
2000 were as follows.
AIM V.I.
AIM V.I. CAPITAL AIM V.I. INTERNATIONAL AIM V.I.
APPRECIATION FUND GROWTH FUND EQUITY FUND VALUE FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 683 648 966 804 390 230 1,250 385
Transfers between funds 54 85 (1,113) 4,358 - 31 235 94
Surrenders and terminations (40) (6) (823) (574) (14) (3) (36) (3)
Rescissions (25) (4) (15) (23) (11) - (95) (8)
Bonus 17 33 19 20 7 11 25 13
Other transactions - - (3) (1) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 689 756 (969) 4,584 372 269 1,379 481
==================================================================================================================================
<CAPTION>
ALGER AMERICAN ALGER AMERICAN ALGER AMERICAN SMALL
ALGER AMERICAN LEVERAGED MIDCAP CAPITALIZATION
GROWTH PORTFOLIO ALLCAP PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 269 571 183 381 755 464 322 87
Transfers between funds (675) 2,975 (541) 1,583 291 60 (36) 17
Surrenders and terminations (535) (426) (295) (283) (32) (5) (5) -
Rescissions (11) (10) (9) (6) (51) (5) (34) -
Bonus 8 21 6 12 16 20 6 3
Other transactions - (1) - (1) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (944) 3,130 (656) 1,686 979 534 253 107
==================================================================================================================================
<CAPTION>
DAVIS VA DAVIS VA DAVIS VA FRANKLIN AGGRESSIVE
FINANCIAL REAL ESTATE VALUE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 336 106 203 143 893 251 60 42
Transfers between funds 124 105 17 5 464 68 (361) 1,630
Surrenders and terminations (19) (1) (7) (2) (21) (1) (220) (32)
Rescissions (4) (3) - (20) (9) (6) - -
Bonus 8 3 5 4 13 8 - -
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 445 210 218 130 1,340 320 (521) 1,640
==================================================================================================================================
</TABLE>
54
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
FRANKLIN GLOBAL FRANKLIN GLOBAL FRANKLIN GROWTH FRANKLIN
COMMUNICATIONS HEALTH CARE AND INCOME HIGH
SECURITIES FUND SECURITIES FUND SECURITIES FUND INCOME FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 41 118 50 84 401 216 158 104
Transfers between funds (1,707) 176 (382) 1,654 (48) (1,839) (353) (906)
Surrenders and terminations (3,406) (4,904) (436) (297) (4,213) (7,588) (1,862) (3,189)
Rescissions - (12) (1) (3) (10) (10) (2) (11)
Bonus - - - - 6 1 - -
Other transactions (12) (10) - - (10) (12) (4) (4)
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (5,084) (4,632) (769) 1,438 (3,874) (9,232) (2,063) (4,006)
==================================================================================================================================
<CAPTION>
FRANKLIN INCOME FRANKLIN LARGE CAP FRANKLIN FRANKLIN NATURAL
SECURITIES GROWTH MONEY RESOURCES
FUND SECURITIES FUND MARKET FUND SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 169 149 135 272 3,786 1,087 18 44
Transfers between funds (80) (1,865) (1,541) 2,971 (1,443) 2,943 (510) 113
Surrenders and terminations (3,785) (6,820) (2,569) (3,289) (8,297) (9,740) (470) (709)
Rescissions (5) (22) (1) (13) - (71) - -
Bonus - - - - - - - -
Other transactions (9) (11) (6) (6) (5) (5) (2) (1)
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (3,710) (8,569) (3,982) (65) (5,959) (5,786) (964) (553)
==================================================================================================================================
<CAPTION>
FRANKLIN RISING
FRANKLIN DIVIDENDS FRANKLIN S&P 500 FRANKLIN
REAL ESTATE FUND SECURITIES FUND INDEX FUND SMALL CAP FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 46 99 361 114 145 202 387 383
Transfers between funds (123) (404) 424 (2,104) 1,271 3,453 (619) 1,198
Surrenders and terminations (801) (1,469) (2,510) (4,981) (835) (625) (2,392) (2,663)
Rescissions - (5) (8) (11) - (4) (6) (9)
Bonus - - 7 - - - 5 7
Other transactions (2) (2) (6) (7) (3) (1) (6) (4)
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (880) (1,781) (1,732) (6,989) 578 3,025 (2,631) (1,088)
==================================================================================================================================
</TABLE>
55
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
FRANKLIN FRANKLIN
TECHNOLOGY FRANKLIN U.S. FRANKLIN VALUE ZERO COUPON
SECURITIES FUND GOVERNMENT FUND SECURITIES FUND FUND 2000
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 37 42 730 237 143 48 - 7
Transfers between funds (30) 1,097 930 (1,028) 1,349 890 - (2,039)
Surrenders and terminations (172) (44) (3,356) (5,329) (497) (386) - (794)
Rescissions - (8) (17) (25) (9) - - -
Bonus - - 11 6 1 - - -
Other transactions - - (7) (8) - - - (1)
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (165) 1,087 (1,709) (6,147) 987 552 - (2,827)
==================================================================================================================================
<CAPTION>
J.P. MORGAN J.P. MORGAN
FRANKLIN ZERO FRANKLIN ZERO INTERNATIONAL U.S. DISCIPLINED
COUPON COUPON OPPORTUNITIES EQUITY
FUND 2005 FUND 2010 PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 56 5 70 20 84 58 173 61
Transfers between funds 86 46 (77) (200) (23) 8 (19) 5
Surrenders and terminations (343) (441) (260) (484) 1 - (4) (1)
Rescissions - - - - (3) (3) - (1)
Bonus - - - - 2 2 2 3
Other transactions - (1) - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (201) (391) (267) (664) 61 65 152 67
==================================================================================================================================
<CAPTION>
MUTUAL DISCOVERY MUTUAL SHARES OPPENHEIMER GLOBAL OPPENHEIMER HIGH
SECURITIES FUND SECURITIES FUND SECURITIES FUND/VA INCOME FUND/VA
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 324 138 1,012 335 706 351 343 116
Transfers between funds (48) 174 818 (1,894) 313 56 61 2
Surrenders and terminations (1,491) (2,162) (3,019) (4,727) (83) (2) (40) (3)
Rescissions (8) (2) (17) (142) (7) (9) (35) (1)
Bonus 5 1 16 - 10 14 7 5
Other transactions (4) (4) (7) (9) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (1,222) (1,855) (1,197) (6,437) 939 410 336 119
==================================================================================================================================
</TABLE>
56
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
OPPENHEIMER PIMCO VIT
MAIN STREET PIMCO VIT STOCKSPLUS PIMCO VIT
GROWTH & HIGH YIELD GROWTH AND TOTAL RETURN
INCOME FUND/VA BOND PORTFOLIO INCOME PORTFOLIO BOND PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 1,263 470 382 60 274 74 1,260 151
Transfers between funds 309 160 335 3 169 12 997 9
Surrenders and terminations (81) (5) (21) - (10) - (29) (1)
Rescissions (83) (4) (5) - (2) (2) (21) -
Bonus 26 22 5 1 6 3 34 9
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 1,434 643 696 64 437 87 2,241 168
==================================================================================================================================
<CAPTION>
SP STRATEGIC SELIGMAN
SP JENNISON PARTNERS GLOBAL SELIGMAN
INTERNATIONAL FOCUSED TECHNOLOGY SMALL-CAP
GROWTH PORTFOLIO GROWTH PORTFOLIO PORTFOLIO VALUE PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 51 - 127 - 530 526 468 105
Transfers between funds 149 - 140 - 108 97 266 13
Surrenders and terminations (42) - - - (27) (4) (15) (1)
Rescissions - - - - (20) (7) (12) (1)
Bonus 1 - 3 - 13 18 13 5
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 159 - 270 - 604 630 720 121
==================================================================================================================================
<CAPTION>
TEMPLETON TEMPLETON TEMPLETON TEMPLETON
ASSET DEVELOPING MARKETS GLOBAL INCOME GROWTH
STRATEGY FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 9 62 165 193 13 29 441 344
Transfers between funds (332) (346) (600) (955) (207) (341) (989) (616)
Surrenders and terminations (520) (672) (2,100) (3,100) (686) (1,170) (4,559) (7,315)
Rescissions - (3) (1) (16) - (9) (8) (8)
Bonus - - 3 1 - - 5 -
Other transactions (1) (2) (5) (6) (1) (2) (10) (13)
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (844) (961) (2,538) (3,883) (881) (1,493) (5,120) (7,608)
==================================================================================================================================
</TABLE>
57
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
TEMPLETON
TEMPLETON INTERNATIONAL TEMPLETON VAN KAMPEN LIT
INTERNATIONAL SMALLER PACIFIC GROWTH ENTERPRISE
SECURITIES FUND COMPANIES FUND SECURITIES FUND PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 250 234 53 43 11 84 80 92
Transfers between funds 265 (545) (338) 89 (5,452) (466) (79) 11
Surrenders and terminations (4,694) (7,420) (240) (399) (349) (1,971) (10) (2)
Rescissions (1) (21) - (4) - (5) (5) -
Bonus - - - - - - 3 4
Other transactions (11) (12) - (1) (1) (5) - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions (4,191) (7,764) (525) (272) (5,791) (2,363) (11) 105
==================================================================================================================================
<CAPTION>
VAN KAMPEN LIT VAN KAMPEN USAZ
GROWTH AND EMERGING ALGER AMERICAN USAZ ALGER
INCOME PORTFOLIO GROWTH PORTFOLIO GROWTH FUND GROWTH FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 178 113 703 - 324 - 123 -
Transfers between funds (122) 30 535 - 353 - 198 -
Surrenders and terminations (4) - (18) - (9) - (9) -
Rescissions (2) (2) (16) - (1) - (2) -
Bonus 9 6 17 - 7 - 3 -
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 59 147 1,221 - 674 - 313 -
==================================================================================================================================
<CAPTION>
USAZ VAN KAMPEN USAZ VAN KAMPEN
USAZ VAN KAMPEN GROWTH AND AGGRESSIVE USAZ VAN KAMPEN
GROWTH FUND INCOME FUND GROWTH FUND COMSTOCK FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 326 - 1,016 - 142 - 1,048 -
Transfers between funds 254 - 631 - 132 - 792 -
Surrenders and terminations (12) - (41) - (3) - (28) -
Rescissions (5) - (14) - (6) - (19) -
Bonus 13 - 32 - 3 - 25 -
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 576 - 1,624 - 268 - 1,818 -
==================================================================================================================================
</TABLE>
58
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
USAZ ALLIANCE
USAZ ALLIANCE CAPITAL USAZ ALLIANCE
CAPITAL LARGE CAP CAPITAL GROWTH USAZ PIMCO
TECHNOLOGY FUND GROWTH FUND AND INCOME FUND VALUE FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 18 - 44 - 27 - 19 -
Transfers between funds 389 - 198 - 286 - 317 -
Surrenders and terminations - - (1) - (3) - (9) -
Rescissions - - - - - - (1) -
Bonus - - 1 - 1 - - -
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 407 - 242 - 311 - 326 -
==================================================================================================================================
<CAPTION>
USAZ PIMCO USAZ TEMPLETON AZOA VIP
USAZ PIMCO GROWTH AND DEVELOPED DIVERSIFIED
RENAISSANCE FUND INCOME FUND MARKETS FUND ASSETS FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 91 - 11 - - - 234 34
Transfers between funds 616 - 191 - 20 - 87 163
Surrenders and terminations (17) - - - - - (37) (15)
Rescissions (1) - - - - - - -
Bonus 2 - - - - - 4 -
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 691 - 202 - 20 - 288 182
==================================================================================================================================
AZOA VIP FIXED AZOA VIP GLOBAL AZOA VIP AZOA VIP
INCOME FUND OPPORTUNITIES FUND GROWTH FUND MONEY MARKET FUND
----------------------------------------------------------------------------------------------------------------------------------
2001 2000 2001 2000 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Contract transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments 295 38 31 10 239 33 3,979 1,919
Transfers between funds 466 99 43 - 81 83 6,603 (839)
Surrenders and terminations (87) (12) 1 - (20) (11) (314) (7)
Rescissions (7) - - - - (3) (225) (40)
Bonus 7 1 - - 8 - 165 106
Other transactions - - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions 674 126 75 10 308 102 10,208 1,139
==================================================================================================================================
</TABLE>
59
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
5. CONTRACT TRANSACTIONS- ALL PRODUCTS ACCUMULATION UNIT ACTIVITY
(IN THOUSANDS) (CONTINUED)
TOTAL
ALL FUNDS
------------------------------------------------------------------------
2001 2000
------------------------------------------------------------------------
Contract transactions
Purchase payments 29,910 13,016
Transfers between funds 3,519 10,179
Surrenders and terminations (56,881) (84,088)
Rescissions (850) (572)
Bonus 611 363
Other transactions (115) (130)
------------------------------------------------------------------------
Total Net Contract Transactions 23,806) (61,232)
========================================================================
60
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
6. FINANCIAL HIGHLIGHTS
A summary of units outstanding, unit values, net assets, investment income
ratio, and total return for variable annuity contracts and the expense ratios,
excluding expenses of the underlying funds, for the period ended December 31,
2001 follows:
<TABLE>
<CAPTION>
AT DECEMBER 31 FOR THE PERIOD ENDED DECEMBER 31, 2001
--------------------------------------------- -------------------------------------------------
UNITS UNIT FAIR VALUE INVESTMENT EXPENSE RATIO TOTAL RETURN
OUTSTANDING LOWEST TO NET ASSETS INCOME LOWEST TO LOWEST TO
(THOUSANDS) HIGHEST (THOUSANDS) RATIO HIGHEST* HIGHEST**
--------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 1,447 $6.69 to $6.80 9,730 0.00% 1.15% to 2.00% -24.81% to -24.16%
AIM V.I. Growth Fund 4,507 $0.49 to $5.70 25,569 0.19% 1.15% to 2.00% -35.10% to -34.64%
AIM V.I. International Equity Fund 641 $5.82 to $5.92 3,753 0.39% 1.15% to 2.00% -25.05% to -24.41%
AIM V.I. Value Fund 1,861 $7.36 to $7.48 13,780 0.23% 1.15% to 2.00% -14.30% to -13.57%
Alger American Growth Portfolio 3,136 $0.69 to $8.02 25,100 0.27% 1.15% to 2.00% -13.48% to -12.83%
Alger American
Leveraged AllCap Portfolio 1,645 $0.65 to $7.51 12,296 0.00% 1.15% to 2.00% -17.52% to -16.90%
Alger American MidCap
Growth Portfolio 1,517 $9.82 to $9.98 14,979 0.00% 1.15% to 2.00% -8.38% to -7.60%
Alger American Small
Capitalization Portfolio 361 $5.02 to $5.11 1,824 0.08% 1.15% to 2.00% -30.91% to -30.32%
Davis VA Financial Portfolio 656 $11.64 to $11.83 7,682 0.07% 1.15% to 2.00% -12.16% to -11.40%
Davis VA Real Estate Portfolio 342 $12.89 to $13.10 4,434 5.33% 1.15% to 2.00% 3.40% to 4.29%
Davis VA Value Portfolio 1,658 $9.54 to $9.69 15,918 0.84% 1.15% to 2.00% -12.18% to -11.42%
Franklin Aggressive
Growth Securities Fund 1,119 $0.51 to $5.75 6,419 0.20% 1.15% to 1.49% -23.85% to -23.69%
Franklin Global Communications
Securities Fund 13,400 $0.52 to $18.43 242,050 0.08% 1.15% to 2.00% -30.80% to -30.21%
Franklin Global Health
Care Securities Fund 1,781 $0.94 to $14.03 24,912 0.17% 1.15% to 1.49% -14.50% to -14.33%
Franklin Growth and
Income Securities Fund 20,129 $0.87 to $30.14 600,661 0.32% 1.15% to 2.00% -4.22% to -3.39%
Franklin High Income Fund 7,560 $0.65 to $18.93 139,801 17.19% 1.15% to 2.00% 2.11% to 2.98%
Franklin Income Securities Fund 17,086 $0.87 to $29.31 493,404 7.33% 1.15% to 2.00% -1.25% to -0.40%
Franklin Large Cap
Growth Securities Fund 14,363 $0.99 to $18.56 270,632 0.58% 1.15% to 2.00% -13.19% to -12.45%
Franklin Money Market Fund 11,438 $0.88 to $16.30 183,001 4.05% 1.15% to 1.49% 2.25% to 2.46%
Franklin Natural Resources
Securities Fund 2,047 $0.58 to $12.21 24,319 0.97% 1.15% to 1.49% -20.47% to -20.26%
Franklin Real Estate Fund 4,251 $0.84 to $30.41 126,659 4.21% 1.15% to 2.00% 5.74% to 6.67%
Franklin Rising Dividends
Securities Fund 12,700 $0.89 to $25.66 324,192 0.09% 1.15% to 2.00% 11.31% to 12.31%
Franklin S&P 500 Index Fund 4,958 $0.71 to $8.17 41,513 0.97% 1.15% to 2.00% -14.56% to -13.54%
Franklin Small Cap Fund 12,429 $0.93 to $20.17 252,254 0.53% 1.15% to 2.00% -16.93% to -16.20%
Franklin Technology Securities Fund 921 $0.47 to $5.23 4,820 0.00% 1.15% to 1.49% -30.63% to -30.41%
Franklin U.S. Government Fund 17,036 $0.99 to $22.26 369,768 7.37% 1.15% to 2.00% 5.23% to 6.14%
Franklin Value Securities Fund 2,882 $0.84 to $10.77 31,558 0.51% 1.15% to 2.00% 11.53% to 12.61%
Franklin Zero Coupon Fund 2005 1,972 $1.00 to $28.57 54,431 6.44% 1.15% to 2.00% 6.77% to 7.68%
Franklin Zero Coupon Fund 2010 1,585 $0.99 to $30.42 46,528 7.11% 1.15% to 2.00% 3.52% to 4.41%
J.P. Morgan International
Opportunities Portfolio 124 $6.97 to $7.08 871 0.96% 1.15% to 2.00% -20.75% to -20.07%
J.P. Morgan U.S. Disciplined
Equity Portfolio 218 $7.97 to $8.10 1,745 0.63% 1.15% to 2.00% -13.66% to -12.92%
Mutual Discovery Securities Fund 10,565 $0.85 to $14.87 160,131 2.12% 1.15% to 2.00% -1.76% to -0.92%
Mutual Shares Securities Fund 23,782 $0.94 to $15.83 379,768 1.99% 1.15% to 2.00% 4.91% to 5.81%
Oppenheimer Global
Securities Fund/VA 1,348 $8.90 to $9.04 12,067 0.47% 1.15% to 2.00% -13.79% to -13.05%
Oppenheimer High Income Fund/VA 454 $9.47 to $9.63 4,332 6.25% 1.15% to 2.00% -0.06% to 0.80%
Oppenheimer Main Street
Growth & Income Fund/VA 2,071 $8.25 to $8.38 17,183 0.38% 1.15% to 2.00% -11.95% to -11.19%
</TABLE>
61
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Notes to Financial Statements (continued)
December 31, 2001
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS (CONTINUED)
AT DECEMBER 31 FOR THE PERIOD ENDED DECEMBER 31, 2001
--------------------------------------------- -------------------------------------------------
UNITS UNIT FAIR VALUE INVESTMENT EXPENSE RATIO TOTAL RETURN
OUTSTANDING LOWEST TO NET ASSETS INCOME LOWEST TO LOWEST TO
(THOUSANDS) HIGHEST (THOUSANDS) RATIO HIGHEST* HIGHEST**
--------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PIMCO VIT High Yield
Bond Portfolio 761 $0.98 to $9.99 7,364 8.16% 1.15% to 2.00% 0.32% to 1.18%
PIMCO VIT StocksPLUS
Growth and Income Portfolio 521 $0.81 to $8.31 4,284 5.74% 1.15% to 2.00% -13.20% to -12.45%
PIMCO VIT Total Return
Bond Portfolio 2,410 $1.15 to $11.78 27,627 4.62% 1.15% to 2.00% 6.23% to 7.15%
SP Jennison International
Growth Portfolio 158 $0.71 to $5.37 846 0.30% 1.15% to 2.00% -37.20% to -36.66%
SP Strategic Partners Focused
Growth Portfolio 268 $0.82 to $6.62 1,766 0.00% 1.15% to 2.00% -17.40% to -16.69%
Seligman Global
Technology Portfolio 1,232 $5.84 to $5.93 7,236 0.00% 1.15% to 2.00% -23.60% to -22.95%
Seligman Small-Cap Value Portfolio 842 $16.46 to $16.73 13,936 0.00% 1.15% to 2.00% 21.06% to 22.10%
Templeton Asset Strategy Fund 2,107 $0.65 to $15.35 27,296 1.53% 1.15% to 1.49% -11.16% to -10.98%
Templeton Developing Markets
Securities Fund 8,223 $0.51 to $7.79 63,526 0.99% 1.15% to 2.00% -9.91% to -9.14%
Templeton Global Income
Securities Fund 2,539 $0.88 to $17.72 43,946 3.77% 1.15% to 1.49% 0.86% to 1.11%
Templeton Growth Securities Fund 21,215 $0.87 to $19.30 410,225 2.15% 1.15% to 2.00% -3.28% to -2.37%
Templeton International
Securities Fund 19,656 $0.69 to $18.20 354,538 3.21% 1.15% to 2.00% -17.67% to -16.93%
Templeton International Smaller
Companies Fund 1,143 $0.70 to $10.85 12,748 3.43% 1.15% to 1.49% -3.95% to -3.75%
Van Kampen LIT Enterprise Portfolio 96 $6.76 to $6.86 651 0.23% 1.15% to 2.00% -21.93% to -21.33%
Van Kampen LIT Growth
and Income Portfolio 203 $11.08 to $11.24 2,263 0.04% 1.15% to 2.00% -7.59% to -6.89%
Van Kampen Emerging
Growth Portfolio1 1,222 $0.79 to $8.23 10,019 0.00% 1.15% to 2.00% -18.87% to -18.41%
USAZ Alger American Growth Fund1 674 $0.87 to $9.15 6,173 0.00% 1.15% to 2.00% -9.02% to -8.51%
USAZ Alger Strategic Growth Fund1 309 $0.88 to $9.20 2,853 0.00% 1.15% to 2.00% -8.53% to -8.01%
USAZ Van Kampen Capital Growth Fund1 572 $0.91 to $9.54 5,455 0.00% 1.15% to 2.00% -5.18% to -4.64%
USAZ Van Kampen Growth
and Income Fund1 1,627 $0.92 to $9.68 15,836 1.09% 1.15% to 2.00% -3.71% to -3.16%
USAZ Van Kampen Aggressive
Growth Fund1 269 $0.77 to $8.04 2,154 0.00% 1.15% to 2.00% -20.08% to -19.62%
USAZ Van Kampen Comstock Fund1 1,824 $0.89 to $9.36 17,053 1.15% 1.15% to 2.00% -6.88% to -6.35%
USAZ Alliance Capital
Technology Fund2 408 $1.06 to $10.75 4,380 0.00% 1.15% to 2.00% 7.37% to 7.51%
USAZ Alliance Capital Large Cap
Growth Fund2 241 $1.04 to $10.53 2,536 0.00% 1.15% to 2.00% 5.18% to 5.31%
USAZ Alliance Capital Growth
and Income Fund2 313 $1.03 to $10.45 3,368 1.35% 1.15% to 2.00% 4.35% to 4.48%
USAZ PIMCO Value Fund2 328 $1.08 to $10.94 3,683 0.25% 1.15% to 2.00% 9.29% to 9.43%
USAZ PIMCO Renaissance Fund2 693 $1.09 to $11.00 7,711 0.00% 1.15% to 2.00% 9.86% to 10.01%
USAZ PIMCO Growth and Income Fund2 204 $1.00 to $10.14 2,095 1.98% 1.15% to 2.00% 1.32% to 1.45%
USAZ Templeton Developed
Markets Fund2 19 $1.01 to $10.23 196 0.00% 1.15% to 2.00% 2.19% to 2.32%
AZOA VIP Diversified Assets Fund 480 $0.88 to $10.25 4,919 3.81% 1.15% to 2.00% -2.41% to -1.57%
AZOA VIP Fixed Income Fund 816 $0.99 to $11.45 9,595 5.86% 1.15% to 2.00% 5.94% to 6.31%
AZOA VIP GlobalOpportunities Fund 88 $0.62 to $6.35 565 0.00% 1.15% to 2.00% -25.09% to -24.45%
AZOA VIP Growth Fund 440 $0.66 to $7.65 3,333 0.61% 1.15% to 2.00% -20.34% to -19.65%
AZOA VIP Money Market Fund 11,347 $1.04 to $10.63 120,221 2.47% 1.15% to 2.00% 1.22% to 2.09%
</TABLE>
The unit values, expense ratios, and total returns are presented in ranges
representing the various contracts offered by the Variable Account and
allocating payments to each sub account.
* Annualized
** Total return does not reflect payment of sales charge.
1. Period from May 1, 2001 (fund commencement) to December 31, 2001.
2. Period from November 5, 2001 (fund commencement) to December 31, 2001.
62
ALLIANZ LIFE INSURANCE
COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2001 and 2000
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Independent Auditors' Report
THE BOARD OF DIRECTORS
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheets of Allianz Life
Insurance Company of North America and subsidiaries as of December 31, 2001 and
2000, and the related consolidated statements of operations, comprehensive
income (loss), stockholder's equity and cash flows for each of the years in the
three-year period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Allianz
Life Insurance Company of North America and subsidiaries as of December 31, 2001
and 2000, and the results of their operations and cash flows for each of the
years in the three-year period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in note 1 to the consolidated financial statements, the Company
changed its method of accounting for derivative instruments in 2001.
As also discussed in note 1 to the consolidated financial statements, in 1999
the Company changed its method of calculating deferred acquisition costs and
future benefit reserves for two-tiered annuities.
January 16, 2002
1
-----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Balance Sheets
DECEMBER 31, 2001 AND 2000 (IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
ASSETS 2001 2000
-----------------------------
<S> <C> <C>
Investments:
Fixed maturity securities, at fair value ........................................ $ 7,512,646 5,590,904
Securities held under agreements to repurchase, at fair value ................... 815,969 0
Equity securities, at fair value ................................................ 476,427 600,922
Mortgage loans on real estate, net .............................................. 665,991 566,547
Short-term securities ........................................................... 297,648 309,524
Policy loans .................................................................... 31,933 25,336
Real estate ..................................................................... 355,403 305,269
Partnerships .................................................................... 32,863 28,566
Options ......................................................................... 173,410
101,796
Loan to Parent Company .......................................................... 100,000 0
Investment in equity method investees ........................................... 4,779 3,655
Other long-term investments ..................................................... 1,841 3,380
-----------------------------
Total investments ............................................................. 10,468,910 7,535,899
Cash ............................................................................... 65,808 41,627
Accrued investment income .......................................................... 116,256 88,298
Receivables (net of allowance for uncollectible accounts of $6,484 in 2001
and $3,358 in 2000) ............................................................. 245,198 309,047
Reinsurance recoverable:
Recoverable on future policy benefit reserves ................................... 4,257,639 4,457,505
Recoverable on unpaid claims .................................................... 438,655 358,567
Receivable on paid claims ....................................................... 60,416 63,034
Goodwill (net of accumulated amortization of $37,959 in 2001 and $20,591 in 2000) .. 304,074 312,122
Value of business acquired (net of accumulated amortization of $58,829 in 2001
and $34,478 in 2000) ............................................................ 160,645 189,454
Deferred acquisition costs ......................................................... 1,165,432 941,511
Home office property and equipment (net of accumulated depreciation of $14,106
in 2001 and $23,437 in 2000) .................................................... 110,516 52,630
Federal income tax recoverable ..................................................... 50,959 652
Other assets ....................................................................... 54,600 65,815
-----------------------------
Assets, exclusive of separate account assets .................................... 17,499,108 14,416,161
Separate account assets ............................................................ 5,667,840 6,822,883
-----------------------------
Total assets .................................................................... $23,166,948 21,239,044
=============================
See accompanying notes to consolidated financial statements.
</TABLE>
2
----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
DECEMBER 31, 2001 AND 2000 (IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY 2001 2000
-----------------------------
<S> <C> <C>
Liabilities
Future benefit reserves:
Life ......................................................................... $ 2,076,105 2,014,015
Annuity ...................................................................... 11,372,817 9,060,710
Policy and contract claims ...................................................... 856,950 912,539
Unearned premiums ............................................................... 41,503 48,907
Reinsurance payable ............................................................. 89,687 146,826
Deferred income on reinsurance .................................................. 146,144 166,503
Deferred income taxes ........................................................... 1,062 15,361
Accrued expenses ................................................................ 87,881 90,159
Commissions due and accrued ..................................................... 64,471 57,173
Other policyholder funds ........................................................ 127,800 136,911
Mortgage notes payable .......................................................... 108,848 46,136
Securities held under agreements to repurchase .................................. 819,968 0
Amounts drawn in excess of bank balances ........................................ 85,799 49,247
Other liabilities ............................................................... 56,160 56,210
-----------------------------
Liabilities, exclusive of separate account liabilities ..................... 15,935,195 12,800,697
Separate account liabilities .................................................... 5,667,840 6,822,883
-----------------------------
Total liabilities .......................................................... 21,603,035 19,623,580
=============================
Stockholder's Equity:
Common stock, $1 par value, 20 million shares authorized, issued and outstanding 20,000 20,000
Additional paid-in capital ...................................................... 830,274 830,274
Retained earnings ............................................................... 693,375 738,354
Accumulated other comprehensive income .......................................... 20,264 26,836
-----------------------------
Total stockholder's equity ................................................. 1,563,913 1,615,464
Commitments and contingencies (notes 7 and 12)
-----------------------------
Total liabilities and stockholder's equity ................................. $23,166,948 21,239,044
=============================
</TABLE>
See accompanying notes to consolidated financial statements.
3
-----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Operations
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Revenue:
Life insurance premiums ................................................$ 476,025 453,789 440,011
Other life policy considerations ....................................... 61,714 61,482 38,801
Annuity considerations ................................................. 200,564 186,393 239,070
Accident and health premiums ........................................... 593,675 654,874 843,906
-----------------------------------------------
Total premiums and considerations .................................... 1,331,978 1,356,538 1,561,788
Premiums and annuity considerations ceded .............................. 374,997 345,279 478,239
-----------------------------------------------
Net premiums and considerations ...................................... 956,981 1,011,259 1,083,549
Investment income, net ................................................. 520,012 403,899 279,982
Realized investment (losses) gains ..................................... (97,534) 122,851 112,253
Other .................................................................. 76,646 84,912 72,301
-----------------------------------------------
Total revenue ........................................................ 1,456,105 1,622,921 1,548,085
-----------------------------------------------
Benefits and expenses:
Life insurance benefits ................................................ 491,763 458,203 382,464
Annuity benefits ....................................................... 514,754 402,170 248,520
Accident and health insurance benefits ................................. 460,987 521,616 765,257
-----------------------------------------------
Total benefits ....................................................... 1,467,504 1,381,989 1,396,241
Benefit recoveries ..................................................... 480,932 441,218 443,441
-----------------------------------------------
Net benefits ......................................................... 986,572 940,771 952,800
Commissions and other agent compensation ............................... 494,135 397,020 304,816
General and administrative expenses .................................... 287,900 243,684 162,798
Taxes, licenses and fees ............................................... 18,121 24,553 26,292
Amortization of goodwill ............................................... 17,368 16,744 3,847
Amortization of value of business acquired, net of interest credited ... 17,581 20,909 4,161
Change in deferred acquisition costs, net .............................. (316,439) (139,748) 129,142
-----------------------------------------------
Total benefits and expenses .......................................... 1,505,238 1,503,933 1,583,856
-----------------------------------------------
(Loss) income from operations before income taxes .................... (49,133) 118,988 (35,771)
-----------------------------------------------
Income tax (benefit) expense:
Current ................................................................ (2,544) 28,871 63,371
Deferred ............................................................... (7,867) (15,917) (73,727)
-----------------------------------------------
Total income tax (benefit) expense ................................... (10,411) 12,954 (10,356)
-----------------------------------------------
(Loss) income before cumulative effect of change in accounting ....... (38,722) 106,034 (25,415)
Cumulative effect of change in accounting, net of tax benefit ............. (6,257) 0 (16,122)
-----------------------------------------------
Net (loss) income ....................................................$ (44,979) 106,034 (41,537)
===============================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Net (loss) income................................................. $ (44,979) 106,034 (41,537)
----------------------------------------------
Other comprehensive (loss) gain:
Foreign currency translation adjustments, net of tax........... (2,925) (798) 1,461
----------------------------------------------
Unrealized gains (losses) on fixed maturity and equity securities:
Unrealized holding (losses) gains arising during the period net
of effect on deferred policy acquisition costs of $86,817 for
2001 and net of tax (benefit) expense of $(35,992)
$23,155 and $(55,781) in 2001, 2000, and 1999, respectively.. (67,044) 43,001 (103,590)
Reclassification adjustment for (gains) losses included in net
income, net of tax benefit (expense) of $34,137, $(42,998),
and $(39,289) in 2001, 2000, and 1999, respectively.......... 63,397 (79,853) (72,964)
----------------------------------------------
Total unrealized holding (losses) gains................... (3,647) (36,852) (176,554)
----------------------------------------------
Total other comprehensive (loss).......................... (6,572) (37,650) (175,093)
----------------------------------------------
Total comprehensive (loss) income......................... $ (51,551) 68,384 (216,630)
==============================================
See accompanying notes to consolidated financial statements.
</TABLE>
5
-----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Stockholder's Equity
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Common stock:
Balance at beginning and end of year......................... $ 20,000 20,000 20,000
----------------------------------------------
Additional paid-in capital:
Balance at beginning of year................................. 830,274 830,274 407,088
Capital contribution......................................... 0 0 423,186
----------------------------------------------
Balance at end of year....................................... 830,274 830,274 830,274
----------------------------------------------
Retained earnings:
Balance at beginning of year................................. 738,354 632,320 673,857
Net (loss) income............................................ (44,979) 106,034 (41,537)
----------------------------------------------
Balance at end of year....................................... 693,375 738,354 632,320
----------------------------------------------
Accumulated other comprehensive income:
Accumulated unrealized holding gain:
Balance at beginning of year................................. 32,382 69,234 245,788
Net unrealized (loss) gain on investments during the year,
net of deferred federal income taxes
and deferred acquisition costs............................ (3,647) (36,852) (176,554)
----------------------------------------------
Balance at end of year....................................... 28,735 32,382 69,234
Accumulated unrealized foreign currency (loss):
Balance at beginning of year................................. (5,546) (4,748) (6,209)
Net unrealized (loss) gain on foreign currency translation
during the year, net of deferred federal income taxes..... (2,925) (798) 1,461
----------------------------------------------
Balance at end of year....................................... (8,471) (5,546) (4,748)
----------------------------------------------
Total accumulated other comprehensive income................. 20,264 26,836 64,486
----------------------------------------------
Total stockholder's equity................................ $ 1,563,913 1,615,464 1,547,080
==============================================
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
6
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
---------------------------------------------
<S> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss).............................................. $ (44,979) 106,034 (41,537)
---------------------------------------------
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Realized investment losses (gains) ............................... 97,534 (134,916) (112,253)
Unrealized loss (gain) on options ................................ 68,906 50,466 (10,472)
Deferred federal income tax (benefit) ............................ (7,867) (15,917) (82,409)
Charges to policy account balances ............................... (50,148) (45,354) (66,945)
Interest credited to policy account balances ..................... 411,728 310,005 251,303
Depreciation and amortization .................................... 22,202 22,352 (5,917)
Equity in earnings of equity method investees .................... (4,682) (2,659) (690)
Change in:
Accrued investment income ...................................... (27,958) (14,524) (1,921)
Receivables .................................................... 69,049 1,819 17,873
Reinsurance recoverable ........................................ 122,396 136,414 (488,896)
Deferred acquisition costs ..................................... (316,439) (139,748) 128,296
Future benefit reserves ........................................ 130,745 219,191 (83,324)
Policy and contract claims and other policyholder funds ........ (64,700) 19,315 206,366
Unearned premiums .............................................. (7,404) (106) (4,765)
Reinsurance payable ............................................ (57,139) (65,413) 13,820
Deferred income on reinsurance ................................. (20,359) (20,385) 80,823
Current tax recoverable ........................................ (50,307) 9,832 (6,424)
Accrued expenses and other liabilities ......................... (2,328) 10,460 (52,776)
Commissions due and accrued .................................... 7,298 1,269 5,627
Other, net ....................................................... 6,479 (11,508) 3,821
----------------------------------------------
Total adjustments....................................... 327,006 330,593 (208,863)
----------------------------------------------
Net cash provided by (used in) operating activities....... 282,027 436,627 (250,400)
----------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
7
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
-----------------------------------------------
<S> <C> <C> <C>
Cash flows provided by (used in) operating activities: $ 282,027 436,627 (250,400)
Purchase of fixed maturity securities ..................... $(4,296,080) (2,048,850) (1,171,682)
Purchase of securities held under agreement to repurchase . (812,219) 0 0
Purchase of equity securities ............................. (454,448) (1,262,887) (404,985)
Purchase of real estate ................................... (57,742) (169,960) (66,502)
Purchase of options ....................................... (140,512) (84,045) (22,145)
Funding of mortgage loans ................................. (124,437) (85,559) (114,840)
Sale and redemption of fixed maturity securities .......... 2,442,611 1,101,652 1,123,115
Matured fixed maturity securities ......................... 65,080 93,125 21,280
Sale of equity securities ................................. 456,238 1,263,995 385,559
Sale of real estate ....................................... 686 487 0
Sale of interest in unconsolidated subsidiary ............. 3,558 0 0
Change in securities under agreements to repurchase ....... 819,968 0 0
Sale of options ........................................... 133 0 0
Repayment of mortgage loans ............................... 24,993 47,945 41,355
Net change in short-term securities ....................... 11,833 (169,953) 38,121
Purchase of home office property and equipment ............ (51,934) (36,765) (4,972)
Purchase of interest in equity method investees ........... (9,320) (24,357) 0
Loan to affiliate ......................................... (100,000) 0 0
Purchase of Life USA, net of cash acquired ................ 0 0 (370,881)
Other, net ................................................ (17,388) (24,914) (5,438)
Net cash used in investing activities ..................... (2,238,980) (1,400,086) (552,015)
-----------------------------------------------
Cash flows provided by financing activities:
Policyholders' deposits to account balances ............... $ 2,958,810 1,957,756 1,033,877
Policyholders' withdrawals from account balances .......... (1,076,940) (1,060,027) (663,733)
Change in amounts drawn in excess of bank balances ........ 36,552 31,144 2,782
Change in mortgage notes payable .......................... 62,712 0 0
Capital contribution ...................................... 0 0 423,186
-----------------------------------------------
Net cash provided by (used in) operating activities ....... 1,981,134 928,873 796,112
-----------------------------------------------
Net Change in cash ........................................ 24,181 (34,586) (6,303)
Cash at beginning of year ......................................... 41,627 76,213 82,516
-----------------------------------------------
Cash at end of year ............................................... $ 65,808 41,627 76,213
===============================================
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
8
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (IN THOUSANDS)
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Supplemental disclosures of noncash transactions:
Fair value of assets acquired in acquisition of LifeUSA:
Fixed maturity securities.................................... $ 0 0 2,283,214
Equity securities............................................ 0 0 21,358
Certificates of deposit and short-term securities............ 0 0 11,285
Policy loans................................................. 0 0 37,618
Options...................................................... 0 0 20,491
Cash......................................................... 0 0 62,767
Accrued investment income.................................... 0 0 35,204
Receivables (net of allowance for uncollectible accounts
of $0, $0, $145).......................................... 0 0 4,768
Recoverable on future policy benefit reserves - annuity...... 0 0 3,023,377
Deferred tax asset........................................... 0 0 29,825
Other assets................................................. 0 0 21,291
Liabilities assumed in acquisition of LifeUSA:
Future policy benefit reserves - annuity..................... 0 0 5,395,155
Reinsurance payable.......................................... 0 0 69,022
Accrued expenses............................................. 0 0 14,611
Commissions due and accrued.................................. 0 0 9,277
Other policyholder funds..................................... 0 0 29,729
Other liabilities............................................ 0 0 42,552
See accompanying notes to consolidated financial statements.
</TABLE>
9
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allianz Life Insurance Company of North America (the Company) is a wholly owned
subsidiary of Allianz of America, Inc. (AZOA), a wholly owned subsidiary of
Allianz Aktiengesellschaft Holding (Allianz AG), a Federal Republic of Germany
company.
The Company is a life insurance company that is licensed to sell group and
individual life, annuity and accident and health policies in the United States,
Canada and several U.S. territories. Based on 2001 net revenues and
considerations, 43%, 38% and 19% of the Company's business are life, accident
and health and annuity, respectively. The Company has made the decision to
terminate all group accident and health reinsurance assumed business and to no
longer pursue the broker administrator distribution channel. The group accident
and health business will decline significantly as a result of these decisions.
The Company's primary distribution channels are through independent agents,
strategic alliances with other insurance companies and third party marketing
organizations.
Following is a summary of the significant accounting policies reflected in the
accompanying consolidated financial statements.
BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP)
which vary in certain respects from accounting rules prescribed or permitted by
state insurance regulatory authorities. The accounts of the Company's major
subsidiaries, LifeUSA Insurance Company (LifeUSA) and Preferred Life Insurance
Company of New York, and other less significant subsidiaries have been
consolidated. The consolidated financial statements only include the results of
LifeUSA's operations subsequent to October 1, 1999, the date of its acquisition
by the Company (see note 2). All significant intercompany balances and
transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported assets
and liabilities, including reporting or disclosure of contingent assets and
liabilities as of the balance sheet date and the reported amounts of revenues
and expenses during the reporting period. Future events, including changes in
mortality, morbidity, interest rates and asset valuations, could cause actual
results to differ from the estimates used in the consolidated financial
statements.
TRADITIONAL LIFE, GROUP LIFE AND GROUP ACCIDENT AND HEALTH INSURANCE
Traditional life products include products with guaranteed premiums and benefits
and consist principally of whole life and term insurance policies, limited
payment contracts and certain annuity products with life contingencies.
Premiums on traditional life and group life products are recognized as income
when earned. Group accident and health premiums are recognized as earned on a
pro rata basis over the risk coverage periods. Benefits and expenses for
traditional and group products are matched with earned premiums so that profits
are recognized over the premium paying periods of the contracts. This matching
is accomplished by establishing provisions for future policy benefits and policy
and contract claims, and deferring and amortizing related policy acquisition
costs.
NONTRADITIONAL AND VARIABLE LIFE AND ANNUITY BUSINESS
Nontraditional and variable life insurance and interest sensitive contracts that
have significant mortality or morbidity risk are accounted for in accordance
with the retrospective deposit method. Interest sensitive contracts that do not
have significant mortality or morbidity risk are accounted for in a manner
consistent with interest bearing financial instruments. For both types of
contracts, premium receipts are reported as deposits to the contractholder's
account while revenues consist of amounts assessed against contractholders
including surrender charges and earned administrative service fees. Mortality or
morbidity charges are also accounted for as revenue on those contracts
containing mortality or morbidity risk. Benefits consist of interest credited to
contractholder's accounts, claims or benefits incurred in excess of the
contractholder's balance, and the change in fair market value of embedded
derivatives in the equity indexed annuity products.
10
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VALUE OF BUSINESS ACQUIRED AND GOODWILL
The value of insurance in force purchased is recorded as the value of business
acquired (VOBA). The initial value was determined by an actuarial study using
the present value of future profits in calculating the value of the insurance
purchased. An accrual of interest is added to the unamortized balance using the
rates credited to the policyholder accounts. The balance is amortized in
relation to the present value of expected future gross profits in the same
manner as deferred acquisition costs. The amortization period is expected to be
approximately 20 years from the date the business was acquired. The activity in
the VOBA balance is summarized below.
2001 2000 1999
----------------------------------
Balance, beginning of year $ 189,454 $ 210,363 $ 0
Additions 0 0 214,524
Interest 6,770 7,433 1,975
Amortization (24,351) (28,342) (6,136)
Cumulative adjustment-FAS 133 (11,228) 0 0
----------------------------------
Balance, end of year $ 160,645 $ 189,454 $ 210,363
----------------------------------
The net amortization of the VOBA in each of the next five years is expected to
be: 2002 - $18,629; 2003 - $18,378; 2004 - $16,513; 2005 - $13,272; and 2006
-$12,280.
Goodwill is the excess of the amount paid to acquire a company over the fair
value of its net assets and VOBA, reduced by amortization and valuation
adjustments, if any. Goodwill related to the purchase of LifeUSA has been
amortized on a straight-line basis over 20 years; all other goodwill has been
amortized over 15 years. The value of both VOBA and goodwill is monitored at
least annually based on estimates of future earnings. For VOBA, those earnings
relate to the insurance in force purchased. For goodwill, estimates are based on
production subsequent to the purchase. If estimated future earnings are less
than the carrying amount of the related asset, the carrying value of the asset
may not be recoverable. Fair value of the asset is determined based on
discounted estimated future cash flows of business purchased or future business,
as applicable. If impairment is indicated, the carrying value will be reduced to
its fair value with a corresponding charge to earnings.
DEFERRED ACQUISITION COSTS
Acquisition costs, consisting of commissions and other costs that vary with and
are primarily related to production of new business, are deferred. For
traditional life and group life products, such costs are amortized over the
revenue-producing period of the related policies using the same actuarial
assumptions used in computing future policy benefit reserves. Acquisition costs
for accident and health insurance policies are deferred and amortized over the
lives of the policies in the same manner as premiums are earned. For interest
sensitive products, acquisition costs are amortized in relation to the present
value of expected future gross profits from investment margins and mortality,
morbidity and expense charges. Deferred acquisition costs amortized during 2001,
2000, and 1999 were $117,854, $162,746, and $312,036, respectively.
FUTURE POLICY BENEFIT RESERVES
Future policy benefit reserves on traditional life products are computed by the
net level premium method based upon estimated future investment yield, mortality
and withdrawal assumptions, commensurate with the Company's experience, modified
as necessary to reflect anticipated trends, including possible unfavorable
deviations. Most life reserve interest assumptions range from 3.5% to 6%.
Future policy benefit reserves for interest sensitive products are generally
carried at accumulated contract values. Reserves on some deferred annuity
contracts are computed based on contractholder cash value accumulations,
adjusted for mortality, withdrawal and interest margin assumptions. For equity
indexed products, the policyholder obligation is divided into two parts - one
part representing the fair value of the index benefit over the life of the
contract, and the residual representing the value of the host contract. The
index benefit is valued at fair value using current capital market observations
along with estimates of future policyholder behavior. The host contract is
valued consistently with similar deferred annuity contracts without an index
benefit.
11
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Future benefit reserves for variable annuity products are carried at accumulated
contract values. Any additional reserves for any death benefits that may exceed
the accumulated contract values are carried at an amount greater than or equal
to a one year term cost. Fair values of investment contracts, which include
deferred annuities and other annuities without significant mortality risk, were
determined by testing amounts payable on demand against discounted cash flows
using interest rates commensurate with the risks involved. Fair values are based
on the amount payable on demand at December 31.
POLICY AND CONTRACT CLAIMS
Policy and contract claims include the liability for claims reported but not yet
paid, claims incurred but not yet reported (IBNR), and claim settlement expenses
as of December 31. Development methods are typically used in the determination
of IBNR. In cases of limited experience or lack of credible claims data, loss
ratios are used to determine an appropriate IBNR. The short-tailed claim and
IBNR liabilities are not discounted, but those claim liabilities resulting from
disability income or long term case benefits include interest and mortality
discounting.
REINSURANCE
Reinsurance premium and benefits paid or provided are accounted for on a basis
consistent with those used in accounting for original policies issued and the
terms of the reinsurance contracts. Insurance liabilities are reported before
the effects of reinsurance. Future policy benefit reserves and unpaid claims
covered under reinsurance contracts are recorded as a reinsurance recoverable.
Amounts paid or deemed to have been paid for claims covered by reinsurance
contracts are recorded as a reinsurance receivable. Reinsurance recoverables are
recognized in a manner consistent with the liabilities related to the underlying
reinsured contracts.
INVESTMENTS
The Company has classified all of its fixed maturity and equity portfolio as
"available-for-sale" and, accordingly, the securities are carried at fair value.
Securities held under agreements to repurchase are also carried at fair value.
Mortgage backed securities and structured securities are amortized using
anticipated prepayments and are accounted for using the retrospective method.
Short-term securities, which include certificates of deposit, are carried at
amortized cost, which approximates market value. Policy loans are reflected at
their unpaid principal balances. Mortgage loans are reflected at unpaid
principal balances adjusted for premium and discount amortization and an
allowance for uncollectible balances. The Company analyzes loan impairment at
least once a year when assessing the adequacy of the allowance for possible
credit losses. The Company does not accrue interest on impaired loans and
accounts for interest income on such loans on a cash basis.
Realized gains and losses are computed based on the specific identification
method. In addition, as a result of market conditions and the growth of the
Company's annuity business in 2001, it became necessary to adjust deferred
policy acquisition costs and other benefits to policyholders for unrealized
gains and losses on available for sale instruments that support policyholder
liabilities. Changes in the fair value of available for sale investments are
reflected as a direct charge or credit to accumulated other comprehensive income
in stockholder's equity, net of related adjustments for deferred policy
acquisition costs and deferred taxes that would have been recorded if these
investments would have been sold as of the balance sheet date.
Impairments in the value of securities held by the Company, considered to be
other than temporary, are recorded as a reduction of the cost of the security,
and a corresponding realized loss is recognized in the Consolidated Statement of
Operations. The Company reviews all securities on a quarterly basis and
recognizes impairment after evaluating various subjective and objective factors,
such as the financial condition of the issuer, market and industry.
As of December 31, 2001 and 2000, investments with a carrying value of $80,233
and $75,110, respectively, were held on deposit with various insurance
departments and in other trusts as required by statutory regulations.
12
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The fair values of invested assets, excluding investments in real estate, are
deemed by management to approximate their estimated market values. The fair
value of fixed maturity, securities held under agreements to repurchase and
equity securities is based primarily on independent pricing services, broker
quotes and other independent information. The fair value of mortgage loans has
been calculated using discounted cash flows and is based on pertinent
information available to management as of year-end. Policy loan balances which
are supported by the underlying cash value of the policies approximate fair
value. Changes in market conditions subsequent to year-end may cause estimates
of fair values to differ from the amounts presented herein.
INVESTMENTS RECORDED USING THE EQUITY METHOD
The Company uses the equity method of accounting for the various organizations
in which it holds a minority interest. The excess of amounts invested over the
proportionate equity in the investee's net assets has been accounted for as
goodwill and is being amortized over a 15-year life. The Company's proportionate
share of gains or losses is reflected in other income on the Consolidated
Statement of Operations.
ACCOUNTING FOR OPTION CONTRACTS
Certain annuity products provide additional benefits to the policy annuitization
value based on the growth in the Standard & Poor's (S&P) 500 Index. The Company
has analyzed the characteristics of these benefits and has purchased option
contracts tied to the S&P 500 Index with similar characteristics to economically
hedge these risks. Management monitors correlation of in force amounts and
option contract values to ensure proper matching. If persistency assumptions
were to deviate significantly from anticipated rates, management would purchase
or sell option contracts as deemed appropriate. As of December 31, 2001,
management believes a proper economic hedge exists.
The option contracts are reported at fair value on the Consolidated Balance
Sheet. The fair value of the options are obtained from counterparties and deemed
by management to approximate the estimated market values. Unrealized gains and
losses on the option contracts are recorded in investment income on the
Consolidated Statement of Operations to offset increases or decreases in the
future policy benefits liability for the index benefit that are shown in annuity
benefits on the Consolidated Statement of Operations.
The Company purchases "over-the-counter" European-Asian call option contracts
based upon the S&P 500 Index. Three types of options are purchased; five-year
options with daily averaging of the index during the last year of the contract,
five-year cliquet options, which use monthly averaging of the index during each
year and resets at each anniversary date of the option contract, and one-year
call spread with monthly averaging of the index. The strike price depends on the
product, index period, cap and credited rate.
The Company only purchases option contracts from counterparties rated A or
better and the option contracts are not used for trading purposes.
ACCOUNTING FOR FORWARD COMMITMENT CONTRACTS
As of December 31, 2001 and 2000 the Company had outstanding commitments of $0
and $669,450, respectively, to purchase securities issued by the Federal
National Mortgage Association (FNMA) and the Federal Home Loan Mortgage
Corporation (FHLMC) on a "to be announced" (TBA) basis. The interest rates on
these securities ranged from 6.5% to 7.5%. The Company received income from
commitments of this type totaling $20,943, $23,436, and $296 in 2001, 2000 and
1999, respectively, which is included in investment income on the Consolidated
Statement of Operations.
SECURITIES HELD UNDER AGREEMENTS TO REPURCHASE
During the last quarter of 2001, the Company entered into mortgage backed
security reverse repurchase agreements ("dollar rolls") with certain securities
dealers. Under this program, the Company identified certain securities for
delivery in the current month and simultaneously contracted with the same dealer
to purchase similar, but not identical, securities on a specified future date.
The Company gave up the right to receive principal and interest on the
securities identified. As of December 31, 2001, mortgage backed
13
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
securities underlying such agreements were carried at a market value of
$815,969. Other liabilities of $819,968 represent funds received under these
agreements. The interest rate on these securities was 6.5%. Funds received upon
the initial agreement are reinvested. The Company received net investment income
from transactions of this type totaling $6,206 in 2001, which is included in
investment income on the Consolidated Statement of Operations.
HOME OFFICE PROPERTY AND EQUIPMENT
Major renewals and improvements are capitalized, while maintenance and repairs
are expensed when incurred. Depreciation is computed over the estimated useful
lives of depreciable assets using the straight-line method. The cost and
accumulated depreciation for home office property and equipment sold, retired or
otherwise disposed of are relieved from the accounts, and resulting gains or
losses are reflected in income.
Preoperating and start-up costs incurred in connection with the construction of
the Company's new headquarters were capitalized until the facility became
operational. These costs will be amortized over a thirty-nine year period.
Capitalized costs, including interest, incurred in 2001 were $60,400. Interest
was capitalized in connection with the construction and recorded as part of the
asset to which it relates and will be amortized over the asset's estimated
useful life. In 2001 and 2000, $2,197 and $796, respectively, of interest was
capitalized. The amount amortized of the capitalized costs, including interest,
during 2001 was $837.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
SEPARATE ACCOUNTS
Separate accounts represent funds for which investment income and investment
gains and losses accrue directly to the policyholders and contractholders. Each
account has specific investment objectives and the assets are carried at fair
value. The assets of each account are legally segregated and are not subject to
claims that arise out of any other business of the Company.
Fair values of separate account assets were determined using the market value of
the underlying investments held in segregated fund accounts. Fair values of
separate account liabilities were determined using the cash surrender values of
the policyholder's and contractholder's account.
RECEIVABLES
Receivable balances approximate estimated fair values. This is based on
pertinent information available to management as of year-end including the
financial condition and credit worthiness of the parties underlying the
receivables.
14
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING CHANGES
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and
No. 138, was adopted effective January 1, 2001. The statement requires all
derivatives (including certain derivative instruments embedded in contracts) to
be recognized on the balance sheet at their fair values and changes in fair
value recognized in earnings or as unrealized gains (losses) in other
comprehensive income. The Company has marked all material derivative instruments
to market. Adoption of SFAS No. 133 on January 1, 2001, resulted in a cumulative
effect of change in accounting, net of taxes, of $6,257, which is being
recognized as a loss in the Consolidated Statement of Operations. This loss is
comprised of an $8,627 million net loss due to the bifurcation and fair value
determination of embedded derivatives in the equity indexed annuity products
off-set by a net gain of $2,370 to mark forward commitment contracts to fair
market values.
In September 2000, the Financial Accounting Standards Board issued SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities, a replacement of SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. This statement
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosure, but it carries
over most of SFAS No. 125 provisions without reconsideration. This statement was
effective for transfers and servicing of financial assets and extinguishment of
liabilities occurring after March 31, 2001. Adoption of this statement did not
have a material impact on the consolidated financial statements.
Effective January 1, 1999, the Company changed its methodology for calculating
deferred acquisition costs and future benefit reserves for two tiered deferred
annuities. The revised calculation better reflects the income streams from this
product. Under the previous method of accounting, a disproportionate amount of
gains were recognized when contract annuitization or surrenders occurred. The
new methodology provides for profit emergence over the life of the block of
annuities. The cumulative effect of the change in accounting principle for the
years prior to 1999 in the amount of $16,122, net of taxes, is recorded in the
accompanying Consolidated Statement of Operations.
In 1999, the Company adopted Statement of Position (SOP) 97-3, Accounting for
Insurance and Other Enterprises for Insurance-Related Assessment, and SOP 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use. No material adjustments were made to the consolidated financial statements
upon adoption of these statements.
ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED
In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001, as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies
criteria that must be met in order for the intangible assets acquired in a
purchase method business combination to be recognized and reported apart from
goodwill. Statement 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
The Company is required to adopt the provisions of Statement 141 immediately,
and Statement 142 effective January 1, 2002. Furthermore, goodwill and
intangible assets determined to have an indefinite useful life acquired in a
purchase business combination completed after June 30, 2001, but before
Statement 142 is adopted in full, will not be amortized, but will continue to be
evaluated for impairment in accordance with the appropriate pre-Statement 142
accounting literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to be amortized and
tested for impairment in accordance with the pre-Statement 142 accounting
literature prior to the full adoption of Statement 142.
Statement 141 will require, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and make any necessary reclassifications in
order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
15
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.
As of the date of adoption, the Company expects to have unamortized goodwill in
the amount of $304,074, which will be subject to the provisions of Statements
141 and 142. Amortization expense related to the goodwill was $17,368, $16,744
and $3,847 for the years ended December 31, 2001, 2000 and 1999, respectively.
The Company did acquire two minority-owned organizations after June 30, 2001
that resulted in goodwill of $5,000. Since these acquisitions were completed
after June 30, 2001 goodwill was not amortized throughout the remainder of the
year. The Company is continuing to research Statement 142 but does not
anticipate reporting goodwill impairment upon adoption.
Statement of Financial Accounting Standard No. 143, Accounting for Asset
Retirement Obligations, addresses the accounting for obligations arising from
the retirement of all tangible long-lived assets and expands the scope to
include obligations that are identifiable by the entity upon acquisition and
construction and during the operating life of a long-lived asset. This statement
is effective for financial statements issued for fiscal years beginning after
June 15, 2002. Adoption of this statement is not expected to have a material
impact on the consolidated financial statements.
Statement of Financial Accounting Standards No. 144, Accounting for Impairment
or Disposal of Long-Lived Assets, replaces FASB Statement No. 121, Accounting
for the Impairment f Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of as well as APB Opinion No. 30, Reporting Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business. This statement is effective
for financial statements issued for fiscal years beginning after December 15,
2001 and interim periods within those fiscal years. Adoption of this statement
is not expected to have a material impact on the consolidated financial
statements.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform to the current
year presentation.
16
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(2) BUSINESS COMBINATION
On October 1, 1999, the Company acquired all of the outstanding capital stock
(including all outstanding options) of LifeUSA Holding, Inc. that it did not
already own for approximately $423,000 in cash. The acquisition was financed by
a capital contribution from AZOA.
The acquisition was accounted for under the purchase method of accounting and,
accordingly, the consolidated financial statements only include the results of
LifeUSA's operations from the date of acquisition. The value of business
acquired was approximately $215,000 and is amortized in relation to the present
value of future gross profits, which will be approximately 20 years. The
remaining excess of the purchase price over the fair value of assets acquired in
the amount of $308,000 was recorded as goodwill and is amortized on a
straight-line basis over 20 years through 2001.
During 1999, expenses of approximately $7,000 were recorded related to the
acquisition of LifeUSA and its integration with the Company. These expenses
resulted primarily from the costs of the integration of the Company's and
LifeUSA's strategies, policies and practices. These charges include filing fees,
legal fees and other consulting fees related to the acquisition.
Following are the Company's unaudited pro forma results for the years ended
December 31, 1999 assuming the acquisition occurred on January 1, 1999.
UNAUDITED
1999
-----------
Total revenue ....................................... $ 1,766,792
Net (loss) income ................................... (44,624)
-----------
These unaudited pro forma results have been prepared for comparative purposes
only and include additional amortization expenses as a result of goodwill and
certain other adjustments. They do not purport to be indicative of the results
of operations that actually would have resulted had the combination occurred on
January 1, 1999 or that may result in the future.
17
-----------------------------------------
<TABLE>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
3) INVESTMENTS
Investments at December 31, 2001 consist of:
<CAPTION>
AS
SHOWN ON
AMORTIZED ESTIMATED CONSOLIDATED
COST FAIR BALANCE
OR COST VALUE SHEET
----------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities:
U.S. government................................................ $ 1,453,503 1,461,090 1,461,090
States and political subdivisions.............................. 75,510 77,281 77,281
Foreign government............................................. 95,761 101,023 101,023
Public utilities............................................... 249,845 247,030 247,030
Corporate securities........................................... 4,793,792 4,896,747 4,896,747
Mortgage backed securities..................................... 378,771 380,102 380,102
Collateralized mortgage obligations............................ 328,756 349,373 349,373
----------------------------------------------
Total fixed maturities....................................... $ 7,375,938 7,512,646 7,512,646
----------------------------------------------
Securities held under agreements to repurchase.................... $ 812,219 815,969 815,969
----------------------------------------------
Equity securities:
Common stocks:
Banks, trusts and insurance companies........................ 1,300 2,350 2,350
Industrial and miscellaneous................................. 476,645 466,271 466,271
Preferred stocks............................................... 7,806 7,806 7,806
----------------------------------------------
Total equity securities...................................... $ 485,751 476,427 476,427
----------------------------------------------
Other investments:
Mortgage loans on real estate.................................. 665,991 XXXXX 665,991
Certificates of deposit and short-term securities.............. 297,648 XXXXX 297,648
Policy loans................................................... 31,933 XXXXX 31,933
Real estate.................................................... 355,403 XXXXX 355,403
Partnerships................................................... 32,863 XXXXX 32,863
Options........................................................ 278,612 XXXXX 173,410
Loan to parent company......................................... 100,000 XXXXX 100,000
Investment in equity method investees.......................... 4,779 XXXXX 4,779
Other long-term investments.................................... 1,841 XXXXX 1,841
----------------------------------------------
Total other investments...................................... $ 1,769,070 XXXXX 1,663,868
----------------------------------------------
Total investments............................................ $10,442,978 XXXXX 10,468,910
==============================================
</TABLE>
18
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(3) INVESTMENTS (CONTINUED)
At December 31, 2001 and 2000, the amortized cost, gross unrealized gains, gross
unrealized losses and estimated fair values of securities are as follows:
<TABLE>
<CAPTION>
AMORTIZED GROSS GROSS ESTIMATED
COST UNREALIZED UNREALIZED FAIR
OR COST GAINS LOSSES VALUE
------------------------------------------------------------
<S> <C> <C> <C> <C>
2001:
Fixed maturity securities:
U.S. government................................ $1,453,503 18,287 10,700 1,461,090
States and political subdivisions.............. 75,510 2,671 900 77,281
Foreign government............................. 95,761 5,293 31 101,023
Public utilities............................... 249,845 3,582 6,397 247,030
Corporate securities........................... 4,793,792 183,614 80,659 4,896,747
Mortgage backed securities..................... 378,771 2,959 1,628 380,102
Collateralized mortgage obligations............ 328,756 20,631 14 349,373
------------------------------------------------------------
Total fixed maturity securities.............. 7,375,938 237,037 100,329 7,512,646
Securities held under agreements to repurchase 812,219 3,750 0 815,969
Equity securities.............................. 485,751 33,677 43,001 476,427
------------------------------------------------------------
Total........................................ $8,673,908 274,464 143,330 8,805,042
============================================================
2000:
Fixed maturity securities:
U.S. government................................ 798,968 27,286 162 826,092
States and political subdivisions.............. 86,944 2,234 1,111 88,067
Foreign government............................. 143,091 3,952 98 146,945
Public utilities............................... 173,045 3,487 4,011 172,521
Corporate securities........................... 3,536,710 80,945 121,740 3,495,915
Mortgage backed securities..................... 294,327 11,466 177 305,616
Collateralized mortgage obligations............ 541,085 14,912 249 555,748
------------------------------------------------------------
Total fixed maturity securities.............. 5,574,170 144,282 127,548 5,590,904
Equity securities.............................. 567,837 136,513 103,428 600,922
------------------------------------------------------------
Total........................................ $6,142,007 280,795 230,976 6,191,826
============================================================
</TABLE>
The net unrealized gains (losses) included in stockholder's equity consists of
the following at December 31:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Fixed maturities.......................................... $ 136,708 16,734 (132,813)
Securities held under agreements
to repurchase........................................... 3,750 0 0
Equities.................................................. (9,324) 33,085 239,327
Adjustments for:
Deferred policy acquisition costs....................... (86,817) 0 0
Deferred taxes.......................................... (15,582) (17,437) (37,280)
----------------------------------------------
Net unrealized gains...................................... 28,735 32,382 69,234
==============================================
</TABLE>
19
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(3) INVESTMENTS (CONTINUED)
The changes in net unrealized gain and (losses) on fixed maturity securities and
securities held under agreements to repurchase before adjustments for deferred
taxes and deferred policy acquisition costs increased (decreased) $123,724,
$149,547, and $(277,300) in each of the years ended December 31, 2001, 2000 and
1999, respectively.
The changes in net unrealized gains and (losses) in equity investments, before
deferred taxes, which include common stocks and nonredeemable preferred stocks
were $(42,409), $(206,242), and $5,676 for the years ended December 31, 2001,
2000 and 1999, respectively.
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 2001, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------------------------
<S> <C> <C>
Due in one year or less ............................... $ 76,796 79,480
Due after one year through five years ................. 2,191,194 2,260,992
Due after five years through ten years ................ 2,506,092 2,521,820
Due after ten years ................................... 1,894,330 1,920,880
Mortgage backed securities and collateralized
mortgage obligations................................ 707,526 729,474
--------------------------
Totals .............................................. $7,375,938 7,512,646
==========================
</TABLE>
Proceeds from sales of available-for-sale fixed maturity securities investments
during 2001, 2000 and 1999 were $2,343,370, $595,935, and $923,571,
respectively. Gross gains of $51,706, $12,308, and $14,709 and gross losses of
$35,434, $22,673, and $19,183 were realized on sales of securities in 2001, 2000
and 1999, respectively. In 2001, a loss of $35,674 was recognized on fixed
maturity securities for other than temporary impairment. The Company also
purchased and sold forward commitments of $5,323,595 during 2001.
Proceeds from the sale of available-for-sale equity securities investments were
$456,238, $1,263,995, and $385,559, during 2001, 2000 and 1999, respectively.
Gross gains of $84,386, $185,969, and $137,211 and gross losses of $78,928,
$41,099, and $20,534 were realized on those sales in 2001, 2000 and 1999,
respectively. In 2001 and 2000, losses of $85,631 and $12,100, respectively,
were recognized on equity securities for other than temporary impairment.
As of December 31, 2001 and 2000, the Company held options with an amortized
cost of $278,612 and $135,176, and fair market value of $173,410 and $101,796,
respectively. The notional amounts of the option contracts were $1,716,248 and
$838,517 at December 31, 2001 and 2000, respectively.
20
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(3) INVESTMENTS (CONTINUED)
Net realized investment gains (losses) for the respective years ended December
31 are summarized as follows:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities........................................ $ (19,402) (10,365) (4,474)
Equity securities................................................ (80,573) 132,770 116,677
Mortgage loans................................................... 0 0 (1,680)
Real estate...................................................... 5,857 0 2,331
Other............................................................ (3,416) 446 (601)
----------------------------------------------
Net gains before taxes........................................ (97,534) 122,851 112,253
Tax (benefit) expense on net realized (losses) gains............. (34,137) 42,998 39,289
----------------------------------------------
Net (losses) gains after taxes................................ $ (63,397) 79,853 72,964
==============================================
</TABLE>
<TABLE>
The valuation allowances on mortgage loans at December 31, 2001, 2000 and 1999
and the changes in the allowance for the years then ended are summarized as
follows:
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Beginning of Year................................................ $ 11,279 11,279 9,599
Charged to operations......................................... 0 0 1,680
Charged to allowance.......................................... (1,094) 0 0
----------------------------------------------
End of Year...................................................... $ 10,185 11,279 11,279
==============================================
</TABLE>
<TABLE>
Major categories of net investment income for the respective years ended
December 31 are:
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Interest:
Fixed maturity securities.................................... $ 453,837 351,203 210,332
Mortgage loans............................................... 47,744 43,125 40,011
Policy loans................................................. 1,695 1,658 737
Short-term securities........................................ 16,786 17,796 1,823
Dividends:
Preferred stock.............................................. 93 19 212
Common stock................................................. 5,019 5,852 5,259
Change in market value of options............................... (68,906) (50,466) 10,472
Interest on assets held by reinsurers........................... 6,023 6,483 8,097
Forward commitment income....................................... 34,023 23,436 296
Rental income on real estate.................................... 47,861 24,615 13,356
Other invested assets........................................... 16,535 80 759
----------------------------------------------
Total investment income.................................... 560,710 423,801 291,354
Investment expenses............................................. 40,698 19,902 11,372
----------------------------------------------
Net investment income...................................... $ 520,012 403,899 279,982
==============================================
</TABLE>
21
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
<TABLE>
(4) SUMMARY TABLE OF FAIR VALUE DISCLOSURES
<CAPTION>
2001 2000
------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------- ----- ------- -----
<S> <C> <C> <C> <C>
Financial assets
Fixed maturity securities:
U.S. Government............................... $1,461,090 1,461,090 826,092 826,092
States and political subdivisions............. 77,281 77,281 88,067 88,067
Foreign governments........................... 101,023 101,023 146,945 146,945
Public utilities.............................. 247,030 247,030 172,521 172,521
Corporate securities.......................... 4,896,747 4,896,747 3,495,915 3,495,915
Mortgage backed securities.................... 380,102 380,102 305,616 305,616
Collateralized mortgage obligations........... 349,373 349,373 555,748 555,748
Securities held under agreements to repurchase.. 815,969 815,969 0 0
Equity securities............................... 476,427 476,427 600,922 600,922
Mortgage loans.................................. 665,991 700,322 566,547 591,485
Short term securities........................... 297,648 297,648 309,524 309,524
Policy loans.................................... 31,933 31,933 25,336 25,336
Options......................................... 173,410 173,410 101,796 101,796
Loan to parent company.......................... 100,000 100,000 0 0
Cash............................................ 65,808 65,808 41,627 41,627
Separate accounts assets........................ 5,667,840 5,667,840 6,822,883 6,822,883
Financial liabilities
Investment contracts............................ 11,099,358 9,543,979 8,846,849 7,332,724
Securities held under agreements to repurchase.. 819,968 819,968 0 0
Mortgage notes payable.......................... 108,848 108,848 46,136 46,136
Separate account liabilities.................... 5,667,840 5,572,641 6,822,883 6,719,606
============================================================
</TABLE>
See Note 1 "Summary of Significant Accounting Policies" for description of the
methods and significant assumptions used to estimate fair values.
(5) LONG TERM DEBT
On April 26, 2000, the Company entered into a Loan Agreement with Wells Fargo
National Bank (Wells Fargo) for $110,000, including a $1,133 irrevocable standby
letter of credit issued in favor of the Housing and Redevelopment Authority in
and for The City of Golden Valley. The loan is for the purchase of land and the
construction of the Company's new headquarters. The interest is treated as an
additional advance at the end of each month and is calculated at either the
LIBOR plus 0.625% or the bank's prime rate. The fee for the letter of credit is
0.15625% on the portion available. If there is a draw on the letter of credit,
interest is calculated at prime plus 2%. As of December 31, 2001 and 2000, the
amount drawn on the loan, including capitalized interest, was $99,848 and
$37,136, respectively. The Company did not draw on the letter of credit and it
was cancelled on October 25, 2001. The loan will mature on April 29, 2002,
however, prepayment is permitted. The Company is obligated to pledge to Wells
Fargo FNMA, GNMA or US Treasury securities equal to 110% of the principal
outstanding plus the maximum amount which may be drawn under the letter of
credit. As of December 31, 2001 and 2000, $109,981 and $42,736 was pledged in
accordance with the agreement, respectively.
22
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(6) ACCIDENT AND HEALTH CLAIMS RESERVES
Accident and health claim reserves are based on estimates that are subject to
uncertainty. Uncertainty regarding reserves of a given accident year is
gradually reduced as new information emerges each succeeding year, thereby
allowing more reliable re-evaluations of such reserves. While management
believes that reserves as of December 31, 2001 are adequate, uncertainties in
the reserving process could cause such reserves to develop favorably or
unfavorably in the near term as new or additional information emerges. Any
adjustments to reserves are reflected in the operating results of the periods in
which they are made. Movements in reserves, which are small relative to the
amount of such reserves, could significantly impact future reported earnings of
the Company.
<TABLE>
Activity in the accident and health claim reserves is summarized as follows:
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Balance at January 1, net of reinsurance
recoverables of $124,463, $184,880 and $133,174................ $ 382,805 385,051 375,190
Adjustment primarily related to commutation and assumption
reinsurance on blocks of business.............................. (90,030) 0 (53,585)
Incurred related to:
Current year................................................... 261,015 305,805 439,065
Prior years.................................................... (10,371) (547) 5,557
----------------------------------------------
Total incurred 250,644 305,258 444,622
----------------------------------------------
Paid related to:
Current year................................................... 128,854 119,238 186,750
Prior years.................................................... 146,800 188,266 194,426
----------------------------------------------
Total paid....................................................... 275,654 307,504 381,176
----------------------------------------------
Balance at December 31, net of reinsurance
recoverables of $126,398, $124,463, $184,880.................. $ 267,765 382,805 385,051
==============================================
</TABLE>
As a result of changes in estimates of claims incurred in prior years, the
accident and health claim reserves incurred decreased by $10,371 and $547 in
2001 and 2000, respectively. The change in amounts are the result of normal
reserve development inherent in the uncertainty of establishing the liability
for accident and health claim reserves. Additional losses of $5,557 were
incurred in 1999 on prior year incurred claims primarily on the reinsurance
assumed (non-HMO) business. Paid claims in 2001 and 2000 are significantly lower
than 1999 due to the termination of the reinsurance assumed business and
discontinuation of the broker administrator business.
23
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(7) REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
risks under excess coverage and coinsurance contracts. The Company retains a
maximum of $3,000 coverage per individual life. Reinsurance contracts do not
relieve the Company from its obligations to policyholders. Failure of reinsurers
to honor their obligations could result in losses to the Company. The Company
evaluates the financial condition of its reinsurers and monitors concentrations
of credit risk to minimize its exposure to significant losses from reinsurer
insolvencies. A contingent liability exists to the extent that the Company's
reinsurers are unable to meet their contractual obligations. Management is of
the opinion that no liability will accrue to the Company with respect to this
contingency.
Life insurance, annuities and accident and health business assumed from and
ceded to other companies is as follows:
<TABLE>
<CAPTION>
PERCENTAGE
ASSUMED CEDED OF AMOUNT
DIRECT FROM OTHER TO OTHER NET ASSUMED
YEAR ENDED AMOUNT COMPANIES COMPANIES AMOUNT TO NET
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 2001:
Life insurance in force........... $29,148,472 194,301,542 25,852,914 197,597,100 98.3%
------------------------------------------------------------------------------
Premiums:
Life........................... 147,396 390,343 122,058 415,681 93.9%
Annuities...................... 200,117 447 23,359 177,205 0.3%
Accident and health............ 452,519 141,156 229,580 364,095 38.8%
------------------------------------------------------------------------------
Total premiums............... $ 800,032 531,946 374,997 956,981 55.6%
==============================================================================
December 31, 2000:
Life insurance in force........... $36,767,941 168,888,297 24,531,393 181,124,845 93.2%
------------------------------------------------------------------------------
Premiums:
Life........................... 184,310 330,961 126,045 389,226 85.0%
Annuities...................... 185,388 1,005 13,343 173,050 0.6%
Accident and health............ 480,539 174,335 205,891 448,983 38.8%
------------------------------------------------------------------------------
Total premiums............... $ 850,237 506,301 345,279 1,011,259 50.1%
==============================================================================
December 31, 1999:
Life insurance in force........... $36,994,161 129,809,733 24,174,006 142,629,888 91.0%
------------------------------------------------------------------------------
Premiums:
Life........................... 205,208 273,604 67,069 411,743 66.5%
Annuities...................... 199,341 39,729 95,232 143,838 27.6%
Accident and health............ 541,847 302,059 315,938 527,968 57.2%
------------------------------------------------------------------------------
Total premiums............... $ 946,396 615,392 478,239 1,083,549 56.8%
==============================================================================
</TABLE>
Included in reinsurance recoverables at December 31, 2001 are $2,094,812,
$878,968, and $583,942 recoverable from three insurers who, as of December 31,
2001, were rated A or higher by A.M. Best's Insurance Reports.
Of the amounts ceded to others, the Company ceded life insurance inforce of
$5,958,233, $4,779,834, and $3,387,592, in 2001, 2000 and 1999, respectively,
and life insurance premiums earned of $10,774, $8,764, and $6,008, in 2001, 2000
and 1999, respectively, to its ultimate parent Allianz AG. The Company also
ceded accident and health premiums earned to Allianz AG of $9,128, $161, and
$3,131, in 2001, 2000 and 1999, respectively.
24
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(7) REINSURANCE (CONTINUED)
Throughout 2001, the Company has entered into numerous reinsurance arrangements
with unrelated insurance companies to reinsure group accident and health
reinsurance assumed business as well as business produced through the broker
administrator distribution channel. In connection with these agreements, the
Company has ceded group accident and health and life premium of $55,398 and
received expense allowances of $11,921 in 2001.
Effective January 1, 2001, the Company entered into a coinsurance agreement with
its subsidiary, LifeUSA, to coinsure all retained business of LifeUSA including
life insurance policies, annuity contracts, and long term care policies. The
transaction also involved the Company recapturing annuity business previously
ceded to LifeUSA. As this transaction was with LifeUSA, there was no impact to
the Company on a consolidated basis. On a statutory basis, in connection with
this agreement, the Company assumed $3,045,259 of future benefit reserves and
paid a ceding commission of $180,500 to LifeUSA.
Effective May 1, 2001, the Company entered into an assumption reinsurance
agreement whereby a Canadian disability block of business was sold to an
unrelated insurance company. Assumption reinsurance transfers all duties,
obligations and liabilities in connection with these policies to the unrelated
insurance company. The Company transferred reserves of $77,778 and recognized a
loss of $3,836 in connection with this agreement. In 2001, the Company also
entered in to a commutation agreement with an unrelated company transferring net
reserves of $12,252 and recognizing a gain of $6,934.
Effective December 31, 2001, the Company entered into a combination coinsurance
and modified coinsurance contract as well as a yearly renewable term reinsurance
agreement with an unrelated insurance company to reinsure a block of traditional
life business. This agreement does not qualify as reinsurance according to
Statement of Financial Accounting Standard (SFAS)113, Accounting and Reporting
for Reinsurance of Short-Duration and Long-Duration Contracts, but does qualify
as financial reinsurance under statutory accounting. In connection with this
agreement, the Company ceded, on a statutory basis, premium of $97,929,
recognized a recoverable on future benefit reserves of $85,159 and a ceding
allowance of $63,472. Impact under GAAP accounting is immaterial.
Effective December 31, 2001, the Company entered into another combination
coinsurance and modified coinsurance contract with an unrelated insurance
company to reinsure a block of inforce variable annuity business. This agreement
also did not qualify as reinsurance under SFAS 113, but is reported as financial
reinsurance under statutory reporting. In connection with this agreement, the
Company ceded, on a statutory basis, premium of $1,540,000, recognized a
recoverable on future benefit reserves of $15,000 and a ceding allowance of
$15,000. Impact under GAAP accounting is immaterial.
Effective December 31, 1999, the Company entered into a 100% coinsurance
agreement with an unrelated insurance company to coinsure the remaining block of
preneed life and annuity business with 1999 premium of $97,100. In connection
with this agreement, the Company recognized a recoverable on future benefit
reserves of $245,000, received a ceding commission of $73,900 and transferred
cash of $154,000. In March of 2000, there was an additional settlement related
to this coinsurance agreement in which the Company recognized a ceding
commission of $1,334 and transferred reserves of $621. The unearned ceding
commission represents deferred revenue that will be amortized over the
revenue-producing period of the related reinsured policies. The servicing of the
coinsured business was also transferred to a third party administrator. During
2001, 2000 and 1999 $6,247, $6,038 and $0 was amortized and included in other
revenue in the Consolidated Statements of Operations. Deferred revenue as of
December 31, 2001 and 2000 was $78,537 and $84,784, respectively.
Effective January 1, 1997, the Company entered into a 100% coinsurance agreement
with an unrelated insurance company to coinsure a block of business including
certain universal life and traditional life insurance policies and annuity
contracts. Deferred revenue resulting from this transaction is being amortized
over the revenue-producing period of the related reinsured policies. During
2001, 2000, and 1999, $12,617, $13,844, and $14,996, respectively, was amortized
and included in other revenue in the consolidated statements of operations.
Deferred revenue as of December 31, 2001 and 2000 was $64,647 and $77,203,
respectively.
25
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(8) INCOME TAXES
INCOME TAX (BENEFIT) EXPENSE
Total income tax (benefit) expense for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Income tax expense attributable to operations:
Current tax (benefit) expense................................ $ (2,544) 28,871 63,371
Deferred tax benefit......................................... (7,867) (15,917) (73,727)
----------------------------------------------
Total income tax (benefit) expense attributable to operations... $ (10,411) 12,954 (10,356)
Tax benefit due to cumulative effect of change in accounting.... (3,369) 0 (8,682)
----------------------------------------------
Total income tax (benefit) expense attributable to net income... (13,780) 12,954 (19,038)
Income tax effect on equity:
Income tax allocated to stockholder's equity:
Attributable to unrealized gains and losses for the year... (3,429) (20,273) (94,283)
----------------------------------------------
Total income tax effect on equity............................... $ (17,209) (7,319) (113,321)
==============================================
</TABLE>
COMPONENTS OF INCOME TAX (BENEFIT) EXPENSE
Income tax expense computed at the statutory rate of 35% varies from tax expense
reported in the consolidated statements of operations for the respective years
ended December 31 as follows:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Income tax (benefit) expense computed at the statutory rate....... $ (17,196) 41,646 (12,520)
Dividends received deductions and tax-exempt interest............. (4,811) (10,409) (2,605)
Adequacy release.................................................. 0 (28,010) 0
Foreign tax....................................................... (949) 935 (1,014)
Interest on tax deficiency........................................ 0 0 800
Prior year adjustment to dividends received deduction............. 5,015 0 0
Goodwill amortization............................................. 5,827 5,678 1,365
Other............................................................. 1,703 3,114 3,618
----------------------------------------------
Income tax (benefit) expense as reported....................... $ (10,411) 12,954 (10,356)
==============================================
</TABLE>
26
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(8) INCOME TAXES (CONTINUED)
<TABLE>
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES ON THE BALANCE SHEET
Tax effects of temporary differences giving rise to the significant components
of the net deferred tax liability at December 31 are as follows:
<CAPTION>
2001 2000
----------------------------
<S> <C> <C>
Deferred tax assets:
Provision for post retirement benefits.... $ 2,666 2,333
Allowance for uncollectible accounts...... 929 929
Policy reserves........................... 357,480 284,790
Net unrealized loss on investments........ 212 0
Impaired assets........................... 22,066 0
Expense accruals.......................... 28,969 36,334
Other..................................... 13,905 3,675
----------------------------
Total deferred tax assets............... 426,227 328,061
----------------------------
Deferred tax liabilities:
Deferred acquisition costs................ 364,651 263,370
Net unrealized gain on investments........ 0 5,511
Value of business acquired ............... 60,156 66,309
Other..................................... 2,482 8,232
----------------------------
Total deferred tax liabilities.......... 427,289 343,422
----------------------------
Net deferred tax liability................... $ 1,062 15,361
============================
</TABLE>
Although realization is not assured, the Company believes it is not necessary to
establish a valuation allowance for the deferred tax asset as it is more likely
than not the deferred tax asset will be realized principally through future
reversals of existing taxable temporary differences and future taxable income.
The amount of the deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future reversals of existing taxable
temporary differences and future taxable income are reduced.
The Company and its subsidiaries file a consolidated federal income tax return
with AZOA and all of its wholly owned subsidiaries. The consolidated tax
allocation agreement stipulates that each company participating in the return
will bear its share of the tax liability pursuant to United States Treasury
Department regulations. The Company, each of its insurance subsidiaries and
USAllianz Securities, Inc., generally will be paid for the tax benefit on their
losses, and any other tax attributes, to the extent they could have obtained a
benefit against their post-1990 separate return taxable income or tax. Income
taxes paid by the Company were $49,481, $16,051, and $57,121, in 2001, 2000 and
1999, respectively. At December 31, 2001 and 2000, the Company had a tax payable
(recoverable) to (from) AZOA of $(24,300) and $8,904, respectively.
At December 31, 2001 and 2000, the Company had a tax recoverable separate from
the agreement with AZOA in the amount of $26,659 and $9,556, respectively. These
amounts are for foreign taxes and LifeUSA taxes recoverable.
27
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(9) RELATED PARTY TRANSACTIONS
Effective January 26, 2001 the Company entered in to an agreement to lend AZOA
$100,000. The loan plus interest will be repaid over twelve years, semi-annual
interest payments for the first five years and level semi-annual payments of
principal and accrued interest over the last seven years. The interest rate is a
fixed rate of 7.18%. AZOA pledged as collateral a security interest in shares of
the common stock outstanding of Allianz Insurance company, which have a
statutory book value as of the date of the loan equal to 125% of the loan.
Interest of $6,681 was collected during the 2001 and is included in investment
income on the Consolidated Statements of Operations.
In conjunction with the purchase of LifeUSA on October 1, 1999, the Company
received a capital contribution from AZOA in the amount of $423,186.
The Company reimbursed AZOA $10,003, $4,729, and $3,582, in 2001, 2000 and 1999,
respectively, for certain administrative and investment management services
performed. The Company's liability to AZOA for such services was $1,180 and
$2,063 at December 31, 2001 and 2000, respectively, and is included in accrued
expenses on the Consolidated Balance Sheet.
The Company shares a data center with and receives other system support from
affiliated insurance companies. Usage and other system support charges paid by
the Company were $1,811, $31, and $902 in 2001, 2000 and 1999, respectively. The
Company's liability for data center and other system support charges was $358
and $1,237 at December 31, 2001 and 2000, respectively, and is included in
accrued expenses on the Consolidated Balance Sheet.
(10) EMPLOYEE BENEFIT PLANS
The Company participates in the Allianz Primary Retirement Plan (PRP), a defined
contribution plan. The Company contributes to the plan based on a percentage of
the participant's eligible salary. All eligible employees begin participating in
the PRP on their hire date. Participants are 100% vested in company
contributions after two years of service. It is the Company's policy to fund the
plan costs as incurred. Total PRP contributions were $3,023, $1,992, and $2,025
in 2001, 2000 and 1999, respectively.
The Company participates in the Allianz Asset Accumulation Plan (AAAP), a
defined contribution plan sponsored by Fireman's Fund Insurance Company.
Eligible employees are immediately enrolled in the AAAP upon their first day of
employment. The AAAP will accept participant's pre-tax or after-tax
contributions up to 15% of the participant's eligible compensation. Under the
eligible employees' provisions, the Company will match 75% of contributions up
to a maximum of 2% during the first year of service and 6% after the first year
of service. Participants are 100% vested in the Company's matching contribution
after three years of service. The Company may decide to declare a profit sharing
contribution under the AAAP based on its year-end results. Employees are not
required to participate in the AAAP to be eligible for the profit sharing
contribution. The expenses of administration of the Plan and the Trust Fund,
including all fees of the Trustee, Investment Manager and Auditors, shall be
payable from the Trust Fund but may, at the discretion of the Company, be paid
by the Company. Any counsel fees shall not be payable from the Trust Fund, but
shall instead be paid by the Company. It is the Company's policy to fund the
AAAP costs as incurred. The Company has expensed $2,861, $2,144, and $980 in
2001, 2000 and 1999, respectively, toward the AAAP match contributions.
The Company provides certain postretirement benefits to employees who retired on
or before December 31, 1988 or who were hired before December 31, 1988 and who
have at least ten years of service when they reach age 55. Employees of the
Company hired or rehired after December 31, 1988 or become employees of the
Company as a result of a merger or acquisition after January 1, 1989 are not
eligible for retiree medical or life insurance coverage. The Company's plan
obligation at December 31, 2001 and 2000 was $7,527 and $6,573, respectively.
This liability is included in other liabilities on the Consolidated Balance
Sheet.
The Company is participating in an Employee Stock Purchase Plan established in
2001 by AZOA that is designed to provide eligible employees with an opportunity
to purchase American Depository Shares of Allianz AG at a discounted price. An
aggregate amount of
28
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(10) EMPLOYEE BENEFIT PLANS (CONTINUED)
250,000 American Depository Shares are reserved for this plan. Allianz AG
determines the purchase price of the shares. A committee appointed by AZOA
determines the discount price. Employees are given the opportunity to purchase
these shares annually on a predetermined date set by Allianz AG. Employees are
not allowed to sell or transfer the shares for a one-year period following the
purchase date. The difference between the market price and the discount price,
or the discount, was paid by the Company in 2001 and amounted to $235.
(11) STATUTORY FINANCIAL DATA AND DIVIDEND RESTRICTIONS
Effective January 1, 2001 the Company adopted Codification as prescribed by The
National Association of Insurance Commissioners (NAIC) which resulted in an
increase to statutory surplus of approximately $16,500. Codification changed the
definition of what comprises prescribed versus permitted statutory accounting
practices, and has resulted in changes to existing accounting policies insurance
enterprises use to prepare their statutory financial statements. Statutory
accounting is directed toward insurer solvency and protection of policyholders.
Accordingly, certain items recorded in financial statements prepared under GAAP
are excluded or vary in determining statutory policyholders' surplus and gain
from operations. Currently, these items include, among others, deferred
acquisition costs, furniture and fixtures, accident and health premiums
receivable which are more than 90 days past due and undeclared dividends to
policyholders. Additionally, future life and annuity policy benefit reserves
calculated for statutory accounting do not include provisions for withdrawals.
The differences between stockholder's equity and net income reported in
accordance with statutory accounting practices on the Company's stand alone
financial statements and the accompanying GAAP consolidated financial statements
as of and for the year ended December 31 are as follows:
<TABLE>
<CAPTION>
STOCKHOLDER'S EQUITY NET INCOME (LOSS)
-----------------------------------------------------------------------------
2001 2000 2001 2000 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Statutory basis $ 700,425 808,684 (285,137) 83,732 97,768
Adjustments:
Change in reserve basis............. (791,350) (463,479) (196,531) (91,992) (80,952)
Deferred acquisition costs.......... 1,165,432 941,511 316,439 139,748 (129,412)
Value of business acquired.......... 160,645 189,454 (17,581) (20,909) (4,161)
Goodwill............................ 198,822 212,891 (17,368) (15,390) (6,373)
Net deferred taxes.................. (18,285) (15,361) 8,520 15,917 73,727
Statutory asset valuation reserve... 40,996 112,830 0 0 0
Statutory interest maintenance reserve 94,004 44,537 49,574 (9,310) (3,967)
Modified coinsurance reinsurance.... (23,504) (25,543) 46,315 28,558 35,552
Unrealized gains on investments..... 96,919 171,173 0 0 0
Nonadmitted assets.................. 29,361 22,719 0 0 0
Deferred income on reinsurance...... (146,144) (166,503) 0 0 0
Investment in subsidiaries.......... 46,772 (190,543) 0 0 0
Valuation allowance on mortgage loans (10,185) (11,279) 1,094 0 (1,680)
Loss from non-insurance subsidiaries 0 0 (1,555) (7,510) (11,714)
Income from insurance subsidiaries.. 0 0 82,674 6,236 29,425
Other............................... 20,005 (15,627) (31,423) (23,046) (39,750)
-----------------------------------------------------------------------------
As reported in the accompanying
consolidated financial
statements................... $ 1,563,913 1,615,464 (44,979) 106,034 (41,537)
=============================================================================
</TABLE>
29
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(11) STATUTORY FINANCIAL DATA AND DIVIDEND RESTRICTIONS (CONTINUED)
The Company is required to meet minimum statutory capital and surplus
requirements. The Company's statutory capital and surplus as of December 31,
2001 and 2000 were in compliance with these requirements. The maximum amount of
dividends that can be paid by Minnesota insurance companies to stockholders
without prior approval of the Commissioner of Commerce is subject to
restrictions relating to statutory earned surplus, also known as unassigned
funds. Unassigned funds are determined in accordance with the accounting
procedures and practices governing preparation of the statutory annual
statement, minus 25% of earned surplus attributable to unrealized capital gains.
In accordance with Minnesota Statutes, the Company may declare and pay from its
surplus, cash dividends of not more than the greater of 10% of its beginning of
the year statutory surplus in any year, or the net gain from operations of the
insurer, not including realized gains, for the 12-month period ending the 31st
day of the next preceding year. Ordinary dividends of $70,043 can be paid in
2002 without prior approval of the Commissioner of Commerce.
REGULATORY RISK BASED CAPITAL
An insurance enterprise's state of domicile imposes minimum risk-based capital
requirements that were developed by the NAIC. The formulas for determining the
amount of risk-based capital specify various weighting factors that are applied
to financial balances or various levels of activity based on the perceived
degree of risk. Regulatory compliance is determined by a ratio of an
enterprise's regulatory total adjusted capital to its authorized control level
risk-based capital, as defined by the NAIC. The Company met its risk based
capital requirements as of December 31, 2001 and 2000.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company is required to file annual statements with insurance regulatory
authorities, which are prepared on an accounting basis prescribed or permitted
by such authorities. Prescribed statutory accounting practices include state
laws, regulations, and general administrative rules, as well as a variety of
publications of the NAIC. Permitted statutory accounting practices encompass all
accounting practices that are not prescribed; such practices differ from state
to state, may differ from company to company within a state, and may change in
the future. The Company does not currently use permitted statutory accounting
practices that have a significant impact on its statutory financial statements.
(12) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in various pending or threatened
legal proceedings arising from the conduct of their business. The most
significant case in which the Company is a defendant, is a class action lawsuit
against Fidelity Union Life Insurance Company (FULICO) whose policies were
assumed by the Company. The Company paid claims through 2001 of $38,800 and
established provisions for benefits and expenses of $60,000 and $5,500 in 2000
and 1999, respectively, related to this case. There was no additional material
impact to the income statement in 2001 related to the reserves. In the opinion
of management, the reserves established sufficiently cover the company's
exposure. Management believes the ultimate resolution of other litigation will
not have a material effect on the consolidated financial position of the
Company.
The Company is contingently liable for possible future assessments under
regulatory requirements pertaining to insolvencies and impairments of
unaffiliated insurance companies. Provision has been made for assessments
currently received and assessments anticipated for known insolvencies.
The Company has acquired minority equity interests in certain field marketing
organizations. Certain provisions within stockholders' agreements, member
agreements and first refusal and put agreements require the Company to purchase
part or all of the stock or member interests in the entities to which these
agreements pertain, if and when the parties to these agreements exercise certain
available options. The exercise period for the various put options ranges from 5
to 11 years, the latest of which expires in 2010. If all put options were
exercised, requiring the Company to purchase all of the stock or member
interests in the entities, the total purchase price that would be paid by the
Company based on current calculations would be $75,000.
30
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
The Company entered in to a sale and leaseback agreement effective December 27,
2001 related to certain furniture and equipment. The assets were removed from
the balance sheet and sold for their net book value of $14,945. The term of the
lease is 6.5 years. The Company also leases office space. Rent expense for all
operating leases was $4,561, $3,323, and $2,862 in 2001, 2000 and 1999,
respectively. The future minimum lease payments required under these operating
leases are as follows:
Operating Lease
----------------------------------
2002 $ 3,534
----------------------------------
2003 2,750
----------------------------------
2004 2,638
----------------------------------
2005 3,181
----------------------------------
2006 and beyond 8,192
----------------------------------
Total 20,295
==================================
(13) UNUSUAL EVENTS
The Company has reported claims of $15,700 in claims (net of retrocession) in
2001 related to the September 11, 2001 attack on the United States. The majority
of the exposure was as a result of assumed reinsurance from various companies.
There are $5,000 in outstanding claim reserves as of December 31, 2001.
Management believes this reserve will be sufficient to cover any additional
claims related to this event.
(14) FOREIGN CURRENCY TRANSLATION
The net assets of the Company's foreign operations are translated into U.S.
dollars using exchange rates in effect at each year-end. Translation adjustments
arising from differences in exchange rates from period to period are included in
the accumulated foreign currency translation adjustment reported as a separate
component of comprehensive income. An analysis of this account for the
respective years ended December 31 follows:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
Beginning amount of cumulative translation adjustments $ (5,546) (4,748) (6,209)
----------------------------------------------
Aggregate adjustment for the period resulting from
translation adjustments................................... (4,500) (1,228) 2,248
Amount of income tax benefit (expense) for period related
to aggregate adjustment................................... 1,575 430 (787)
----------------------------------------------
Net aggregate translation included in equity.............. (2,925) (798) 1,461
----------------------------------------------
Ending amount of cumulative translation adjustments.......... $ (8,471) (5,546) (4,748)
----------------------------------------------
Canadian foreign exchange rate at end of year................ 0.6282 0.6672 0.6924
==============================================
</TABLE>
31
-----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(15) SUPPLEMENTARY INSURANCE INFORMATION
The following table summarizes certain financial information by line of business
for 2001, 2000 and 1999:
<TABLE>
<CAPTION>
AS OF DECEMBER 31
-------------------------------------------------------------
OTHER
DEFERRED POLICY
POLICY FUTURE CLAIMS AND
ACQUISITION BENEFIT UNEARNED BENEFITS
COSTS RESERVES PREMIUMS PAYABLE
-------------------------------------------------------------
<S> <C> <C> <C> <C>
2001:
Life............................................ $ 254,646 2,073,241 1,156 153,593
Annuities....................................... 900,108 11,298,838 0 327
Accident and health............................. 10,678 2,864 40,347 703,030
-------------------------------------------------------------
$ 1,165,432 13,374,943 41,503 856,950
==============================================================
2000:
Life............................................ $ 246,785 2,014,015 2,823 165,925
Annuities....................................... 690,254 9,007,312 0 25
Accident and health............................. 4,472 0 46,084 746,589
-------------------------------------------------------------
$ 941,511 11,021,327 48,907 912,539
==============================================================
1999:
Life............................................ $ 231,927 1,847,955 3,049 116,569
Annuities....................................... 561,966 7,796,583 0 1,771
Accident and health............................. 7,870 0 45,964 809,575
-------------------------------------------------------------
$ 801,763 9,644,538 49,013 927,915
==============================================================
</TABLE>
32
----------------------------------------
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999 (in thousands)
(15) SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
The following table summarizes certain financial information by line of business
for 2001, 2000 and 1999:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------
PREMIUM NET CHANGE
REVENUE IN
AND OTHER NET POLICY OTHER
CONTRACT INVESTMENT ACQUISITION OPERATING
CONSIDERATIONS INCOME BENEFITS COSTS (A) EXPENSES
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2001:
Life............................... $ 415,681 56,217 346,868 (9,099) 121,989
Annuities.......................... 177,206 436,766 372,787 (297,172) 527,679
Accident and health................ 364,094 27,029 266,917 (10,168) 150,487
-----------------------------------------------------------------------------
$ 956,981 520,012 986,572 (316,439) 800,155
=============================================================================
2000:
Life............................... $ 389,226 43,563 329,805 (14,858) 156,021
Annuities.......................... 173,050 337,533 254,183 (128,288) 347,694
Accident and health................ 448,983 22,803 356,783 3,398 161,542
-----------------------------------------------------------------------------
$ 1,011,259 403,899 940,771 (139,748) 665,257
=============================================================================
1999:
Life............................... $ 411,743 36,171 319,210 (14,665) 153,281
Annuities.......................... 143,838 216,554 168,451 133,268 166,715
Accident and health................ 527,968 27,257 465,139 10,539 173,910
-----------------------------------------------------------------------------
$ 1,083,549 279,982 952,800 129,142 493,906
=============================================================================
(a) See note 1 for total gross amortization.
</TABLE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The following financial statements of the Company are included in Part
B hereof.
1. Independent Auditors' Report.
2. Consolidated Balance Sheets as of December 31, 2001 and 2000.
3. Consolidated Statements of Operations for the years ended December
31, 2001, 2000 and 1999.
4. Consolidated Statements for Comprehensive Income (Loss) for the
years ended December 31, 2001, 2000 and 1999.
5. Consolidated Statements of Stockholder's Equity for the years
ended December 31, 2001, 2000 and 1999.
6. Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999.
7. Notes to Consolidated Financial Statements - December 31, 2001,
2000 and 1999.
The following financial statements of the Variable Account are
included in Part B hereof.
1. Independent Auditors' Report.
2. Statements of Assets and Liabilities as of December 31, 2001.
3. Statements of Operations for the period ended December 31, 2001.
4. Statements of Changes in Net Assets for the years ended
December 31, 2001 and 2000.
5. Notes to Financial Statements - December 31, 2001.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account(1)
2. Not Applicable
3.a. Principal Underwriter's Agreement(2)
3.b. General Agency Agreement (4)
4. Individual Variable Annuity Contract(1)
4.a. Waiver of Contingent Deferred Sales Charge Endorsement(1)
4.b. Enhanced Death Benefit Endorsement(1)
5. Application for Individual Variable Annuity Contract(1)
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8.a. Form of Fund Participation Agreement between AIM Variable
Insurance Funds, Inc., Allianz Life Insurance Company of North
America and NALAC Financial Plans LLC(3)
b. Form of Fund Participation Agreement between USAllianz Variable
Insurance Products Trust, Allianz Life Insurance Company of
North America and BISYS Fund Services Limited Partnership(3)
c. Form of Fund Participation Agreement between The Prudential Series
Fund, Inc., The Prudential Insurance Company of America, Prudential
Investment Management Services LLC and Allianz Life Insurance
Company of North America (5)
d. Form of Fund Participation Agreement between Franklin Templeton
Variable Insurance Products Trust, Templeton Variable Products Series
Fund, Franklin Templeton Distributors, Inc., and Allianz Life
Insurance Company of North America.(7)
e. Form of Fund Participation Agreement between Van Kampen Life
Investment Trust, Van Kampen Funds, Inc., Van Kampen Asset
Management Inc. and Allianz Life Insurance Company of North
America(6)
f. Form of Fund Participation Agreement between Van Kampen Life
Investment Trust, Van Kampen Funds Inc, Van Kampen Asset Management
and Allianz Life of North America (9)
g. Form of Fund Participation Agreement between Van Kampen Funds, Inc.,
and USAllianz Investor Services, LLC (9)
h. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust, and Van Kampen
Asset Management, Inc. (9)
i. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust, and Van Kampen
Investment Advisory Corporation. (9)
j. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust and Van Kampen Asset
Management, Inc. (9)
k. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust, and Alliance
Capital Management L.P. (9)
l. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust, and PIMCO
Advisers L.P. (9)
m. Portfolio Management Agreement between USAllianz Advisers,
LLC, USAllianz Variable Insurance Products Trust and Templeton
Investment Counsel,LLC. (9)
n. Form of Fund Participation Agreement between Davis Variable Account
Fund, Inc., Davis Distributors, LLC and Allianz Life Insurance
Company of North America (8)
o. Form of Fund Participation Agreement between Oppenheimer Variable
Account Funds, Oppenheimer Funds Inc. and Allianz Life Insurance
Company of North America (8)
p. Form of Fund Participation Agreement between Seligman Portfolios,
Inc. and Allianz Life Insurance Company of North America (8)
q. Form of Fund Participation Agreement between Dreyfus Investment
Portfolios and Allianz Life Insurance Company of North America (10)
9. Opinion and Consent of Counsel
10. Independent Auditors' Consent
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Data (10)
14. Company Organizational Chart (4)
15. Powers Of Attorney (8)
(1) Incorporated by reference to Registrant's Form N-4 electronically filed on
June 24, 1996.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
form N-4 electronically filed on December 13, 1996.
(3) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709 and
811-05618) electronically filed on November 12, 1999.
(4) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709 and
811-05618) electronically filed on April 27, 2000.
(5) Incorporated by reference to Post-Effective Amendment No. 2 to Registrant's
Form N-4 (File Nos. 333-82329 and 811-05618) electronically filed on
December 15, 2000.
(6) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-82329 and
811-05618) electronically filed on December 29, 1999.
(7) Incorporated by reference to Post-Effective Amendment No.18 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
April 26, 2001.
(8) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-82329 and
811-05618) electronically filed on December 29, 1999.
(9) Incorporated by reference to Post-Effective Amendment No.20 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
November 1, 2001.
(10) Incorporated by reference to Post-Effective Amendment No.21 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
April 24, 2002.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
------------------------------ ---------------------------------
<S> <C>
Robert W. MacDonald Chairman of the Board
5701 Golden Hills Drive
Minneapolis, MN 55416
Mark A. Zesbaugh Chief Executive Officer and
5701 Golden Hills Drive Director
Minneapolis, MN 55416
Gabrielle Matzdorff Sr. Vice President and
5701 Golden Hills Drive Chief Financial Officer
Minneapolis, MN 55416
Denise Blizil Senior Vice President -
5701 Golden Hills Drive Chief Administrative Officer
Minneapolis, MN 55416
Charles Kavitsky President -
5701 Golden Hills Drive Chief Marketing Officer
Minneapolis, MN 55416
Suzanne Pepin Senior Vice President -
5701 Golden Hills Drive Chief Legal Officer
Minneapolis, MN 55416
Neil McKay Senior Vice President -
5701 Golden Hills Drive Chief Actuary
Minneapolis, MN 55416
Paul M Saffert Director
Allianz of America Corp.
777 San Marin Drive
Novato, CA 94998
Michael Diekmann Director
Allianz AG
Koeniginstrausse 28
D-80802
Munich, Germany
Michael P. Sullivan Director
7505 Metro Boulevard
Minneapolis, MN 55439
Dr. Gerhard Rupprecht Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Wells Fargo and Company
Wells Fargo Center
Sixth & Marquette
Minneapolis, MN 55479-0116
Robert M. Kimmitt Director
Commerce One, Inc.
4440 Rosewood Drive
Pleasanton, CA 94588-3050
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Insurance Company organizational chart was filed as Exhibit 14 (File
Nos. 333-06709 and 811-05618) in Post-Effective Amendment No. 8 filed
April 27, 2000 and is incorporated herein by reference.
Item 27. Number of Contract Owners
As of May 31, 2002 there were 7,252 qualified Contract Owners and 17,246
non-qualified Contract Owners with Contracts in the separate account
Item 28. Indemnification
The Bylaws of the Insurance Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company
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,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
Company 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 Company 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 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.
Item 29. Principal Underwriters
a. USAllianz Investor Services, LLC is the principal underwriter for the
Contracts. It also is the principal underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers(managers) and directors (Board of
Governors) of USAllianz Investor Services, LLC:
<TABLE>
<CAPTION>
Positions and Offices
Business Address with Underwriter
---------------------- ----------------------
<S> <C>
Christopher H.Pinkerton Chairman, Chief Executive Officer, President,
5701 Golden Hills Drive Chief Manager & Director
Minneapolis, MN 55416
Tracy H. Gardner Chief Administrative Officer &
5701 Golden Hills Drive Sr. Vice President
Minneapolis, MN 55416
Michael M. Ahles Chief Financial Officer & Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Catherine Q. Farley Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Cynthia M. Robeck Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Jennifer J. Wagner Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Keith L. Johnson Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Carol B.Shaw Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Corey J. Walther Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Dave Schliesman Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Jeffrey W. Kletti Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Myron Rothstein Vice President
5701 Golden Hills Drive
Minneapolis, MN 55416
Patrick Allen Divisional VP - NE
5701 Golden Hills Drive
Minneapolis, MN 55416
Edward Barrett Divisional VP - SE
5701 Golden Hills Drive
Minneapolis, MN 55416
Kevin Rooney Divisional VP - MID
5701 Golden Hills Drive
Minneapolis, MN 55416
Gerald Boucher Divisional VP - W
5701 Golden Hills Drive
Minneapolis, MN 55416
Chris Johnston Divisional VP - Wirehouse
5701 Golden Hills Drive
Minneapolis, MN 55416
Wayne Peterson Compliance Officer
5701 Golden Hills Drive
Minneapolis, MN 55416
Stewart Gregg Secretary
5701 Golden Hills Drive
Minneapolis, MN 55416
Jan Witort Assistant Secretary
5701 Golden Hills Drive
Minneapolis, MN 55416
</TABLE>
c. Not Applicable
Item 30. Location of Accounts and Records
Michael Ahles, whose address is 5701 Golden Hills Drive, Minneapolis, Minnesota
55416 and Delaware Valley Financial Services, USAllianz Service Center, 300
Berwyn Park, Berwyn, Pennsylvania 19312, maintain physical possession of the
accounts, books or documents of the Variable Account required to be maintained
by Section 31(a) of the Investment Company Act of 1940, as amended, and the
rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
REPRESENTATIONS
Allianz Life Insurance Company of North America ("Company") hereby represents
that the fees and charges deducted under the Contract described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(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 403(b)(11) in any sales literature used 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.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it has caused this Registration
Statement to be signed on its behalf in the City of Minneapolis and State of
Minnesota, on this 29th day of August, 2002.
ALLIANZ LIFE
VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By:/s/ STEWART GREGG
--------------------------------
Senior Counsel
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By:/s/ STEWART GREGG
------------------------------
Senior Counsel
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
<TABLE>
<CAPTION>
<S> <C> <C>
Robert W. MacDonald* Chairman of the Board 08/29/2002
Robert W. MacDonald
Mark A. Zesbaugh* Director and Chief Executive Officer 08/29/2002
Mark A. Zesbaugh
Michael P. Sullivan* Director 08/29/2002
Michael P. Sullivan
Dr. Gerhard Rupprecht* Director 08/29/2002
Dr. Gerhard Rupprecht
Rev. Dennis J. Dease* Director 08/29/2002
Rev. Dennis J. Dease
James R. Campbell* Director 08/29/2002
James R. Campbell
Robert M. Kimmitt* Director 08/29/2002
Robert M. Kimmitt
Michael Diekmann* Director 08/29/2002
Michael Diekmann
Paul M Saffert* Director 08/29/2002
Paul M Saffert
Gabrielle Matzdorff* Sr. Vice President and 08/29/2002
Gabrielle Matzdorff Chief Financial Officer
Charles Kavitsky* President and 08/29/2002
Charles Kavitsky Chief Marketing Officer
Denise Blizil* Sr. Vice President and 08/29/2002
Denise Blizil Chief Administrative Officer
</TABLE>
*By Power of Attorney
By: /s/ STEWART GREGG
--------------------------------
Stewart Gregg
Attorney-in-Fact
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 22
TO
FORM N-4
ALLIANZ LIFE VARIABLE ACCOUNT B
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
EXHIBIT
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Independent Auditors' Consent
EX-99.B15 Powers of Attorney
Allianz Life Insurance Company of North America [Allianz Logo]
Stewart Gregg, FSA, MAAA
Assistant Vice President & Senior Counsel
Legal
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Telephone: 763/765 2913
Telefax: 763/765 6355
www.allianzlife.com
August 29, 2002
Board of Directors
Allianz Life Insurance Company of North America
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
RE: Opinion and Consent of Counsel
Allianz Life Variable Account B
Dear Sir or Madam:
You have requested my Opinion of Counsel in connection with the filing with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, of Post-Effective Amendment No. 22 to the Registration Statement No.
333-06709 on Form N-4 for the Individual Flexible Payment Variable Annuity
Contract to be issued by Allianz Life Insurance Company of North America and its
separate account, Allianz Life Variable Account B File No. 333-06709.
I am of the following opinions:
1. Allianz Life Variable Account B is a unit investment trust as that term
is defined in Section 4(2) of the Investment Company Act of 1940 (the Act), and
is currently registered with the Securities and Exchange Commission, pursuant to
Section 8(a) of the Act.
2. Upon the acceptance of purchase payments made by a Contract Owner
pursuant to a Contract issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such a Contract
Owner will have a legally-issued, fully-paid, non-assessable contractual
interest under such Contract.
You may use this opinion letter, or copy hereof, as an exhibit to the
Registration Statement.
I consent to the reference under the caption "Legal Opinions" contained in the
Statement of Additional Information which forms a part of the Registration
Statement.
Sincerely,
Allianz Life Insurance Company of North America
By: /s/ STEWART GREGG
------------------------
Stewart Gregg
KPMG LLP
4200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Independent Auditors' Consent
The Board of Directors of Allianz Life Insurance Company of North America and
the Contract Owners of Allianz Life Variable Account B:
We consent to the use of our report dated March 22, 2002 on the financial
statements of Allianz Life Variable Account B and our report dated January 16,
2002 on the consolidated financial statements of Allianz Life Insurance Company
of North America and subsidiaries included herein and to the reference to our
Firm under the heading "EXPERTS."
Our report dated January 16, 2002 on the consolidated financial statements of
Allianz Life Insurance Company of North America and subsidiaries refers to a
change in the method of accounting for derivative instruments in 2001 and a
change in the method of calculating deferred acquisition costs and future
benefit reserves for two-tiered annuities in 1999.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
August 29, 2002
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert W. MacDonald, Chief
Executive Officer and a Director of Allianz Life Insurance Company of North
America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg
and Wayne A. Robinson as my attorney and agent, for me, and in my name as Chief
Executive Officer and Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
/s/ Robert W. MacDonald
Robert W. MacDonald
WITNESS my hand and seal this 17 day of July 2001.
WITNESS:
Mary Ann Lemke
-----------------------
name:
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Mark A. Zesbaugh, Senior Vice
President and Chief Financial Officer of Allianz Life Insurance Company of North
America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Robert W. MacDonald, Suzanne J. Pepin, Janet L.
Witort, Stewart D. Gregg and Wayne A. Robinson each individually as my attorney
and agent, for me, and in my name as Senior Vice President and Chief Financial
Officer of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ Mark A. Zesbaugh
Mark A. Zesbaugh
WITNESS my hand and seal this 17 day of July2001.
WITNESS:
Mary Ann Lemke
-----------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Michael P. Sullivan, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Director of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ Michael P.Sullivan
Michael P. Sullivan
WITNESS my hand and seal this 17 day of July 2001.
WITNESS:
Mary Ann Lemke
------------------
name:
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Dr. Gerhard G. Rupprecht, Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Director of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ Dr.Gerhard G. Rupprecht
Dr.Gerhard G. Rupprecht
WITNESS my hand and seal this 6 day of July 2001.
WITNESS:
------------------
name:
Urkundenrolle Nr. 3767/2001
Unterschriftsbeglaubigung
Die Vorstehende, heute vor mir vollzogene Unterschrift von
Herrn Dr. Gerhard Rupprecht, Vorsitzender des Vorstands,
Geschaftsansassig in 70178 Stuttgart, Reinsburgstr. 19,
geboren am 29.11.1948
beglaubige ich.
Herr Dr. Rupprecht ist mir personlich bekannt.
Stuttgart, den 6. Juli 2001
Notar /s/ Wenz
(Wenz)
(Notary seal)
Kosten:
Gerbuhr gem. ss. 45 KostO
aus DM 50.000,00 40,00 DM
Gebuhr gem.ss.58,153 KostO 43,00 DM
Schreibauslagen 2,00 DM
16% USt. Aus DM 85,00 13,60 DM
--------
98,60 DM
Notar
Wenz
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Reverand Dennis J. Dease, Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Director of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ Dennis J. Dease
Dennis J. Dease
WITNESS my hand and seal this 17 day of July 2001.
WITNESS:
Mary Ann Lemke
-----------------------
name:
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, James R. Campbell, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Director of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ James R. Campbell
James R. Campbell
WITNESS my hand and seal this 17 day of July 2001.
WITNESS:
Mary Ann Lemke
-----------------------
name:
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert M. Kimmitt, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Director of Allianz Life on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
/s/ Robert M. Kimmitt
-----------------
Robert M. Kimmitt, Esq.
WITNESS my hand and seal this 11 day of July 2001.
WITNESS:
Lorraine Marshall
-----------------------
name:Lorraine Marshall
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Michael Diekmann, Director of Allianz
Life Insurance Company of North America (Allianz Life), a corporation duly
organized under the laws of Minnesota, do hereby appoint Robert W. MacDonald,
Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A. Robinson each
individually as my attorney and agent, for me, and in my name as Director of
Allianz Life on behalf of Allianz Life, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of aforesaid Acts.
/s/ Michael Diekmann
-----------------------------
Michael Diekmann
WITNESS my hand and seal this 13th day of February 2002.
WITNESS:
/s/ Judy K. Bechtold
-----------------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Paul M. Saffert, Director of Allianz
Life Insurance Company of North America (Allianz Life), a corporation duly
organized under the laws of Minnesota, do hereby appoint Robert W. MacDonald,
Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A. Robinson each
individually as my attorney and agent, for me, and in my name as Director of
Allianz Life on behalf of Allianz Life, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of aforesaid Acts.
/s/ Paul Saffert
-----------------------------
Paul M. Saffert
WITNESS my hand and seal this 17 day of January, 2002.
WITNESS:
/s/ Elizabeth S. Mckibben
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Gabby Matzdorff, Senior Vice President
and Chief Financial Officer of Allianz Life Insurance Company of North America
(Allianz Life), a corporation duly organized under the laws of Minnesota, do
hereby appoint Mark A. Zesbaugh, Suzanne J. Pepin, Janet L. Witort, Stewart D.
Gregg and Wayne A. Robinson each individually as my attorney and agent, for me,
and in my name as Senior Vice President and Chief Financial Officer of Allianz
Life on behalf of Allianz Life, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of aforesaid Acts.
/s/ Gabby Matzdorff
-----------------------------
Gabby Matzdorff
WITNESS my hand and seal this 22 day of February, 2002.
WITNESS:
/s/ Gail M. Smith
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Charles Kavitsky, President and Chief
Marketing Officer of Allianz Life Insurance Company of North America (Allianz
Life), a corporation duly organized under the laws of Minnesota, do hereby
appoint Mark Zesbaugh, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and
Wayne A. Robinson each individually as my attorney and agent, for me, and in my
name as President and Chief Marketing Officer of Allianz Life on behalf of
Allianz Life, with full power to execute, deliver and file with the Securities
and Exchange Commission all documents required for registration of a security
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended, and to do and perform each and every act that said attorney
may deem necessary or advisable to comply with the intent of aforesaid Acts.
/s/ Charles Kavitsky
----------------------
Charles Kavitsky
DATE: 6-5-02
WITNESS:
/s/ Susan Swanson
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Denise Blizil, Chief Administrative
Officer of Allianz Life Insurance Company of North America (Allianz Life), a
corporation duly organized under the laws of Minnesota, do hereby appoint Mark
A. Zesbaugh, Suzanne J. Pepin, Janet L. Witort, Stewart D. Gregg and Wayne A.
Robinson each individually as my attorney and agent, for me, and in my name as
Chief Administrative Officer of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
/s/Denise Blizil
-----------------------------
Denise Blizil
DATE: 6-5-2002
WITNESS:
/s/ Sue Swanson