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 March 31, 2003
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 _______
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes _______ No ___X___
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE PERMITTED
ABBREVIATED NARRATIVE DISCLOSURE.
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
FORM 10-Q
For the Quarter Ended March 31, 2003
Table of Contents
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 2003 (unaudited) and
December 31, 2002 3
Consolidated Statements of Income for the
three months ended March 31, 2003
and 2002 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 2003 and 2002
(unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 6 - 8
Item 2. Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations 9 - 13
Item 4. Controls and Procedures 13
PART II - OTHER INFORMATION 14 - 20
SIGNATURES 21
EXHIBITS 22 - 27
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share amounts)
March 31, December 31,
2003 2002
---------------- ---------------
ASSETS (Unaudited)
Investments:
Fixed maturities available-for-sale, at fair value
(Amortized cost: 2003, $5,642,508; 2002, $5,105,431) $5,813,579 $5,288,855
Mortgage loans on real estate 566,534 587,535
Other investments 5,411 2,381
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Total investments 6,385,524 5,878,771
Cash and cash equivalents 170,257 1,118,692
Amounts due from brokers 523,547 2,775
Accrued investment income 53,413 53,673
Deferred policy acquisition costs 281,866 260,577
Other assets 14,694 17,471
Separate account assets 682,023 694,771
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Total assets $8,111,324 $8,026,730
=========== ===============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits for fixed annuities and
universal life-type insurance $5,868,141 $5,411,954
Policy claims and other
policyholders' funds 14,059 9,050
Amounts due to brokers 610,189 985,081
Deferred income taxes 26,803 17,608
Other liabilities 70,522 82,453
Separate account liabilities 682,023 694,771
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Total liabilities 7,271,737 7,200,917
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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 591,872 591,872
Accumulated other comprehensive income (loss),
net of tax:
Net unrealized securities gains 97,666 104,259
Net unrealized derivative losses (12,118) (13,234)
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Total accumulated other comprehensive income 85,548 91,025
Retained earnings 159,167 139,916
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Total stockholder's equity 839,587 825,813
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Total liabilities and stockholder's equity $8,111,324 $8,026,730
=========== ===============
See accompanying notes to consolidated financial statements.
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(unaudited)
Three months ended
March 31,
--------------------------------------
2003 2002
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Revenues:
Contractholder charges $ 1,791 $ 1,148
Mortality and expense risk fees 2,700 3,419
Net investment income 86,335 69,131
Net realized gain on investments 26,149 82
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Total revenues 116,975 73,780
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Benefits and expenses:
Interest credited on investment contracts and
universal life-type insurance 61,172 48,705
Amortization of deferred policy acquisition costs 13,979 9,706
Other insurance and operating expenses 12,213 15,917
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Total benefits and expenses 87,364 74,328
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Income (loss) before income tax expense (benefit) 29,611 (548)
Income tax expense (benefit) 10,360 (125)
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Net income (loss) $ 19,251 $ (423)
============== =============
See accompanying notes to consolidated financial statements.
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three months ended
March 31,
2003 2002
---------------- ---------------
Cash flows from operating activities:
Net income (loss) $ 19,251 $ (423)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Change in accrued investment income 260 4,905
Change in other assets 2,777 8,694
Change in deferred policy
acquisition costs, net (19,078) (8,155)
Change in policy claims and other
policyholders' funds 5,009 16,772
Deferred income taxes 12,144 (3,326)
Change in other liabilities (11,931) (25,816)
Amortization of premium, net 3,466 55
Net realized gain on investments (26,149) (82)
Other 1,761 (5,861)
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Net cash used in operating activities $ (12,490) $ (13,237)
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Cash flows from investing activities:
Fixed maturities available-for-sale:
Purchases $(2,144,129) $(523,078)
Maturities, sinking fund payments and calls 218,647 128,490
Sales 1,411,233 341,575
Other investments:
Purchases -- (2,007)
Sales 17,780 17,618
Change in amounts due from broker (520,772) 38,930
Change in amounts due to broker (374,892) (183,288)
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Net cash used in investing activities (1,392,133) (181,760)
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Cash flows from financing activities:
Activity related to investment contracts
and universal life-type insurance:
Considerations received 540,182 242,367
Surrenders and death benefits (145,166) (144,070)
Interest credited to account balances 61,172 48,705
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Net cash provided by financing activities 456,188 147,002
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Net decrease in cash and cash equivalents (948,435) (47,995)
Cash and cash equivalents at beginning of period 1,118,692 260,214
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Cash and cash equivalents at end of period $ 170,257 $ 212,219
============ ==========
See accompanying notes to consolidated financial statements.
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(In thousands)
(unaudited)
1. Basis of Presentation
The accompanying Consolidated Financial Statements should be read in
conjunction with the financial statements in the Annual Report on Form
10-K of American Enterprise Life Insurance Company (the Company) for
the year ended December 31, 2002. Certain reclassifications of prior
period amounts have been made to conform to the current presentation.
The interim financial information in this report has not been audited.
In the opinion of management, all adjustments necessary for a fair
presentation of the consolidated financial position and the
consolidated results of operations for the interim periods have been
made. All adjustments made were of a normal, recurring nature. Results
of operations reported for interim periods are not necessarily
indicative of results for the entire year.
Recently Issued Accounting Standards
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities" (FIN 46), which addresses consolidation
by business enterprises of variable interest entities (VIEs). The
accounting provisions and expanded disclosure requirements are
effective at inception for VIEs created after January 31, 2003, and are
effective for reporting periods beginning after June 15, 2003, for VIEs
created prior to February 1, 2003. The Company continues to evaluate
all relationships and interests in entities that may be considered
VIEs.
2. Investment Securities
Gross realized gains on sales of securities classified as
Available-for-Sale, using the specific identification method, were
$40,712 and $6,905 for the three months ended March 31, 2003 and 2002,
respectively. Gross realized losses on sales of securities classified
as Available-for-Sale were ($8,082) and ($4,341) for the same periods.
The Company also recognized other-than-temporary impairment losses on
Available-for-Sale securities of ($6,336) for the three months ended
March 31, 2003. There were no other-than-temporary impairment losses on
Available-for-Sale securities for the three months ended March 31,
2002.
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands)
(unaudited)
3. Comprehensive Income
Comprehensive income is defined as the aggregate change in
stockholders' equity, excluding changes in ownership interests. It is
the sum of net income and changes in unrealized gains or losses on
available-for-sale securities and unrealized gains or losses on
derivatives.
Total comprehensive income was $13,774 and for the three months ended
March 31, 2003 compared to a total comprehensive net loss of $23,778
for the three months ended March 31, 2002. The difference between net
income and total comprehensive income for the three month period ended
March 31, 2003 and 2002 is primarily the result of net unrealized gains
and losses on available-for-sale securities that arose during the
periods.
4. Taxes and interest
Cash paid for income taxes totaled $538 and $21,643 for the three
months ended March 31, 2003 and 2002, respectively. Cash paid for
interest on borrowings was not material for the three months ended
March 31, 2003 and 2002.
5. Commitments and contingencies
There were no outstanding commitments to fund mortgage loans at March
31, 2003.
The maximum amount of life insurance risk retained by the Company is
$750 on any single life. Risk not retained is reinsured with other life
insurance companies on a yearly renewable term basis. The Company
retains all accidental death benefit and waiver of premium risk.
Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.
The Company is a party to litigation and arbitration proceedings in the
ordinary course of its business. 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.
The majority of the variable annuity contracts offered by the Company
contain guaranteed minimum death benefit (GMDB) provisions. To the
extent that the guaranteed minimum death benefit is higher than the
current account value at the time of death, a cost is incurred by the
issuer of the policy. Current accounting literature does not prescribe
advance recognition of the projected future net costs associated with
these guarantees, and accordingly, the Company currently does
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AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands)
(unaudited)
5. Commitments and contingencies (continued)
not record a liability corresponding to these future obligations for
death benefits in excess of annuity account value. At present, the
amount paid in excess of contract value is expensed when payable.
Amounts expensed for the three months ended March 31, 2003 and 2002,
were $1 million and $1 million, respectively. The Company also issues
certain variable annuity contracts that contain a guaranteed minimum
income benefit (GMIB) feature which, if elected by the contract owner
and after a stipulated waiting period from contract issuance,
guarantees a minimum lifetime annuity based on predetermined annuity
purchase rates. To date, the Company has not expensed any amount
related to GMIBs. Management believes that an anticipated American
Institute of Certified Public Accountants (AICPA) Statement of
Position, "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts" (the "SOP"), would require the recording of a liability for
the expected net costs associated with these guarantees under certain
circumstances. The impact of the SOP, which is currently projected to
be finalized in the second quarter of 2003, is currently being
evaluated.
The Company's annuity products all have minimum interest rate
guarantees in their fixed accounts. These guarantees range from 3% to
4.5%. To the extent interest rates decline below the minimum, the
Company's spread would be negatively affected.
The IRS routinely examines the Company's federal income tax returns and
is currently conducting an audit for the 1993 through 1996 tax years.
Management does not believe there will be a material adverse effect on
the Company's consolidated financial position as a result of these
audits.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
American Enterprise Life Insurance Company (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"), a
Minnesota corporation. IDS Life is a wholly owned subsidiary of American Express
Financial Corporation ("AEFC"). AEFC is a wholly owned subsidiary of American
Express Company. The Company provides financial institution clients American
Express branded financial products and services to support their retail
insurance and annuity operations. It issues variable life insurance and fixed
and variable annuity contracts, primarily through regional and national
financial institutions and regional and/or independent broker-dealers, in all
states except New York and New Hampshire. American Enterprise REO 1, LLC is a
wholly owned subsidiary of the Company. This subsidiary holds real estate
investments and/or mortgage loans on real estate.
The Company follows accounting principles generally accepted in the United
States (GAAP).
Results of Operations for the Three Months Ended March 31, 2003 and 2002
Net income was $19.3 million for the three months ended March 31, 2003, compared
to a net loss of $0.4 million for the three months ended March 31, 2002. The
change primarily reflects increased investment levels and increased realized
gains partially offset by the impact of lower average yields, primarily due to
portfolio repositioning and increased interest credited on annuity contracts.
Cash on sales totaled $557 million for the three months ended March 31, 2003,
compared to $272 million for the three months ended March 31, 2002. This growth
is due to a significant increase in annuity sales, both fixed and variable,
particularly in the fixed account portion of the Company's variable annuities.
Contractholder charges increased 56 percent to $1.8 million for the three months
ended March 31, 2003, compared with $1.1 million for the three months ended
March 31, 2002, due primarily to an increase in variable annuity contract
surrender charges.
Mortality and expense risk fees decreased to $2.7 million for the three months
ended March 31, 2003 compared with $3.4 million for the three months ended March
31, 2002. This was primarily due to a decrease in average value of separate
account assets outstanding.
Net investment income increased to $86 million for the three months ended
March 31, 2003 compared with $69 million a year ago. This increase was primarily
due to higher average fixed maturity security portfolio balances in 2003 offset
by the impact of lower average yields.
Net realized gain on investments was $26.1 million for the three months ended
March 31, 2003 compared to $0.1 million for the three months ended March 31,
2002. For the quarter ended March 31, 2003, $40.7 million of total investment
gains, primarily resulting from sales of mortgage-backed securities where the
Company repositioned its portfolio to
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improve its prepayment risk profile, were partially offset by $14.4 million of
impairments and losses, the majority of which were airline-related exposures.
Included in these total investment gains and losses are $40.7 million of gross
realized gains and $8.1 million of gross realized losses from sales of
securities, as well as $6.3 million of other-than-temporary investment
impairment losses, classified as Available-for-Sale.
Total benefits and expenses were $87 million, an increase of 18 percent from the
three months ended March 31, 2002. The largest component of expenses, interest
credited on investment contracts and universal-life type insurance, increased 26
percent to $61 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 the relatively low interest rate
environment.
Amortization of deferred policy acquisition costs (DAC) increased to $14 million
for the three months ended March 31, 2003, compared to $10 million for the three
months ended March 31, 2002. The expense growth was primarily due to third
quarter 2002 changes in assumed customer asset value growth rates.
Deferred policy acquisition costs
The costs of acquiring new business, including, for example, direct sales
commissions, policy issue costs and other related costs have been deferred on
the sale of annuity contracts. The deferred acquisition costs (DAC) for certain
annuities are amortized as a percentage of the estimated gross profits expected
to be realized on the policies. DAC for other annuities are amortized using the
interest method.
Amortization of DAC requires the use of certain assumptions including interest
margins, persistency rates, maintenance expense levels and customer asset value
growth rates for variable annuities. The customer asset value growth rate is the
rate at which contract values are assumed to appreciate in the future. This rate
is net of asset fees, and anticipates a blend of equity and fixed income
investments. Management routinely monitors a wide variety of trends in the
business including comparisons of actual and assumed experience. Management
reviews and, where appropriate, adjusts its assumptions with respect to customer
asset value growth rates on a quarterly basis.
Management monitors other principal DAC assumptions, such as persistency,
mortality, interest margin and maintenance expense level assumptions, each
quarter. Unless management identifies a material deviation over the course of
the quarterly monitoring process, management reviews and updates these DAC
assumptions annually in the third quarter of each year.
When assumptions are changed, the percentage of estimated gross profits or
portion of interest margins used to amortize DAC may also change. A change in
the required amortization percentage is applied retrospectively; an increase in
amortization percentage will result in an acceleration of DAC amortization while
a decrease in amortization percentage will result in a deceleration of DAC
amortization. The impact on results of operations of changing assumptions with
respect to the amortization of DAC can be either positive or negative in any
particular period, and is reflected in the period that such changes are made.
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DAC of $282 million related to annuities was on the Company's balance sheet at
March 31, 2003.
Impact of Recent Market-Volatility on Results of Operations
Various aspects of the Company business are impacted by equity market levels and
other market-based events. Three areas in particular involve DAC, asset
management fees and structured investments. The direction and magnitude of the
changes in equity markets can increase or decrease DAC expense levels and asset
management fees and correspondingly affect results of operations in any
particular period. Similarly, the value of the Company's structured investment
portfolio is impacted by various market factors. Persistency of, or increases
in, bond and loan default rates, among other factors, could result in negative
adjustments to the market values of these investments in the future, which would
adversely impact results of operations.
Another area impacted by market-based events is guaranteed minimum death
benefits (GMDB). The majority of the variable annuity contracts offered by the
Company contain GMDB provisions. To the extent that the guaranteed minimum death
benefit is higher than the current account value at the time of death, a cost is
incurred by the issuer of the policy. Current accounting literature does not
prescribe advance recognition of the projected future net costs associated with
these guarantees, and accordingly, the Company currently does not record a
liability corresponding to these future obligations for death benefits in excess
of annuity account value. At present, the amount paid in excess of contract
value is expensed when payable. Amounts expensed for the three months ended
March 31, 2003 and 2002, were $1 million and $1 million, respectively. The
Company also issues certain variable annuity contracts that contain a guaranteed
minimum income benefit (GMIB) feature which, if elected by the contract owner
and after a stipulated waiting period from contract issuance, guarantees a
minimum lifetime annuity based on predetermined annuity purchase rates. To date,
the Company has not expensed any amount related to GMIBs. Management believes
that an anticipated American Institute of Certified Public Accountants (AICPA)
Statement of Position, "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts" (the
"SOP"), would require the recording of a liability for the expected net costs
associated with these guarantees under certain circumstances. The impact of the
SOP, which is currently projected to be finalized in the second quarter of 2003,
is currently being evaluated.
The Company's annuity products all have minimum interest rate guarantees in
their fixed accounts. These guarantees range from 3% to 4.5%. To the extent
interest rates decline below the minimum, the Company's spreads would be
negatively affected.
Liquidity and Capital Resources
The liquidity requirements of the Company are generally 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. Maturities of the Company's investments is largely matched with the
expected future payments of annuity obligations.
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The primary uses of funds are annuity obligations, commissions and 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 March 31, 2003. The Company
also uses reverse repurchase agreements for short term liquidity needs. There
were no outstanding reverse repurchase agreements at March 31, 2003.
At March 31, 2003, 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.
Additionally, the Company had a reserve for losses on mortgage loans of $7
million at March 31, 2003.
During 2001, the Company placed its rated CDO securities and related accrued
interest, (collectively referred to as transferred assets), having an aggregate
book value of $54 million, into a securitization trust. In return, the Company
received $7 million in cash (excluding transaction expenses) relating to sales
to unaffiliated investors and retained interests in the trust with allocated
book amounts aggregating $47 million. As of March 31, 2003, the retained
interests had a carrying value of $44 million, of which $31 million is
considered investment grade. The Company has no obligations, contingent or
otherwise, to such unaffiliated investors. One of the results of this
transaction is that increases or decreases in future cash flows of the
individual CDOs are combined into one overall cash flow for purposes of
determining the carrying value of the retained interests and related impact on
results of operations.
OTHER REPORTING MATTERS
Accounting Developments
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46),
which addresses consolidation by business enterprises of variable interest
entities (VIEs). Certain disclosures are required for financial statements
issued after January 31, 2003 and are addressed in Note 1 to the Consolidated
Financial Statements. The impact of adopting FIN 46 on the Consolidated
Financial Statements is still being reviewed.
In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." This Statement amends and clarifies accounting for
derivative instruments embedded in other contracts, and for hedging activities
under SFAS No. 133. The Statement is effective for contracts entered into or
modified and hedging relationships designated after June 30, 2003, and to
certain preexisting contracts. The Company is currently evaluating the impact of
adopting SFAS No. 149 on the Consolidated Financial Statements.
-12-
The AICPA has issued a proposed Statement of Position, "Accounting and Reporting
by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and
for Separate Accounts." See the Company's Impact of Recent Market-Volatility on
Results of Operations section of the Management Discussion and Analysis for
further discussion.
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.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report, the Company carried
out an evaluation under the supervision and with the participation of the
Company's management, including the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of its disclosure controls and
procedures. Based on that evaluation, the CEO and CFO have concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. The CEO and CFO also note
that subsequent to the date of their evaluation, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect the internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
-13-
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a party to litigation and arbitration
proceedings in the ordinary course of its business. 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.
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.
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.
-14-
PART II - OTHER INFORMATION (continued)
3.4 Amended By-Laws of American Enterprise Life, dated September
11, 2002 filed electronically as Exhibit 6.3 to
Post-Effective Amendment No. 10 to the Registration
Statement No. 333-92297, 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.
4.4(a) Form of Deferred Annuity Contract Data Pages (240343) filed
as Exhibit 4.1(a) to Post-Effective Amendment No. 10 to
Registration Statement No. 333-92297, 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.
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
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PART II - OTHER INFORMATION (continued)
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
44213), 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.
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
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PART II - OTHER INFORMATION (continued)
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.
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
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PART II - OTHER INFORMATION (continued)
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.
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.
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PART II - OTHER INFORMATION (continued)
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.1 to Registration Statement No. 333-72777 on
form N-4, filed on or about July 8, 1999, is incorporated by
reference.
4.26 Form of Traditional IRA or SEP-IRA Endorsement (form
272108), filed electronically as Exhibit 4.11 to
Post-Effective Amendment No. 10 to Registration Statement
No. 333-92297, is incorporated by reference.
4.27 Form of Roth IRA Endorsement (form 272109), filed
electronically as Exhibit 4.12 to Post-Effective Amendment
No. 10 to Registration Statement No. 333-92297, is
incorporated by reference.
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PART II - OTHER INFORMATION (continued)
4.28 Form of Variable Annuity Unisex Endorsement (form 272110),
filed electronically as Exhibit 4.13 to the Post-Effective
Amendment No. 10 to Registration Statement No. 333-92297, is
incorporated by reference. --
(b) Reports on Form 8-K.
Form 8-K, filed April 21, 2003, Item 5, reporting that on April
15, 2003 American Enterprise Life Insurance Company appointed
Jeryl A. Millner, Vice President and Controller. Ms. Millner will
act as the Company's Principal Accounting Officer. She succeeds
Philip C. Wentzel, who was recently appointed Vice President,
Business Planning & Analysis for American Express Financial
Corporation, IDS Life Insurance Company's parent. On April 17,
2003 John T. Sweeney was appointed Vice President-Finance for the
Company. Mr. Sweeney will act as the Company's Principal and
Chief Financial Officer.
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.
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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/ John T. Sweeney
--------------------
NAME AND TITLE John T. Sweeney
Executive Vice President - Finance and
Chief Financial Officer
DATE May 15, 2003
BY /s/ Carol A. Holton
---------------------
NAME AND TITLE Carol A. Holton
Chief Executive Officer
DATE May 15, 2003
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