UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-65080
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
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(Exact name of registrant as specified in its charter)
INDIANA 94-2786905
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
829 AXP FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA 55474
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (612) 671-3131
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE PERMITTED
ABBREVIATED NARRATIVE DISCLOSURE.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
FORM 10-Q
For the Quarter Ended September 30, 2002
Table of Contents
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 2002 (unaudited) and
December 31, 2001 3 - 4
Consolidated Statements of Income for the
three and nine months ended September 30, 2002
and 2001 (unaudited) 5 - 6
Consolidated Statements of Cash Flows for the
nine months ended September 30, 2002 and 2001
(unaudited) 7 - 8
Notes to Consolidated Financial Statements
(unaudited) 9 - 11
Item 2. Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations 12 - 16
PART II - OTHER INFORMATION 17 - 23
SIGNATURES 24
EXHIBITS 25 - 30
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
ASSETS 2002 2001
- ------
(unaudited)
---------------- ------------------
Investments:
Available for sale:
Fixed maturities, at fair value (Amortized cost:
2002, $3,934,219; 2001, $3,282,893) $4,101,039 $3,302,753
Common stocks, at fair value
(Cost: 2002, $0; 2001, $172) -- 344
Mortgage loans on real estate 601,867 654,209
Other investments 2,400 2,400
---------------- ------------------
Total investments 4,705,306 3,959,706
Cash and cash equivalents 701,650 260,214
Amounts due from brokers -- 41,705
Other accounts receivable 1,551 1,812
Accrued investment income 45,837 45,422
Deferred policy acquisition costs 260,506 217,923
Deferred income taxes -- 32,132
Other assets 14 8,527
Separate account assets 662,034 708,240
---------------- ------------------
Total assets $6,376,898 $5,275,681
================ ==================
-3-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(continued)
September 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 2002 2001
- ------------------------------------
(unaudited)
--------------- -----------------
Liabilities:
Future policy benefits:
Fixed annuities $4,943,734 $3,765,679
Universal life-type insurance 12 3
Policy claims and other
policyholders' funds 60,487 2,286
Amounts due to brokers 42,736 225,127
Deferred income taxes 14,634 --
Other liabilities 66,415 64,517
Separate account liabilities 662,034 708,240
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Total liabilities 5,790,052 4,765,852
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Stockholder's equity:
Capital stock, $150 par value per share;
100,000 shares authorized, 20,000 shares
issued and outstanding 3,000 3,000
Additional paid-in capital 341,872 341,872
Accumulated other comprehensive income (loss),
net of tax:
Net unrealized securities gains 108,433 13,021
Net unrealized derivative losses (15,338) (21,670)
---------------- ------------------
Total accumulated other comprehensive income (loss) 93,095 (8,649)
Retained earnings 148,879 173,606
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Total stockholder's equity 586,846 509,829
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Total liabilities and stockholder's equity $6,376,898 $5,275,681
=============== =================
See accompanying notes.
-4-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(unaudited)
Three months ended
September 30,
2002 2001
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Revenues:
Contractholder charges $ 1,890 $ 1,465
Mortality, expense risk and other fees 2,925 2,735
Net investment income 74,178 69,230
Net realized gain (loss) on investments 2,785 (5,945)
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Total revenues 81,778 67,485
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Benefits and expenses:
Interest credited on universal life-type
insurance and investment contracts 52,884 47,068
Amortization of deferred policy
acquisition costs 16,142 11,039
Other insurance and operating expenses 34,506 25,696
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Total benefits and expenses 103,532 83,803
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Loss before income tax benefit (21,754) (16,318)
Income tax benefit (7,965) (5,766)
--------- ---------
Net loss $(13,789) $(10,552)
========= =========
See accompanying notes.
-5-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(unaudited)
Nine months ended
September 30,
2002 2001
--------------- -----------------
Revenues:
Contractholder charges $ 4,778 $ 4,516
Mortality, expense risk and other fees 9,738 7,417
Net investment income 214,028 202,290
Net realized loss on investments (775) (90,744)
---------- ----------
Total revenues 227,769 123,479
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Benefits and expenses:
Interest credited on universal life-type
insurance and investment contracts 151,879 137,416
Amortization of deferred policy
acquisition costs 36,848 33,989
Other insurance and operating expenses 77,818 39,336
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Total benefits and expenses 266,545 210,741
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Loss before income tax benefit (38,776) (87,262)
Income tax benefit (13,842) (30,384)
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Net loss $(24,934) $(56,878)
========== ==========
See accompanying notes.
-6-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine months ended
September 30,
2002 2001
---------------- ---------------
Cash flows from operating activities:
Net loss $(24,934) $(56,878)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Change in accrued investment income (415) 9,821
Change in other accounts receivable 261 (175)
Change in other assets 8,513 (11,364)
Change in deferred policy
acquisition costs, net (42,583) (13,973)
Change in policy claims and other
policyholders' funds 58,201 (1,171)
Deferred income taxes (7,814) 13,073
Change in other liabilities 1,898 33,901
Amortization of premium, net 169 13,543
Net realized loss on investments 775 90,744
Other, net 8,920 (14,350)
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Net cash provided by operating activities $ 2,991 $63,171
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-7-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
(continued)
Nine months ended
September 30,
2002 2001
---------------- ------------------
Cash flows from investing activities:
Fixed maturities available-for-sale:
Purchases $(1,733,730) $(832,391)
Maturities, sinking fund payments and calls 345,274 248,869
Sales 741,768 482,519
Other investments:
Purchases (2,691) (6,207)
Sales 50,437 43,693
Change in amounts due from broker 41,705 961
Change in amounts due to broker (182,391) (15,864)
------------ ----------
Net cash used in investing activities (739,628) (78,420)
------------ ----------
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 1,465,983 561,392
Surrenders and death benefits (439,789) (610,839)
Interest credited to account balances 151,879 136,422
------------ -----------
Net cash provided by financing activities 1,178,073 86,975
------------ -----------
Net increase in cash and cash equivalents 441,436 71,726
Cash and cash equivalents at beginning of period 260,214 34,852
------------ ----------
Cash and cash equivalents at end of period $ 701,650 $106,578
============ ==========
See accompanying notes.
-8-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
(In thousands)
(unaudited)
1. General
The interim financial information in this report has not been audited.
In the opinion of the management of American Enterprise Life Insurance
Company (the Company), the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of normal
recurring adjustments) necessary to present fairly its balance sheet as
of September 30, 2002, statements of income for the three months and
nine months ended September 30, 2002 and 2001 and statements of cash
flows for the nine months ended September 30, 2002 and 2001. Results of
operations reported for the interim periods are not necessarily
indicative of results for the entire year. The consolidated financial
statements should be read in conjunction with the financial statements
in the Annual Report on Form 10-K of the Company for the year ended
December 31, 2001. Certain prior year amounts have been reclassified to
conform to the current year's presentation.
The Company is a stock life insurance company organized under the laws
of the State of Indiana. The Company is a wholly-owned subsidiary of
IDS Life Insurance Company (IDS Life) which is a wholly-owned
subsidiary of American Express Financial Corporation (AEFC). AEFC is a
wholly-owned subsidiary of American Express Company. The Company serves
residents of 48 states. American Enterprise REO 1, LLC is a
wholly-owned subsidiary of the Company.
2. Comprehensive Income
Total comprehensive income was $56,074 and $41,297 for the three months
and $76,810 and $39,624 for the nine months ended September 30, 2002
and 2001, respectively. The significant difference between net loss and
total other comprehensive income is a result of unrealized gains that
arose during the year on fixed maturity holdings.
3. Statements of cash flows
Cash paid for interest on borrowings totaled $nil and $15 for the nine
months ended September 30, 2002, and 2001, respectively. Cash paid for
income taxes totaled $19,417 for the nine months ended September 30,
2002 compared to cash received of $27,192 for the nine months ended
September 30, 2001.
-9-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(unaudited)
(continued)
4. Accounting developments
The Financial Accounting Standards Board is currently considering rules
that could affect the future accounting for special purpose vehicles.
Such vehicles could potentially include collateralized debt
obligations, structured loan trusts, mutual funds, hedge funds and
limited partnerships. The effect could include adjustments to current
carrying values and/or consolidation of underlying assets and
liabilities. While such rules would not change the economic value
inherent in these operations, the financial statement effect of any
changes cannot be determined until the rules are finalized.
5. Commitments and contingencies
Commitments to fund mortgage loan investments in the ordinary course of
business at September 30, 2002 aggregated $1,200.
The maximum amount of life insurance risk retained by the Company is
$750 on any policy insuring a single life and $1,500 on any policy
insuring a joint-life combination. Risk not retained is reinsured with
other life insurance companies, primarily on a yearly renewable term
basis. The Company retains all accidental death benefit and waiver of
premium risk.
In recent years, life insurance companies have been named defendants
in lawsuits, including class action lawsuits, alleging improper life
insurance sales practices, alleged agent misconduct, failure to
properly supervise agents and other matters relating to life insurance
policies and annuity contracts. The Company's parent, IDS Life, was
named a defendant in three purported class-action lawsuits. A fourth
lawsuit alleging the same allegation was also filed in federal court.
The Company is a named defendant in one of the state filed lawsuits
and the federal lawsuit. These class action lawsuits included
allegations of improper insurance and annuity sales practices
including improper replacement of existing annuity contracts and
insurance policies, improper use of annuities to fund tax deferred
contributory retirement plans, alleged agent misconduct, failure to
properly supervise agents and other matters relating to life insurance
policies and annuity contracts. In January 2000, we reached an
agreement in principle to settle the three class action lawsuits,
including the one described above. It is expected the settlement will
provide $215 million of benefits to more than two million participants
in exchange for a release by class members of all insurance and
annuity market conduct claims dating back to 1985. The settlement
received court approval. Implementation of the settlement commenced
October 15, 2001.
-10-
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(unaudited)
(continued)
5. Commitments and contingencies (continued)
Numerous individuals opted out of the settlement described above and
therefore did not release their claims against AEFC and its
subsidiaries. Some of these class members who opted out were
represented by counsel and presented separate claims to the Company.
Most of their claims have been settled.
The outcome of any litigation or threatened litigation cannot be
predicted with any certainty. However, in the aggregate, the Company
does not consider any lawsuits in which it is named as a defendant to
have a material impact on the Company's financial position or operating
results.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended September 30, 2002 Compared to Nine Months Ended
September 30, 2001:
Consolidated net loss was $25 million for the nine months ended September 30,
2002, compared to $57 million in 2001. Loss before income taxes totaled $39
million in the first nine months of 2002, compared with $87 million in the first
nine months of 2001. The change primarily reflects a net pre-tax loss of $85
million from the write-down and sale of certain high-yield securities in the
first nine months of 2001, primarily offset by an increase in total benefits and
corporate expenses in 2002.
Deposits received totaled $1.5 billion for the nine months ended September 30,
2002, compared to $673 million in 2001. The increase is primarily due to
increased sales of fixed annuities.
Contractholder charges increased 6 percent to $4.8 million for the nine months
ended September 30, 2002, compared with $4.5 million for the nine months ended
September 30, 2001, due primarily to an increase in variable annuity surrender
charges.
Mortality, expense risk and other fees increased to $9.7 million for the nine
months ended September 30, 2002 compared with $7.4 million a year ago. This was
primarily due to an increase in average separate account assets outstanding. The
Company receives a mortality and expense risk fee from the separate accounts.
Net investment income increased to $214 million for the nine months ended
September 30, 2002 compared with $202 million a year ago. This increase was
primarily due to credit-related yield adjustments on fixed maturity investments
in 2001 and higher average portfolio balances, partially offset by lower
portfolio yields in 2002.
Net realized loss on investments was $.8 million for the nine months ended
September 30, 2002 compared to a net realized loss of $91 million a year ago.
The 2001 loss was primarily due to the write-down and sale of certain high-yield
investments.
Total benefits and expenses were $267 million, an increase of 26 percent from a
year ago. The largest component of expenses, interest credited on universal-life
type insurance and investment contracts, increased 11 percent to $152 million.
This was primarily due to higher aggregate amounts of fixed annuities in force,
partially offset by a decrease in the rate of interest credited to annuity
contracts due to declining interest rates. The decreased interest rates also
resulted in a significant decrease in the market value of interest rate swaps,
which is the primary driver of the increase in other insurance and operating
expenses. The Company enters into pay-fixed, receive-variable interest rate
swaps to protect the margin between interest rates earned on investments and the
interest rates credited to annuity contract holders (interest margins).
-12-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The swaps are economic hedges that are not designated for hedge accounting
treatment under SFAS No. 133. If interest rates remain at current levels, the
decrease in the value of the interest rate swaps recognized currently will be
approximately offset in the future by increases in interest margins. Other
insurance and operating expenses also includes an increase of $1 million due to
greater guaranteed minimum death benefits paid this year ($2 million) versus
last year ($1 million).
Amortization of deferred policy acquisition costs (DACs) increased to $37
million for the nine months ended September 30, 2002, compared to $34 million a
year ago. The expense growth was primarily due to an increase in the
amortization of higher costs due to the favorable sales volumes and due to a net
expense increase related to DAC that is further described below.
Deferred Acquisition Costs
The Company's DAC represents the cost of acquiring new business, principally
sales and other distribution and underwriting costs, that have been deferred on
the sale of annuity products. DAC's are amortized over periods approximating the
lives of the business, generally as a percentage of premiums or estimated gross
profits or as a percentage of the liabilities associated with the products. The
projections underlying the amortization of DAC require the use of certain
assumptions, including interest margins, mortality rates, persistency rates,
maintenance expense levels and customer asset value growth rates for variable
products. As actual experience differs from the current assumptions, management
considers on a quarterly basis the need to change key assumptions underlying the
amortization models prospectively. For example, if the stock market trend rose
or declined appreciably, it could impact assumptions made about customer asset
value growth rates and result in an adjustment to income, either positively or
negatively. The impact on results of operations of changing prospective
assumptions with respect to the amortization of DAC can be either positive or
negative in any particular period, and is reflected in the period in which such
changes are made.
During the third quarter, the Company completed a comprehensive review of its
DAC related practices. This review, which included benchmarking assistance from
an industry specialist, analyzed various historical DAC dynamics in addition to
the industry benchmarks. The specific areas reviewed included costs deferred,
customer asset value growth rates including reversion to mean assumptions, DAC
amortization periods, mortality rates and product persistency. As a result of
this review, the Company made certain revisions related to DAC that resulted in
a net $6 million increase in expenses this quarter. This net expense increase
reflected revisions within two key drivers of DAC.
o The Company reset its customer asset value growth rate assumptions for
variable annuity products to anticipate near-term and long-term market
performance consistent with long-term historical averages. The customer
asset value growth rate is the rate at which contract values are assumed to
appreciate in the future. The Company is now projecting growth in customer
contract values at 7%. This rate is net of asset fees,
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
and anticipates a blend of equity and fixed income investments. Prior to
resetting these assumptions, the Company was projecting long-term customer
asset value growth at 7.5% and near-term growth at approximately twice that
rate. The impact of resetting these assumptions, along with the impact of
unfavorable third quarter equity market performance, accounted for the
majority of the increase in DAC amortization expense.
Going forward, the Company intends to continue to use a mean reversion
method as a guideline in setting the near-term customer asset value growth
rate, also referred to as the mean reversion rate. In periods when market
performance results in actual contract value growth at a rate different
than that assumed, the Company will reassess the near-term rate in order to
continue to project its best estimate of long-term growth. For example, if
actual contract value growth during the fourth quarter is less than 7% on
an annualized basis, the Company would increase the mean reversion rate
assumed over the near-term to the rate needed to achieve the long-term
growth rate of 7% by the end of that period, assuming this long-term view
is still appropriate.
o The Company also reviewed its acquisition costs to clarify those costs that
vary with and are primarily related to the acquisition of new and renewal
annuity deposits. The Company revised the types and amounts of costs
deferred. This resulted in an increase in expense of $1 million pretax
recognized during the quarter.
The first category of revised assumptions relating to customer asset value
growth rates should reduce the risk of adverse DAC adjustments going forward.
The second revised category, relating to the types and amounts of costs
deferred, will somewhat increase ongoing expenses, although these additional
expenses should be offset to some extent as reengineering and other cost control
initiatives are expected to mitigate their impact.
Impact of Recent Market Volatility on Results of Operations
Various aspects of the Company's business can be significantly impacted by
equity levels and other market-based factors. One of these items is the
management and mortality and expense fee revenues which are primarily based on
the market value of separate account assets. Other areas impacted by market
volatility involve deferred acquisitions costs (as noted above), structured
investments and the variable annuity guaranteed minimum death benefit feature.
The value of the Company's structured investment portfolio is impacted by
various market factors. These investments include collateralized debt
obligations and structured loan trusts (backed by high-yield bonds and bank
loans), which are held by the Company through interests in special purpose
entities. The carrying value of these investments is based on cash flow
projections, which are affected by factors such as default rates, persistency of
defaults, recovery rates and interest rates, among others. The current valuation
of these investments assumes high levels of near-term defaults, relative to
historical default rates. Persistency of or increases in these default rates
could result in negative adjustments to the market values of these investments
in the future, which would
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
adversely impact results of operations. Conversely, a decline in the default
rates would result in higher values and would benefit future results of
operations.
The majority of the variable annuity contracts offered by the Company contain
guaranteed minimum death benefit (GMDB) provisions. At time of issue, these
contracts typically guarantee the death benefit payable will not be less than
the amount invested, regardless of the performance of the customer's account.
Most contracts also provide for some type of periodic adjustment of the
guaranteed amount based on the change in the value of the contract. A large
portion of the Company's contracts containing a GMDB provision adjust annually.
The periodic adjustment of these contracts can either increase or decrease the
guaranteed amount though not below the amount invested adjusted for withdrawals.
When market values of the customer's accounts decline, the death benefit payable
on a contract with a GMDB may exceed the accumulated contract value. Currently,
the amount paid in excess of contract value is expensed in the period the
payment occurs.
Liquidity and Capital Resources
The liquidity requirements of the Company are met by funds provided by annuity
considerations, capital contributions, investment income, proceeds from sales of
investments as well as maturities and periodic repayments of investment
principal.
The primary uses of funds are policy benefits, commissions, operating expenses
and investment purchases.
The Company has an available line of credit with AEFC aggregating $50 million.
The line of credit is used strictly as a short-term source of funds. No
borrowings were outstanding under the agreement at September 30, 2002. The
Company also uses reverse repurchase agreements for short term liquidity needs.
There were no outstanding reverse repurchase agreements at September 30, 2002.
At September 30, 2002, approximately 4 percent of the Company's investments in
fixed maturities were below investment grade bonds. These investments may be
subject to a higher degree of risk than the investment grade issues because of
the borrower's generally greater sensitivity to adverse economic conditions,
such as recession or increasing interest rates, and in certain instances, the
lack of an active secondary market. Expected returns on below investment grade
bonds reflect consideration of such factors. The Company has identified those
fixed maturities for which a decline in fair value is determined to be other
than temporary, and has written them down to fair value with a charge to
earnings.
At September 30, 2002, the Company had a reserve for losses on mortgage loans of
$10 million.
-15-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements in the management's discussion and analysis of consolidated
financial condition and results of operations section of this Form 10-Q contain
forward-looking statements which are subject to risks and uncertainties that
could cause results to differ materially from such statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. The Company undertakes no
obligation to update publicly or revise any forward-looking statements.
Important factors that could cause actual results to differ materially from the
Company's forward-looking statements include, among other things, fluctuations
in the equity and interest rate environment and changes in the ability of
issuers of investment securities held by the Company to meet their debt
obligations, which could result in further losses in the Company's investment
portfolio.
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to Note 5 of the Notes to Consolidated
Financial Statements (unaudited) contained in the Report filed
on Form 10-Q for the quarterly period ended September 30,
2002.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
3.1 Amendment and Restatement of Articles of Incorporation of
American Enterprise Life dated July 29, 1986, filed
electronically as Exhibit 6.1 to American Enterprise Life
Personal Portfolio Plus 2's Initial Registration Statement
No. 33-54471, filed on or about July 5, 1994, is
incorporated by reference.
3.2 Amended By-laws of American Enterprise Life, filed
electronically as Exhibit 6.2 to American Enterprise Life
Personal Portfolio Plus 2's Initial Registration Statement
No. 33-54471, filed on or about July 5, 1994, is
incorporated by reference.
-17-
PART II - OTHER INFORMATION (continued)
3.3 Consent in writing in lieu of a meeting of the Board of
Directors of American Enterprise Life Insurance Company
establishing the American Enterprise MVA Account dated Aug.
18, 1999, filed electronically as Exhibit 3.3 to
Registrant's Initial Registration Statement No. 333-86297,
filed on or about Aug. 31, 1999, is incorporated by
reference.
4.1 Form of Deferred Annuity Contract for the American
Express(R) Signature One Variable Annuity (form 240180),
filed electronically as Exhibit 4.1 to American Enterprise
Variable Annuity Account's Post-Effective Amendment No. 1 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Dec. 7, 1999, is incorporated by reference.
4.2 Form of Deferred Annuity Contract for the Wells Fargo
Advantage(SM) Variable Annuity (form 44209), filed
electronically as Exhibit 4.1 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Nov. 4, 1999, is incorporated by reference.
4.3 Form of Deferred Annuity Contract for the Wells Fargo
Advantage(SM) Builder Variable Annuity (form 44210), filed
electronically as Exhibit 4.2 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Nov. 4, 1999, is incorporated by reference.
4.4 Form of Deferred Annuity Contract for the American Express
New Solutions(SM) Variable Annuity (form 240343) filed
electronically As Exhibit 4.1 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-92297 on Form N-4, filed on
or about Feb. 11, 2000, is incorporated by reference.
4.5 Form of Deferred Annuity Contract for American Express
Signature Variable Annuity (R) (form 43431) filed
electronically as Exhibit 4.1 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-74865 on form N-4, filed on
or about Aug. 4, 1999, is incorporated by reference.
-18-
PART II - OTHER INFORMATION (continued)
4.6 Form of Deferred Annuity Contract for the American
Express(R) Galaxy Premier Variable Annuity and the American
Express Pinnacle Variable Annuity(SM) (form 44170) filed
electronically as Exhibit 4.1 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-82149, filed on or about
Sept. 21, 1999, is incorporated by reference.
4.7 Form of Deferred Annuity Contract for American Express
FlexChoice(SM) Variable Annuity contract Option L (form
271496) filed electronically as Exhibit 4.1 to American
Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-73958 on
form N-4, filed on or Feb. 20, 2002, is incorporated by
reference.
4.8 Form of Deferred Annuity Contract for American Express
FlexChoice(SM) Variable Annuity contract Option C (form
271491) filed electronically as Exhibit 4.2 to American
Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-73958 on
form N-4, filed on or Feb. 20, 2002, is incorporated by
reference.
4.9 Form of Enhanced Death Benefit Rider for the Wells Fargo
Advantage(SM) Variable Annuity, the Wells Fargo
Advantage(SM) Builder Variable Annuity and the American
Express FlexChoice(SM) Variable Annuity contracts (form
4213), filed electronically as Exhibit 4.3 to American
Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-85567 on
form N-4, filed on or about Nov. 4, 1999, is incorporated by
reference.
4.10 Form of Guaranteed Minimum Income Benefit Rider for the
American Express Signature Variable Annuity (R) and the
American Express(R) Signature One Variable Annuity (6%
Accumulation Benefit Base) (form 240186), filed
electronically as Exhibit 4.2 to American Enterprise
Variable Annuity Account's Post-Effective Amendment No. 3 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Feb. 11, 2000, is incorporated by reference.
4.11 Form of Guaranteed Minimum Income Benefit Rider for the
American Express New Solutions(SM) Variable Annuity (form
240350), filed electronically as Exhibit 4.4 to American
Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-92297 on
Form N-4, filed on or about Feb. 11, 2000, is incorporated
by reference.
-19-
PART II - OTHER INFORMATION (continued)
4.12 Form of Guaranteed Minimum Income Benefit Rider for the
Wells Fargo Advantage(SM) Variable Annuity, the Wells Fargo
Advantage(SM) Builder Variable Annuity and the American
Express FlexChoice(SM) Variable Annuity contracts (form
44214), filed electronically as Exhibit 4.4 to American
Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-85567 on
form N-4, filed on or about Nov. 4, 1999, is incorporated by
reference.
4.13 Form of 5% Accumulation Death Benefit Rider for the American
Express Signature Variable Annuity(R) and the American
Express Signature One Variable Annuity(SM) (form 240183),
filed electronically as Exhibit 4.3 to American Enterprise
Variable Annuity Account's Post-Effective Amendment No. 1 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Dec. 8, 1999, is incorporated by reference.
4.14 Form of Value Option Return of Purchase Payment Death
Benefit Rider for the American Express (R) Signature One
Variable Annuity (form 240182), filed electronically as
Exhibit 4.11 to Registrant's Post-Effective Amendment No. 6
to Registration Statement No. 333-86297 on form S-1, filed
on or about May 1, 2000, is incorporated by reference.
4.15 Form of 8% Performance Credit Rider for the American Express
Signature Variable Annuity(R) and the American Express(R)
Signature One Variable Annuity (form 240187), filed
electronically as Exhibit 4.4 to American Enterprise
Variable Annuity Account's Post-Effective Amendment No. 2 to
Registration Statement No. 333-85567 on form N-4, filed on
or about Dec. 30, 1999, is incorporated by reference.
4.16 Form of Performance Credit Rider for the American Express
New Solutions(SM) Variable Annuity (form 240349), filed
electronically as Exhibit 4.2 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-92297 on Form N-4, filed on
or about Feb. 11, 2000, is incorporated by reference.
-20-
PART II - OTHER INFORMATION (continued)
4.17 Form of Benefit Protector(SM) Death Benefit Rider for the
Wells Fargo Advantage(SM) Variable Annuity, the Wells Fargo
Advantage(SM) Builder Variable Annuity, the American Express
New Solutions (SM) Variable Annuity, the American Express(R)
Galaxy Premier Variable Annuity, the American Express
Pinnacle Variable Annuity(SM), the American Express(R)
Signature One Variable Annuity and the American Express
FlexChoice(SM) Variable Annuity contracts (form 271155),
filed electronically as Exhibit 4.15 to American Enterprise
Variable Annuity Account's Post-Effective Amendment No. 6 to
Registration Statement No. 333-85567 on form N-4, filed on
or about March 1, 2001, is incorporated by reference.
4.18 Form of Benefit Protector(SM) Plus Death Benefit Rider for
the Wells Fargo Advantage(SM) Variable Annuity, the Wells
Fargo Advantage(SM) Builder Variable Annuity, the American
Express New Solutions (SM)Variable Annuity, the American
Express(R) Galaxy Premier Variable Annuity, the American
Express Pinnacle Variable Annuity(SM), the American
Express(R) Signature One Variable Annuity and the American
Express FlexChoice(SM) Variable Annuity contracts (form
271156), filed electronically as Exhibit 4.16 to American
Enterprise Variable Annuity Account's Post-Effective
Amendment No. 6 to Registration Statement No. 333-85567 on
form N-4, filed on or about March 1, 2001, is incorporated
by reference.
4.19 Form of Maximum Anniversary Value Death Benefit Rider for
the American Express New Solutions (SM) Variable Annuity
(form 240346), filed electronically as Exhibit 4.3 to
American Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-92297,
filed on or about February 11, 2000, is incorporated by
reference.
4.20 Form of Roth IRA Endorsement for the Wells Fargo
Advantage(SM) Variable Annuity, the Wells Fargo
Advantage(SM) Builder Variable Annuity, the American Express
Signature Variable Annuity(R), the American Express(R)
Signature One Variable Annuity, the American Express New
Solutions (SM) Variable Annuity, the American Express(R)
Galaxy Premier Variable Annuity, the American Express
Pinnacle Variable Annuity(SM) and the American Express
FlexChoice(SM) Variable Annuity contracts (form 43094),
filed electronically as Exhibit 4.2 to American Enterprise
Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-74865 on form N-4, filed on
or about Aug. 4, 1999, incorporated by reference.
-21-
PART II - OTHER INFORMATION (continued)
4.21 Form of SEP-IRA for the Wells Fargo Advantage(SM) Variable
Annuity, the Wells Fargo Advantage(SM) Builder Variable
Annuity, the American Express (R) Signature One Variable
Annuity, the American Express(R) Galaxy Premier Variable
Annuity, and the American Express Pinnacle Variable
Annuity(SM) (form 43412), filed electronically as Exhibit
4.3 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No.
333-72777 on form N-4, filed on or about July 8, 1999, is
incorporated by reference.
4.22 Form of SEP-IRA for the American Express Signature Variable
Annuity(R), the American Express New Solutions(SM) Variable
Annuity and the American Express FlexChoice(SM) Variable
Annuity contracts (form 43433) filed electronically as
Exhibit 4.3 to American Enterprise Variable Annuity
Account's Pre-Effective Amendment No. 1 to Registration
Statement No. 333-74865 on form N-4, filed on or about Aug.
4, 1999, is incorporated by reference.
4.23 Form of Disability Waiver of Withdrawal Charges Rider for
the Wells Fargo Advantage(SM) Variable Annuity, the Wells
Fargo Advantage(SM) Builder Variable Annuity and the
American Express FlexChoice(SM) Variable Annuity contracts
(form 44215), filed electronically as Exhibit 4.5 to
American Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-85567 on
form N-4, filed on or about Nov. 4, 1999, is incorporated by
reference.
4.24 Form of Unemployment Waiver of Withdrawal Charges Rider for
the Wells Fargo Advantage(SM) Variable Annuity and the Wells
Fargo Advantage(SM) Builder Variable Annuity (form 44216),
to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No.
333-85567 on form N-4, filed on or about Nov. 4, 1999, is
incorporated by reference.
4.25 Form of TSA Endorsement for the Wells Fargo Advantage(SM)
Variable Annuity, the Wells Fargo Advantage(SM) Builder
Variable Annuity, the American Express Signature Variable
Annuity(R) and the American Express FlexChoice(SM) Variable
Annuity contracts (form 43413), filed electronically as
Exhibit 4.4 to American Enterprise Variable Annuity
Account's Pre-Effective Amendment No. 1 to Registration
Statement No. 333-72777 on form N-4, filed on or about July
8, 1999, is incorporated by reference.
-22-
PART II - OTHER INFORMATION (continued)
(b) Reports on Form 8-K.
Form 8-K, dated September 6, 2002, Item 5, reporting that
Moody's Investor Services has changed its outlook on the Aa3
insurance financial strength rating to negative from stable.
Item 7. Exhibits 99.1 and 99.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002.
Exhibits 99.3 and 99.4
Certification pursuant to 15 U.S.C. as adopted pursuant to section 302
of the Sarbanes-Oxley Act of 2002.
-23-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRANT AMERICAN ENTERPRISE LIFE
INSURANCE COMPANY
BY /s/ Philip C. Wentzel
----------------------
NAME AND TITLE Philip C. Wentzel
Vice President and Controller
BY /s/ Carol A. Holton
---------------------
NAME AND TITLE Carol A. Holton
Chief Executive Officer
DATE November 13, 2002