CORRESP 1 filename1.htm corresp
(FROST BROWN TODD LOGO)
Ohio · Kentucky · Indiana · Tennessee · West Virginia
Kevin L. Cooney
(513) 651-6712
kcooney@fbtlaw.com
April 25, 2010
Via Email (ruckmanc@sec.gov) and EDGAR
Mr. Craig Ruckman
Office of Insurance Products
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
      Re:   Annuity Investors Variable Account B
Comments on Post-Effective Amendments filed pursuant to Section 485(a) in February 2010
Independence Variable Annuity Contract, File No. 333-51955
Dear Mr. Ruckman:
On behalf of Annuity Investors Variable Account B (the “Registrant”), we are hereby submitting responses to the verbal comments of the staff of the U.S. Securities and Exchange Commission (the “Staff”) that were provided to the Registrant in a telephone call on April 16, 2010. These comments were made in connection with the filing in February 2010 of a Post-Effective Amendment to the Registration Statement filed pursuant to Rule 485(a) of the Securities Act of 1933, as amended (“1933 Act”), with the following 1933 Act File No. 333-51955 (the “485(a) Filing”).
The Registrant understands that the comments of the Staff, as presented in this letter, are not the legal record of the comments. We have attempted to recite the Staff comments as accurately as possible based on our notes of the April 16, 2010 telephone call.
A copy of the revised prospectus for File No. 333-51955 (“Independence”) the Registrant proposes, which includes changes made in response to the Staff’s comments on the prospectus in the 485(a) Filing, is attached as Attachment A (the “Independence Prospectus”).
             
201 East Fifth Street, Suite 2200   Cincinnati, Ohio 45202   513.651.6800  513.651.6981 fax   www.frostbrowntodd.com

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 2
Response to Staff Comments
1.   General — The Prospectus Supplement: Closed Funds includes a separate set of expense examples. Please confirm supplementally that the additional examples are required to be disclosed to contract owners receiving that supplemental prospectus.
     Response:   The examples in the prospectus are based on the expense ratios of portfolios in which currently available subaccounts (“Available Subaccounts”) invest. These examples do not take into account the expense ratios of portfolios in which closed subaccounts (“Closed Subaccounts”) invest. One of the Closed Subaccounts invests in The Timothy Plan Strategic Growth Variable Series portfolio (the “Closed Timothy Portfolio.”). The 2009 expense ratio for the Closed Timothy Portfolio is higher than the expense ratio of any portfolio in which an Available Subaccount invests. Therefore, using the Closed Timothy Portfolio’s expense ratio, we will generate additional examples for a contract with maximum fund operating expenses. We will include these additional examples in the supplemental prospectus pursuant to instruction 21(b) of Item 3 of Form N-4.
2.   General — Please provide a cross-reference in the prospectus to the Prospectus Supplment: Closed Funds that indicates that such supplemental prospectus contains additional expense examples.
    Response:   We have included the following cross reference in the prospectus.
 
    The following investment options are available only to Contract Owners who held Accumulation Units in these Subaccounts on November 30, 2004: AIM V.I. Dynamics Fund Closed Subaccount, Janus Aspen Worldwide Growth Closed Subaccount, The Timothy Plan Conservative Growth Variable Series Closed Subaccount, and The Timothy Plan Strategic Growth Variable Series Closed Subaccount. If you still have funds allocated to one of these closed Subaccounts, please see the supplemental prospectus that accompanies this document for additional examples.
3.   General — The use of multiple continuing supplemental prospectuses fragments the disclosure in some instances. The Staff requests that the Registrant revise the prospectus to incorporate relevant information contained in the continuing supplemental prospectuses, in particular those related to contract riders, into the main prospectus and to reduce the number of continuing supplemental prospectuses associated with the contract.
    Response:   The Registrant has eliminated the supplemental prospectus related to the three-year guarantee interest rate option. With respect to the supplemental prospectus related to investment options that are no longer available with the contract, the Registrant will retain this supplemental prospectus and continue
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 3
to distribute it to the limited number of contract owners who have previously allocated funds to such investment options. With respect to the supplemental prospectus related to riders that are no longer available with the contract, the Registrant will retain this supplemental prospectus and continue to distribute it to the limited number of contract owners who purchased contracts with these riders. The Registrant believes that targeted use of these supplemental prospectuses, which is similar to the approach described in the instructions to Item 11 of Form N-1, is appropriate because this approach ensures that affected contract owners receive relevant information and unaffected contract owners are not confused by the receipt of irrelevant information.
4.   General — Please clarify supplementally whether the Annuity Investors Life Insurance Company (the “Company”) has entered into any guarantee or support agreements with third parties to support the Company’s guarantees under the policies.
    Response:   The Company has not entered into any guarantees or support agreements with third parties to support any of the guarantees under the contracts.
5.   General — Please confirm supplementally that the contract name on the front of the prospectus is and will continue to be the same as included in the EDGAR Class Identifiers. If they are not the same, please confirm supplementally that they will be made the same by changing either the name on the prospectus or the respective EDGAR Class Identifier.
    Response:   The name of the contract on the front of the prospectus is, and will continue to be, the name included in the EDGAR Class Identifier for the contract.
6.   General — Please clarify supplementally if the Registrant qualifies for and intends to rely upon Rule 12h-7 under the Exchange Act, and if so, include a statement to that effect in the prospectus.
    Response:   The Registrant does not intend to rely upon Rule 12h-7 under the Securities Exchange Act of 1934.
7.   Expense Tables — Table A — Please convert the descriptive text in the table to table footnotes.
    Response:   The Registrant made the requested changes.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 4
8.   Expense Tables — Table A: Contract Owner Transaction Expenses (Loan Interest Spread) — Please clarify in a footnote to Table A and in the Contract Loans section of the prospectus the “maximum loan rate” and the components of the “loan interest spread”. In addition, please include the collateralization requirements for contract loans in the footnote.
  Response:   The narrative text under Loan Interest Spread in Table A was moved to a footnote. The footnote was expanded to include information regarding the collateralization requirements for contract loans, the maximum loan rate of the Company and the components of the loan interest spread.
9.   Expense Tables — Table B — In the Expense Tables: Table B, the prospectus refers to a “standard contract” and an “enhanced contract.” Please confirm supplementally that all persons are being offered both the standard and the enhanced version of the contract. If not, please explain supplementally why the Registrant does not need a separate EDGAR Class Identifier for each and clarify (a) why it is not misleading to include both the standard and enhanced versions in the same prospectus and (b) the legal and factual belief why both are included in the same registration statement. In addition, if both versions are offered to everyone, please refer to them as “versions” in the prospectus, supplement the glossary to distinguish between the versions and add additional disclosure in the prospectus to distinguish between the versions.
  Response:   The Registrant has revised the prospectus to refer to the “individual version” and “group version” of the contract and have added disclosure to the prospectus to distinguish between the versions. The Registrant sells the contract in both the individual market and the group market. The “individual version” is available to all individuals. The “group version” is available to all groups. The Registrant may waive the administration charge that would otherwise apply to a group contract when it expects to incur reduced expenses in connection with the administration of the contract.
10.   Expense Tables — Narrative Following Table C: Total Annual Portfolio Operating Expenses — In the paragraph discussing the Ibbotson Portfolios following Table C, please add disclosure that the contract holder will effectively be paying the management fees of the “acquired funds.”
        Response:   The Registrant has added the requested statement.
11.   Examples — Please make the title for Table B and the description of the applicable fees in the Examples consistent for ease of cross-reference.
        Response:   The reference in the first paragraph under the Examples heading of the prospectus was modified to refer to Annual Expenses, which is the same as the title to Table B.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 5
12.   Examples — Why do the example assumptions refer to a “minimum” and “maximum” Separate Account annual expenses if they are the same? If no difference, please remove “minimum” and “maximum” descriptors. Please confirm supplementally that Expense Tables — Table B includes the maximum expense amounts.
        Response:   The Registrant confirms that the maximum expense amounts are included in Table B of the Expense Tables. The Registrant revised the descriptions of the examples to remove any references to “minimum Separate Account annual expenses” or “maximum Separate Account annual expenses” in cases where the expenses do not vary.
13.   Overview — What Benefits are Available Under the Contract? — Please add a statement that describes that a withdrawal of Account Value may result in a reduction of the Death Benefit amount by more than the amount of the withdrawal.
        Response:   The Registrant has added the requested statement.
14.   Fixed Accounts — Please include a statement that the Fixed Accounts are part of the Company’s general accounts.
        Response:   The Registrant has added the requested statement.
15.   Charges and Deductions — In the opening paragraph, please add a cross-reference to the Automatic Transfer Programs.
        Response:   The Registrant has added the requested cross-reference.
16.   Purchase Payments — Please clarify what is intended by the paragraph captioned “1998 Version” in the Purchase Payments section of the prospectus.
        Response:   The prospectus relates to two versions of contract—the 2007 version and the 1998 version. The 2007 version is not available in all states. Some provisions in the 2007 version differ from the corresponding provisions in the 1998 version. We have noted these differences throughout the prospectus.
17.   Purchase Payments — Please capitalize the term “Good Order” throughout the prospectus.
        Response:   The Registrant has capitalized the term “Good Order” throughout the prospectus.
18.   Purchase Payments — Please add a discussion regarding how Net Investment Factors are determined.
        Response:   The Registrant has added a discussion of the Net Investment Factor in the Definitions section of the prospectus.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 6
19.   Purchase Payments — Please clarify whether the amounts allocated to a Fixed Account Option with Guarantee Period are subject to penalty for transfer out of such Fixed Account Option with Guarantee Period prior to the maturity of the guarantee period.
        Response:   The Registrant has added disclosure to the Fixed Account section of the prospectus and the Transfers section of the prospectus to clarify that there is no penalty for such transfers prior to the maturity of the guarantee period but that such transfers are limited in amount.
20.   Charges and Deductions — In the Charges and Deductions section, please add a cross reference to the Contract Loans section of the prospectus for a description of loan-related expenses.
        Response:   In the Charges and Deductions section of the prospectus, the Registrant has added a brief description of the fees, charges and other costs (e.g., loan interest rate spread) associated with contract loans and a cross-reference to the Contract Loans section of the prospectus.
21.   Accumulation Period — Transfers — Please revise the table on current transfer restrictions that clarifies and distinguished the differences between the Fixed Accumulation Account and the Fixed Account Guarantee Period options that also includes the impact of any restrictions on transfer.
        Response:   The Registrant has revised the table on current transfer restrictions.
22.   Contract Loans — Please clarify that the maximum rate charged may be higher if required by a plan administrator or other third party.
        Response:   The Registrant added disclosure to the Contract Loans section of the prospectus to address this comment.
23.   Contract Loans — Please clarify if, and if so how, the interest charged on a contract loan is capitalized.
        Response:   The Registrant added disclosure to the Contract Loans section of the prospectus to address this comment.
24.   Contract Loans — Please add a statement that clarifies that amounts held in the Fixed Accumulation Account as collateral for a loan may earn less than amounts invested in the other Subaccounts during the same time period.
        Response:   This concept is currently explained in the second paragraph in the Contract Loans section of the prospectus. The paragraph includes the following statements: “A loan, whether or not repaid, will have a permanent effect on
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 7
the Account Value of the Contract because the collateral cannot be suballocated to the Subaccounts or the Fixed Account guarantee periods. The longer the loan is outstanding, the greater the effect is likely to be. This effect could be favorable or unfavorable.”
25.   Contract Loans — Please clarify if there are any transfer restrictions imposed on the amounts transferred to the Fixed Accumulation Account as collateral for a contract loan. In addition, are such restrictions still applicable on those amounts in the Fixed Accumulation Account once the loan is repaid? In other words, as the loan is repaid how does the repayment of the loan affect the amounts transferred as collateral to the Fixed Accumulation Account and the ability to transfer such amounts out from the Fixed Accumulation Account?
        Response:   The restrictions on transfers to and from the Fixed Accumulation Account do not apply to transfers of collateral into and out of the Fixed Accumulation Account. The Registrant has added disclosure explaining this exception in the Contract Loans section of the prospectus. The Registrant has added disclosure that the amount of collateral required must equal 110% of the outstanding loan and that the contract owner will be permitted to transfer excess collateral out of the Fixed Accumulation Account to the other Subaccounts.
26.   Contract Loans — Please clarify how Purchase Payments are treated while a loan is outstanding and when are they applied to reduce the amount of outstanding loans?
        Response:   The Registrant treats Purchase Payments and loan repayments separately. The Registrant has added disclosure that Purchase Payments made while the loan is outstanding are not treated as loan repayments and will not reduce the amount of outstanding loans.
27.   Contract Loans/Annuity Benefit — Please clarify whether there is any restriction on annuitizing the Contract while a loan remains outstanding and whether the Annuity Benefit amount is adjusted as a result.
        Response:   The Registrant requires the contract owner to pay all contract loans in full before annuitizing the contract. The Registrant has added disclosure to clarify this requirement.
28.   Death Benefit — Please revise in plain English the language that describes the settlement options available under the contract if the beneficiary in a non-natural person and whether fixed payment settlement options are available when the payee is identified.
        Response:   The Registrant has revised the disclosure to indicate that otherwise a Beneficiary that is a non-natural person may only elect a fixed period payment.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 8
29.   Death Benefit — Death Benefit Amount — Please add a statement that describes that a withdrawal of Account Value may result in a reduction of the Death Benefit amount by more than the amount of the withdrawal.
        Response:   The Registrant has added the requested statement.
30.   Death Benefit Amount — Please provide examples of the death benefit amounts for the “1998 version” and include the effect of a partial surrender/withdrawal on such amounts.
        Response:   The Registrant has added examples describing the available death benefit amounts.
31.   Payment of Benefits — Please provide a discussion concerning the fixed dollar benefits and variable dollar benefits, including (a) what makes each “fixed” versus “variable”, (b) how initial payments are determined and (c) the importance of the assumed investment rate of return used to set the initial payment amounts and how may vary based upon actual performance.
        Response:   The Registrant has added a discussion concerning fixed dollar benefits and variable dollar benefits.
32.   Settlement Options — Please clarify that the settlement options are available with respect to both fixed dollar benefits and variable dollar benefits.
        Response:   The Registrant has added language to the prospectus that clarifies that both fixed dollar benefits and variable dollar benefits are available for each of the settlement options.
33.   Benefit Payment Period — Settlement Options — Please clarify the impact of the annuitant dying if a settlement option based on a fixed period is elected and that the death of the annuitant if a settlement option based upon a life contingency may result in only a single payment being made.
        Response:   The Registrant has added language to the prospectus to explain that (a) if a fixed period settlement option is selected, the death of the annuitant will not impact the payments and that they will continue for the remainder of the period and (b) if the life contingency settlement option is selected, the death of the annuitant may result in only a single payment being made.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 9
34.   Annuity Investors Life Insurance Company — Please clarify that contract owners must rely upon the financial strength of the Company for the payment of claims (including death benefits) and that the Company’s general account will be subject to the claims of the Company’s creditors.
        Response:   The Registrant has clarified that contract owners must rely on the financial strength of the Company for the payment of claims (including death benefits) and that the Company’s general account will be subject to the claims of the Company’s creditors.
35.   Appendix B — If true, please add a statement to the effect that the Company has entered into an Information Sharing Agreement with the underlying Portfolios as required by Rule 22c-2 of the 1940 Act.
        Response:   The Registrant has added a statement regarding Information Sharing Agreements as required by Rule 22c-2 of the Investment Company Act of 1940.
36.   Appendix B — U.S. Mail Restrictions — In the U.S. Mail Restrictions on Managers of Multiple Contracts section of Appendix B, please disclose the situations where such persons may submit transfer requests other than by mail.
        Response:   The Registrant has added the following statement to the prospectus: “The Company may permit a manager of multiple contracts to submit transfer requests other than by mail upon written request if contracts are managed independently rather than in the aggregate. The manager of multiple contracts must provide the Company with sufficient information regarding the management methodology to support the representation that aggregate transfers will not be an intended or unintended consequence of day to day management decisions. The Company will monitor the contracts associated with the grant of any exception and, in the event a pattern of aggregate transactions emerges, again require transfer request via U.S. mail.”
37.   Appendix B — Other Restrictions — Please identify and provide examples of the “unanticipated financial emergencies” where the Company would waive the transfer restriction procedures.
        Response:   The Company would consider waiving the transfer restriction procedures in the event of a financial emergency that ameliorates the potential negative investment results that typically results from short-term trading. In other words, if extent economic conditions arise such that the impact of short-term trading is benign or a positive, the Company may allow it.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 10
38.   Prospectus Supplements — Generally — On any continuing supplemental prospectus that includes the statement beginning “If the terms of this prospectus supplement . . .”, please state clearly that all material rights and obligations with respect to the contract and its riders are described in the prospectus.
        Response:   The Registrant has deleted the statement identified in this comment from the prospectus supplement.
39.   Prospectus Supplement: Closed Funds — Please confirm supplementally that all changes to the expense and examples sections of the prospectus will also be made to the continuing supplemental prospectus to the extent applicable.
        Response:   Changes to the expense and examples section in the prospectus will also be made to the closed fund supplemental prospectus to the extent applicable.
40.   Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — Please add an overview section that briefly summarizes the key benefits of each rider and distinguished between the two. Please update the cross-reference to the “Designated Subaccounts” to the proper section of the prospectus.
        Response:   The Registrant has added an Overview section after the Supplement to Examples section of the document and has revised the cross-reference to additional information about the Designated Subaccounts.
41.   Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — In the discussion of the GMWB, please clarify when the Company may decline to reset the Beneficial Base Amount. In addition, please revise the textual discussion regarding the Roll-up Base Amount and the provided example to clarify how such amount is calculated and that the example is determined in the same manner as described in the narrative.
        Response:   The Registrant has added the following text in the Reset Opportunities discussions: “If you do not elect a reset by Written Request on an applicable Contract Anniversary or request automatic resets, we will not reset the Benefit Base Amount even if your Account Value is higher than the Benefit Base Amount on the Contract Anniversary.” In the Rollup Base Amount discussion of the GLWB, the Registrant has included the formulas for calculating the Rollup Base Amount and the Rollup Interest Credit and, after each example, has included a table showing how these amounts were calculated in the example.
(FROST BROWN TODD)

 


 

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 11
42.   Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — Under the discussion of Reset Opportunities, please clarify if resets are available after the Benefit Start Date.
        Response:   Resets are not available after the Benefit Start Date. The Registrant has added a statement to this effect to both Reset Opportunities sections.
43.   Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — In the discussion, please revise the Activation of the Rider section to explain that the GMWB may not be activated when the GLWB is in effect (rather than when the GMWB is in effect).
        Response:   The Registrant made the requested correction.
     The Tandy representations, executed by the Registrant, are included with this letter as Attachment B.
     The Independence Prospectus, which reflects the applicable revisions discussed above, is included with this letter. They also contain the following updated material:
    updated information related the underlying Portfolios
 
    updated information related to the loan interest spread
 
    updated costs in the examples
 
    updated financial information
 
    updated text in the Federal Tax Matters section
     The revised prospectus includes corrections to typographical errors, additional customer service contact information, and clarifying references related to domestic partners.
     Please contact Kevin L. Cooney at (513) 651-6712 or kcooney@fbtlaw.com immediately for responses to any questions or comments.
         
  Frost Brown Todd LLC
 
 
  By:   /s/ Kevin L. Cooney    
    Kevin L. Cooney   
       
 
KLC:jss
cc:         Ms. Karen McLaughlin (via email)
(FROST BROWN TODD)

 


 

Attachment A
Prospectus for File No. 333-51955
Independence Prospectus
             
201 East Fifth Street, Suite 2200   Cincinnati, Ohio 45202   513.651.6800  513.651.6981 fax   www.frostbrowntodd.com

 


 

ANNUITY INVESTORS LIFE INSURANCE COMPANY®
ANNUITY INVESTORS® VARIABLE ACCOUNT B
THE COMMODORE INDEPENDENCE
®
INDIVIDUAL AND GROUP FLEXIBLE PREMIUM DEFERRED ANNUITIES
PROSPECTUS DATED MAY 1, 2010
This prospectus describes individual and group flexible premium deferred annuity contracts. The individual contracts and interests in the group contracts are referred to in this prospectus as the “Contracts.” Annuity Investors Life Insurance Company® (the “Company”) is the issuer of the Contracts. The Contracts are available for tax-qualified and non-tax-qualified annuity purchases. The Contracts offer tax-deferred treatment of earnings, Annuity Benefits, and a Death Benefit. The tax treatment of annuities is discussed in the Federal Tax Matters section of this prospectus. The Contracts offer both variable and fixed investment options.
The variable investment options are Subaccounts of Annuity Investors® Variable Account B (the “Separate Account”). The Contracts currently offers Subaccounts listed below. Each Subaccount invests in shares of a registered investment company or a portfolio of a registered investment company (each, a “Portfolio”). The Portfolios are listed below.
     
American Century Variable Portfolios   Invesco Variable Insurance Funds*
-Large Company Value Fund-Class I
  -Invesco V.I. Capital Development Fund-Series I Shares
-Mid Cap Value Fund-Class I
  -Invesco V.I. Core Equity Fund-Series I Shares
-Ultra® Fund-Class I
  -Invesco V.I. Financial Services Fund-Series I Shares
-Vista SM Fund-Class I
  -Invesco V.I. Global Health Care Fund -Series I Shares
 
  -Invesco V.I. High Yield Fund-Series I Shares
Calamos®Advisors Trust
  -Invesco V. I. Small Cap Equity Fund-Series I Shares
-Growth and Income Portfolio
  -Invesco Van Kampen V.I. U.S. Mid Cap Value Portfolio-Class I
 
  -Invesco Van Kampen V.I. Value Portfolio-Class I
Davis Variable Account Fund, Inc.
   
-Value Portfolio
  Janus Aspen Series
 
  -Balanced Portfolio-Institutional Shares
Dreyfus Investment Portfolios
  -Enterprise Portfolio-Institutional Shares
-MidCap Stock Portfolio-Service Shares
  -Forty Portfolio-Institutional Shares
-Technology Growth Portfolio-Initial Shares
  -Janus Portfolio-Service Shares -Institutional Shares
 
  -Overseas Portfolio-Institutional Shares
The Dreyfus Socially Responsible Growth Fund, Inc.-IS
   
 
  Morgan Stanley-The Universal Institutional Funds, Inc.
Dreyfus Stock Index Fund, Inc.-Institutional Shares
  -Core Plus Fixed Income Portfolio-Class I
 
  -Mid-Cap Growth Portfolio-Class I
Dreyfus Variable Investment Funds
  -U.S. Real Estate Portfolio-Class I
-Appreciation Portfolio-Initial Shares
   
-Growth and Income Portfolio-Initial Shares
  Oppenheimer Variable Account Funds
-Money Market Portfolio
  -Balanced Fund-Non-Service Shares
-Opportunistic Small Cap Portfolio-Initial Shares
  -Capital Appreciation Fund-Non-Service Shares
 
  -Main Street Fund®-Non-Service Shares
Financial Investors Variable Insurance Trust
   
-Ibbotson Balanced ETF Asset Allocation Portfolio-Class II
  PIMCO Variable Insurance Trust
-Ibbotson Conservative ETF Asset Allocation Portfolio-Class II
  -Real Return Portfolio-Administrative Class
-Ibbotson Growth ETF Asset Allocation Portfolio-Class II
  -Total Return Portfolio-Administrative Class
-Ibbotson Income/Growth ETF Asset Allocation Portfolio-Class II
   
 
  Wilshire Variable Insurance Trust
Franklin Templeton Variable Insurance Products Trust
  -2015 ETF Fund
-Templeton Foreign Securities Fund-Class 2
  -2025 ETF Fund
 
  -2035 ETF Fund
 
* The full legal name of Invesco Variable Insurance Funds is AIM Variable Insurance Funds (Invesco Variable Insurance Funds).
2010 Portfolio Changes — The list above and this prospectus reflects the name changes and transactions described below.
    On April 19, 2010, the Dreyfus Developing Leaders Portfolio, a series of the Dreyfus Variable Insurance Fund, changed its name to the Dreyfus Opportunistic Small Cap Portfolio.
 
    On May 1, 2010, the AIM portfolios changed their brand name to Invesco. For example, AIM V.I. Capital Development Fund became Invesco V.I. Capital Development Fund.

i


 

    On May 1, 2010, The Universal Institutional Funds, Inc. changed its brand name from Van Kampen to Morgan Stanley.
 
    On June 1, 2010 or as soon as practical after that date, Van Kampen’s U.S. Mid Cap Value Portfolio and Value Portfolio, which currently are series of The Universal Institutional Funds, Inc., will be merged into AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and change its brand name to Invesco Van Kampen. The list above reflects this anticipated transaction.
The following investment options are available only to Contract Owners who held Accumulation Units in these Subaccounts on November 30, 2004: Invesco V.I. Dynamics Fund Closed Subaccount, Janus Aspen Worldwide Growth Closed Subaccount, The Timothy Plan Conservative Growth Variable Series Closed Subaccount, and The Timothy Plan Strategic Growth Variable Series Closed Subaccount. If you still have funds allocated to one of these closed Subaccounts, please see the supplemental prospectus that accompanies this document for additional examples.
The fixed investment options are provided through the Company’s Fixed Account. The Contracts currently offers the following fixed investment options: the Fixed Accumulation Account option and the Fixed Account One-Year Guarantee option. This prospectus includes information you should know before investing in the Contracts. This prospectus is not complete without the current prospectuses for the Portfolios. Please keep this prospectus and the Portfolio prospectuses for future reference.
A Statement of Additional Information (“SAI”), dated May 1, 2010, contains more information about the Separate Account and the Contracts. The Company filed the SAI with the Securities and Exchange Commission. The SAI is part of this prospectus. The table of contents for the SAI is printed on the last page of this prospectus. For a free copy of the SAI, complete and return the form on the last page of this prospectus, or call us at 1-800-789-6771. You may also access the SAI (as well as all other information regarding the Contracts, the Separate Account or the Company) at the Securities and Exchange Commission’s web site: www.sec.gov. The registration number for the Contracts is 333-51955.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

These securities may be sold by a bank or credit union, but are not financial institution products.
  The Contracts are not FDIC or NCUSIF insured.
 
  The Contracts are obligations of the Company and not of the bank or credit union.
 
  The bank or credit union does not guarantee the Company’s obligations under the Contracts.
 
  The Contracts involve investment risk and may lose value.
Contract Versions
This prospectus relates to 2 versions of The Commodore Independence® contract—the 2007 version and the 1998 version.
The 2007 version is not available in all states. To find out which version of the Contract is available in the state where you live, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, OH 45201-5423, 1-800-789-6771.
Some provisions in the 2007 version differ from the corresponding provisions in the 1998 version. We have noted these differences in this prospectus. Please refer to the form number on your Contract or certificate to determine the applicable Contract version.
     
2007 Version Form Numbers   1998 Version Form Numbers
 
P 1813206 (individual contract)
  A 802 (NQ98)-3 and A 802 (Q98)-3 (individual contracts)
G 2010407 (group contract)
  G 802 (99)-3 (group contract)
C 2010507 (participant certificate )
  G 802 (99)-3 (participant certificate)
For assistance in identifying the version of the Contract that you own or the group Contract under which you are a participant, contact us at our Administrative Office, P.O. Box 5423, Cincinnati OH 45201-5423, 1-800-789-6771.

ii


 

Right to Cancel
You may cancel a Contract within 20 days after you receive it. The right to cancel may be longer in some states. In many states, you will bear the risk of investment gain or loss on any amounts allocated to the Subaccounts prior to cancellation. The right to cancel may not apply to group Contracts. The right to cancel is described more fully in the Right to Cancel section of this prospectus.

iii


 

TABLE OF CONTENTS
         
DEFINITIONS
    6  
EXPENSE TABLES
    8  
Table A: Contract Owner Transaction Expenses
    8  
Table B: Annual Expenses
    9  
Table C: Total Annual Portfolio Operating Expenses
    9  
Examples
    10  
FINANCIAL INFORMATION
    11  
Condensed Financial Information
    11  
Financial Statements
    11  
OVERVIEW
    11  
What is the Separate Account?
    11  
What Are the Contracts?
    11  
What Benefits Are Available under the Contract?
    11  
What Are the Risks Related to the Contract?
    11  
How Do I Purchase or Cancel a Contract?
    12  
Will Any Charges or Penalties Apply if I Make Withdrawals or Surrender a Contract?
    12  
What Other Charges and Deductions Apply to the Contract?
    12  
How Do I Contact the Company?
    12  
THE PORTFOLIOS
    12  
Overview
    12  
Portfolios, Share Classes, Advisors and Portfolio Investment Categories
    13  
THE FIXED ACCOUNTS
    15  
PURCHASE PAYMENTS AND ALLOCATIONS TO INVESTMENT OPTIONS
    16  
Overview
    16  
Purchase Payments
    16  
CHARGES AND DEDUCTIONS
    17  
Charges and Deductions by the Company
    17  
Expenses of the Portfolios
    19  
TRANSFERS
    19  
Transfers
    19  
Transfer Restrictions Related to Active Trading Strategies
    21  
WITHDRAWALS AND SURRENDERS
    21  
CONTRACT LOANS
    23  
ANNUITY BENEFIT
    23  
DEATH BENEFIT
    25  
Death Benefit
    25  
SETTLEMENT OPTIONS
    28  
Settlement Options
    28  
THE CONTRACTS
    30  
Right to Cancel
    30  
Termination
    31  
Ownership Provisions
    31  
Annuitant Provisions
    32  
Beneficiary Provisions
    33  
Payees under the Contract
    33  
ANNUITY INVESTORS LIFE INSURANCE COMPANY®
    34  
THE SEPARATE ACCOUNT
    35  
General
    35  
Additions, Deletions or Substitutions of Portfolios
    35  
VOTING OF PORTFOLIO SHARES
    35  
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
    36  
FEDERAL TAX MATTERS
    36  
Tax Deferral on Annuities
    36  
Tax-Qualified Retirement Plans
    37  
Nonqualified Deferred Compensation Plans
    38  
Summary of Income Tax Rules
    39  
Required Minimum Distributions
    40  

iv 


 

         
DELIVERY OF DOCUMENTS TO CONTRACT OWNERS
    40  
Reports and Confirmations
    40  
Householding
    40  
Electronic Delivery of Required Documents
    40  
THE REGISTRATION STATEMENT
    40  
STATEMENT OF ADDITIONAL INFORMATION
    41  


 

DEFINITIONS
The capitalized terms defined on this page will have the meanings given to them when used in this prospectus. Other terms that have a specific meaning under the Contracts, but which are not defined on this page, will be explained in the section of this prospectus where they are primarily used.
Account Value
The aggregate value of your interest in all of the Subaccounts and the Fixed Account options as of the end of any Valuation Period.
Accumulation Unit
A unit of measure used to calculate the value of a Subaccount before the Commencement Date.
Accumulation Unit Value
The value of an Accumulation Unit at the end of a Valuation Period.
The initial Accumulation Unit Value for each Subaccount other than the money market Subaccount was set at $10. The initial Accumulation Unit Value for the money market Subaccount was set at $1. The initial Accumulation Unit Value for a Subaccount was established at the inception date of the Separate Account, or on the date the Subaccount was established, if later.
After the initial Accumulation Unit Value is established, the Accumulation Unit Value for a Subaccount at the end of each Valuation Period is the Accumulation Unit Value at the end of the previous Valuation Period multiplied by the Net Investment Factor for that Subaccount for the current Valuation Period.
A Net Investment Factor of 1 produces no change in the Accumulation Unit Value for that Valuation Period. A Net Investment Factor of more than 1 or less than 1 produces an increase or a decrease, respectively, in the Accumulation Unit Value for that Valuation Period. The Accumulation Unit Value will vary to reflect the investment experience of the applicable Portfolios.
Annuitant
The natural person on whose life Annuity Benefit payments are based. More information about the Annuitant is included in the Contracts section of this prospectus.
Annuity Benefit
The payments that may be made under the Annuity Benefit section of the Contract.
Beneficiary
The person entitled to receive any Death Benefit under this Contract. More information about the Beneficiary is included in the Contract section of the prospectus.
Benefit Unit
A unit of measure used to determine the dollar value of any variable dollar payments after the Commencement Date.
Benefit Unit Value
The initial Benefit Unit Value for a Subaccount will be set equal to the Accumulation Unit Value for that Subaccount at the end of the first Valuation Period in which a variable dollar benefit is established by the Company. Thereafter, the Benefit Unit Value for a Subaccount at the end of a Valuation Period is determined by multiplying the previous Benefit Unit Value by the Net Investment Factor for that Subaccount for the current Valuation Period, and multiplying the number again by a daily investment factor for each day in the Valuation Period. The daily investment factor reduces the previous Benefit Unit Value by the daily amount of the assumed interest rate (3% per year, compounded annually) which is already incorporated in the calculation of variable dollar benefit payments.
Company
Annuity Investors Life Insurance Company®.
Ø     The words “we” “us” and “our” in this prospectus also refer to Annuity Investors Life Insurance Company®.

6


 

Commencement Date
The Annuity Commencement Date if an Annuity Benefit is payable or the Death Benefit Commencement Date if a Death Benefit is payable.
  The Annuity Commencement Date is the first day of the first payment interval for which an Annuity Benefit payment is to be made. The Annuity Commencement Date is shown on the Contract specifications page.
 
  The Death Benefit Commencement Date is (1) the first day of the first payment interval for a Death Benefit that is paid as periodic payments or (2) the date of payment for a Death Benefit that is paid as a lump sum.
Contract
An individual contract or interest in a group contract described in this prospectus.
Contract Anniversary
The date in each year that is the annual anniversary of the Contract effective date. The Contract effective date is the date that the Contract is issued. The Contract effective date is set out on the Contract specifications page.
Contract Year
Each 12 month period that begins on the Contract effective date or on a Contract Anniversary.
Death Benefit
The benefit described in the Death Benefit section of the Contract.
Fixed Account
The Fixed Account is part of the Company’s general account. The Fixed Account options are listed in the “Allocations to Investment Options” section of this prospectus.
Good Order
We cannot process information or a request until we have received your instructions in “Good Order” at our Administrative Offices. We will consider information or a request to be in “Good Order” when we have actually received a Written Request, along with all the information and other legal documentation that we require to process the information or request. To be in “Good Order,” instructions must be sufficiently clear so that we do not need to exercise any discretion to process the information or request
Net Asset Value
The amount computed by a Portfolio as the price at which the Portfolio’s shares are purchased and redeemed. It is computed no less frequently than each Valuation Period
Net Investment Factor
The factor the represents the percentage change in the Accumulation Unit Values and the Benefit Unit Values from one Valuation Period to the next. The Net Investment Factor for each Valuation Period reflects changes to the net asset value of the underlying Portfolio, dividends or capital gains distributions by the Portfolio, credits and charges for tax reserves with respect to the Subaccount, and the mortality and expense risk charges and administration charges.
Owner
For purposes of this prospectus, references to Owner mean (1) the owner of an individual annuity contract or (2) the participant in a group annuity contract (even though the participant is not the owner of the group contract itself).
Ø    The words “you” and “your” in this prospectus also refer to the Owner as defined above.
Portfolio
A registered investment company or a portfolio of a registered investment company in which the corresponding Subaccount invests. The Portfolios are listed on the cover page of this prospectus.
Purchase Payments
An amount paid to us for this Contract, less any fee charged by the person remitting payments and the deduction of applicable premium or other taxes.

7


 

SEC
Securities and Exchange Commission.
Separate Account
Annuity Investors Variable Account B, which is an account that was established and is maintained by the Company.
Subaccount
A subdivision of the Separate Account. Each Subaccount invests in the shares of the corresponding Portfolio listed on the cover page of this Prospectus.
Tax Qualified Contract
A contract that is intended to qualify for special tax treatment for retirement savings. The Contract specifications page indicates whether this Contract is a Tax-Qualified Contract.
Valuation Date
Each day on which the New York Stock Exchange is open for business.
Valuation Period
The period starting at the close of regular trading on the New York Stock Exchange on any Valuation Date and ending at the close of trading on the next succeeding Valuation Date.
Written Request
Information provided to us or a request made to us that is:
    complete and satisfactory to us and
 
    on our form or in a manner satisfactory to us and
 
    received by us at our Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-5423.
A Written Request may, at our discretion, be made by telephone or electronic means.
We will treat a Written Request as a standing order. It may be modified or revoked only by a subsequent Written Request, when permitted by the terms of the Contract. A Written Request is subject to (1) any payment that we make before we acknowledge the Written Request and (2) any other action that we take before we acknowledge the Written Request.
Additional Details
The Statement of Additional Information contains more information about Accumulation Units and Benefit Units. It also contains the formula for determining the Net Investment Factor for any Subaccount for any Valuation Period and an explanation of how the following values are calculated:
    Variable account value
 
    Fixed account value
 
    Accumulation Unit Values; and
 
    Benefit Unit values
EXPENSE TABLES
These tables describe the fees and expenses you will pay when you buy or hold the Contract. No charges are imposed when you withdraw amounts from or surrender the Contract.
Table A: Contract Owner Transaction Expenses
The first table describes the fees and expenses that you will pay at the time you buy the Contract, make a transfer between investment options, or borrow money under the Contract. Premium taxes may also be deducted.

8


 

                 
    Current   Maximum
Sales load imposed on Purchase Payments
  None   None
Sales load imposed on withdrawals or on surrenders
  None   None
Transfer Fee(1)
  $ 25     $ 30  
Annual Automatic Transfer Program Fee
  None   $ 30  
Annual Systematic Withdrawal Fee
  None   $ 30  
Loan Interest Spread(2)
    3.00 %     5.00 %
 
(1)   The transfer fee currently applies to transfers in excess of 12 in any Contract Year.
 
(2)   Generally we require collateral in an amount equal to 110% of the outstanding loan balance. The loan interest spread is the difference between the amount of interest we charge you for a loan and the amount of interest we credit to your collateral. Because the maximum interest rate we charge on a loan is 8% and the minimum interest rate that we credit to collateral is 3%, the maximum loan interest spread is 5%. However, a plan administrator or an employer retirement plan may require us to charge a higher interest rate on loans. In this case, the maximum loan interest rate spread will be higher than 5%.
Table B: Annual Expenses
The next table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including Portfolio fees and expenses. Separate Account annual expenses are shown as a percentage of the average value of the Owner’s interest in the Subaccounts.
                                         
    Individual                     Group Contracts With  
    Contracts     Group Contracts     Administration Charge Waived*  
    Current     Current     Maximum     Current     Maximum  
Annual Contract Maintenance Fee
  $ 40     $ 40     $ 40     $ 40     $ 40  
Separate Account Annual Expenses
                                       
Mortality and Expense Risk Charge
    1.25 %     0.75 %     0.95 %     0.75 %     0.95 %
Administration Charge
    0.15 %     0.15 %     0.15 %     0.00 %     0.00 %
 
                             
Total Separate Account Annual Expenses
    1.40 %     1.10 %     0.90 %     0.95 %     0.75 %
 
*   We may waive the Administration Charge for group contracts when we expect to incur reduced expenses in connection with the administration of the contract.
If you surrender your Contract, we will apply the contract maintenance fee at that time.
Table C: Total Annual Portfolio Operating Expenses
The next table shows the minimum and maximum total operating expenses of the Portfolios that you may pay periodically during the time that you own the Contract. These expenses are deducted from Portfolio assets and include management fees, distribution and service (12b-1) fees, acquired fund fees, and other expenses. More detail concerning each Portfolio’s fees and expenses is contained in the prospectus of that Portfolio.
                 
    Minimum   Maximum
Before any fee reduction or expense reimbursement
    0.29 %     1.37 %
After contractual fee reductions and/or expense reimbursements(1)
    0.29 %     1.31 %
 
(1)   Contractual fee reductions and/or expense reimbursements related to a Portfolio will continue for a period that ends on a specific date. All contractual fee caps currently in place will end on April 30, 2011.
The information about Portfolio expenses that we used to prepare this table was provided to us by the Portfolios. We have not independently verified the Portfolio expense information. The minimum and maximum expenses shown in the table are for the year ended December 31, 2009. Actual expenses of a Portfolio in future years may be higher or lower.
The Portfolios in the Financial Investors Variable Insurance Trust and the Wilshire Variable Insurance Trust are structured as “fund of funds” and invest in other investment companies (“Acquired Funds”). As a result, each Ibbotson portfolio and each Wilshire portfolio will likely incur higher expenses than fund that invest directly in securities and you will effectively be paying a portion of the management fees and other expenses of the Acquired Funds.

9


 

The minimum expenses, both before and after any fee reduction and/or expense reimbursement, are the expenses of the Dreyfus Stock Index Fund, Inc.
The maximum expenses before fee reductions and/or expense reimbursements are the expenses of the Ibbotson Conservative ETF Asset Allocation Portfolio. The adviser and subadviser to the Ibbotson Conservative ETF Asset Allocation Portfolio have contractually agreed to jointly waive its management fee and subadvisory fee, respectively, and/or reimburse expenses so that net annual fund operating expenses, excluding acquired fund fees and expenses and extraordinary expenses, do not exceed a maximum of 0.73% of the average daily net assets through April 30, 2011. The addition of excluded expenses may cause the net annual fund operating expenses to exceed the maximum amount of 0.73% agreed to by the adviser and subadviser.
The maximum expenses after fee reductions and/or expense reimbursement, are the expenses of the Calamos Growth and Income Portfolio.
Examples
These examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include the Contract Owner transaction expenses (described in Table A above), the Annual Expenses (described in Table B above), and Portfolio operating expenses (described Table C above). Your actual costs may be higher or lower than the costs shown in the examples.
Example 1(a): Individual Contract with Maximum Fund Operating Expenses
Assumptions
    You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
 
    The annual contract maintenance fee ($40), the Separate Account annual expenses (1.40%), and the maximum Portfolio expenses (1.37% before reimbursement or 1.31% after reimbursement) are incurred .
In this table, we assume that you surrender your Contract at the end of the period . In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 325     $ 1,040     $ 1,849     $ 4,358  
After reimbursement
  $ 319     $ 1,021     $ 1,816     $ 4,286  
Example 1(b): Group Contract with Maximum Fund Operating Expenses
Assumptions
    You invest $10,000 in a group Contract for the periods indicated and your investment has a 5% return each year.
 
    The annual contract maintenance fee ($40), the maximum Separate Account annual expenses (1.10%), and the maximum Portfolio expenses (1.37% before reimbursement or 1.31% after reimbursement) are incurred.
In this table, we assume that you surrender your Contract at the end of the period. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $       $       $       $    
After reimbursement
  $       $       $       $    
Example 2: Individual Contract with Minimum Fund Operating Expenses
Assumptions
    You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
 
    The annual contract maintenance fee ($40), the Separate Account annual expenses (1.40%), and the minimum Portfolio expenses (0.29%) are incurred.
In this table, we assume that you surrender your Contract at the end of the period. In this case, your costs would be:

10


 

                                 
    1 year   3 years   5 years   10 years
 
  $ 215     $ 693     $ 1,242     $ 2,983  
FINANCIAL INFORMATION
Condensed Financial Information
Condensed financial information for the Contracts is set forth in Appendix A to this prospectus. It includes
    year-end accumulation unit values for each Subaccount for each of the last 10 fiscal years through December 31, 2009, or from the end of the year of inception of a Subaccount, if later, to December 31, 2009; and
 
    number of accumulation units outstanding as of the end of each period.
Financial Statements
The financial statements and reports of the independent registered public accounting firm of the Company and of the Separate Account are included in the Statement of Additional Information.
OVERVIEW
What is the Separate Account?
The Separate Account is an account that was established and is maintained by the Company. It is a unit investment trust registered with the SEC under the Investment Company Act of 1940. The Separate Account is divided into Subaccounts. Each Subaccount invests in shares of the corresponding Portfolio listed on the cover page of this prospectus. If you choose a variable investment option, you are investing in a Subaccount, not directly in the corresponding Portfolio.
What Are the Contracts?
The Contracts are individual and group deferred annuities, which are insurance products. The Contracts are sold with either a standard or an enhanced fee structure, as described in the Expense Tables of this prospectus.
Before the Commencement Date, you can allocate Purchase Payments among any of the variable investment options currently offered and two Fixed Account options.
  The variable investment options are the Subaccounts. Each Subaccount invests in a Portfolio. You bear the risk of any investment gain or loss on amounts allocated to the Subaccounts.
 
  The Fixed Account options earn a fixed rate of interest declared by us, which will be at least 1% per year, or any higher Fixed Account guaranteed interest rate stated in your Contract. We guarantee amounts invested in a Fixed Account option and the earnings on those amounts so long as those amounts remain in the Fixed Account option.
After the Commencement Date, payments can be allocated between variable dollar benefit and fixed dollar benefit options. If a variable dollar benefit option is selected, Benefit Units can be allocated to any of the Subaccounts that are then available.
What Benefits Are Available under the Contract?
     
Annuity Benefit
  When the Contract is annuitized, we promise to pay a stream of Annuity Benefit payments for the duration of the settlement option selected.
 
   
Death Benefit
  A Death Benefit will be paid under the Contract if you or a joint owner dies before the Annuity Commencement Date and before the Contract is surrendered.
A partial surrender or withdrawal from the Contract may result in the reduction of the Death Benefit that is greater than the amount of the partial surrender or withdrawal.
What Are the Risks Related to the Contract?
The variable investment options to which you allocate Purchase Payments may lose value, which would cause your Account Value to decrease. We may not be able to pay claims related to the annuity, death or guaranteed withdrawal benefits. A penalty tax may be imposed at the time of a withdrawal or a surrender depending on your age and other circumstances.

11


 

How Do I Purchase or Cancel a Contract?
You may purchase a Contract only through a registered securities representative. The requirements to purchase a Contract and more information about ownership of a Contract are explained in The Contracts section of this prospectus.
You may cancel a Contract within 20 days after you receive it. The right to cancel may be longer in some states. In many states, you will bear the risk of investment gain or loss on any amounts allocated to the Subaccounts prior to cancellation. The right to cancel may not apply to group Contracts. The right to cancel is described more fully in the Right to Cancel section of this prospectus.
Will Any Charges or Penalties Apply if I Make Withdrawals or Surrender a Contract?
There are no charges imposed on withdrawals from the Contracts or surrenders of the Contracts, except that the annual Contract maintenance fee will be deducted at the time of a surrender. Withdrawal and surrender procedures are described in the Withdrawals and Surrenders section of this prospectus.
A penalty tax may be imposed at the time of a withdrawal or a surrender depending on your age and other circumstances. Tax consequences of a withdrawal or a surrender are described in the Federal Tax Matters section of this prospectus. The right to withdraw or surrender may be restricted under certain tax-qualified retirement plans.
What Other Charges and Deductions Apply to the Contract?
We will charge the fees and charges listed below unless we reduce or waive the fee or charge as discussed in the Charges and Deductions section of this prospectus. The mortality and expense risk charge may never be entirely waived.
  An annual Contract maintenance fee, which is assessed only against investments in the Subaccounts
 
  A transfer fee for certain transfers among investment options
 
  An administration charge, which is an expense of the Separate Account and charged against all assets in the Subaccounts
 
  A mortality and expense risk charge, which is an expense of the Separate Account and charged against all assets in the Subaccounts
 
  Premium taxes, if any
In addition to charges and deductions under the Contracts, the Portfolios incur expenses that are passed through to you. Portfolio expenses for the fiscal year ended December 31, 2009 are described in the prospectuses and statements of additional information for the Portfolios.
How Do I Contact the Company?
Any questions or inquiries should be directed to our Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-5423, 1-800-789-6771. Please include the Contract number and your name. You may also contact us through our web site, www.gafri.com.
THE PORTFOLIOS
Overview
The Separate Account currently offers the following Subaccounts, each of which is invested in a Portfolio with its own investment objectives and policies. The current Portfolio prospectuses, which accompany this prospectus, contain additional information concerning the investment objectives and policies of each Portfolio, the investment advisory services and administrative services of each Portfolio and the charges of each Portfolio. There is no assurance that the Portfolios will achieve their stated objectives. The SEC does not supervise the management or the investment practices and/or policies of any of the Portfolios. You should read the Portfolio prospectuses carefully before making any decision concerning the allocation of purchase payments to, or transfers among, the Subaccounts. For a copy of any prospectus of any Portfolio, which contains more complete information about the Portfolio, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-4523, call us at 1-800-789-6771, or go to our website at www.gafri.com.
The Company and/or its affiliates may directly or indirectly receive payments from the Portfolios and/or their service providers (investment advisers, administrators and/or distributors) in connection with certain administrative, marketing and other services provided by the Company and/or its affiliates and expenses incurred by the Company and/or its

12


 

affiliates. The Company and/or its affiliates generally receive three types of payments: Rule 12b-1 fees, support fees and other payments. The Company and its affiliates may use the proceeds from these payments for any corporate purpose, including payment of expense related to promoting, issuing, distributing and administering the Contracts, marketing the underlying Portfolios, and administering the Separate Account. The Company and its affiliates may profit from these payments. More information about these payments is included in the Statement of Additional Information.
Portfolios, Share Classes, Advisors and Portfolio Investment Categories
             
    SHARE        
PORTFOLIO   CLASS   ADVISOR   INVESTMENT CATEGORY
American Century Variable Portfolios, Inc.
           
Large Company Value Fund
  Class I   American Century Investment Management   Domestic equity: Large value
Mid Cap Value Fund
  Class I   American Century Investment Management   Domestic equity: Mid cap value
Ultra® Fund
  Class I   American Century Investment Management   Domestic equity: Large growth
VistaSM Fund
  Class I   American Century Investment Management   Domestic equity: Mid cap growth
Calamos®Advisors Trust
           
Growth and Income Portfolio
  n/a   Calamos Advisors LLC   Balanced: Moderate allocation
Davis Variable Account Fund, Inc.
           
Value Portfolio
  n/a   Davis Selected Advisers, L.P.
Sub-Adviser: Davis Selected Advisers-NY, Inc.
  Domestic equity: Large blend
Dreyfus Portfolios
           
Dreyfus Investment Portfolios MidCap Stock Portfolio
  Service   The Dreyfus Corporation   Domestic equity: Mid cap blend
Dreyfus Investment Portfolios Technology Growth Portfolio
  Initial   The Dreyfus Corporation   Domestic equity: Technology
The Dreyfus Socially Responsible Growth Fund, Inc.
  Institutional   The Dreyfus Corporation   Domestic equity: Large growth
Dreyfus Stock Index Fund, Inc.
  Institutional   The Dreyfus Corporation (Index Mgr: Mellon Capital Management Corp*)   Domestic equity: Large blend
Dreyfus Variable Investment Fund Appreciation Portfolio
  Initial   The Dreyfus Corporation   Domestic equity: Large blend
Dreyfus Variable Investment Fund Growth and Income Portfolio
  Initial   The Dreyfus Corporation   Domestic equity: Large growth
Dreyfus Variable Investment Fund Money Market Portfolio
  N/A   The Dreyfus Corporation   Money market: Money market taxable
Dreyfus Variable Investment Fund Opportunistic Small Cap Portfolio
  Initial   The Dreyfus Corporation   Domestic equity: Small blend
Financial Investors Variable Insurance Trust
           
Ibbotson Balanced ETF Asset Allocation Portfolio
  Class II   ALPS Advisers, Inc.   Balanced: Moderate allocation
Ibbotson Conservative ETF Asset Allocation Portfolio
  Class II   ALPS Advisers, Inc.   Balanced: Conservative allocation
Ibbotson Growth ETF Asset Allocation Portfolio
  Class II   ALPS Advisers, Inc.   Domestic equity: Large blend
Ibbotson Income and Growth ETF Asset Allocation Portfolio
  Class II   ALPS Advisers, Inc.   Balanced: Conservative allocation
Franklin Templeton Variable Insurance Products Trust
           
Templeton Foreign Securities Fund
  Class 2   Templeton Investment Counsel, LLC   International equity: Foreign large value
Invesco Variable Insurance Funds+
           
Invesco V.I. Capital Development Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Mid cap growth
Invesco V.I. Core Equity Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Large blend
Invesco V.I. Financial Services Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Financial
Invesco V.I. Global Health Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Health
Invesco V.I. High Yield Fund
  Series I   Invesco Advisors, Inc.   Specialty bond: High yield bond

13


 

             
    SHARE        
PORTFOLIO   CLASS   ADVISOR   INVESTMENT CATEGORY
Invesco V.I. Small Cap Equity Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Small blend
Invesco Van Kampen U.S. Mid Cap Value Portfolio
  Class I   Van Kampen**   Domestic equity: Mid cap value
Invesco Van Kampen Value Portfolio
  Class I   Van Kampen**   Domestic equity: Large value
Janus Aspen Series
           
Balanced Portfolio
  Institutional   Janus Capital Management   Balanced: Market allocation
Enterprise Portfolio
  Institutional   Janus Capital Management   Domestic equity: Mid cap growth
Forty Portfolio
  Institutional   Janus Capital Management   Domestic equity: Large growth
Janus Portfolio
  Institutional   Janus Capital Management   Domestic equity: Large growth
Overseas Portfolio
  Institutional   Janus Capital Management   International equity: Foreign large growth
Morgan Stanley—The Universal Institutional Funds, Inc.
           
Mid Cap Growth Portfolio
  Class I   Van Kampen**   Domestic equity: Mid cap growth
U.S. Real Estate Portfolio
  Class I   Van Kampen**   Specialty stock: Real estate
Oppenheimer Variable Account Funds
           
Balanced Fund
  Service   OppenheimerFunds   Balanced: Moderate allocation
Capital Appreciation Fund
  Non-Service   OppenheimerFunds   Domestic equity: Large growth
Main Street Fund®
  Non-Service   OppenheimerFunds   Domestic equity: Large blend
PIMCO Variable Insurance Trust
           
Real Return Portfolio
  Administrative   Pacific Investment Management Company   General bond: Inflation-protected bond
Total Return Portfolio
  Administrative   Pacific Investment Management Company   General bond: Intermediate-term bond
Wilshire
           
2015 ETF Fund
  n/a   Wilshire Associates Incorporated   Balanced: Target date 2011-2015
2025 ETF Fund
  n/a   Wilshire Associates Incorporated   Balanced: Target date 2021-2025
2035 ETF Fund
  n/a   Wilshire Associates Incorporated   Balanced: Target date 2031-2035
 
+   The full legal name of Invesco Variable Insurance Funds is AIM Variable Insurance Funds (Invesco Variable Insurance Funds).
 
*   An affiliate of The Dreyfus Corporation.
2010 Portfolio Changes — The list above and this prospectus reflects the name changes and transactions described below.
    On April 19, 2010, the Dreyfus Developing Leaders Portfolio, a series of the Dreyfus Variable Insurance Fund, changed its name to the Dreyfus Opportunistic Small Cap Portfolio.
 
    On May 1, 2010, the AIM portfolios changed their brand name to Invesco. For example, AIM V.I. Capital Development Fund became Invesco V.I. Capital Development Fund.
 
    On May 1, 2010, The Universal Institutional Funds, Inc. changed its brand name from Van Kampen to Morgan Stanley.
 
    On June 1, 2010 or as soon as practical after that date, Van Kampen’s U.S. Mid Cap Value Portfolio and Value Portfolio, which currently are series of The Universal Institutional Funds, Inc., will be merged into AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and change its brand name to Invesco Van Kampen. The list above reflects this anticipated transaction.
Each Ibbotson Portfolio and each Wilshire Portfolio listed in the table above is structured as a “fund of funds”. A “fund of funds” attempts to achieve its investment objective by investing in other investment companies (each, an “Acquired Fund”), which in turn invests directly in securities. Each Ibbotson Portfolio and each Wilshire Portfolio indirectly incurs a proportionate share of the expenses of each Acquired Fund in which it invests. As a result of this fund of funds structure, the Ibbotson Portfolios and the Wilshire Portfolios will likely incur higher expenses than funds that invest directly in securities.

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THE FIXED ACCOUNTS
The available fixed investment options are:
    Fixed Accumulation Account Option
 
    Fixed Account Option One-Year Guarantee Period
The Fixed Account options are only available in connection with individual contracts.
Interests in the Fixed Account options are not securities and are not registered with the SEC. The Fixed Account options are part of the Company’s general account. Amounts allocated to the Fixed Account options will receive a stated rate of interest of at least 3% per year. Amounts allocated to the Fixed Account options and interest credited to the Fixed Account options are guaranteed by the Company. Interests in the Subaccounts are securities registered with the SEC. The Owner bears the risk of investment gain or loss on amounts allocated to the Subaccounts.
There are restrictions on allocations to the Fixed Accounts, which are more fully described in the Purchase Payments and Investment Options-Allocations sections of this prospectus. There are also restrictions on transfers to and from the Fixed Accounts, which are described more fully in the Transfers section of this prospectus.
Fixed Accumulation Account
Amounts allocated to the Fixed Accumulation Account generally will receive a stated rate of interest of at least 3% per year. We may from time to time pay a higher current interest rate for the Fixed Accumulation Account.
Fixed Account Options with Guarantee Periods
Amounts allocated to a Fixed Account option with a guarantee period will receive a stated rate of interest for the guarantee period. The stated rate of interest will not change during the applicable guarantee period. The stated rate of interest will be at least the minimum required under the law of the state when and where the Contract is issued, but may be higher.
Example: You allocate $5,000 to the Fixed Account Option One-Year Guarantee Period when the stated rate of interest for the option is 3.5%. The $5,000 you allocated to the option will earn interest at a rate of 3.5% per year, compounded annually, for the next year.
Renewal of Fixed Account Options with Guarantee Periods
At the end of a guarantee period and for 30 days preceding the end of the period, the Owner may elect a new option to replace the option that is then maturing. The Company will notify the Owner of the date on which the amount matures and Fixed Account options available at that time.
The entire amount in the maturing option may be re-allocated to any of the then-current Fixed Account options or Subaccounts. The Owner may not re-allocate to a Fixed Account option with a guarantee period that would extend beyond the annuity commencement date (the “latest date”).
If the Owner does not elect a new option, the entire amount maturing will be re-allocated to the maturing option so long as its guarantee period does not extend beyond the “latest date.” If the guarantee period extends beyond the “latest date,” the entire amount maturing will be re-allocated to the Fixed Account option with the longest available guarantee period that expires before the “latest date” or, failing that, the Fixed Accumulation option.
1998 Version   An amount that was allocated or transferred to any of the then available Fixed Account options with a guarantee period will mature at the end of the period. When an amount matures, you may transfer it as indicated above. No amount may be allocated to a guarantee period option that would extend beyond the Owner’s 85th birthday or 5 years after the effective date of the Contract, if later (the “85/5 restriction”). If you do not transfer the amount, then we will apply it to a new guarantee period under the One-Year Guarantee Period Option. If that guarantee period is not available due to the 85/5 restriction, then the amount will be transferred to the Fixed Accumulation Account.

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PURCHASE PAYMENTS AND ALLOCATIONS TO INVESTMENT OPTIONS
Overview
Generally you can make one or more Purchase Payments at any time before the Annuity Commencement Date. We will allocate Purchase Payments to the available Subaccounts and Fixed Account options according to your instructions.
You can control the allocation of investments through transfers or through the following investment programs offered by the Company: dollar cost averaging, portfolio rebalancing, and interest sweep. These programs and telephone, facsimile and Internet transfer procedures are described in the Transfers section of this prospectus. For more information on these programs, see the Automatic Transfer Programs section of this prospectus.
Purchase Payments
Purchase Payments must be received by us at our Variable Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-5423. Upon request, we will provide you with a receipt as proof of payment.
Current Restrictions on Purchase Payment Amounts
                 
    Tax Qualified Contract   Non Tax Qualified Contract
Minimum amounts
               
Minimum initial Purchase Payment
  $ 20,000     $ 20,000  
Minimum additional Purchase Payment
  $ 50     $ 100  
 
               
Maximum amounts
               
Maximum single Purchase Payment
  500,000  or Company approval    $500,000  or Company approval 
We reserve the right to increase or decrease the minimum and maximum Purchase Payment amounts, at our discretion and at any time, where permitted by law.
We will apply your initial Purchase Payment to your account using the following rules.
  If the application form is in Good Order, we will apply the initial Purchase Payment within 2 business days of receipt of the Purchase Payment.
 
  If the application form is not in Good Order, we will attempt to get the application form in Good Order within 5 business days. If the application form is not in Good Order at the end of 5 business days, we will inform the applicant of the reason for the delay and that the Purchase Payment will be returned immediately unless he or she specifically agrees that we may keep the Purchase Payment until the application form is in Good Order. Once the application form is in Good Order, we will apply the Purchase Payment within 2 business days.
We will apply each additional Purchase Payment to your account as of the Valuation Date on which we receive the Purchase Payment and any related allocation instructions in Good Order. If any portion of the additional Purchase Payment is allocated to a Subaccount, we will apply it at the next Accumulation Unit Value calculated after we receive the Purchase Payment and related allocation instructions in Good Order.
Allocations to Investment Options
You can allocate Purchase Payments in whole percentages to any of the available Subaccounts or Fixed Account options. Allocation instructions must be made by Written Request.
     
Subaccount Option   Fixed Account Options
 
See the Portfolios section of this prospectus for a list of the currently available Subaccounts.
  The currently available Fixed Account options for individual Contracts are:

     Fixed Accumulation Account

     Fixed Account One-Year Guarantee Period

The Fixed Account options are not available under group Contracts.
Interests in the Subaccounts are securities registered with the SEC. You bear the risk of investment gain or loss on amounts allocated to the Subaccounts.

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Current Restrictions on Allocations
The current restrictions on allocations for either tax-qualified or non-tax-qualified Contracts are:
     
Minimum allocation to any Subaccount
  $10 
 
   
Minimum allocation to Fixed Accumulation Account
  $10 
 
   
Minimum allocation to a Fixed Account option with a guaranteed period
  $2,000 

No amounts may be allocated to any guarantee period option which would extend beyond the Annuity Commencement Date.
 
   
Allocation during right to cancel period
  No current restrictions, but the Company reserves the right to require that purchase payment(s) be allocated to the money market Subaccount or to the Fixed Accumulation Account option during the right to cancel period.
We may, in our sole discretion, restrict or prohibit allocations to Subaccounts or Fixed Account options from time to time on a nondiscriminatory basis.
CHARGES AND DEDUCTIONS
Charges and Deductions by the Company
We assess two types of charges and deductions. We assess charges to the Contract, which are reflected in the Account Value of the Contract, but not in Accumulation Unit Values or Benefit Unit Values. These charges are the annual Contract maintenance fee, transfer fees, and premium taxes, where applicable. We also assess charges against the Separate Account. These charges are reflected in the Accumulation Unit Values and Benefit Unit Values. These charges are the administration charge and the mortality and expense risk charge.
Contract Maintenance Fee
     
Purpose of Fee
  To offset expenses incurred in issuing the Contracts and in maintaining the Contracts and the Separate Account.
 
   
Amount of Fee
  $40.00 per year.
 
   
When and How Deducted
  Before the Commencement Date, we deduct this fee pro rata from amounts invested in the Subaccounts as of the Valuation Period after each Contract Anniversary that this Contract is in effect. After the Commencement Date, we deduct a portion of the annual fee from each variable dollar payment. We also deduct the full annual fee at the time of a surrender.
 
   
Waivers
  Before the Commencement Date if the Account Value is at least $40,000 on the date the fee is due (individual Contracts only). After the Commencement Date if the amount applied to a variable dollar benefit is at least $40,000 (individual Contracts only). In our discretion where we incur reduced sales and servicing expenses. After the Commencement Date where required to satisfy state law.
 
   
Transfer Fee
   
 
   
Purpose of Fee
  To offset costs incurred in administering the Contracts.
 
   
Amount of Fee
  $25 for each transfer in excess of 12 in any Contract Year. We reserve the right to change the amount of this fee at any time or the number of transfers that can be made without incurring the transfer fee. The maximum amount of the fee that we would impose on a transfer is $30.
 
   
When and How Deducted
  Before the Commencement Date, we deduct the fee from the amount transferred.
 
   
Waivers
  Currently, the transfer fee does not apply to transfers associated with the dollar cost averaging, interest sweep and portfolio rebalancing programs. Transfers associated with these programs do not count toward the 12 free transfers permitted in a Contract Year.

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Administration Charge
     
Purpose of Charge
  To offset expenses incurred in administering the Contracts and the Separate Account.
 
   
Amount of Charge
  Daily charge equal to 0.000411% of the daily net asset value for each Subaccount, which corresponds to an annual effective rate of 0.15%.
 
   
When and How Deducted
  Before the Commencement Date and, if variable dollar payments are to be made, after the Commencement Date, we deduct this charge from amounts invested in the Subaccounts.
 
   
Waivers
  May be waived or reduced in our discretion where we incur reduced sales and servicing expenses.
Mortality and Expense Risk Charge
     
Purpose of Charge
  As compensation for assuming mortality and expense risks under the Contract.

     We assume mortality risks because we are obligated under the Contracts to make Annuity Benefit payments and Death Benefit payments.

     We assume expense risks because our actual expenses in administering the Contracts and the Separate Account could exceed the amount recovered through the Contract maintenance fees, transfer fees and administration charges.
 
   
Amount of Charge
  Daily charge equal to 0.003446% of the daily net asset value for each Subaccount, which corresponds to an effective annual rate of 1.25%.
 
   
When and How Deducted
  Before the Commencement Date and, if variable dollar payments are to be made, after the Commencement Date, we deduct this charge from amounts invested in the Subaccounts.
 
   
Waivers
  When we expect to incur reduced sales and servicing expenses, we may issue a Contract with a reduced mortality and expense risk charge. These Contracts are referred to as “Enhanced Contracts.” The mortality and expense risk charge under an Enhanced Contract is either:

     a daily charge of 0.002615% of the daily net asset value for each Subaccount, which corresponds to an effective annual rate of 0.95%, or

     a daily charge of 0.002063% of the daily net asset value for each Subaccount, which corresponds to an effective annual rate of 0.75%.
Premium Taxes
Currently some state governments impose premium taxes on annuity purchase payments. These taxes currently range from zero to 3.5% depending upon the jurisdiction. A federal premium tax has been proposed but not enacted. We will deduct any applicable premium taxes from the Purchase Payments or the Account Value at the time that the tax is imposed.
Expenses Related to Loans
If loans are available under your Contract and you borrow money under the loan provisions of your Contract, we will charge interest on the loan. The maximum interest rate we charge on a loan is 8%. For more information about loans, see the Contract Loans section of the prospectus
Maximum Charges
Except as described below, we will never charge more to a Contract than the fees and charges described below, even if our actual expenses exceed the total fees and charges collected. If the fees and charges that we collect exceed the actual expenses that we incur, the excess will be profit to us and will not be returned to Owners.
We reserve the right to eliminate this waiver at any time. We also reserve the right to charge fees for the automatic transfer programs described in the Transfers section of this prospectus, and/or for the systematic withdrawal program described in the Withdrawals and Surrenders section of this prospectus, if we determine, in our discretion, that such charges are necessary to offset the costs of administering the programs.
Discretionary Waivers of Charges
We will look at the following factors to determine if we will waive a charge, in part or in full, due to reduced sales and servicing expenses: (1) the size and type of the group to which sales are to be made, (2) the total amount of Purchase Payments to be received, and (3) any prior or existing relationship with us. We would expect to incur reduced sales and servicing expenses in connection with Contracts offered to our employees and employees of our subsidiaries and/or affiliates. There may be other circumstances, of which we are not presently aware, that could result in reduced sales and

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servicing expenses. In no event will we waive a charge where such waiver would be unfairly discriminatory to any person.
Expenses of the Portfolios
In addition to charges and deductions by the Company, each Portfolio incurs management fees and other expenses that are described in the prospectus and statement of additional information for the Portfolio. Portfolio expenses, like Separate Account expenses, are reflected in Accumulation Unit Values and Benefit Unit Values.
TRANSFERS
Transfers
Before the Commencement Date, you may transfer amounts among Subaccounts, between Fixed Account options (where available), and/or between Subaccounts and Fixed Account options (where available).
A transfer is effective on the Valuation Date during which we receive the Written Request for transfer. We will process transfers to a Subaccount at the Accumulation Unit Value calculated after we receive the transfer request in Good Order.
Current Restrictions on Transfers
The current restrictions on transfers are:
     
    Tax-Qualified and Non-Tax-Qualified
Minimum Transfers from
   
 
   
     - any Subaccount
  $500 or balance of Subaccount, if less than $1,000
 
   
     - Fixed Account option
  $500 or balance of Fixed Account option, if less
 
   
Minimum Transfer to
   
 
   
     - Fixed Accumulation Account
  None
 
   
     - Fixed Account option with guarantee period
  $2,000 — No amounts may be transferred to a guarantee period option which would extend beyond the Annuity Commencement Date.
 
   
Maximum Transfers from
   
 
   
     - Fixed Accumulation Account
  During any contract year, 20% of the Fixed Account option’s value as of the most recent contract anniversary.
 
   
     - Maturing Fixed Account option with guarantee period
  The amount contained in the maturing Fixed Account option with guarantee period.
 
   
     - Non-Maturing Fixed Account option with guarantee period
  During any contract year, 20% of the Fixed Account option’s value as of the most recent contract anniversary without penalty.
 
   
General Restrictions on Transfers from Fixed
Account options
 
§       May not be made prior to first contract anniversary.
 
   
 
 
§      Amounts transferred from Fixed Account options to Subaccounts may not be transferred back to Fixed Account options for a period of six months from the date of the original transfer.
 
   
General Restrictions on Transfers to Fixed
Account option with guarantee period
  For Contracts issued after May 1, 2004 in states where the Company has received regulatory approval, amounts may be transferred to the Three-Year Guaranteed Interest Rate Option only during the first contract year.
We may, in our sole discretion, restrict or prohibit any type of transfer or the availability of any Subaccount or Fixed Account option on a nondiscriminatory basis. We may modify our transfer procedures at any time and at our sole discretion.
How to Request a Transfer
Currently, you may make a transfer request by Written Request or any of the following alternate methods:
    by telephone at 1-800-789-6771
 
    by facsimile at 513-768-5115 or

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    over the Internet through our web site at www.gafri.com.
All transfer requests must comply with the terms of the Contract. We accept transfer instructions once each Valuation Period. Once instructions have been accepted, they may not be rescinded; however, new instructions may be given the following Valuation Period.
You may place transfer requests by telephone, by facsimile or over the Internet between 9:30 a.m. and 4:00 p.m. Access to these alternate methods of placing transfer requests, particularly through our web site, may be limited or unavailable during periods of peak demand, system upgrading and maintenance, or for other reasons. We may withdraw the right to make transfers by telephone, facsimile or over the Internet upon 10 days’ written notice to affected Contract Owners.
We will not be liable for complying with transfer instructions that we reasonably believe are genuine, or for any loss, damage, cost or expense in acting on such instructions. In addition, we will not be liable for refusing to comply with transfer instructions that are not in Good Order or that we reasonably believe are not genuine, or for any loss, damage, cost or expense for failing to act on such instructions. You or the person controlling payments will bear the risk of such loss. We will employ reasonable procedures to determine that telephone, facsimile or Internet instructions are genuine. If we do not employ such procedures, we may be liable for losses due to unauthorized or fraudulent instructions. These procedures may include, among others, tape recording telephone instructions or requiring use of a unique password or other identifying information.
Automatic Transfer Programs
Before the Commencement Date, we offer the automatic transfer services described below. To enroll in one of these programs, you will need to complete the appropriate authorization form, which you can obtain from us by calling 1-800-789-6771. There are risks involved in switching between investment options available under the Contract.
Currently, the transfer fee does not apply to dollar cost averaging, portfolio rebalancing, or interest sweep transfers, and transfers under these programs will not count toward the 12 transfers permitted under the Contract without a transfer fee charge.
             
        Minimum Account    
Service   Description   Requirements   Limitations/Notes
Dollar Cost Averaging Dollar cost averaging requires regular investments regardless of fluctuating price levels and does not guarantee profits or prevent losses in a declining market. You should consider your financial ability to continue dollar cost averaging transfers through periods of changing price levels.
  Automatic transfers from the money market Subaccount to any other Subaccount(s), or from the Fixed Accumulation Account option (where available) to any Subaccount(s), on a monthly or quarterly basis.   Source of funds must be at least $10,000. Minimum transfer per month is $500. When balance of source of funds falls below $500, entire balance will be allocated according to dollar cost averaging instructions.   Dollar cost averaging transfers may not be made to any of the Fixed Account options. The dollar cost averaging transfers will take place on the last Valuation Date of each calendar month or quarter as requested by the Owner.
 
           
Portfolio Rebalancing Portfolio rebalancing does not guarantee profits or prevent losses in a declining market.
  Automatically transfer amounts between the Subaccounts and the Fixed Accumulation Account option (where available) to maintain the percentage allocations selected by the Owner.   Minimum Account Value of $10,000.   Transfers will take place on the last Valuation Date of each calendar quarter. Portfolio rebalancing will not be available if the dollar cost averaging program or an interest sweep from the Fixed Accumulation Account option is being utilized.
 
Interest Sweep
  Automatic transfers of the income from any Fixed Account option(s) to any Subaccount(s).   Balance of each Fixed Account option selected must be at least $5,000. Maximum transfer from each Fixed Account option selected is 20% of such Fixed Account option’s value per year. Amounts transferred under the interest sweep program will reduce the 20% maximum transfer amount otherwise allowed.   Interest sweep transfers will take place on the last Valuation Date of each calendar quarter.

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Changes in or Termination of Automatic Transfer Programs
You may change any automatic transfer instructions that are in place or may terminate your participation in any of the automatic transfer programs at any time. To change your instructions or to terminate your participation, you must send us a Written Request by U.S. or overnight mail, or by facsimile at 513-768-5115. You must give us at least 30 days’ notice to change any automatic transfer instructions that are already in place or to terminate your participation in an automatic transfer program.
We may terminate, suspend or modify any aspect of the automatic transfer programs described above without prior notice to you, as permitted by applicable law. Any such termination, suspension or modification will not affect automatic transfer programs already in place.
We may also impose an annual fee for participation in an automatic transfer program or increase the current annual fee, as applicable, in such amount(s) as we may then determine to be reasonable. The maximum amount of the annual fee that we would impose for participating in each automatic transfer program is $30.
Transfer Restrictions Related to Active Trading Strategies
Neither the Contracts described in this prospectus nor the underlying Portfolios are designed to support active trading strategies that involve frequent movement between or among Subaccounts (sometimes referred to as “market-timing” or “short-term trading”). Persons who intend to use an active trading strategy should consult a financial advisor and request information on variable annuity contracts that offer underlying Portfolios designed specifically to support active trading strategies.
We have implemented several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. Transfer restrictions may vary by state.
Appendix B to this prospectus contains more information about these processes and restrictions.
WITHDRAWALS AND SURRENDERS
You can access your Account Value before the Annuity Commencement Date through withdrawals from the Contract, Contract loans (if available), or a surrender of the Contract. Contract loans are described more fully in the next section of this prospectus.
You may take withdrawals from the Contract at any time before the Annuity Commencement Date. Withdrawals must be made by Written Request. The amount of the withdrawal must be at least $500. No withdrawal can be made that would reduce the Account Value of the Contract to less than $500.
A withdrawal will result in the cancellation of Accumulation Units from each of the applicable Subaccounts and/or a reduction in the value of your interest in the applicable Fixed Account options. Unless the Written Request states otherwise, the reduction in each Subaccount and Fixed Account option will be in the same proportion as the reduction in the total Account Value. If you wish to specify the Subaccount(s) and/or Fixed Account option(s) from which you wish to make a withdrawal and the amount of the withdrawal to be taken from each specified Subaccount and/or Fixed Account option, you must include this information in the Written Request.
You may surrender a Contract in full for the Account Value at any time before the Annuity Commencement Date. A full surrender will terminate the Contract. Surrenders must be made by Written Request. The amount available for surrender

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will be the Account Value at the end of the Valuation Period in which the Written Request for surrender is received by us. Any fee, charges, loans or applicable premium tax or other taxes not previously deducted will be deducted as part of the calculation of the Account Value.
An amount paid on a withdrawal or surrender may be paid to or for another annuity or tax-qualified account in an exchange, transfer, or rollover to the full extent allowed by federal tax law.
A withdrawal or surrender is effective on the Valuation Date during which we receive the Written Request for withdrawal or surrender in Good Order. A withdrawal or surrender that results in the cancellation of Accumulation Units will be processed at the next Accumulation Unit Value calculated after we receive the Written Request in Good Order.
Restrictions and Charges on Withdrawals and Surrenders
         
    Tax Qualified Contracts   Non Tax Qualified Contracts
Minimum withdrawal amount
  $500    $500 
 
       
Minimum remaining Account Value after a
withdrawal
  $500    $500 
 
       
Amount available for surrender
(valued as of end of Valuation Period in which we receive the surrender request)
  Account Value subject to tax law or employer plan restrictions on withdrawals   Account Value subject to employer plan restrictions on withdrawals
 
       
Contract maintenance fee on full surrender
  $40     
 
       
Tax penalty for early withdrawal
  When applicable, 10% of amount distributed before age 59 1/2 (25%for certain SIMPLE IRAs)    
Deferral of Payment
We have the right to suspend or delay the date of payment of a withdrawal or surrender from the Subaccounts at certain times. We may do this for any period:
  when the New York Stock Exchange is closed or when trading on the New York Stock Exchange is restricted;
 
  when the SEC determines that an emergency exists as a result of which the disposal of securities in the Separate Account is not reasonably practicable or it is not reasonably practicable to determine fairly the value of the nets assets in the Separate Account; or
 
  when the SEC permits a suspension or delay in payment for the protection of security holders.
As permitted under certain state laws, we also reserve the right to delay the processing and payment of a withdrawal or surrender from the Fixed Account. We may delay processing and payment for up to 6 months after we receive your Written Request. If we delay processing and payment, we will comply with applicable state law.
Systematic Withdrawal
Before the Annuity Commencement Date, you may elect to automatically withdraw money from the Contract. The Account Value must be at least $10,000 in order to make a systematic withdrawal election. The minimum monthly amount that can be withdrawn is $100.
You may begin or discontinue systematic withdrawals at any time by Written Request. You must give us at least 30 days’ notice to change any systematic withdrawal instructions that are currently in place. We reserve the right to discontinue offering systematic withdrawals at any time.
Currently, we do not charge a fee for systematic withdrawal services. However, we reserve the right to impose an annual fee in such amount as we may then determine to be reasonable for participation in the systematic withdrawal program. If imposed, the fee will not exceed $30 annually.
Before electing a systematic withdrawal program, you should consult with a financial advisor. Systematic withdrawal is similar to annuitization, but will result in different taxation of payments and potentially a different amount of total payments over the life of the Contract than if annuitization were elected.

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CONTRACT LOANS
We may make loans to Owners of certain Tax Qualified Contracts. If loans are available under a Tax Qualified Contract, loan provisions are described in the loan endorsement to the Contract. If loans are available under your Contract and you borrow money under the loan provisions, we will charge interest on the loan. The maximum interest rate we charge is 8%. Any such loans will be secured with an interest in the Contract, and the collateral for the loan will be moved from the Subaccounts you designate to the Fixed Accumulation Account option and earn a fixed rate of interest applicable to loan collateral, which will be at least 3%. Generally, we require the collateral amount to be 110% of the outstanding loan balance. The restrictions that otherwise apply to the Fixed Accumulation Account do not apply to transfers of collateral amounts to the Fixed Accumulation Account or to such amounts no longer required to collateralize the loan.
The difference between the interest rate we charge on a loan and the interest rate we credit to the collateral amount is called the “loan interest spread.”
    Because the maximum interest rate we charge on a loan is 8% and the minimum interest rate we credit to the collateral amount in the Fixed Accumulation Account is 3%, the maximum loan interest spread is 5%.
 
    Because we are currently charging 6% interest on loans and crediting 3% interest on collateral, the current “loan interest spread” is 3%.
 
    A plan administrator or employer retirement plan may require us to charge an interest rate on loans that is higher than 8%. In this case, the maximum “loan interest spread” will be higher than 5% and the current “loan interest spread” will be higher than 3%.
Any unpaid interest will be added to the loan. As a result, it will be compounded and be part of the loan.
If loans are available under your Contract and you borrow money under the loan provisions, you will not be able to surrender or annuitize your Contract until all such loans are paid in full. Loans may also limit the amount of money that you can partially surrender from your Contract. If you default in repaying a loan under your Contract, we may pay off the loan by effectively reducing your Account Value by an amount equal to the balance of the loan.
If we receive money from you while a loan is outstanding under your Contract, we will treat the money as a Purchase Payment unless you notify us that the money is a loan payment.
Loan amounts and repayment requirements are subject to provisions of the Internal Revenue Code. A default on a loan will result in a taxable event. You should consult a tax advisor before exercising loan privileges.
A loan, whether or not repaid, will have a permanent effect on the Account Value of a Contract because the collateral cannot be allocated to the Subaccounts or Fixed Account One-Year Guarantee Period option. The longer the loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. If the investment results are greater than the interest rate being credited on collateral while the loan is outstanding, the Account Value will not increase as rapidly as it would have increased if no loan were outstanding. If investment results are below that interest rate, the Account Value will be higher than it would have been if no loan had been outstanding.
ANNUITY BENEFIT
     
ü Annuity Benefit
  The payments that may be made under the Annuity Benefit section of the Contract.
 
   
ü Annuity Benefit Amount
  The Account Value, reduced by any fees and charges, loans, and applicable premium tax or other taxes not previously deducted, will be used to provide Annuity Benefit payments under the Contract.
 
   
ü Annuity Commencement Date
  The first day of the first payment interval for which an Annuity Benefit payment is to be made.
When the Contract is annuitized, we promise to pay a stream of Annuity Benefit payments for the duration of the settlement option selected. Upon annuitization, the Account Value is no longer available to you. Annuity Benefit payments are based on the Account Value. Annuity Benefit payments may be calculated and paid as variable dollar

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payments, fixed dollar payments, or a combination of both The stream of payments, whether variable dollar or fixed dollar, is an obligation of our general account. However, we guarantee only the amount of fixed dollar payments. You (or the applicable payee) bear the risk that any variable dollar payment may be less than the initial variable dollar payment or that it may decline to zero, if Benefit Unit Values for that payment decrease sufficiently.
Annuity Commencement Date
The Annuity Commencement Date is set out on the Contract specification page. You may change the Annuity Commencement Date by Written Request. We must receive the Written Request at least 30 days before the date that the Annuity Benefit payments are scheduled to begin.
You should consider the following rules when designating the Annuity Commencement Date.
     
Tax Qualified Contract   Non Tax Qualified Contract
 
The Annuity Commencement Date generally must be no later than the Contract Anniversary following your 70th birthday. The Annuity Commencement Date can be later only if we agree.
  The Annuity Commencement Date generally must be no later than (1) the Contract Anniversary following the 85th birthday of the elder of you or any joint owner or (2) five years after the effective date of the Contract, whichever is later. The Annuity Commencement Date can be later only if we agree
Form of Annuity Benefit
You may elect to have Annuity Benefit payments made pursuant to any form of settlement option that is currently available. The standard forms of settlement options are described in the Settlement Options section of this prospectus. You may request fixed dollar payments, variable dollar payments, or a combination of both.
You may elect a settlement option or change your election by Written Request. The election or any change in your election must be made before the Annuity Commencement Date. We must receive your Written Request at least 30 days before the Annuity Commencement Date.
If you have not made an election as to the form of settlement option, we will attempt to contact you to ascertain the form of settlement option to be used. If you do not select a settlement option, Annuity Benefit payments will be made annually under the terms of Settlement Option B with a fixed period of 10 years, as described in the Settlement Options section of this prospectus. In addition, the form of the Annuity Benefit payments (fixed dollar payments, variable dollar payments, or a combination of both) will reflect the allocation of your Account Value as of the end of the Valuation Period that precedes the Annuity Commencement Date.
     
1998 Version
  If you do not select a settlement option, Annuity Benefit payments will be fixed dollar payments made monthly under the terms of Settlement Option B for a period of 10 years.
If this Contract is a Tax Qualified Contract, an election of a settlement option is subject to restrictions stated in the tax qualification endorsement. If this Contract is not a tax qualified contract, then an election of a settlement option is subject to the distribution rules set forth in the Contract.
Person Who Receives Annuity Benefit Payments
Annuity Benefit payments generally will be made to the Annuitant as payee. There are 2 exceptions to this general rule.
  If you are not the Annuitant, you can elect to have the Annuity Benefit payments made to yourself as payee.
 
  Annuity Benefit payments may be paid as a transfer or rollover to, or as a tax-free exchange for, an annuity or tax-qualified account as permitted by federal tax law.
Annuity Benefit payments that are still payable after the death of the payee will be made to the applicable contingent payee or, if there is no designated or surviving contingent payee, the estate of the last payee who received payments.
For group contracts, Annuity Benefit payments will be made to the Participant as payee. Any Annuity Benefit amounts remaining payable on his or her death will be paid to the contingent payee designated by the Participant by Written

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Request. We may reject the naming of a non-natural payee. The Participant will be the person on whose life any Annuity Benefit payments are based.
DEATH BENEFIT
Death Benefit
     
ü Beneficiary
  The person entitled to receive any Death Benefit under this Contract. More information about the Beneficiary is included in the Contract section of the prospectus .
 
   
ü Death Benefit
  The benefit described in the Death Benefit section of the Contract.
 
   
ü Death Benefit Commencement Date
  (1) The first day of the first payment interval for a Death Benefit that is paid as periodic payments or (2) the date of payment for a Death Benefit that is paid as a lump sum.
 
   
ü Death Benefit Valuation Date
  The earlier of (1) the date that we have received both Due Proof of Death and a Written Request with instructions as to the form of the Death Benefit and (2) the Death Benefit Commencement Date.
 
   
ü Due Proof of Death
  A certified copy of a death certificate or a certified copy of a decree made by a court of competent jurisdiction as to the finding of death. We will also accept other proof that is satisfactory to us.
A Death Benefit will be paid under this Contract if you or a joint owner dies before the Annuity Commencement Date and before the Contract is surrendered.
A Death Benefit will also be paid under the following circumstances.
  You or a joint owner is a non-natural person and the Annuitant dies before the Annuity Commencement Date and before the Contract is surrendered.
 
  The Contract is a Tax Qualified Contract and the Annuitant dies before the Annuity Commencement Date and before the Contract is surrendered.
If your surviving (or civil union partner/domestic partner/same-gender spouse in applicable states) becomes a successor owner of the Contract, no Death Benefit will be paid on your death.
Only one Death Benefit will be paid under the Contract. No Death Benefit will be paid until we receive Due Proof of Death. If a Death Benefit becomes payable, it will be in lieu of all other benefits under the Contract and all other rights under this Contract will be terminated.
A partial surrender or withdrawal from the Contract may result in the reduction of the Death Benefit that is greater than the amount of the partial surrender or withdrawal.
Death Benefit Amount
The amount of the Death Benefit will be based on the greater of (1) the Account Value on the Death Benefit Valuation Date and (2) the total of all Purchase Payments, reduced proportionally for any withdrawals. Any reduction in the Purchase Payments that we make to reflect withdrawals will be made in the same percentage as the percentage reduction in your Account Value on the date of the withdrawal.
Example of Determination of Death Benefit Amount
This example is intended to help you understand how a withdrawal impacts the Death Benefit amount.
Assuming your total Purchase Payments equal $100,000, your Account Value is $90,000, you withdraw $10,000 from the Contract, and you are left with an Account Value of $80,000.

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Step One: Calculate the proportional reduction.
(GRAPHIC)
Step Two: Calculate the reduced Purchase Payment amount.
         
Purchase Payments
  $ 100,000  
Less proportional reduction for withdrawals
    – 11,111  
 
     
Purchase Payments reduced for withdrawals
  $ 88,889  
Step Three: Determine the Death Benefit amount.
Immediately after the withdrawal, the reduced Purchase Payments of $88,889 is greater than the Account Value of $80,000, so the Death Benefit amount would be $88,889.

1998   Version The Death Benefit will be an amount equal to the greater of (1) the Account Value as of the Death Benefit Valuation Date                and (2) 100% of the Purchase Payment(s) received by us, less any amounts returned to you.
Example of Determination of Death Benefit Amount (1998 version)
This example is intended to help you understand how a withdrawal impacts the Death Benefit amount.
Assuming your total Purchase Payments equal $100,000, your Account Value is $90,000, you withdraw $10,000 from the Contract, and you are left with an Account Value of $80,000.
 
Step One: Calculate the reduced Purchase Payment amount.
         
Purchase Payments
  $ 100,000  
Less proportional reduction for withdrawals
    – 10,000  
 
     
Purchase Payments reduced for withdrawals
  $ 90,000  
 
Step Two: Determine the Death Benefit amount.
Immediately after the withdrawal, the reduced Purchase Payments of $90,000 is greater than the Account Value of $80,000, so the Death Benefit amount would be $90,000.
The death benefit amount will be reduced by any applicable premium tax or other taxes not previously deducted and by any outstanding loans.
Death Benefit Commencement Date
The Beneficiary may designate the Death Benefit Commencement Date by Written Request. The Written Request must be made within one year of the death of the applicable person. If no designation is made, then the Death Benefit Commencement Date will be one year after the death.
Allocations and Transfers of Death Benefit Amount
On the Death Benefit Valuation Date, we will allocate the Death Benefit amount among the Subaccounts and the Fixed Account options. This allocation will be made in the same proportion as the value of each option bears to the total Account Value as of the end of the Valuation Period immediately before that date. After this allocation, the amount of the Death Benefit to be paid will be based on the Account Value.
Between the Death Benefit Valuation Date and the Death Benefit Commencement Date, the Beneficiary may transfer funds among the Subaccounts and the Fixed Account options. These transfers are subject to the limitations described in the Transfers section and Appendix B of this prospectus.

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Form of Death Benefit
You may elect to have Death Benefit payments made in one lump sum or pursuant to any form of settlement option that is currently available. The standard forms of settlement options are described in the Settlement Options section of this prospectus. You may request fixed dollar payments, variable dollar payments, or a combination of both. There is no additional charge associated with the form of Death Benefit election.
If the beneficiary is an individual and the lump sum payment option is selected, we pay the death benefit by establishing an interest-bearing draft account for the beneficiary in the amount of the death benefit. This account is called the Great American Benefit Choice Account. We send the beneficiary a personalized “checkbook” for this account. The beneficiary may withdraw all or part of the money in this account at any time by writing a draft against the account. The servicing bank will process the draft by drawing funds from our general account.
The Great American Benefit Choice Account earns interest, which is compounded daily and credited monthly. We set the interest rate for this account. We review the rate periodically and we may change it at any time. We may make a profit on the money held in this account.
The Great American Benefit Choice Account is part of our general account. It is not a bank account, and it is not insured by the FDIC, NCUSIF, or any government agency. As part of our general account, it is subject to the claims of our creditors.
In some circumstances when a lump sum payment option is selected, we do not establish a draft account for the beneficiary.
    If the death benefit is less than $5,000 or the beneficiary is a non-natural person such as a trust, estate or corporation, we pay the death benefit with a single check payable to the beneficiary.
 
    If the beneficiary is a resident of Arkansas, Colorado, Florida, Kansas, Maryland, Nevada, North Carolina or North Dakota and he or she requests that the lump sum be paid by check, we pay the death benefit with a single check payable to the beneficiary.
The election must be made before your death. You may change the election at any time before your death. The election or any change in the election must be made by Written Request.
If you do not make any election, the Beneficiary may make that election after your death and before the Death Benefit Commencement Date. A Beneficiary may change the Beneficiary’s own election by Written Request. We must receive the Written Request at least 30 days before the Death Benefit Commencement Date.
If neither you nor the Beneficiary has made an election, Death Benefit payments will be made annually under the terms of Settlement Option A with a fixed period of 4 years, as described in the Settlement Options section of this prospectus. In addition, the form of the Death Benefit payments (fixed dollar payments, variable dollar payments, or a combination of both) will reflect the allocation of your Account Value as of the end of the Valuation Period that precedes the Death Benefit Commencement Date.
1998 Version   If you do not select a settlement option, Death Benefit payments will be fixed dollar payments made monthly under the terms of Settlement Option A for a period of 4 years.
The Beneficiary generally will be the person on whose life any Death Benefit payments under a settlement option will be based. If the Beneficiary is a non-natural person, the Beneficiary may elect to have payments under a life option based on the life of a person to whom the Beneficiary is obligated. This election must be made by Written Request before the Death Benefit Commencement Date.
If this Contract is a Tax-Qualified Contract, an election of a settlement option is subject to restrictions stated in the tax qualification endorsement. If this Contract is not a tax-qualified contract, then an election of a settlement option is subject to the distribution rules set forth in the Contract.
Application of a Death Benefit to a Settlement Option
When a Death Benefit is applied to a settlement option, we promise to pay a stream of benefit payments for the duration of the settlement option selected. Benefit payments are based on the Account Value. Benefit payments may be

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calculated and paid as variable dollar payments, fixed dollar payments, or a combination of both. The stream of payments, whether variable dollar or fixed dollar, is an obligation of our general account. However, we guarantee only the amount of fixed dollar payments. The Beneficiary (or the applicable payee) bears the risk that any variable dollar payment may be less than the initial variable dollar payment, or that it may decline to zero, if Benefit Unit Values for that payment decrease sufficiently.
Person Who Receives Death Benefit Payments
Death Benefit payments generally will be made to the Beneficiary as payee. There are 2 exceptions to this general rule.
  If the Beneficiary is a non-natural person, the Beneficiary may elect to have Death Benefit payments made to a payee to whom the Beneficiary is obligated to make corresponding payments. This election must be made by Written Request before the Death Benefit Commencement Date. Otherwise, a Beneficiary that is a non-natural person may only elect to have settlement option payments made under a fixed period payment option.
 
  Death Benefit payments may be paid as a transfer or rollover to, or as a tax-free exchange for, an annuity or tax-qualified account as permitted by federal tax law.
Death Benefit payments that are still payable after the death of the payee will be made to the applicable contingent payee or, if there is no designated or surviving contingent payee, the estate of the last payee who received payments.
Step Up in Account Value for Successor Owner
If your (or civil union partner/domestic partner/same-gender spouse in applicable states) becomes the successor owner of the Contract, the Account Value may be increased. There is no additional charge associated with this feature.
  The Account Value will be increased to equal the amount of the Death Benefit that would have been payable if your (or civil union partner/domestic partner/same-gender spouse in applicable states) had not become the successor owner.
 
  If the Death Benefit that would have been payable is equal to the Account Value on the applicable date, the Account Value will not be increased.
If the Account Value is increased under this provision, we will add the amount of the increase to the Fixed Accumulation Account.
Any increase under this provision will occur as of the date that would have been the Death Benefit Valuation Date. The date that would have been the Death Benefit Valuation Date will be the later of (1) the date that we receive Due Proof of Death or (2) the date we receive the successor owner election. This date will never be later than one year after the date of your death.
SETTLEMENT OPTIONS
Settlement Options
We will make periodic payments under the standard forms of settlement options described below. More than one settlement option may be elected if the requirements for each settlement option elected are satisfied.
We will make periodic payments in any other form of settlement option that is acceptable to us at the time of any election. All elected settlement options must comply with pertinent laws and regulations. Once payment begins under a settlement option that is contingent on the life of a specified person or persons, the settlement option may not be changed or commuted (i.e., redeemed at present value). Other settlement options may be commuted on a basis acceptable to you and us at the time of the commutation request.
For life contingent settlement options, the death of the Annuitant may result in only a single payment being made. For fixed period settlement options, the periodic payments will continue for the entire fixed period even if the Annuitant dies during the payment period.
     
Option   Description
 
Option A
Income for a Fixed Period
  We will make periodic payments for a fixed period of 5 to 30 years.
(Payment intervals of 1 to 4 years are available for Death Benefit settlement options only.)

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Option   Description
 
Option B
Life Annuity with Payments for a Fixed Period
  We will make periodic payments for at least a fixed period. If the person on whose life benefit payments are based lives longer than the fixed period, then we will make payments until his or her death.
 
   
Option C
Joint and One-Half Survivor Annuity
  We will make periodic payments until the death of the primary person on whose life benefit payments are based. After the death of the primary person, we will make one-half of the periodic payment until the death of the secondary person on whose life benefit payments are based.
The Annuity 2000 Mortality Table for blended lives (60% female/40% male) with interest at 1% per year, compounded annually, is used to compute all guaranteed settlement option factors, values, and benefits under the Contract.
1998 Version   The 1983 Individual Annuity Mortality Table with interest at 3% per year, compounded annually, is used to compute all guaranteed settlement option factors, values, and benefits under the Contract.
Forms of Benefit Payments Under Settlement Options
Fixed Dollar Payments
Fixed dollar benefit payments are determined by multiplying the amount applied to the fixed dollar benefit (expressed in thousands of dollars and after deduction of any fees and charges, loans, or applicable premium taxes) by the amount of the payment per $1,000 of value which the Company is currently paying for settlement options of that type. Fixed dollar benefit payments will remain level for the duration of the Benefit Payment Period.
The Company guarantees minimum fixed dollar benefit payment factors based on 1983 group annuity mortality tables, for blended lives (60% female/40% male) with interest at 3% per year, compounded annually. The minimum monthly payments per $1,000 of value for the Company’s standard settlement options are set forth in tables in the Contracts. Upon request, the Company will provide information about minimum monthly payments for ages or fixed periods not shown in the settlement option tables.
Variable Dollar Payments
The first variable dollar benefit payment is the amount it would be if it were a fixed dollar benefit payment calculated at the Company’s minimum guaranteed settlement option factors, reduced by a pro rata portion of the certificate maintenance fee, equal to the amount of the fee divided by the number of payments to be made over a 12-month period.
The amount of each subsequent variable dollar benefit payment will reflect the investment performance of the Subaccount(s) selected and may vary from payment to payment. For example, because the first benefit payment includes a 3% rate of interest, subsequent benefit payments will be less than the first payment if the net investment performance of the applicable Subaccount(s) is less than 3%.
The amount of each subsequent payment is the sum of the payment due for each Subaccount selected, less a pro rata portion of the certificate maintenance fee, as described above. The payment due for a Subaccount equals the shares for that Subaccount, which are the Benefit Units, times their value, which is the Benefit Unit Value for that Subaccount as of the end of the fifth Valuation Period preceding the due date of the payment.
The number of Benefit Units for each Subaccount selected is determined by allocating the amount of the first variable dollar benefit payment (before deduction of the pro rata portion of the certificate maintenance fee) among the Subaccount(s) selected in the percentages indicated by the Owner (or Payee). The dollar amount allocated to a Subaccount is divided by the Benefit Unit Value for that Subaccount as of the first day of the Benefit Payment Period. The result is the number of Benefit Units that the Company will pay for that Subaccount at each payment interval. The number of Benefit Units for each Subaccount remains fixed during the Benefit Payment Period, except as a result of any transfers among Subaccounts or as provided under the settlement option elected. An explanation of how Benefit Unit Values are calculated is included in the Glossary of Financial Terms of this prospectus.

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Payments under Settlement Options
Payments under any settlement option may be in fixed dollar payments, variable dollar payments, or a combination of both.
Payments under any settlement option may be in monthly, quarterly, semi-annual or annual payment intervals. The first payment will be paid as of the last day of the initial payment interval. If the amount of any regular payment under the form of settlement option elected would be less than $50, an alternative form of settlement option will have to be elected. In our discretion, we may require benefit payments to be made by direct deposit or wire transfer to the account of a designated payee.
If payment under a settlement option depends on whether a specified person is still alive, we may at any time require proof that the person is still living. We will require proof of the age of any person on whose life payments are based. If more than one person is the payee under a settlement option, we will make payments to the payees jointly. No more than 2 persons may be initial payees under Option C.
We may modify minimum amounts, payment intervals and other terms and conditions at any time without prior notice to you. If we change the minimum amounts, we may change any current or future payment amounts and/or payment intervals to conform with the change.
Considerations in Selecting a Settlement Option and Payment Forms
Periodic payments under a settlement option are affected by various factors, including the length of the payment period, the life expectancy of the person on whose life benefit payments are based, the frequency of the payment interval (monthly, quarterly, semi-annual or annual), and the payment form selected (fixed dollar or variable dollar).
  Generally, the longer the period over which payments are made or the more frequently the payments are made, the lower the amount of each payment because more payments will be made.
 
  For life contingent settlement options (Option B and Option C), the longer the life expectancy of the Annuitant or Beneficiary, the lower the amount of each payment because more payments are expected to be paid.
 
  Fixed dollar payments will remain level for the duration of the payment period.
 
  The actual amount of each variable dollar payment may vary from payment to payment regardless of the duration of the payment period. The actual amount of each variable dollar payment will reflect the investment performance of the Subaccount(s) selected. The assumed daily investment factor, which is based on a net investment rate of 1% per year, compounded annually, (3% per year, compounded annually, for the 1998 version of the Contract) also affects the amount by which variable dollar payments increase or decrease.
THE CONTRACTS
Each Contract is an agreement between you and us. Values, benefits and charges are calculated separately for each Contract. In the case of a group Contract, the agreement is between us and the group owner. An individual participant under a group Contract will receive a certificate of participation, which is evidence of the participant’s interest in the group Contract. A certificate of participation is not a Contract. Values, benefits and charges are calculated separately for each certificate issued under a Contract. The description of Contract provisions in this prospectus applies to the interests of certificate Owners, except where otherwise noted.
Because we are subject to the insurance laws and regulations of all the jurisdictions where we are licensed to operate, the availability of certain Contract rights and provisions in a given state may depend on that state’s approval of the Contracts. Where required by state law or regulation, the Contracts will be modified accordingly. To obtain an explanation of the modifications that we have made to Contracts delivered in the state where you live, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771.
Right to Cancel
If you are the Owner of an individual Contract, you may cancel it by returning it and giving us written notice of cancellation. You have until midnight of the 20th day following the day you receive the Contract. The Contract must be returned and the required notice must be given to us, or to the agent who sold it to you, in person or by mail. If sent by mail, the return of the Contract or the notice is effective on the date it is postmarked, with the proper address and with postage paid. If you cancel your individual Contract as set forth above, the Contract will be void and we will refund the

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Purchase Payments plus or minus any investment gains or losses under the Contract as of the end of the Valuation Period during which we receive the returned Contract.
Federal law or the law of the state where you live may vary your cancellation rights.
    When required by state or federal law, we will refund the Purchase Payments without any investment gain or loss, during all or the applicable part of the right to cancel period.
 
    When required by state or federal law, we will refund the Purchase Payments in full, without deducting any fees or charges, during the right to cancel period.
 
    When required by state law, the right to cancel period may be longer than 20 days.
 
    When required by state law, the right to cancel may apply to group Contracts.
During the right to cancel period, we reserve the right to allocate all Purchase Payments temporarily to the Fixed Accumulation Account or a money market Subaccount, at our discretion. If we exercise this right, we will reallocate your Account Value as of the end of the right to cancel period. When we make this reallocation, we will follow the allocation instructions that you provided with your initial Purchase Payment.
Termination
We reserve the right to terminate any Contract at any time that the Account Value is less than $500. If we terminate the Contract, we will pay you the Account Value less any fees and charges, loans, and applicable premium tax or other taxes not previously deducted.
A group Contract may be terminated on 60 days advance notice, in which case participants will be entitled to continue their interests on a deferred, paid-up basis, subject to our termination right as described above.
Ownership Provisions
Owner
The Owner is the person with authority to exercise all of the ownership rights under a Contract, such as making allocations among investment options, electing a settlement option, and designating the Annuitant, Beneficiary and payee. If you live in a community property state and have a (or civil union partner/domestic partner/same-gender spouse in applicable states) at any time while you own this Contract, the laws of that state may vary your ownership rights.
An Owner must ordinarily be a natural person, or a trust or other legal entity holding a Contract for the benefit of a natural person. If the Owner or a joint owner is a non-natural person, then the age of the eldest Annuitant will be treated as the age of the owner for all purposes under this Contract.
Successor Owner
In some cases, your (or civil union partner/domestic partner/same-gender spouse in applicable states) may succeed to the ownership of the Contract after your death. Specifically, if you die before the Annuity Commencement Date and your (or civil union partner/domestic partner/same-gender spouse in applicable states) is the surviving joint owner or sole surviving Beneficiary under the Contract, he or she will become the successor owner of the Contract if (1) you make that Written Request before your death or (2) after your death, your (or civil union partner/domestic partner/same-gender spouse in applicable states) makes that Written Request within one year of your death and before the Death Benefit Commencement Date. As successor owner, your (or civil union partner/domestic partner/same-gender spouse in applicable states) will then succeed to all rights of ownership under the Contact except the right to name another successor owner.
As required by federal tax law, the Contract contains rules about the rate at which a death benefit must be paid to a beneficiary who is not your spouse. If the successor owner is not you spouse as defined by federal tax law, then after your death the contract values must be distributed in a manner that complies with these rules.
Civil Union Partners, Domestic Partners and Same-Gender Married Couples: The federal Defense of Marriage Act states that none of the following persons are considered married under federal law: civil union partners, domestic partners, or same-gender married couples. Therefore the favorable tax treatment provided by federal tax law to a surviving spouse is NOT available to a surviving civil union partner, a surviving domestic partner, or the surviving spouse of a same-gender marriage. For information about federal tax laws, please consult a tax advisor.

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1998 Version   Your (or civil union partner/domestic partner/same-gender spouse in applicable states) may not succeed to the ownership of the Contract after your death unless the Contract was issued with an endorsement that permits your (or civil union partner/domestic partner/same-gender spouse in applicable states) to become the successor owner.
Joint Owners
     
Tax Qualified Contracts
  For an individual Contract, no joint owner is permitted.
 
   
Non Tax Qualified Contracts
  Two persons may jointly own the Contract. Each joint owner may exercise allocation and transfer rights independently. All other rights of ownership must be exercised by joint action.
 
   
 
  A surviving joint owner who is not the (or civil union partner/domestic partner/same-gender spouse in applicable states) of a deceased owner may not become a successor owner, but will be deemed to be the Beneficiary of the Death Benefit that becomes payable on the death of the first owner to die, regardless of any Beneficiary designation.
Transfer of Ownership
     
Tax Qualified Contracts
  You may not transfer, sell or in any way alienate your interest in the Contract except to the limited extent provided in the tax qualification endorsement.
 
   
Non Tax Qualified Contracts
  You may transfer ownership at any time during your lifetime. A transfer must be made by Written Request. Except as otherwise elected or required by law, a transfer of ownership will not cancel a designation of an Annuitant or Beneficiary or a settlement option election. A transfer of ownership may have adverse tax consequences
Assignment
     
Tax Qualified Contracts
  You may not pledge, charge, encumber, or in any way assign your interest in the Contract.
 
   
Non Tax Qualified Contracts
  You may assign all or any part of your rights under this Contract except:
    the right to designate or change a Beneficiary
 
    the right to designate or change an Annuitant
 
    the right to transfer ownership and
 
    the right to elect a settlement option.
     
 
  The person to whom rights are assigned is called an assignee. An assignment must be made by Written Request. We are not responsible for the validity of any assignment. If an assignment is allowed, the rights of an assignee, including the right to any payment under the Contact, come before the right of the Owner, Annuitant, Beneficiary, or other payee. An assignment may be ended only by the assignee or as provided by law.
Annuitant Provisions
The Annuitant is the natural person on whose life Annuity Benefit payments are based.
Annuitant
     
Tax Qualified Contracts
  If this Contract is an individual contract, the Annuitant must be the Owner. If this Contract is a group contract, then the Annuitant is the designated participant in the group plan for whose benefit the Contract was purchased. The designation cannot be changed.

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Non Tax Qualified Contracts
  The Annuitant is the person or persons designated by you. If you do not designate an Annuitant or if no Annuitant designated by you is surviving, then the Annuitant will be each Owner who is a natural person.
    A designation may name 2 or more natural persons jointly as the Annuitant. On the death of a joint Annuitant, the survivor will become the sole Annuitant.
 
    A designation may name a contingent Annuitant. A contingent Annuitant will become the Annuitant only if there is no surviving primary Annuitant.
     
 
  You generally may make or change a designation of Annuitant at any time before the Annuity Commencement Date. A designation of annuitant must be made by Written Request.
 
   
 
  The designation of Annuitant may not be made or changed if the Owner or a joint owner is a trustee or a non-natural person. Except as otherwise elected or as required by law, a change of Annuitant will not cancel a designation of a Beneficiary or a settlement option election.
Beneficiary Provisions
The Beneficiary is the person entitled to receive any Death Benefit under this Contract.
If there is a joint owner and that joint owner survives you, then that joint owner is the Beneficiary regardless of any designation of Beneficiary made by you. If there is no joint owner who survives you, than the Beneficiary is the person or persons that you designate. If there is no joint Owner or Beneficiary designated by you who survives you, then your estate will be the Beneficiary.
If a Beneficiary dies within 30 days after your death, we will assume that he or she did not survive you for purposes of this Contract.
You may designate 2 or more persons jointly as the Beneficiary. Unless you state otherwise, joint Beneficiaries who survive you will be entitled to equal shares. You may also designate one or more persons as contingent Beneficiary. Unless you state otherwise, a contingent Beneficiary will be entitled to a benefit only if there is no primary Beneficiary who survives you.
Unless you have specified that a prior designation of Beneficiary is irrevocable, you may make or change a designation of Beneficiary at any time before the Annuity Commencement Date. A designation of Beneficiary must be made by Written Request. Except as otherwise elected or as required by law, a change of Beneficiary will not cancel a designation of an Annuitant or a settlement option election.
The Beneficiary will be the measuring life for life contingent Death Benefit payments (Option C).
Payees under the Contract
A payee is a person to whom benefits are paid under this Contract.
Payees
     
Tax Qualified Contracts
  You are the Annuitant under the Contract and, as the Annuitant, you are the payee of the Annuity Benefit.
 
   
Non Tax Qualified Contracts
  The Beneficiary is the payee of the Death Benefit. The Annuitant under the Contract is the payee of the Annuity Benefit. If you are not the Annuitant, you can elect to have the Annuity Benefit Payments made to you as payee.
 
   
 
  The Beneficiary is the payee of the Death Benefit.

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Designation of Other Payees
     
Annuity Benefits
  You may designate a contingent payee to receive Annuity Benefit payments that are still payable after the death of the payee.
 
   
 
  If there is no such payee or contingent payee surviving, then we will make such payments to the person or person designated as contingent payee by the last payee who received payments.
 
   
 
  Failing that, we will make such payments to the estate of the last payee who received payments.
 
   
 
  Unless you have specified that a prior designation is irrevocable, you may change the payee or contingent payee at any time.
 
   
Death Benefits
  You may designate a contingent payee to receive Death Benefit payments that are still payable after the death of the Beneficiary.
 
   
 
  If there is no such payee or contingent payee surviving, then we will make such payments to the person or person designated as contingent payee by the Beneficiary.
 
   
 
  Failing that, we will make such payments to the estate of the last payee who received payments.
 
   
 
  A Beneficiary may not change a contingent payee designation made by you. A Beneficiary may make or change any other payee or contingent designation at any time.
A designation or change of payee or contingent payee must be made by Written Request. In any event, the Annuitant will be the person on whose life Annuity Benefits payments are based and the Beneficiary will be the person on whose life Death Benefit payments under a settlement option will be based. No change of payee or contingent payee at any time will change this.
Irrevocable naming of a Payee other than the Owner can have adverse tax consequences.
ANNUITY INVESTORS LIFE INSURANCE COMPANY®
The Company is a stock life insurance company incorporated under the laws of the State of Ohio in 1981. The Company is principally engaged in the sale of variable and fixed annuity policies. The administrative office of the Company is located at 525 Vine Street, Cincinnati, Ohio 45202.
The obligations under the Contracts are obligations of the Company. The fixed benefits under this Contract are provided through the Fixed Account. The Fixed Account is part of our general account and its values are not dependent on the investment performance of the Subaccounts that make up the Separate Account. The variable benefits under this Contract are provided through the Separate Account, which is described below.
The Company’s general account assets are used to guarantee the payment of applicable annuity and death benefits under the Contracts. As a result, Contract owners must rely on the financial strength of the Company for any benefit payments under the Contract. To the extent that we are required to pay benefit amounts in excess of the applicable Contract values, such amounts will come from the Company’s general account assets. You should be aware that the Company’s general account is exposed to the risks normally associated with a portfolio of fixed-income securities, including interest rate risk, liquidity risk and credit risk. The Company’s financial statements in the Statement of Additional Information include a further discussion of investments held by the Company’s general account. In addition, the Company’s general account is subject to the claims of its creditors.
The Company and Great American Advisors® , Inc., the principal underwriter of the Contracts, are involved in various kinds of routine litigation that, in management’s judgment, are not of material importance to their assets or the Separate Account. There are no pending legal proceedings against the Separate Account.

34


 

THE SEPARATE ACCOUNT
General
We established the Separate Account on December 19, 1996, as an insurance company separate account under the laws of the State of Ohio pursuant to resolution of our Board of Directors. The Separate Account is registered with the SEC as a unit investment trust. It is divided into Subaccounts that invest in corresponding Portfolios. Interests in the Subaccounts are securities registered with the SEC. However, the SEC does not supervise the management or investment practices or policies of the Separate Account.
The assets of the Separate Account will be held for the exclusive benefit of Owners of, and the persons entitled to payment under, the Contracts offered by this prospectus and all other contracts issued by the Separate Account. The assets of the Separate Account are owned by the Company, but they are held separately from the other assets of the Company. Under Ohio law, the assets of a separate account are not chargeable with liabilities incurred in any other business operation of the Company. Income, gains and losses incurred on the assets in the Separate Account, whether realized or not, are credited to or charged against the Separate Account, without regard to other income, gains or losses of the Company. Therefore, the performance of the Separate Account is entirely independent of the investment performance of our general account assets or any other separate account maintained by us.
We may operate the Separate Account as a management company or any other form permitted by law. We may de-register the Separate Account in the event such registration is no longer required. We may combine the Separate Account with one or more separate accounts. We would only take these actions if we deemed them to be in the best interest of persons having voting right under the Contracts.
Additions, Deletions or Substitutions of Portfolios
New Subaccounts may be established when, in our sole discretion, marketing, tax, investment or other conditions warrant. Any new Subaccounts will be made available to existing Owners on a basis to be determined by us and that is not discriminatory. We do not guarantee that any of the Subaccounts or any of the Portfolios will always be available for allocation of Purchase Payments or variable dollar payments or for transfers. We may substitute the shares of a different portfolio or a different class of shares for shares held in a Portfolio.
In the event of any addition, merger, combination or substitution, we may make such changes in the Contract as may be necessary or appropriate to reflect such event. Additions, mergers, combinations or substitutions may be due to an investment decision by us, or due to an event not within our control, such as liquidation of a Portfolio or an irreconcilable conflict of interest between the Separate Account and another insurance company that offers the Portfolio. We will obtain approval of additions, mergers, combinations or substitution from the SEC to the extent required by the 1940 Act, or other applicable law. We will also notify you before we make a substitution.
VOTING OF PORTFOLIO SHARES
To the extent required by law, we will vote all Portfolio shares held in the Separate Account at regular and special shareholder meetings of the respective Portfolios. The Portfolios are not required to hold annual or other regular meetings of shareholders.
Before the Commencement Date, we will vote Portfolio shares according to instructions of Owners, unless we are permitted to vote shares in our own right. We will solicit voting instructions in accordance with procedures established by the respective Portfolios. Each person or entity having a voting interest in a Subaccount will receive proxy material, reports and other material relating to the appropriate Portfolio.
We will calculate the number of votes for which you may provide voting instructions separately for each Subaccount. We will determine the number by applying your percentage interest, if any, in a particular Subaccount to the total number of votes attributable to that Subaccount. We will determine your percentage interest and the total number of votes as of the record date established by that Portfolio for voting purposes.
We will also vote or abstain from voting shares for which we receive no timely instructions and shares we hold as to which Owners have no beneficial interest (including shares held by us as reserves for benefit payments*). We will vote or abstain from voting such shares in proportion to the voting instructions we receive from Owners of all Contracts participating in the Subaccount. Because we will use this proportional method of voting, a small number of Owners may

35


 

determine the manner in which we will vote Portfolio shares for which we solicit voting instructions but receive no timely instructions.
 
*   Neither the Owner nor payee has any interest in the Separate Account after the Commencement Date. Benefit Units are merely a measure of the amount of the benefit payments we are obligated to pay on each payment date.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
Great American Advisors®, Inc. (“GAA”) is the principal underwriter of the contracts. Its business address is 525 Vine Street, Cincinnati, Ohio 45202. GAA is an indirect wholly-owned subsidiary of American Financial Group, Inc. and, as a result, an affiliate of the Company.
The Contracts are sold by insurance agents who are also registered representatives of (1) GAA or (2) other broker-dealers that have entered into selling agreements with GAA. GAA and the other broker-dealers are registered under the Securities Exchange Act of 1934, and are members of the National Association of Securities Dealers, Inc. All registered representatives who sell the Contracts are appointed by the Company as insurance agents and are authorized under applicable state insurance regulations to sell variable annuity contracts.
The Company pays commissions to GAA for promotion and sale of the contracts. GAA retains the commissions for sales made through its registered representatives, or pays the commissions to other broker-dealers for sales made through their registered representatives. GAA and the other broker-dealers pay their registered representatives from their own funds. Commissions paid by us are calculated as a percentage of the purchase payments received for a contract. The maximum percentage is 8.5% of the purchase payments received from a contract. Commissions paid by us may also be calculated as a percentage of the contract value (sometimes called a trail commission). Trail commissions are not expected to exceed 1% of the contract value on an annual basis.
Commissions paid on the Contracts and payments for other services are not charged directly to you or your Account Value, but are charged indirectly through fees and charges imposed under the Contracts. If these fees and charges are not sufficient to cover the commissions and other payments, any deficiency will be made up from our general assets.
The Statement of Additional Information includes more information about the compensation we pay to GAA and additional compensation that GAA pays to select selling firms.
FEDERAL TAX MATTERS
This section provides a general description of federal income tax considerations relating to the Contracts. The purchase, holding and transfer of a Contract may have federal estate and gift tax consequences in addition to income tax consequences. Estate and gift taxation is not discussed in this prospectus or in the Statement of Additional Information. State taxation will vary depending on the state in which you reside, and is not discussed in this prospectus or in the Statement of Additional Information.
The tax information provided in the prospectus is not intended or written to be used as legal or tax advice. It is written solely to provide general information related to the sale and holding of the Contracts. A taxpayer cannot use it for the purpose of avoiding penalties that may be imposed under the tax laws. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor who is not affiliated with the Company.
Tax Deferral on Annuities
Internal Revenue Code (“IRC”) Section 72 governs taxation of annuities in general. The income earned on a Contract is generally not included in income until it is withdrawn from the Contract. In other words, a Contract is a tax-deferred investment. The Contracts must meet certain requirements in order to qualify for tax-deferred treatment under IRC Section 72. These requirements are discussed in the Statement of Additional Information. In addition, tax deferral is not available for a Contract when an Owner is not a natural person unless the Contract is part of a tax-qualified retirement plan or the Owner is a mere agent for a natural person. For a nonqualified deferred compensation plan, this rule means that the employer as Owner of the Contract will generally be taxed currently on any increase in the Account Value, although the plan itself may provide a tax deferral to the participating employee. For a group nonqualified

36


 

Contract where the Owner has no rights over the separate interests, this rule is applied to each participant who is not a natural person.
Tax-Qualified Retirement Plans
Annuities may also qualify for tax-deferred treatment, or serve as a funding vehicle, under tax-qualified retirement plans that are governed by other IRC provisions. These provisions include IRC Sections 401 (pension and profit sharing plans), 403(b) (tax-sheltered annuities), 408 and 408A (individual retirement annuities), and 457(g) (governmental deferred compensation plans). Tax-deferral is generally also available under these tax-qualified retirement plans through the use of a trust or custodial account without the use of an annuity.
The tax law rules governing tax-qualified retirement plans and the treatment of amounts held and distributed under such plans are complex. If the Contract is to be used in connection with a tax-qualified retirement plan, including an individual retirement annuity (“IRA”) under a Simplified Employee Pension (SEP) Plan, you should seek competent legal and tax advice regarding the suitability of the Contract for the situation involved and the requirements governing the distribution of benefits.
Contributions to a tax-qualified Contract are typically made with pre-tax dollars, while contributions to other Contracts are typically made from after-tax dollars, though there are exceptions in either case. Tax-qualified Contracts may also be subject to restrictions on withdrawals that do not apply to other Contracts. These restrictions may be imposed to meet the requirements of the IRC or of an employer plan. Following is a brief description of the types of tax-qualified retirement plans for which the Contracts are available.
Individual Retirement Annuities
IRC Sections 219 and 408 permit certain individuals or their employers to contribute to an individual retirement arrangement known as an “Individual Retirement Annuity” or “IRA”. Under applicable limitations, an individual may claim a tax deduction for certain contributions to an IRA. Contributions made to an IRA for an employee under a Simplified Employee Pension (SEP) Plan or Savings Incentive Match Plan for Employees (SIMPLE) established by an employer are not includable in the gross income of the employee until distributed from the IRA. Distributions from an IRA are taxable to the extent that they represent contributions for which a tax deduction was claimed, contributions made under a SEP plan or SIMPLE, or income earned on the Contract.
Roth IRAs
IRC Section 408A permits certain individuals to contribute to a Roth IRA. Contributions to a Roth IRA are not tax deductible. Tax-free distributions of contributions may be made at any time. Distributions of earnings are tax-free following the five-year period beginning with the first year for which a Roth IRA contribution was made if the Owner has attained age 591/2, become disabled, or died, or for qualified first-time homebuyer expenses.
Tax-Sheltered Annuities
IRC 403(b) of the Code permits public schools and charitable, religious, educational, and scientific organizations described in IRC Section 501(c)(3) to establish “tax-sheltered annuity” or “TSA” plans for their employees. TSA contributions and Contract earnings are generally not included in the gross income of the employee until distributed from the TSA. Amounts attributable to contributions made under a salary reduction agreement cannot be distributed until the employee attains age 591/2, severs employment, becomes disabled, incurs a hardship, is eligible for a qualified reservist distribution, or dies. The IRC and the plan may impose additional restrictions on distributions.
Pension, Profit–Sharing, and 401(k) Plans
IRC Section 401 permits employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish such plans for themselves and their employees. These plans may use annuity contracts to fund plan benefits. Generally, contributions are deductible to the employer in the year made, and contributions and earnings are generally not included in the gross income of the employee until distributed from the plan. The IRC and the plan may impose restrictions on distributions. Purchasers of a Contract for use with such plans should seek competent advice regarding the suitability of the Contract under the particular plan.
Roth TSAs and Roth 401(k)s
IRC Section 402A permits TSA plans and 401(k) plans to allow participating employees to designate some part or all of their future elective contributions as Roth contributions. Roth contributions to a TSA or 401(k) plan are included in the employee’s taxable income as earned. Distributions are considered to come proportionally from contributions and

37


 

earnings. Distributions attributable to contributions are tax-free. Distributions attributable to earnings are tax-free following the five-year period beginning with the first year for which Roth contributions are made to the plan if the employee has attained age 591/2, become disabled, or died. Amounts attributable to Roth TSA and Roth 401(k) contributions are subject to the same distribution restrictions that apply to other amounts attributable to TSA or 401(k) contributions made under a salary reduction agreement. The plan may impose additional restrictions on distributions.
Governmental Deferred Compensation Plans
State and local government employers may purchase annuity contracts to fund eligible deferred compensation plans for their employees as described in IRC Section 457(b). Contributions and earnings are generally not included in the gross income of the employee until the employee receives distributions from the plan. Amounts cannot be distributed until the employee attains age 701/2, severs employment, becomes disabled, incurs an unforeseeable emergency, or dies. The plan may impose additional restrictions on distributions.
Nonqualified Deferred Compensation Plans
Employers may invest in annuity contracts in connection with unfunded deferred compensation plans for their employees. Such plans may include eligible deferred compensation plans of non-governmental tax-exempt employers described in IRC Section 457(b); deferred compensation plans of both governmental and nongovernmental tax-exempt employers that are taxed under IRC Section 457(f) and subject to Section 409A; and nonqualified deferred compensation plans of for-profit employers subject to Section 409A. In most cases, these plans are designed so that amounts credited under the plan will not be includable in the employees’ gross income until paid under the plan. In these situations, the annuity contracts are not plan assets and are subject to the claims of the employer’s general creditors. Whether or not made from the Contract, benefits payments are subject to restrictions imposed by the IRC and the plan.

38


 

Summary of Income Tax Rules
The following chart summarizes the basic income tax rules governing tax-qualified retirement plans, nonqualified deferred compensation plans, and other Contracts.
             
        Nonqualified Deferred    
    Tax-Qualified Contracts and Plans   Compensation Plans   Other Annuity Contracts
Plan Types
 
§     IRC §401 (Pension,
Profit–Sharing, 401(k))
§     IRC §403(b)
(Tax-Sheltered Annuity)
§     IRC §408 (IRA,
SEP, SIMPLE IRA)
§     IRC §408A (Roth
IRA)
§     IRC §402A (Roth
TSA or Roth 401(k))
§     IRC §457
(Governmental §457)
 
§     IRC §409A
§     IRC §457 (Nongovernmental
§457)
  IRC §72 only
 
           
Who May Purchase a Contract
  Eligible employee, employer, or employer plan.   Employer on behalf of eligible employee. Employer generally loses tax-deferred status of Contract itself.   Anyone. Non-natural person will generally lose tax-deferred status.
 
           
Distribution Restrictions   Distributions from Contract or plan may be restricted to meet requirements of the Internal Revenue Code and/or terms of the retirement plan.   None.
 
           
Taxation of Surrenders and Lump Sum Death Benefit   Generally, 100% of distributions must be included in taxable income. However, the portion that represents an after-tax contributions or other “investment in the contract” is not taxable. Distributions from Roth IRA are deemed to come first from after-tax contributions. Distributions from other Contracts are generally deemed to come from investment in the contract on a pro-rata basis. Distributions from §408A Roth IRA or §402A Roth TSA or Roth 401(k) are completely tax free if certain requirements are met.   Generally, distributions must be included in taxable income until all earnings are paid out. Thereafter, distributions are tax-free return of the “investment in the contract”.

However, distributions are tax-free until any contributions from before August 14, 1982 are returned.
 
           
Taxation of Annuitization Payments (annuity benefit or death benefit)   For fixed dollar benefit payments, a percentage of each payment is tax free equal to the ratio of after-tax “investment in the contract” (if any) to the total expected payments, and the balance is included in taxable income. For variable dollar benefit payments, a specific dollar amount of each payment is tax free, as predetermined by a pro rata formula, rather than a percentage of each payment. In either case, once the after-tax “investment in the contract” has been recovered, the full amount of each benefit payment is included in taxable income. Distributions from a Roth IRA, Roth TSA, or Roth 401(k) are completely tax free if certain requirements are met.
 
           
Possible Penalty Taxes for Distributions Before Age 591/2
  Taxable portion of payments made before age 591/2 may be subject to 10% penalty tax (or 25% for a SIMPLE IRA during the first two years of participation). Penalty taxes do not apply to payments after the participant’s death, or to §457 plans. Other exceptions may apply.   No penalty taxes.   Taxable portion of payments made before age 591/2 may be subject to a 10% penalty tax. Penalty taxes do not apply to payments after the Owner’s death. Other exceptions may apply.
 
           
Assignment/ Transfer of Contract   Assignment and transfer of Ownership generally not permitted.   Generally, deferred earnings taxable to transferor on transfer or assignment. Gift tax consequences are not discussed herein.
 
           
Federal Income Tax Withholding
  Eligible rollover distributions from §401, §403(b), and governmental §457(b) plan Contracts are subject to 20% mandatory withholding on taxable portion unless direct rollover. For other payments, Payee may generally elect to have taxes withheld or not.   Generally subject to wage withholding.   Generally, Payee may elect to have taxes withheld or not.

39


 

Required Minimum Distributions
The Contracts are subject to the required minimum distribution (“RMD”) rules of federal tax law. These rules vary based on the tax qualification of the Contract or the plan under which it is issued.
For a tax-qualified Contract other than a Roth IRA, required minimum distributions must generally begin by April 1 following attainment of age 701/2. However, for a Tax-Sheltered Annuity Plan, Pension, Profit-Sharing, or 401(k) Plan, or Governmental Deferred Compensation Plan of an employer, a participant who is not a 5% owner of the employer may delay required minimum distributions until April 1 following the year in which the participant retires from that employer. The required minimum distributions during life are calculated based on standard life expectancy tables adopted under federal tax law. For a Roth IRA or Contract that is not tax-qualified, there are no required minimum distributions during life.
All Contracts are generally subject to required minimum distributions after death. Generally, if payments have begun under a settlement option during life or if under a tax-qualified Contract the required beginning date for distributions had been reached, then after death any remaining payments must be made at least as rapidly as those made or required before death. Otherwise, the death benefit must be paid out in full within five years after death, or must be paid out in substantially equal payments beginning within one year of death over a period not exceeding the beneficiary’s life expectancy. For a traditional IRA, a Roth IRA, or a Contract that is not tax-qualified, a beneficiary who is a surviving spouse (as defined by federal tax law) may elect out of these requirements, and apply the required minimum distribution rules as if the Contract were his or her own.
DELIVERY OF DOCUMENTS TO CONTRACT OWNERS
Reports and Confirmations
At least once each Contract Year, we will mail reports of the Contract’s Account Value and any other information required by law to you. We will not send these reports after the Commencement Date or a full surrender of the Contract, whichever is first. We will confirm receipt of any Purchase Payments made after the initial Purchase Payment in quarterly statements of account activity.
Householding
If you and other Owners at a shared address consented to receive only one copy of each prospectus, annual report, or other required document per household (“householding”), you may revoke your consent at any time. Please contact us at 1-800-789-6771 or www.gafri.com if you wish to receive separate documents. If you are currently receiving multiple copies of required documents, you may contact us at 1-800-789-6771 or www.gafri.com for additional information about householding.
Electronic Delivery of Required Documents
If you wish to receive prospectuses, SAIs, annual reports, and other required documents only in electronic form, you must give your consent to electronic delivery. You may revoke this consent at any time. Please contact us at 1-800-789-6771 or www.gafri.com for additional information about electronic delivery of documents.
THE REGISTRATION STATEMENT
We filed a Registration Statement with the SEC under the Securities Act of 1933 relating to the Contracts offered by this prospectus. This prospectus was filed as a part of the Registration Statement, but it does not constitute the complete Registration Statement. The Registration Statement contains further information relating to the Company and the Contracts. The Registration Statement and the exhibits thereto may be inspected and copied at the office of the SEC, located at 100 F Street, N.E., Washington, D.C., and may also be accessed at the SEC’s web site www.sec.gov. The registration number for the Contracts is 333-51955.
Statements in this prospectus discussing the content of the Contracts and other legal instruments are summaries. The actual documents are filed as exhibits to the Registration Statement. For a complete statement of the terms of the Contracts or any other legal document, refer to the appropriate exhibit to the Registration Statement.

40


 

STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information containing more details concerning the subjects discussed in this prospectus is available. The following is the table of contents for the Statement of Additional Information:
Annuity Investors Life Insurance Company
     General Information and History
     State Regulations
     Separate Account and Subaccounts
Portfolios
     General Information
     Revenue We Receive from the Portfolios and/or Their Service Providers
Services
     Telephone, Facsimile and Internet Instructions for Transfer Requests
     Safekeeping of Separate Account Assets
     Records and Reports
     Experts
Distribution of the Contracts
     Compensation Paid to GAA
     Additional Compensation Paid to Selected Selling Firms
Performance Information
     Standardized Total Return—Average Annual Total Return
     Adjusted Historical Total Return
     Non-Standardized Total Return—Cumulative Total Return
     Standardized Yield for the Money Market Subaccount
Benefit Unit Transfer Formulas
Glossary of Financial Terms
Federal Tax Matters
     Taxation of Separate Account Income
     Tax Deferral on Non-Tax-Qualified Contracts
Financial Statements
Copies of the Statement of Additional Information dated May 1, 2010 are available without charge.
  To request a copy, please clip this coupon on the dotted line below, enter your name and address in the spaces provided, and mail to: Annuity Investors Life Insurance Company, P.O. Box 5423, Cincinnati, Ohio 45201-5423.
 
  You may also call us at 1-800-789-6771, or visit us at our web site www.gafri.com to request a copy.
Annuity Investors Variable Account B
Request for Statement of Additional Information
             
Name:
           
             
Address:
           
             
City:
    State:     Zip:
             

41


 

APPENDIX A: CONDENSED FINANCIAL INFORMATION
                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
American Century VP Large Company Value Fund-Class I Shares (Inception Date 12/1/2004)
  8.901355    
 
    251,200.267       9.040175       408.687       9.133548       0.000       12/31/09  
  7.520419    
 
    292,792.476       7.614507       586.278       7.677635       0.000       12/31/08  
  12.161971    
 
    382,937.244       12.276538       562.471       12.353222       0.000       12/31/07  
  12.494572    
 
    420,902.275       12.573776       280.955       12.626654       0.000       12/31/06  
  10.560864    
 
    99,384.541       10.595660       82.915       10.618830       0.000       12/31/05  
  10.216542    
 
    36,701.792       10.219180       0.000       10.220930       0.000       12/31/04  
American Century VP Mid Cap Value Fund-Class I Shares (Inception Date 12/1/2004)
  12.261657    
 
    554,495.560       12.452868       1,805.921       12.581419       0.000       12/31/09  
  9.570065    
 
    643,576.702       9.689796       2,128.521       9.770091       0.000       12/31/08  
  12.830516    
 
    824,409.192       12.951404       1,978.442       13.032269       0.000       12/31/07  
  13.320957    
 
    911,824.088       13.405406       2,031.092       13.461747       0.000       12/31/06  
  11.229852    
 
    114,376.075       11.266849       132.931       11.291465       0.000       12/31/05  
  10.395465    
 
    24,970.228       10.398152       0.000       10.399928       0.000       12/31/04  
American Century VP Ultra® Fund-Class I Shares (Inception Date 12/1/2004)
  9.109140    
 
    465,662.402       9.251218       7,296.322       9.346746       0.000       12/31/09  
  6.869832    
 
    518,640.998       6.955803       7,329.338       7.013465       0.000       12/31/08  
  11.906808    
 
    575,813.493       12.019004       7,031.090       12.094070       0.000       12/31/07  
  9.979396    
 
    707,542.380       10.042693       8,378.330       10.084934       0.000       12/31/06  
  10.463493    
 
    32,615.015       10.497965       0.000       10.520913       0.000       12/31/05  
  10.386756    
 
    598.086       10.389435       0.000       10.391213       0.000       12/31/04  
American Century VP VistaSM Fund-Class I Shares (Inception Date 12/1/2004)
  10.046098    
 
    743,185.410       10.202788       5,530.674       10.308131       0.000       12/31/09  
  8.319404    
 
    826,352.105       8.423513       8,326.352       8.493327       0.000       12/31/08  
  16.424171    
 
    915,985.190       16.578885       8,152.670       16.682385       0.000       12/31/07  
  11.918299    
 
    976,806.445       11.993889       11,321.554       12.044325       0.000       12/31/06  
  11.088360    
 
    79,780.294       11.124884       0.000       11.149189       0.000       12/31/05  
  10.399373    
 
    4,938.285       10.402055       0.000       10.403835       0.000       12/31/04  
Calamos Growth and Income Portfolio (Inception Date 5/1/2007)
  9.633554    
 
    118,358.600       9.712245       339.368       9.764828       0.000       12/31/09  
  7.007788    
 
    111,399.974       7.043597       429.616       7.067460       0.000       12/31/08  
  10.412111    
 
    51,983.045       10.433387       230.905       10.447519       0.000       12/31/07  
Davis Value Portfolio (Inception Date 5/1/2007)
  7.559947    
 
    190,658.865       7.621755       2,583.968       7.663033       0.000       12/31/09  
  5.845926    
 
    154,220.486       5.875823       945.382       5.895744       0.000       12/31/08  
  9.935864    
 
    36,509.854       9.956171       13.838       9.969667       0.000       12/31/07  
Dreyfus IP MidCap Stock Portfolio-Service Shares (Inception Date 5/1/2007)
  7.284643    
 
    6,059.237       7.344183       0.000       7.383992       0.000       12/31/09  
  5.459428    
 
    6,054.670       5.487338       0.000       5.505956       0.000       12/31/08  
  9.297957    
 
    1,976.759       9.316963       0.000       9.329598       0.000       12/31/07  

42


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Dreyfus IP Technology Growth Portfolios-Initial Shares (Inception Date 12/1/2004)
  10.895130    
 
    997,390.377       11.065036       4,874.101       11.179274       0.000       12/31/09  
  7.008211    
 
    1,051,298.784       7.095896       4,912.351       7.154718       0.000       12/31/08  
  12.085181    
 
    1,154,532.874       12.199017       4,614.070       12.275209       0.000       12/31/07  
  10.684409    
 
    1,309,668.746       10.752145       7,254.620       10.797370       0.000       12/31/06  
  10.388053    
 
    32,100.558       10.422269       0.000       10.445063       0.000       12/31/05  
  10.151024    
 
    198.889       10.153642       0.000       10.155381       0.000       12/31/04  
The Dreyfus Socially Responsible Growth Fund, Inc.-Initial Shares (Inception Date 7/15/1997)
  10.287151    
 
    560,684.875       10.679251       7,795.056       8.817978       0.000       12/31/09  
  7.800236    
 
    579,088.137       8.072969       7,715.712       6.652498       0.000       12/31/08  
  12.064814    
 
    630,147.828       12.448556       6,547.156       10.237389       0.000       12/31/07  
  11.353220    
 
    701,011.037       11.678582       5,863.440       9.584710       0.000       12/31/06  
  10.543914    
 
    795,479.598       10.813247       5,790.816       8.856675       0.000       12/31/05  
  10.320091    
 
    913,267.538       10.551666       5,286.547       8.625051       0.000       12/31/04  
  9.854396    
 
    925,266.631       10.045110       4,815.599       8.194494       4,333.000       12/31/03  
  7.930106    
 
    960,232.146       8.059684       3,420.290       6.561870       3,843.678       12/31/02  
  11.317226    
 
    1,066,026.751       11.468022       1,578.746       9.318292       3,077.581       12/31/01  
  14.823134    
 
    894,007.973                               12/31/00  
Dreyfus Stock Index Fund, Inc.-Initial Shares (Inception Date 7/15/1997)
  12,160550    
 
    3,157,298.781       12.623970       14,673.632       10.258200       0.000       12/31/09  
  9.762392    
 
    3,356,601.303       10.103650       13,245.896       8.193641       0.000       12/31/08  
  15.752402    
 
    3,792,658.208       16.253270       8,643.223       13.153999       0.000       12/31/07  
  15.179498    
 
    4,190,418.249       15.614354       7,744.043       12.611288       0.000       12/31/06  
  13.328744    
 
    4,493,460.193       13.669089       6,535.021       11.017946       0.000       12/31/05  
  12.911696    
 
    4,792,865.682       13.201315       7,554.962       10.619518       0.000       12/31/04  
  11.835440    
 
    4,670,251.024       12.064404       9,003.839       9.685471       73,399.535       12/31/03  
  9.349226    
 
    4,454,143.840       9.501934       6,861.288       7.613224       67,021.625       12/31/02  
  12.210993    
 
    4,141,595.630       12.373650       4,522.004       9.894503       58,922.095       12/31/01  
  14.100696    
 
    3,598,196.884                               12/31/00  
Dreyfus VIF Appreciation Portfolio-Initial Shares (Inception Date 7/15/1997)
  13.314101    
 
    646,153.835       12.623970       2,554.564       11.344306       0.000       12/31/09  
  11.017708    
 
    708,576.070       11.402845       3,921.416       9.340292       0.000       12/31/08  
  15.862343    
 
    863,904.016       16.366759       3,664.796       13.379175       0.000       12/31/07  
  15.017729    
 
    946,182.350       15.447987       4,551.668       12.602520       0.000       12/31/06  
  13.075735    
 
    1,005,802.778       13.409645       4,744.717       10.917645       0.000       12/31/05  
  12.704674    
 
    1,036,367.953       12.989662       6,831.224       10.554457       0.000       12/31/04  
  12.265787    
 
    936,025.635       12.503079       8,455.513       10.138694       2,923.121       12/31/03  
  10.264481    
 
    821,738.414       10.432114       6,651.281       8.442660       2,343.298       12/31/02  
  12.497173    
 
    717,965.716       12.663627       5,276.343       10.228319       1,894.964       12/31/01  
  13.974173    
 
    649,590.073                               12/31/00  

43


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Dreyfus VIF Growth and Income Portfolio-Initial Shares (Inception Date 7/15/1997)
  10.209163    
 
    333,618.835       10.598240       4,148.936       9.829376       0.000       12/31/09  
  8.039857    
 
    397,593.350       8.320928       3,603.879       7.701708       0.000       12/31/08  
  13.684704    
 
    484,210.513       14.119889       3,131.987       13.042638       0.000       12/31/07  
  12.799045    
 
    534,977.589       13.165752       3,400.363       12.136646       0.000       12/31/06  
  11.335178    
 
    573,338.603       11.624648       4,096.135       10.694477       0.000       12/31/05  
  11.122877    
 
    660,745.227       11.372419       5,058.158       10.441383       0.000       12/31/04  
  10.496627    
 
    594,854.140       10.699714       4,344.521       9.804034       1,018.544       12/31/03  
  8.409071    
 
    633,983.863       8.546428       2,655.811       7.815544       780.152       12/31/02  
  11.419341    
 
    646,842.656       11.571439       1,474.275       10.560897       544.980       12/31/01  
  12.299306    
 
    572,006.660                               12/31/00  
Dreyfus VIF Money Market Portfolio (Inception Date 7/15/1997)
  1.214495    
 
    5,766,256.197       1.252565       45,108.568       1.236565       0.000       12/31/09  
  1.227384    
 
    6,894,098.095       1.262277       38,305.622       1.244346       0.000       12/31/08  
  1.216497    
 
    7,980,519.294       1.248206       35,610.229       1.228338       0.000       12/31/07  
  1.183188    
 
    6,426,348.042       1.211707       35,651.958       1.189895       0.000       12/31/06  
  1.152576    
 
    6,753,332.466       1.177927       40,350.784       1.154189       0.000       12/31/05  
  1.140557    
 
    5,458,310.932       1.162738       4,618.151       1.137075       0.000       12/31/04  
  1.146684    
 
    11,398,828.937       1.165764       9,040.873       1.138179       133,840.928       12/31/03  
  1.153638    
 
    26,597,370.970       1.169798       23,476.567       1.140327       126,326.727       12/31/02  
  1.153108    
 
    17,775,594.379       1.166325       15,244.920       1.134928       127,843.640       12/31/01  
  1.128116    
 
    7,677,545.259                               12/31/00  
Dreyfus VIF Opportunistic Small Cap Portfolio -Initial Shares (Inception Date 7/15/1997)
  10.091016    
 
    566,076.124       10.475736       3,327.238       10.027548       0.000       12/31/09  
  8.120054    
 
    592,552.159       8.404032       3,429.651       8.028251       0.000       12/31/08  
  13.197067    
 
    683,423.829       13.616883       3,292.355       12.981641       0.000       12/31/07  
  15.049986    
 
    807,530.215       15.481299       5,517.924       14.729135       0.000       12/31/06  
  14.708620    
 
    908,638.512       15.084331       6,468.518       14.322591       0.000       12/31/05  
  14.099077    
 
    919,021.905       14.415462       6,838.658       13.660000       0.000       12/31/04  
  12.842412    
 
    898,484.551       13.090970       9,249.068       12.379997       5,775.857       12/31/03  
  9.888294    
 
    887,931.962       10.049896       5,581.765       9.485334       5,490.189       12/31/02  
  12.397758    
 
    698,539.631       12.563024       2,568.238       11.833795       4,481.981       12/31/01  
  13.391746    
 
    482,890.909                               12/31/00  
DWS Small Cap Index VIP Fund-Class A (Inception Date 5/1/1999)
  13.570609    
 
    294,557.144       14.022277       171.426       14.324246       0.000       12/31/09  
  10.880984    
 
    299,117.876       11.201557       217.385       11.419700       0.000       12/31/08  
  16.753029    
 
    419,825.549       17.193942       153.623       17.493245       0.000       12/31/07  
  17.321028    
 
    452,371.808       17.722591       276.237       17.994514       0.000       12/31/06  
  14.951171    
 
    417,983.505       15.251478       151.892       15.454348       0.000       12/31/05  
  14.543337    
 
    347,239.433       14.790573       44.787       14.957190       0.000       12/31/04  
  12.525203    
 
    434,240.830       12.699687       8.778       12.816964       1,637.748       12/31/03  
  8.673629    
 
    165,980.862       8.768488       0.000       8.832017       1,015.061       12/31/02  
  11.074827    
 
    153,151.939       11.162755       54.021       11.221359       577.104       12/31/01  
  11.003134    
 
    83,894.729                               12/31/00  

44


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Ibbotson Balanced ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  8.907869    
 
    186,322.194       8.980628       1,219.928       9.029267       0.000       12/31/09  
  7.558919    
 
    107,236.129       7.597522       1,051.150       7.623267       0.000       12/31/08  
  10.093988    
 
    48,022.988       10.114606       801.436       10.128323       0.000       12/31/07  
Ibbotson Conservative ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  10.218964    
 
    63,998.511       10.302376       1,504.883       10.358142       0.000       12/31/09  
  9.572516    
 
    57,711.154       9.621357       1,052.032       9.653924       0.000       12/31/08  
  10.331779    
 
    12,429.371       10.352868       798.961       10.366907       0.000       12/31/07  
Ibbotson Growth ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  8.282285    
 
    258,899.931       8.349955       1,308.443       8.395174       0.000       12/31/09  
  6.738875    
 
    162,988.155       6.773305       1,058.808       6.796254       0.000       12/31/08  
  9.994910    
 
    55,891.199       10.015324       805.328       10.028907       0.000       12/31/07  
Ibbotson Income and Growth ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  9.525025    
 
    73,753.690       9.602792       1,319.783       9.654796       0.000       12/31/09  
  8.526582    
 
    35,362.381       8.570101       1,302.787       8.599135       0.000       12/31/08  
  10.193054    
 
    9,987.815       10.213871       805.937       10.227717       0.000       12/31/07  
Invesco V.I. Capital Development Fund -Series I Shares (Inception Date 12/1/2004)
  10.360399    
 
    881,089.599       10.521990       8.898.877       10.630654       0.000       12/31/09  
  7.380463    
 
    946,895.438       7.472825       8,104.862       7.534783       0.000       12/31/08  
  14.131174    
 
    1,085,589.211       14.264320       5,721.311       14.353410       0.000       12/31/07  
  12.930724    
 
    1,168,401.050       13.012710       6,948.243       13.067437       0.000       12/31/06  
  11.254617    
 
    16,459.887       11.291687       1,008.183       11.316377       0.000       12/31/05  
  10.413665    
 
    2,721.825       10.416351       0.000       10.418135       0.000       12/31/04  
Invesco V.I. Core Equity Fund -Series I Shares (Inception Date 5/1/2006)
  10.042331    
 
    638,170.693       10.155438       5,046.866       10.231256       0.000       12/31/09  
  7.938572    
 
    737,379.930       8.003616       5,312.221       8.047095       0.000       12/31/08  
  11.525903    
 
    807,450.262       11.584894       4,107.964       11.624216       0.000       12/31/07  
  10.812798    
 
    946,182.515       10.834974       3,675.733       10.849709       0.000       12/31/06  
Invesco V.I. Financial Services Fund -Series I Shares (Inception Date 5/1/2001)
  5.105057    
 
    166,863.342       5.240456       320.689       5.332510       0.000       12/31/09  
  4.063096    
 
    166,382.593       4.158185       2,546.957       4.222670       0.000       12/31/08  
  10.161746    
 
    160,195.947       10.367656       1,986.127       10.506972       0.000       12/31/07  
  13.250780    
 
    177,386.400       13.477974       2,490.821       13.631352       0.000       12/31/06  
  11.540835    
 
    198,663.153       11.703172       1,383.076       11.812566       0.000       12/31/05  
  11.051409    
 
    208,252.570       11.172949       256.950       11.254711       0.000       12/31/04  
  10.313195    
 
    157,061.561       10.395135       38.751       10.450179       0.000       12/31/03  
  8.070175    
 
    118,822.635       8.110243       0.000       8.137086       0.000       12/31/02  
  9.616190    
 
    71,816.401       9.635286       0.000       9.648046       0.000       12/31/01  

45


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Invesco V.I. Global Health Care Fund -Series I Shares (Inception Date 5/1/2001)
  10.955003    
 
    274,749.744       11.245254       904.173       11.442574       0.000       12/31/09  
  8.702188    
 
    313,750.756       8.905665       1,193.409       9.043659       0.000       12/31/08  
  12.365170    
 
    335,033.531       12.615701       1,151.691       12.785234       0.000       12/31/07  
  11.212446    
 
    367,788.244       11.404707       1,104.143       11.534535       0.000       12/31/06  
  10.805644    
 
    405,402.095       10.957652       948.050       11.060091       0.000       12/31/05  
  10.132965    
 
    382,011.757       10.244403       727.654       10.319384       0.000       12/31/04  
  9.553444    
 
    311,542.224       9.629350       552.891       9.680353       1,325.870       12/31/03  
  7.580976    
 
    210,450.701       7.618614       203.656       7.643844       1,160.526       12/31/02  
  10.175290    
 
    59,824.959       10.195475       0.000       10.208982       0.000       12/31/01  
Invesco V.I. High Yield Fund -Series I Shares (Inception Date 7/15/1997)
  13.096510    
 
    205,734.182       13.324556       212,978       13.478143       0.000       12/31/09  
  8.693381    
 
    215,192.913       8.817948       199.476       8.901628       0.000       12/31/08  
  11.866015    
 
    246,721.437       11.999364       304.725       12.088721       0.000       12/31/07  
  11.887590    
 
    336,558.419       11.984482       257.915       12.049249       0.000       12/31/06  
  10.886907    
 
    350,885.548       10.942429       230.396       10.979447       0.000       12/31/05  
  10.749148    
 
    449,939.142       10.771273       214.851       10.785980       0.000       12/31/04  
  10.095432    
 
    859,221.923       10.290759       188.060       9.127994       755.565       12/31/03  
  8.186958    
 
    488,086.809       8.320679       169.835       7.365950       653.397       12/31/02  
  8.410616    
 
    546,183.962       8.522682       149.057       7.529874       2,221.642       12/31/01  
  10.025816    
 
    403,918.794                               12/31/00  
Invesco V.I. Small Cap Equity Fund -Series I Shares (Inception Date 12/1/2004)
  10.560052    
 
    233,790.333       10.724769       2,147.285       10.835495       0.000       12/31/09  
  8.830277    
 
    221,619.162       8.940764       2,135.677       9.014858       0.000       12/31/08  
  13.038707    
 
    199,548.559       13.161563       2,251.030       13.243751       0.000       12/31/07  
  12.572746    
 
    59,594.167       12.652463       552.133       12.705655       0.000       12/31/06  
  10.857407    
 
    15,527.249       10.893167       559.580       10.916974       0.000       12/31/05  
  10.184771    
 
    48.134       10.187404       0.000       10.189150       0.000       12/31/04  
Invesco Van Kampen V.I. U.S. Mid Cap Value Portfolio-Class I (Inception Date 7/15/1997)
  19.564836    
 
    405,313.835       20.310531       2,290.539       16.933514       0.000       12/31/09  
  14.254077    
 
    429,690.091       14.752454       5,446.869       12.274779       0.000       12/31/08  
  24.624489    
 
    546,047.920       25.407617       5,239.508       21.097538       0.000       12/31/07  
  23.159385    
 
    581,474.070       23.822985       6,217.919       19.741624       0.000       12/31/06  
  19.459486    
 
    530,733.841       19.956509       5,226.294       16.504310       0.000       12/31/05  
  17.572071    
 
    467,487.388       17.966354       4,302.132       14.828568       0.000       12/31/04  
  15.551851    
 
    417,352.873       15.852805       3,927.983       13.057884       3,535.862       12/31/03  
  11.143745    
 
    383,714.571       11.325832       3,089.661       9.310623       2,938.407       12/31/02  
  15.699340    
 
    335,452.774       15.908551       1,648.470       13.052029       2,465.356       12/31/01  
  16.438193    
 
    253,713.630                               12/31/00  

46


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
InvescoVan Kampen V.I. Value Portfolio-Class I (Inception Date 7/15/1997)
  12.969058    
 
    549,162.263       13.462273       5,555.538       12.978157       0.000       12/31/09  
  10.040068    
 
    596,256.187       10.391062       6,775.137       9.997190       0.000       12/31/08  
  15.875263    
 
    789,939.565       16.380071       3,986.655       15.727231       0.000       12/31/07  
  16.611311    
 
    850,561.888       17.087197       6,292.311       16.372900       0.000       12/31/06  
  14.412225    
 
    863,389.460       14.780240       6,598.174       14.133911       0.000       12/31/05  
  13.978413    
 
    807,191.172       14.291958       5,717.704       13.639509       0.000       12/31/04  
  12.030718    
 
    620,028.974       12.263462       5,123.338       11.680115       5,265.487       12/31/03  
  9.098209    
 
    526,832.864       9.246820       3,689.937       8.789584       5,091.530       12/31/02  
  11.851536    
 
    401,628.667       12.009406       2,274.954       11.392961       3,995.102       12/31/01  
  11.751659    
 
    132,621.948                               12/31/00  
Janus Aspen Balanced Portfolio-Institutional Shares (Inception Date 7/15/1997)
  23.041572    
 
    1,889,388.689       23.919450       8,415.042       19.070596       0.000       12/31/09  
  18.563244    
 
    2,106,521.139       19.212030       10,499.537       15.286575       0.000       12/31/08  
  22.371024    
 
    2,407,948.228       23.082360       9,247.980       18.328937       0.000       12/31/07  
  20.527683    
 
    2,849,443.225       21.115777       10,256.899       16.733348       0.000       12/31/06  
  18.802986    
 
    3,224,954.488       19.283124       11,389.809       15.250326       0.000       12/31/05  
  17.664922    
 
    3,596,278.746       18.061165       13,350.072       14.255222       0.000       12/31/04  
  16.507560    
 
    3,685,075.400       16.826897       19,069.761       13.254381       55,839.756       12/31/03  
  14.676594    
 
    3,702,620.254       14.916257       13,120.266       11.726184       53,841.269       12/31/02  
  15.907374    
 
    3,578,735.833       16.119263       9,654.166       12.646851       49,552.895       12/31/01  
  16.920712    
 
    3,181,464.624                               12/31/00  
Janus Aspen Enterprise Portfolio-Institutional Shares (Inception Date 7/15/1997)
  16.896627    
 
    773,505.725       17.540879       10,917.383       14.000626       0.000       12/31/09  
  11.832549    
 
    844,041.239       12.246416       11,363.637       9.755020       0.000       12/31/08  
  21.325158    
 
    959,193.271       22.003604       11,623.480       17.491664       0.000       12/31/07  
  17.723408    
 
    1,111,731.741       18.231471       15,635.292       14.463654       0.000       12/31/06  
  15.820887    
 
    1,192,692.579       16.225130       18,154.900       12.846067       0.000       12/31/05  
  14.286652    
 
    1,246,239.904       14.607357       18,555.090       11.541971       0.000       12/31/04  
  11.999290    
 
    1,291,553.100       12.231626       21,025.289       9.645385       9,670.762       12/31/03  
  9.005921    
 
    1,290,667.557       9.153163       14,073.466       7.203589       7,684.759       12/31/02  
  12.672131    
 
    1,215,838.484       12.841113       8,626.211       10.086016       5,676.145       12/31/01  
  21.224171    
 
    993,843.327                               12/31/00  
Janus Aspen Forty Portfolio-Institutional Shares (Inception Date 5/1/1999)
  12.237077    
 
    1,142,119.314       12.635964       7,534.795       12.908012       0.000       12/31/09  
  8.481186    
 
    1,176,081.761       8.731075       6,784.900       8.901070       0.000       12/31/08  
  15.402418    
 
    1,180,450.358       15.807816       6,304.616       16.082905       0.000       12/31/07  
  11.403714    
 
    1,272,789.383       11.668168       6,914.755       11.847172       0.000       12/31/06  
  10.576925    
 
    1,421,322.533       10.789432       8,924.998       10.932929       0.000       12/31/05  
  9.505422    
 
    1,369,066.381       9.667060       9,080.188       9.775955       0.000       12/31/04  
  8.153727    
 
    1,483,721.928       8.267358       11,535.264       8.343697       15,170.725       12/31/03  
  6.859260    
 
    1,548,077.357       6.934292       7,637.061       6.984492       12,880.523       12/31/02  
  8.247987    
 
    1,650,016.481       8.313484       4,570.921       8.357094       14,587.924       12/31/01  
  10.678675    
 
    1,384,637.536                               12/31/00  

47


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Janus Aspen Janus Portfolio-Institutional Shares (Inception Date 7/15/1997)
  12.088320    
 
    1,152693.064       12.549112       6,194.177       10.214771       0.000       12/31/09  
  8.991468    
 
    1,287,933.053       9.305880       7,518.771       7.559562       0.000       12/31/08  
  15.128819    
 
    1,451,223.867       15.610044       7,515.669       12.654990       0.000       12/31/07  
  13.332590    
 
    1,661,699.848       13.714717       8,850.842       11.095916       0.000       12/31/06  
  12.140136    
 
    1,816,341.463       12.450279       12,118.207       10.052654       0.000       12/31/05  
  11.805932    
 
    1,963,661.008       12.070890       12,071.718       9.726734       0.000       12/31/04  
  11.455733    
 
    2,117,639.460       11.677475       17,617.840       9.390815       6,765.629       12/31/03  
  8.817912    
 
    2,338,003.425       8.962034       12,164.934       7.192879       5,335.350       12/31/02  
  12.166993    
 
    2,211,504.181       12.329165       7,211.443       9.875724       4,241.678       12/31/01  
  16.393493    
 
    1,792,958.592                               12/31/00  
Janus Aspen Overseas Portfolio-Institutional Shares (Inception Date 7/15/1997)
  29.081634    
 
    983,173.085       30.189779       10,697.900       24.742872       0.000       12/31/09  
  16.426264    
 
    1,076,456.667       17.000439       11,248.267       13.905104       0.000       12/31/08  
  34.791646    
 
    1,193,428.967       35.897704       8,914.364       29.302067       0.000       12/31/07  
  27.500771    
 
    1,183,279.918       28.288499       12,357.534       23.044141       0.000       12/31/06  
  18.969977    
 
    966,575.134       19.454325       10,632.810       15.815871       0.000       12/31/05  
  14.542258    
 
    681,071.772       14.868462       11,182.362       12.063394       0.000       12/31/04  
  12.398800    
 
    669,789.197       12.638673       15,388.121       10.233679       1,862.207       12/31/03  
  9.318679    
 
    678,787.112       9.470891       11,468.866       7.653548       1,312.902       12/31/02  
  12.698027    
 
    675,126.139       12.867174       7,907.782       10.377532       901.701       12/31/01  
  16.774550    
 
    620,740.857                               12/31/00  
Morgan Stanley UIF Core Plus Fixed Income Portfolio-Class I (Inception Date 7/15/1997)
  14.924840    
 
    558,865.908       15.493462       4,606.681       14.718576       0.000       12/31/09  
  13.805232    
 
    633,167.502       14.287712       4,309.288       13.545767       0.000       12/31/08  
  15.593051    
 
    790,109.961       16.088872       3,609.600       15.222548       0.000       12/31/07  
  14.997858    
 
    934,853.788       15.427535       4,516.328       14.567237       0.000       12/31/06  
  14.663212    
 
    1,031,163.550       15.037636       4,510.157       14.170531       0.000       12/31/05  
  14.269584    
 
    1,040,814.398       14.589653       5,455.212       13.720741       0.000       12/31/04  
  13.866152    
 
    1,111,500.860       14.134373       5,899.268       13.265872       1,753.649       12/31/03  
  13.437077    
 
    1,065,387.210       13.656469       3,834.895       12.791995       0.000       12/31/02  
  12.694998    
 
    713,042.852       12.864100       1,978.853       12.025963       0.000       12/31/01  
  11.776122    
 
    380,480.921                               12/31/00  
Morgan Stanley UIF Mid Cap Growth Portfolio-Class I (Inception Date 5/1/2007)
  9.178449    
 
    89,948.195       9.253450       438.289       9.303582       0.000       12/31/09  
  5.904344    
 
    47,092.588       5.934535       363.377       5.954656       0.000       12/31/08  
  11.249638    
 
    24,266.882       11.272627       46.682       11.287901       0.000       12/31/07  

48


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Morgan Stanley UIF U.S. Real Estate Portfolio-Class I (Inception Date 7/15/1997)
  23.259087    
 
    317,774.229       24.145689       3,177.397       23.304908       0.000       12/31/09  
  18.378595    
 
    350,079.782       19.021158       5,062.382       18.321747       0.000       12/31/08  
  30.015533    
 
    439,009.316       30.969853       4,628.248       29.770452       0.000       12/31/07  
  36.711245    
 
    617,880.841       37.762738       6,918.700       36.226614       0.000       12/31/06  
  26.969864    
 
    638,271.701       27.658464       6,314.368       26.480086       0.000       12/31/05  
  23.367170    
 
    618,052.255       23.891270       4,374.554       22.827424       0.000       12/31/04  
  17.374679    
 
    549,927.036       17.710793       5,725.997       16.888195       396.422       12/31/03  
  12.811814    
 
    469,712.672       13.021061       3,710.088       12.391776       378.990       12/31/02  
  13.094325    
 
    269,466.499       13.268793       1,955.110       12.602570       0.000       12/31/01  
  12.088940    
 
    147,402.642                               12/31/00  
Oppenheimer Balanced Fund/VA-Non-Service Series (Inception Date 12/1/2004)
  7.913698    
 
    172,651.262       8.037124       200.415       8.120120       0.000       12/31/09  
  6.584545    
 
    185,839.541       6.666936       2,649.655       6.722201       0.000       12/31/08  
  11.814395    
 
    264,436.247       11.925723       3,049.914       12.000204       0.000       12/31/07  
  11.545935    
 
    284,653.565       11.619151       2,173.335       11.668021       0.000       12/31/06  
  10.535194    
 
    293,699.326       10.569900       1,006.485       10.593011       0.000       12/31/05  
  10.284433    
 
    3,001.731       10.287083       0.000       10.288847       0.000       12/31/04  
Oppenheimer Capital Appreciation Fund/VA-Non-Service Series (Inception Date 12/1/2004)
  9.803405    
 
    256,120.266       9.956301       451.380       10.059128       0.000       12/31/09  
  6.879768    
 
    231,588.838       6.965871       1,178.186       7.023626       0.000       12/31/08  
  12.807951    
 
    209,919.379       12.928631       1,621.643       13.009370       0.000       12/31/07  
  11.380578    
 
    206,005.347       11.452745       1,085.611       11.500898       0.000       12/31/06  
  10.691883    
 
    85,720.169       10.727101       453.514       10.750537       0.000       12/31/05  
  10.317159    
 
    581.341       10.319818       0.000       10.321584       0.000       12/31/04  
Oppenheimer Main Street Fund®/VA-Non-Service Series (Inception Date 12/1/2004)
  9.691422    
 
    190,755.847       9.842547       5,501.973       9.944190       0.000       12/31/09  
  7.661801    
 
    169,948.768       7.757647       5,434.999       7.821946       0.000       12/31/08  
  12.629722    
 
    217,168.911       12.748689       2,639.277       12.828298       0.000       12/31/07  
  12.267378    
 
    188,104.597       12.345144       2,240.578       12.397044       0.000       12/31/06  
  10.816022    
 
    161,384.797       10.851650       1,136.259       10.875367       0.000       12/31/05  
  10.350617    
 
    13,062.128       10.353285       0.000       10.355055       0.000       12/31/04  
PIMCO VIT Real Return Portfolio-Administrative Class (Inception Date 12/1/2004)
  11.852373    
 
    424,389.110       12.037094       1,462.297       12.161328       0.000       12/31/09  
  10.153005    
 
    379,477.577       10.279969       2,772.903       10.365146       0.000       12/31/08  
  11.079101    
 
    207,278.006       11.183495       2,829.432       11.253355       0.000       12/31/07  
  10.154210    
 
    212,006.902       10.218623       4,352.416       10.261614       0.000       12/31/06  
  10.224854    
 
    240,401.144       10.258560       2,314.795       10.280983       0.000       12/31/05  
  10.156423    
 
    10,066.473       10.159043       0.000       10.160781       0.000       12/31/04  
PIMCO VIT Total Return Portfolio-Administrative Class (Inception Date 12/1/2004)
  12.982892    
 
    470,047.023       13.185247       7,727.755       13.321331       0.000       12/31/09  
  11.542860    
 
    423,985.467       11.687201       5,599.654       11.784016       0.000       12/31/08  
  11.170817    
 
    238,092.027       11.276074       2,086.449       11.346509       0.000       12/31/07  
  10.417487    
 
    207,153.358       10.483551       1,880.102       10.527660       0.000       12/31/06  
  10.173284    
 
    199,476.486       10.206803       453.274       10.229129       0.000       12/31/05  
  10.070332    
 
    627.100       10.072934       0.000       10.074659       0.000       12/31/04  

49


 

                                                         
                                            Number of    
                                            Group    
                            Number of Group   Group   Contract    
                    Group Contract   Contract (1.10%   Contract   (0.90% Total    
            Number of   (1.10% Total   Total Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Templeton Foreign Securities Fund-Class 2 (Inception Date 5/1/2007)
  8.486115    
 
    104,462.210       8.555439       4,496.982       8.601793       0.000       12/31/09  
  6.280197    
 
    71,522.023       6.312285       2,735.993       6.333687       0.000       12/31/08  
  10.683643    
 
    40,534.202       10.705462       798.561       10.719983       0.000       12/31/07  
Wilshire 2015 Moderate Fund (Inception Date 5/1/2007)
  8.853895    
 
    71,047.736       8.926219       789.876       8.974543       0.000       12/31/09  
  7.460428    
 
    46,470.538       7.498538       4,307.481       7.523944       0.000       12/31/08  
  10.007599    
 
    17,496.921       10.028056       1,962.408       10.041657       0.000       12/31/07  
Wilshire 2025 Moderate Fund (Inception Date 5/1/2007)
  8.378892    
 
    23,545.507       8.447325       352.060       8.493070       0.000       12/31/09  
  7.054421    
 
    10,980.789       7.090459       16,457.335       7.114485       0.000       12/31/08  
  9.970642    
 
    8,817.01       9.991008       6,305.373       10.004555       0.000       12/31/07  
Wilshire 2035 Moderate Fund (Inception Date 5/1/2007)
  7.790364    
 
    27,324.342       7.854013       1,674.880       7.896532       0.000       12/31/09  
  6.535932    
 
    20,882.706       6.569332       15,141.054       6.591588       0.000       12/31/08  
  9.921001    
 
    3,691.070       9.941273       4,746.712       9.954751       0.000       12/31/07  

50


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
American Century VP Large Company Value Fund-Class I Shares (Inception Date 12/1/2004)
  9.110166    
 
    276.061       9.204074       0.000       12/31/09  
  7.661835    
 
    212.809       7.725233       701.696       12/31/08  
  12.334045    
 
    161.673       12.410921       679.354       12/31/07  
  12.613437    
 
    125.863       12.666366       582.549       12/31/06  
  10.613037    
 
    0.000       10.636196       0.000       12/31/05  
  10.220496    
 
    0.000       10.222238       0.000       12/31/04  
American Century VP Mid Cap Value Fund-Class I Shares (Inception Date 12/1/2004)
  12.549202    
 
    0.000       12.678538       0.000       12/31/09  
  9.749980    
 
    0.000       9.830643       5,700.671       12/31/08  
  13.012035    
 
    0.000       13.093148       5,045.823       12/31/07  
  13.447669    
 
    0.000       13.504095       4,798.742       12/31/06  
  11.285315    
 
    0.000       11.309936       23.011       12/31/05  
  10.399486    
 
    0.000       10.401262       0.000       12/31/04  
American Century VP Ultra® Fund-Class I Shares (Inception Date 12/1/2004)
  9.322807    
 
    399.260       9.418897       0.000       12/31/09  
  6.999024    
 
    297.949       7.056941       1,917.709       12/31/08  
  12.075286    
 
    130.840       12.150573       1,876.658       12/31/07  
  10.074375    
 
    485.952       10.116676       1,630.132       12/31/06  
  10.515180    
 
    411.819       10.538120       4.188       12/31/05  
  10.390771    
 
    0.000       10.392546       0.000       12/31/04  
American Century VP VistaSM Fund-Class I Shares (Inception Date 12/1/2004)
  10.281743    
 
    231.050       10.387738       0.000       12/31/09  
  8.475842    
 
    201.267       8.545985       13,738.973       12/31/08  
  16.656480    
 
    192.517       16.760292       12,565.904       12/31/07  
  12.031706    
 
    181.135       12.082229       6,879.128       12/31/06  
  11.143119    
 
    21.514       11.167429       8.772       12/31/05  
  10.403392    
 
    21.514       10.405171       0.000       12/31/04  
Calamos Growth and Income Portfolio (Inception Date 5/1/2007)
  9.751667    
 
    0.000       9.804401       0.000       12/31/09  
  7.061494    
 
    0.000       7.085385       598.528       12/31/08  
  10.443994    
 
    0.000       10.458123       0.000       12/31/07  
Davis Value Portfolio (Inception Date 5/1/207)
  7.652717    
 
    1,955.888       7.694089       0.000       12/31/09  
  5.890766    
 
    1,230.299       5.910695       1,612.196       12/31/08  
  9.966295    
 
    0.000       9.979785       0.000       12/31/07  
Dreyfus IP MidCap Stock Portfolio-Service Shares (Inception Date 5/1/2007)
  7.374033    
 
    0.000       7.413912       0.000       12/31/09  
  5.501304    
 
    0.000       5.519921       0.000       12/31/08  
  9.326448    
 
    0.000       9.339073       0.000       12/31/07  
Dreyfus IP Technology Growth Portfolio-Initial Shares (Inception Date 12/1/2004)
  11.150653    
 
    818.657       11.265584       0.000       12/31/09  
  7.139993    
 
    786.393       7.199074       2,486.816       12/31/08  
  12.256148    
 
    568.074       12.332559       2,613.785       12/31/07  
  10.786066    
 
    493.194       10.831351       2,499.762       12/31/06  
  10.439369    
 
    20.730       10.462156       2.095       12/31/05  
  10.154947    
 
    20.730       10.156685       0.000       12/31/04  

51


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
The Dreyfus Socially Responsible Growth Fund, Inc.-Initial Shares (Inception Date 7/15/1997)
  10.880630    
 
    0.000       8.970781       0.000       12/31/09  
  8.212751    
 
    0.000       6.757562       4,055.249       12/31/08  
  12.644827    
 
    0.000       10.383292       3,703.507       12/31/07  
  11.844662    
 
    0.000       9.706556       2,857.136       12/31/06  
  10.950470    
 
    0.000       8.955771       1,847.923       12/31/05  
  10.669460    
 
    0.000       8.708439       949.377       12/31/04  
  10.141935    
 
    0.000       8.261258       968.674       12/31/03  
  8.125307    
 
    0.000       6.605501       625.579       12/31/02  
  11.544188    
 
    0.000       9.366268       0.000       12/31/01  
Dreyfus Stock Index Fund, Inc.-Initial Shares (Inception Date 7/15/1997)
  12.862112    
 
    4,483.990       10.436006       0.000       12/31/09  
  10.278672    
 
    3,454.321       8.323078       18,120.086       12/31/08  
  16.509660    
 
    1,009.877       13.341516       18,424.198       12/31/07  
  15.836519    
 
    532.986       12.771644       14,298.329       12/31/06  
  13.842665    
 
    537.406       11.141253       12,717.488       12/31/05  
  13.348780    
 
    680.516       10.722192       8,796.650       12/31/04  
  12.180793    
 
    680.516       9.764386       7,635.158       12/31/03  
  9.579380    
 
    3,171.095       7.663841       5,807.305       12/31/02  
  12.455945    
 
    3,086.013       9.945431       0.000       12/31/01  
Dreyfus VIF Appreciation Portfolio-Initial Shares (Inception Date 7/15/1997)
  14.082019    
 
    53.885       11.540874       0.000       12/31/09  
  11.600224    
 
    30.664       9.487800       5,763.693       12/31/08  
  16.624757    
 
    17.568       13.569868       6,332.276       12/31/07  
  15.667624    
 
    0.000       12.762733       5,348.565       12/31/06  
  13.579785    
 
    0.000       11.039795       3,200.889       12/31/05  
  13.134636    
 
    150.958       10.656479       524.528       12/31/04  
  12.623565    
 
    150.958       10.221281       637.550       12/31/03  
  10.517029    
 
    150.958       8.498780       404.810       12/31/02  
  12.747715    
 
    150.958       10.280968       0.000       12/31/01  
Dreyfus VIF Growth and Income Portfolio-Initial Shares (Inception Date 7/15/1997)
  10.798137    
 
    4.044       9.999775       0.000       12/31/09  
  8.465028    
 
    4.044       7.823392       6,935.623       12/31/08  
  14.342553    
 
    4.044       13.228581       6,647.698       12/31/07  
  13.353024    
 
    0.000       12.290990       6,284.037       12/31/06  
  11.772215    
 
    0.000       10.814168       4,573.316       12/31/05  
  11.499396    
 
    0.000       10.542352       2,110.774       12/31/04  
  10.802876    
 
    0.000       9.883935       1,683.104       12/31/03  
  8.616047    
 
    0.000       7.867534       1,380.154       12/31/02  
  11.648352    
 
    0.000       10.615303       0.000       12/31/01  

52


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Dreyfus VIF Money Market Portfolio (Inception Date 7/15/1997)
  1.272974    
 
    11,666.616       1.254056       0.000       12/31/09  
  1.281179    
 
    3,284.131       1.260375       65,266.763       12/31/08  
  1.265595    
 
    7.177       1.242900       105,591.754       12/31/07  
  1.227578    
 
    0.000       1.202985       79,903.634       12/31/06  
  1.192295    
 
    0.000       1.165821       74,816.781       12/31/05  
  1.175604    
 
    0.000       1.147250       41,121.286       12/31/04  
  1.177135    
 
    0.000       1.146810       30,543.174       12/31/03  
  1.179709    
 
    0.000       1.147255       13,181.025       12/31/02  
  1.174767    
 
    0.036       1.140245       0.000       12/31/01  
Dreyfus VIF Opportunistic Small Cap Portfolio -Initial Shares (Inception Date 7/15/1997)
  10.673474    
 
    594.992       10.201279       0.000       12/31/09  
  8.549692    
 
    644.201       8.155005       5,902.659       12/31/08  
  13.831817    
 
    635.120       13.166567       4,504.824       12/31/07  
  15.701713    
 
    516.548       14.916250       4,478.428       12/31/06  
  15.276001    
 
    459.556       14.482701       4,245.206       12/31/05  
  14.576616    
 
    548.248       13.791916       3,532.709       12/31/04  
  13.217353    
 
    491.205       12.480727       2,861.914       12/31/03  
  10.131883    
 
    471.199       9.548300       2,066.318       12/31/02  
  12.646674    
 
    229.386       11.894597       0.000       12/31/01  
DWS Small Cap Index VIP Fund-Class A (Inception Date 5/1/1999)
  14.248812    
 
    327.071       14.555630       0.000       12/31/09  
  11.365292    
 
    232.865       11.586652       1,054.740       12/31/08  
  17.418714    
 
    103.383       17.722014       1,126.528       12/31/07  
  17.926929    
 
    73.897       18.202156       1,003.543       12/31/06  
  15.404037    
 
    57.528       15.609142       832.924       12/31/05  
  14.915983    
 
    36.274       15.084265       481.304       12/31/04  
  12.788062    
 
    144.907       12.906395       370.115       12/31/03  
  8.816430    
 
    4.364       8.880430       268.850       12/31/02  
  11.207088    
 
    272.943       11.266052       0.000       12/31/01  
Ibbotson Balanced ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  9.017101    
 
    1,018.156       9.065855       0.000       12/31/09  
  7.616827    
 
    0.000       7.642594       447.796       12/31/08  
  10.124902    
 
    0.000       10.138600       0.000       12/31/07  
Ibbotson Conservative ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  10.344203    
 
    152.048       10.400078       0.000       12/31/09  
  9.645794    
 
    0.000       9.678378       21.697       12/31/08  
  10.363409    
 
    0.000       10.377428       0.000       12/31/07  
Ibbotson Growth ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  8.383881    
 
    10,991.398       8.429220       0.000       12/31/09  
  6.790527    
 
    4,389.235       6.813495       0.000       12/31/08  
  10.025519    
 
    0.000       10.039091       0.000       12/31/07  
Ibbotson Income and Growth ETF Asset Allocation Portfolio-Class II (Inception Date 5/1/2007)
  9.641793    
 
    14,836.552       9.693892       0.000       12/31/09  
  8.591886    
 
    18.461       8.620923       0.000       12/31/08  
  10.224263    
 
    0.000       10.238098       0.000       12/31/07  

53


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Invesco V.I. Capital Development Fund-Series I Shares (Inception Date 12/1/2004)
  10.603442    
 
    2,860.529       10.712763       0.000       12/31/09  
  7.519284    
 
    1,526.789       7.581515       18,140.974       12/31/08  
  14.331134    
 
    89.361       14.420491       15,559.952       12/31/07  
  13.053761    
 
    30.786       13.108573       13,889.446       12/31/06  
  11.310210    
 
    0.000       11.334888       0.000       12/31/05  
  10.417688    
 
    0.000       10.419472       0.000       12/31/04  
Invesco V.I. Core Equity Fund-Series I Shares (Inception Date 5/1/2006)
  10.212277    
 
    120.484       10.288379       0.000       12/31/09  
  8.036226    
 
    61.410       8.079812       245.999       12/31/08  
  11.614400    
 
    15.286       11.653774       559.770       12/31/07  
  10.846037    
 
    0.000       10.860776       481.069       12/31/06  
Invesco V.I. Financial Services Fund-Series I Shares (Inception Date 5/1/2001)
  5.309402    
 
    340.535       5.402611       0.000       12/31/09  
  4.206499    
 
    222.160       4.271711       825.928       12/31/08  
  10.472081    
 
    148.794       10.612748       627.399       12/31/07  
  13.592983    
 
    112.573       13.747660       2,974.384       12/31/06  
  11.785233    
 
    75.651       11.895426       2,656.644       12/31/05  
  11.234312    
 
    28.405       11.316604       296.508       12/31/04  
  10.436461    
 
    0.000       10.491819       506.763       12/31/03  
  8.130414    
 
    0.000       8.157371       331.521       12/31/02  
  9.644875    
 
    0.000       9.657683       0.000       12/31/01  
Invesco V.I. Global Health Care Fund-Series I Shares (Inception Date 5/1/2001)
  11.393028    
 
    920.626       11.592819       0.000       12/31/09  
  9.009033    
 
    716.591       9.148575       10,120.141       12/31/08  
  12.742728    
 
    452.451       12.913941       10,174.312       12/31/07  
  11.502013    
 
    305.222       11.632963       9,669.402       12/31/06  
  11.034447    
 
    202.797       11.137654       7,840.922       12/31/05  
  10.300635    
 
    77.557       10.376110       3,984.789       12/31/04  
  9.667612    
 
    179.965       9.718905       3,546.346       12/31/03  
  7.637544    
 
    0.000       7.662880       2,641.906       12/31/02  
  10.205610    
 
    61.085       10.219152       0.000       12/31/01  
Invesco V.I. High Yield Fund-Series I Shares (Inception Date 7/15/1997)
  13.439612    
 
    368.140       13.594280       0.000       12/31/09  
  8.880649    
 
    301.264       8.964798       167.430       12/31/08  
  12.066339    
 
    232.319       12.156051       844.287       12/31/07  
  12.033030    
 
    176.048       12.097966       896.818       12/31/06  
  10.970185    
 
    115.761       11.007248       1,138.551       12/31/05  
  10.782305    
 
    43.918       10.797012       774.713       12/31/04  
  10.389982    
 
    0.001       9.202367       587.034       12/31/03  
  8.388454    
 
    0.000       7.414915       367.999       12/31/02  
  8.579354    
 
    0.000       7.568636       0.000       12/31/01  

54


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Invesco V.I. Small Cap Equity Fund-Series I Shares (Inception Date 12/1/2004)
  10.807756    
 
    371.211       10.919176       0.000       12/31/09  
  8.996308    
 
    250.577       9.070753       4,969.919       12/31/08  
  13.223189    
 
    83.231       13.305633       4,703.400       12/31/07  
  12.692358    
 
    0.000       12.745634       447.990       12/31/06  
  10.911028    
 
    0.000       10.934828       0.000       12/31/05  
  10.188714    
 
    0.000       10.190457       0.000       12/31/04  
Invesco Van Kampen V.I. U.S. Mid Cap Value Portfolio-Class I (Inception Date 7/15/1997)
  20.693868    
 
    1,127.798       17.226911       0.000       12/31/09  
  15.008140    
 
    726.316       12.468605       4,468.885       12/31/08  
  25.808634    
 
    396.489       21.398137       3,948.681       12/31/07  
  24.162157    
 
    0.000       19.992502       3,602.634       12/31/06  
  20.210094    
 
    0.000       16.688897       2,736.473       12/31/05  
  18.167210    
 
    0.000       14.971848       1,952.421       12/31/04  
  16.005864    
 
    113.080       13.164187       1,518.257       12/31/03  
  11.418226    
 
    28.150       9.372474       957.992       12/31/02  
  16.014471    
 
    28.150       13.119130       0.000       12/31/01  
Invesco Van Kampen V.I. Value Portfolio-Class I (Inception Date 7/15/1997)
  13.716224    
 
    1,625.303       13.203094       0.000       12/31/09  
  10.571048    
 
    860.318       10.155118       5,652.214       12/31/08  
  16.638432    
 
    279.735       15.951436       4,173.943       12/31/07  
  17.330296    
 
    33.363       16.581099       2,425.539       12/31/06  
  14.967892    
 
    33.363       14.292090       2,094.705       12/31/05  
  14.451571    
 
    33.363       13.771392       1,612.617       12/31/04  
  12.381730    
 
    33.363       11.775296       1,475.807       12/31/03  
  9.322154    
 
    33.363       8.848037       949.630       12/31/02  
  12.089242    
 
    124.533       11.451625       0.000       12/31/01  
Janus Aspen Balanced Portfolio-Institutional Shares (Inception Date 7/15/1997)
  24.370407    
 
    289.077       19.401026       0.000       12/31/09  
  19.544625    
 
    150.770       15.527985       6,319.822       12/31/08  
  23.446278    
 
    130.164       18.590184       5,626.001       12/31/07  
  21.416039    
 
    38.089       16.946087       6,565.836       12/31/06  
  19.527811    
 
    39.724       15.420964       4,291.048       12/31/05  
  18.262753    
 
    171.888       14.393020       2,476.146       12/31/04  
  16.989064    
 
    171.888       13.362331       2,154.381       12/31/03  
  15.037669    
 
    1,282.216       11.804093       1,579.653       12/31/02  
  16.226337    
 
    1,282.216       12.711912       0.000       12/31/01  
Janus Aspen Enterprise Portfolio-Institutional Shares (Inception Date 7/15/1997)
  17.871563    
 
    311.037       13.243244       0.000       12/31/09  
  12.458395    
 
    244.854       9.909087       2,430.325       12/31/08  
  22.350394    
 
    223.145       17.740916       2,835.597       12/31/07  
  18.490639    
 
    198.823       14.647491       2,928.081       12/31/06  
  16.430939    
 
    174.191       12.989749       2,276.876       12/31/05  
  14.770332    
 
    251.906       11.653511       836.499       12/31/04  
  12.349444    
 
    218.778       9.723925       612.357       12/31/03  
  9.227625    
 
    856.311       7.251447       472.925       12/31/02  
  12.926320    
 
    832.210       10.137880       0.000       12/31/01  

55


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Janus Aspen Forty Portfolio-Institutional Shares (Inception Date 5/1/1999)
  12.840126    
 
    290.186       13.116501       0.000       12/31/09  
  8.858714    
 
    264.996       9.031187       19,258.834       12/31/08  
  16.014480    
 
    249.918       16.293206       8,199.026       12/31/07  
  11.802739    
 
    238.337       11.983880       7,866.365       12/31/06  
  10.897390    
 
    224.632       11.042426       7,397.910       12/31/05  
  9.749062    
 
    369.844       9.858999       4,108.809       12/31/04  
  8.324912    
 
    340.749       8.401910       3,673.250       12/31/03  
  6.972208    
 
    1,816.324       7.022777       2,582.245       12/31/02  
  8.346510    
 
    1,813.269       8.390380       0.000       12/31/01  
Janus Aspen Janus Portfolio-Institutional Shares (Inception Date 7/15/1997)
  12.785966    
 
    3.892       10.391789       0.000       12/31/09  
  9.467180    
 
    3.892       7.678977       3,045.528       12/31/08  
  15.856446    
 
    3.892       12.835365       2,956.246       12/31/07  
  13.910006    
 
    0.000       11.236984       2,508.839       12/31/06  
  12.608502    
 
    0.000       10.165143       2,153.599       12/31/05  
  12.205852    
 
    128.720       9.820772       2,368.105       12/31/04  
  11.790223    
 
    128.720       9.467320       2,297.375       12/31/03  
  9.035150    
 
    128.720       7.240699       1,647.960       12/31/02  
  12.411252    
 
    128.720       9.926552       0.000       12/31/01  
Janus Aspen Overseas Portfolio-Institutional Shares (Inception Date 7/15/1997)
  30.758924    
 
    3,020.438       25.171553       0.000       12/31/09  
  17.294734    
 
    2,196.968       14.124673       9,428.699       12/31/08  
  36.463478    
 
    426.772       29.719504       6,981.651       12/31/07  
  28.690648    
 
    56.867       23.336974       4,630.919       12/31/06  
  19.701127    
 
    56.867       15.992759       1,486.339       12/31/05  
  15.034373    
 
    22.784       12.179969       7.075       12/31/04  
  12.760432    
 
    0.000       10.317004       0.000       12/31/03  
  9.547961    
 
    0.000       7.704394       0.000       12/31/02  
  12.952582    
 
    0.000       10.430913       0.000       12/31/01  
Morgan Stanley UIF Core Plus Fixed Income Portfolio-Class I (Inception Date 7/15/1997)
  15.785713    
 
    1,556.323       14.973537       0.000       12/31/09  
  14.535198    
 
    1,053.994       13.759623       7,163.347       12/31/08  
  16.342712    
 
    2.990       15.439456       8,443.460       12/31/07  
  15.647093    
 
    0.000       14.752371       6,674.444       12/31/06  
  15.228624    
 
    0.000       14.329012       5,142.497       12/31/05  
  14.752650    
 
    0.000       13.853286       2,009.888       12/31/04  
  14.270730    
 
    0.000       13.373842       1,396.144       12/31/03  
  13.767746    
 
    0.000       12.876914       1,029.422       12/31/02  
  12.949664    
 
    0.000       12.087792       0.000       12/31/01  
Morgan Stanley UIF Mid Cap Growth Portfolio-Class I (Inception Date 5/1/2007)
  9.291050    
 
    28.841       9.341289       0.000       12/31/09  
  5.949633    
 
    21.247       5.969766       421.177       12/31/08  
  11.284097    
 
    0.688       11.299357       0.000       12/31/07  

56


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Morgan Stanley UIF U.S. Real Estate Portfolio-Class I (Inception Date 7/15/1997)
  24.601334    
 
    716.093       23.708841       0.000       12/31/09  
  19.350719    
 
    454.136       18.611116       2,994.991       12/31/08  
  31.458353    
 
    214.591       30.194587       3,866.750       12/31/07  
  38.299964    
 
    185.446       36.686891       6,139.587       12/31/06  
  28.009655    
 
    166.868       26.776196       4,606.920       12/31/05  
  24.158129    
 
    115.611       23.047942       2,205.295       12/31/04  
  17.881625    
 
    69.022       17.025662       1,794.121       12/31/03  
  13.127169    
 
    28.392       12.474088       1,338.574       12/31/02  
  13.357067    
 
    215.533       12.667405       0.000       12/31/01  
Oppenheimer Balanced Fund/VA-Non-Service Series (Inception Date 12/1/2004)
  8.099333    
 
    1,591.194       8.182818       0.000       12/31/09  
  6.708361    
 
    946.650       6.763874       3,569.579       12/31/08  
  11.981564    
 
    461.906       12.056266       3,170.208       12/31/07  
  11.655797    
 
    21.039       11.704735       2,850.419       12/31/06  
  10.587241    
 
    21.039       10.610348       2,458.961       12/31/05  
  10.288407    
 
    21.039       10.290166       0.000       12/31/04  
Oppenheimer Capital Appreciation Fund/VA-Non-Service Series (Inception Date 12/1/2004)
  10.033347    
 
    2,109.767       10.136803       0.000       12/31/09  
  7.009156    
 
    1,311.073       7.067181       7,367.825       12/31/08  
  12.989159    
 
    199.412       13.070156       5,806.126       12/31/07  
  11.488852    
 
    0.000       11.537101       2,292.609       12/31/06  
  10.744687    
 
    0.000       10.768137       1,989.469       12/31/05  
  10.321144    
 
    0.000       10.322909       0.000       12/31/04  
Oppenheimer Main Street Fund®/VA-Non-Service Series (Inception Date 12/1/2004)
  9.918750    
 
    3,212.104       10.020970       0.000       12/31/09  
  7.805867    
 
    1,847.892       7.870435       3,712.440       12/31/08  
  12.808410    
 
    32.319       12.888223       1,512.291       12/31/07  
  12.384076    
 
    0.000       12.436042       53.947       12/31/06  
  10.869450    
 
    0.000       10.893157       24.847       12/31/05  
  10.354615    
 
    0.000       10.356388       0.000       12/31/04  
PIMCO VIT Real Return Portfolio-Administrative Class (Inception Date 12/1/2004)
  12.130221    
 
    105.835       12.255178       0.000       12/31/09  
  10.343841    
 
    0.000       10.429376       2,977.641       12/31/08  
  11.235886    
 
    0.000       11.305940       199.235       12/31/07  
  10.250872    
 
    0.000       10.293911       7.016       12/31/06  
  10.275393    
 
    0.000       10.297819       0.000       12/31/05  
  10.160349    
 
    0.000       10.162087       0.000       12/31/04  
PIMCO VIT Total Return Portfolio-Administrative Class (Inception Date 12/1/2004)
  13.287246    
 
    5,122.936       13.432336       0.000       12/31/09  
  11.759784    
 
    3,422.084       11.864286       2,400.209       12/31/08  
  11.328898    
 
    71.404       11.406504       933.906       12/31/07  
  10.516640    
 
    0.000       10.567262       35.340       12/31/06  
  10.223567    
 
    0.000       10.252148       3.738       12/31/05  
  10.074230    
 
    0.000       10.082128       0.000       12/31/04  

57


 

                                         
            Number of Group           Number of Group    
Group Contracts with       Contracts with   Group Contracts with   Contracts with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Templeton Foreign Securities Fund-Class 2 (Inception Date 5/1/2007)
  8.590188    
 
    751.094       8.636630       0.000       12/31/09  
  6.328334    
 
    173.635       6.349740       1,740.206       12/31/08  
  10.716349    
 
    22.401       10.730846       1,186.991       12/31/07  
Wilshire 2015 Moderate Fund (Inception Date 5/1/2007)
  8.962486    
 
    2,398.181       9.010889       0.000       12/31/09  
  7.517602    
 
    2,398.181       7.543013       0.000       12/31/08  
  10.038253    
 
    687.173       10.051838       0.000       12/31/07  
Wilshire 2025 Moderate Fund (Inception Date 5/1/2007)
  8.481629    
 
    0.000       8.527480       0.000       12/31/09  
  7.108474    
 
    0.000       7.132525       314.799       12/31/08  
  10.001167    
 
    0.000       10.014711       0.000       12/31/07  
Wilshire 2035 Moderate Fund (Inception Date 5/1/2007)
  7.885910    
 
    0.000       7.928539       0.000       12/31/09  
  6.586031    
 
    0.000       6.608316       506.673       12/31/08  
  9.951380    
 
    0.000       9.964857       0.000       12/31/07  
The above table gives year-end Accumulation Unit information for each Subaccount from the end of the year of inception (the Separate Account commencement date or the effective date of the Subaccount) to December 31, 2009. This information should be read in conjunction with the Separate Account financial statements including the notes to those statements. The beginning Accumulation Unit Value for the Dreyfus VIF Money Market Portfolio Subaccount was 1.000000 as of its inception date. The beginning Accumulation Unit Value for each other Subaccount was 10.000000 as of its inception date.
2010 Portfolio Changes — The table above reflects the name changes and transactions described below.
    On April 19, 2010, the Dreyfus Developing Leaders Portfolio, a series of the Dreyfus Variable Insurance Fund, changed its name to the Dreyfus Opportunistic Small Cap Portfolio.
 
    On May 1, 2010, the AIM portfolios changed their brand name to Invesco. For example, AIM V.I. Capital Development Fund became Invesco V.I. Capital Development Fund.
 
    On May 1, 2010, The Universal Institutional Funds, Inc. changed its brand name from Van Kampen to Morgan Stanley.
 
    On June 1, 2010 or as soon as practical after that date, Van Kampen’s U.S. Mid Cap Value Portfolio and Value Portfolio, which currently are series of The Universal Institutional Funds, Inc., will be merged into AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and change its brand name to Invesco Van Kampen. The list above reflects this anticipated transaction.

58


 

APPENDIX B: TRANSFER RESTRICTIONS
Restrictions on Transfers; Disruptive Trading, Market Timing and Frequent Transfers
We discourage (and will take action to deter) short-term trading in the Contracts because the frequent movement between or among Subaccounts may negatively impact other Contract Owners, Annuitants and Beneficiaries. Short-term trading can result in:
  the dilution of Accumulation Unit Values or Portfolio net asset values
 
  Portfolio advisors taking actions that negatively impact performance such as keeping a larger portion of the Portfolio assets in cash or liquidating investments prematurely in order to support redemption requests
 
  increased administrative costs due to frequent purchases and redemptions
To help protect Contract Owners, Annuitants and Beneficiaries from the negative impact of these practices, we have implemented several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. There is no guarantee that we will be able to detect harmful trading practices, or, if it is detected, to prevent recurrences.
U.S. Mail Restrictions on Persons Engaged in Harmful Trading Practices
We monitor transfer activity in order to identify those who may be engaged in harmful trading practices and we produce and examine transaction reports. Generally, a Contract may appear on these reports if the Contract Owner (or a third party acting on their behalf) engages in a certain number of “transfer events” in a given period. A “transfer event” is any transfer, or combination of transfers, occurring on a given trading day (Valuation Date). For example, multiple transfers by a Contract Owner involving 10 underlying Portfolios in one day count as one transfer event. A single transfer occurring on a given trading day and involving only 2 underlying Portfolios (or one underlying Portfolio if the transfer is made to or from the Fixed Account options) will also count as one transfer event. A transfer event would not include a transfer made pursuant to one of the automatic transfer programs such as dollar cost averaging, portfolio rebalancing and interest sweep.
As a result of this monitoring process, we may restrict the method of communication by which transfer requests will be accepted. In general, we will adhere to the following guidelines:
     
Trading Behavior   Our Response
 
6 or more transfer events in one quarter of a Contract Year
  We will mail a letter to the Contract Owner notifying the Contract Owner that:

(1)    we have identified the Contract Owner as a person engaging in harmful trading practices; and


(2)    if the Contract Owner’s transfer events exceed 12 in one Contract Year, we will automatically require the Contract Owner to submit transfer requests via regular first-class U.S. mail and we will not accept transfer requests from the Contract Owner that are sent by other means such as electronic means or overnight, priority or courier delivery.
 
More than 12
transfer events in
one Contract Year
  We will automatically require the Contract Owner to submit transfer requests via regular first-class U.S. mail and we will not accept transfer requests from the Contract Owner that are sent by any other means.
On each Contract Anniversary, we will start the monitoring anew, so that each Contract starts with zero transfer events the first day of each new Contract Year. See, however, the “Other Restrictions” provision below.
U.S Mail Restrictions on Managers of Multiple Contracts
Some investment advisors/representatives manage the assets of multiple Contracts pursuant to trading authority granted or conveyed by multiple Contract Owners. We generally will require these multi-contract advisors to submit all transfers requests via regular first-class U.S. mail.
The Company may permit a manager of multiple contracts to submit transfer requests other than by mail upon written request if contracts are managed independently rather than in the aggregate. The manager of multiple contracts must provide the Company with sufficient information regarding the management methodology to support the representation that aggregate transfers will not be an intended or unintended consequence of day to day management decisions. The

59


 

Company will monitor the contracts associated with the grant of any exception and, in the event a pattern of aggregate transactions emerges, again require transfer request via U.S. mail.
Other Restrictions
We reserve the right to refuse or limit transfer requests, or take any other action we deem necessary, in order to protect Contract Owners, Annuitants, and Beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some Contract Owners (or third parties acting on their behalf). In particular, trading strategies designed to avoid or take advantage of our monitoring procedures (and other measures aimed at curbing harmful trading practices) that are nevertheless determined by us to constitute harmful trading practices, may be restricted. We will consider the following factors:
  the dollar amount involved in the transfer event
 
  the total assets of the Portfolio involved in the transfer event
 
  the number of transfer events completed in the current quarter of the Contract Year
 
  whether the transfer event is part of a pattern of transfer events designed to take advantage of short-term market fluctuations or market efficiencies
In addition, the Portfolios reserve the right, in their sole discretion and without prior notice, to reject, restrict or refuse purchase orders received from insurance company separate accounts that the Portfolios determine not to be in the best interest of their shareholders. We will apply such rejections, restrictions or refusals by the Portfolios uniformly and without exception.
The restrictions discussed above are designed to prevent harmful trading practices. Despite such transfer restrictions, there is a risk that such harmful trading practices could still occur. If we determine our goal of curtailing harmful trading practices is not being fulfilled, we may amend or replace the procedures described above without prior notice. We will consider waiving the procedures described above for unanticipated financial emergencies; for example, if extent economic conditions arise such that the impact of short-term trading is benign or a positive, the Company may allow it.
Information Sharing
As required by Rule 22c-2 under the Investment Company Act of 1940, we have entered into information sharing agreements with Portfolio companies. Under the terms of these agreements, we are required, if requested by a Portfolio company:
    To provide Contract owner information and information about transactions in the Portfolio shares during a specified period; and
 
    To prohibit or restrict further purchases or exchanges by a Contract owner if the Portfolio company identifies the Contract owner as a person who has engaged in trading that violated the Portfolio company’s frequent trading policies.

60


 

ANNUITY INVESTORS LIFE INSURANCE COMPANYÒ
ANNUITY INVESTORSÒ VARIABLE ACCOUNT B
THE COMMODORE SPIRITÒ
THE COMMODORE ADVANTAGEÒ
AND THE COMMODORE INDEPENDENCEÒ
GROUP AND INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITIES
SUPPLEMENTAL PROSPECTUS DATED MAY 1, 2010
Annuity Investors Life Insurance Company (the “Company,” “we,” “our” or “us”) is providing you with this Supplemental Prospectus that supplements and should be read with the prospectus (“Contract Prospectus”) dated May 1, 2010, for either The Commodore Spirit®, The Commodore Advantage® or The Commodore Independence® Variable Annuity (the “Contract”). The Contract Prospectus contains details regarding your Contract. Please read the Contract Prospectus and this Supplemental Prospectus carefully and keep them for future reference. Unless otherwise indicated, terms used in this Supplemental Prospectus have the same meaning as in the Contract Prospectus.
This Supplemental Prospectus provides information you should know before making any decision to allocate purchase payments or transfer amounts to the subaccounts (collectively, the “Closed Subaccounts”) investing in the following Portfolios:
Invesco Variable Investment Funds+
-Invesco V.I. Dynamics Fund-Series I Shares
Janus Aspen Series
-Worldwide Portfolio-Institutional Shares
The Timothy Plan Variable Series
-Conservative Growth Variable Series
-Strategic Growth Variable Series
 
+ The full legal name of Invesco Variable Insurance Funds is AIM Variable Insurance Funds (Invesco Variable Insurance Funds).
The Invesco V.I. Dynamics Fund Closed Subaccount, the Janus Aspen Worldwide Growth Closed Subaccount, The Timothy Plan Conservative Growth Variable Series Closed Subaccount, and The Timothy Plan Strategic Growth Variable Series Closed Subaccount are additional investment options of the Contracts available only to Contract Owners who held Accumulation Units in these Subaccounts on November 30, 2004. Each of these investment options will become unavailable to you once you no longer have money in that Subaccount. Unless the context requires otherwise, all provisions of the Contract Prospectus are applicable to the Subaccounts described in this Supplemental Prospectus.
The Statement of Additional Information (“SAI”) dated May 1, 2010, contains more information about the Separate Account and the Contracts, including the Subaccounts. We filed the SAI with the Securities and Exchange Commission and it is legally part of the Contract Prospectus and this Supplemental Prospectus. The table of contents for the SAI is located on the last page of the Contract Prospectus. For a free copy, complete and return the form on the last page of the Contract Prospectus, or call us at 1-800-789-6771. You may also access the SAI and the other documents filed with the Securities and Exchange Commission about the Company, the Separate Account and the Contracts at the Securities and Exchange Commission’s website: http:\\www.sec.gov. The registration number for The Commodore Spirit® is 333-19725; The Commodore Advantage® is 333-51971; and The Commodore Independence® is 333-51955.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THE CONTRACT PROSPECTUS OR THIS SUPPLEMENTAL PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

1


 

You should rely only on the information contained in the Contract, the Contract Prospectus, this Supplemental Prospectus, the SAI, or our approved sales literature. The description of the Contract in the Contract Prospectus is subject to the specific terms of your Contract as it contains specific contractual provisions and conditions. If the terms of your Contract differ from those in the Contract Prospectus, you should rely on the terms in your Contract. No one is authorized to give any information or make any representation other than those contained in the Contract, the Contract Prospectus, this Supplemental Prospectus, the SAI or our approved sales literature.

These securities may be sold by a bank or credit union, but are not financial institution products.
§   The Contracts are not FDIC or NCUSIF insured
 
§   The Contracts are obligations of the Company and not of the bank or credit union
 
§   The bank or credit union does not guarantee the Company’s obligations under the Contracts
 
§   The Contracts involve investment risk and may lose value

2


 

EXPENSE TABLES
The “Table C: Total Annual Portfolio Operating Expenses” subsection and the “Expense Examples” subsection in this section of the Supplemental Prospectus differ from the corresponding tables in the Contract Prospectus. The following tables have been revised to include information with respect to each Closed Subaccount.
Table C: Total Annual Portfolio Operating Expenses
The next tables shows the minimum and maximum total operating expenses of the Portfolios, including those associated with the Closed Subaccounts, that you may pay periodically during the time that you own the Contract. These expenses are deducted from Portfolio assets and include management fees, distribution and service (12b-1) fees, acquired fund fees and other expenses. More detail concerning each Portfolio’s fees and expenses is contained in the prospecutss for that Portfolio.
                 
    Minimum   Maximum
Before any fee reduction or expense reimbursement
    2.08 %     0.29 %
After contractual fee reductions and/or expense reimbursements
    2.08 %     0.29 %
 
(1)   Contractual fee reductions and/or expense reimbursements related to a Portfolio will continue for a period that ends on a specific date. All contractual fee caps currently in place will end on April 30, 2011.
The information about Portfolio expenses that the Company used to prepare this table was provided to the Company by the Portfolios. The Company has not independently verified the Portfolio expense information. The minimum and maximum expenses shown in the table are for the year ended December 31, 2009, except as noted below. Actual expenses of a Portfolio in future years may be higher or lower.
The Portfolios in the Financial Investors Variable Insurance Trust, the Timothy Plan Variable Series and the Wilshire Variable Insurance Trust are structured as “fund of funds” and invest in other investment companies (“Acquired Funds”). As a result, each Ibbotson portfolio, each Timothy portfolio and each Wilshire portfolio will likely incur higher expenses than fund that invest directly in securities and you will effectively be paying a portion of the management fees and other expenses of the Acquired Funds..
The minimum expenses, both before and after any fee reduction and/or expense reimbursement, are the expenses of the Dreyfus Stock Index Fund, Inc.
The maximum expenses before and after fee reductions and/or expense reimbursements are the expenses of the Timothy Plan Strategic Growth Variable Series Fund.
Examples
Examples for The Commodore Advantage® Contract
These additional examples are intended to help you compare the cost of investing in the Advantage® Contract with the cost of investing in other variable annuity contracts. These costs include the Contract Owner transaction expenses (described in Table A of the Advantage® prospectus), the annual contract maintenance fee and the Separate Account expenses (described in Table B of the Advantage®), and Portfolio fees and expenses (described in Table C above). By comparing the costs shown in the tables below for each example, you can see the impact of early withdrawal charges on your costs. For an example of a Contract with Minimum Fund Operating Expenses, please see the Contract Prospectus.
Example 1: Contract with Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Advantage® Contract for the periods indicated and your investment has a 5% return each year.
 
  The annual contract maintenance fee ($30), the Separate Account annual expenses (1.40%), and the maximum Portfolio expenses (2.08%) are incurred.

3


 

In this table, we assume that you surrender your Advantage® Contract at the end of the period. We also assume that the applicable contingent deferred sales charge is incurred. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 1,186     $ 1,929     $ 2,676     $ 5,072  
After reimbursement
  $ 1,186     $ 1,929     $ 2,676     $ 5,072  
In this table, we assume that you keep your Advantage® Contract and leave your money in your Advantage® Contract for the entire period or you annuitize your Advantage® Contract at the end of the period. The contingent deferred sales charge does not apply in these situations. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 386     $ 1,229     $ 2,176     $ 5,072  
After reimbursement
  $ 386     $ 1,229     $ 2,176     $ 5,072  
By comparing the costs shown in the tables above, you can see the impact of contingent deferred sales charges on your costs.
Examples for The Commodore Independence® Contract
These additional examples are intended to help you compare the cost of investing in the Independence® Contract with the cost of investing in other variable annuity contracts. These costs include the Contract Owner transaction expenses (described in Table A of the Independence® prospectus), the annual contract maintenance fee and the Separate Account expenses (described in Table B of the Independence®), and Portfolio fees and expenses (described in Table C above). By comparing the costs shown in the tables below for each example, you can see the impact of early withdrawal charges on your costs. For an example of a Contract with Minimum Fund Operating Expenses, please see the Contract Prospectus.
Example 1: Contract with Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Independence® Contract for the periods indicated and your investment has a 5% return each year.
 
  The annual contract maintenance fee ($40), the Separate Account annual expenses (1.40%), and the maximum Portfolio expenses (2.08%) are incurred.
In this table, we assume that you surrender your Independence® Contract at the end of the period. We also assume that the applicable contingent deferred sales charge is incurred. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 396     $ 1,260     $ 2,227     $ 5,178  
After reimbursement
  $ 396     $ 1,260     $ 2,227     $ 5,178  
In this table, we assume that you keep your Independence® Contract and leave your money in your Independence® Contract for the entire period or you annuitize your Independence® Contract at the end of the period. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 396     $ 1,260     $ 2,227     $ 5,178  
After reimbursement
  $ 396     $ 1,260     $ 2,227     $ 5,178  
By comparing the costs shown in the tables above, you can see the impact of contingent deferred sales charges on your costs.
Examples for The Commodore Spirit® Contract
These additional examples are intended to help you compare the cost of investing in the Spirit® Contract with the cost of investing in other variable annuity contracts. These costs include the Contract Owner transaction expenses (described in

4


 

Table A of the Spirit® prospectus), the annual contract maintenance fee and the Separate Account expenses (described in Table B of the Spirit®), and Portfolio fees and expenses (described in Table C above). By comparing the costs shown in the tables below for each example, you can see the impact of early withdrawal charges on your costs. For an example of a Contract with Minimum Fund Operating Expenses, please see the Contract Prospectus.
Example 1: Contract with Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Spirit® Contract for the periods indicated and your investment has a 5% return each year.
 
  The annual contract maintenance fee of $30 and Separate Account annual expenses of 1.40% are incurred.
 
  The annual contract maintenance fee ($30), the maximum Separate Account annual expenses (1.40%), and the maximum Portfolio expenses (2.08%) are incurred.
In this table, we assume that you surrender your Spirit® Contract at the end of the period. We also assume that the applicable contingent deferred sales charge is incurred. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 1,086     $ 1,729     $ 2,476     $ 5,072  
After reimbursement
  $ 1,086     $ 1,729     $ 2,476     $ 5,072  
In this table, we assume that you keep your Spirit® Contract and leave your money in your Spirit® Contract for the entire period or you annuitize your Spirit® Contract at the end of the period. The contingent deferred sales charge does not apply in these situations. In this case, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 386     $ 1,229     $ 2,176     $ 5,072  
After reimbursement
  $ 386     $ 1,229     $ 2,176     $ 5,072  
By comparing the costs shown in the tables above, you can see the impact of contingent deferred sales charges on your costs.
FINANCIAL INFORMATION
The “Financial Information” section of each prospectus is supplemented as follows:
Condensed Financial Information
Appendix A to this Supplemental Prospectus provides condensed financial information for the Commodore Spirit®, the Commodore Advantage®, and the Commodore Independence® variable annuities with respect to each Closed Subaccount. This information includes the following information:
  year-end accumulation unit values for each Subaccount for each of the last 10 fiscal years through December 31, 2009, or from the end of the year of inception of a Subaccount, if later, to December 31, 2009; and
 
  number of accumulation units outstanding as of the end of each period.
THE PORTFOLIOS
The “Portfolios” section of each prospectus is supplemented as follows:
The Separate Account currently offers each of the Closed Subaccounts only to the Contract Owners who held Accumulation Units in such Closed Subaccount on the date it was closed to new investors (as indicated on the first page of this Supplemental Prospectus). Each Closed Subaccount invests in the corresponding Portfolio listed below, which has its own investment objectives, policies and practices. The current Portfolio prospectuses, which accompany this Supplemental Prospectus, contain additional information concerning the investment objectives and policies of the Portfolios, the investment advisory services and administrative services of the Portfolios, and the charges of the Portfolios.

5


 

You should read the Portfolio prospectuses and this Supplemental Prospectus carefully before making any decision concerning allocating additional purchase payments or transferring amounts to any of these Closed Subaccounts or the Subaccounts.
             
    SHARE        
PORTFOLIO   CLASS   ADVISOR   INVESTMENT CATEGORY
Invesco Variable Investment Funds+
           
Invesco V.I. Dynamics Fund
  Series I   Invesco Advisors, Inc.   Domestic equity: Mid cap growth
Janus Aspen Series
           
Worldwide Portfolio
  Institutional   Janus Capital Management LLC   International equity: World stock
The Timothy Plan Variable Series
           
Conservative Growth Variable Series
  N/A   Timothy Partners, Ltd.   Balanced: Moderate allocation
Strategic Growth Variable Series
  N/A   Timothy Partners, Ltd.   Domestic equity: Mid cap growth
 
+   The full legal name of Invesco Variable Insurance Funds is AIM Variable Insurance Funds (Invesco Variable Insurance Funds).

6


 

APPENDIX A: CONDENSED FINANCIAL INFORMATION
The tables below give year-end Accumulation Unit Information for the Commodore Spirit®, Commodore Advantage®, and Commodore Independence® variable annuities with respect to each Closed Subaccount for each of the last 10 fiscal years through December 31, 2009, or from the end of the year of inception of a Subaccount, if later, to December 31, 2009. The information should be read in conjunction with the Separate Account financial statements, including the notes to those statements. The beginning Accumulation Unit Value for each Closed Subaccount shown was 10.00000 as of its inception date.
The Commodore Spirit® (Current Contract)
                                                         
                                            Number of    
                                    Enhanced with   Enhanced with    
            Number of           Number of   Administration   Administration    
            Standard           Enhanced   Charges   Charges Waived    
Standard       Accumulation   Enhanced   Accumulation   Waived   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Invesco V.I. Dynamics Fund-Series I Shares (Inception Date 5/1/2001)                
  8.180679    
 
    44,201.169       8.397536       0.000       8.507936       190.206       12/31/09  
  5.824689    
 
    55,720.355       5.960938       0.000       6.030174       147.224       12/31/08  
  11.378261    
 
    91,372.086       11.608837       0.000       11.725794       112.020       12/31/07  
  10.287076    
 
    105,073.806       10.463499       0.000       10.552834       88.031       12/31/06  
  8.984924    
 
    75,896.111       9.111342       0.000       9.175262       60.280       12/31/05  
  8.229888    
 
    77,529.977       8.320433       0.000       8.366155       23.763       12/31/04  
  7.364205    
 
    63,086.332       7.422756       0.000       7.452291       0.000       12/31/03  
  5.417943    
 
    78,143.205       5.444887       0.000       5.458451       0.000       12/31/02  
  8.067308    
 
    93,275.876       8.083372       0.000       8.091444       0.000       12/31/01  
Janus Aspen Worldwide Portfolio-Institutional Shares (Inception Date 7/15/1997)                
  11.783409    
 
    902,705.882       12.232581       6,492.712       12.463098       267.565       12/31/09  
  8.678898    
 
    1,008,264.804       8.982374       6,153.773       9.137790       238.860       12/31/08  
  15.907143    
 
    1,161,307.113       16.413070       6,328.041       16.671615       214.662       12/31/07  
  14.717387    
 
    1,410,898.731       15.139123       8,089.661       15.354205       198.036       12/31/06  
  12.627182    
 
    1,622,445.152       12.949718       9,847.675       13.113864       180.878       12/31/05  
  12.096493    
 
    1,892,337.612       12.367909       10,895.424       12.505798       292.617       12/31/04  
  11.708282    
 
    2,099,555.231       11.934844       14,464.542       12.049706       277.111       12/31/03  
  9.574914    
 
    2,438,561.261       9.731344       10,650.649       9.810429       2,191.502       12/31/02  
  13.032840    
 
    2,364,153.929       13.206482       7,650.835       13.294015       2,191.502       12/31/01  
  17.039678    
 
    2,082,293.354       17.215191       5,014.610       17.303370       3,484.654       12/31/00  
The Timothy Plan Conservative Growth Variable Series (Inception Date 5/1/2002)                
  11.051517    
 
    267,285.063       11.310713       13.208       11.442288       0.00       12/31/09  
  9.127064    
 
    321,412.820       9.312776       13.208       9.406857       0.000       12/31/08  
  12.952754    
 
    455,222.276       13.176001       13.418       13.288878       0.000       12/31/07  
  12.081358    
 
    512,762.391       12.252064       13.418       12.338233       0.000       12/31/06  
  11.224446    
 
    572,609.363       11.348586       13.418       11.411149       0.000       12/31/05  
  10.806880    
 
    586,564.485       10.893329       175.420       10.936855       0.000       12/31/04  
  10.342389    
 
    348,794.768       10.393659       37.886       10.419451       0.000       12/31/03  
  8.916475    
 
    167,693.588       8.934171       0.200       8.943061       0.000       12/31/02  

7


 

                                                         
                                            Number of    
                                    Enhanced with   Enhanced with    
            Number of           Number of   Administration   Administration    
            Standard           Enhanced   Charges   Charges Waived    
Standard       Accumulation   Enhanced   Accumulation   Waived   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
The Timothy Plan Strategic Growth Variable Series (Inception Date 5/1/2002)                
  10.063779    
 
    347,592.943       10.299424       0.000       10.419061       0.000       12/31/09  
  7.882894    
 
    412,084.563       8.042976       0.000       8.124096       0.000       12/31/08  
  13.227039    
 
    518,810.234       13.454461       0.000       13.569466       0.000       12/31/07  
  12.181313    
 
    629,515.069       12.352932       0.000       12.439564       0.000       12/31/06  
  11.247959    
 
    673,218.784       11.371889       0.000       11.434368       0.000       12/31/05  
  10.772978    
 
    687,211.128       10.858721       0.000       10.901897       0.000       12/31/04  
  10.104822    
 
    408,637.294       10.154501       0.000       10.179502       0.000       12/31/03  
  8.194917    
 
    159,507.218       8.210855       0.000       8.218868       0.000       12/31/02  
The Commodore Spirit® (Contract with Death Benefit Rider No Longer Available*)
 
*   See The Commodore Spirit® Supplemental Prospectus dated May 1, 2010 regarding the Cancelled Death Benefit Rider for more information.
                                                         
                            Number of           Number of    
                            Optional           Optional    
                    Optional   Death Benefit   Optional   Death Benefit    
            Number of   Death Benefit   (issue age 65   Death Benefit   (issue age over    
            Standard   (issue age 65   and younger)   (issue age over   65/under 79)    
Standard       Accumulation   and younger)   Accumulation   65/under 79)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Invesco V.I. Dynamics Fund-Series I Shares (Inception Date 5/1/2001)                
  8.180679    
 
    44,201.169       8.109649       208.331       8.004270       0.000       12/31/09  
  5.824689    
 
    55,720.355       5.779978       188.518       5.713559       0.000       12/31/08  
  11.378261    
 
    91,372.086       11.302455       173.124       11.189694       0.000       12/31/07  
  10.287076    
 
    105,073.806       10.228974       157.523       10.142423       0.000       12/31/06  
  8.984924    
 
    75,896.111       8.943219       130.974       8.881025       0.000       12/31/05  
  8.229888    
 
    77,529.977       8.199982       100.281       8.155318       0.000       12/31/04  
  7.364205    
 
    63,086.332       7.344844       64.658       7.315884       0.000       12/31/03  
  5.417943    
 
    78,143.205       5.409027       24.686       5.395649       0.000       12/31/02  
  8.067308    
 
    93,275.876       8.061982       0.000       8.053984       0.000       12/31/01  
Janus Aspen Worldwide Portfolio-Institutional Shares (Inception Date 7/15/1997)                
  11.783409    
 
    902,705.882       11.637188       1,124.888       11.421722       0.000       12/31/09  
  8.678898    
 
    1,008,264.804       8.579906       2,591.601       8.433883       0.000       12/31/08  
  15.907143    
 
    1,161,307.113       15.741778       2,332.385       15.497595       0.000       12/31/07  
  14.717387    
 
    1,410,898.731       14.579256       2,270.609       14.375089       0.000       12/31/06  
  12.627182    
 
    1,622,445.152       12.521328       2,340.830       12.364730       0.000       12/31/05  
  12.096493    
 
    1,892,337.612       12.007224       2,503.457       11.875064       0.000       12/31/04  
  11.708282    
 
    2,099,555.231       11.633594       2,809.923       11.522959       0.000       12/31/03  
  9.574914    
 
    2,438,561.261       9.523209       2,621.610       9.446581       0.000       12/31/02  
  13.032840    
 
    2,364,153.929       12.975281       1,362.573       12.889939       0.000       12/31/01  
  17.039678    
 
    2,082,293.354       N/A       N/A       N/A       N/A       12/31/00  

8


 

                                                         
                            Number of           Number of    
                            Optional           Optional    
                    Optional   Death Benefit   Optional   Death Benefit    
            Number of   Death Benefit   (issue age 65   Death Benefit   (issue age over    
            Standard   (issue age 65   and younger)   (issue age over   65/under 79)    
Standard       Accumulation   and younger)   Accumulation   65/under 79)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
The Timothy Plan Conservative Growth Variable Series (Inception Date 5/1/2002)                
  11.051517    
 
    267,285.063       10.966451       3,013.278       10.840002       0.000       12/31/09  
  9.127064    
 
    321,412.820       9.066003       10,848.742       8.975117       0.000       12/31/08  
  12.952754    
 
    455,222.276       12.879212       10,816.707       12.769620       0.000       12/31/07  
  12.081358    
 
    512,762.391       12.025018       9,153.898       11.940953       0.000       12/31/06  
  11.224446    
 
    572,609.363       11.183411       4,407.021       11.122095       0.000       12/31/05  
  10.806880    
 
    586,564.485       10.778271       4,590.387       10.735463       0.000       12/31/04  
  10.342389    
 
    348,794.768       10.325409       7,343.039       10.299964       0.000       12/31/03  
  8.916475    
 
    167,693.588       8.910599       1,125.801       8.901785       0.000       12/31/02  
The Timothy Plan Strategic Growth Variable Series (Inception Date 5/1/2002)                
  10.063779    
 
    347,592.943       9.986399       144.314       9.871459       0.000       12/31/09  
  7.882894    
 
    412,084.563       7.830225       245.679       7.751894       0.000       12/31/08  
  13.227039    
 
    518,810.234       13.152081       208.850       13.040454       0.000       12/31/07  
  12.181313    
 
    629,515.069       12.124648       175.753       12.040151       0.000       12/31/06  
  11.247959    
 
    673,218.784       11.206981       140.480       11.145787       0.000       12/31/05  
  10.772978    
 
    687,211.128       10.744596       590.905       10.702146       0.000       12/31/04  
  10.104822    
 
    408,637.294       10.088364       3,195.360       10.063711       0.000       12/31/03  
  8.194917    
 
    159,507.218       8.189622       4,019.666       8.181687       0.000       12/31/02  
The Commodore Independence® (Current Contract)
                                                         
                            Number of           Number of    
                            Group Contract           Group Contract    
                    Group Contract   (1.10% Total   Group Contract   (0.90% Total    
            Number of   (1.10% Total   Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Invesco V.I. Dynamics Fund-Series I Shares (Inception Date 5/1/2001)                
  8.180679    
 
    44,201.169       8.397536       0.000       8.544938       0.000       12/31/09  
  5.824689    
 
    55,720.355       5.960938       0.000       6.053343       0.000       12/31/08  
  11.378261    
 
    91,372.086       11.608837       0.000       11.764863       0.000       12/31/07  
  10.287076    
 
    105,073.806       10.463499       0.000       10.582630       0.000       12/31/06  
  8.984924    
 
    75,896.111       9.111342       0.000       9.196547       0.000       12/31/05  
  8.229888    
 
    77,529.977       8.320433       0.000       8.381370       0.000       12/31/04  
  7.364205    
 
    63,086.332       7.422756       0.000       7.462101       7.139       12/31/03  
  5.417943    
 
    78,143.205       5.444887       0.000       5.462949       0.000       12/31/02  
  8.067308    
 
    93,275.876       8.083372       0.000       8.094120       0.000       12/31/01  

9


 

                                                         
                            Number of           Number of    
                            Group Contract           Group Contract    
                    Group Contract   (1.10% Total   Group Contract   (0.90% Total    
            Number of   (1.10% Total   Separate   (0.90% Total   Separate    
            Individual   Separate   Account   Separate   Account    
Individual       Contract   Account   Expenses)   Account   Expenses)    
Contract       Accumulation   Expenses)   Accumulation   Expenses)   Accumulation    
Accumulation       Units   Accumulation   Units   Accumulation   Units    
Unit Value       Outstanding   Unit Value   Outstanding   Unit Value   Outstanding   Year
Janus Aspen Worldwide Portfolio-Institutional Shares Inception Date 7/15/1997)                
  11.783409    
 
    902,705.882       12.232581       6,492.712       9.567083       0.000       12/31/09  
  8.678898    
 
    1,008,264.804       8.982374       6,153.773       7.010936       0.000       12/31/08  
  15.907143    
 
    1,161,307.113       16.413070       6,328.041       12.784750       0.000       12/31/07  
  14.717387    
 
    1,410,898.731       15.139123       8,089.661       11.768528       0.000       12/31/06  
  12.627182    
 
    1,622,445.152       12.949718       9,847.675       10.046327       0.000       12/31/05  
  12.096493    
 
    1,892,337.612       12.367909       10,895.424       9.575676       0.000       12/31/04  
  11.708282    
 
    2,099,555.231       11.934844       14,464.542       9.221822       46,144.266       12/31/03  
  9.574914    
 
    2,438,561.261       9.731344       10,650.649       7.504379       39,742.411       12/31/02  
  13.032840    
 
    2,364,153.929       13.206482       7,650.835       10.164080       32,752.139       12/31/01  
  17.039678    
 
    2,082,293.354       N/A       N/A       N/A       N/A       12/31/00  
The Timothy Plan Conservative Growth Variable Series (Inception Date 5/1/2002)                
  11.051517    
 
    267,285.063       11.310713       13.208       11.486379       0.000       12/31/09  
  9.127064    
 
    321,412.820       9.312776       13.208       9.438349       0.000       12/31/08  
  12.952754    
 
    455,222.276       13.176001       13.418       13.326634       0.000       12/31/07  
  12.081358    
 
    512,762.391       12.252064       13.418       12.367019       0.000       12/31/06  
  11.224446    
 
    572,609.363       11.348586       13.418       11.432023       0.000       12/31/05  
  10.806880    
 
    586,564.485       10.893329       175.420       10.951356       0.000       12/31/04  
  10.342389    
 
    348,794.768       10.393659       37.886       10.428026       0.000       12/31/03  
  8.916475    
 
    167,693.588       8.934171       0.200       8.946009       0.000       12/31/02  
The Timothy Plan Strategic Growth Variable Series (Inception Date 5/1/2002)                
  10.063779    
 
    347,592.943       10.299424       0.000       10.459135       0.000       12/31/09  
  7.882894    
 
    412,084.563       8.042976       0.000       8.151231       0.000       12/31/08  
  13.227039    
 
    518,810.234       13.454461       0.000       13.607903       0.000       12/31/07  
  12.181313    
 
    629,515.069       12.352932       0.000       12.468482       0.000       12/31/06  
  11.247959    
 
    673,218.784       11.371889       0.000       11.455183       0.000       12/31/05  
  10.772978    
 
    687,211.128       10.858721       0.000       10.916251       0.000       12/31/04  
  10.104822    
 
    408,637.294       10.154501       0.000       10.187798       0.000       12/31/03  
  8.194917    
 
    159,507.218       8.210855       0.000       8.221523       0.000       12/31/02  

10


 

                                         
            Number of Group     Number of Group    
Group Contract with       Contract with   Group Contract with   Contract with    
Administration charges       Administration charges   Administration charges   Administration charges    
waived (0.95% Total       waived (0.95% Total   waived (0.75% Total   waived (0.75% Total    
Separate Account       Separate Account   Separate Account   Separate Account    
Expenses)       Expenses)   Expenses)   Expenses)    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Invesco V.I. Dynamics Fund-Series I Shares (Inception Date 5/1/2001)
  8.507936    
 
    190.206       8.657206       0.000       12/31/09  
  6.030174    
 
    147.224       6.123616       137.983       12/31/08  
  11.725794    
 
    112.020       11.883356       137.993       12/31/07  
  10.552834    
 
    88.031       10.672996       122.199       12/31/06  
  9.175262    
 
    60.280       9.261113       111.545       12/31/05  
  8.366155    
 
    23.763       8.427490       63.240       12/31/04  
  7.452291    
 
    0.000       7.491858       57.208       12/31/03  
  5.458451    
 
    0.000       5.476583       18.335       12/31/02  
  8.091444    
 
    0.000       8.102202       0.000       12/31/01  
Janus Aspen Worldwide Portfolio-Institutional Shares Inception Date 7/15/1997)
  12.463098    
 
    267.565       9.732872       0.000       12/31/09  
  9.137790    
 
    238.860       7.121653       3,191.505       12/31/08  
  16.671615    
 
    214.662       12.966900       2,734.959       12/31/07  
  15.354205    
 
    198.036       11.918070       2,527.467       12/31/06  
  13.113864    
 
    180.878       10.158682       2,571.733       12/31/05  
  12.505798    
 
    292.617       9.668184       2,190.387       12/31/04  
  12.049706    
 
    277.111       9.296883       2,169.871       12/31/03  
  9.810429    
 
    2,191.502       7.554217       1,573.229       12/31/02  
  13.294015    
 
    2,191.502       10.216331       0.000       12/31/01  
The Timothy Plan Conservative Growth Variable Series (Inception Date 5/1/2002)
  11.442288    
 
    0.000       11.619853       0.000       12/31/09  
  9.406857    
 
    0.000       9.533610       2,295.238       12/31/08  
  13.288878    
 
    0.000       13.440722       4,102.160       12/31/07  
  12.338233    
 
    0.000       12.453961       4,166.020       12/31/06  
  11.411149    
 
    0.000       11.495051       2,663.055       12/31/05  
  10.936855    
 
    0.000       10.995154       133.936       12/31/04  
  10.419451    
 
    0.000       10.453956       6.078       12/31/03  
  8.943061    
 
    0.000       8.954924       0.000       12/31/02  
The Timothy Plan Strategic Growth Variable Series (Inception Date 5/1/2002)
  10.419061    
 
    0.000       10.580473       0.000       12/31/09  
  8.124096    
 
    0.000       8.233353       277.991       12/31/08  
  13.569466    
 
    0.000       13.724129       225.416       12/31/07  
  12.439564    
 
    0.000       12.555889       182.582       12/31/06  
  11.434368    
 
    0.000       11.518110       132.752       12/31/05  
  10.901897    
 
    0.000       10.959701       70.404       12/31/04  
  10.179502    
 
    0.000       10.212939       30.285       12/31/03  
  8.218868    
 
    0.000       8.229559       0.000       12/31/02  

11


 

The Commodore Advantage® (Current Contract)
                                         
                            Number of    
                    Standard with   Standard with    
            Number of   Administration   Administration    
Standard       Standard   Charges Waived   Charges Waived    
Accumulation Unit       Accumulation Units   Accumulation Unit   Accumulation Units    
Value       Outstanding   Value   Outstanding   Year
Invesco V.I. Dynamics Fund-Series I Shares (Inception Date 5/1/2001)
  8.180679    
 
    44,201.169       8.288477       0.000       12/31/09  
  5.824689    
 
    55,720.355       5.892457       0.000       12/31/08  
  11.378261    
 
    91,372.086       11.493024       0.000       12/31/07  
  10.287076    
 
    105,073.806       10.374943       0.000       12/31/06  
  8.984924    
 
    75,896.111       9.047929       0.000       12/31/05  
  8.229888    
 
    77,529.977       8.275039       0.000       12/31/04  
  7.364205    
 
    63,086.331       7.393411       0.000       12/31/03  
  5.417943    
 
    78,143.205       5.431395       0.000       12/31/02  
  8.067308    
 
    93,275.876       8.075340       0.000       12/31/01  
Janus Aspen Worldwide Portfolio-Institutional Shares)(Inception Date 7/15/1997)
  11.783409    
 
    902,705.882       9.191218       9,612.559       12/31/09  
  8.678898    
 
    1,008,264.804       6.759364       9,612.550       12/31/08  
  15.907143    
 
    1,161,307.113       12.369963       9,914.578       12/31/07  
  14.717387    
 
    1,410,898.731       11.427272       9,745.222       12/31/06  
  12.627182    
 
    1,622,445.152       9.789468       17,865.960       12/31/05  
  12.096493    
 
    1,892,337.612       9.363811       18,261.241       12/31/04  
  11.708282    
 
    2,099,555.231       9.049605       17,208.944       12/31/03  
  9.574914    
 
    2,438,561.261       7.389719       10,530.938       12/31/02  
  13.032840    
 
    2,364,153.929       10.043546       0.000       12/31/01  
  17.039678    
 
    2,082,293.354       N/A       N/A       12/31/00  
The Timothy Plan Conservative Growth Variable Series (Inception Date 5/1/2002)
  11.051517    
 
    267,285.063       11.180501       0.000       12/31/09  
  9.127064    
 
    321,412.820       9.219554       0.000       12/31/08  
  12.952754    
 
    455,222.276       13.064018       0.000       12/31/07  
  12.081358    
 
    512,762.391       12.166498       0.000       12/31/06  
  11.224446    
 
    572,609.363       11.286400       856.937       12/31/05  
  10.806880    
 
    586,564.485       10.850052       619.421       12/31/04  
  10.342389    
 
    348,794.768       10.368005       0.000       12/31/03  
  8.916475    
 
    167,693.588       8.925318       0.000       12/31/02  
The Timothy Plan Strategic Growth Variable Series (Inception Date 5/1/2002)
  10.063779    
 
    347,592.943       10.181022       0.000       12/31/09  
  7.882894    
 
    412,084.563       7.962596       0.000       12/31/08  
  13.227039    
 
    518,810.234       13.340344       0.000       12/31/07  
  12.181313    
 
    629,515.069       12.266874       0.000       12/31/06  
  11.247959    
 
    673,218.784       11.309780       0.000       12/31/05  
  10.772978    
 
    687,211.128       10.815763       0.000       12/31/04  
  10.104822    
 
    408,637.294       10.129626       0.000       12/31/03  
  8.194917    
 
    159,507.218       8.202876       0.000       12/31/02  

12


 

ANNUITY INVESTORS LIFE INSURANCE COMPANY®
ANNUITY INVESTORS® VARIABLE ACCOUNT B
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITIES
SUPPLEMENTAL PROSPECTUS DATED MAY 1, 2010 FOR
CONTRACTS ISSUED BEFORE JUNE 1, 2009
Commodore Advantage® Contracts
Commodore Independence® Contracts
Commodore Spirit® Contracts
GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER
GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER
This supplemental prospectus provides information about the Guaranteed Lifetime Withdrawal Benefit Rider and the Guaranteed Minimum Withdrawal Benefit Rider (each, a “Rider” and together, the “Riders”). The Riders are available with the Commodore Advantage®, Commodore Independence® and Commodore Spirit® Contracts issued before June 1, 2009 (each, a “Contract” and together, the “Contracts”).

This Supplemental Prospectus applies to Contracts issued before June 1, 2009.

If your Contract effective date is before June 1, 2009, the Riders are included with your Contract and you should read this supplemental prospectus carefully and keep it for future reference. Your Contract effective date is set out on your Contract specifications page.
This Supplemental Prospectus does not apply to Contracts issued on or after June 1, 2009.

If your Contract effective date is on or after June 1, 2009, the Riders are not included with your Contract and this supplemental prospectus does not apply to your Contract. Your Contract effective date is set out on your Contract specifications page.
The Riders may not be available in all states. For additional information about the availability of the Riders, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771.
This supplemental prospectus supplements and should be read with the prospectus dated May 1, 2010, for your Contract. Unless otherwise indicated, terms used in this supplemental prospectus have the same meaning as in your Contract prospectus.
The Statement of Additional Information (“SAI”) dated May 1, 2010, contains more information about the Separate Account and the Contracts. We filed the SAI with the Securities and Exchange Commission (SEC) and it is legally part of the Contract prospectuses and this supplemental prospectus. The table of contents for the SAI is located on the last page of each Contract prospectus. For a free copy of the SAI, complete and return the form on the last page of the Contract prospectus, or call us at 1-800-789-6771. You may also access the SAI and the other documents filed with the SEC about the Company, the Separate Account and the Contracts at the SEC’s website: http:\\www.sec.gov. The registration number for each Contract is set out below.
         
Commodore Advantage® Contract
    333-51971  
 
Commodore Independence® Contract
    333-51955  
 
Commodore Spirit® Contract
    333-19725  
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THE CONTRACT PROSPECTUSES OR THIS SUPPLEMENTAL PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

1


 

No one is authorized to give any information or make any representation about the Riders other than those contained in this supplemental prospectus or our approved sales literature. You should rely only on Rider information contained in the applicable Rider, this supplemental prospectus, or our approved sales literature. The description of the Riders in this supplemental prospectus is subject to the specific terms of the Riders as they contain specific contractual provisions and conditions. If the terms of the Riders issued with your Contract differ from those in this supplemental prospectus, you should rely on the terms of the Riders issued with your Contract.

  The Contracts may be sold by a bank or credit union, but they are not a deposit or obligation of the bank or credit union or guaranteed by the bank or credit union.
 
  The Contracts are not FDIC or NCUSIF insured.
 
  The Contracts involve investment risk and may lose value.

2


 

SUPPLEMENT TO EXPENSE TABLES
The following information supplements the Separate Account Annual Expenses table in your Contract prospectus.
                 
    Current   Maximum
Guaranteed Lifetime Withdrawal Benefit Rider Charge
    0.55 %     1.20 %
Guaranteed Lifetime Withdrawal Benefit Rider with Spousal Continuation Charge
    0.70 %     1.20 %
Guaranteed Minimum Withdrawal Benefit Rider Charge
    0.40 %     1.00 %
Rider charges are assessed only if you activate the Rider. Rider charges are assessed against the Benefit Base Amount determined under the Rider. The Benefit Base Amount starts with the Account Value of the Contract on the date that the Rider is activated. However, after activation, the Benefit Base Amount will not reflect income, gains, or losses in your Account Value unless you elect to reset the Benefit Base Amount. After a Rider is activated, withdrawals from the Contract other than to pay Rider charges or Rider Benefits will reduce the Benefit Base Amount by the same percentage as the percentage reduction in the Account Value. See the Guaranteed Living Withdrawal Benefit and Guaranteed Minimum Withdrawal Benefit sections of this prospectus.
Only one of these optional Riders may be activated and in effect at any point in time.
  If you choose to activate the Guaranteed Lifetime Withdrawal Benefit Rider, it will provide a lifetime withdrawal benefit, up to a certain amount each benefit year.
 
  If you choose to activate the Guaranteed Minimum Withdrawal Benefit Rider, it will provide a minimum withdrawal benefit, up to a certain amount each benefit year.
You cannot activate either of these Riders if in the future we are no longer issuing that Rider with any new annuity contracts and we prohibit further activations on a nondiscriminatory basis.
If you activate one of these Riders, your investment options will be limited to certain designated Subaccounts.
Guaranteed withdrawal benefit rider charges are assessed only if you activate one of these optional Riders. Rider charges are calculated as a percentage of the Benefit Base Amount determined under the Rider.
The Benefit Base Amount starts with the Account Value of your Contract on the date that the Rider is activated. However, after activation, the Benefit Base Amount will not reflect income, gains, or losses in your Account Value unless you elect to reset the Benefit Base Amount.
After a Rider is activated, “excess withdrawals” from your Contract will reduce the Benefit Base Amount by the same percentage as the percentage reduction in the Account Value. “Excess withdrawals” can adversely affect the benefit provided by these Riders.
The current charges set out in the table are the Rider charges as of May 1, 2010. We may change the charge for your Rider at any time or times that:
  you activate the Rider if you activate it on a date other than the Rider Issue Date;
 
  you elect to reset the Benefit Base Amount; or
 
  you take an Excess Withdrawal.

3


 

SUPPLEMENT TO EXAMPLES FOR COMMODORE ADVANTAGE® CONTRACTS
The following information supplements the Examples section in the Commodore Advantage® Contract prospectus.
Example for Contract with Optional Benefit Rider and Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
 
  You activate the Guaranteed Lifetime Withdrawal Benefit with Spousal Continuation when you purchase your Contract and the maximum rider charge of 1.20% is incurred.
 
  The annual contract maintenance fee of $30 and Separate Account annual expenses of 1.40% are incurred.
 
  The maximum Portfolio expenses before reimbursement (1.37%) or after reimbursement (1.31%) are incurred.
 
  Table #1 assumes that you surrender your Contract at the end of the indicated period and the applicable contingent deferred sales charge is incurred.
 
  Table #2 assumes that you annuitize your Contract at the end of the indicated period or you keep your Contract and leave your money in your Contract for the entire period.
  (1)   If you surrender your Contract at the end of the period, your costs will be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 1,237     $ 2,086     $ 2,943     $ 5,633  
After reimbursement
  $ 1,231     $ 2,068     $ 2,912     $ 5,672  
  (2)   If you annuitize your Contract at the end of the period or keep your Contract for the entire period, your costs will be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 437     $ 1,386     $ 2,493     $ 5,633  
After reimbursement
  $ 431     $ 1,368     $ 2,462     $ 5,569  
SUPPLEMENT TO EXAMPLES FOR COMMODORE INDEPENDENCE® CONTRACTS
The following information supplements the Examples section in the Commodore Independence® Contract prospectus.
Example for Contract with Optional Benefit Rider and Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
 
  You activate the Guaranteed Lifetime Withdrawal Benefit with Spousal Continuation Rider when you purchase your Contract and the maximum Rider charge of 1.20% is incurred.
 
  The annual contract maintenance fee of $40 and Separate Account annual expenses of 1.40% are incurred.
 
  The maximum Portfolio expenses before reimbursement (1.37%) or after reimbursement (1.31%) are incurred.
If you surrender or annuitize your Contract at the end of the period, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 447     $ 1,416     $ 2,493     $ 5,736  
After reimbursement
  $ 441     $ 1,398     $ 2,462     $ 5,672  

4


 

SUPPLEMENT TO EXAMPLES FOR COMMODORE SPIRIT® CONTRACTS
The following information supplements the Examples section in the Commodore Spirit® Contract prospectus.
Example for Contract with Optional Benefit Rider and Maximum Fund Operating Expenses
Assumptions
  You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
 
  You activate the Guaranteed Lifetime Withdrawal Benefit with Spousal Continuation when you purchase your Contract and the maximum rider charge of 1.20% is incurred.
 
  The annual contract maintenance fee of $30 and Separate Account annual expenses of 1.40% are incurred.
 
  The maximum Portfolio expenses before reimbursement (1.37%) or after reimbursement (1.31%) are incurred.
 
  Table #1 assumes that you surrender your Contract at the end of the indicated period and the applicable contingent deferred sales charge is incurred.
 
  Table #2 assumes that you annuitize your Contract at the end of the indicated period or you keep your Contract and leave your money in your Contract for the entire period.
  (1)   If you surrender your Contract at the end of the period, your costs would be:
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 1,137     $ 1,886     $ 2,743     $ 5,633  
After reimbursement
  $ 1,131     $ 1,868     $ 2,712     $ 5,569  
  (2)   If you annuitize your Contract at the end of the period or keep your Contract for the entire period:, your cost would be
                                 
    1 year   3 years   5 years   10 years
Before reimbursement
  $ 437     $ 1,386     $ 2,443     $ 5,633  
After reimbursement
  $ 431     $ 1,368     $ 2,412     $ 5,569  

5


 

OVERVIEW
The chart below provides a simple comparison of the general characteristics of the basic Riders.
         
    Guaranteed Lifetime Withdrawal Benefit   Guaranteed Minimum Withdrawal Benefit
    Lifetime GRIP   PayPlan
What benefit does this Rider provide?
  This Rider provides a lifetime withdrawal Benefit, up to a certain amount each Benefit Year, even after the Contract value is zero.   This Rider provides a minimum withdrawal Benefit, up to a certain amount each Benefit Year, even after the Contract value is zero.
 
       
When do Benefit Payments begin?
  We will make Benefit payments upon your Written Request. The Insured must be at least 55 years old on the Benefit Start Date to receive a Benefit under the Rider.   We will make Benefit payments upon your Written Request.
 
       
How much are the Benefit Payments?
  The annual Benefit amount is a percentage of the Benefit Base Amount on the payment date. The percentage is based on the Insured’s age on Benefit Start Date as follows:   The annual Benefit amount is 5% of the Benefit Base Amount on the payment date.
 
 
 
   4% if the Insured is under age 60
   
 
 
 
   5% if the Insured is age 60 or older
   
 
       
When do Benefit Payments end?
  Generally, all rights to take Benefit payments end when the Insured dies.   Your right to take Benefit payments will continue until the total Benefit payments equal the Benefit Base Amount. This is not a fixed period.
 
       
How much does the Rider cost?
  The current charge for the Lifetime GRIP Rider for each Contract Year is 0.65% of the Benefit Base Amount.   The current charge for the PayPlan Rider for each Contract Year is 0.40% of the Benefit Base Amount.
GUARANTEED LIFETIME WITHDRAWAL BENEFIT
Introduction
We offer a Guaranteed Lifetime Withdrawal Benefit through a rider (the “Rider”) to this Contract. If you choose to activate the Rider, it will provide a lifetime withdrawal Benefit, up to a certain amount each Benefit Year, even after the Contract value is zero. The Insured must be at least 55 years old on the Benefit Start Date to receive a Benefit under the Rider.
         
ü
  Benefit   A guaranteed withdrawal benefit that is available under the Benefits section of the Rider.
 
       
ü
  Benefit Base Amount   The amount on which Rider charges and Benefit payments are based.
 
       
ü
  Benefit Start Date   The first day that a Benefit under the Rider is to be paid.
 
       
ü
  Benefit Year   A 12 month period beginning on the Benefit Start Date or on an anniversary of the Benefit Start Date.
 
       
ü
  Excess Withdrawal   (1) A withdrawal from the Contract after the Rider Effective Date and before the Benefit Start Date or (2) a withdrawal from the Contract on or after the Benefit Start Date to the extent that the withdrawal exceeds the Benefit amount that is available on the date of payment. A withdrawal to pay Rider charges is never considered an Excess Withdrawal.
 
       
ü
  Designated Subaccount   Each Subaccount that we designate from time to time to hold Contract values on which Benefits may be based.
 
       
ü
  Insured   The person whose lifetime is used to measure the Benefits under the Rider. The Insured is set out on the Rider specifications page. The Insured cannot be changed after the issue date of the Rider as shown on the Rider specifications page.
 
       
ü
  Rider Anniversary   The date in each year that is the annual anniversary of the Rider Effective Date.

6


 

         
ü
  Rider Effective Date   The Contract Effective Date or Contract Anniversary on which the Rider is activated.
 
       
ü
  Rider Year   Each 12 month period that begins on the Rider Effective Date or a Rider Anniversary.
 
       
ü
  Written Request   Information provided to us or a request made to use that is (1) complete and satisfactory to us and (2) on our form or in a manner satisfactory to us and (3) received by us at our Administrative Office.
Activation of the Rider
You may elect to activate the Rider on the Contract effective date or on any Contract Anniversary. To activate the Rider, you must make a written request before the date on which the Rider is to take effect. The Ride is not effective until you activate it. If you activate the Rider on a date other than the Rider Issue Date, we may change the charge for your Rider.
At the time of activation, you may elect to activate the Spousal Benefit.
Once the Rider is activated, you may not participate in the dollar cost averaging program otherwise available under the Contract.
You cannot activate the Rider
  if the Contract is a tax-qualified contract and, on the Rider Effective Date, you will be 81 years old or older (or the Annuitant will be 81 years old or older if the Contract is owned by a plan sponsor or trustee);
 
  if the Contract is a non-tax-qualified contract and, on the Rider Effective Date, you or the joint owner, if any, will be 86 years old or older (or the Annuitant will be 86 years old or older if you or a joint owner is not a human being);
 
  if the Guaranteed Minimum Withdrawal Benefit Rider is in effect;
 
  an event has occurred that would terminate the Rider; or
 
  if in the future we are no longer issuing the Rider with any new annuity contracts and we prohibit further activations on a nondiscriminatory basis.
We are no longer issuing the Rider but, if we issued the Rider with your Contract, you may activate it subject to the restrictions set out above. We will notify you if we prohibit further activations. You may decline the Rider at any time by Written Request.
Ø   The Rider may not be available in all states and may not be available with Contracts issued before September 7, 2007. If your Contract was issued in connection with an employer plan, the availability of the Rider may be restricted. For additional information about the availability of the Rider, contact us at our Administrative Office, P.O. Box 5423, Cincinnati OH 45201-5423, 1-800-789-6771.
Some Factors to Consider Before You Activate the Rider
If you activate the Rider, certain restrictions on investment options and withdrawals apply. These restrictions are designed to minimize the possibility that your Account Value will be reduced to zero before your death and, as a result, the possibility that we will be required to make Benefit payments under the Rider from our general account. Unless your Account Value is reduced to zero, Benefit payments are made from your Account Value. If your Account Value is reduced to zero, then Benefits payments are made from our general account. Any Benefit payments under the Rider that we make from our general account are subject to our financial strength and claims-paying ability.
To maximize your potential to receive Benefit payments under the Rider, you should not take any Excess Withdrawals. Due to the long-term nature of an annuity contract, there is a possibility that you may need to take withdrawals, in excess of the Benefit payments under the Rider, to meet your living expenses. Excess Withdrawals will reduce, and could eliminate, Benefit payments under the Rider and may increase the Rider charges.
If you receive Benefit payments under the Rider, there is a possibility that the total Benefit payments under the Rider will be less than the Rider charges that you paid. We will not refund the Rider charges that you pay even if you choose never to take any Benefit payments under the Rider, you never receive any Benefit payments under the Rider, or all Benefit payments under the Rider are made from your Account Value.

7


 

Certain qualified contracts may have restrictions that limit the benefit of the Rider.
Before activating the Rider, you should carefully consider the charges, limitations, restrictions and risks associated with the Rider as well as your personal circumstances. It may not be appropriate for you to activate the Rider if:
  you plan on taking Excess Withdrawals from your Contract;
 
  you do not plan to take Benefit payments under the Rider for a significant period of time; or
 
  you are interested in maximizing the annuity benefit, the death benefit, or the tax-deferral nature of your Contract.
Consult your tax advisor and registered representative or other financial professional before you activate the Rider.
Rider Charge
In exchange for the ability to receive Benefits for life, we will assess an annual charge not to exceed 1.20% of the current Benefit Base Amount. The Rider charge offsets expenses that we incur in administering the Rider and compensates us for assuming the mortality and expense risks under the Rider. Currently, the charge is 0.55% of the current Benefit Base Amount. After the Rider is activated, the charge for your Rider will not change except under the circumstances described in “Reset Opportunities” below.
We will assess the Rider charge on each Rider Anniversary. We will also assess a prorated charge upon surrender of the Contract or termination of the Rider. We will take the Rider charge by withdrawing amounts proportionally from each Designated Subaccount (as discussed below) to which you have allocated your Account Value at the time the charge is taken.
Designated Subaccounts
Before the Rider Effective Date, you must transfer your Account Value to one or more Designated Subaccount(s) that you select. The required transfers must be made by Written Request. If you do not make the required transfers, we will reject your request to activate the Rider.
Ø   Please review the explanation of a Written Request in the Definitions section of this prospectus.
The Designated Subaccounts are listed below.
Ibbotson Balanced ETF Asset Allocation Portfolio-Class II
Ibbotson Conservative ETF Asset Allocation Portfolio-Class II
Ibbotson Growth ETF Asset Allocation Portfolio-Class II
Ibbotson Income and Growth ETF Asset Allocation Portfolio-Class II
We reserve the right to change the Designated Subaccounts. If you have activated the Rider and it is in effect, any such change will not require a transfer of existing funds; however, such a change would prevent future allocations and transfers to a Subaccount that is no longer a designated Subaccount. We will send you a written notice of any change in the Designated Subaccounts.
Ø   Additional information about the Designated Subaccounts is located in The Portfolios section of the Contract prospectus.
The Designated Subaccounts are generally designed to provide consistent returns by minimizing risk. In minimizing risk, the Designated Subaccounts may also limit the potential for investment return. Consult your registered representative or other financial professional to assist you in determining whether the Designated Subaccounts provide investment options that are suited to your financial needs and risk tolerance.
Following the Rider Effective Date, you may reallocate your Account Value among the Designated Subaccounts in accordance with the Transfer provisions of the Contract.
Impact of the Rider on the Contract
Following the Rider Effective Date, we may decline to accept Purchase Payments to the Contract in excess of $50,000 per Contract Year. Before or after the Rider Effective Date, we may decline to accept any additional Purchase Payments to the Contract if we are no longer issuing annuity contracts with the Rider unless you decline or terminate

8


 

the Rider. In this case, we will notify you that you must decline or terminate the Rider before we will accept any additional Purchase Payments to the Contract. If the Contract allows loans, all rights under the Rider will terminate if you fail to pay off all loans by the Benefit Start Date, and no new loans may be taken after the Benefit Start Date.
Impact on Transfers. If you activate the Rider, transfers will be limited to certain designated Subaccounts. The timing restrictions on transfers to and from the Fixed Accumulation Account do not apply to transfer made in connection with activating the Rider.
Impact on Withdrawals. Benefit payments under the Rider are exempt from the withdrawal limits. You can request a Benefit payment in an amount of $500 or less. A Benefit payment can be made that would reduce the Surrender Value of your Contract to less than $500. We will not terminate your Contract if Benefit payments under the Rider reduce the Surrender Value below $500. If you activate the Rider, then withdrawals may adversely affect the benefits under the Rider.
Annuity Benefit. If you activate the Rider, applicable Rider charges will reduce the Annuity Benefit amount.
Death Benefit. If you activate the Rider, applicable Rider charges will reduce the Death Benefit amount.
Benefit Base Amount Before the Benefit Start Date
The amount of the Benefit payments that will be available to you under the Rider depends on the Benefit Base Amount.
On or before the Benefit Start Date, the Benefit Base Amount will equal the greater of your Rollup Base Amount or your Reset Base Amount, if any.
Rollup Base Amount
Your Rollup Base Amount starts with your Account Value as of the Rider Effective Date. To this we add the amount of any Purchase Payments made since the Rider Effective Date. At the end of each of the first five Rider Years, as long as you have not taken an Excess Withdrawal, we also add a simple interest credit. Each interest credit is calculated as 5% of the Account Value on the Rider Effective Date, plus Purchase Payments received since the Rider Effective Date, and minus the Fixed Account value, if any, at the end of the Rider Year. There is no compounding. The interest credit for a Purchase Payment received during the Rider Year will be prorated. No further interest credit will be made after there has been a withdrawal from the Contract after the Rider Effective Date other than to pay Rider charges. If an Excess Withdrawal is taken, the Rollup Base Amount will be reduced by the same percentage as the percentage reduction in your Account Value.
Rollup Formulas
     
Rollup Base Amount =
  Account Value on Rider Effective Date +
Purchase Payments received since the Rider Effective Date +
Interest – Proportional reductions for Excess Withdrawals
 
   
Rollup Interest Credit =
  (Account Value on Rider Effective Date +
Purchase Payments received since the Rider Effective Date –
Fixed Account value, if any at the end of the Rider Year) x 0.05
Reset Base Amount
The Reset Base Amount starts with the Account Value of the Contract on the most recent Rider Anniversary for which you elect to reset, as described under “Reset Opportunities” below. If an Excess Withdrawal is taken, the Reset Base Amount is reduced by the same percentage as the percentage reduction in your Account Value.
Examples of Benefit Base Amount Calculation
These examples are intended to help you understand how the Base Benefit Amount is calculated. They assume that:
  you make the Purchase Payments shown,
 
  gains, losses, and charges cause your Account Value to vary as shown,
 
  you take no withdrawals except as shown, and
 
  you elect to reset on each Rider Anniversary on which your Account Value has increased over the prior year.
The Benefit Base Amount is used to calculate Benefit payments under the Rider. It is not a cash value, surrender value, or death benefit. It is not available for annuitization or withdrawal. It is not a minimum or guaranteed value for any

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Subaccount or any Contract value. To calculate the Benefit Base Amount in the example, compare the Reset Base Amount (column 4) and the Rollup Base Amount (column 6) on each Rider Anniversary. The Benefit Base Amount is the greater of these two amounts.
An outstanding loan balance affects the amount of certain Rider benefits.
Example 1
                                                 
    Assume:     Then:  
    Purchase             Reset     Rollup     Rollup     Benefit  
Rider   Payment or     Account     Base     Interest     Base     Base  
Anniversary   Withdrawal     Value     Amount     Credits     Amount     Amount  
0
  $ 100,000     $ 100,000                     $ 100,000     $ 100,000  
1
            106,000     $ 106,000     $ 5,000       105,000       106,000  
2
    50,000       159,000       159,000       5,000       160,000       160,000  
3
            168,000       168,000       7,500       167,500       168,000  
4
            180,000       180,000       7,500       175,000       180,000  
5
            175,000       180,000       7,500       182,500       182,500  
6
            181,000       181,000               182,500       182,500  
7
            186,000       186,000               182,500       186,000  
8
            184,000       186,000               182,500       186,000  
9
            190,000       190,000               182,500       190,000  
This table shows how the Rollup Base Amount and the Rollup Interest Credits in Example 1 were calculated. The calculations are based on the Rollup Formulas set out above.
                 
Rider Anniversary     Rollup Base Amount Calculation   Credit Calculation  
  0    
$100,000
       
  1    
$100,000 + $5,000 = $105,000
    0.05 x $100,000 = $5,000  
  2    
$105,000 + $50,000 + $5,000 = $160,000
    0.05 x $100,000 = $5,000  
  3    
$160,000 + $7,500 = $167,500
    0.05 x $150,000 = $7,500  
  4    
$167,500 + $7,500 = $175,000
    0.05 x $150,000 = $7,500  
  5    
$175,000 + $7,500 = $182,500
    0.05 x $150,000 = $7,500  
Example 2
                                                 
    Assume:     Then:  
    Purchase             Reset     Rollup     Rollup     Benefit  
Rider   Payment or     Account     Base     Interest     Base     Base  
Anniversary   Withdrawal     Value     Amount     Credits     Amount     Amount  
0
  $ 100,000     $ 100,000                     $ 100,000     $ 100,000  
1
            106,000     $ 106,000     $ 5,000       105,000       106,000  
2
            109,000       108,000       5,000       110,000       110,000  
3
    -23,000       92,000       86,400               88,000       88,000  
4
            98,400       98,400               88,000       98,400  
5
            95,733       98,400               88,000       98,400  
6
            97,333       98,400               88,000       98,400  
7
            100,000       100,000               88,000       100,000  
8
            98,933       100,000               88,000       100,000  
9
            100,533       100,533               88,000       100,533  

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This table shows how the Rollup Base Amount and the Rollup Interest Credits in Example 2 were calculated. The calculations are based on the Rollup Formulas set out above.
             
Rider Anniversary   Rollup Base Amount Calculation   Credit Calculation
  0    
$100,000
   
  1    
$100,000 + $5,000 = $105,000
  0.05 x $100,000 = $5,000
  2    
$105,000 + $5,000 = $110,000
  0.05 x $100,000 = $5,000
  3    
$110,000 – $22,000 = $88,000
  None due to withdrawal
  4    
$88,000
  None due to withdrawal
  5    
$88,000
  None due to withdrawal
Because a withdrawal is taken, the Rollup Base Amount is reduced by the same percentage as the percentage reduction in the Account Value.
     
Percentage Reduction
  1.00- ($92,000 / $92,000 + $23,000) = 1.00 – 0.80 = 20%
Rollup Base Amount Reduction
  $110,000 x 0.20 = $22,000
New Rollup Base Amount
  $110,000 – $22,000 = $88,000
The Account Values assumed in these examples are for illustration purposes only, and are not intended to predict the performance of any particular Subaccounts or Fixed Account options.
When a reset is elected, the Reset Base Amount prevents the Benefit Base Amount from falling when the Account Value falls due to investment losses. In these examples, on the 8th Rider Anniversary, the Reset Base Amount prevents a drop in the Benefit Base Amount even though the Account Value has fallen. It also prevents a drop in the Benefit Base Amount on the 5th Rider Anniversary but, in the first example, the Rollup Base Amount gave an even better result.
The Rollup Base Amount ensures that the Benefit Base Amount will grow by a minimum factor over the first five years. In the first example, on the 2nd, 5th, and 6th Rider Anniversaries, the Rollup Base Amount has grown by more than the cumulative growth in the Account Value and results in a Benefit Base Amount that is greater than the Account Value. In the second example, the Rollup Base Amount was beneficial on the 2nd Rider Anniversary, but Rollup Amounts stopped because of the withdrawal on the 3rd Rider Anniversary.
See the paragraphs labeled Rollup Base Amount and Reset Base Amount for a description of the manner in which we determine these amounts.
Lifetime Withdrawals
Anytime after the Rider Effective Date, you may begin taking the lifetime withdrawal Benefit if the Insured is at least 55 years old.
On the Benefit Start Date, the Benefit Base Amount is set and will not change unless you take an Excess Withdrawal. Unless a Spousal Benefit is in effect, the Benefit Percentage is determined based on the age of the Insured (who is typically you) on the Benefit Start Date as set out below.
         
Age of Insured on Benefit Start Date   Benefit Percentage
 
At least age 55 but under age 60
    4.0 %
Age 60 or older
    5.0 %
On the Benefit Start Date and each anniversary of the Benefit Start Date, the Benefit Base Amount will be multiplied by the Benefit Percentage to determine the Benefit amount for the following Benefit Year. Generally, the Benefit amount is the maximum amount that can be withdrawn from the Contract before the next anniversary of the Benefit Start Date without reducing the Benefit Base Amount. The ability to take a withdrawal Benefit will continue until the earlier of your death, annuitization, or any other event that terminates the Rider.
All withdrawals from your Contract, including Benefit payments under the Rider, may result in the receipt of taxable income under federal and state law, and, if made prior to age 59 1/2, may be subject to a 10% federal penalty tax.

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At a minimum, the Benefit amount at any point during a Benefit Year will never be less than the Internal Revenue Code “required minimum distribution” for the calendar year that ends with or within the Benefit Year. For this purpose, we will compute the required minimum distribution based on the values of the Contract without considering any other annuity or tax-qualified account. The required minimum distribution will be reduced by all prior withdrawals or Benefit payments from the Contract made in the applicable calendar year. In calculating the required minimum distribution for this purpose, we may choose to disregard changes in the federal tax law that are made after the issue date of the Rider shown on the Rider specifications page if such changes would increase the required minimum distribution. We will notify you if we make this choice. If we choose to disregard changes in federal tax law that would increase the required minimum distribution, then you will need to satisfy this increase either from another annuity or tax-qualified account or by taking an Excess Withdrawal from the Contract.
Although lifetime withdrawals up to the Benefit amount do not reduce the Benefit Base Amount, they do reduce Contract values, the Death Benefit, and the amount available for annuitization. We will make lifetime withdrawals proportionally from the Designated Subaccounts as of the date the Benefit payment is made.
Purchase Payments that we receive after the Benefit Start Date will not increase the Benefit Base Amount. Excess Withdrawals taken after the Benefit Start Date will cause an adjustment in the Benefit Base Amount. The Benefit Base Amount is reduced by the same percentage as the percentage reduction in your Account Value due to the Excess Withdrawal. An Excess Withdrawal that reduces the Benefit Base Amount below $1,250 will result in termination of the Rider.
Example of Impact of Excess Withdrawal on Benefits
This example is intended to help you understand how an Excess Withdrawal impacts the lifetime withdrawal Benefit.
Assume that, on your Benefit Start Date, your Benefit Base Amount is $125,000, your Benefit Percentage is 5%, and the required minimum distribution rules do not require a greater Benefit. These assumptions produce a lifetime withdrawal Benefit of $6,250 ($125,000 x 5% = $6,250) per Benefit Year. Now assume that you have not previously taken an Excess Withdrawal, and you have not taken your Benefit for the current Benefit Year. Then, when your Account Value is $115,000, you withdraw $20,000 from the Contract, leaving you with an Account Value of $95,000.
Step One: Calculate the Excess Withdrawal.
         
Total withdrawals for the Benefit Year
  $ 20,000  
Benefit amount for the Benefit Year
    - 6,250  
 
     
Excess Withdrawal
  $ 13,750  
Step Two: Calculate the Account Value immediately before the Excess Withdrawal.
         
Account Value before withdrawal
  $ 115,000  
Benefit amount for the Benefit Year
    - 6,250  
 
     
Account Value before Excess Withdrawal
  $ 108,750  
Step Three: Calculate the proportional reduction for the Excess Withdrawal.
(GRAPHIC)
1 — $95,000 Account Value immediately after the $20,000 withdrawal = 12.6437% Percentage Reduction —— —— —— — $108,750 Account Value immediately before the Excess Withdrawal $125,000 Base Benefit Amount            x 12.6437% Percentage Reduction = $15,805 Proportional Reduction
Step Four: Calculate the reduced Base Benefit Amount.
         
Base Benefit Amount
  $ 125,000  
Less proportional reduction for Excess Withdrawals
    - 15,805  
 
     
Base Benefit Amount reduced for Excess Withdrawals
  $ 109,195  

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Step Five: Determine the new lifetime withdrawal Benefit.
         
Base Benefit Amount after reduction
  $ 109,195  
Benefit Percentage
    x 5 %
 
     
New lifetime withdrawal Benefit amount
  $ 5,460  
Impact of Rider Benefit Payments and Charges
Withdrawals made from the Contract to pay Benefits or to pay charges for the Rider will be subject to all of the terms and conditions of the Contract, except as explained below:
  the amount need not meet the minimum amount for a withdrawal that is otherwise required;
 
  the amount withdrawn may reduce your Account Value below the minimum amount that is otherwise required;
 
  we will not terminate the Contract if the amount withdrawn reduces your Account Value below the minimum amount that is otherwise required; and
 
  the amount withdrawn may completely exhaust your Account Value.
Also note that, after you activate the Rider, withdrawals under a systematic withdrawal program may be Excess Withdrawals. You should consider the advisability of maintaining a systematic withdrawal program after you activate the Rider.
Reset Opportunities
On each Rider Anniversary before the Benefit Start Date and on the Benefit Start Date, you will have the opportunity to reset the Reset Base Amount equal to your Account Value as of that Rider Anniversary or the Benefit Start Date, whichever is applicable. You may not reset the Reset Base Amount after the Benefit Start Date. If you elect to reset the Reset Base Amount and the then current charge for new issues of this Rider is higher than the charge that we are then assessing for your Rider, the reset will trigger an increase in the Rider charge. The increase in the Rider charge will be effective for the next Rider Year. To make a reset election, you must send us a Written Request and we must receive the Written Request before the Benefit Start Date and no later than 30 days after the “reset date” itself.
Generally it would be to your advantage to elect a reset on (1) any Rider Anniversary when your Account Value is higher than the Reset Base Amount on that Rider Anniversary, and (2) on the Benefit Start Date if your Account Value on the Benefit Start Date is higher than the Reset Base Amount on that date. However, if you elect a reset, we may increase the Rider charges to the level that applies to new Contracts at that time.
At any time before the Benefit Start Date, you may choose to automatically reset the Reset Base Amount equal to your Account Value, if higher, on each Rider Anniversary. An automatic reset election must be made by Written Request and will take effect on the next Rider Anniversary. If an automatic reset triggers an increase in the Rider charge, we will send you a notice of the new Rider charge and provide you with the opportunity to opt-out of the reset that triggered the increase. To make an opt-out election, you must send us a Written Request and we must receive the Written Request no later than 30 days from the date of the notice. An opt-out election will end your participation in the automatic reset program. You may voluntarily terminate your participation in the automatic reset program at any time by Written Request.
If you do not elect a reset by Written Request on an applicable Contract Anniversary or request automatic resets, we will not reset the Reset Base Amount even if your Account Value is higher than the Reset Base Amount on the Contract Anniversary.
Spousal Benefit
ü
  Spousal Benefit   A Benefit available after the death of the Insured for the remaining life of the Spouse.
 
       
ü
  Spouse   The person who is the spouse of the Insured as of the Rider Effective Date.
A spouse will cease to be considered the Spouse if the marriage of the Insured and Spouse is terminated by divorce, dissolution, annulment, or for other cause apart from the death of the Insured.
A new spouse cannot be substituted after the Rider Effective Date.

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For an additional annual charge, you can elect, at the time that you activate the Rider, to add a Spousal Benefit if the Insured is married on that date.
The Spousal Benefit allows a surviving Spouse to continue to receive, for the duration of his/her lifetime, a withdrawal Benefit provided the following 4 conditions are satisfied:
  you added the Spousal Benefit at the time that you activated the Rider;
 
  the Spouse as of the Rider Effective Date remains the Spouse of the Insured through the death of the Insured;
 
  no Death Benefit becomes payable under the Contract; and
 
  the Spouse is the sole Beneficiary and elects to become the successor owner of the Contract.
The Spouse’s right to a withdrawal Benefit will continue until his/her death or the termination of the Rider, whichever is first.
If the Spousal Benefit is in effect, the Benefit Percentage is determined based on the age of the Insured or the age of the Spouse, whichever is less, on the Benefit Start Date as set out below.
         
Age of Younger of Insured or Spouse on    
Benefit Start Date   Benefit Percentage
 
At least age 55 but under age 60
    4.0 %
Age 60 or older
    5.0 %
Currently, the additional annual charge for the Spousal Benefit is 0.15% of the Benefit Base Amount. After the Rider including the Spousal Benefit is activated, the annual Rider charge rate will never exceed 1.20% of the Benefit Base Amount.
If during the life of the Insured the marriage terminates due to divorce, dissolution or annulment, or death of the Spouse, the Spousal Benefit will end. We will stop the associated Rider charge when we receive evidence of the termination of the marriage that is satisfactory to us. Once the Spousal Benefit has ended, it may not be re-elected or added to cover a subsequent spouse.
Impact on Outstanding Loans
As a general rule, you must transfer your Account Value to one or more Designated Subaccounts before the Rider Effective Date. We will make an exception with respect to collateral for Contract loans outstanding before the Benefit Start Date. The following table describes the special transfer rules applicable to collateral for Contract loans.
     
Time/Period   Transfer Rule
 
At the time of activation
  You are not required to transfer the portion of your Fixed Account value that is then needed as collateral for a Contract loan.
 
   
From time to time after activation and before the Benefit Start Date
  We may require you to transfer the portion of your Fixed Account value that is no longer needed as collateral for a Contract loan. You must make this transfer within 30 days of our written notice to you of this requirement, or all rights under the Rider will terminate.
 
   
On or before the Benefit Start Date
  You must pay off the Contract loan and transfer the portion of your Fixed Account value that is no longer needed as collateral. If you do not pay off the Contract loan and make the required transfer, all rights under the Rider will terminate.
After you activate the Rider, a loan payment will be allocated proportionally to the Designated Subaccounts to which you have allocated your Account Value as of the date the loan payment is made.
Termination of the Rider
All rights under the Rider will terminate at the time indicated if any of the following events occurs:
  upon your Written Request to decline or terminate the Rider;
 
  at any time that the Insured transfers or assigns an ownership interest in the Contract;

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  if you or a joint owner of the Contract is not a human being, at any time that the Insured is no longer named as an Annuitant under the Contract;
 
  upon a failure to transfer funds to a Designated Subaccount before the Rider Effective Date;
 
  upon a transfer of funds within the Contract after the Rider Effective Date to an investment option that is not a Designated Subaccount, except to the limited extent required for collateral for a loan;
 
  upon an Excess Withdrawal from the Contract that reduces the Benefit Base Amount below $1,250;
 
  upon the surrender or annuitization of the Contract;
 
  upon a death that would give rise to a Death Benefit under the Contract, unless the Spouse is the sole Beneficiary and elects to become the successor owner of the Contract;
 
  upon the death of the Insured before the Benefit Start Date; or
 
  upon the complete payment of all Benefits under the Rider.
Declining the Rider
You may decline the Rider at any time by Written Request.
Additional Information about Written Requests
Written Requests must be received by us at our Administrative Office. The address of our Administrative Office is P.O. Box 5423, Cincinnati, Ohio 45201-5423. A Written Request may, at our discretion, be made by telephone or electronic means.
We will treat a Written Request as a standing order. It may be modified or revoked only by a subsequent Written Request, when permitted by the terms of the Contract. A Written Request is subject to (1) any payment that we make before we acknowledge the Written Request and (2) any other action that we take before we acknowledge the Written Request.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT
Introduction
We offer a Guaranteed Minimum Withdrawal Benefit through a rider (the “Rider”) to this Contract. If you choose to activate the Rider, it will provide a minimum withdrawal Benefit, up to a certain amount each Benefit Year, even after the Contract value is zero.
 
ü
  Benefit   A guaranteed withdrawal benefit that is available under the Benefits section of the Rider.
 
       
ü
  Benefit Base Amount   The amount on which Rider charges and Benefit payments are based.
 
       
ü
  Benefit Start Date   The first day that a Benefit under the Rider is to be paid.
 
       
ü
  Benefit Year   A 12 month period beginning on the Benefit Start Date or on an anniversary of the Benefit Start Date.
 
       
ü
  Excess Withdrawal   (1) A withdrawal from the Contract after the Rider Effective Date and before the Benefit Start Date, or (2) a withdrawal from the Contract on or after the Benefit Start Date to the extent that the withdrawal exceeds the Benefit amount that is available on the date of payment. A withdrawal to pay Rider charges is never considered an Excess Withdrawal.
 
       
ü
  Designated Subaccount   Each Subaccount that we designate from time to time to hold Contract values on which Benefits may be based.
 
       
ü
  Rider Anniversary   The date in each year that is the annual anniversary of the Rider Effective Date.
 
       
ü
  Rider Effective Date   The Contract Effective Date or Contract Anniversary on which the Rider is activated.
 
       
ü
  Rider Year   Each 12 month period that begins on the Rider Effective Date or a Rider Anniversary.

15


 

ü
  Written Request   Information provided to us or a request made to use that is (1) complete and satisfactory to us and (2) on our form or in a manner satisfactory to us and (3) received by us at our Administrative Office
Activation of the Rider
You may elect to activate the Rider on the Contract effective date or on any Contract Anniversary. To activate the Rider, you must make a written request before the date on which the Rider is to take effect. The Ride is not effective until you activate it. If you activate the Rider on a date other than the Rider Issue Date, we may change the charge for your Rider.
At the time of activation, you may elect to activate the Spousal Benefit.
Once the Rider is activated, you may not participate in the dollar cost averaging program otherwise available under the Contract.
You cannot activate the Rider
  if the Contract is a tax-qualified contract and, on the Rider Effective Date, you will be 81 years old or older (or the Annuitant will be 81 years old or older if the Contract is owned by a plan sponsor or trustee);
 
  if the Contract is a non-tax-qualified contract and, on the Rider Effective Date, you or the joint owner, if any, will be 86 years old or older (or the Annuitant will be 86 years old or older if you or a joint owner is not a human being);
 
  if the Guaranteed Lifetime Withdrawal Benefit Rider is in effect;
 
  an event has occurred that would terminate the Rider; or
 
  if in the future we are no longer issuing the Rider with any new annuity contracts and we prohibit further activations on a nondiscriminatory basis.
We are no longer issuing the Rider but, if we issued the Rider with your Contract, you may activate it subject to the restrictions set out above. We will notify you if we prohibit further activations. You may decline the Rider at any time by Written Request.
Ø   The Rider may not be available in all states and may not be available with Contracts issued before September 7, 2007. If your Contract was issued in connection with an employer plan, the availability of the Rider may be restricted. For additional information about the availability of the Rider, contact us at our Administrative Office, P.O. Box 5423, Cincinnati OH 45201-5423, 1-800-789-6771.
Some Factors to Consider Before You Activate the Rider
If you activate the Rider, certain restrictions on investment options and withdrawals apply. These restrictions are designed to minimize the possibility that your Account Value will be reduced to zero before your death and, as a result, the possibility that we will be required to make Benefit payments under the Rider from our general account. Unless your Account Value is reduced to zero, Benefit payments are made from your Account Value. If your Account Value is reduced to zero, then Benefits payments are made from our general account. Any Benefit payments under the Rider that we make from our general account are subject to our financial strength and claims-paying ability.
To maximize your potential to receive Benefit payments under the Rider, you should not take any Excess Withdrawals. Due to the long-term nature of an annuity contract, there is a possibility that you may need to take withdrawals, in excess of the Benefit payments under the Rider, to meet your living expenses. Excess Withdrawals will reduce, and could eliminate, Benefit payments under the Rider and may increase the Rider charges.
If you receive Benefit payments under the Rider, there is a possibility that the total Benefit payments under the Rider will be less than the Rider charges that you paid. We will not refund the Rider charges that you pay even if you choose never to take any Benefit payments under the Rider, you never receive any Benefit payments under the Rider, or all Benefit payments under the Rider are made from your Account Value.
Certain qualified contracts may have restrictions that limit the benefit of the Rider.
Before activating the Rider, you should carefully consider the charges, limitations, restrictions and risks associated with the Rider as well as your personal circumstances. It may not be appropriate for you to activate the Rider if:

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  you plan on taking Excess Withdrawals from your Contract;
 
  you do not plan to take Benefit payments under the Rider for a significant period of time; or
 
  you are interested in maximizing the annuity benefit, the death benefit, or the tax-deferral nature of your Contract.
Consult your tax advisor and registered representative or other financial professional before you activate the Rider.
Rider Charge
In exchange for the ability to receive minimum withdrawal Benefits, we will assess an annual charge not to exceed 1% of the current Benefit Base Amount. The Rider charge offsets expenses that we incur in administering the Rider and compensates us for assuming the mortality and expense risks under the Rider. Currently, the charge is 0.40% of the current Benefit Base Amount. After the Rider is activated, the charge for your Rider will not change except under the circumstances described in “Reset Opportunities” below.
We will assess the Rider charge on each Rider Anniversary. We will also assess a prorated charge upon surrender of the Contract or termination of the Rider. We will take the Rider charge by withdrawing amounts proportionally from each Designated Subaccount (as discussed below) to which you have allocated your Account Value at the time the charge is taken.
Designated Subaccounts
Before the Rider Effective Date, you must transfer your Account Value to one or more Designated Subaccount(s) that you select. The required transfers must be made by Written Request. If you do not make the required transfers, we will reject your request to activate the Rider.
Ø   Please review the explanation of a Written Request in the Definitions section of this prospectus.
The Designated Subaccounts are listed below.
Ibbotson Balanced ETF Asset Allocation Portfolio-Class II
Ibbotson Conservative ETF Asset Allocation Portfolio-Class II
Ibbotson Growth ETF Asset Allocation Portfolio-Class II
Ibbotson Income and Growth ETF Asset Allocation Portfolio-Class II
We reserve the right to change the Designated Subaccounts. If you have activated the Rider and it is in effect, any such change will not require a transfer of existing funds; however, such a change would prevent future allocations and transfers to a Subaccount that is no longer a designated Subaccount. We will send you a written notice of any change in the Designated Subaccounts.
Ø   Additional information about the Designated Subaccounts is located in The Portfolios section and Appendix B of this prospectus.
The Designated Subaccounts are generally designed to provide consistent returns by minimizing risk. In minimizing risk, the Designated Subaccounts may also limit the potential for investment return. Consult your registered representative or other financial professional to assist you in determining whether the Designated Subaccounts provide investment options that are suited to your financial needs and risk tolerance.
Following the Rider Effective Date, you may reallocate your Account Value among the Designated Subaccounts in accordance with the Transfer provisions of the Contract.
Impact of the Rider on the Contract
Following the Rider Effective Date, we may decline to accept Purchase Payments to the Contract in excess of $50,000 per Contract Year. Before or after the Rider Effective Date, we may decline to accept any additional Purchase Payments to the Contract if we are no longer issuing annuity contracts with the Rider unless you decline or terminate the Rider. In this case, we will notify you that you must decline or terminate the Rider before we will accept any additional Purchase Payments to the Contract. If the Contract allows loans, all rights under the Rider will terminate if you fail to pay off all loans by the Benefit Start Date, and no new loans may be taken after the Benefit Start Date.

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Impact on Transfers. If you activate the Rider, transfers will be limited to certain designated Subaccounts. The timing restrictions on transfers to and from the Fixed Accumulation Account do not apply to transfer made in connection with activating the Rider.
Impact on Withdrawals. Benefit payments under the Rider are exempt from the withdrawal limits. You can request a Benefit payment in an amount of $500 or less. A Benefit payment can be made that would reduce the Surrender Value of your Contract to less than $500. We will not terminate your Contract if Benefit payments under the Rider reduce the Surrender Value below $500. If you activate the Rider, then withdrawals may adversely affect the benefits under the Rider.
Annuity Benefit. If you activate the Rider, applicable Rider charges will reduce the Annuity Benefit amount.
Death Benefit. If you activate the Rider, applicable Rider charges will reduce the Death Benefit amount.
Benefit Base Amount
The amount of the Benefit payments that will be available to you under the Rider depends on the Benefit Base Amount. The Benefit Base Amount is used to calculate Benefit payments under the Rider. It is not a cash value, surrender value, or death benefit. It is not available for annuitization or withdrawal. It is not a minimum or guaranteed value for any Subaccount or any Contract value.
Unless you elect to reset, the Base Benefit Amount is equal to the Account Value on the Rider Effective Date, less adjustments for any Excess Withdrawals since the Rider Effective Date. On or after the most recent Rider Anniversary for which you elect to reset, as described under “Reset Opportunities” below, the Benefit Base Amount will be equal to your Account Value as of that Rider Anniversary, less adjustments for any Excess Withdrawals since that Rider Anniversary.
If you do not elect a reset by Written Request on an applicable Contract Anniversary or request automatic rests, we will not reset the Benefit Base Amount even if your Account Value is higher than the Benefit Base Amount on the Contract Anniversary.
No reset may be elected after the Benefit Start Date. The Benefit Base Amount is reduced by the same percentage as the percentage reduction in your Account Value due to the Excess Withdrawal.
An outstanding loan balance affects the amount of certain Rider benefits.
Minimum Withdrawals
Anytime after the Rider Effective Date, you may begin taking the minimum withdrawal Benefit.
The Benefit amount that may be withdrawn during each Benefit Year is equal to 5% of the current Benefit Base Amount.
Although withdrawals up to the Benefit amount do not reduce the Benefit Base Amount, they do reduce the total Benefits that remain to be paid under the Rider. They also reduce Contract values, the Death Benefit, and the amount available for annuitization. We will make withdrawals proportionally from the Designated Subaccounts as of the date the Benefit payment is made.
All withdrawals from your Contract, including Benefit payments under the Rider, may result in the receipt of taxable income under federal and state law, and, if made prior to age 59 1/2, may be subject to a 10% federal penalty tax.
At a minimum, the Benefit amount at any point during a Benefit Year will never be less than the Internal Revenue Code “required minimum distribution” for the calendar year that ends with or within the Benefit Year. For this purpose, we will compute the required minimum distribution based on the values of the Contract without considering any other annuity or tax-qualified account. The required minimum distribution will be reduced by all prior withdrawals or Benefit payments from the Contract made in the applicable calendar year. In calculating the required minimum distribution for this purpose, we may choose to disregard changes in the federal tax law that are made after the issue date of the Rider shown on the Rider specifications page if such changes would increase the required minimum distribution. We will notify you if we make this choice. If we choose to disregard changes in federal tax law that would increase the required

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minimum distribution, then you will need to satisfy this increase either from another annuity or tax-qualified account or by taking an Excess Withdrawal from the Contract.
Purchase Payments that we receive after the Benefit Start Date will not increase the Benefit Base Amount. An Excess Withdrawal that reduces the Benefit Base Amount below $1,250 will result in termination of the Rider.
Duration of Benefits
Your right to take a withdrawal Benefit will continue until the total Benefit payments equal the current Benefit Base Amount. This is not a fixed period. The right to take a withdrawal Benefit will end before the total Benefit payments equal the current Benefit Base Amount if you annuitize the Contract, a death benefit becomes payable under the Contract, or any other event occurs that terminates the Rider.
Your right to take a withdrawal Benefit will last for 20 years if all of the following conditions are met: (1) each year you take a withdrawal Benefit exactly equal to 5% of the Benefit Base Amount, (2) you do not take a withdrawal Benefit of more than 5% of the Benefit Base Amount because of a required minimum distribution, (3) you take no Excess Withdrawals on or after the Benefit Start Date, and (4) the Rider does not terminate. If in any year you take a withdrawal Benefit of less than 5% of the Benefit Base Amount, your right to take a withdrawal Benefit may last for more than 20 years. If you take a withdrawal Benefit of more then 5% of the Benefit Base Amount because of a required minimum distribution, or if you take an Excess Withdrawal on or after the Benefit Start Date, your right to take a withdrawal Benefit may last for fewer than 20 years.
Example of Impact of Excess Withdrawal on Benefits
This example is intended to help you understand how an Excess Withdrawal impacts the minimum withdrawal Benefit.
Assume that, on your Benefit Start Date, your Benefit Base Amount is $125,000, your Benefit Percentage is 5%, and the required minimum distribution rules do not require a greater Benefit. These assumptions produce a minimum withdrawal Benefit of $6,250 ($125,000 x 5% = $6,250) per Benefit Year.
Now assume that, in the first and second Benefit Years, you withdraw the $6,250 Benefit and, in the third Benefit year when your current Account Value is $115,000, you withdraw $20,000 from the Contract, leaving you with an Account Value of $95,000.
Step One: Calculate the Excess Withdrawal.
         
Total withdrawals for the Benefit Year
  $ 20,000  
Benefit amount for the Benefit Year
    - 6,250  
 
     
Excess Withdrawal
  $ 13,750  
Step Two: Calculate the Account Value immediately before the Excess Withdrawal.
         
Account Value before withdrawal
  $ 115,000  
Benefit amount for the Benefit Year
    - 6,250  
 
     
Account Value before Excess Withdrawal
  $ 108,750  
Step Three: Calculate the proportional reduction for the Excess Withdrawal.
(GRAPHIC)
1 — $95,000 Account Value immediately after the $20,000 withdrawal = 12.6437% Percentage Reduction —— $108,750 Account Value immediately before the Excess Withdrawal $125,000 Base Benefit Amount            x 12.6437% Percentage Reduction = $15,805 Proportional Reduction
Step Four: Calculate the reduced Base Benefit Amount.
         
Base Benefit Amount
  $ 125,000  
Less proportional reduction for Excess Withdrawals
    - 15,805  
 
     
Base Benefit Amount reduced for Excess Withdrawals
  $ 109,195  

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Step Five: Determine the new minimum withdrawal Benefit and Benefits remaining.
         
Base Benefit Amount after reduction
  $ 109,195  
Benefit Percentage
    x 5 %
 
     
New lifetime withdrawal Benefit amount
  $ 5,460  
 
       
Base Benefit Amount after reduction
  $ 109,195  
Less Benefits for first three Benefit Years
    - 18,750  
 
     
Benefits remaining
  $ 90,445  
An Excess Withdrawal that reduces the Benefit Base Amount below $1,250 will result in termination of the Rider.
Also note that, after you activate the Rider, withdrawals under a systematic withdrawal program may be Excess Withdrawals. You should consider the advisability of maintaining a systematic withdrawal program after you activate the Rider.
Impact of Rider Benefit Payments and Charges
Withdrawals made from the Contract to pay Benefits or to pay charges for the Rider will be subject to all of the terms and conditions of the Contract, except as explained below:
  the amount need not meet the minimum amount for a withdrawal that is otherwise required;
 
  the amount withdrawn may reduce your Account Value below the minimum amount that is otherwise required;
 
  we will not terminate the Contract if the amount withdrawn reduces your Account Value below the minimum amount that is otherwise required; and
 
  the amount withdrawn may completely exhaust your Account Value.
Reset Opportunities
On each Rider Anniversary before the Benefit Start Date and on the Benefit Start Date, you will have the opportunity to reset the Reset Base Amount equal to your Account Value as of that Rider Anniversary or the Benefit Start Date, whichever is applicable. You may not reset the Reset Base Amount after the Benefit Start Date. If you elect to reset the Benefit Base Amount and the then current charge for new issues of this Rider is higher than the charge that we are then assessing for your Rider, the reset will trigger an increase in the Rider charge. The increase in the Rider charge will be effective for the next Rider Year. To make a reset election, you must send us a Written Request and we must receive the Written Request before the Benefit Start Date and no later than 30 days after the “reset date” itself.
Generally it would be to your advantage to elect a reset on (1) any Rider Anniversary when your Account Value is higher than the Reset Base Amount on that Rider Anniversary, and (2) on the Benefit Start Date if your Account Value on the Benefit Start Date is higher than the Reset Base Amount on that date. However, if you elect a reset, we may increase the Rider charges to the level that applies to new Contracts at that time.
At any time before the Benefit Start Date, you may choose to automatically reset the Reset Base Amount equal to your Account Value, if higher, on each Rider Anniversary. An automatic reset election must be made by Written Request and will take effect on the next Rider Anniversary. If an automatic reset triggers an increase in the Rider charge, we will send you a notice of the new Rider charge and provide you with the opportunity to opt-out of the reset that triggered the increase. To make an opt-out election, you must send us a Written Request and we must receive the Written Request no later than 30 days from the date of the notice. An opt-out election will end your participation in the automatic reset program. You may voluntarily terminate your participation in the automatic reset program at any time by Written Request.
Impact on Outstanding Loans
As a general rule, you must transfer your Account Value to one or more Designated Subaccounts before the Rider Effective Date. We will make an exception with respect to collateral for Contract loans outstanding before the Benefit Start Date. The following table describes the special transfer rules applicable to collateral for Contract loans.

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Time/Period   Transfer Rule
 
At the time of activation
  You are not required to transfer the portion of your Fixed Account value that is then needed as collateral for a Contract loan.
 
   
From time to time after activation and before the Benefit Start Date
  We may require you to transfer the portion of your Fixed Account value that is no longer needed as collateral for a Contract loan. You must make this transfer within 30 days of our written notice to you of this requirement, or all rights under this Rider will terminate.
 
   
On or before the Benefit Start Date
  You must pay off the Contract loan and transfer the portion of your Fixed Account value that is no longer needed as collateral. If you do not pay off the Contract loan and make the required transfer, all rights under the Rider will terminate.
After you activate the Rider, a loan payment will be allocated proportionally to the Designated Subaccounts to which you have allocated your Account Value as of the date the loan payment is made,
Termination of the Rider
All rights under the Rider will terminate at the time indicated if any of the following events occurs:
  upon your Written Request to decline or terminate the Rider;
 
  upon a failure to transfer funds to a Designated Subaccount before the Rider Effective Date;
 
  upon a transfer of funds within the Contract after the Rider Effective Date to an investment option that is not a Designated Subaccount, except to the limited extent required for collateral for a loan;
 
  upon an Excess Withdrawal from the Contract that reduces the Benefit Base Amount below $1,250;
 
  upon the surrender or annuitization of the Contract;
 
  upon a death that would give rise to a Death Benefit under the Contract, unless the Spouse is the sole Beneficiary and elects to become the successor owner of the Contract;
 
  upon the death of the Insured before the Benefit Start Date; or
 
  upon the complete payment of all Benefits under the Rider.
Declining the Rider
You may decline the Rider at any time by Written Request.
Additional Information about Written Requests
Written Requests must be received by us at our Administrative Office. The address of our Administrative Office is P.O. Box 5423, Cincinnati, Ohio 45201-5423. A Written Request may, at our discretion, be made by telephone or electronic means.
We will treat a Written Request as a standing order. It may be modified or revoked only by a subsequent Written Request, when permitted by the terms of the Contract. A Written Request is subject to (1) any payment that we make before we acknowledge the Written Request and (2) any other action that we take before we acknowledge the Written Request.

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Attachment B
Acknowledgement
     The undersigned, on behalf of the Annuity Investors Variable Account B (the “Registrant”) hereby acknowledge that:
    The Registrant is responsible for the adequacy and accuracy of the disclosure in their respective filings;
 
    Comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filings; and
 
    The Registrant may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
             
    Annuity Investors Variable Account C    
 
           
 
  By:   Annuity Investors Life Insurance Company    
 
           
 
  By:   /s/ John P. Gruber    
 
  Name:  
 
John P. Gruber
   
 
  Its:   Senior Vice President, General Counsel & Chief Compliance Officer    
Dated: April 25, 2010
201 East Fifth Street, Suite 2200          Cincinnati, Ohio 45202          513.651.6800 513.651.6981 fax          www.frostbrowntodd.com