Registration No. 33-15464
=============================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                     POST-EFFECTIVE AMENDMENT NO.    24

                                       TO

                                    FORM S-6

              FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
                     OF SECURITIES OF UNIT INVESTMENT TRUST
                            REGISTERED ON FORM N-8B-2

ALLIANZ LIFE VARIABLE ACCOUNT A
-------------------------------
(Exact Name of Trust)

ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
-----------------------------------------------
(Name of Depositor)




1750 Hennepin Avenue, Minneapolis, MN                          55403-2195
-------------------------------------                          ----------
(Address of Depositor's Principal Executive Offices)           (Zip Code)

     Name and Address of Agent for Service
          Michael T. Westermeyer
          Allianz Life Insurance Company of North America
          1750 Hennepin Avenue
          Minneapolis, MN  55403-2195

     Copies to:
          Judith A. Hasenauer
          Blazzard, Grodd & Hasenauer, P.C.
          P.O. Box 5108
          Westport, CT 06881
          (203) 226-7866


It is proposed that this filing will become effective:

     _____ immediately  upon filing  pursuant to paragraph  (b) of Rule 485
     __X__ on May 1, 2000 pursuant to paragraph (b) of Rule 485
     _____ 60 days after filing  pursuant to paragraph  (a)(1) of Rule 485
     _____ on (date) pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

      [ ] This  Post-Effective  Amendment  designates a new effective date for a
previously filed post-effective amendment.


Title and amount of securities being registered:
     Individual Single Premium Variable Life Insurance Policies.


                        CROSS REFERENCE TO ITEMS REQUIRED
                                 BY FORM N-8B-2

<TABLE>
<CAPTION>

<S>          <C>
N-8B-2 Item  Caption in Prospectus

1            Allianz Life, The Separate Account

2            Allianz Life

3            Not Applicable

4            Distributor

5            The Separate Account

6(a)         Not Applicable
(b)          Not Applicable

9            Not Applicable

10           Purchases

11           Investment Options

12           Investment Options

13           Expenses

14           Purchases

15           The Separate Account

16           Investment Options

17           Policy Values, Access to your Money
             and Transfers

18           Purchases

19           Not Applicable

20           Not Applicable

21           Not Applicable

22           Not Applicable

23           Not Applicable

24           Not Applicable

25           Allianz Life

26           Allianz Life

27           Allianz Life

28           Allianz Life

29           Allianz Life

30           Allianz Life

31           Not Applicable

32           Not Applicable

33           Not Applicable

34           Not Applicable

35           Allianz Life

37           Not Applicable

38           Distributor

39           Distributor

40           Not Applicable

41(a)        Distributor

42           Not Applicable

43           Not Applicable

44           Purchases

45           Not Applicable

46           Policy Values, Access to your Money
             and Transfers

47           Not Applicable

48           Not Applicable

49           Not Applicable

50           Not Applicable

51           Allianz Life

52           Investment Options

53           Taxes

54           Financial Statements

55           Not Applicable
</TABLE>



                THE SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
                                    issued by
                         ALLIANZ LIFE VARIABLE ACCOUNT A

                                       and

                 ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
--------------------------------------------------------------------------------

This  prospectus  describes the Single Premium  Variable Life  Insurance  Policy
(Policy)  offered by Allianz Life  Insurance  Company of North America  (Allianz
Life). All references to "we," "us" and "our" refer to Allianz Life.

The Policy is a variable benefit policy.  We have designed the Policy for use in
estate planning and other insurance needs of individuals.


The Policy  offers you  Variable  Options,  each of which  invest in a Portfolio
listed below.  When you buy a Policy,  you are subject to investment  risk. This
means that the death  benefit and your Policy  Value may  increase  and decrease
depending upon the performance of the Variable Option(s) you select. Some of the
Variable Options may not be available in your state. There is a Guaranteed Death
Benefit  payable.  However,  any loans  against  the  Policy  will  impact  this
guarantee.  You can  surrender  your  Policy for its Cash  Surrender  Value.  No
partial surrenders are allowed.


VARIABLE OPTIONS:

AIM VARIABLE INSURANCE FUNDS:

AIM V.I. Growth Fund

THE ALGER AMERICAN FUND:


Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio


FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST#:


Franklin Aggressive Growth Securities Fund
Franklin Global Communications Securities Fund*
Franklin Global Health Care Securities Fund
Franklin Growth and Income Securities Fund*
Franklin High Income Fund
Franklin Income Securities Fund
Franklin Large Cap Growth Securities Fund*
Franklin Money Market Fund
Franklin Natural Resources Securities Fund
Franklin Real Estate Fund*
Franklin Rising Dividends Securities Fund*
Franklin S&P 500 Index Fund
Franklin Small Cap Fund
Franklin Technology Securities Fund
Franklin U.S. Government Fund*
Franklin Value Securities Fun
Franklin Zero Coupon Funds-- 2000, 2005 and 2010
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Asset Strategy Fund*
Templeton Developing Markets Securities Fund*
Templeton Global Income Securities Fund
Templeton Growth Securities Fund*
Templeton International Securities Fund*
Templeton International Smaller Companies Fund
Templeton Pacific Growth Securities Fund*

#Effective May 1, 2000 the funds of Templeton Variable Products Series Fund were
merged into similar  funds of Franklin  Templeton  Variable  Insurance  Products
Trust.


USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:


USAllianz VIP Diversified Assets Fund
USAllianz VIP Fixed Income Fund
USAllianz VIP Growth Fund


THE  SECURITIES AND EXCHANGE  COMMISSION  HAS NOT APPROVED OR DISAPPROVED  THESE
SECURITIES  OR  DETERMINED  IF THIS  PROSPECTUS  IS  TRUTHFUL OR  COMPLETE.  ANY
REPRESENTATIOIN TO THE CONTRARY IS A CRIMINAL OFFENSE.


<TABLE>
<CAPTION>

*The Fund name changed:

   CURRENT NAME                                        PREVIOUS NAME
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>
 Franklin Global  Communications  Securities  Fund     Franklin  Global  Utilities Securities Fund
 Franklin  Growth and Income Securities Fund           Franklin Growth and Income Fund
 Franklin Large Cap Growth Securities Fund             Franklin Capital Growth Fun
 Franklin Real Estate Fund                             Franklin Real Estate  Securities  Fun
 Franklin Rising Dividends Securities Fund             Franklin Rising Dividends Fund
 Franklin U.S. Government Fund                         Franklin U.S. Government Securities Fund
 Templeton Asset Strategy Fund                         Templeton Global Asset Allocation Fund
 Templeton Developing Markets Securities Fund          Templeton Developing Markets Equity Fund
 Templeton Growth Securities Fund                      Templeton Global Growth Fund
 Templeton International Securities Fund               Templeton International Equity Fund
 Templeton Pacific Growth Securities Fund              Templeton Pacific Growth Fund

</TABLE>


2


The Portfolios are described in the attached fund prospectuses.  You can make or
lose  money  based on the  Portfolio's  performance.  The  Policy is  subject to
investment risk.


Please  read this  prospectus  before  investing  and keep it on file for future
reference.  It contains  important  information  about the  Allianz  Life Single
Premium Variable Life Insurance Policy.  The Securities and Exchange  Commission
(SEC)  maintains  a  Web  site   (http://www.sec.gov)   that  contains  material
incorporated by reference and other  information  regarding  companies that file
electronically with the SEC.

The Policy:

o is not a bank deposit

o is not federally insured

o is not endorsed by any bank or government agency

o is not guaranteed and may be subject to loss of
principal

This prospectus is not an offering of the securities in any state,  country,  or
jurisdiction in which we are not authorized to sell the Policy.  You should rely
only on the  information  contained in this  prospectus or that we have referred
you to. We have not authorized  anyone to provide you with  information  that is
different.


Dated May 1, 2000




<PAGE>

                                                                    Prospectus 3

 TABLE OF   CONTENTS


Special Terms                                       4

Summary                                             4

Part I                                              6

1. The Variable Life

Insurance Policy                                    6

2. Purchases                                        6
     Single Premium                                 6
     Application for a Policy                       7
     Allocation of Single Premium                   7
     Free Look                                      7
     Grace Period                                   7
     Reinstatement                                  7
     Policy Values                                  7
     Exchange Provision                             8

3. Investment Options                               8
     Transfers                                     10
     Substitution                                  10

4. Expenses                                        10
     Insurance Charges                             10
     Cost of Insurance Charge                      10
     Deferred Issue Charge                         11
     Transfer Fee                                  11
     Taxes                                         11
     Portfolio Expenses                            11

5. Death Benefit                                   11

6. Taxes                                           13
     Life Insurance in General                     13
     Taking Money Out of Your Policy               13
     Diversification                               13


7. Access to Your Money                            13
     Loans                                         13
     Total Surrender and Termination of the Policy 14

8. Other Information                               14
     Allianz Life                                  14
     The Separate Account                          14
     Distributor                                   14
     Suspension of Payments or Transfers           15
     Ownership                                     15

Part II                                            15
     Management of Allianz Life                    15
     Administration of the Policies                16
     Voting                                        16
     The Separate Account                          16
     Legal Opinions                                16
     Misstatement of Age or Sex                    17
     Right to Contest                              17
     Settlement Options                            17
     Tax Status                                    17
     Reports to Owners                             20
     Legal Proceedings                             20
     Experts                                       20
     Financial Statements                          20

Appendix A - Illustration of

Policy Values

Appendix B - Table of Net

Single Premium Factors



<PAGE>

4

SPECIAL TERMS
--------------------------------------------------------------------------------


We have tried to make this prospectus as readable and  understandable for you as
possible.  However,  by the very nature of the Policy certain technical words or
terms are  unavoidable.  We have  identified  some of those words or terms.  For
several of these terms we have  provided a  definition.  For the  remainder,  we
believe  that  you  will  find an  adequate  discussion  in the  text.  The page
indicated  here is where we believe you will find the best  explanation  for the
word or term. These words or terms are in italics or bold on the indicated page.

Cash  Surrender  Value - Your  Policy  Value  less  the  sum of the  uncollected
Deductions and any Indebtedness.

Deductions - The charges we levy against your Policy.

Face  Amount - The amount of coverage  that you  choose.  This amount is used to
determine the death benefit.

Guaranteed  Death  Benefit - We  guarantee  that the Policy will remain in force
regardless of investment  experience,  unless the Indebtedness under your Policy
exceeds  the  Policy  Value  less  uncollected   Deductions.   If  there  is  no
Indebtedness, the Policy cannot lapse even if the Policy Value is $0.

Indebtedness - The amount of any existing Policy loans plus the pro-rata portion
of any accrued interest.

Policy  Date,  Policy  Anniversary,  Policy  Year - The Policy  Date is when the
insured's  life is  covered  under your  Policy.  It is the date from which your
Policy Anniversaries and Policy Years are determined.


Policy  Value - The total  value of your  Policy.  It is equal to the sum of the
values  allocated to the variable  options and the values  allocated to the loan
account. (Policy Value is referred to as Account Value in the Policy.)


Processing  Date - The  Policy  Date and the same day of the month as the Policy
Date at the end of each successive  3-month period.  The Processing Date is when
we deduct charges and recalculate the death benefit.

Valuation  Unit - An accounting  unit used to calculate  Policy Values when they
are allocated to the Variable Options.

                                                    Page


Beneficiary.                                         15
Business Day.                                         7
Insured.                                              4
Issue Date.                                           7
Joint Owner.                                         15
Loan Account.                                        14
Owner.                                               15
Portfolio.                                            8
Premium                                               6
Variable Option.                                      8


The prospectus is divided into three sections:  Summary, Part I and Part II. The
sections in the  Summary  correspond  to  sections in Part I of this  prospectus
where the topics are discussed in more detail.  Additional important information
is contained in Part II of this prospectus.

SUMMARY

1. THE VARIABLE LIFE INSURANCE POLICY
--------------------------------------------------------------------------------

The variable life  insurance  policy that we are offering is a contract  between
you, the owner, and Allianz Life, an insurance company.  The Policy provides for
the payment of a death  benefit to your selected  beneficiary  upon the death of
the insured.  This death benefit is distributed  free from federal income taxes.
The Policy can be used as part of your estate planning.  Estate taxes may apply.
The insured is the person whose life is insured under the Policy. You, the owner
can also be the insured but you do not have to be.


You can choose among the Variable  Options.  Each variable option invests in one
portfolio of a fund.  The portfolios are listed in Item 3. You can allocate your
unloaned  Policy Value to any or all of the variable  options.  You can transfer
between  Variable Options up to 12 times a year without charge and without being
taxed. If you make more than 12 transfers in a year, we will charge $25 or 2% of
the amount  transferred,  whichever is less.  Market timing transfers may not be
permitted.

While the Policy is in force, the Policy Value and, under certain circumstances,
the death benefit,  will vary with the investment  performance of the portfolios
you choose.  You are not taxed on the earnings  from the variable  options until
you surrender or borrow from your Policy.


                                                                   Prospectus  5

2. PURCHASES

--------------------------------------------------------------------------------


You buy the Policy with a single premium payment.  The minimum single premium we
will accept is $20,000.  In some  circumstances,  the insured may be required to
provide us with  medical  records or a complete  paramedical  examination.  Your
registered representative can help you complete the proper forms.

3. INVESTMENT OPTIONS

--------------------------------------------------------------------------------



The  Variable  Options  each invest in a portfolio  of a fund.  You can put your
money  in  the  Portfolios  which  are  described  in  the   accompanying   fund
prospectuses.  Depending  upon  market  conditions  and the  performance  of the
portfolio(s) you select, you can make or lose money in any of these portfolios.


4. EXPENSES

--------------------------------------------------------------------------------


The Policy has both insurance  features and investment  features,  and there are
costs related to each that reduce the return on your investment.

Each  business  day we deduct a total  insurance  charge  which is equal,  on an
annual basis, to 0.75% of your average Policy Value.

Each  Processing  Date we deduct  from your Policy  Value the cost of  insurance
charge.  This charge pays us for providing you with death benefit protection for
the period since the last  Processing  Date. This charge varies and depends upon
the sex, age and rating classification of the insured.

When the single  premium is  received  by us, we accrue  against  your  Policy a
deferred issue charge.  This charge  includes a premium tax charge which is 2.5%
of the premium;  a sales  charge which is 4% of the premium;  and a policy issue
charge which is 0.5% of the premium.  A portion of the deferred  issue charge is
deducted  annually for the first 10 years of the Policy.  If you surrender  your
Policy before the full amount of the deferred issue charge is deducted,  we will
collect the  remaining  portion of the charge from your Policy Value at the time
of surrender.


Under certain circumstances, we may assess a transfer fee when you transfer your
Policy Value from one Variable Option to another.

There are also annual Portfolio  operating  expenses,  which vary depending upon
the  Portfolio(s)  you select.  These  expenses range from 0.49% to 1.56% of the
average daily value of the Portfolios.


5. DEATH BENEFIT

--------------------------------------------------------------------------------


The Policy  provides for a Face Amount of  insurance.  On the day we issue you a
Policy the death  benefit is the Face Amount.  Thereafter  the death benefit may
vary.  The actual amount  payable to your  beneficiary is the death benefit less
any Indebtedness.

The death  benefit  will be the greater of 1) your Face Amount or 2) your Policy
Value multiplied by a specified percentage. These percentages vary by the age of
the insured and are shown in your  Policy.  Therefore,  increases in your Policy
Value under certain circumstances will increase the death benefit. A decrease in
Policy Value may decrease the death benefit, but the death benefit will never be
less than the Face Amount so long as the Policy remains in force.

When you apply for a Policy,  you designate a  beneficiary  who will receive the
death benefit.  You can change your  beneficiary  unless you have  designated an
irrevocable beneficiary. The beneficiary does not have to be a natural person.

6. TAXES

--------------------------------------------------------------------------------


Your earnings are not taxed until you take them out. In most cases,  your Policy
will be a modified  endowment  contract  unless it was  exchanged for a contract
issued before June 21, 1988. Money taken out of a modified endowment contract is
considered to come from earnings first and is taxed as income.  Also, if you are
younger than 591/2 when you take money out, you may be charged a 10% federal tax
penalty on the earnings withdrawn. The death benefit is paid to your beneficiary
income tax free. However, estate taxes may apply.


7. ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------

Under the Policy you may surrender the Policy at anytime for its Cash  Surrender
Value. You can also borrow some of your Policy Value. The minimum loan amount is
$1,000.  Loans  will  affect  the death  benefit,  Policy  Value and  investment
performance. You cannot make partial surrenders.

8. OTHER INFORMATION

--------------------------------------------------------------------------------

Right to Examine

If you cancel  your  Policy  within ten days after you  receive it (or  whatever
period is required in your state),

6

we will  return  to you the  greater  of 1) the  premium(s)  you paid or 2) your
Policy Value on the day we, or the agent through whom it was purchased, received
the returned  Policy.  Until the end of the time you are allowed to examine your
Policy (15 days or the required period in your state),  your premium will remain
in the Franklin Money Market Fund.  After that, we will invest your Policy Value
as you requested.

Who Should Purchase the Policy?

The Policy is designed for an individual who wants to:

o   create or conserve his/her estate;

o   retain access to cash through loans and surrenders;
    and

o   use the income tax advantages of life insurance.


If you  currently  own a  variable  life  insurance  policy  on the  life of the
insured,  you should consider whether the purchase of the Policy is appropriate.
Also, you should carefully consider whether the Policy should be used to replace
an existing policy on the life of an insured.  Replacement of an existing policy
with this Policy may not be advantageous to your situation.


Allianz Life will not issue a Policy on an insured  older than 80.  However,  we
may waive this requirement under special circumstances.

9. INQUIRIES
--------------------------------------------------------------------------------

If you need more information, please contact us at:


Allianz Life Insurance Company of North America
1750 Hennepin Ave.
Minneapolis, MN 55403
1-800-542-5427


If you need  Policy  owner  service  (such as  changes  in  Policy  information,
questions regarding Policy Values, or to make a loan), please contact us at:

USAllianz Service Center
300 Berwyn Park

P.O Box 3031
Berwyn, PA 19312-0031
1-800-624-0197

<PAGE>

PART I

1. THE VARIABLE LIFE INSURANCE POLICY
--------------------------------------------------------------------------------

This variable life insurance  policy is a contract  between you, the owner,  and
Allianz  Life, an insurance  company.  This kind of policy is most commonly used
for estate planning.


While the insured is still  alive,  you can select  among the  Variable  Options
offered in the Policy.  (The  Variable  Options are listed in Item 3.) Currently
you can  transfer  between the  Variable  Options up to 12 times a year  without
charge. The Policy Value and, under some  circumstances,  the death benefit will
go up or down depending upon the investment  experience of the  Portfolio(s) you
select.  This gives you the  opportunity to capture the upside  potential of the
market. It also means you could lose money.


While  your money  remains in the  Policy,  you pay no current  income  taxes on
earnings or gains. This is called tax-deferred accumulation. It helps your money
grow  faster.  Subject to some  limitations,  you may take money out at any time
through loans or a surrender. There are no partial surrenders allowed, only full
surrenders.  However,  any  money  you  take  out,  even as a loan,  is taxed as
earnings  until all  earnings  have been  removed  from the  Policy.  If you are
younger than age 591/2 when you take money out, you may also incur an additional
10%  federal tax  penalty.  If you  purchased a Policy in exchange  for a policy
issued prior to June 21, 1988,  different  tax rules may apply.  (See Section 6.
Taxes. Part II also contains more detailed information regarding taxes.)

Because this is a life insurance policy,  it provides a death benefit,  which is
an amount  greater  than your Policy  Value.  When the insured  dies,  the death
benefit  (minus  any  loans  and  any  accrued  loan  interest)  is paid to your
beneficiary free from federal income tax. Estate taxes may apply.

2. PURCHASES
--------------------------------------------------------------------------------

SINGLE PREMIUM

The single premium is the money you give us to buy the Policy. The minimum
single premium we will accept is $20,000. When you apply for the Policy, you
request a specific amount of insurance which will vary depending, in part, on
the amount of the premium you pay. We call this amount the Face Amount of the
Policy. The Internal


                                                                   Prospectus  7

Revenue Code (Code) has established  certain criteria which must be met in order
for a life  insurance  policy to qualify as life  insurance  under the Code. The
Code re- quires  that there be a minimum  Face  Amount for a  specified  premium
depending upon the age of the insured.

APPLICATION FOR A POLICY

In order to  purchase  a  Policy,  you must  submit to us an  application  which
provides us with information on the proposed insured. In some cases, we will ask
for  additional  information.  We may request  that the insured  provide us with
medical records or possibly require other medical tests.

We will not issue a Policy if the insured is over age 80,  except under  special
circumstances.

We will  review all the  information  we have about the  insured  and  determine
whether or not the insured  meets our  standards  for  issuing the Policy.  This
process is called  underwriting.  If the insured  meets all of our  underwriting
requirements,  we will issue a Policy.  There are several  underwriting  classes
under  which the Policy may be issued.  We will not issue the Policy  unless the
premium and the application are in good order as determined by our  underwriting
rules.

ALLOCATION OF SINGLE PREMIUM


When you purchase a Policy,  we will initially invest your money in the Franklin
Money Market Fund.  After 15 days from the issue date (or the period required in
your  state),  we will  allocate  your  Policy  Value to the  Portfolios  as you
requested in the  application.  The issue date is the date that  underwriting is
completed  and we issue the policy.  We reserve the right to limit the number of
Variable Options which you can invest in. Currently,  you can invest in up to 10
Variable Options.


If as a result of  underwriting  review,  we do not issue you a Policy,  we will
return your premium, plus interest required by your state.

FREE LOOK

If you change your mind about owning a Policy,  you can cancel it within 10 days
after receiving it (or the period required in your state). We will give you back
the greater of your premium payment or your Policy Value.  Any amounts we refund
will include all Policy fees and charges.

GRACE PERIOD

Your  policy will lapse if your total  Indebtedness  under the Policy is greater
than your  Policy  Value less any  uncollected  Deductions.  If you have no loan
outstanding, the Policy cannot lapse even if your Policy Value goes to zero.

If your Policy does lapse,  you have a 31-day grace period to repay your loan by
making a payment of at least an amount which is  sufficient  to keep your Policy
in force  through  3  Processing  Dates.  If you do not make the  required  loan
repayment  by the end of the  grace  period,  your  Policy  will  lapse  and all
coverage under your Policy will terminate without value.

Your Policy  continues  in force  during the grace  period.  If the insured dies
during the grace period, the death benefit is calculated as the death benefit in
effect  immediately  prior to the start of the  grace  period  less any  accrued
Deductions and less any Indebtedness.

REINSTATEMENT

If your  Policy  terminates  while the  insured  is still  alive you can have it
reinstated if the Policy did not terminate  because you made a total  surrender.
You can only reinstate your Policy during the lifetime of the insured.

The requirements for a reinstatement are:

o We must receive a properly executed application for reinstatement.  It must be
  sent to our Service Office.

o You must provide us with satisfactory evidence of insurability of the insured.

o You must pay a  premium  sufficient  to keep  the Pol icy in force  through  3
  Processing Dates.

o You must repay any Indebtedness.

We will reinstate your Policy on the next  Processing  Date after we approve the
reinstatement application.

The  effective  date  of the  reinstated  Policy  is the  next  Processing  Date
following our approval of your application for reinstatement.

POLICY VALUES


The  value of your  Policy  will go up or down  depending  upon  the  investment
performance of the Variable  Option(s) you choose and the charges and deductions
made against the Policy Value.  In order to keep track of your Policy Value,  we
use a unit of measure we call a Valuation  Unit. (A Valuation  Unit works like a
share of a mutual fund.)

Every  business day Allianz Life  determines  the value of a Valuation  Unit for
each of the  Variable  Options.  The  value of a  Valuation  Unit for any  given
business day is determined by multiplying a factor we call the net


8


investment  factor times the value of Valuation  Unit for the previous  business
day. We do this for each Variable Option.  The net investment factor is a number
that  reflects  the change (up or down) in an  underlying  investment  Portfolio
share.  Our business days are each day that the New York Stock  Exchange is open
for business.  Our business day closes when the New York Stock Exchange  closes,
usually 4:00 P.M. Eastern time.


The value of a Valuation Unit may go up or down from day to day.


When you make a premium payment, we credit your Policy with Valuation Units. The
number of  Valuation  Units  credited is  determined  by dividing  the amount of
premiums  allocated to a Variable  Option by the value of the Valuation Unit for
that Variable Option.

When we assess the  Deductions we do so by deducting  Valuation  Units from your
Policy.  If you select more than one Variable Option, we make the deductions pro
rata  from all of the  Variable  Options.  When  you make a loan we also  deduct
Valuation Units and place the amount in the Loan Account.


EXCHANGE PROVISION

You can exchange a Policy for a policy with  benefits  that do not vary with the
investment results of the Portfolios.  You must elect such an exchange within 24
months after we issue you the Policy.  You do not need to submit any evidence of
insurability  so long as the benefits  under the new policy are equal to or less
than the benefits under the Policy at the time of exchange.

3. INVESTMENT OPTIONS
--------------------------------------------------------------------------------

The Contract offers Variable Options, which invest in Portfolios of AIM Variable
Insurance  Funds,  Inc., The Alger American Fund,  Franklin  Templeton  Variable
Insurance  Products Trust, and the USAllianz  Variable Insurance Products Trust.
Additional Portfolios may be available in the future.

You should read the fund  prospectuses  (which are attached to this  prospectus)
carefully before investing.

AIM Variable  Insurance  Funds,  The Alger  American  Fund,  Franklin  Templeton
Variable  Insurance  Products Trust and USAllianz  Variable  Insurance  Products
Trust  are  the  funds  underlying  your  Policy.  Each  portfolio  has  its own
investment objective.


Franklin  Templeton  Variable  Insurance  Products  Trust  (formerly,   Franklin
Valuemark  Funds)  issues  two  classes  of shares  which are  described  in the
attached  prospectus for Franklin  Templeton  Variable Insurance Products Trust.
Only Class 1 shares are available in connection with your Policy.  Effective May
1, 2000, the funds of Templeton  Variable  Products Series Fund were merged into
similar funds of Franklin Templeton Variable Insurance Products Trust.


Investment advisers for each portfolio are listed in the table below and are as
follows: A I M Advisors, Inc.; Allianz of America, Inc.; Fred Alger Management,
Inc.; Franklin Advisers, Inc.; Franklin Advisory Services, LLC; Franklin Mutual
Advisers, LLC; Templeton Asset Management Ltd.; Templeton Global Advisors
Limited; and Templeton Investment Counsel, Inc. Certain advisers have retained
one or more subadvisers to help them manage the Portfolios.

The investment  objectives and policies of certain portfolios are similar to the
investment  objectives  and  policies of other  mutual funds that certain of the
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the Portfolios may be higher or lower than the results
of such other mutual funds. The investment  advisers cannot guarantee,  and make
no  representation,  that  the  investment  results  of  similar  funds  will be
comparable even though the funds have the same investment advisers.


A Portfolio's  performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments,  non-investment
grade  debt  securities,  initial  public  offerings  (IPOs) or  companies  with
relatively small market  capitalizations.  IPOs and other investment  techniques
may have a magnified  performance impact on a Portfolio with a small asset base.
A Portfolio may not experience similar performance as its assets grow.

THE FRANKLIN ZERO COUPON  FUND-2000  WILL MATURE  DECEMBER 15, 2000. If you have
not made a section prior to the maturity date of a Zero Coupon Fund,  the Policy
Value held in the Franklin Zero Coupon Fund-2000  underlying your Policy will be
automatically  transferred to the Franklin Money Market Fund. We will notify you
of a  maturing  Zero  Coupon  Fund in  writing  at  least  30 days  prior to the
maturity. Included with the notification will be investment options available at
that time as well as the automatic Money Market option.


Shares of the  Portfolios  may be offered in  connection  with certain  variable
annuity  contracts and variable  life  insurance  policies of various  insurance
companies which

<PAGE>

<TABLE>
<CAPTION>

                                                                   Prospectus  9

The  following is a list of the  Portfolios  available  under the Policy and the investment adviser for each Portfolio:

                                                                      Investment

Variable Options                                                      Advisers
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                  <C>
AIM Variable Insurance Funds:

AIM V.I. Growth Fund                                                  A I M Advisors, Inc.

THE ALGER AMERICAN FUND:

Alger American Growth Portfolio                                       Fred Alger Management, Inc.
Alger American Leveraged AllCap Portfolio                             Fred Alger Management, Inc.
(seeks long term capital appreciation)

FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST:


Franklin Aggressive Growth Securities Fund                            Franklin Advisers, Inc.
Franklin Global Communications Securities Fund*                       Franklin Advisers, Inc.
Franklin Global Health Care Securities Fund                           Franklin Advisers, Inc.
Franklin Growth and Income Securities Fund*                           Franklin Advisers, Inc.
Franklin High Income Fund                                             Franklin Advisers, Inc.
Franklin Income Securities Fund                                       Franklin Advisers, Inc.
Franklin Large Cap Growth Securities Fund*                            Franklin Advisers, Inc.
Franklin Money Market Fund                                            Franklin Advisers, Inc.
Franklin Natural Resources Securities Fund                            Franklin Advisers, Inc.
Franklin Real Estate Fund*                                            Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund*                            Franklin Advisory Services, LLC
Franklin S&P 500 Index Fund                                           Franklin Advisers, Inc.
Franklin Small Cap Fund                                               Franklin Advisers, Inc.
Franklin Technology Securities Fund                                   Franklin Advisers, Inc.
Franklin U.S. Government Fund*                                        Franklin Advisers, Inc.
Franklin Value Securities Fund                                        Franklin Advisory Services, LLC
Franklin Zero Coupon Funds - 2000, 2005 and 2010                      Franklin Advisers, Inc.
Mutual Discovery Securities Fund (capital appreciation)               Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund                                         Franklin Mutual Advisers, LLC
(capital appreciation with income as a secondary goal)
Templeton Asset Strategy Fund*                                        Templeton Investment Counsel, Inc.
Templeton Developing Markets Securities Fund*                         Templeton Asset Management Ltd.
Templeton Global Income Securities Fund                               Franklin Advisers, Inc.
Templeton Growth Securities Fund*                                     Templeton Global Advisors Limited
Templeton International Securities Fund*                              Templeton Investment Counsel, Inc.
Templeton International Smaller Companies Fund                        Templeton Investment Counsel, Inc.
Templeton Pacific Growth Securities Fund*                             Franklin Advisers, Inc.
Templeton International Smaller Companies Fund                        Templeton Global Advisors Limited
Templeton Pacific Growth Fund                                         Franklin Advisers, Inc.


USAllianz variable INSURANCE
PRODUCTS TRUST:

USAllianz VIP Diversified Assets Fund                                  Allianz of America, Inc.
USAllianz VIP Fixed Income Fund                                        Allianz of America, Inc.
USAllianz VIP Growth Fund                                              Allianz of America, Inc.

</TABLE>

10

<TABLE>
<CAPTION>

*The Portfolio name changed as of the effective date listed below:

   CURRENT NAME                                    PREVIOUS NAME                               EFFECTIVE DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                         <C>
   Franklin Global Communications Securities Fund  Franklin Global Utilities Securities Fund   11-15-1999
   Franklin Growth and Income Securities Fund      Franklin Growth and Income Fund             05-01-2000
   Franklin Large Cap Growth Securities Fund       Franklin Capital Growth Fund                12-15-1999
   Franklin Real Estate Fund                       Franklin Real Estate Securities Fund        11-15-1999
   Franklin Rising Dividends Securities Fund       Franklin Rising Dividends Fund              11-15-1999
   Franklin U.S. Government Fund                   Franklin U.S. Government Securities Fund    11-15-1999
   Templeton Asset Strategy Fund                   Templeton Global Asset Allocation Fund      05-01-2000
   Templeton Developing Markets Securities Fund    Templeton Developing Markets Equity Fund    05-01-2000
   Templeton Growth Securities Fund                Templeton Global Growth Fund                05-01-2000
   Templeton International Securities Fund         Templeton International Equity Fund         05-01-2000
   Templeton Pacific Growth Securities Fund        Templeton Pacific Growth Fund               05-01-2000

</TABLE>



may or may not be affiliated with Allianz Life.  Certain  Portfolios may also be
sold directly to qualified plans. The investment  advisers believe that offering
their shares in this manner will not be disadvantageous to you.

Allianz Life may enter into certain arrangements under which it is reimbursed by
the Portfolios' advisers,  distributors and/or affiliates for the administrative
services which it provides to the Portfolios.

TRANSFERS

You can transfer  money among the Variable  Options.  Currently  you can make 12
transfers  every Policy Year without  charge while the insured is alive.  If you
make more than 12 transfers in a year,  there is a transfer  fee  deducted.  (We
measure  years from your Policy  Date.) The fee is $25 per transfer or, if less,
2% of the amount transferred. The minimum amount which you can transfer is $500,
or your entire value in the Variable Option.

You can make transfers by telephone  only if you previously  elected to do so in
writing.  Unless we are instructed otherwise, if you own the Policy with a joint
owner we will accept  instructions  from either you or the other owner.  We will
use reasonable  procedures to confirm that instructions given to us by telephone
are genuine. If we fail to use such procedures,  we may be liable for any losses
due  to  unauthorized  or  fraudulent  instructions.  We  record  all  telephone
instructions.

We  have  not  designed  the  Policy  for  use  by  professional  market  timing
organizations or other persons using programmed,  large, or frequent  transfers.
Such activity may be  disruptive to a Portfolio.  We reserve the right to reject
any transfer request from any person, if in the Portfolio managers' judgment,  a
Portfolio  would  be  unable  to  invest  effectively  in  accordance  with  its
investment  objectives and policies, or would otherwise potentially be adversely
affected.

SUBSTITUTION

We may elect to  substitute  one of the Variable  Options you have selected with
another Variable Option.  We would not do this without the prior approval of the
Securities and Exchange Commission.  We will give you notice of our intent to do
this. We may also limit further  investment in a Variable  Option if we deem the
investment inappropriate.

4. EXPENSES
--------------------------------------------------------------------------------


There are charges and other expenses  associated with the Policy that reduce the
return on your investment in the Policy. These charges and expenses are:

INSURANCE CHARGES

Each  business day we will make a deduction  for the  mortality and expense risk
charge and the administrative charge.

MORTALITY AND EXPENSE RISK CHARGE.  This charge is equal, on an annual basis, to
0.60% of the Policy Value of the Policy.  This charge cannot be increased.  This
charge  compensates  us for assuming the  mortality  and expense risks under the
Policy.

ADMINISTRATIVE CHARGE. This charge is equal, on an annual basis, to 0.15% of the
Policy Value of the Policy. This charge cannot be increased. This charge
compensates us for expenses we incur in the administration of the Policies.

COST OF INSURANCE CHARGE

This  charge  compensates  us for  insurance  coverage  provided  since the last
Processing Date.

The guaranteed  cost of insurance  charge is determined by  multiplying  the net
amount  at risk by the cost of  insurance  rate.  The net  amount at risk is the
difference


                                                                  Prospectus  11

between the death benefit and the sum of your Cash Surrender Value and your loan
account value. The cost of insurance rate is based upon the sex (in states where
permitted),  age and rate classification of the insured. The rate classification
of the insured is determined through our underwriting process.

The Policy  provides that for standard  risks,  the guaranteed cost of insurance
rate is based on the  Commissioners  Standard  1980  Ordinary  Male and  Female,
Smoker and  Non-Smoker  Mortality  Tables last birthday  (1980 CSO Tables).  For
substandard  risks,  the guaranteed cost of insurance rate is higher and will be
based upon a  multiple  of the 1980 CSO  Tables.  The  multiple  is based on the
insured's  substandard  rating.  Tables  setting  forth the  guaranteed  cost of
insurance rates are included in each Policy.

We can use rates that are less than the guaranteed cost of insurance rates shown
in the Policy.  We refer to these rates as the current cost of insurance  rates.
The current rates we currently use are approximately 75% of the 1980 CSO Tables.
The  current  rates  will  never be more  than the  guaranteed  maximum  cost of
insurance rates.

DEFERRED ISSUE CHARGE


When we receive your single  premium  payment,  a Deferred Issue Charge of 7% of
the premium is accrued.  We deduct this charge in 10 equal annual  deductions of
0.7% of the premium on Policy  Anniversaries  for the first 10 Policy Years.  If
you  surrender the Policy  before the full amount is deducted,  the  uncollected
portion of this charge is deducted  from the Policy  Value.  The total  Deferred
Issue  Charge is 7.0% of the premium.  The Deferred  Issue Charge is for premium
taxes (2.5% of the  single-premium);  sales charge (4.0% of the single-premium);
and Policy issue charge (0.5% of the single-premium). For policies issued in the
state of California  only, the Deferred Issue Charge is for premium taxes (2.35%
of the single-premium);  sales charge (4.15% of the single-premium);  and Policy
issue charge (0.5% of the single-premium).


PREMIUM  TAXES - Most  states  and  certain  jurisdictions,  such as cities  and
counties,  tax  premium  payments.  Premium  taxes  vary from state to state and
generally range from 2% to 3%. This charge does not apply in states that have no
premium tax.

SALES  CHARGE  - This  sales  charge  reimburses  us for  expenses  incurred  in
connection with the promotion,  sale and distribution of the Policy. This charge
is not expected to cover all of our  distribution  costs.  If this charge is in-
sufficient to cover the  distribution  costs, we may make up the difference from
our general  assets and from the profit we expect from the Mortality and Expense
Risk Charge.

POLICY  ISSUE  CHARGE - This  charge is  designed  to cover  the  administrative
expenses we incur in connection  with issuing a Policy.  Such  expenses  include
initial underwriting review, medical examinations, inspection reports, attending
physicians'  statements,  insurance  underwriting  costs, Policy issuance costs,
establishing permanent Policy records, preparation of illustrations, preparation
of riders and the initial confirmation of the transaction.

TRANSFER FEE


Currently you can make 12 free transfers  every year. We measure a year from the
Policy  Date.  If you make  more  than 12  transfers  a year,  we will  deduct a
transfer fee of $25, or 2% of the amount that is transferred, whichever is less.
If we do assess a transfer fee, it will be deducted from the amount transferred.


Your initial allocation will not count in determining the transfer fee.

TAXES

We may  assess a charge  against  a Policy  for any  taxes  attributable  to the
Policy. We do not expect to incur such taxes.

PORTFOLIO EXPENSES

There are  deductions  from the assets of the various  Portfolios  for operating
expenses (including management fees), which are summarized on the next page. See
the accompanying fund prospectuses for a complete description.


5. DEATH BENEFIT
--------------------------------------------------------------------------------

The primary purpose of the Policy is to provide death benefit  protection on the
life of your insured. Even if your Policy Value is $0, the Policy will not lapse
if there is no Indebtedness under the Policy.

The death benefit is paid upon receipt of due proof of the insured's  death. The
death  benefit  is the  greater  of:  1) the  Face  Amount;  or 2) the  variable
insurance amount as of the date we receive proof of death of the insured.  After
the issue date, the variable  insurance  amount will be your Policy Value,  less
the uncollected Deductions,  multiplied by the net single premium factor for the
insured's  attained age as of such date. The table of net single premium factors
is contained in Appendix B to this prospectus and is

(cont. on p. 13)

<PAGE>

12

<TABLE>
<CAPTION>

FUND ANNUAL EXPENSES:
(as a percentage of a Portfolio's  average net assets for the most recent fiscal
year). See the accompanying Portfolio prospectuses for more information.

                                                MANAGEMENT
                                               AND PORTFOLIO           12B-1                           TOTAL ANNUAL
                                           ADMINISTRATION FEES1        FEES         OTHER EXPENSES        EXPENSES
------------------------------------------------------------------------------------------------------------------------------------

<S>                                               <C>                   <C>              <C>               <C>
AIM V.I. Growth Fund                              .63%                  --               .10%              .73%

Alger American Growth Portfolio                   .75%                  --               .04%              .79%

Alger American Leveraged AllCap Portfolio2        .85%                  --               .08%              .93%

Franklin Aggressive Growth Fund3                  .50%                  --               .22%              .72%

Franklin Global Communications Securities Fund    .48%                  --               .03%              .51%

Franklin Global Health Care Securities Fund       .60%                  --               .22%              .82%

Franklin Growth and Income Securities Fund        .47%                  --               .02%              .49%

Franklin High Income Fund                         .51%                  --               .03%              .54%

Franklin Income Securities Fund                   .48%                  --               .02%              .50%

Franklin Large Cap Growth Securities Fund4        .75%                  --               .02%              .77%

Franklin Money Market Fund                        .52%                  --               .01%              .53%

Franklin Natural Resources Securities Fund        .62%                  --               .04%              .66%

Franklin Real Estate Fund                         .56%                  --               .02%              .58%

Franklin Rising Dividends Securities Fund         .73%                  --               .02%              .75%

Franklin S&P 500 Index Fund5                      .15%                  --               .38%              .53%

Franklin Small Cap Fund6                          .55%                  --               .27%              .82%

Franklin Technology Securities Fund3              .55%                  --               .38%              .93%

Franklin U.S. Government  Fund                    .49%                  --               .02%              .51%

Franklin Value Securities Fund                    .60%                  --               .21%              .81%

Franklin Zero Coupon Fund - 2000                  .63%                  --               .02%              .65%

Franklin Zero Coupon Fund - 2005                  .63%                  --               .02%              .65%

Franklin Zero Coupon Fund - 2010                  .63%                  --               .02%              .65%

Mutual Discovery Securities Fund                  .80%                  --               .21%             1.01%

Mutual Shares Securities Fund4                    .60%                  --               .19%              .79%

Templeton Asset Strategy Fund6                    .60%                  --               .18%              .78%

Templeton Developing Markets Securities Fund6    1.25%                  --               .31%             1.56%

Templeton Global Income Securities Fund4          .60%                  --               .05%              .65%

Templeton Growth Securities Fund4                 .83%                  --               .05%              .88%

Templeton International Securities Fund6          .69%                  --               .19%              .88%

Templeton International Smaller Companies Fund    .85%                  --               .26%             1.11%

Templeton Pacific Growth Securities Fund         1.00%                  --               .08%             1.08%

USAllianz VIP Diversified Assets Fund5/7          .55%                 .25%              .20%             1.00%

USAllianz VIP Fixed Income Fund5/7                .50%                 .25%              .00%              .75%

USAllianz VIP Growth Fund5/7                      .65%                 .25%              .00%              .90%

<FN>

1. The Portfolio  Administration  Fee is a direct expense for the Franklin Global Health Care Securities  Fund, the Franklin Small
Cap Fund, the Franklin Value  Securities  Fund,  the Mutual  Discovery  Securities  Fund, the Mutual Shares  Securities  Fund, the
Templeton  Asset  Strategy Fund,  the Templeton  Developing  Markets Fund,  the Templeton  International  Securities  Fund and the
Templeton  International  Smaller Companies Fund. Other Portfolios of Franklin Templeton Variable Insurance Products Trust pay for
similar services  indirectly through the Management Fee. See the Franklin Templeton Variable Insur- ance Products Trust prospectus
for further information regarding these fees.

2. Other expenses for the Alger American Leveraged AllCap Fund include 0.01% of interest expense.

3. The Franklin Aggressive Growth Securities Fund and the Franklin Technology  Securities Fund commenced operations as of the date
of this prospectus. The expenses shown above for these portfolios are therefore estimated for the current fiscal year.

4 On 2/8/00, a merger and  reorganization  was approved that combined the fund with a similar fund of Templeton  Variable Products
Series Fund, effective 5/1/00. The table shows total expenses based on the fund's assets as of 12/31/99, and not the assets of the
combined fund.  However,  if the table reflected  combined assets,  the fund's  Management  Fees,  Other Expenses,  and Total Fund
Operating  Expenses after 5/1/00 would be estimated as: 0.75%,  0.02%,  and 0.77%  respectively  for the Franklin Large Cap Growth
Securities Fund; 0.60%,  0.19%, and 0.79% respectively for the Mutual Shares Securities Fund; 0.80%, 0.05%, and 0.85% respectively
for the Templeton Growth  Securities Fund; and .0.60%,  0.04%, and 0.64%  respectively for the Templeton Global Income  Securities
Fund.

5. The Franklin S&P 500 Index Fund, the US Allianz VIP  Diversified  Assets Fund, the US Allianz VIP Fixed Income Fund, and the US
Allianz VIP Growth Fund commenced  operations on November 12, 1999.  The expenses  shown above for these  portfolios are therefore
estimated for the fund's current fiscal year.

6. On 2/8/00,  shareholders  approved a merger and reorganization  that combined the assets of the fund with a similar fund of the
Templeton  Variable Prod ucts Series Fund,  effective 5/1/00. The shareholders of the fund had approved new management fees, which
apply to the combined fund effective 5/1/00.  The table shows restated total expenses based on the new fees and assets of the fund
as of 12/31/99,  and not the assets of the  combined  fund.  However,  if the table  reflected  both the new fees and the combined
assets,  the fund's Management Fees, Other Expenses,  and Total Fund Operating Expenses after 5/1/00 would be estimated as: 0.55%,
0.27%, and 0.82% respectively for the Franklin Small Cap Fund; 1.25%,  0.29%, and 1.54% respectively for the Templeton  Developing
Markets Securities Fund; 0.60%,  0.14%, and 0.74% respectively for the Templeton Asset Strategy Fund; and 0.65%,  0.20%, and 0.85%
respectively for the Templeton International Securities Fund.

7. Certain expenses of the USAllianz VIP Funds have been assumed by the Adviser. Had those expenses not been assumed, total return
would have been l lower and total fund expenses would have been 3.80% for the USAllianz VIP Diversified Assets Fund, 3.77% for the
USAllianz VIP Fixed Income Fund, and 3.90% for the Growth Fund.

</FN>
</TABLE>

<PAGE>

                                                                  Prospectus  13

(cont. from p. 11)

shown in your Policy.  The Face Amount is  determined  on the date we issue your
Policy.  The  variable  insurance  amount is the same as the Face Amount on that
date. Thereafter the variable insurance amount will vary.

The amount payable for the death benefit is reduced by any  Indebtedness and any
accrued Deductions,  and is increased by any amount due from riders.  Payment of
the death benefit may be delayed  pending receipt of any applicable tax consents
and/or  forms  from a state.  Your  Policy  will  terminate  without  value,  as
described in the grace period  provision,  if your  Indebtedness is greater than
the Policy Value less the uncollected Deductions.

6. TAXES

--------------------------------------------------------------------------------

NOTE:  We  have  prepared  the  following  information  on  taxes  as a  general
discussion of the subject.  It is not in tended as tax advice to any person. You
should  consult  your own tax  adviser  about  your own  circumstances.  We have
included an additional discussion regarding taxes in Part II of this prospectus.

LIFE INSURANCE IN GENERAL

Life  insurance,  such  as the  Policy,  is a means  of  providing  for  certain
financial  protections upon your death and setting aside money for future needs.
Congress  recognized the importance of such planning and provided  special rules
in the Internal Revenue Code (Code) for life insurance.

Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your life  insurance  policy until you take the money out. The
beneficiaries  are not taxed when they receive the death proceeds upon the death
of the insured. However, estate taxes may apply.

You, as the owner,  will not be taxed on  increases  in the value of your Policy
until a  distribution  occurs -- either as a  surrender  or as a loan.  When you
receive a  distribution,  you are taxed on the amount of the  surrender  that is
earnings.

TAKING MONEY OUT OF YOUR POLICY

For tax purposes,  your Policy will be treated as a modified endowment contract,
unless under certain  circumstances  it was exchanged for a policy issued before
June 21, 1988.  Consequently,  if you make a withdrawal or take a loan from your
Policy,  the Code  treats it as first  coming from  earnings  and then from your
premiums. These earnings are included in taxable income.

The Code also provides that any amount  received from an insurance  policy which
is included  in income may be subject to a 10%  penalty.  The  penalty  will not
apply if the income  received is: 1) paid on or after the  taxpayer  reaches age
591 1/42;  2) paid if the  taxpayer  becomes  totally  disabled (as that term is
defined in the Code);  or 3) in a series of  substantially  equal  payments made
annually (or more  frequently)  for the life or life expectancy of the taxpayer.
If you  purchased a Policy in  exchange  for a policy  issued  prior to June 21,
1988,  different  tax  rules may  apply.  See "Tax  Status"  in Part II for more
details.

DIVERSIFICATION

The Code provides  that the  underlying  investments  for a variable life policy
must satisfy  certain  diversification  requirements in order to be treated as a
life insurance contract.  We believe that the portfolios are being managed so as
to comply with the requirements.

Under current federal tax law, it is unclear as to the circumstances under which
you,  because  of the  degree  of  control  you  exercise  over  the  underlying
investments,  and not us would be  considered  the  owner of the  shares  of the
investment  portfolios.  If you are considered the owner of the investments,  it
will result in the loss of the favorable  tax  treatment  for the Policy.  It is
unknown  to what  extent  owners are  permitted  to select  portfolios,  to make
transfers  among the portfolios or the number and type of portfolios  owners may
select from without being  considered the owner of the shares.  If guidance from
the Internal  Revenue  Service is provided  which is  considered a new position,
then the guidance would  generally be applied  prospectively.  However,  if such
guidance  is  considered  not to be a new  position,  it may  be  applied  retro
actively. This would mean that you, as the owner of the Policy, could be treated
as the owner of the portfolios.  Due to the uncertainty in this area, we reserve
the  right to  modify  the  Policy  in an  attempt  to  maintain  favorable  tax
treatment.

7. ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------

The Cash Surrender Value in your Policy is available: 1) by making a complete
surrender, or 2) by taking a loan from your Policy.

LOANS

You may borrow  money from us while the Policy is still in force.  The Policy is
the only security we require for a Policy loan.  You cannot borrow  against your
Policy until the end of the right to examine period and you cannot borrow if the
Policy is in a grace period. Loans are con-

14

sidered  distributions  from the Policy for tax  purposes and the portion of the
loan that has come from  earnings will be taxable to you and may be subject to a
10% penalty tax. Loan amounts are treated as coming first from earnings and then
from premiums. See "Tax Status" in Part II for more details.

LOAN AMOUNT. The maximum loan amount is equal to 90% of the Policy Value less
any uncollected Deductions.

The  minimum  loan  amount is $1,000.  If total loans equal or exceed the Policy
Value,  the  Policy  will  terminate  at  the  end  of the  grace  period  if an
appropriate loan repayment is not made.

LOAN ACCOUNT.  When you make a loan, a portion of your Policy Value equal to the
loan will be  transferred  on a prorata  basis from the  portfolios  to the loan
account.  The loan  account is a portion of our general  account  that  contains
Policy Values attributable to Policy loans.

LOAN  INTEREST.  Loan interest due on the Policy loan accrues daily at a current
rate of 4.75% per annum. The loan interest is due each Policy Anniversary and if
not paid will  become  part of the loan.  When that  happens,  a portion  of the
Policy Value equal to the loan interest due is transferred,  on a prorata basis,
from the portfolios to the loan account.

INTEREST CREDITED. Amounts held in the loan account are credited daily with
interest, at a current rate of 4.0% per annum.

EFFECT  OF LOAN.  When you  make a loan  against  your  Policy,  we will  redeem
Valuation Units from the portfolios  equal to the loan request and transfer that
amount to the loan account.

A Policy  loan,  whether  or not  repaid,  will have a  permanent  effect on the
Policy.  This is  because  the loan  account  does not  share in the  investment
results of the port fo lio(s). If it is not repaid,  the Policy loan and accrued
loan interest  will reduce the amount of Policy  Value.  It will also reduce the
amount payable at death because Indebtedness is deducted from the death benefit.

LOAN  REPAYMENTS.  You can  repay all or part of a loan at any time  while  your
Policy is in force and the insured is alive.  The minimum loan repayment  amount
is $1,000.  If you want to repay a loan in full,  the loan  repayment must equal
the loan plus all the  accrued  loan  interest.  When you repay a loan,  we will
transfer the amount held in the loan account to the portfolios according to your
most recent instructions.

Unless you tell us  otherwise,  any payment we receive from you will go first to
pay any interest due and then to repay any loan.

TOTAL SURRENDER AND TERMINATION OF THE POLICY

You can  terminate  your Policy by notifying us in writing.  We will pay you the
Cash Surrender Value. When that happens, the Policy will be terminated and there
will be no other  benefits.  When  you  make a total  surrender  we  deduct  any
uncollected Deductions. Partial surrenders are not allowed.

Your Policy will also terminate if the grace period has ended or the insured has
died.

8. OTHER INFORMATION
--------------------------------------------------------------------------------

ALLIANZ LIFE


Allianz Life Insurance  Company of North America  (Allianz Life),  1750 Hennepin
Avenue, Minneapolis,  Minnesota 55403, was organized under the laws of the state
of Minnesota in 1896.  Allianz Life offers fixed and variable life insurance and
annuities  and group  life,  accident  and  health  insurance.  Allianz  Life is
licensed  to do direct  business  in 49 states  and the  District  of  Columbia.
Allianz Life is a wholly-owned subsidiary of Allianz Versicherugs-AG Holding.


USAllianz  Investor  Services,  LLC (formerly NALAC Financial  Plans,  LLC) is a
wholly-owned  subsidiary of Allianz Life. It provides  marketing services and is
the principal  underwriter of the Policy.  USAllianz Investor  Services,  LLC is
reimbursed for expenses incurred in the distribution of the Policies.

Administration for the Policy is provided at our Service Office:

         USAllianz Service Center
         300 Berwyn Park
         P.O. Box 3031
         Berwyn, PA 19312-0031
         1-800-624-0197

THE SEPARATE ACCOUNT

We  established a separate  account,  Allianz Life Separate  Account A (Separate
Account), to hold the assets that underlie the Policies.

The  assets  of the  Separate  Account  are  held in our name on  behalf  of the
Separate  Account and legally belong to us. However,  those assets that underlie
the  Policies,  are not  chargeable  with  liabilities  arising out of any other
business we may conduct. All the income, gains and

                                                                  Prospectus  15

losses  (realized or unrealized)  resulting from those assets are credited to or
against the Policies and not against any other policies we may issue.

DISTRIBUTOR

USAllianz Investor  Services,  LLC, 1750 Hennepin Ave.,  Minneapolis,  MN 55403,
acts as the distributor of the Policies.  USAllianz Investor Services, LLC is an
affiliate of Allianz Life.

Commissions will be paid to broker-dealers who sell the Policies. Broker-dealers
will be paid commissions up to 6% of premiums and a trail commission up to 0.25%
per year of the Policy  Value after the first Policy  Year.  In addition,  under
certain  circumstances,  Allianz Life may pay certain sellers production bonuses
which will take into account,  among other things, the total premiums which have
been paid under Policies associated with the broker-dealer. In addition, Allianz
Life may pay certain sellers for other services not directly related to the sale
of the Policies (such as special marketing support allowances).

Sometimes,  we  enter  into  an  agreement  with  the  broker-dealer  to pay the
broker-dealer  persistency  bonuses, in addition to the standard  commission.  A
persistency bonus is paid as an additional commission to certain  broker-dealers
based on the  value  and  length  of time in  force  for the  block of  policies
associated with the broker-dealer.

SUSPENSION OF PAYMENTS OR TRANSFERS

We may be required  to suspend or postpone  any  payments or  transfers  for any
period when:

1) the New York Stock Exchange is closed (other than customary weekend and
   holiday closings);

2) trading on the New York Stock Exchange is restricted;

3) an emergency exists as a result of which disposal of shares of the Portfolios
   is not  reasonably  practicable or Allianz Life cannot  reasonably  value the
   shares of the Portfolios;

4) during any other  period when the  Securities  and  Exchange  Commission,  by
   order, so permits for the protection of owners.

OWNERSHIP

OWNER. You, as the owner of the Policy, have all of the rights under the Policy.
If you die  while  the  Policy  is still in force  and the  insured  is  living,
ownership  passes to a successor  owner or if none, then your estate becomes the
owner.

JOINT OWNER. The Policy can be owned by joint owners. Authorization of both
joint owners is required for all Policy changes except for telephone transfers.

BENEFICIARY.  The beneficiary is the person(s) or entity you name to receive any
death benefit.  The beneficiary is named at the time the Policy is issued unless
changed at a later date.  Unless an irrevocable  beneficiary has been named, you
can change the  beneficiary  at any time before the insured dies. If there is an
irrevocable  beneficiary,  all Policy  changes except  premium  allocations  and
transfers require the consent of the beneficiary.

ASSIGNMENT. You can transfer ownership of (assign) the Policy.

PART II - MORE INFORMATION
--------------------------------------------------------------------------------

MANAGEMENT OF ALLIANZ LIFE

As of May 1, 2000 the directors and executive  officers of the Company and their
principal occupations for the past 5 years are as follows:

Name                   Principal Occupations During the Past Five Years
--------------------------------------------------------------------------------

Robert W. MacDonald    Chief Executive Officer and Director, since October,1999
                       Previously Chief Executive Officer of LifeUSA.

Margery G. Hughes      President and Chief Administrative Officer, since
                       October 1999. Previously President and Chief
                       Administrative Officer of LifeUSA.

Mark A. Zesbaugh       Senior Vice President and Chief Financial Officer,
                       since October 1999. Previously Chief Financial
                       Officer of LifeUSA.

Lowell C. Anderson     Chariman of the Board. Previously Chairman, Pres-
                       ident and Chief Executive Officer of the Company
                       since October, 1988.

Herbert F. Hansmeyer   Chairman of the Board of Allianz Life of America
                       Corp. Member of the Board of Management of
                       Allianz Life-AG, Munich, Germany, since 1986.

Dr. Gerhard Rupprecht  Chairman of the Board of Management - Allianz Life
                       Lebensversicherungs since 1979.

Michael P. Sullivan    President, Chief Executive Officer and Director of
                       International Dairy Queen, Inc. since 1987.

Michael T. Westermeyer Vice President - Corporate Legal Officer and Secr-
                       tary of the Company since April 1997. Formerly
                       Second Vice President, Senior Counsel and Assistant
                       Secretary of the Company.

Paul Howman            Vice President - Underwriting of the Company since 1995.

Robert S. James        President - Individual Marketing Division of the Com-
                       pany since March 31, 1995. Previously President of

16

                       Financial Markets Division.

Edward J. Bonach       President, Special Markets Division. Previoulsy Exec-
                       utive Vice President - Chief Financial Officer and
                       Treasurer of the Company since 1993.

Rev. Dennis J. Dease   President, University of St. Thomas, St. Paul since
                       July 1991.

James R. Campbell      Chairman and Chief Executive Officer of Norwes
                       Bank MN, N.A. since 1998. Previously Executive
                       Vice President since February 1988.

Robert M. Kimmitt      Partner in the law firm of Wilmer, Cutler & Pickering.



ADMINISTRATION OF THE POLICIES

While we have primary  responsibility for all administration of the Policies and
the Separate Account, we have retained the services of Delaware Valley Financial
Services,   Inc.  ("DVFS"  or  "USAllianz   Service  Center")   pursuant  to  an
Administrative  Agreement.  Such administrative services include issuance of the
Policies and maintenance of Policy owners' records.  We pay all charges and fees
assessed  by  DVFS.  DVFS  serves  as the  administrator  to  various  insurance
companies  offering  variable  and fixed  annuity and  variable  life  insurance
contracts.  Our ability to administer the Policies  could be adversely  affected
should DVFS elect to terminate the Agreement.

VOTING

Pursuant to our view of present  applicable  law, we will vote the shares of the
portfolios at special  meetings of shareholders in accordance with  instructions
received from owners having a voting interest.  We will vote shares for which we
have not received  instructions.  We will vote all shares in the same proportion
as the shares for which we have received  instructions.  We will vote our shares
in the same manner. The funds do not hold regular meetings of shareholders.

If the Investment Company Act of 1940 or any regulation thereunder is amended or
if the  present  interpretation  thereof  changes so as to permit us to vote the
shares in our own right, we may elect to do so.

The voting interests of an owner is determined as follows:

o Owners may cast one vote for each $100 of Policy Value which is allocated to a
  portfolio on the record date. Fractional votes are counted.

o The number of shares which a person has a right to vote will be  determined as
  of the date chosen by us.

o Each owner having a voting interest will receive  periodic reports relating to
  the  portfolios in which he or she has an interest,  proxy material and a form
  with which to give such voting instructions.

DISREGARD  OF  VOTING  INSTRUCTIONS.  We may,  when  required  to do so by state
insurance  authorities,  vote shares of the funds without regard to instructions
from owners. We will do this if such instructions would require the shares to be
voted to cause a portfolio to make,  or refrain from making,  investments  which
would result in changes in the  sub-classification  or investment  objectives of
the portfolio. We may also disapprove changes in the investment policy initiated
by owners or trustees/directors of the funds, if such disapproval:

o is reasonable and is based on a good faith determination by us that the change
  would violate state or federal law;

o the change would not be consistent with the investment objectives of the
  portfolios; or

o which varies from the general quality and nature of investments and investment
  techniques used by other funds with similar investment  objectives  underlying
  other variable contracts offered by us or of an affiliated company.

In the event we do disregard voting  instructions,  a summary of this action and
the reasons for such action will be included in the next  semi-annual  report to
owners.

THE SEPARATE ACCOUNT

We have  established  the  separate  account,  Allianz Life  Separate  Account A
(Separate Account), to hold the assets that underlie the Policies.  Our Board of
Directors adopted a resolution to establish the Separate Account under Minnesota
insurance law on May 31, 1985. We have registered the Separate  Account with the
Securities  and  Exchange  Commission  as a  unit  investment  trust  under  the
Investment  Company Act of 1940.  The Separate  Account is divided into Variable
Options  (also  known as  sub-accounts).  Each  Variable  Option  invests in one
Portfolio.

The investment  program of the Separate  Account will not be changed without the
approval by the Insurance  Commissioner of the state of Minnesota.  If required,
the approval process is on file with the Commissioner of the state in which this
Policy is issued.

If the New York Stock  Exchange is closed  (except for holidays and weekends) or
trading is  restricted  due to an  emergency  as defined by the  Securities  and
Exchange Commission so that we cannot value Valuation Units, we

                                                                  Prospectus  17

may postpone all procedures which require valuation of the Valuation Units until
valuation is possible.

LEGAL OPINIONS

Blazzard, Grodd & Hasenauer, P.C., Westport,  Connecticut has provided advice on
certain  matters  relating  to the  federal  securities  and  income tax laws in
connection with the Policies.

MISSTATEMENT OF AGE OR SEX

If the age or sex of the  insured(s) is  incorrectly  stated,  the death benefit
will be adjusted. This adjustment will reflect the death benefit that would have
been provided by the last cost of insurance at the correct age and/or sex of the
insured.

OUR RIGHT TO CONTEST

We cannot contest the validity of the Policy,  except in the case of fraud after
it has been in effect during the insured's  lifetime for 2 years from the Policy
Date. If the Policy is  reinstated,  the 2-year period is measured from the date
of  reinstatement.  In addition,  if the insured  commits  suicide in the 2-year
period, or such period as specified in state law, the benefit payable is limited
to premiums paid, less debt and less any surrenders.

SETTLEMENT OPTIONS

The Cash Surrender Value or the death proceeds may be paid in a lump sum or may
be applied to one of the Settlement Options. The Settlement Options are:

Option 1:  Proceeds at Interest

Option 2:  Payments for a Definite Period

Option 3:  Life Annuity with Minimum Guarantee for Minimum Period

Option 4:  Payments for a Designated Amount

Option 5:  Life Annuity with Cash Refund

You or the  beneficiary  can select to have the  Settlement  Options  payable on
either a fixed or variable basis.

TAX STATUS

NOTE:  The  following  description  is based upon our  understanding  of current
federal  income tax law  applicable  to life  insurance  in  general.  We cannot
predict the probability  that any changes in such laws will be made.  Purchasers
are cautioned to seek  competent tax advice  regarding the  possibility  of such
changes. Section 7702 of the Internal Revenue Code of 1986, as amended ("Code"),
defines the term "life insurance  contract" for purposes of the Code. We believe
that the Policies to be issued will qualify as "life insurance  contracts" under
Section 7702.  We do not  guarantee  the tax status of the Policies.  Purchasers
bear the complete risk that the Policies may not be treated as "life  insurance"
under federal income tax laws. Purchasers should consult their own tax advisers.
It should be further understood that the following  discussion is not exhaustive
and that special  rules not  described in this  prospectus  may be applicable in
certain situations.

INTRODUCTION.  The discussion  contained  herein is general in nature and is not
intended as tax advice.  Each person  concerned  should  consult a competent tax
adviser.  No attempt is made to consider any applicable state or other tax laws.
Moreover,  the discussion  herein is based upon Allianz Life's  understanding of
current  federal  income  tax  laws  as  they  are  currently  interpreted.   No
representation is made regarding the likelihood of continuation of those current
federal  income  tax  laws or of the  current  interpretations  by the  Internal
Revenue Service.

We are taxed as a life insurance  company under the Code. For federal income tax
purposes,  the Separate Account is not a separate entity and its operations form
a part of our operation.

DIVERSIFICATION.  Section  817(h) of the Code  imposes  certain  diversification
standards on the underlying assets of variable life insurance policies. The Code
provides  that a  variable  life  insurance  policy  will not be treated as life
insurance for any period (and any subsequent  period) for which the  investments
are not, in accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified.  Disqualification of
the Policy as a life  insurance  contract  would result in imposition of federal
income tax to the owner with  respect to earnings  allocable to the Policy prior
to the receipt of payments  under the  Policy.  The Code  contains a safe harbor
provision which provides that life insurance  policies such as the Policies meet
the  diversification  requirements  if,  as of the  close of each  quarter,  the
underlying assets meet the diversification  standards for a regulated investment
company and no more than fifty-five (55%) percent of the total assets consist of
cash, cash items, U.S.  Government  securities and securities of other regulated
investment  companies.  There is an exception for securities  issued by the U.S.
Treasury in connection with variable life insurance policies.

On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
Section 1.817-5), which established diversification requirements for the
investment portfolios underlying variable contracts such as the Policies. The
Regulations amplify the diversification requirements for

18

variable  contracts set forth in the Code and provide an alternative to the safe
harbor provision described above. Under the Regulations, an investment portfolio
will be deemed  adequately  diversified if: (i) no more than 55% of the value of
the total assets of the portfolio is represented by any one investment;  (ii) no
more than 70% of the value of the total assets of the  portfolio is  represented
by any two investments;  (iii) no more than 80% of the value of the total assets
of the portfolio is represented by any three investments;  and (iv) no more than
90% of the value of the total assets of the portfolio is represented by any four
investments.  For  purposes of these  Regulations,  all  securities  of the same
issuer are treated as a single investment.

The  Code  provides  that,  for  purposes  of  determining  whether  or not  the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code are met, "each United States  government agency or
instrumentality shall be treated as a separate issuer".

We intend that each  Portfolio  underlying  the Policies  will be managed by the
investment  advisers  in such a manner as to comply  with these  diversification
requirements.

The Treasury  Department has indicated that the  diversification  Regulations do
not provide  guidance  regarding  the  circumstances  where owner control of the
investments of the Separate  Account causes the owner to be treated as the owner
of the  assets  of the  Separate  Account,  thereby  resulting  in the  loss  of
favorable  tax  treatment  for the Policy.  At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.

The amount of owner control which may be exercised under the Policy is different
in some respects from the  situations  addressed in published  rulings issued by
the Internal  Revenue Service in which it was held that the policy owner was not
the owner of the assets of the separate  account.  It is unknown  whether  these
differences, such as the owner's ability to transfer among investment choices or
the number and type of investment choices available, would cause the owner to be
considered as the owner of the assets of the Separate Account.

In the event any  future  guidance  or ruling is  considered  to set forth a new
position,  such guidance or ruling will generally be applied only prospectively.
However,  if such  ruling  or  guidance  was not  considered  to set forth a new
position,  it  may  be  applied  retroactively  resulting  in  the  owner  being
retroactively determined to be the owner of the assets of the Separate Account.

Due to the  uncertainty  in this area, we reserve the right to modify the Policy
in an attempt to maintain favorable tax treatment.

TAX  TREATMENT  OF THE POLICY.  The Policy has been  designed to comply with the
definition  of life  insurance  contained in Section 7702 of the Code.  Although
some interim  guidance has been  provided  and  proposed  regulations  have been
issued,  final  regulations  have not  been  adopted.  Section  7702 of the Code
requires that the amount of mortality and other expense  charges be  reasonable.
In establishing  these charges,  we have relied on the interim guidance provided
in IRS  Notice  88-128  and  proposed  regu-  lations  issued  on July 5,  1991.
Currently,  there is even less  guidance as to a Policy  issued on a substandard
risk basis and thus it is even less clear  whether a Policy issued on such basis
would meet the requirements of Section 7702 of the Code.

While we have  attempted  to comply with Section  7702,  the law in this area is
very complex and unclear. There is a risk, therefore,  that the Internal Revenue
Service will not concur with our  interpretations of Section 7702 that were made
in  determining  such  compliance.  In the event the Policy is determined not to
comply,  it would not qualify for the favorable tax treatment  usually  accorded
life insurance  policies.  Owners should consult their tax advisers with respect
to the tax consequences of purchasing the Policy.

POLICY  PROCEEDS.  Loan proceeds  and/or  surrender  payments from the Policies,
including those resulting from the lapse of the Policy, are fully taxable to the
extent of income in the Policy and may further be subject to an  additional  10%
federal  income tax  penalty.  (See "Tax  Treatment  of Loans and  Surrenders.")
Otherwise,  the Policy should  receive the same federal  income tax treatment as
any other type of life  insurance.  As such,  the death  benefit  thereunder  is
excludable from the gross income of the beneficiary  under Section 101(a) of the
Code. Furthermore,  the owner is not deemed to be in constructive receipt of the
Policy Value or Cash Surrender Value, in- cluding  increments  thereon,  under a
Policy until surrender  thereof.  If the death proceeds are to be paid under one
of the  Settlement  Options,  the payments  will be pro rated between the amount
attributable   to  the  death  benefit   which  will  be  excludable   from  the
beneficiary's  income  and the amount  attributable  to  interest  which will be
includable in the beneficiary's income.

Federal,  state and local  estate,  inheritance  and other tax  consequences  of
ownership,  or receipt of Policy proceeds,  depend on the  circumstances of each
Policy

                                                                  Prospectus  19

owner or beneficiary. Owners and beneficiaries should consult their tax
advisers.

TAX  TREATMENT  OF LOANS  AND  SURRENDERS.  The Code  alters  the tax  treatment
accorded to loans and certain  distributions  from life insurance policies which
are  deemed  to  be  "modified  endowment   contracts".   The  Policy's  premium
requirements  are such that  Policies  issued on or after June 21,  1988 will be
treated as modified  endowment  contracts.  A Policy  received in exchange for a
modified endowment contract is also a modified endowment contract  regardless of
whether it meets the 7-pay test.

However,  an exchange under Section 1035 of the Code of a life insurance  policy
entered into before June 21, 1988 for the Policy will not cause the Policy to be
treated as a modified endowment contract if no additional premiums are paid.

A Policy,  that was entered into prior to June 21,  1988,  may be deemed to be a
modified  endowment  contract if it is materially  changed and fails to meet the
7-pay test.  A Policy  fails to meet the 7-pay test when the  cumulative  amount
paid under the Policy at any time  during the first 7 Policy  Years  exceeds the
sum of the net level  premiums which would have been paid on or before such time
if the Policy  provided for paid-up future benefits after the payment of 7 level
annual  premiums.  A material  change  would  include any increase in the future
benefits provided under a Policy unless the increase is attributable to: (1) the
payment of premiums  necessary  to fund the lowest death  benefit and  qualified
additional  benefits  payable  in the  first  seven  Policy  Years;  or (2)  the
crediting of interest or other earnings (including  policyholder dividends) with
respect to such premiums.

Assuming that the Policy is treated as a modified endowment contract, surrenders
and/or loan  proceeds  are  taxable to the extent of income in the Policy.  Such
distributions  are deemed to be on a last-in,  first-out basis,  which means the
taxable income is distributed first. Loan proceeds and/or surrender payments may
also be subject to an additional 10% federal  income tax penalty  applied to the
income portion of such distribution.  The penalty shall not apply,  however,  to
any  distribution:  (1) made on or after the date on which the taxpayer  reaches
age 591/2; (2) which is attributable to the taxpayer  becoming  disabled (within
the meaning of Section  72(m)(7) of the Code);  or (3) which is part of a series
of substantially  equal periodic payments made not less frequently than annually
for the life (or life  expectancy)  of the taxpayer or the joint lives (or joint
life  expectancies)  of such taxpayer and his or her  beneficiary.  Furthermore,
only under  limited  circumstances  will  interest  paid on Policy  loans be tax
deductible.

If a  Policy  is not  classified  as a  modified  endowment  contract,  then any
surrenders  shall be treated first as a recovery of the investment in the Policy
which would not be received as taxable income. However, if a distribution is the
result of a reduction  in  benefits  under the Policy  within the first  fifteen
years  after the Policy is issued in order to comply  with  Section  7702,  such
distribution  will,  under rules set forth in Section 7702, be taxed as ordinary
income to the extent of income in the Policy.

Any  loans  from a  Policy  which  is not  classified  as a  modified  endowment
contract,  will be treated as  indebtedness of the Owner and not a distribution.
Upon  complete  surrender or lapse of the Policy or when  maturity  benefits are
paid,  if the amount  received  plus the policy debt exceeds the total  premiums
paid that are not treated as previously  surrendered  by the Policy  owner,  the
excess generally will be treated as ordinary income.

Policy owners should seek competent tax advice on the tax consequences of taking
loans,  making a total surrender or making any material  modifications  to their
Policies.

TAX TREATMENT OF SETTLEMENT OPTIONS. Under the Code, a portion of the Settlement
Option  payments which are in excess of the death benefit  proceeds are included
in the Beneficiary's  taxable income.  Under a Settlement Option payable for the
lifetime  of the  Beneficiary,  the death  benefit  proceeds  are divided by the
Beneficiary's  life  expectancy (or joint life expectancy in the case of a joint
and survivor  option) and proceeds  received in excess of these prorated amounts
are  included  in taxable  income.  The value of the death  benefit  proceeds is
reduced by the value of any period  certain or refund  guarantee.  Under a fixed
payment or fixed  period  option,  the death  benefit  proceeds  are prorated by
dividing the proceeds over the payment period under the option.  Any payments in
excess of the prorated amount will be included in taxable income.

MULTIPLE  POLICIES.  The Code further provides that multiple modified  endowment
contracts that are issued within a calendar year period to the same owner by one
company or its  affiliates  are treated as one modified  endowment  contract for
purposes of determining the taxable portion of any loans or distributions.  Such
treatment may result in adverse tax  consequences  including more rapid taxation
of the loans or distributed  amounts from such combination of contracts.  Policy
owners

20

should  consult  a tax  adviser  prior to  purchasing  more  than  one  modified
endowment contract in any calendar year period.

TAX  TREATMENT  OF  ASSIGNMENTS.  An  assignment  of a Policy  or the  change of
ownership of a Policy may be a taxable  event.  Policy owners  should  therefore
consult competent tax advisers should they wish to assign or change the owner of
their Policies.

QUALIFIED PLANS. The Policies may be used in conjunction with certain  qualified
plans.  Because the rules governing such use are complex, a purchaser should not
do so until he has consulted a competent qualified plans consultant.

INCOME TAX  WITHHOLDING.  All  distributions  or the  portion  thereof  which is
includable in gross income of the Policy owner are subject to federal income tax
withholding. However, the Policy owner in most cases may elect not to have taxes
withheld.  The Policy owner may be required to pay penalties under the estimated
tax rules,  if the Policy  owner's  withholding  and  estimated tax payments are
insufficient.

REPORTS TO OWNERS

We will send to each owner  semi-annual  and annual  reports of the  Portfolios.
Within 30 days after each Policy  Anniversary,  an annual statement will be sent
to each  owner.  The  statement  will show the current  amount of death  benefit
payable under the Policy,  the current Policy Value,  the current Cash Surrender
Value,  current debt and will show all transactions  previously  confirmed.  The
statement  will also show  premiums  paid and all  charges  deducted  during the
Policy Year.

Confirmations  will  be  mailed  to  Policy  owners  within  seven  days  of the
transaction of: (a) the receipt of premium; (b) any transfer between Portfolios;
(c) any loan,  interest  repayment,  or loan repayment;  (d) any surrender;  (e)
exercise of the free look privilege;  and (f) payment of the death benefit under
the  Policy.  Upon  request a Policy  owner  shall be  entitled  to a receipt of
premium payment.

LEGAL PROCEEDINGS

There are no legal  proceedings to which the Separate Account or the Distributor
is a party or to which the assets of the Separate  Account are subject.  Allianz
Life is not  involved  in any  litigation  that  is of  material  importance  in
relation to its total assets or that relates to the Separate Account.

EXPERTS

The financial statements of Allianz Life Variable Account A and the consolidated
financial  statements of Allianz  Life, as of, and for the year ended,  December
31, 1999, included in this Prospectus have been audited by KPMG LLP, independent
auditors,  as indicated in their reports  included in this  prospectus,  and are
included  herein,  in reliance  upon such reports and upon the authority of said
firm as experts in accounting and auditing.

FINANCIAL STATEMENTS

The consolidated  financial statements of Allianz Life that are included in this
prospectus  should be  considered  only as bearing  upon our ability to meet our
obligations under the Policy.









                         ALLIANZ LIFE VARIABLE ACCOUNT A
                                       OF

                 ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA

                              Financial Statements

                                December 31, 1999

<PAGE>

Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Independent Auditors' Report


The Board of Directors of Allianz Life  Insurance  Company of North  America and
Policyholders of Allianz Life Variable Account A:

We have audited the  accompanying  statements of assets and  liabilities  of the
sub-accounts of Allianz Life Variable Account A as of December 31, 1999, and the
related statements of operations and changes in net assets for each of the years
in the  three-year  period  then  ended.  These  financial  statements  are  the
responsibility of the Variable  Account's  management.  Our responsibility is to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial  statements.  Investment securities
held in custody for the benefit of the Variable  Account were confirmed to us by
AIM Variable Insurance Funds, Inc., The Alger American Fund,  Franklin Templeton
Variable  Insurance  Products Trust, and USAllianz  Variable  Insurance Products
Trust.  An audit also includes  assessing  the  accounting  principles  used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of Allianz
Life  Variable  Account  A at  December  31,  1999,  and the  results  of  their
operations  and the  changes  in their net  assets  for each of the years in the
three-year period then ended, in conformity with generally  accepted  accounting
principles.

                                                              KPMG LLP





Minneapolis, Minnesota
February 4, 2000

<PAGE>

<TABLE>
<CAPTION>

Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements

Statements of Assets and Liabilities
December 31, 1999
                                                                                     Franklin

                                                              Alger  Alger American   Global        Franklin    Franklin
                                                     AIM    American   Leveraged  Communications Global Health Growth and  Franklin
                                                  VI Growth  Growth      AllCap     Securities  Care Securities  Income  High Income
                                                    Fund      Fund        Fund         Fund           Fund        Fund       Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>          <C>       <C>               <C>       <C>       <C>
Investments at net asset value:

  AIM VI Growth Fund

   3,244 shares, cost $102,904                  $104,606          -          -             -              -           -           -
  Alger American Growth Fund

   1,738 shares, cost $108,939                         -    111,878          -             -              -           -           -
  Alger American Leveraged AllCap Fund

   120 shares, cost $6,610                             -          -      6,966             -              -           -           -
  Franklin Global Communications Securities Fund

   95,296 shares, cost $1,735,057                      -          -          -     2,369,062              -           -           -
  Franklin Global Health Care Securities Fund

   4,931 shares, cost $48,559                          -          -          -             -         48,427           -           -
  Franklin Growth and Income Fund

   174,023 shares, cost $3,069,403                     -          -          -             -              -   3,094,134           -
  Franklin High Income Fund

   141,855 shares, cost $1,726,809                     -          -          -             -              -           -   1,398,695
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                     104,606    111,878      6,966     2,369,062         48,427   1,094,134   1,398,695
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
 Accrued mortality and expense risk charges           15         68         50         5,392            248      15,667       2,358
 Accrued administrative charges                        3         17         13         1,280             62       3,917         589
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                     18         85         63         6,672            310      19,584       2,947
------------------------------------------------------------------------------------------------------------------------------------
Net assets                                      $104,588    111,793      6,903     2,362,390         48,117   3,074,550   1,395,748
------------------------------------------------------------------------------------------------------------------------------------
Policy owners' equity (note 4)                  $104,588    111,793      6,903     2,362,390         48,117   3,074,550   1,395,748
------------------------------------------------------------------------------------------------------------------------------------



<FN>
                                            See accompanying  notes to financial
statements.

                                                                               3

</FN>
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Assets and Liabilities (cont.)
December 31, 1999
                                                  Franklin  Franklin  Franklin   Franklin                     Franklin     Franklin
                                                   Income   Large Cap  Money   Natural Resources Franklin  Rising Dividends  S&P 500
                                                Securities Growth Sec  Market    Securities    RealEstate    Securities      Index
                                                    Fund      Fund     Fund       Fund           Fund          Fund          Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>      <C>        <C>          <C>           <C>             <C>
Investments at net asset value:

  Franklin Income Securities Fund

   82,616 shares, cost $1,259,130             $1,213,628           -         -         -            -             -               -
  Franklin Large Cap Growth Securities Fund

   43,610 shares, cost $699,773                        -     919,304         -         -            -             -               -
  Franklin Money Market Fund

   1,283,666 shares, cost $1,283,666                   -          -  1,283,666         -            -             -               -
  Franklin Natural Resources Securities Fund

   30,276 shares, cost $329,522                        -          -          -   330,922            -             -               -
  Franklin Real Estate Fund

   41,159 shares, cost $614,176                        -          -          -         -      614,093             -               -
  Franklin Rising Dividends Securities Fund

   77,852 shares, cost $1,136,415                      -          -          -         -            -      1,059,568              -
  Franklin S&P 500 Index Fund

   12,767 shares, cost $133,279                        -          -          -         -            -             -         134,823
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                   1,213,628    919,304  1,283,666   330,922      614,093      1,059,568        134,823
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
 Accrued mortality and expense risk charges        5,771        643      2,003     1,647        3,187          6,279             26
 Accrued administrative charges                    1,443        161        501       411          797          1,570              6
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                  7,214        804      2,504     2,058        3,984          7,849             32
------------------------------------------------------------------------------------------------------------------------------------
Net assets                                    $1,206,414    918,500  1,281,162   328,864      610,109      1,051,719        134,791
------------------------------------------------------------------------------------------------------------------------------------
Policy owners' equity (note 4)                $1,206,414    918,500  1,281,162   328,864      610,109      1,051,719        134,791
------------------------------------------------------------------------------------------------------------------------------------
<FN>
                                            See accompanying  notes to financial
statements.

                                                                               4

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Assets and Liabilities (cont.)
December 31, 1999

                                                                      Franklin                                          Mutual
                                              Franklin  Franklin U.S.  Value    Franklin     Franklin     Franklin     Discovery
                                              Small Cap  Government  Securities Zero Coupon  Zero Coupon  Zero Coupon  Securities
                                                Fund      Fund          Fund    Fund - 2000  Fund - 2005  Fund - 2010    Fund
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>             <C>      <C>         <C>        <C>          <C>
Investments at net asset value:

    Franklin Small Cap Fund

   63,497 shares, cost $1,255,963             $1,706,161          -           -          -           -          -            -
  Franklin U.S. Government Fund
   85,501 shares, cost $1,070,843                      -  1,007,202           -          -           -          -            -
  Franklin Value Securities Fund

   741 shares, cost $6,343                             -          -       5,851          -           -          -            -
  Franklin Zero Coupon Fund - 2000
   27,996 shares, cost $329,745                        -          -           -    351,905           -          -            -
   Franklin Zero Coupon Fund - 2005
   24,919 shares, cost $308,806                        -          -           -          -     361,577          -            -
  Franklin Zero Coupon Fund - 2010
   27,701 shares, cost $440,816                        -          -           -          -          -     391,966            -
  Mutual Discovery Securities Fund

   40,352 shares, cost $482,859                        -          -           -          -          -           -      547,583
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                   1,706,161  1,007,202       5,851    351,905    361,577     391,966      547,583
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
 Accrued mortality and expense risk charges        8,345      2,243          32        518        532         483          516
 Accrued administrative charges                    2,086        561           8        130        133         120          129
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                 10,431      2,804          40        648        665         603          645
------------------------------------------------------------------------------------------------------------------------------------
Net assets                                    $1,695,730  1,004,398       5,811    351,257    360,912     391,363      546,938
------------------------------------------------------------------------------------------------------------------------------------
Policy owners' equity (note 4)                $1,695,730  1,004,398       5,811    351,257    360,912     391,363      546,938
------------------------------------------------------------------------------------------------------------------------------------
<FN>
                                            See accompanying  notes to financial
statements.

                                                                               5

</FN>
</TABLE>


<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America

Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999

                                                                                                                         Templeton

                                              Mutual   Templeton      Templeton               Templeton      Templeton International
                                              Shares   Developing   Global Asset Templeton   Global Income International  Smaller
                                           Securities Markets Equity Allocation Global Growth  Securities     Equity     Companies
                                              Fund        Fund          Fund        Fund         Fund          Fund        Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>       <C>         <C>          <C>         <C>              <C>
Investments at net asset value:

    Mutual Shares Securities Fund

   82,769 shares, cost $1,018,876           $1,095,030         -          -            -          -              -            -
  Templeton Developing Markets Equity Fund

   84,075 shares, cost $819,895                      -   881,952          -            -          -              -            -
  Templeton Global Asset Allocation Fund

   21,344 shares, cost $247,176                      -         -    252,077            -          -              -            -
  Templeton Global Growth Fund

   177,586 shares, cost $2,620,038                   -         -          -    2,775,663          -              -            -
  Templeton Global Income Securities Fund

   16,528 shares, cost $191,447                      -         -          -            -    182,965              -            -
  Templeton International Equity Fund

   124,044 shares, cost $2,077,368                   -         -          -            -          -      2,226,583            -
  Templeton International Smaller Companies Fund

   3,532 shares, cost $40,082                        -         -          -            -          -              -       39,103
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                 1,095,030   881,952    252,077    2,775,663    182,965      2,226,583       39,103
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
 Accrued mortality and expense risk charges      3,970     7,300        588       19,669      2,038         14,793          335
 Accrued administrative charges                    993     1,825        147        4,917        509          3,698           84
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                4,963     9,125        735       24,586      2,547         18,491          419
------------------------------------------------------------------------------------------------------------------------------------
Net assets                                  $1,090,067   872,827    251,342    2,751,077    180,418      2,208,092       38,684
------------------------------------------------------------------------------------------------------------------------------------
Policy owners' equity (note 4)              $1,090,067   872,827    251,342    2,751,077    180,418      2,208,092       38,684
------------------------------------------------------------------------------------------------------------------------------------
<FN>
                                            See accompanying  notes to financial
statements.

                                                                               6

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Assets and Liabilities (cont.)
December 31, 1999

                                                                     Templeton   USAllianz      USAllianz
                                                                      Pacific  VIP Diversified  VIP Fixed    USAllianz    Total
                                                                       Growth     Assets          Income    VIP Growth     All
                                                                        Fund       Fund            Fund         Fund      Funds
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>            <C>          <C>    <C>
Investments at net asset value:

    Templeton Pacific Growth Fund

  43,781 shares, cost $448,304                                       $446,123         -             -            -
    USAllianz VIP Diversified Assets Fund

   0 shares, cost $0                                                        -         -             -            -
   USAllianz VIP Fixed Income Fund

    0 shares, cost $0                                                       -         -             -            -
    USAllianz VIP Growth Fund

    0 shares, cost $0                                                       -         -             -            -
------------------------------------------------------------------------------------------------------------------------------------
      Total assets                                                    446,123         -             -            -      24,961,513
------------------------------------------------------------------------------------------------------------------------------------

Liabilities:
  Accrued mortality and expense risk charges                            3,685         -             -            -         108,401
  Accrued administrative charges                                          921         -             -            -          27,031
------------------------------------------------------------------------------------------------------------------------------------
      Total liabilities                                                 4,606         -             -            -         135,432
------------------------------------------------------------------------------------------------------------------------------------
      Net assets                                                     $441,517         -             -            -      24,826,081
------------------------------------------------------------------------------------------------------------------------------------

Policy owners' equity (note 4)                                       $441,517         -             -            -      24,826,081
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                               7

</FN>
</TABLE>


<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations

For the years ended December 31, 1999, 1998 and 1997

                                                                                                       Alger American

                                                   AIM VI Growth Fund   Alger American Growth Fund  Leveraged AllCap Fund
------------------------------------------------------------------------------------------------------------------------------------
                                                   1999   1998    1997       1999   1998    1997    1999   1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>          <C>    <C>    <C>        <C>    <C>     <C>     <C>      <C>
Investment income:
 Dividends reinvested in fund shares            $     -      -      -          -       -      -        -      -       -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges                  14      -      -         68       -      -       50      -       -
 Administrative charges                               3      -      -         17       -      -       13      -       -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                                       17      -      -         85       -      -       63      -       -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net                       (17)     -      -        (85)      -      -      (63)     -       -
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
 Realized capital gain distributions on mutual funds  -      -      -          -       -      -        -      -       -
 Realized gains (losses) on sales of investments, net 1      -      -          -       -      -        1      -       -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net           1      -      -          -       -      -        1      -       -
  Net change in unrealized appreciation
   (depreciation) on investments                  1,702      -      -      2,939       -      -      356      -       -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealize
appreciation (depreciation) on investments, net   1,703      -      -      2,939       -      -      357      -       -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
 operations                                     $ 1,686      -      -      2,854       -      -      294      -       -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
                                            See accompanying  notes to financial
statements.

                                                                               8

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                               Franklin Global            Franklin Global
                                        Communications Securities Fund  Health Care Securities Fund  Franklin Growth and Income Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997         1999    1998    1997           1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>     <C>          <C>      <C>       <C>       <C>       <C>      <C>
Investment income:
 Dividends reinvested in fund shares      $ 68,883  63,845  66,211         75       -       -          122,075  86,614   61,679
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges         13,853  10,459   9,862        242       54      -           21,089  16,628   14,386
 Administrative charges                      3,463   2,615   2,466         60       13      -            5,272   4,157    3,597
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                              17,316  13,074  12,328        302       67      -           26,361  20,785   17,983
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net               51,567  50,771  53,883       (227)     (67)     -           95,714  65,829   43,696
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
 Realized capital gain distributions
  on mutual funds                          166,820  93,096  91,611          -        -      -          340,300 203,765   59,819
 Realized gains (losses) on sales of
  investments, net                         268,795  56,812  59,135       (162)       2      -           23,652  27,735   75,044
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
 on investments, net                       435,615 149,908  150,746      (162)       2      -          363,952 231,500  134,863
 Net change in unrealized appreciation
  (depreciation) on investments            183,386 (40,828) 116,553    (1,826)   1,694      -        (453,957)(118,668) 283,057
------------------------------------------------------------------------------------------------------------------------------------
  Total realized gains (losses) and
  unrealized appreciation (depreciation
  on investments, net                      619,001 109,080  267,299    (1,988)   1,696      -         (90,005  112,832  417,920
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $670,568 159,851  321,182    (2,215)   1,629      -           5,709  178,661  461,616
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                               9

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                                              Franklin                Franklin Large
                                          Franklin High Income Fund   Income Securities Fund    Cap Growth Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999     1998    1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>      <C>      <C>      <C>      <C>       <C>    <C>        <C>
Investment income:
 Dividends reinvested in fund shares      $379,407  160,598  153,512  127,089  111,419  71,443    2,787     833       7
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges         10,123   10,568   12,094    7,825    8,671   7,189     4,139  1,287      96
 Administrative charges                      2,531    2,642    3,023    1,956    2,168   1,797     1,035    322      24
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                              12,654   13,210   15,117    9,781   10,839   8,986     5,174  1,609     120
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net              366,753  147,388  138,395  117,308  100,580  62,457    (2,387)  (776)   (113)
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
 Realized capital gain distributions
 on mutual funds                            55,544    9,531    5,036   45,538   26,313  15,347         -      -       -
 Realized gains (losses) on sales
   of investments, net                     (44,053)  29,193   43,795 (115,178)   3,544   7,042     2,133    989     (11)
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses)
 on investments, net                        11,491   38,724   48,831  (69,640)  29,857  22,389     2,133    989     (11)
 Net change in unrealized appreciation
(depreciation) on investments             (391,353)(177,480)   4,999  (78,033)(115,794) 68,874   185,307 34,912    (548)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net       (379,862)(138,756)  53,830 (147,673) (85,937) 91,263   187,440 35,901  (559)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $(13,109)  8,632   192,225  (30,365)  14,643 153,720   185,053 35,125   (672)
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              10

</FN>
</TABLE>

PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                                         Franklin Natural

                                          Franklin Money Market Fund  Resources Securities Fund  Franklin Real Estate Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999     1998    1997      1999    1998    1997      1999      1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>      <C>     <C>        <C>      <C>     <C>      <C>      <C>      <C>
Investment income:
 Dividends reinvested in fund shares       $71,180  62,012  35,286     2,670    2,271   1,844    48,690    26,119  12,965
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges          9,461   7,539   4,368     1,368      461     416     2,727     3,282   3,466
 Administrative charges                      2,365   1,885   1,092       342      115     104       682       821     867
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                              11,826   9,424   5,460     1,710      576     520     3,409     4,103   4,333
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net               59,354  52,588  29,826       960    1,695   1,324    45,281    22,016   8,632
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                                -       -       -         -        -       -     67,468    16,168   6,191
  Realized gains (losses) on sales
 of investments, net                            -       -       -    (11,396)  (8,058) (1,936) (179,615    15,172  17,125
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                               -       -       -    (11,396)  (8,058) (1,936) (112,147)   31,340  23,316
 Net change in unrealized appreciation
(depreciation) on investments                   -       -       -     57,915  (35,420) (25,118)  31,946  (179,557) 57,737
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net             -       -       -     46,519  (43,478) (27,054) (80,201) (148,217) 81,053
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $59,354  52,588  29,826     47,479  (41,783) (25,730) (34,920) (126,201) 89,685
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              11

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                                 Franklin Rising

                                          Dividends Securities Fund  Franklin S&P 500 Index Fund  Franklin Small Cap Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999     1998    1997      1999    1998    1997       1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>     <C>       <C>        <C>      <C>  <C>     <C>      <C>
Investment income:
 Dividends reinvested in fund shares    $   17,581    9,265   5,990        -       -       -      4,439     386     384
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges          7,013    5,177   3,657       26       -       -     11,584   3,458   1,277
 Administrative charges                      1,753    1,294     914        6       -       -      2,896     865     319
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                               8,766    6,471   4,571       32       -       -     14,480   4,323   1,596
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net                8,815    2,794   1,419      (32)      -       -    (10,041) (3,937) (1,212)
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                           176,138  113,543  10,229        -       -       -        620  49,628   4,546
  Realized gains (losses) on sales
   of investments, net                    (157,350)   6,199  18,073        -       -       -    346,621  (1,660)  2,723
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                           18,788  119,742  28,302        -       -       -    347,241  47,968   7,269
 Net change in unrealized appreciation
(depreciation) on investments             (153,361) (77,635) 93,007    1,544       -       -    472,910 (48,794)  22,458
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net       (134,573) 42,107  121,309    1,544       -       -    820,151    (826)  29,727
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                  $(125,758) 44,901  122,728    1,512       -       -    810,110  (4,763)  28,515
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              12

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                  Franklin                  Franklin                   Franklin
                                             U.S. Government Fund     Value Securities Fund     Zero Coupon Fund - 2000
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998    1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>        <C>     <C>        <C>       <C>      <C>   <C>      <C>     <C>
Investment income:
 Dividends reinvested in fund shares      $152,061   64,457  52,576      15        -       -     57,505   27,976  24,296
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges          6,209    5,484   5,796      15        -       -      2,164    2,236   2,223
 Administrative charges                      1,552    1,371   1,449       4        -       -        541      559     556
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                               7,761    6,855   7,245      19        -       -      2,705    2,795   2,779
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net              144,300   57,602  45,331      (4)       -       -     54,800   25,181  21,517
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                                -       -       -         -        -       -      7,930    4,476     550
  Realized gains (losses) on sales
   of investments, net                       6,118   17,179  27,003      (5)      (3)      -      1,819    4,953   5,922
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                            6,118   17,179  27,003      (5)      (3)      -      9,749    9,429   6,472
 Net change in unrealized appreciation
(depreciation) on investments             (167,882) (18,101)    136    (203)    (289)      -    (56,550) (11,643) (6,554)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net       (161,764)   (922)  27,139    (208)    (292)      -    (46,801)  (2,214)    (82)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $(17,464) 56,680   72,470    (212)    (292)      -      7,999   22,967  21,435
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              13

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                  Franklin                  Franklin                   Mutual
                                           Zero Coupon Fund-2005      Zero Coupon Fund-2010    Discovery Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998    1997       1999      1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>     <C>       <C>      <C>     <C>       <C>       <C>     <C>
Investment income:
 Dividends reinvested in fund shares     $  47,477  22,733  25,018    70,880   25,369  22,065    13,135    5,534      40
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges          2,161   2,431   2,373     3,057    2,862   2,535     3,044    2,229   1,140
 Administrative charges                        540     608     593       764      716     634       761      557     285
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                               2,701   3,039   2,966     3,821    3,578   3,169     3,805    2,786   1,425
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net               44,776  19,694  22,052    67,059   21,791  18,896     9,330    2,748  (1,385)
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                             2,291   5,259      87    20,609    3,510     176        -     5,149       -
  Realized gains (losses) on sales
   of investments, net                       1,717   2,463  11,706   (15,611)   2,415   1,074     1,014    5,744     166
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                            4,008   7,722  11,793     4,998    5,925   1,250     1,014   10,893     166
 Net change in unrealized appreciation
(depreciation) on investments              (74,447) 13,788   1,480  (146,933)  27,536  35,571    87,371  (49,861) 26,719
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net        (70,439) 21,510  13,273  (141,935)  33,461  36,821    88,385  (38,968) 26,885
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $(25,663) 41,204  35,325   (74,876)  55,252  55,717    97,715  (36,220) 25,500
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              14

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                                         Templeton Developing         Templeton Global
                                          Mutual Shares Securities Fund  Markets Equity Fund       Asset Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999     1998     1997     1999     1998     1997      1999     1998      1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>       <C>      <C>     <C>       <C>      <C>        <C>      <C>       <C>
Investment income:
 Dividends reinvested in fund shares       $31,535   11,623      72   12,690    19,038    10,159    17,439   10,932    7,863
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges          8,110    6,003   2,067    7,442     2,862     3,802     1,526    1,629    2,512
 Administrative charges                      2,027    1,501     517    1,860       715       950       381      407      628
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                              10,137    7,504   2,584    9,302     3,577     4,752     1,907    2,036    3,140
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net               21,398    4,119  (2,512)   3,388    15,461     5,407    15,532    8,896    4,723
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                                -    10,153      -         -    61,907    16,114    16,486   13,002    2,268
  Realized gains (losses) on sales
   of investments, net                      57,630   10,137   2,034  (36,364)  (23,346)    1,960       393   11,507   23,197
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                           57,630   20,290   2,034  (36,364)   38,561    18,074    16,879   24,509   25,465
 Net change in unrealized appreciation
(depreciation) on investments               58,050  (35,219) 51,689  329,456  (198,108) (127,265)  (16,541) (31,637)  11,716
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net        115,680  (14,929) 53,723  293,092  (159,547) (109,191)      338   (7,128)  37,181
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $137,078  (10,810) 51,211  296,480  (144,086) (103,784)   15,870    1,768   41,904
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              15

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                  Templeton            Templeton Global                Templeton
                                             Global Growth Fund      Income Securities Fund    International Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999      1998    1997      1999    1998    1997      1999      1998     1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>      <C>     <C>      <C>      <C>      <C>      <C>
Investment income:
 Dividends reinvested in fund shares      $ 48,676   39,344   15,984   17,513   12,826  10,037   118,404   55,115   33,230
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges         22,604    9,684    7,051    1,140    1,127     903    16,444   10,176    8,366
 Administrative charges                      5,651    2,421    1,763      285      282     226     4,111    2,544    2,092
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                              28,255   12,105    8,814    1,425    1,409   1,129    20,555   12,720   10,458
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net               20,421   27,239    7,170   16,088   11,417   8,908    97,849   42,395   22,772
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                           235,493  143,312    5,328        -        -       -    57,531  110,714   50,952
  Realized gains (losses) on sales
   of investments, net                     135,515   13,548   15,707  (19,414)    (315)    668   210,059    9,119   13,328
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                          371,008  156,860   21,035  (19,414)    (315)    668   267,590  119,833   64,280
 Net change in unrealized appreciation
(depreciation) on investments               30,632  (70,051)  80,562   (9,989)    (521) (6,915)   89,659  (97,026)  25,384
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net        401,640   86,809  101,597  (29,403)    (836) (6,247)  357,249   22,807   89,664
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                   $422,061  114,048  108,767  (13,315)  10,581   2,661   455,098   65,202  112,436
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              16

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                           Templeton International           Templeton                 USAllianz
                                            Smaller Companies Fund      Pacific Growth Fund    VIP Diversified Assets Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998      1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>       <C>      <C>    <C>     <C>        <C>          <C>    <C>    <C>
Investment income:
 Dividends reinvested in fund shares       $  736     488      17     4,339   10,966     8,455        -      -      -
------------------------------------------------------------------------------------------------------------------------------------
 Mortality and expense risk charges           204      99      29     3,239    1,388       214        -      -      -
 Administrative charges                        51      25       7       810      347        53        -      -      -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                                255     124      36     4,049    1,735       267        -      -      -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net                 481     364     (19)      290    9,231     8,188        -      -      -
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                                -     565       -         -    3,337         -        -      -      -
  Realized gains (losses) on sales
   of investments, net                        (73)   (121)     (2)  (38,203) (38,525)      907        -      -      -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                             (73)    444      (2)  (38,203) (35,188)      907        -      -      -
 Net change in unrealized appreciation
(depreciation) on investments               4,391  (4,295) (1,075)  140,678   (7,500) (164,185)       -      -      -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net         4,318  (3,851) (1,077)  102,475  (42,688) (163,278)       -      -      -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                    $4,799  (3,487) (1,096)  102,765  (33,457) (155,090)       -      -      -
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              17

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Operations (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                   USAllianz                 USAllianz
                                            VIP Fixed Income Fund         VIP Growth Fund           Total All Funds
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998    1997      1999        1998        1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>    <C>       <C>       <C>    <C> <C>          <C>      <C>
Investment income:
 Dividends reinvested in fund shares        $   -       -       -         -        -       -  1,437,281     829,763    619,133
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
 Mortality and expense risk charges             -       -       -         -        -       -    166,941     115,794     95,822
 Administrative charges                         -       -       -         -        -       -     41,732      28,950     23,956
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                                  -       -       -         -        -       -    208,673     144,744    119,778
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net                   -       -       -         -        -       -  1,228,608     685,019    499,355
Realized gains (losses) and unrealized
 appreciation (depreciation) on investments:
  Realized capital gain distributions
 on mutual funds                                -       -       -         -        -       -  1,192,768     873,428    268,254
  Realized gains (losses) on sales
   of investments, net                          -       -       -         -        -       -    438,044     144,683    324,660
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on
 investments, net                               -       -       -         -        -       -  1,630,812   1,018,111    592,914
 Net change in unrealized appreciation
(depreciation) on investments                   -       -       -         -        -       -    127,167  (1,240,497)   548,282
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses)
 and unrealized appreciation
 (depreciation) on investments, net             -       -       -         -        -       -  1,757,979     222,386) 1,141,196
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
 assets from operations                     $   -       -       -         -        -       -  2,986,587     462,633  1,640,551
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              18

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets For the years ended December 31, 1999,  1998
and 1997

                                                  AIM                          Alger                Alger American
                                               VI Growth Fund          American Growth Fund     Leveraged AllCap Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998    1997     1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>    <C>    <C>         <C>  <C>     <C>        <C>       <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net            $   (17)     -       -       (85)       -    -        (63)      -        -
  Realized gains (losses) on investments, net    1      -       -         -        -    -          1       -        -
  Net change in unrealized appreciation
   (depreciation) on investments             1,702      -       -      2,939       -    -        356       -        -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                             1,686      -       -      2,854       -    -        294       -        -
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                             60      -       -        290       -    -        290       -        -
  Transfers between funds                  102,862      -       -    108,720       -    -      6,349       -        -
  Surrenders and terminations                    -      -       -         -        -    -          -       -        -
  Policy loan transactions                       3      -       -          3       -    -          -       -        -
  Other transactions (note 2)                  (23)     -       -        (74)      -    -        (30)      -        -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions        102,902      -       -    108,939       -    -      6,609       -        -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets          104,588      -       -    111,793       -    -      6,903       -        -
Net assets at beginning of year                 -       -       -         -        -    -          -       -        -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year                 $104,588      -       -    111,793       -    -      6,903       -       -
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              19

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                Franklin Global           Franklin Global            Franklin
                                      Communications Securities Fund  Health Care Securities  Fund Growth and Income Fund
------------------------------------------------------------------------------------------------------------------------------------
                                           1999     1998    1997       1999    1998    1997      1999     1998       1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>        <C>     <C>        <C>     <C>   <C>     <C>          <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net        $ 51,567    50,771     53,883    (227)     (67)   -      95,714   65,829      43,696
  Realized gains (losses) on investments
, net                                   435,615   149,908    150,746    (162)       2    -     363,952  231,500     134,863
  Net change in unrealized appreciation
   (depreciation) on investments        183,386   (40,828)   116,553  (1,826)   1,694    -    (453,957)(118,668)    283,057
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                        670,568   159,851    321,182  (2,215)   1,629    -       5,709   178,661    461,616
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                      91,957   104,584    116,828       -        -    -     426,492   427,399    387,084
  Transfers between funds                78,700   (38,007)   (67,788)  3,673    6,656    -     160,733   282,965    194,269
  Surrenders and terminations           (92,132)  (46,228)    (8,311)      -        -    -    (172,737)  (66,385)  (271,440)
  Policy loan transactions              (58,830)   32,511    (60,609)      -        -    -     (33,949)  (31,446)     3,110
  Other transactions (note 2)           (69,624)  (65,057)   (60,143) (1,606)     (20)   -    (217,639) (202,446)  (163,700)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions     (49,929)  (12,197)   (80,023) 42,067    6,636    -     162,900   410,087    149,323
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets       620,639   147,654    241,159  39,852    8,265    -     168,609   588,748    610,939
Net assets at beginning of year       1,741,751 1,594,097  1,352,938   8,265        -    -   2,905,941 2,317,193  1,706,254
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year            $2,362,390 1,741,751  1,594,097  48,117    8,265    -   3,074,550 2,905,941  2,317,193
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              20

</FN>
</TABLE>





<TABLE>
<CAPTION>
<PAGE>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                   Franklin                       Franklin                 Franklin Large
                                               High Income Fund              Income Securities        FundCap Growth Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999      1998     1997       1999     1998       1997      1999      1998      1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>       <C>        <C>        <C>       <C>        <C>      <C>      <C>        <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net         $ 366,753   147,388   138,395    117,308   100,580    62,457   (2,387)    (776)    (113)
  Realized gains (losses) on
investments, net                           11,491    38,724    48,831    (69,640)   29,857    22,389    2,133      989      (11)
  Net change in unrealized appreciation
   (depreciation) on investments         (391,353) (177,480)    4,999    (78,033) (115,794)   68,874  185,307   34,912     (548)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                          (13,109)    8,632   192,225    (30,365)   14,643   153,720  185,053   35,125     (672)
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                        41,715    55,984    50,642    184,826   219,675   255,347    2,228        -        -
  Transfers between funds                (340,702)  (12,125) (140,178)  (229,489)  295,129    46,671  415,799  194,912   94,715
  Surrenders and terminations             (19,154)  (21,000)  (67,891)  (146,257)  (50,336)  (11,918)       -        -        -
  Policy loan transactions                111,630  (168,452)  (33,557)   (33,988)  (12,262)  (25,240)       -        -        -
  Other transactions (note 2)             (38,583)  (43,702)  (41,580)   (95,328) (101,921)  (96,044)  (9,373)  (3,276)    (429)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions      (245,094) (189,295) (232,564)  (320,236)  350,285   168,816  408,654  191,636   94,286
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets        (258,203) (180,663)  (40,339)   350,601)  364,928   322,536  593,707  226,761   93,614
Net assets at beginning of year         1,653,951 1,834,614 1,874,953  1,557,015 1,192,087   869,551  324,793   98,032    4,418
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year              $1,395,748 1,653,951 1,834,614  1,206,414 1,557,015 1,192,087  918,500  324,793   98,032
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              21

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                                               Franklin Natural

                                              Franklin Money Market Fund   Resources Securities Fund  Franklin Real Estate Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999       1998       1997    1999    1998     1997      1999      1998      1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>        <C>        <C>      <C>     <C>     <C>        <C>       <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net           $ 59,354     52,588     29,826      960   1,695    1,324    45,281    22,016    8,632
  Realized gains (losses) on
investments, net                                 -          -          -  (11,396) (8,058)  (1,936) (112,147)   31,340   23,316
  Net change in unrealized appreciation
   (depreciation) on investments                 -          -          -   57,915 (35,420) (25,118)   31,946  (179,557)  57,737
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                            59,354     52,588     29,826   47,479 (41,783) (25,730)  (34,920) (126,201)  89,685
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                      1,449,209  3,668,991  1,996,782   11,095  13,268   15,837    95,970   115,546   92,480
  Transfers between funds               (1,876,143)(2,423,871)(2,136,510) 158,751  59,479   (5,829)   29,166    37,909  176,166
  Surrenders and terminations               (5,222)   (25,503)   (52,158)  (4,568) (5,593)     (52)  (27,988)  (10,028)  (2,795)
  Rescissions                                    -    (29,369)         -        -       -        -         -        -         -
  Policy loan transactions                (212,772)    (9,864)   (25,633)  (1,372)    789      172    (4,008)   (4,950) (15,416)
  Other transactions (note 2)              (37,400)   (39,778)   168,886   (7,584) (6,590)  (6,922)  (50,794)  (55,881) (43,348)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions       (682,328) 1,140,606    (48,633) 156,322  61,353    3,206    42,346    82,596  207,087
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets         (622,974) 1,193,194    (18,807) 203,801  19,570  (22,524)    7,426   (43,605) 296,772
Net assets at beginning of year          1,904,136    710,942    729,749  125,063 105,493  128,017   602,683   646,288  349,516
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year               $1,281,162  1,904,136    710,942  328,864 125,063  105,493   610,109   602,683  646,288
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              22

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                Franklin Rising               Franklin
                                           Dividends Securities Fund     S&P 500 Index Fund      Franklin Small Cap Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997       1999    1998    1997    1999      1998      1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>         <C>      <C>      <C>     <C>  <C>       <C>        <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net          $  8,815     2,794    1,419      (32)     -     -    (10,041)    3,937)   (1,212)
  Realized gains (losses) on
investments, net                           18,788   119,742   28,302        -      -     -    347,241    47,968     7,269
  Net change in unrealized appreciation
   (depreciation) on investments         (153,361)  (77,635)  93,007    1,544      -     -    472,910   (48,794)   22,458
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                         (125,758)   44,901  122,728    1,512      -     -    810,110    (4,763)   28,515
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                       154,974   161,902  108,408      188      -     -    110,923   113,167    44,998
  Transfers between funds                 163,115   244,722  193,808  133,170      -     -     56,814   400,975   248,658
  Surrenders and terminations             (55,133)  (14,872) (17,668)       -      -     -    (18,608)   (9,697)     (965)
  Policy loan transactions                 (7,676)   (4,345)  (5,874)       4      -     -     (7,020)     (575)        -
  Other transactions (note 2)             (86,406)  (78,620) (51,398)     (83)     -     -    (66,249)  (47,188)  (19,801)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions       168,874   308,787  227,276  133,279      -     -     75,860   456,682   272,890
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets          43,116   353,688  350,004  134,791      -     -    885,970   451,919   301,405
Net assets at beginning of year         1,008,603   654,915  304,911        -      -     -    809,760   357,841    56,436
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year              $1,051,719 1,008,603  654,915  134,791      -     -  1,695,730   809,760   357,841
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              23

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                  Franklin                 Franklin                    Franklin
                                            U.S. Government Fund      Value Securities Fund      Zero Coupon Fund - 2000
------------------------------------------------------------------------------------------------------------------------------------
                                            1999     1998    1997      1999    1998    1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>      <C>       <C>      <C>       <C>   <C>      <C>      <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net           $144,300   57,602    45,331      (4)      -      -     54,800   25,181   21,517
  Realized gains (losses) on
 investments, net                            6,118   17,179    27,003      (5)     (3)     -      9,749    9,429    6,472
  Net change in unrealized appreciation
   (depreciation) on investments          (167,882) (18,101)      136    (203)   (289)     -    (56,550) (11,643)  (6,554)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                           (17,464)  56,680    72,470    (212)   (292)     -      7,999   22,967   21,435
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                         35,686   36,225    40,913       -       -      -          -        -        -
  Transfers between funds                  118,949    2,433  (108,226)  2,985   3,405      -          -        -  (17,434)
  Surrenders and terminations               (4,133) (28,787)  (20,318)      -       -      -          -   (9,045)       -
  Policy loan transactions                  (5,749)  (7,674)   (7,823)      -       -      -     (5,480)  (7,106)     (73)
  Other transactions (note 2)              (31,127) (28,339)  (27,460)    (60)    (15)     -     (3,818)  (4,490)  (4,421)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions        113,626  (26,142) (122,914)  2,925   3,390      -     (9,298) (20,641) (21,928)
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets           96,162   30,538   (50,444)  2,713   3,098      -     (1,299)   2,326     (493)
Net assets at beginning of year            908,236  877,698   928,142   3,098       -      -    352,556  350,230  350,723
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year               $1,004,398  908,236   877,698   5,811   3,098      -    351,257  352,556  350,230
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                    Franklin                 Franklin                   Mutual
                                            Zero Coupon Fund-2005     Zero Coupon Fund-2010   Discovery Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999     1998     1997      1999    1998    1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>      <C>      <C>      <C>      <C>      <C>     <C>       <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net           $ 44,776   19,694   22,052   67,059   21,791   18,896    9,330    2,748   (1,385)
  Realized gains (losses) on
investments, net                             4,008    7,722   11,793    4,998    5,925    1,250    1,014   10,893      166
  Net change in unrealized appreciation
   (depreciation) on investments           (74,447)  13,788    1,480 (146,933)  27,536   35,571   87,371  (49,861)  26,719
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                           (25,663)  41,204   35,325  (74,876)  55,252   55,717   97,715  (36,220)  25,500
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                              -        -        -        -        -        -        -        -        -
  Transfers between funds                        -        -  (61,213)  17,617        -    3,652   47,820  155,186  281,309
  Surrenders and terminations                    -        -        -        -        -        -        -        -        -
  Policy loan transactions                       -        -        -     (211)  (1,739)    (183)    (184) (56,263)       -
  Other transactions (note 2)               (4,393)  (4,873)  (4,798)  (7,354)  (6,849)  (5,717)  (8,537)  (7,963)  (1,893)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions         (4,393)  (4,873) (66,011)  10,052   (8,588)  (2,248)  39,099   90,960  279,416
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets          (30,056)  36,331  (30,686) (64,824)  46,664   53,469  136,814   54,740  304,916
Net assets at beginning of year            390,968  354,637  385,323  456,187  409,523  356,054  410,124  355,384   50,468
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year                 $360,912  390,968  354,637  391,363  456,187  409,523  546,938  410,124  355,384
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              25

</FN>
</TABLE>
<PAGE>





<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                    Mutual                   Templeton                    Templeton
                                           Shares Securities Fund  Developing Markets Equity Fund  Global Asset Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------
                                             1999      1998     1997      1999    1998    1997      1999      1998     1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>      <C>       <C>      <C>      <C>      <C>      <C>        <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net           $ 21,398     4,119   (2,512)   3,388   15,461     5,407   15,532    8,896     4,723
  Realized gains (losses) on
 investments, net                           57,630    20,290    2,034  (36,364)  38,561    18,074   16,879   24,509    25,465
  Net change in unrealized appreciation
   (depreciation) on investments            58,050   (35,219)  51,689  329,456 (198,108) (127,265) (16,541) (31,637)   11,716
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                           137,078   (10,810)  51,211  296,480 (144,086) (103,784)  15,870    1,768    41,904
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                         85,752    74,363   16,585  121,799  159,440   191,340    1,388    1,438       430
  Transfers between funds                  (66,613)  214,033  776,453   12,846    5,954     2,200        -    5,929  (108,898)
  Surrenders and terminations              (53,521)   (3,707)       -  (58,096) (19,910)  (24,839)       -        -      (108)
  Policy loan transactions                     639  (111,671)  (1,956)  (5,057) (16,461)  (20,884)    (249) (77,494)        -
  Other transactions (note 2)              (51,904)  (41,817)  (9,654) (58,605) (56,866)  (77,790)  (4,265)  (4,852)   (5,240)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions        (85,647)  131,201  781,428   12,887   72,157    70,027   (3,126) (74,979) (113,816)
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets           51,431   120,391  832,639  309,367  (71,929)  (33,757)  12,744  (73,211)  (71,912)
Net assets at beginning of year          1,038,636   918,245   85,606  563,460  635,389   669,146  238,598  311,809   383,721
Net assets at end of year               $1,090,067 1,038,636  918,245  872,827  563,460   635,389  251,342  238,598   311,809
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              26

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                     Templeton                     Templeton                   Templeton
                                                Global Growth Fund       Global Income Securities Fund  International Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
                                            1999       1998       1997       1999     1998     1997      1999      1998     1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>        <C>       <C>       <C>       <C>      <C>        <C>       <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net           $ 20,421     27,239      7,170   16,088   11,417    8,908     97,849     42,395    22,772
  Realized gains (losses) on
investments, net                           371,008    156,860     21,035  (19,414)    (315)     668    267,590    119,833    64,280
  Net change in unrealized appreciation
   (depreciation) on investments            30,632    (70,051     80,562   (9,989)    (521)  (6,915)    89,659    (97,026)   25,384
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                           422,061    114,048    108,767  (13,315)  10,581    2,661    455,098     65,202   112,436
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                        303,315    318,275    317,636   40,576   43,650   42,795    311,731    343,054   359,829
  Transfers between funds                  521,326    262,188    272,672   (6,299)   8,645   (1,929)   (29,725)   214,070   170,913
  Surrenders and terminations              (97,718)   (42,480)   (35,910)  (6,067)  (2,203)  (1,422)  (170,512)   (77,537)  (30,410)
    Policy loan transactions               (20,511)   (11,353)   (19,640)  (5,426)  (4,262)  (2,728)   (30,248)   (14,359)  (37,789)
  Other transactions (note 2)             (160,767)  (144,669)  (131,055) (18,386) (18,506) (17,463)  (155,117)  (150,458  (138,095)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions        545,645    381,961    403,703    4,398   27,324   19,253    (73,871)   314,770   324,448
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets          967,706    496,009    512,470   (8,917)  37,905   21,914    381,227    379,972   436,884
Net assets at beginning of year          1,783,371  1,287,362    774,892  189,335  151,430  129,516  1,826,865  1,446,893 1,010,009
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year               $2,751,077  1,783,371  1,287,362  180,418  189,335  151,430  2,208,092  1,826,865 1,446,893
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              27

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                            Templeton International          Templeton                  USAllianz
                                            Smaller Companies Fund      Pacific Growth Fund    VIP Diversified Assets Fund
------------------------------------------------------------------------------------------------------------------------------------
                                              1999     1998    1997      1999    1998    1997      1999     1998    1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>      <C>     <C>      <C>       <C>          <C>     <C>     <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net            $   481     364      (19)     290    9,231     8,188       -      -       -
  Realized gains (losses) on
 investments, net                              (73)    444      (2)  (38,203) (35,188)      907       -      -       -
  Net change in unrealized appreciation
   (depreciation) on investments             4,391  (4,295) (1,075)  140,678   (7,500) (164,185)      -      -       -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                             4,799  (3,487) (1,096)  102,765  (33,457) (155,090)      -      -       -
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                              -       -       -    73,542   91,236   134,478       -      -       -
  Transfers between funds                   16,263   9,480  13,608    38,598  (25,732)  (41,449)      -      -       -
  Surrenders and terminations                    -       -       -    (7,288) (15,757)  (10,217)      -      -       -
  Policy loan transactions                       -       -       -    (1,853)  (2,091)  (13,651)      -      -       -
  Other transactions (note 2)                 (481)   (360)    (42)  (38,569) (29,702)  (52,839)      -      -       -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions         15,782   9,120  13,566    64,430   17,954    16,322       -      -       -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets           20,581   5,633  12,470   167,195  (15,503) (138,768)      -      -       -
Net assets at beginning of year             18,103  12,470      -    274,322  289,825   428,593       -      -       -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year               $   38,684  18,103  12,470   441,517  274,322   289,825       -      -       -
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                            See accompanying  notes to financial
statements.

                                                                              28

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Financial Statements (continued)

Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999, 1998 and 1997

                                                      USAllianz              USAllianz
                                               VIP Fixed Income Fund       VIP Growth Fund            Total All Funds
------------------------------------------------------------------------------------------------------------------------------------
                                              1999     1998    1997      1999   1998   1997    1999        1998         1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>     <C>      <C>      <C>    <C> <C>        <C>         <C>
Increase (decrease) in net assets:
 Operations:
  Investment income (loss), net             $   -       -       -         -        -     -   1,228,608     685,019     499,355
  Realized gains (losses) on investments, net   -       -       -         -        -     -   1,630,812   1,018,111     592,914
  Net change in unrealized appreciation
   (depreciation) on investments                -       -       -         -        -     -     127,167  (1,240,497)    548,282
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations                                -       -       -         -        -     -   2,986,587     462,633   1,640,551
------------------------------------------------------------------------------------------------------------------------------------
 Policy transactions (note 4):

  Purchase payments                             -       -       -         -        -     -   3,544,006   5,948,197   4,172,412
  Transfers between funds                       -       -       -         -        -     -    (314,715)    (95,665)   (214,360)
   Surrenders and terminations                  -       -       -         -        -     -    (939,134)   (449,068)   (556,422)
  Rescissions                                   -       -       -         -        -     -           -     (29,369)          -
    Policy loan transactions                    -       -       -         -        -     -    (322,304)   (509,067)   (267,774)
  Other transactions (note 2)                   -       -       -         -        -     -  (1,224,179) (1,144,238)   (790,946)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
 resulting from policy transactions             -       -       -         -        -     -     743,674   3,720,790   2,342,910
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets               -       -       -         -        -     -   3,730,261   4,183,423   3,983,461
Net assets at beginning of year             $   -       -       -         -        -     -  21,095,820  16,912,397  12,928,936
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year                   $   -       -       -         -        -     -  24,826,081  21,095,820  16,912,397
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                           See  accompanying  notes to financial
statements.

                                                                              29

</FN>
</TABLE>
<PAGE>




Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements
December 31, 1999


1. Organization

Allianz Life Variable  Account A (Variable  Account) is a segregated  investment
account of  Allianz  Life  Insurance  Company of North  America  (Allianz  Life)
registered  with the  Securities  and Exchange  Commission as a unit  investment
trust  pursuant  to the  provisions  of the  Investment  Company Act of 1940 (as
amended).  The Variable  Account was  established  on May 31, 1985 and commenced
operations  September 8, 1987.  Accordingly,  it is an accounting entity wherein
all segregated account transactions are reflected.

The Variable  Account's assets are the property of Allianz Life and are held for
the benefit of the owners and other persons  entitled to payments under variable
life policies  issued through the Variable  Account and  underwritten by Allianz
Life.  The  assets of the  Variable  Account,  equal to the  reserves  and other
liabilities of the Variable  Account,  are not chargeable with  liabilities that
arise from any other business which Allianz Life may conduct.

The Variable  Account's  sub-accounts may invest, at net asset values, in one or
more of select  portfolios  of AIM Variable  Insurance  Funds,  Inc.,  The Alger
American Fund,  Franklin  Templeton Variable Insurance Products Trust (formerly,
Franklin  Valuemark Funds),  and USAllianz Variable Insurance Products Trust, in
accordance  with the selection made by the policy owner.  Not all portfolios are
available as  investment  options for the products  which  comprise the Variable
Account.  The investment advisers for each portfolio are listed in the following
table.

<TABLE>
<CAPTION>

Portfolio                                                Investment Adviser
<S>                                                      <C>
AIM VI Growth Fund                                       AIM Advisors, Inc.
Alger American Growth Fund                               Fred Alger Management, Inc.
Alger American Leveraged AllCap Fund                     Fred Alger Management, Inc.
Franklin Global Communications Securities Fund           Franklin Advisers, Inc.
Franklin Global Health Care Securities Fund              Franklin Advisers, Inc.
Franklin Growth and Income Fund                          Franklin Advisers, Inc.
Franklin High Income Fund                                Franklin Advisers, Inc.
Franklin Income Securities Fund                          Franklin Advisers, Inc.
Franklin Large Cap Growth Securities Fund                Franklin Advisers, Inc.
Franklin Money Market Fund                               Franklin Advisers, Inc.
Franklin Natural Resources Securities Fund               Franklin Advisers, Inc.
Franklin Real Estate Fund                                Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund                Franklin Advisory Services, LLCS&P 500 Index Fund        Franklin Advisers,
Inc.
Franklin Small Cap Fund                                  Franklin Advisers, Inc.
Franklin U.S. Government Fund                            Franklin Advisers, Inc.
Franklin Value Securities Fund                           Franklin Advisory Services, LLC
Franklin Zero Coupon - 2000 Fund                         Franklin Advisers, Inc.
Franklin Zero Coupon - 2005 Fund                         Franklin Advisers, Inc.
Franklin Zero Coupon - 2010 Fund                         Franklin Advisers, Inc.
Mutual Discovery Securities Fund                         Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund                            Franklin Mutual Advisers, LLC
Templeton Developing Markets Equity Fund                 Templeton Asset Management Ltd.
Templeton Global Asset Allocation Fund                   Templeton Global Advisors Limited
Templeton Global Growth Fund                             Templeton Global Advisors Limited
Templeton Global Income Securities Fund                  Franklin Advisers, Inc.
Templeton International Equity Fund                      Franklin Advisers, Inc.
Templeton International Smaller Companies Fund           Templeton Investment Counsel, Inc.
Templeton Pacific Growth Fund                            Franklin Advisers, Inc.
USAllianz VIP Diversified Assets Fund                    Allianz of America, Inc.
USAllianz VIP Fixed Income Fund                          Allianz of America, Inc.
USAllianz VIP Growth Fund                                Allianz of America, Inc.

                                                                              30

</TABLE>
<PAGE>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

2. Significant Accounting Policies

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Investments

Investments  of the Variable  Account are valued daily at market value using net
asset values provided by AIM Variable  Insurance Funds, Inc., The Alger American
Fund,  Franklin  Templeton  Variable Insurance Products Trust, and the USAllianz
Variable Insurance Products Trust.

Realized investment gains include realized gain distributions  received from the
respective portfolios and gains on the sale of portfolio shares as determined by
the average cost method.  Realized  gain  distributions  are  reinvested  in the
respective  portfolios.  Dividend distributions received from the portfolios are
reinvested in additional  shares of the portfolios and are recorded as income to
the Variable Account on the ex-dividend date.

A Fixed Account investment option is available to variable universal life policy
owners.  This account is comprised of equity and fixed income  investments which
are part of the general  assets of Allianz Life.  The  liabilities  of the Fixed
Account are part of the general obligations of Allianz Life and are not included
in the  Variable  Account.  The  guaranteed  minimum rate of return on the Fixed
Account is 3%.

The Franklin Global Health Care  Securities  Fund and Franklin Value  Securities
Fund were added as available  investment options on May 1, 1998. On November 12,
1999,  the AIM VI Growth  Fund,  Alger  American  Growth  Fund,  Alger  American
Leveraged  AllCap Fund,  Franklin S&P 500 Index Fund,  USAllianz VIP Diversified
Assets Fund, USAllianz VIP Fixed Income Fund, and USAllianz VIP Growth Fund were
added as available investment options.

During the year ended December 31, 1999,  several portfolios changed their names
as summarized, with the effective date of the change, in the following table.

<TABLE>
<CAPTION>

Current Portfolio                                    Prior Portfolio Name                      Effective Date
<S>                                                  <C>                                       <C>
Franklin Global Communications Securities Fund       Franklin Global Utilities Securities Fund November 15, 1999
Franklin Real Estate Fund                            Franklin Real Estate Securities Fund      November 15, 1999
Franklin Rising Dividends Securities Fund            Franklin Rising Dividends Fund            November 15, 1999
Franklin U.S. Government Fund                        Franklin U.S. Government Securities Fund  November 15, 1999
Franklin Large Cap Growth Securities Fund            Franklin Capital Growth Fund              December 15, 1999

</TABLE>
Expenses

Asset Based Expenses

A mortality and expense risk charge is deducted  from the Variable  Account on a
daily basis equal,  on an annual basis,  to 0.60% of the daily net assets of the
Variable Account.

An administrative  charge is deducted from the Variable Account on a daily basis
equal,  on an annual  basis,  to 0.15% of the daily net  assets of the  Variable
Account.

                                                                              31

<PAGE>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

2. Significant Accounting Policies (Continued)

Contract Based Expenses

A cost of insurance charge is deducted against each policy by liquidating units.
The amount of the charge is based  upon age,  sex,  rate class and net amount at
risk (death  benefit less total cash surrender  value).  Total cost of insurance
charges paid by the policy  owners for the years ended  December 31, 1999,  1998
and 1997 were $1,024,902, $939,693 and $832,417, respectively.

A deferred  issue  charge is deducted  annually,  at the end of the policy year,
from each single premium  variable life policy for the first ten policy years by
liquidating  units.  The  amount  of  the  charge  is 7% of the  single  premium
consisting  of 2.5% for premium  taxes,  4% for sales  charge and .5% for policy
issue charge (in the State of California,  2.35%, 4.15% and .5%,  respectively).
If  the  policy  is  surrendered  before  the  full  amount  is  collected,  the
uncollected  portion of this charge is deducted  from the account  value.  Total
deferred  issue charges paid by the policy  owners for years ended  December 31,
1999, 1998 and 1997 were $42,540, $40,600, and $37,629, respectively.

A policy charge is deducted on each monthly  anniversary date from each variable
universal life policy by liquidating units. The amount of the charge is equal to
2.5% of each premium  payment for premium taxes plus $20 per month for the first
policy year and $9 per month guaranteed thereafter.  Currently, Allianz Life has
agreed to  voluntarily  limit the charge to $5 per month after the first  policy
year.  Total  policy  charges  paid by the  policy  owners  for the years  ended
December  31,  1999,  1998 and  1997  were  $167,757,  $213,159,  and  $211,485,
respectively.

Twelve free transfers are permitted each contract year.  Thereafter,  the fee is
the lesser of $25 or 2% of the amount transferred. No transfer charges were paid
by the policy  owners  during  years ended  December  31,  1999,  1998 and 1997,
respectively. Net transfers to the Fixed Account during years ended December 31,
1999, 1998 and 1997 were $314,715, $95,665, and $214,360, respectively.

The cost of  insurance,  deferred  issue,  policy and transfer  charges paid are
reflected in the Statements of Changes in Net Assets as Other transactions.

3. Federal Income Taxes

Operations  of the  Variable  Account  form a  part  of,  and  are  taxed  with,
operations of Allianz Life, which is taxed as a life insurance company under the
Internal Revenue Code.

Allianz Life does not expect to incur any federal  income taxes in the operation
of the Variable  Account.  If, in the future,  Allianz Life  determines that the
Variable  Account may incur federal  income  taxes,  it may then assess a charge
against the Variable Account for such taxes.

                                                                              32

<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

4. Policy Transactions - Unit Activity

Transactions  in units for each fund for the years ended December 31, 1999, 1998
and 1997, were as follows:

                                                           Alger     Franklin     Franklin                               Franklin
                                                  Alger  American     Global      Global      Franklin Franklin Franklin Large Cap
                                           AIM  American Leveraged Communications Health Care Growth &  High    Income    Growth
                                        VI Growth Growth   AllCap   Securities  Securities    Income   Income Securities Securities
                                          Fund     Fund     Fund       Fund        Fund        Fund     Fund     Fund     Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>    <C>        <C>        <C>         <C>          <C>      <C>      <C>        <C>
Units outstanding at December 31, 1996     -        -       -        54,519         -         54,351   84,503   39,98        391
Policy transactions:
 Purchase payments                         -        -       -         4,451         -         10,974   2,141    11,090         -
 Transfers between funds                   -        -       -        (2,894)        -          5,516  (5,679)    1,881     7,029
 Surrenders and terminations               -        -       -          (304)        -         (7,932) (3,022)     (513)        -
 Policy loan transactions                  -        -       -        (2,428)        -            (68) (1,471)   (1,113)        -
 Other transactions                        -        -       -        (2,288)        -         (4,624) (1,789)   (4,161)      (34)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions        -        -       -        (3,463)        -          3,866  (9,820)    7,184     6,995
------------------------------------------------------------------------------------------------------------------------------------

Units outstanding at December 31, 1997     -        -       -        51,056         -         58,217   74,683   47,169     7,386
------------------------------------------------------------------------------------------------------------------------------------

Policy transactions:
 Purchase payments                         -        -       -         3,254         -         10,356   2,263     8,710         -
 Transfers between funds                   -        -       -        (1,327)      778          6,612    (511)   11,713    13,340
 Surrenders and terminations               -        -       -        (1,451)        -         (1,628)   (852)   (1,996)        -
 Policy loan transactions                  -        -       -         1,042         -           (754) (6,603)     (481)        -
 Other transactions                        -        -       -        (2,025)       (2)        (4,902) (1,762)   (4,044)      (230)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions        -        -       -          (507)      776          9,684  (7,465)   13,902     13,110
------------------------------------------------------------------------------------------------------------------------------------

Units outstanding at December 31, 1998     -        -       -        50,549       776         67,901   67,218   61,071     20,496
====================================================================================================================================
Policy transactions:
 Purchase payments                         6       27      24         2,513         -          9,794   1,690     7,313        121
 Transfers between funds               9,424   10,207     546         2,372     4,350          3,569 (13,852)   (9,019)    24,283
 Surrenders and terminations               -        -       -        (2,487)        -         (3,906)   (778)   (5,700)         -
 Policy loan transactions                  -        -       -        (1,632)        -           (776)  4,472    (1,326)         -
 Other transactions                       (2)      (7)     (3)       (1,783)     (176)        (4,992) (1,561)   (3,782)       (541)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions    9,428   10,227     567        (1,017)    4,174          3,689 (10,029)  (12,514)     23,863
------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at

 December 31, 1999                     9,428   10,227     567        49,532     4,950         71,590  57,189    48,557      44,359
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                                                              33

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

4. Policy Transactions - Unit Activity (continued)
                                                  Franklin               Franklin                                          Franklin
                                        Franklin  Natural                 Rising   Franklin  Franklin  Franklin Franklin    Zero
                                         Money   Resources   Franklin    Dividends  S&P 500    Small     U.S.     Value     Coupon
                                         Market  Securities Real Estate Securities   Index     Cap   Government Securities  -2000
                                          Fund      Fund       Fund         Fund     Fund      Fund     Fund      Fund       Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>       <C>          <C>        <C>     <C>      <C>           <C>      <C>
Units outstanding at December 31, 1996   46,930    8,152     12,678       19,304       -      4,338    45,204        -       14,687
Policy transactions:
 Purchase payments                      125,344    1,090      3,106        5,847       -      3,088     1,925        -            -
 Transfers between funds               (120,861)    (400)     5,867       10,275       -     17,595    (5,101)       -         (707)
 Surrenders and terminations             (3,267)      (6)       (93)        (909)      -        (74)     (952)       -            -
 Policy loan transactions                (1,621)      (7)      (534)        (334)      -          -      (382)       -           (3)
 Other transactions                      (2,758)    (475)    (1,455)      (2,780)      -     (1,348)   (1,294)       -         (181)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions      (3,163)     202      6,891       12,099       -     19,261    (5,804)       -         (891)
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1997   43,767    8,354     19,569       31,403       -     23,599    39,400        -       13,796
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                      216,819    1,227      3,889        7,667       -      7,774     1,572        -            -
 Transfers between funds               (142,026)   4,888      1,042       11,079       -     26,906        45      401            -
 Surrenders and terminations             (1,535)    (544)      (354)        (668)      -       (631)   (1,237)       -         (346)
 Rescissions                             (1,784)       -          -        -           -          -         -        -            -
 Policy loan transactions                  (599)      57       (163)        (199)      -        (47)     (332)       -         (263)
 Other transactions                      (2,394)    (609)    (1,880)      (3,711)      -     (3,266)   (1,215)      (2)        (171)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions      68,481    5,019      2,534       14,168       -     30,736    (1,167)     399         (780)
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1998  112,248   13,373     22,103       45,571       -     54,335    38,233      399       13,016
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                       63,552      994      3,616        7,371      18      6,412     1,517        -            -
 Transfers between funds                (88,436)  13,577      1,406        7,234  12,857      2,514     5,003      351            -
 Surrenders and terminations               (303)    (385)    (1,034)      (2,659)      -     (1,091)     (178)       -            -
 Policy loan transactions               (12,282)    (121)      (148)        (360)      -       (330)     (245)       -         (200)
 Other transactions                      (2,142)    (648)    (1,924)      (4,136)     (8)    (3,631)   (1,327)      (8)        (140)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions     (39,611)  13,417      1,916        7,450  12,867      3,874     4,770      343         (340)
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1999   72,637   26,790     24,019       53,021  12,867     58,209    43,003      742       12,676
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                                                              34

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

4. Policy Transactions - Unit Activity (continued)
                                       Franklin Franklin                     Templeton  Templeton           Templeton
                                         Zero     Zero   Mutual     Mutual   Developing  Global    Templeton Global      Templeton
                                        Coupon   Coupon Discovery   Shares     Markets    Asset    Global     Income   International
                                        -2005    -2010 Securities  Securities  Equity  Allocation  Growth    Securities   Equity
                                         Fund     Fund     Fund      Fund        Fund      Fund     Fund       Fund         Fund
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>     <C>      <C>      <C>         <C>       <C>       <C>         <C>         <C>
Units outstanding at December 31, 1996  14,331   11,896   4,953     8,280      59,260    30,332    58,157      7,756       60,849
Policy transactions:
 Purchase payments                           -        -       -     1,460      15,655        31    21,703      2,567       19,816
 Transfers between funds                (2,226)     119  24,650    67,284      (2,887)   (7,728)   18,498       (108)       9,327
 Surrenders and terminations                 -        -       -         -      (1,900)       (9)   (2,308)       (85)      (1,686)
 Policy loan transactions                    -       (6)      -      (184)     (1,728)        -    (1,348)      (164)      (2,099)
 Other transactions                       (173)    (183)   (164)     (841)     (6,291)     (396)   (8,935)    (1,050)      (7,573)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions     (2,399)     (70) 24,486    67,719       2,849    (8,102)   27,610      1,160        17,785
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1997  11,932   11,826  29,439    75,999      62,109    22,230    85,767      8,916        78,634
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                          -         -       -     6,140      18,632       102    20,228      2,504        17,692
 Transfers between funds                    -         -  11,424    16,707         714       445    16,458        502        10,775
 Surrenders and terminations                -         -       -      (307)     (2,188)        -    (2,700)      (129)      (3,966)
 Policy loan transactions                   -       (45) (4,187)   (8,559)     (1,902)   (5,298)     (677)      (244)        (733)
 Other transactions                      (154)     (184)   (647)   (3,446)     (6,572)     (335)   (9,229)    (1,062)      (7,641)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions      (154)     (229)  6,590    10,535       8,684    (5,086)   24,080      1,571        16,127
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1998 11,778    11,597  36,029    86,534      70,793    17,144   109,847     10,487        94,761
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                          -         -      -     6,655       12,797        97    17,440      2,351        15,075
 Transfers between funds                    -        36  3,795    (4,569)        (292)        -    29,397       (416)       (1,898)
 Surrenders and terminations                -         -      -    (3,954)      (5,532)        -    (5,394)      (354)       (8,060)
 Policy loan transactions                   -        (6)   (15)       44         (539)      (17)   (1,166)      (312)       (1,465)
 Other transactions                      (139)     (205)  (694)   (4,023)      (5,779)     (302)   (9,072)    (1,070)       (7,285)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions      (139)     (175) 3,086    (5,847)         655      (222)   31,205        199        (3,633)
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1999 11,639    11,422 39,115    80,687       71,448    16,922   141,052     10,686        91,128
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                                                              35

</FN>
</TABLE>
<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

4. Policy Transactions - Unit Activity (continued)
                                                                   Templeton             USAllianz
                                                                 International Templeton    VIP      USAllianz  USAllianz
                                                                    Smaller    Pacific  Diversified  VIP Fixed     VIP     Total
                                                                   Companies   Growth     Assets     Income      Growth     All
                                                                     Fund       Fund       Fund       Fund        Fund     Funds
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>    <C>            <C>         <C>         <C>   <C>
Units outstanding at December 31, 1996                                    -   27,810        -           -           -       668,666
Policy transactions:
 Purchase payments                                                        -    9,779        -           -           -       240,067
 Transfers between funds                                              1,143   (2,629)       -           -           -        17,964
 Surrenders and terminations                                              -     (759)       -           -           -       (23,819)
 Policy loan transactions                                                 -     (884)       -           -           -       (14,374)
 Other transactions                                                      (4)  (3,737)       -           -           -       (52,534)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions                                   1,139    1,770        -           -           -       167,304
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1997                                1,139   29,580        -           -           -       835,970
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                                                        -   11,546        -           -           -       340,375
 Transfers between funds                                                795   (2,703)       -           -           -       (11,943)
 Surrenders and terminations                                              -   (2,018)       -           -           -       (22,550)
 Rescissions                                                              -        -        -           -           -        (1,784)
 Policy loan transactions                                                 -     (247)       -           -           -       (30,234)
 Other transactions                                                     (35)  (3,684)       -           -           -       (59,202)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions                                     760    2,894        -           -           -       214,662
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1998                                1,899   32,474        -           -           -     1,050,632
------------------------------------------------------------------------------------------------------------------------------------


Policy transactions:
 Purchase payments                                                        -    7,406        -           -           -       166,789
 Transfers between funds                                              1,448    2,890        -           -           -        16,777
 Surrenders and terminations                                              -     (672)       -           -           -       (42,487)
 Policy loan transactions                                                 -     (168)       -           -           -       (16,592)
 Other transactions                                                     (46)  (3,497)       -           -           -       (58,923)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
 resulting from policy transactions                                   1,402    5,959        -           -           -        65,564
------------------------------------------------------------------------------------------------------------------------------------


Units outstanding at December 31, 1999                                3,301   38,433        -           -           -     1,116,196
------------------------------------------------------------------------------------------------------------------------------------

<FN>
                                                                              36

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

5. Unit Values

A summary of unit values and units  outstanding  for variable life contracts and
the expense ratios,  including expenses of the underlying funds, for each of the
five years in the period ended December 31, 1999 follows:

                                                                                                               Ratio of
                                                                                                               Expenses

                                                                             Units                            to Average
                                                                          Outstanding Unit Value  Net Assets  Net Assets*
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>          <C>         <C>          <C>
AIM VI Growth Fund
December 31,
 1999(1)                                                                    9,428      $11.094     $104,588     1.48+%


Alger American Growth Fund
December 31,
 1999(1)                                                                   10,227       10.932      111,793     1.54+


Alger American Leveraged AllCap Fund
December 31,
 1999(1)                                                                      567       12.171        6,903     1.68+


Franklin Global Communications Securities Fund
December 31,
 1999                                                                      49,532       47.679    2,362,390     1.26
 1998                                                                      50,549       34.456    1,741,751     1.25
 1997                                                                      51,056       31.223    1,594,097     1.25
 1996                                                                      54,519       24.816    1,352,938     1.25
 1995                                                                      66,198       23.353    1,545,922     1.25


Franklin Global Health Care Securities Fund
December 31,
 1999                                                                       4,950        9.720       48,117     1.57
 1998(2)                                                                      776       10.656        8,265     1.59+


Franklin Growth and Income Fund
December 31,
 1999                                                                      71,590       42.947    3,074,550     1.24
 1998                                                                      67,901       42.797    2,905,941     1.24
 1997                                                                      58,217       39.803    2,317,193     1.24
 1996                                                                      54,351       31.393    1,706,254     1.25
 1995                                                                      38,021       27.700    1,053,166     1.27


Franklin High Income Fund
December 31,
 1999                                                                      57,189       24.406    1,395,748     1.29
 1998                                                                      67,218       24.606    1,653,951     1.28
 1997                                                                      74,683       24.565    1,834,614     1.28
 1996                                                                      84,503       22.188    1,874,953     1.29
 1995                                                                      65,333       19.628    1,282,342     1.31

<FN>
                                                                              37

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

5. Unit Values (continued)
                                                                                                               Ratio of
                                                                                                               Expenses

                                                                            Units                            to Average
                                                                        Outstanding  Unit Value  Net Assets  Net Assets*
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>          <C>       <C>            <C>
Franklin Income Securities Fund
December 31,
 1999                                                                      48,557      $24.846   $1,206,414     1.25%
 1998                                                                      61,071       25.496    1,557,015     1.24
 1997                                                                      47,169       25.273    1,192,087     1.25
 1996                                                                      39,985       21.747      869,551     1.25
 1995                                                                      26,614       19.691      524,066     1.26


Franklin Large Cap Growth Securities Fund
December 31,
 1999                                                                      44,359       20.706      918,500     1.52
 1998                                                                      20,496       15.847      324,793     1.52
 1997                                                                       7,386       13.273       98,032     1.52
 1996(3)                                                                      391       11.303        4,418     1.52+


Franklin Money Market Fund
December 31,
 1999                                                                      72,637       17.638    1,281,162     1.28
 1998                                                                     112,248       16.964    1,904,136     1.20
 1997                                                                      43,767       16.244      710,942     1.20
 1996                                                                      46,930       15.550      729,749     1.18
 1995                                                                      45,768       14.898      681,852     1.15


Franklin Natural Resources Securities Fund
December 31,
 1999                                                                      26,790       12.277      328,864     1.41
 1998                                                                      13,373        9.353      125,063     1.39
 1997                                                                       8,354       12.629      105,493     1.44
 1996                                                                       8,152       15.704      128,017     1.40
 1995                                                                      10,831       15.214      164,784     1.41


Franklin Real Estate Fund
December 31,
 1999                                                                      24,019       25.401      610,109     1.33
 1998                                                                      22,103       27.267      602,683     1.29
 1997                                                                      19,569       33.025      646,288     1.29
 1996                                                                      12,678       27.568      349,516     1.32
 1995                                                                       7,628       20.913      159,525     1.34


Franklin Rising Dividends Securities Fund
December 31,
 1999                                                                      53,021       19.835    1,051,719     1.50
 1998                                                                      45,571       22.132    1,008,603     1.47
 1997                                                                      31,403       20.855      654,915     1.49
 1996                                                                      19,304       15.795      304,911     1.51
 1995                                                                      10,700       12.816      137,129     1.53

<FN>
                                                                              38

</FN>
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

5. Unit Values (continued)
                                                                                                               Ratio of
                                                                                                               Expenses

                                                                             Units                            to Average
                                                                          Outstanding Unit Value  Net Assets  Net Assets*
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>          <C>        <C>           <C>
Franklin S&P 500 Index Fund
December 31,
 1999(1)                                                                   12,867      $10.476     $134,791     1.30+%


Franklin Small Cap Fund
December 31,
 1999                                                                      58,209       29.131    1,695,730     1.52
 1998                                                                      54,335       14.903      809,760     1.52
 1997                                                                      23,599       15.164      357,841     1.52
 1996                                                                       4,338       13.011       56,436     1.52
 1995(5)                                                                        -       10.157            -     1.65+


Franklin U.S. Government Fund
December 31,
 1999                                                                      43,003       23.356    1,004,398     1.26
 1998                                                                      38,233       23.755      908,236     1.25
 1997                                                                      39,400       22.276      877,698     1.25
 1996                                                                      45,204       20.532      928,142     1.26
 1995                                                                      32,402       19.966      646,949     1.27


Franklin Value Securities Fund
December 31,
 1999                                                                         742        7.820        5,811     1.56
 1998(2)                                                                      399        7.751        3,098     1.87+


Franklin Zero Coupon Fund - 2000
December 31,
 1999                                                                      12,676       27.709      351,257     1.40
 1998                                                                      13,016       27.086      352,556     1.15
 1997                                                                      13,796       25.386      350,230     1.15
 1996                                                                      14,687       23.880      350,723     1.15
 1995                                                                      14,874       23.491      349,422     1.15


Franklin Zero Coupon Fund - 2005
December 31,
 1999                                                                      11,639       31.011      360,912     1.40
 1998                                                                      11,778       33.196      390,968     1.15
 1997                                                                      11,932       29.722      354,637     1.15
 1996                                                                      14,331       26.888      385,323     1.15
 1995                                                                      12,382       27.229      337,160     1.15

<FN>
                                                                              39

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

5. Unit Values (continued)
                                                                                                               Ratio of
                                                                                                               Expenses

                                                                             Units                            to Average
                                                                          Outstanding Unit Value  Net Assets  Net Assets*
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>         <C>         <C>          <C>
Franklin Zero Coupon Fund - 2010
December 31,
 1999                                                                      11,422      $34.265     $391,363     1.40%
 1998                                                                      11,597       39.336      456,187     1.15
 1997                                                                      11,826       34.629      409,523     1.15
 1996                                                                      11,896       29.931      356,054     1.15
 1995                                                                       3,735       30.991      115,736     1.15


Mutual Discovery Securities Fund
December 31,
 1999                                                                      39,115       13.983      546,938     1.76
 1998                                                                      36,029       11.383      410,124     1.75
 1997                                                                      29,439       12.072      355,384     1.81
 1996(4)                                                                    4,953       10.190       50,468     2.12+


Mutual Shares Securities Fund
December 31,
 1999                                                                      80,687       13.509    1,090,067     1.54
 1998                                                                      86,534       12.002    1,038,636     1.52
 1997                                                                      75,999       12.082      918,245     1.55
 1996(4)                                                                    8,280       10.339       85,606     1.75+


Templeton Developing Markets Equity Fund
December 31,
 1999                                                                      71,448       12.217      872,827     2.14
 1998                                                                      70,793        7.959      563,460     2.16
 1997                                                                      62,109       10.230      635,389     2.17
 1996                                                                      59,260       11.292      669,146     2.24
 1995                                                                      22,210        9.357      207,819     2.16


Templeton Global Asset Allocation Fund
December 31,
 1999                                                                      16,922       14.852      251,342     1.57
 1998                                                                      17,144       13.917      238,598     1.59
 1997                                                                      22,230       14.027      311,809     1.69
 1996                                                                      30,332       12.651      383,721     1.61
 1995(6)                                                                       21       10.637          220     1.65+


Templeton Global Growth Fund
December 31,
 1999                                                                     141,052       19.504    2,751,077     1.63
 1998                                                                     109,847       16.235    1,783,371     1.63
 1997                                                                      85,767       15.010    1,287,362     1.63
 1996                                                                      58,157       13.324      774,892     1.68
 1995                                                                      31,471       11.069      348,359     1.72

<FN>
                                                                              40

</FN>
</TABLE>

<PAGE>




<TABLE>
<CAPTION>
Allianz Life Variable Account A
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999

5. Unit Values (continued)
                                                                                                               Ratio of
                                                                                                               Expenses

                                                                             Units                            to Average
                                                                          Outstanding Unit Value  Net Assets  Net Assets*
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>         <C>         <C>          <C>
Templeton Global Income Securities Fund
December 31,
 1999                                                                      10,686      $16.881     $180,418     1.40%
 1998                                                                      10,487       18.052      189,335     1.38
 1997                                                                       8,916       16.985      151,430     1.37
 1996                                                                       7,756       16.700      129,516     1.36
 1995                                                                       5,801       15.347       89,028     1.39


Templeton International Equity Fund
December 31,
 1999                                                                      91,128       24.230    2,208,092     1.65
 1998                                                                      94,761       19.278    1,826,865     1.63
 1997                                                                      78,634       18.400    1,446,893     1.64
 1996                                                                      60,849       16.598    1,010,009     1.64
 1995                                                                      40,830       13.600      555,276     1.67


Templeton International Smaller Companies Fund
December 31,
 1999                                                                       3,301       11.717       38,684     1.86
 1998                                                                       1,899        9.528       18,103     1.85
 1997                                                                       1,139       10.943       12,470     1.81
 1996(3)                                                                        -       11.194            -     1.53+


Templeton Pacific Growth Fund
December 31,
 1999                                                                      38,433       11.488      441,517     1.83
 1998                                                                      32,474        8.447      274,322     1.85
 1997                                                                      29,580        9.798      289,825     1.78
 1996                                                                      27,810       15.412      428,593     1.74
 1995                                                                      21,322       13.977      298,014     1.76


USAllianz VIP Diversified Assets Fund
December 31,
 1999(1)                                                                        -            -            -     1.75+


USAllianz VIP Fixed Income Fund
December 31,

 1999(1)                                                                        -            -            -     1.50+


USAllianz VIP Growth Fund
December 31,
 1999(1)                                                                        -            -            -     1.65+

* For the year ended  December 31,  including  the effect of the expenses of the
underlying  funds.  +  Annualized.   1  Period  from  November  12,  1999  (fund
commencement)   to  December   31,  1999.  2  Period  from  May  1,  1998  (fund
commencement)   to  December   31,  1998.  3  Period  from  May  1,  1996  (fund
commencement)  to  December  31,  1996.  4 Period  from  November  8, 1996 (fund
commencement)  to  December  31,  1996.  5 Period  from  November  1, 1995 (fund
commencement)   to  December   31,  1995.  6  Period  from  May  1,  1995  (fund
commencement) to December 31, 1995.

<FN>
                                                                              41

</FN>
</TABLE>







                             ALLIANZ LIFE INSURANCE
                            COMPANY OF NORTH AMERICA
                                AND SUBSIDIARIES
                        Consolidated Financial Statements
                           December 31, 1999 and 1998

Allianz Life Insurance Company of North America
And Subsidiaries
Independent Auditors' Report

The Board of Directors

Allianz Life Insurance Company of North America and subsidiaries:
We have audited the  accompanying  consolidated  balance  sheets of Allianz Life
Insurance  Company of North America and subsidiaries as of December 31, 1999 and
1998,  and the related  consolidated  statements  of  operations,  comprehensive
(loss) income,  stockholder's equity and cash flows for each of the years in the
three-year  period  ended  December  31,  1999.  These  consolidated   financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Allianz
Life Insurance Company of North America and subsidiaries as of December 31, 1999
and 1998,  and the  results of their  operations  and cash flows for each of the
years in the  three-year  period ended  December 31, 1999,  in  conformity  with
generally accepted accounting principles.

As discussed in note 1 to the  consolidated  financial  statements,  the Company
changed its method of calculating  deferred acquisition costs and future benefit
reserves for two-tiered annuities.

                                                                       KPMG LLP



February 7, 2000


<PAGE>

<TABLE>
<CAPTION>



Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Balance Sheets

December 31, 1999 and 1998 (in thousands)

  Assets                                                                                    1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                <C>              <C>
Investments:
   Fixed maturities, at fair value                                                     $ 4,582,350        2,538,291
   Equity securities, at fair value                                                       675,541           512,404
   Mortgage loans on real estate                                                          528,933           457,128
   Certificates of deposit and short-term securities                                      139,571           166,366
   Policy loans                                                                            46,573             7,118
   Real estate                                                                            154,063            80,637
   Options                                                                                 68,217            15,109
   Investment in equity investments                                                         3,045            80,928
------------------------------------------------------------------------------------------------------------------------------------
     Total investments                                                                  6,198,293         3,857,981
Cash                                                                                       58,110            67,195
Accrued investment income                                                                  73,774            36,649
Receivables (net of allowance for uncollectible accounts of
 $3,395 in 1999 and $3,254 in 1998)                                                       310,866           323,971
Reinsurance recoverable:
   Funds held on deposit                                                                1,151,941         1,170,170
   Recoverable on future policy benefit reserves                                        3,330,612         1,191,098
   Recoverable on unpaid claims                                                           405,086           293,179
   Receivable on paid claims                                                               74,483            24,986
Goodwill (net of accumulated amortization of $3,847 in 1999)                              304,561                 0
Value of business acquired                                                                210,363                 0
Deferred acquisition costs                                                                801,763           930,059
Other assets                                                                               55,811            35,755
Federal income tax recoverable                                                             10,484             4,060
------------------------------------------------------------------------------------------------------------------------------------
   Assets, exclusive of separate account assets                                        12,986,147         7,935,103
Separate account assets                                                                 8,488,404         9,915,150
------------------------------------------------------------------------------------------------------------------------------------
   Total assets                                                                        $21,474,551        17,850,253
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Balance Sheets (continued)

December 31, 1999 and 1998 (in thousands)

                                                                                            1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                 <C>
Liabilities Future benefit reserves:

      Life                                                                            $ 1,874,904         1,445,844
      Annuity                                                                           7,796,583         3,588,491
   Policy and contract claims                                                             927,915           770,846
   Unearned premiums                                                                       49,013            53,778
   Reinsurance payable                                                                    212,239           129,397
   Deferred income on reinsurance                                                         186,888           106,065
   Deferred income taxes                                                                   51,356           257,903
   Accrued expenses                                                                       108,232            91,631
   Commissions due and accrued                                                             55,904            41,000
   Other policyholder funds                                                                77,782            20,586
   Other liabilities                                                                       98,251            89,038
------------------------------------------------------------------------------------------------------------------------------------
        Liabilities, exclusive of separate account liabilities                         11,439,067         6,594,579
   Separate account liabilities                                                         8,488,404         9,915,150
------------------------------------------------------------------------------------------------------------------------------------
        Total liabilities                                                              19,927,471        16,509,729
------------------------------------------------------------------------------------------------------------------------------------
Stockholder's equity:
   Common stock, $1 par value, 20 million shares authorized, issued and outstanding        20,000            20,000
   Additional paid-in capital                                                             830,274           407,088
   Retained earnings                                                                      632,320           673,857
   Accumulated other comprehensive income                                                  64,486           239,579
------------------------------------------------------------------------------------------------------------------------------------
        Total stockholder's equity                                                      1,547,080         1,340,524
Commitments and contingencies (notes 7 and 12)
------------------------------------------------------------------------------------------------------------------------------------
        Total liabilities and stockholder's equity                                     $21,474,551        17,850,253
------------------------------------------------------------------------------------------------------------------------------------


<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Operations

Years ended December 31, 1999, 1998 and 1997 (in thousands)


                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>               <C>
Revenue:
   Life insurance premiums                                            $  447,026          416,199           339,841
   Other life policy considerations                                       31,786           52,668            83,816
   Annuity considerations                                                239,070          222,632           219,262
   Accident and health premiums                                          843,906          773,570           747,718
------------------------------------------------------------------------------------------------------------------------------------
     Total premiums and considerations                                 1,561,788        1,465,069         1,390,637
   Premiums and annuity considerations ceded                             478,239          411,316           438,018
------------------------------------------------------------------------------------------------------------------------------------
        Net premiums and considerations                                1,083,549        1,053,753           952,619
   Investment income, net                                                274,860          217,066           162,350
   Realized investment gains                                             112,253           89,226            61,488
   Other                                                                  72,301           78,174            53,760
------------------------------------------------------------------------------------------------------------------------------------
     Total revenue                                                     1,542,963        1,438,219         1,230,217
------------------------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
   Life insurance benefits                                               382,464          461,891           336,090
   Annuity benefits                                                      243,398          251,463           206,189
   Accident and health insurance benefits                                765,257          623,640           566,746
------------------------------------------------------------------------------------------------------------------------------------
     Total benefits                                                    1,391,119        1,336,994         1,109,025
   Benefit recoveries                                                    443,441          501,719           426,607
------------------------------------------------------------------------------------------------------------------------------------
        Net benefits                                                     947,678          835,275           682,418
   Commissions and other agent compensation                              304,816          322,697           310,665
   General and administrative expenses                                   162,798          116,007           106,744
   Taxes, licenses and fees                                               26,292           15,848            20,605
   Amortization of goodwill                                                3,847                0                 0
   Amortization of value of business acquired, net of interest credited    4,161                0                 0
   Change in deferred acquisition costs, net                             129,142           (2,979)          (63,742)
------------------------------------------------------------------------------------------------------------------------------------
     Total benefits and expenses                                       1,578,734        1,286,848         1,056,690
------------------------------------------------------------------------------------------------------------------------------------
     (Loss) income from operations before income taxes                   (35,771)         151,371           173,527
------------------------------------------------------------------------------------------------------------------------------------
Income tax (benefit) expense:   Current                                   63,371           48,410            31,571
   Deferred                                                              (73,727)           2,822            28,283
------------------------------------------------------------------------------------------------------------------------------------
     Total income tax (benefit) expense                                  (10,356)          51,232            59,854
------------------------------------------------------------------------------------------------------------------------------------
     (Loss) income before cumulative effect of change in accounting      (25,415)         100,139           113,673
Cumulative effect of change in accounting, net of tax benefit of $8,682  (16,122)               0                 0
------------------------------------------------------------------------------------------------------------------------------------
     Net (loss) income                                                $  (41,537)         100,139           113,673
------------------------------------------------------------------------------------------------------------------------------------


<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income

Years ended December 31, 1999, 1998 and 1997 (in thousands)

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                  <C>              <C>
Net (loss) income                                                     $  (41,537)          100,139          113,673
------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) gain:

   Foreign currency translation adjustments, net of tax                    1,461            (1,761)            (975)
------------------------------------------------------------------------------------------------------------------------------------
Unrealized (losses) gains on fixed maturities and equity securities:  Unrealized
holding (losses) gains arising during the period net of tax (benefit) expense of
$(55,781), $57,703 and $71,594 in 1999, 1998,

and 1997, respectively                                                  (103,590)          107,162          132,961
Reclassification adjustment for gains included in net income, net of tax
 expense of $39,289, $30,627, and $21,588 in 1999, 1998, and 1997,
 respectively                                                             72,964           56,879            40,093
------------------------------------------------------------------------------------------------------------------------------------
        Total unrealized holding (losses) gains                         (176,554)          50,283            92,868
------------------------------------------------------------------------------------------------------------------------------------

        Total other comprehensive (loss) income                         (175,093)          48,522            91,893
------------------------------------------------------------------------------------------------------------------------------------

        Total comprehensive (loss) income                             $ (216,630)         148,661            205,566
------------------------------------------------------------------------------------------------------------------------------------

<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Stockholder's Equity

Years ended December 31, 1999, 1998 and 1997 (in thousands)

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                  <C>               <C>
   Balance at beginning and end of year                               $   20,000           20,000            20,000
------------------------------------------------------------------------------------------------------------------------------------
Preferred stock:
   Balance at beginning of year                                                0           25,000            25,000
   Redemption of stock during the year                                         0           (25,000)               0
------------------------------------------------------------------------------------------------------------------------------------
     Balance at end of year                                                    0                0            25,000
------------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital:   Balance at beginning of year               407,088          407,088           407,088
   Capital contribution                                                  423,186                0                 0
------------------------------------------------------------------------------------------------------------------------------------
     Balance at end of year                                              830,274          407,088           407,088
------------------------------------------------------------------------------------------------------------------------------------
Retained earnings:
   Balance at beginning of year                                          673,857          574,447           462,925
   Net income                                                             41,537)         100,139           113,673
   Cash dividend to stockholder                                                0             (729)          (2,151)
------------------------------------------------------------------------------------------------------------------------------------
     Balance at end of year                                              632,320          673,857           574,447
------------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income: Accumulated unrealized holding gain:

     Balance at beginning of year                                        245,788          195,505           102,637
     Net unrealized gain (loss) on investments
        during the year, net of deferred federal income taxes           (176,554)          50,283            92,868
------------------------------------------------------------------------------------------------------------------------------------
     Balance at end of year                                               69,234          245,788           195,505
Accumulated unrealized foreign currency (loss):
   Balance at beginning of year                                           (6,209)          (4,448)           (3,473)
   Net unrealized gain (loss) on foreign currency
     translation during the year, net of deferred federal income taxes     1,461           (1,761)             (975)
------------------------------------------------------------------------------------------------------------------------------------
     Balance at end of year                                               (4,748)          (6,209)           (4,448)
------------------------------------------------------------------------------------------------------------------------------------
   Total accumulated other comprehensive income                           64,486          239,579           191,057
------------------------------------------------------------------------------------------------------------------------------------
     Total stockholder's equity                                       $1,547,080        1,340,524         1,217,592
------------------------------------------------------------------------------------------------------------------------------------

<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows

December 31, 1999, 1998 and 1997 (in thousands)


                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                <C>               <C>            <C>
Cash flows provided by (used in) operating activities:
   Net (loss) income                                                  $   (41,537)        100,139           113,673
------------------------------------------------------------------------------------------------------------------------------------
   Adjustments to reconcile  net (loss) income to net cash (used in) provided by
     operating activities:

        Realized investment gains                                        (112,253)         (89,226)          (61,488)
        Deferred federal income tax expense                               (82,409)           2,822            28,283
        Charges to policy account balances                                (66,945)        (104,681)         (148,159)
        Interest credited to policy account balances                      251,303          262,956           251,182
        Change in:
          Accrued investment income                                        (1,921)           1,696            (2,215)
          Receivables                                                      17,873          (61,295)         (107,398)
          Reinsurance recoverable                                        (435,498)        (162,959)       (1,205,410)
          Deferred acquisition costs                                      128,296           (2,979)          (63,742)
          Future benefit reserves                                        (136,722)          25,183           138,370
          Policy and contract claims and other policyholder funds         184,939          154,213            92,230
          Unearned premiums                                                (4,765)           3,610            17,992
          Reinsurance payable                                              13,820           17,713            68,725
          Current tax recoverable                                          (6,424)          16,701            (8,306)
          Accrued expenses and other liabilities                          (31,349)          14,797            12,113
          Commissions due and accrued                                       5,627            1,483             2,414
        Depreciation and amortization                                      (5,917)         (12,711)          (13,312)
        Equity in earnings of equity investments                             (690)          (2,207)                0
        Other, net                                                         (1,151)              94                18
------------------------------------------------------------------------------------------------------------------------------------
        Total adjustments                                                (284,186)          65,210          (998,703)
------------------------------------------------------------------------------------------------------------------------------------
        Net cash (used in) provided by operating activities              (325,723)         165,349          (885,030)
------------------------------------------------------------------------------------------------------------------------------------


<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows (continued)

Years ended December 31, 1999, 1998 and 1997 (in thousands)


                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                  <C>              <C>           <C>
Cash flows (used in) provided by operating activities                 $  (325,723)         165,349          (885,030)
Cash flows (used in) provided by investing activities:
   Purchase of fixed maturities                                        (1,171,682)      (1,256,653)       (1,748,950)
   Purchase of equity securities                                         (404,985)      (1,518,096)       (1,699,847)
   Purchase of real estate                                                (66,502)         (36,367)           (8,398)
   Purchase of options                                                    (32,617)         (11,503)           (3,482)
   Funding of mortgage loans                                             (114,840)        (168,870)         (103,626)
   Sale of fixed maturities                                             1,123,115        1,460,969         1,921,534
   Matured fixed maturities                                                21,280           28,152             1,150
   Sale of equity securities                                              385,559        1,560,695         1,691,789
   Sale of real estate                                                          0            7,103               551
   Repayment of mortgage loans                                             41,355           29,105            29,520
   Net change in certificates of deposit and short-term securities         38,121          (49,242)           87,848
   Purchase of Life USA, net of cash acquired                            (370,881)         (79,091)                0
   Other                                                                   (5,438)          (5,489)           94,126
------------------------------------------------------------------------------------------------------------------------------------
   Net cash (used in) provided by investing activities                   (557,515)         (39,287)          262,215
------------------------------------------------------------------------------------------------------------------------------------
Cash flows provided by (used in) financing activities:

   Policyholders' deposits to account balances                         1,033,877          864,446           748,430
   Policyholders' withdrawals from account balances                      (663,733)        (562,667)         (524,579)
   Change in assets held under reinsurance agreements                      80,823            7,876           150,526
   Funds (repaid) borrowed on dollar reverse repurchase agreements, net         0         (369,664)          239,468
   Capital contribution                                                   423,186                0                 0
   Redemption of preferred stock                                                0          (25,000)                0
   Cash dividends paid                                                          0             (729)           (2,151)
------------------------------------------------------------------------------------------------------------------------------------
   Net cash provided by (used in) financing activities                    874,153          (85,738)          611,694
------------------------------------------------------------------------------------------------------------------------------------
        Net change in cash                                                 (9,085)          40,324           (11,121)
Cash at beginning of year                                                  67,195           26,871            37,992
------------------------------------------------------------------------------------------------------------------------------------
Cash at end of year                                                   $   58,110           67,195             26,871
------------------------------------------------------------------------------------------------------------------------------------

<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows (continued)

Years ended December 31, 1999, 1998 and 1997 (in thousands)

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                        <C>               <C>
Supplemental disclosures of noncash transactions:
   Fair value of assets acquired in acquisition of LifeUSA:

     Fixed maturities                                                 $ 2,283,214                0                 0
     Equity securities                                                    21,358                 0                 0
     Certificates of deposit and short-term securities                    11,285                 0                 0
     Policy loans                                                         37,618                 0                 0
     Options                                                              20,491                 0                 0
     Cash                                                                 62,767                 0                 0
     Accrued investment income                                            35,204                 0                 0
     Receivables (net of allowance for uncollectible accounts of $145)     4,768                 0                 0
     Recoverable on future policy benefit reserves - annuity           3,023,377                 0                 0
     Deferred tax asset                                                   29,825                 0                 0
     Other assets                                                         21,291                 0                 0

   Liabilities assumed in acquisition of LifeUSA:

     Future policy benefit reserves - annuity                          5,395,155                 0                 0
     Reinsurance payable                                                  69,022                 0                 0
     Accrued expenses                                                     14,611                 0                 0
     Commissions due and accrued                                           9,277                 0                 0
     Other policyholder funds                                             29,729                 0                 0
     Other liabilities                                                    42,552                 0                 0

<FN>

See accompanying notes to consolidated financial statements.

</FN>
</TABLE>

 <PAGE>




Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(1) Summary of Significant Accounting Policies

Allianz Life Insurance  Company of North America (the Company) is a wholly owned
subsidiary  of Allianz of America,  Inc.  (AZOA),  a wholly owned  subsidiary of
Allianz  Aktiengesellschaft  Holding (Allianz AG), a Federal Republic of Germany
company.

The  Company is a life  insurance  company  that is  licensed  to sell group and
individual life,  annuity and accident and health policies in the United States,
Canada  and  several   U.S.   territories.   Based  on  1999  net  revenues  and
considerations,  36%, 18% and 46% of the Company's business is life, annuity and
accident and health,  respectively.  The Company's primary distribution channels
are through  strategic  alliances with other  insurance  companies,  third party
marketing   organizations  and  with  independent  agents.  The  Company  has  a
significant relationship with The Franklin Templeton Group and its broker/dealer
network related to sales of its variable life and variable annuity products.

Following is a summary of the significant  accounting  policies reflected in the
accompanying consolidated financial statements.

Basis of Presentation

The  consolidated  financial  statements  have been prepared in accordance  with
generally accepted  accounting  principles (GAAP) which vary in certain respects
from  accounting  rules  prescribed or permitted by state  insurance  regulatory
authorities. The accounts of the Company's major subsidiaries, Life USA Holding,
Inc. (Life USA) and Preferred Life Insurance Company of New York, and other less
significant  subsidiaries  have been  consolidated.  The consolidated  financial
statements  only  include the  results of Life USA's  operations  subsequent  to
October 1, 1999,  the date of its  acquisition  by the Company (see note 2). All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management to make certain estimates and assumptions that affect reported assets
and  liabilities  including  reporting or disclosure  of  contingent  assets and
liabilities  as of the balance  sheet date and the reported  amounts of revenues
and  expenses   during  the  reporting   period.   Actual   results  could  vary
significantly from management's estimates.

Traditional Life, Group Life and Group Accident and Health Insurance
Traditional life products include products with guaranteed premiums and benefits
and  consist  principally  of whole life and term  insurance  policies,  limited
payment contracts and certain annuity products with life contingencies.

Premiums on  traditional  life and group life products are  recognized as income
when due. Group  accident and health  premiums are recognized as earned on a pro
rata basis over the risk coverage periods. Benefits and expenses for traditional
and group  products  are  matched  with  earned  premiums  so that  profits  are
recognized  over the premium paying  periods of the contracts.  This matching is
accomplished  by  establishing  provisions for future policy benefits and policy
and contract  claims,  and deferring and amortizing  related policy  acquisition
costs.

Nontraditional and Variable Life and Annuity Business

Nontraditional and variable life insurance and interest sensitive contracts that
have  significant  mortality or morbidity  risk are  accounted for in accordance
with the retrospective deposit method.  Interest sensitive contracts that do not
have  significant  mortality or  morbidity  risk are  accounted  for in a manner
consistent  with  interest  bearing  financial  instruments.  For both  types of
contracts,  premium  receipts are  reported as deposits to the  contractholder's
account  while  revenues  consist of amounts  assessed  against  contractholders
including surrender charges and earned administrative service fees. Mortality or
morbidity  charges  are  also  accounted  for  as  revenue  on  those  contracts
containing mortality or morbidity risk. Benefits consist of interest credited to
contractholder's  accounts  and  claims or  benefits  incurred  in excess of the
contractholder's balance.

<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(1) Summary of Significant Accounting Policies (Continued)


Value of Business Acquired and Goodwill

The value of insurance  in force  purchased is recorded as the value of business
acquired  (VOBA).  The initial value was determined by an actuarial  study using
the present value of future  profits in  calculating  the value of the insurance
purchased.  An accrual of interest is added to the unamortized balance using the
rates  credited  to the  policyholder  accounts.  The  balance is  amortized  in
relation  to the  present  value of expected  future  gross  profits in the same
manner as deferred  acquisition costs. The amortization period is expected to be
approximately 20 years from the date the business was acquired.  The activity in
the VOBA balance for 1999 is summarized below.

Balance, beginning of year$  0
Additions              214,524
Interest                 1,975
Amortization           (6,136)
                        ------
Balance, end of year   210,363
                        ------

The  amortization  of the VOBA in each of the next five years is expected to be:
2000 - $21,491;  2001 -  $20,123;  2002 -  $18,329;  2003 - $18,105;  and 2004 -
$16,958.

Goodwill  is the  excess of the amount  paid to acquire a company  over the fair
value  of its net  assets  and  VOBA,  reduced  by  amortization  and  valuation
adjustments,  if any.  Goodwill is  amortized on a  straight-line  basis over 20
years.  The value of VOBA and goodwill will be monitored at least annually based
on  estimates  of  future  earnings.  For  VOBA,  those  earnings  relate to the
insurance  in  force  purchased.  For  goodwill,  estimates  will  be  based  on
production  subsequent to the purchase.  If estimated  future  earnings are less
than the carrying  amount of the related asset,  the carrying value of the asset
may not be recoverable.  If impairment is indicated,  the carrying value will be
reduced to its fair value with a corresponding charge to earnings.

Deferred Acquisition Costs

Acquisition costs,  consisting of commissions and other costs that vary with and
are  primarily  related  to  production  of  new  business,  are  deferred.  For
traditional  life and group life  products,  such costs are  amortized  over the
revenue-producing  period  of the  related  policies  using  the same  actuarial
assumptions used in computing future policy benefit reserves.  Acquisition costs
for accident and health  insurance  policies are deferred and amortized over the
lives of the  policies in the same manner as premiums  are earned.  For interest
sensitive  products,  acquisition costs are amortized in relation to the present
value of expected  future gross profits from  investment  margins and mortality,
morbidity and expense charges. Deferred acquisition costs amortized during 1999,
1998 and 1997 were $312,036, $202,644, and $219,266, respectively.

Future Policy Benefit Reserves

Future policy benefit  reserves on traditional life products are computed by the
net level premium method based upon estimated future investment yield, mortality
and withdrawal assumptions, commensurate with the Company's experience, modified
as necessary  to reflect  anticipated  trends,  including  possible  unfavorable
deviations. Most life reserve interest assumptions range from 6% to 3.5%.

Future policy  benefit  reserves for interest  sensitive  products are generally
carried at  accumulated  contract  values.  Reserves  on some  deferred  annuity
contracts  are  computed  based  on  contractholder  cash  value  accumulations,
adjusted for mortality, withdrawal and interest margin assumptions.

Fair values of investment contracts,  which include deferred annuities and other
annuities without significant mortality risk, were determined by testing amounts
payable  on  demand   against   discounted   cash  flows  using  interest  rates
commensurate  with the risks  involved.  Fair  values  are  based on the  amount
payable on demand at December 31.

Policy and Contract Claims

Policy and contract claims  represent an estimate of claims and claim adjustment
expenses  that  have been  reported  but not yet paid and  incurred  but not yet
reported as of December 31.

<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(1) Summary of Significant Accounting Policies (Continued)


Reinsurance

Insurance  liabilities are reported  before the effects of reinsurance.  Amounts
paid or deemed to have been paid for claims covered by reinsurance contracts are
recorded as reinsurance receivable.  Reinsurance receivables are recognized in a
manner  consistent  with the  liabilities  related to the  underlying  reinsured
contracts.

Investments

The Company has  classified  all of its fixed  maturity and equity  portfolio as
"available-for-sale" and, accordingly, the securities are carried at fair value.
Short-term  investments are carried at amortized cost, which approximates market
value. Policy loans are reflected at their unpaid principal  balances.  Mortgage
loans are  reflected  at unpaid  principal  balances  adjusted  for  premium and
discount amortization and an allowance for uncollectible  balances.  The Company
analyzes loan impairment at least once a year when assessing the adequacy of the
allowance for possible  credit losses.  The Company does not accrue  interest on
impaired loans and accounts for interest income on such loans on a cash basis.

Realized  gains and losses are  computed  based on the  specific  identification
method.

As of December 31, 1999 and 1998,  investments with a carrying value of $164,045
and  $116,197,  respectively,  were  held  on  deposit  with  various  insurance
departments and in other trusts as required by statutory regulations.

The fair values of invested assets,  excluding  investments in real estate,  are
deemed by management to approximate  their  estimated  market  values.  The fair
value of mortgage loans has been calculated  using  discounted cash flows and is
based on pertinent  information  available to management as of year-end.  Policy
loan balances which are supported by the  underlying  cash value of the policies
approximate fair value. Changes in market conditions  subsequent to year-end may
cause estimates of fair values to differ from the amounts presented herein.

Accounting for Option Contracts

Certain annuity products provide additional benefits to the policy annuitization
value based on the growth in the Standard & Poor's (S&P) 500 Index.  The Company
has analyzed the  characteristics  of these  benefits and has  purchased  option
contracts tied to the S&P 500 Index with similar  characteristics to hedge these
risks.  Management monitors  correlation of in force amounts and option contract
values to ensure proper  matching.  If persistency  assumptions  were to deviate
significantly from anticipated  rates,  management would purchase or sell option
contracts as deemed appropriate.  As of December 31, 1999, management believes a
proper hedge exists.

The option  contracts  are  reported at fair value on the  consolidated  balance
sheet.  The fair value of the options is deemed by management to approximate the
estimated market values. Unrealized gains and losses on the option contracts are
recorded in annuity  benefits on the  consolidated  statement of  operations  to
offset increases in the future policy benefits  liability recorded for the index
benefit.

The Company purchases  "over-the-counter"  European-Asian  call option contracts
based upon the S&P 500  Index.  Two types of options  are  purchased:  five- and
seven-year options with daily averaging of the index during the last year of the
contract and five-year  cliquet options which use monthly averaging of the index
during each year and resets at each anniversary date of the contract. The strike
price depends on the product,  index period,  cap and credited rate. The Company
only purchases option contracts from counterparties  rated AA- or better and the
option contracts are not used for trading purposes.

Income Taxes

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(1) Summary of Significant Accounting Policies (Continued)


Separate Accounts

Separate  accounts  represent funds for which  investment  income and investment
gains and losses accrue directly to the policyholders and contractholders.  Each
account has specific  investment  objectives  and the assets are carried at fair
value. The assets of each account are legally  segregated and are not subject to
claims that arise out of any other business of the Company.

Fair values of separate account assets were determined using the market value of
the underlying  investments  held in segregated  fund  accounts.  Fair values of
separate account  liabilities were determined using the cash surrender values of
the policyholder's and contractholder's account.

Receivables

Receivable  balances  approximate  estimated  fair  values.  This  is  based  on
pertinent  information  available to  management  as of year-end  including  the
financial  condition  and  credit  worthiness  of  the  parties  underlying  the
receivables.  Changes in market  conditions  subsequent  to  year-end  may cause
estimates of fair values to differ from the amounts presented herein.

Accounting Changes

Effective  January 1, 1999, the Company  changed its methodology for calculating
deferred  acquisition  costs and future benefit reserves for two tiered deferred
annuities.  The revised calculation better reflects the income streams from this
product. Under the previous method of accounting,  a disproportionate  amount of
gains were recognized when contract  annuitization or surrenders  occurred.  The
new  methodology  provides  for profit  emergence  over the life of the block of
annuities.  The cumulative effect of the change in accounting  principle for the
years prior to 1999 in the amount of $16,122,  net of taxes,  is recorded in the
accompanying  consolidated statement of operations.  The effect of the change in
methodology does not have a significant  impact on the financial  statements for
prior years, therefore no proforma retroactive information is included.

In 1999, the Company  adopted  Statement of Position (SOP) 97-3,  Accounting for
Insurance and Other Enterprises for Insurance-Related  Assessment, and SOP 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use. No material adjustments were made to the consolidated  financial statements
upon adoption of these statements.

     In 1998, the Company  adopted  Statement of Financial  Accounting  Standard
(SFAS) No. 125,  Accounting for Transfers and Servicing of Financial  Assets and
Extinguishments of Liabilities,  and SFAS No. 132,  Employers  Disclosures about
Pensions and Other  Postretirement  Benefits.  No  adjustments  were made to the
consolidated financial statements upon adoption of these pronouncements.


Accounting Pronouncements to be Adopted

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting  for Derivative  Instruments  and Hedging  Activities.  The statement
establishes   accounting  and  reporting  standards  for  derivative   financial
instruments and other similar financial  instruments and for hedging activities.
In June 1999,  SFAS No. 137,  Accounting for Derivative  Instruments and Hedging
Activities - Deferral of Effective  Date of FASB  Statement  No. 133 was issued.
This statement  defers the effective date to fiscal years  beginning  after June
15, 2000. The Company will adopt these statements on January 1, 2001. The impact
of  adoption  of SFAS No. 133 on the  financial  position of the Company has not
been determined.


Reclassifications

Certain  prior year balances  have been  reclassified  to conform to the current
year presentation.

<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(2) Business Combination

On October 1, 1999, the Company  acquired all of the  outstanding  capital stock
(including all outstanding  options) of Life USA that it did not already own for
approximately  $423 million in cash. The  acquisition  was financed by a capital
contribution from AZOA.

The  acquisition  was accounted for under the purchase method of accounting and,
accordingly,  the consolidated  financial statements include only the results of
Life  USA's  operations  from the date of  acquisition.  The  value of  business
acquired was  approximately  $215 million and is being  amortized in relation to
the present value of future gross profits, which will be approximately 20 years.
The  remaining  excess  of the  purchase  price  over the fair  value of  assets
acquired  in the amount of $308  million has been  recorded  as goodwill  and is
being amortized on a straight-line basis over 20 years.

During 1999,  expenses of  approximately $7 million were recorded related to the
acquisition  of Life USA and its  integration  with the Company.  These expenses
resulted  primarily from the costs of the  integration of the Company's and Life
USA's  strategies,  policies and practices.  These charges  include filing fees,
legal fees and other consulting fees related to the acquisition.

Following  are the  Company's  unaudited  pro forma  results for the years ended
December 31, 1999 and 1998 assuming the acquisition occurred on January 1, 1998.

                                          Unaudited
                                   1999              1998
------------------------------------------------------------------------------
Total revenue                 $ 1,766,792         1,654,531
Net (loss) income                 (44,624)          103,236
------------------------------------------------------------------------------

These  unaudited pro forma results have been prepared for  comparative  purposes
only and include  additional  amortization  expenses as a result of goodwill and
certain other  adjustments.  They do not purport to be indicative of the results
of operations that actually would have resulted had the combination  occurred on
January 1, 1998 or that may result in the future.

In 1998,  the Company  accounted for its investment in Life USA under the equity
method of accounting and carried its investment at cost,  adjusted for its share
of Life USA's  earnings,  amortization of goodwill and dividends  received.  The
difference  between the cost of the investment  and underlying  equity was to be
amortized on a straight-line  basis over ten years. As of December 31, 1998, the
company  held  21.41%  of the  outstanding  common  stock  of Life  USA  with an
approximate  market  value  of  $68,290.  The  carrying  value  of the  Life USA
investment  at year-end  1998 was  $80,928,  which was  $20,983  higher than the
equity in net assets of $59,945.

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(3) Investments

Investments at December 31, 1999 consist of:

                                                                                                             Amount
                                                                                                            shown on

                                                                         Amortized        Estimated       consolidated
                                                                           cost             fair             balance
                                                                          or cost           value             sheet
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>               <C>
Fixed maturities:
   U.S. government                                                    $  294,587          291,996           291,996
   States and political subdivisions                                      57,378           52,452            52,452
   Foreign government                                                    172,877          169,686           169,686
   Public utilities                                                      227,934          220,602           220,602
   Corporate securities                                                2,981,913        2,873,327         2,873,327
   Mortgage backed securities                                            345,794          347,235           347,235
   Collateralized mortgage obligations                                   634,680          627,052           627,052
------------------------------------------------------------------------------------------------------------------------------------
     Total fixed maturities                                           $4,715,163        4,582,350         4,582,350
------------------------------------------------------------------------------------------------------------------------------------
Equity securities:
   Common stocks:
     Banks, trusts and insurance companies                                22,935           23,831            23,831
     Industrial and miscellaneous                                        413,279          651,710           651,710
------------------------------------------------------------------------------------------------------------------------------------
     Total equity securities                                          $  436,214          675,541           675,541
------------------------------------------------------------------------------------------------------------------------------------
Other investments:
   Mortgage loans on real estate                                         528,933            XXXXXX          528,933
   Certificates of deposit and short-term securities                     139,571            XXXXXX          139,571
   Policy loans                                                           46,573            XXXXXX           46,573
   Real estate                                                           154,063            XXXXXX          154,063
   Options                                                                51,131            XXXXXX           68,217
   Investment in equity investments                                        3,045            XXXXXX            3,045
------------------------------------------------------------------------------------------------------------------------------------
     Total other investments                                          $  923,316            XXXXXX          940,402
------------------------------------------------------------------------------------------------------------------------------------
     Total investments                                                $6,074,693            XXXXXX        6,198,293
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(3) Investments (CONTINUED)

At December 31, 1999 and 1998, the amortized cost, gross unrealized gains,  gross unrealized losses and estimated fair values
of securities are as follows:

                                                          Amortized        Gross            Gross           Estimated
                                                            cost        unrealized       unrealized           fair
                                                           or cost         gains           losses             value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>              <C>             <C>
1999:

   U.S. Government                                     $  294,587          3,340            5,931           291,996
   States and political subdivisions                       57,378              0            4,926            52,452
   Foreign government                                     172,877            334            3,525           169,686
   Public utilities                                       227,934             20            7,352           220,602
   Corporate securities                                 2,981,913          3,902          112,488         2,873,327
   Mortgage backed securities                             345,794          5,026            3,585           347,235
   Collateralized mortgage obligations                    634,680          2,126            9,754           627,052
------------------------------------------------------------------------------------------------------------------------------------
     Total fixed maturities                             4,715,163         14,748          147,561         4,582,350
   Equity securities                                      436,214        289,441           50,114           675,541
------------------------------------------------------------------------------------------------------------------------------------
     Total                                             $5,151,377        304,189          197,675         5,257,891
------------------------------------------------------------------------------------------------------------------------------------
1998:

   U.S. Government                                     $  274,813         36,717              234           311,296
   States and political subdivisions                       94,640          6,481                0           101,121
   Foreign government                                      34,652          2,079                0            36,731
   Public utilities                                        66,236          5,948              202            71,982
   Corporate securities                                 1,441,359         67,234            9,891         1,498,702
   Mortgage backed securities                             401,505         26,799                0           428,304
   Collateralized mortgage obligations                     80,599         10,141              585            90,155
------------------------------------------------------------------------------------------------------------------------------------
     Total fixed maturities                             2,393,804        155,399           10,912         2,538,291
   Equity securities                                      278,753        245,913           12,262           512,404
------------------------------------------------------------------------------------------------------------------------------------
     Total                                             $2,672,557        401,312           23,174         3,050,695
------------------------------------------------------------------------------------------------------------------------------------
<FN>

The changes in unrealized (losses) gains on fixed maturity securities were $(277,300),  $22,170,  and $58,422 in each of the years
ended December 31, 1999, 1998 and 1997, respectively.

The changes in unrealized gains in equity investments, which include common stocks and nonredeemable preferred stocks were $5,676,
$55,188, and $84,718 for the years ended December 31, 1999, 1998 and 1997, respectively.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(3) Investments (CONTINUED)

The amortized cost and estimated  fair value of fixed  maturities at December 31, 1999, by  contractual  maturity,  are shown
below.  Expected  maturities  will differ  from  contractual  maturities  because  borrowers  may have the right to call or prepay
obligations with or without call or prepayment penalties.

                                                                                          Amortized         Estimated
                                                                                            cost           fair value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>                  <C>
   Due in one year or less                                                             $  102,823           102,554
   Due after one year through five years                                                1,055,901         1,037,031
   Due after five years through ten years                                               1,279,988         1,243,845
   Due after ten years                                                                  1,295,977         1,224,633
   Mortgage backed securities and collateralized mortgage obligations                     980,474           974,287
------------------------------------------------------------------------------------------------------------------------------------
     Totals                                                                            $4,715,163         4,582,350
------------------------------------------------------------------------------------------------------------------------------------

Gross gains of $151,920,  $105,723,  and $70,335 and gross losses of $39,717,  $18,217,  and $8,654 were realized on sales of
securities in 1999, 1998 and 1997, respectively.

Net realized investment gains (losses) for the respective years ended December 31 are summarized as follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
Fixed maturities, at market                                           $    (4,474)         30,299            40,268
Equity securities                                                         116,677          57,207            21,413
Mortgage loans                                                             (1,680)           ,320)             (982)
Real estate                                                                   331           3,133               635
Other                                                                        (601)            93)               154
------------------------------------------------------------------------------------------------------------------------------------
     Net gains before taxes                                               112,253          89,226            61,488
Tax expense on net realized gains                                          39,257          31,229            21,521
------------------------------------------------------------------------------------------------------------------------------------
     Net gains after taxes                                            $    72,996           7,997            39,967
------------------------------------------------------------------------------------------------------------------------------------

     The valuation allowances on mortgage loans at December 31, 1999, 1998 and 1997 and the changes in the allowance for the years
then ended are summarized as follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
Beginning of Year                                                     $    9,599             8,279              7,279
   Charged to operations                                                   1,680             1,320             1,000
   Recoveries                                                                  0                0                  0
------------------------------------------------------------------------------------------------------------------------------------
End of Year                                                           $   11,279             9,599             8,279
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(3) Investments (CONTINUED)

Major categories of net investment income for the respective years ended December 31 are:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>               <C>
Interest:
   Fixed maturities                                                   $  212,992          155,397           211,335
   Mortgage loans                                                         40,011           34,449            25,232
   Policy loans                                                              737              497             6,526
   Short-term investments                                                  1,823           15,022            12,804
Dividends:
   Preferred stock                                                           212              668               748
   Common stock                                                            5,259            5,190             4,603
Interest on assets held by reinsurers                                      8,097            8,272             8,858
Rental income on real estate                                              13,356            7,505             5,657
Other invested assets                                                      6,405            1,132             3,781
------------------------------------------------------------------------------------------------------------------------------------
     Total investment income                                             288,892          228,132           279,544

Investment expenses related to coinsurance agreements (note 8)             2,660            2,689            98,417
Investment expenses                                                       11,372            8,377            18,777
------------------------------------------------------------------------------------------------------------------------------------
     Net investment income                                            $  274,860          217,066           162,350
------------------------------------------------------------------------------------------------------------------------------------
<FN>

During the first two months of 1998,  the Company  entered into mortgage  backed  security  reverse  repurchase  transactions
("dollar rolls") with certain  securities  dealers.  Under this program,  the Company sold certain  securities for delivery in the
current  month and  simultaneously  contracted  with the same dealer to repurchase  similar,  but not  identical,  securities on a
specified future date. The Company gave up the right to receive  principal and interest on the securities sold. As of December 31,
1999 and 1998 there were no outstanding  amounts under the Company's  dollar roll program.  Average  balances  outstanding for the
first two months of 1998 were $120,525 and weighted average interest rates were 6.5%. The maximum balance  outstanding during 1998
was $120,525. No dollar rolls were transacted in 1999.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(4) Summary Table of Fair Value Disclosures

                                                                   1999                               1998
------------------------------------------------------------------------------------------------------------------------------------
                                                          Carrying         Fair           Carrying            Fair
                                                           Amount          Value           Amount             Value
                                                           -------         -----           -------            -----
Financial assets

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>              <C>               <C>
   Fixed maturities, at market:
     U.S. Government                                   $  291,996        291,996          311,296           311,296
     States and political subdivisions                     52,452         52,452          101,121           101,121
     Foreign governments                                  169,686        169,686           36,731            36,731
     Public utilities                                     220,602        220,602           71,982            71,982
     Corporate securities                               2,873,327      2,873,327        1,546,342         1,546,342
     Mortgage backed securities                           347,235        347,235          380,664           380,664
     Collateralized mortgage obligations                  627,052        627,052           90,155            90,155
   Equity securities                                      675,541        675,541          512,404           512,404
   Mortgage loans                                         528,933        530,033          457,128           495,202
   Short term investments                                 139,571        139,571          166,366           166,366
   Policy loans                                            46,573         46,573            7,118             7,118
   Options                                                 68,217         68,217           15,109            15,109
   Investment in equity investments                         3,045          4,286           80,928            68,290
   Receivables                                            310,866        310,866          323,971           323,971
   Separate accounts assets                             8,488,404      8,488,404        9,915,150         9,915,150

Financial liabilities

------------------------------------------------------------------------------------------------------------------------------------
   Investment contracts                                 7,609,726      7,208,876        3,645,657         3,035,787
   Separate account liabilities                         8,488,404      8,361,112        9,915,150         9,765,791
------------------------------------------------------------------------------------------------------------------------------------

     See Note 1 "Summary of Significant  Accounting  Policies" for description of the methods and significant  assumptions used to
estimate fair values.

(5) Receivables

Receivables at December 31 consist of the following:

                                                                                            1999              1998
------------------------------------------------------------------------------------------------------------------------------------
Premiums due                                                                           $  264,685           270,657
Agents balances                                                                             4,809            10,088
Related party receivables                                                                   2,230             3,852
Reinsurance commission receivable                                                           9,304             8,022
Scholarship enrollment fees                                                                14,125            12,010
Due from administrators                                                                     4,550            13,271
Other                                                                                      11,163             6,071
------------------------------------------------------------------------------------------------------------------------------------
        Total receivables                                                              $  310,866            323,971
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(6) Accident and Health Claims Reserves

Accident and health claims reserves are based on estimates that are subject to uncertainty. Uncertainty regarding reserves of
a given  accident year is gradually  reduced as new  information  emerges each  succeeding  year,  thereby  allowing more reliable
re-evaluations of such reserves.  While management  believes that reserves as of December 31, 1999 are adequate,  uncertainties in
the  reserving  process  could cause such  reserves to develop  favorably  or  unfavorably  in the near term as new or  additional
information  emerges.  Any  adjustments to reserves are reflected in the operating  results of the periods in which they are made.
Movements in reserves,  which are small  relative to the amount of such  reserves,  could  significantly  impact  future  reported
earnings of the Company.

Activity in the accident and health claims  reserves,  exclusive of long term care,  hospital  indemnity and AIDS reserves of
$19,542, $9,918, and $12,479 in 1999, 1998 and 1997, respectively, is summarized as follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>               <C>
Balance at January 1, net of reinsurance
   recoverables of $128,764, $141,033, and $124,320                   $  366,425          312,886           273,813
Adjustment primarily related to commutation of block of business         (53,585)               0                 0
Incurred related to:
   Current year                                                          431,279          417,042           346,901
   Prior years                                                             3,264           (12,217)          (12,087)
------------------------------------------------------------------------------------------------------------------------------------
Total incurred                                                           434,543          404,825           334,814
------------------------------------------------------------------------------------------------------------------------------------
Paid related to:
   Current year                                                          193,341          204,100           150,942
   Prior years                                                           185,696          147,186           144,798
------------------------------------------------------------------------------------------------------------------------------------
 Total paid                                                              379,037          351,286           295,740
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, net of reinsurance
   recoverables of $175,142, $128,764, and $141,033                   $  368,346          366,425            312,887
------------------------------------------------------------------------------------------------------------------------------------
<FN>

The Company incurred  additional losses in 1999 on prior year incurred claims primarily on its reinsurance  assumed (non-HMO)
business.  Due to lower than anticipated  losses related to prior years,  the provision for claims and claim  adjustment  expenses
decreased in 1998 and 1997.

</FN>
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(7) Reinsurance

In the normal  course of business,  the Company  seeks to limit its  exposure to loss on any single  insured and to recover a
portion of benefits paid by ceding risks under excess  coverage and  coinsurance  contracts.  The Company  retains a maximum of $1
million  coverage per individual  life.  Reinsurance  contracts do not relieve the Company from its obligations to  policyholders.
Failure of  reinsurers  to honor their  obligations  could result in losses to the Company.  The Company  evaluates  the financial
condition of its  reinsurers  and monitors  concentrations  of credit risk to minimize  its  exposure to  significant  losses from
reinsurer insolvencies.

Life insurance, annuities and accident and health business assumed from and ceded to other companies is as follows:

                                                                                                           Percentage

                                                           Assumed         Ceded                            of amount
                                            Direct       from other      to other            Net             assumed
Year ended                                  amount        companies      companies         amount            to net
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1999:
<S>                                    <C>            <C>             <C>             <C>                      <C>
Life insurance in force                $36,994,161    129,809,733     24,174,006      142,629,888              91.0%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
   Life                                   205,208         273,604         67,069          411,743              66.5%
   Annuities                              199,341          39,729         95,232          143,838              27.6%
   Accident and health                    541,847         302,059        315,938          527,968              57.2%
------------------------------------------------------------------------------------------------------------------------------------
     Total premiums                    $  946,396         615,392        478,239        1,083,549              56.8%
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1998:
Life insurance in force                $34,118,554     98,832,792     19,483,581      113,467,765              87.1%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
   Life                                   244,416         224,451         93,812          375,055              59.8%
   Annuities                              220,812           1,820         50,385          172,247               1.1%
   Accident and health                    479,237         294,333        267,119          506,451              58.1%
------------------------------------------------------------------------------------------------------------------------------------
     Total premiums                    $  944,465         520,604        411,316        1,053,753              49.4%
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1997:
Life insurance in force                $32,234,241     72,682,842     19,873,094       85,043,989              85.5%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
   Life                                   252,859         170,798        110,579          313,078              54.6%
   Annuities                              217,353           1,910         30,789          188,474               1.0%
   Accident and health                    436,105         311,612        296,650          451,067              69.1%
------------------------------------------------------------------------------------------------------------------------------------
     Total premiums                    $  906,317         484,320        438,018          952,619              50.8%
------------------------------------------------------------------------------------------------------------------------------------
<FN>

Included in reinsurance receivables at December 31, 1999 are $2,095,817 and $849,279 recoverable from two insurers who, as of
December 31, 1999, were both rated A+ by A.M.  Best's  Insurance  Reports.  A contingent  liability  exists to the extent that the
Company's reinsurers are unable to meet their contractual obligations.  Management is of the opinion that no liability will accrue
to the Company with respect to this contingency.

Of the amounts ceded to others, the Company ceded life insurance inforce of $3,387,592,  $2,067,664,  and $1,163,533 in 1999,
1998 and  1997,  respectively,  and life  insurance  premiums  earned  of  $6,008,  $4,165,  and  $2,538  in 1999,  1998 and 1997,
respectively,  to its ultimate  parent  Allianz AG. The Company also ceded  accident and health  premiums  earned to Allianz AG of
$3,131, $2,817, and $2,467 in 1999, 1998 and 1997.

</FN>
</TABLE>


<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(7) Reinsurance (Continued)

Effective January 1, 1999, the Company entered into a 100% coinsurance agreement
with an  unrelated  insurance  company to  coinsure a block of preneed  life and
annuity  business  with  1999  premium  of  $10,300.  In  connection  with  this
agreement,  the Company  recognized a recoverable on future benefit  reserves of
$95,000, received a ceding commission of $2,600 and transferred cash of $91,700.
The  unearned  ceding  commission  represents  deferred  revenue  that  will  be
amortized over the  revenue-producing  period of the related reinsured policies.
During  1999,  $1,200  was  amortized  and  included  in  other  revenue  in the
consolidated  statements of operations.  The servicing of the coinsured business
was also transferred to a third party administrator.

Effective  December  31,  1999,  the  Company  entered  into a 100%  coinsurance
agreement with an unrelated insurance company to coinsure the remaining block of
preneed life and annuity  business  with 1999 premium of $97,100.  In connection
with this  agreement,  the Company  recognized a recoverable  on future  benefit
reserves of $245,000,  received a ceding  commission of $73,900 and  transferred
cash of $154,000.  The unearned ceding  commission  represents  deferred revenue
that  will  be  amortized  over  the  revenue-producing  period  of the  related
reinsured policies. The servicing of the coinsured business was also transferred
to a third party administrator. Because the agreement was effective December 31,
1999, no revenue was recognized on this transaction in 1999.

Effective January 1, 1997, the Company entered into a 100% coinsurance agreement
with an unrelated  insurance  company to coinsure a block of business  with life
insurance  inforce of  $13,200,000  and 1997 premium of $90,000.  The  coinsured
block included certain  universal life and traditional  life insurance  policies
and annuity contracts. In connection with this agreement, the Company recognized
a  recoverable  on future  benefit  reserves  of  $1,102,000,  received a ceding
commission  of $138,500 and  transferred  assets of $881,000,  which support the
business.  The unearned ceding commission  represents deferred revenue that will
be  amortized  over  the  revenue-producing  period  of  the  related  reinsured
policies. During 1999, 1998 and 1997 $14,996, $15,965 and $22,647, respectively,
was amortized and included in other  revenue in the  consolidated  statements of
operations.  The servicing of the coinsured  business was also  transferred to a
third party  insurer who is also the  retrocessionaire  of the block.  Effective
January 1, 1998, the coinsurance  agreement was amended to include another block
of business  with future  benefit  reserves  of  $66,000,  capitalized  deferred
acquisition costs of $1,935 and deferred income of $750.

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(8) Income Taxes

Income Tax (Benefit) Expense

     Total income tax expense (benefit) for the years ended December 31 are as follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
Income tax expense attributable to operations:

<S>                                                                   <C>                  <C>               <C>
   Current tax expense                                                $   63,371           48,410            31,571
   Deferred tax (benefit) expense                                         (73,727)          2,822            28,283
------------------------------------------------------------------------------------------------------------------------------------
Total income tax (benefit) expense attributable to operations             (10,356)         51,232            59,854
Tax benefit due to cumulative effect of change in accounting               (8,682)              0                 0
------------------------------------------------------------------------------------------------------------------------------------
Total income tax (benefit) expense attributable to net income             (19,038)         51,232            59,854
Income tax effect on equity:
   Income tax allocated to stockholder's equity:

     Attributable to unrealized gains and losses for the year             (94,283)         26,127            49,748
------------------------------------------------------------------------------------------------------------------------------------

Total income tax effect on equity                                     $  (113,321)         77,359           109,602
------------------------------------------------------------------------------------------------------------------------------------


Components of Income Tax (Benefit) Expense

Income tax expense computed at the statutory rate of 35% varies from tax expense  reported in the consolidated  statements of
operations for the respective years ended December 31 as follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
Income tax (benefit) expense computed at the statutory rate           $   (12,520)         52,980            60,735
Dividends received deductions and tax-exempt interest                      (2,605)         (3,294)           (2,792)
Foreign tax                                                                (1,014)           (133)              916
Interest on tax deficiency                                                    800             900             1,100
Goodwill amortization                                                       1,365               0                 0
Other                                                                       3,618             779              (105)
------------------------------------------------------------------------------------------------------------------------------------
        Income tax (benefit) expense as reported                      $  (10,356)          51,232             59,854
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(8) Income Taxes (Continued)


Components of Deferred Tax Assets and  Liabilities on the Balance Sheet Tax effects of temporary  differences  giving rise to
the significant components of the net deferred tax liability at December 31 are as follows:

                                                                                            1999              1998
------------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
<S>                                                                                    <C>                    <C>
   Provision for post retirement benefits                                              $    2,286             2,223
   Allowance for uncollectible accounts                                                       929               929
   Policy reserves                                                                        282,573           173,414
------------------------------------------------------------------------------------------------------------------------------------
     Total deferred tax assets                                                            285,788           176,566
------------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
   Deferred acquisition costs                                                             219,869           272,815
   Net unrealized gain                                                                     25,701           128,883
   Value of business acquired                                                              73,627                 0
   Other                                                                                   17,947            32,771
------------------------------------------------------------------------------------------------------------------------------------
     Total deferred tax liabilities                                                       337,144           434,469
------------------------------------------------------------------------------------------------------------------------------------
Net deferred tax liability                                                             $   51,356            257,903
------------------------------------------------------------------------------------------------------------------------------------
<FN>

Although  realization  is not assured,  the Company  believes it is not necessary to establish a valuation  allowance for the
deferred tax asset as it is more likely than not the deferred tax asset will be realized  principally  through future reversals of
existing taxable  temporary  differences and future taxable income.  The amount of the deferred tax asset  considered  realizable,
however,  could be reduced in the near term if estimates of future reversals of existing taxable temporary  differences and future
taxable income are reduced.

The Company and its subsidiaries,  with the exception of Life USA Insurance Company,  files a consolidated federal income tax
return with AZOA and all of its wholly owned subsidiaries.  The consolidated tax allocation agreement stipulates that each company
participating in the return will bear its share of the tax liability  pursuant to United States Treasury  Department  regulations.
The Company and each of its insurance  subsidiaries  generally will be paid for the tax benefit on their losses, and any other tax
attributes, to the extent they could have obtained a benefit against their post-1990 separate return taxable income or tax. Income
taxes paid by the Company were $57,121,  $30,808, and $39,914 in 1999, 1998 and 1997, respectively.  At December 31, 1999 and 1998
the Company had a tax recoverable from AZOA of $3,251 and $3,030, respectively.

At December 31, 1999 and 1998,  the Company had a tax  recoverable  separate  from the  agreement  with AZOA in the amount of
$7,233 and $1,030,  respectively.  These amounts are for foreign taxes and Life USA taxes recoverable prior to the purchase by the
Company.

</FN>
</TABLE>

<PAGE>

24

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)



(9) Related Party Transactions

In  conjunction  with the  purchase  of LifeUSA on October 1, 1999,  the Company
received a capital contribution from AZOA in the amount of $423,186.

The Company  reimbursed AZOA $3,582,  $2,495, and $2,519 in 1999, 1998 and 1997,
respectively,  for certain  administrative  and investment  management  services
performed.  The Company's  liability to AZOA for such services was $581 and $490
at December 31, 1999 and 1998, respectively.

The Company  shares a data center with and receives  other  system  support from
affiliated insurance  companies.  Usage and other system support charges paid by
the Company were $902,  $1,291 and $2,826 in 1999, 1998 and 1997,  respectively.
The  Company's  liability for data center and other system  support  charges was
$157 and $345 at December 31, 1999 and 1998, respectively.

The Company  has 200 million  authorized  shares of  preferred  stock with a par
value of $1 per share.  This  preferred  stock is  issuable  in series  with the
number of shares, redemption rights and dividend rate designated by the Board of
Directors  for each series.  Dividends are  cumulative  at a rate  reflective of
prevailing  market  conditions  at time of issue and are  payable  semiannually.
Dividend  payments are restricted by provisions in State of Minnesota  statutes.
The Company had 25 million shares of Series A preferred stock  outstanding until
March 1998, which was held by AZOA with a dividend rate of 6.4% and a book value
of $25,000.  In March 1998,  the Company  redeemed  and  canceled the 25 million
shares of Series A preferred stock.

 (10) Employee Benefit Plans

The  Company  participates  in the  Allianz  Primary  Retirement  Plan  (Primary
Retirement Plan), a defined  contribution plan. The Company makes  contributions
to a money  purchase  pension  plan on  behalf  of  eligible  participants.  All
employees,  excluding  agents,  are  eligible  to  participate  in  the  Primary
Retirement  Plan after two years of service.  The  contributions  are based on a
percentage of the participant's  salary with the participants  being 100% vested
upon eligibility.  It is the Company's policy to fund the plan costs as accrued.
Total pension  contributions were $2,025, $756, and $810 in 1999, 1998 and 1997,
respectively.

The Company  participates in the Allianz Asset Accumulation Plan (Allianz Plan),
a  defined   contribution  plan  sponsored  by  AZOA.  Under  the  Allianz  Plan
provisions,  the Company will match 75% of eligible employees'  contributions up
to a maximum of 6% of a participant's compensation.  The plan can also declare a
profit  sharing  allocation of up to 5.0% of base pay at year-end based upon the
profitability of AZOA. All employees are eligible to participate  after one year
of service and are fully vested in the  Company's  matching  contribution  after
three years of service.  The Allianz  Plan will accept  participants'  pretax or
after tax contributions up to 15% of the participant's  compensation.  It is the
Company's  policy to fund the  Allianz  Plan costs as  accrued.  The Company has
accrued $980,  $868,  and $1,057 in 1999,  1998 and 1997,  respectively,  toward
planned contributions.

Employees of Life USA also  participated in a defined  contribution  plan, which
will be merged with the Allianz Plan  effective  January 1, 2000.  Total Company
contributions made subsequent to October 1, 1999 were $329.

The Company provides certain postretirement benefits to employees who retired on
or before  December 31, 1988 or who were hired before  December 31, 1988 and who
have at least ten years of service  when they reach age 55. The  Company's  plan
obligation  at December  31, 1999 and 1998 was $6,532 and $6,352,  respectively.
This liability is included in "Other  liabilities" in the  accompanying  balance
sheet.

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(11) Statutory Financial Data and Dividend Restrictions

Statutory accounting is directed toward insurer solvency and protection of policyholders. Accordingly, certain items recorded
in financial statements prepared under GAAP are excluded or vary in determining statutory policyholders' surplus and net gain from
operations.  Currently, these items include, among others, deferred acquisition costs, furniture and fixtures, accident and health
premiums receivable which are more than 90 days past due, deferred taxes and undeclared dividends to policyholders.  Additionally,
future life and annuity benefit reserves calculated for statutory  accounting do not include provisions for withdrawals.  The NAIC
has completed a project to codify  statutory  accounting  practices,  the result of which will  constitute  the primary  source of
"prescribed"  statutory accounting practices.  Accordingly,  that project, which is currently in the process of state adoption and
expected to be effective  January 1, 2001,  will change the definition of what comprises  prescribed  versus  permitted  statutory
accounting  practices,  and may result in changes to existing  accounting  policies  insurance  enterprises  use to prepare  their
statutory  financial  statements.  The Company has not quantified the effects of adopting the NAIC codification on their statutory
financial statements.

The differences between  stockholder's  equity and net income reported in accordance with statutory  accounting practices and
the accompanying consolidated financial statements as of and for the year ended December 31 are as follows:

                                          Stockholder's equity                           Net income
------------------------------------------------------------------------------------------------------------------------------------
                                             1999           1998           1999             1998              1997
                                             -----          -----          -----            -----             -----
<S>                                    <C>                 <C>             <C>              <C>               <C>
Statutory basis                        $   873,617         654,371         97,768           35,188            72,343
Adjustments:
   Change in reserve basis                (289,261)       (226,145)       (80,952)           2,036           (99,981)
   Deferred acquisition costs              801,763         930,059       (128,296)           2,979            63,742
   Difference in accounting for
   purchase of Life USA                    340,675               0         (6,373)               0                 0
   Net deferred taxes                      (51,356)       (257,903)        82,409           (2,822)          (28,283)
   Statutory asset valuation reserve       236,210         178,011              0                0                 0
   Statutory interest maintenance reserve   43,786          48,697         (4,912)          14,361              7,994
   Modified coinsurance reinsurance              0          (2,358)             0           29,595             81,790
   Unrealized (losses) gains
   on investments                         (136,719)        158,391              0                0                 0
   Nonadmitted assets                        7,411          14,946              0                0                 0
   Deferred income on reinsurance         (186,888)       (106,065)             0                0                 0
   Other liabilities related
   to reinsurance                          (32,998)        (52,337)             0                0                 0
   Valuation allowance on mortgage loans   (11,279)         (9,599)        (1,680)          (1,320)           (1,000)
   Loss from non-insurance subsidiaries          0               0        (11,714)            (618)           (1,260)
   Other                                   (47,881)         10,456         11,613           20,740            18,327
------------------------------------------------------------------------------------------------------------------------------------
      As reported in the accompanying
      consolidated financial statements $1,547,080       1,340,524        (42,137)         100,139           113,672
------------------------------------------------------------------------------------------------------------------------------------
<FN>

The Company is required to meet minimum  statutory  capital and surplus  requirements.  The Company's  statutory  capital and
surplus as of December 31, 1999 and 1998 were in compliance with these  requirements.  The maximum amount of dividends that can be
paid by Minnesota  insurance  companies to  stockholders  without  prior  approval of the  Commissioner  of Commerce is subject to
restrictions relating to statutory earned surplus,  also known as unassigned funds.  Unassigned funds are determined in accordance
with the accounting procedures and practices governing preparation of the statutory annual statement,  minus 25% of earned surplus
attributable to unrealized capital gains. In accordance with Minnesota Statutes, the Company may declare and pay from its surplus,
cash  dividends of not more than the greater of 10% of its  beginning of the year  statutory  surplus in any year, or the net gain
from operations of the insurer,  not including  realized gains,  for the 12-month period ending the 31st day of the next preceding
year. In 1998, the Company paid AZOA dividends on preferred  stock in the amount $729. A common stock dividend of $551 was paid in
1997. Dividends of $49,391 could be paid in 2000 without prior approval of the Commissioner of Commerce.

</FN>
</TABLE>

<PAGE>



Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(11) Statutory Financial Data and Dividend Restrictions (Continued)


Regulatory Risk Based Capital

An insurance  enterprise's  state of domicile imposes minimum risk-based capital
requirements  that were  developed  by the  National  Association  of  Insurance
Commissioners  (NAIC).  The formulas for  determining  the amount of  risk-based
capital specify various weighting factors that are applied to financial balances
or various levels of activity based on the perceived degree of risk.  Regulatory
compliance is determined by a ratio of an enterprise's regulatory total adjusted
capital to its authorized  control level risk-based  capital,  as defined by the
NAIC.  Enterprises below specific  triggerpoints or ratios are classified within
certain levels,  each of which requires specified  corrective action. The levels
and ratios are as follows:

                           Ratio of total adjusted capital to
                           authorized control level risk-based
      Regulatory Event       capital (less than or equal to)
        -------------             ---------------------

    Company action level     2 (or 2.5 with negative trends)
   Regulatory action level                 1.5
  Authorized control level                  1
   Mandatory control level                 0.7

The Company's  adjusted  capital is in excess of the Company  action level as of
December 31, 1999 and 1998.

Permitted Statutory Accounting Practices

The  Company is required to file annual  statements  with  insurance  regulatory
authorities,  which are prepared on an accounting  basis prescribed or permitted
by  such  authorities.  Currently,  prescribed  statutory  accounting  practices
include state laws, regulations,  and general administrative rules, as well as a
variety of publications of the NAIC.  Permitted statutory  accounting  practices
encompass all  accounting  practices  that are not  prescribed;  such  practices
differ from state to state,  may differ from company to company  within a state,
and may change in the  future.  The Company  does not  currently  use  permitted
statutory  accounting  practices that have a significant impact on its statutory
financial statements.

(12) Commitments and Contingencies

The Company and its  subsidiaries  are involved in various pending or threatened
legal proceedings arising from the conduct of their business.  In the opinion of
management,  the ultimate resolution of such litigation will not have a material
effect on the consolidated financial position of the Company.

The  Company  is  contingently  liable for  possible  future  assessments  under
regulatory   requirements   pertaining  to   insolvencies   and  impairments  of
unaffiliated  insurance  companies.  Provision  has been  made  for  assessments
currently received and assessments anticipated for known insolvencies.

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(13) Foreign Currency Translation

The net assets of the Company's  foreign  operations are translated into U.S.  dollars using exchange rates in effect at each
year-end. Translation adjustments arising from differences in exchange rates from period to period are included in the accumulated
foreign currency translation  adjustment reported as a separate component of comprehensive income. An analysis of this account for
the respective years ended December 31 follows:

                                                                           1999             1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                   <C>               <C>
Beginning amount of cumulative translation adjustments                $    (6,209)          (4,448)           (3,473)
------------------------------------------------------------------------------------------------------------------------------------
Aggregate adjustment for the period resulting from
translation adjustments                                                     2,248           (2,710)           (1,500)
Amount of income tax (expense) benefit for period
related to aggregate adjustment                                              (787)             949               525
------------------------------------------------------------------------------------------------------------------------------------
   Net aggregate translation included in equity                             1,461           (1,761)             (975)
------------------------------------------------------------------------------------------------------------------------------------
Ending amount of cumulative translation adjustments                   $    (4,748)          (6,209)           (4,448)
------------------------------------------------------------------------------------------------------------------------------------
Canadian foreign exchange rate at end of year                              0.6924           0.6535            0.6992
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>



<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(14) Supplementary Insurance Information

     The following table summarizes certain financial information by line of business for 1999, 1998 and 1997:

                                                                             As of December 31
------------------------------------------------------------------------------------------------------------------------------------
                                                                       Future policy                          Other
                                                          Deferred       benefits,                           policy
                                                           policy         losses,                          claims and
                                                         acquisition    claims and        Unearned          benefits
                                                            costs      loss expense       premiums           payable
------------------------------------------------------------------------------------------------------------------------------------
1999:

<S>                                                    <C>             <C>                  <C>             <C>
Life                                                   $  231,927      1,874,904            3,049           116,569
Annuities                                                 561,966      7,728,072                0             1,771
Accident and health                                         7,870              0           45,964           809,575
------------------------------------------------------------------------------------------------------------------------------------
                                                       $  801,763      9,602,976           49,013           927,915
------------------------------------------------------------------------------------------------------------------------------------

1998:

Life                                                   $  217,262      1,445,844            3,859            97,647
Annuities                                                 694,388      3,588,491                0             1,727
Accident and health                                        18,409              0           49,919           671,472
------------------------------------------------------------------------------------------------------------------------------------
                                                       $  930,059      5,034,335           53,778           770,846
------------------------------------------------------------------------------------------------------------------------------------

1997:

Life                                                   $  189,971      1,297,269            5,215            63,572
Annuities                                                 717,721      3,251,829                0             1,881
Accident and health                                        19,388              0           44,953           487,660
------------------------------------------------------------------------------------------------------------------------------------
                                                       $  927,080      4,549,098           50,168           553,113
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>


<TABLE>
<CAPTION>

Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)

December 31, 1999, 1998 and 1997 (in thousands, except share data)


(14) Supplementary Insurance Information (Continued)

                                                              For the year ended December 31
------------------------------------------------------------------------------------------------------------------------------------
                                            Premium                      Benefits,       Net change
                                            revenue                       claims             in
                                           and other         Net        losses, and        policy             Other
                                           contract      investment     settlement       acquisition        operating
                                        considerations     income        expenses         costs (a)         expenses
------------------------------------------------------------------------------------------------------------------------------------
1999:

<S>                                    <C>                 <C>           <C>               <C>              <C>
Life                                   $  411,743          36,171        319,210           (14,665)         153,281
Annuities                                 143,838         211,432        163,329           133,268          166,715
Accident and health                       527,968          27,257        465,139            10,539          173,910
------------------------------------------------------------------------------------------------------------------------------------
                                       $1,083,549         274,860        947,678           129,142          493,906
------------------------------------------------------------------------------------------------------------------------------------
1998:

Life                                   $  375,055          34,731        306,318           (27,291)         141,705
Annuities                                 172,247         158,458        135,356           23,333           151,719
Accident and health                       506,451          23,877        393,601              979           161,128
------------------------------------------------------------------------------------------------------------------------------------
                                       $1,053,753         217,066        835,275            (2,979)         454,552
------------------------------------------------------------------------------------------------------------------------------------
1997:

Life                                   $  313,078          24,352        230,357           (14,363)          99,913
Annuities                                 188,474         118,028        124,535           (44,924)         186,789
Accident and health                       451,067          19,970        327,526            (4,455)         151,312
------------------------------------------------------------------------------------------------------------------------------------
                                       $  952,619         162,350        682,418           (63,742)         438,014
------------------------------------------------------------------------------------------------------------------------------------
(a)    See note 1 for total gross amortization.

</TABLE>



APPENDIX A
--------------------------------------------------------------------------------


ILLUSTRATION OF POLICY VALUES

The following tables show you how Policy Values, Cash Surrender Values and death
benefits  of your  Policy will  change  with the  investment  experience  of the
portfolios.  The Policy Values,  Cash Surrender Values and death benefits in the
tables take into account all charges and  deductions  against the Policy.  These
tables  assume that the cost of insurance  rates for the Policy are based on the
current and guaranteed rates  appropriate to the class shown.  These tables also
assume  that you paid a $100,000  single  premium.  For  premiums  of other than
$100,000, the tables shown can be adjusted (i.e. for a $20,000 premium, multiply
the tables by $20,000 divided by 100,000 or for a $200,000 premium, multiply the
attached  tables by $200,000  divided by 100,000).  These tables all assume that
the insured,  both male and female, is in the most favorable risk status,  i.e.,
non-smoker.  For insureds who are  classified as smoker or less  favorable  risk
status,  the cost of insurance will be greater and therefore  Policy Values will
be less given the same assumed  hypothetical  gross annual  investment  rates of
return.

The tables assume gross investment returns of 0%, 6% and 12% to be level for all
years shown.  The values would be different if the rates of return  averaged 0%,
6% and 12% over the  period  of years  but  fluctuated  above  and  below  those
averages during individual years.


The daily management and portfolio administration fees are assumed to be .66% on
an annual basis,  of the net assets of the Class 1 portfolios of Valuemark Funds
(Trust)  (which  is the  arithmetic  average  of the  management  and  portfolio
administration  fees assessed in 1999). The values also assume that each Class 1
portfolio of the Trust will incur expenses annually which are assumed to be .11%
of the average  net assets of the  portfolio.  This is the average in 1999.  The
variable  options will be assessed for  mortality and expense risks at an annual
rate of 0.60% of the average  daily net assets of the  variable  options and for
administrative  expenses  at an annual  rate of 0.15% of the  average  daily net
assets of the variable  options.  After  taking these  expenses and charges into
consideration,  the illustrated  gross annual investment rates of 0%, 6% and 12%
are equivalent to net rates of -1.51%, 4.40% and 10.31%.


Allianz Life deducts the cost of insurance for a Policy  Processing  Period from
the  Policy  Values.  The cost of  insurance  rate is  based  on the sex  (where
permitted by state law), attained age and rate class of the insured.

Upon request, we will provide a comparable  illustration based upon the attained
age, sex (where  permitted by state law) and rate class of the proposed  insured
and for the Face Amount or premium requested.



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                              DESIGNED FOR: JANE DOE
MINNEAPOLIS, MINNESOTA                                                       PREPARED BY: ANY REPRESENTATIVE

                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                     FEMALE NON-SMOKER

Initial Face Amount:                         $448,956         Single Premium: .                           $100,000
Issue Age:                                         35         State:                                            MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming  0.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
      <S>           <C>              <C>                <C>            <C>               <C>              <C>
       1            $100,000         $105,000            0             97,389            91,089           448,956
       2                   0          110,250            0             94,789            89,189           448,956
       3                   0          115,763            0             92,194            87,294           448,956
       4                   0          121,551            0             89,600            85,400           448,956
       5                   0          127,628            0             87,004            83,504           448,956
      10                   0          162,889            0             73,841            73,841           448,956
      15                   0          207,893            0             63,545            63,545           448,956
      20                   0          265,330            0             51,763            51,763           448,956
      25                   0          338,635            0             37,216            37,216           448,956
      30                   0          432,194            0             18,172            18,172           448,956



                            Summary of end of year values  assuming  0.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             97,255            90,955           448,956
       2                   0          110,250            0             94,513            88,913           448,956
       3                   0          115,763            0             91,766            86,866           448,956
       4                   0          121,551            0             89,010            84,810           448,956
       5                   0          127,628            0             86,241            82,741           448,956
      10                   0          162,889            0             71,984            71,984           448,956
      15                   0          207,893            0             60,150            60,150           448,956
      20                   0          265,330            0             46,009            46,009           448,956
      25                   0          338,635            0             28,152            28,152           448,956
      30                   0          432,194            0              3,735             3,735           448,956


<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUND THAT THIS ASSUMED  INVESTMENT  RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                               DESIGNED FOR: JANE DOE
MINNEAPOLIS, MINNESOTA                                                        PREPARED BY: ANY REPRESENTATIVE

                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                     FEMALE NON-SMOKER

Initial Face Amount:                         $448,956         Single Premium:                             $100,000
Issue Age:                                         35         State:                                            MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming  6.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
     <S>            <C>              <C>                 <C>           <C>               <C>              <C>
       1            $100,000         $105,000            0             103,286            96,986          452,685
       2                   0          110,250            0             106,690           101,090          456,258
       3                   0          115,763            0             110,212           105,312          459,692
       4                   0          121,551            0             113,854           109,654          462,994
       5                   0          127,628            0             117,620           114,120          466,178
      10                   0          162,889            0             138,377           138,377          480,645
      15                   0          207,893            0             166,646           166,646          494,156
      20                   0          265,330            0             199,912           199,912          508,583
      25                   0          338,635            0             238,876           238,876          523,964
      30                   0          432,194            0             284,200           284,200          540,388


                            Summary of end of year values  assuming  6.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             103,148            96,848          452,041
       2                   0          110,250            0             106,400           100,800          454,948
       3                   0          115,763            0             109,753           104,853          457,689
       4                   0          121,551            0             113,209           109,009          460,270
       5                   0          127,628            0             116,770           113,270          462,704
      10                   0          162,889            0             136,151           136,151          472,911
      15                   0          207,893            0             162,361           162,361          481,449
      20                   0          265,330            0             192,615           192,615          490,020
      25                   0          338,635            0             227,311           227,311          498,596
      30                   0          432,194            0             266,709           266,709          507,131


<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUNDS THAT THIS ASSUMED  INVESTMENT RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                              DESIGNED FOR: JANE DOE
MINNEAPOLIS, MINNESOTA                                                       PREPARED BY: ANY REPRESENTATIVE



                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                     FEMALE NON-SMOKER

Initial Face Amount:                         $448,956         Single Premium:                             $100,000
Issue Age:                                         35         State:                                            MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming 12.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
      <S>           <C>              <C>                 <C>           <C>               <C>             <C>
       1            $100,000         $105,000            0             109,108           102,880          480,193
       2                   0          110,250            0             119,250           113,650          512,945
       3                   0          115,763            0             130,292           125,392          547,344
       4                   0          121,551            0             142,398           138,198          583,516
       5                   0          127,628            0             155,668           152,168          621,602
      10                   0          162,889            0             243,607           243,607          846,153
      15                   0          207,893            0             386,581           386,581         1,146,329
      20                   0          265,330            0             611,167           611,167         1,554,834
      25                   0          338,635            0             962,598           962,598         2,111,411
      30                   0          432,194            0            1,509,895         1,509,895        2,870,974


                            Summary of end of year values  assuming 12.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             109,036           102,736          479,523
       2                   0          110,250            0             118,930           113,330          511,503
       3                   0          115,763            0             129,758           124,858          545,011
       4                   0          121,551            0             141,603           137,403          580,159
       5                   0          127,628            0             154,559           151,059          617,074
      10                   0          162,889            0             239,771           239,771          832,832
      15                   0          207,893            0             376,846           376,846         1,117,462
      20                   0          265,330            0             589,324           589,324         1,499,263
      25                   0          338,635            0             916,987           916,987         2,011,365
      30                   0          432,194            0            1,419,034         1,419,034        2,698,208

<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUND THAT THIS ASSUMED  INVESTMENT  RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                              DESIGNED FOR: JOHN DOE
MINNEAPOLIS, MINNESOTA                                                       PREPARED BY: ANY REPRESENTATIVE

                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                      MALE NON-SMOKER

Initial Face Amount:                         $400,205         Single Premium:                             $100,000
Issue Age:                                         35         State:                                            MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming  0.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
      <S>           <C>              <C>                 <C>           <C>               <C>              <C>
       1            $100,000         $105,000            0             97,394            91,094           400,205
       2                   0          110,250            0             94,803            89,203           400,205
       3                   0          115,763            0             92,222            87,322           400,205
       4                   0          121,551            0             89,646            85,446           400,205
       5                   0          127,628            0             87,073            83,573           400,205
      10                   0          162,889            0             74,075            74,075           400,205
      15                   0          207,893            0             63,775            63,775           400,205
      20                   0          265,330            0             51,376            51,376           400,205
      25                   0          338,635            0             34,597            34,597           400,205
      30                   0          432,194            0              9,481             9,481           400,205
                            Summary of end of year values  assuming  0.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             97,261            90,961           400,205
       2                   0          110,250            0             94,532            88,932           400,205
       3                   0          115,763            0             91,803            86,903           400,205
       4                   0          121,551            0             89,071            84,871           400,205
       5                   0          127,628            0             86,332            82,832           400,205
      10                   0          162,889            0             72,296            72,296           400,205
      15                   0          207,893            0             60,450            60,450           400,205
      20                   0          265,330            0             45,582            45,582           400,205
      25                   0          338,635            0             24,508            24,508           400,205
      30                   0          432,194            0                0                 0             400,205

<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUND THAT THIS ASSUMED  INVESTMENT  RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                              DESIGNED FOR: JOHN DOE
MINNEAPOLIS, MINNESOTA                                                       PREPARED BY: ANY REPRESENTATIVE

                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                      MALE NON-SMOKER

Initial Face Amount:                         $400,205          Single Premium:                            $100,000
Issue Age:                                         35          State:                                           MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming  6.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
      <S>           <C>              <C>                 <C>           <C>               <C>              <C>
       1            $100,000         $105,000            0             103,291           96,991           403,520
       2                   0          110,250            0             106,707           101,107          406,689
       3                   0          115,763            0             110,246           105,346          409,727
       4                   0          121,551            0             113,913           109,713          412,643
       5                   0          127,628            0             117,710           114,210          415,445
      10                   0          162,889            0             138,743           138,743          428,081
      15                   0          207,893            0             167,301           167,301          439,917
      20                   0          265,330            0             200,680           200,680          452,722
      25                   0          338,635            0             238,828           238,828          466,895
      30                   0          432,194            0             281,496           281,496          482,776


                            Summary of end of year values  assuming  6.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.



                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             103,155           96,855           402,952
       2                   0          110,250            0             106,422           100,822          405,544
       3                   0          115,763            0             109,798           104,898          407,986
       4                   0          121,551            0             113,286           109,086          410,288
       5                   0          127,628            0             116,889           113,389          412,457
      10                   0          162,889            0             136,631           136,631          421,564
      15                   0          207,893            0             163,212           163,212          429,166
      20                   0          265,330            0             193,603           193,603          436,757
      25                   0          338,635            0             227,250           227,250          444,259
      30                   0          432,194            0             263,328           263,328          451,617

<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUND THAT THIS ASSUMED  INVESTMENT  RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA                              DESIGNED FOR: JOHN DOE
MINNEAPOLIS, MINNESOTA                                                       PREPARED BY: ANY REPRESENTATIVE

                                                         VALUEMARK
                                          SINGLE PREMIUM VARIABLE LIFE INSURANCE
                                                      MALE NON-SMOKER

Initial Face Amount:                         $400,205         Single Premium:                             $100,000
Issue Age:                                         35         State:                                            MN
---------------------------------------------------------------------------------------------------------------------------

                            Summary of end of year values  assuming 12.00% gross
                                  rate of return.  This illustration is based on
                                  CURRENT mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
      <S>           <C>              <C>                 <C>           <C>               <C>             <C>
       1            $100,000         $105,000            0             109,185           102,885          428,040
       2                   0          110,250            0             119,269           113,669          457,218
       3                   0          115,763            0             130,333           125,433          487,852
       4                   0          121,551            0             142,472           138,272          520,057
       5                   0          127,628            0             155,787           152,287          553,953
      10                   0          162,889            0             244,246           244,246          753,603
      15                   0          207,893            0             388,095           388,095         1,020,497
      20                   0          265,330            0             613,547           613,547         1,384,125
      25                   0          338,635            0             962,641           962,641         1,881,906
      30                   0          432,194            0            1,496,536         1,496,536        2,566,618


                            Summary of end of year values  assuming 12.00% gross
                                 rate of return.  This  illustration is based on
                                 GUARANTEED mortality costs.

                                      PREMIUM                                            CASH
   POLICY                              ACCUM           POLICY          POLICY          SURRENDER           DEATH
    YEAR             PAYMENT          @ 5.00%           LOAN            VALUE            VALUE            BENEFIT
---------------------------------------------------------------------------------------------------------------------------
       1            $100,000         $105,000            0             109,043           102,743          427,451
       2                   0          110,250            0             118,956           113,356          455,959
       3                   0          115,763            0             129,812           124,912          485,826
       4                   0          121,551            0             141,701           137,501          517,158
       5                   0          127,628            0             154,718           151,218          550,062
      10                   0          162,889            0             240,611           240,611          742,388
      15                   0          207,893            0             378,817           378,817          996,099
      20                   0          265,330            0             592,386           592,386         1,336,388
      25                   0          338,635            0             917,041           917,041         1,792,760
      30                   0          432,194            0            1,402,305         1,402,305        2,405,009

<FN>
IT IS EMPHASIZED THAT THE ASSUMED  INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE ARE ILLUSTRATIVE  ONLY. THEY SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL  DEPEND ON A NUMBER  OF  FACTORS,  INCLUDING  THE  INVESTMENT  ALLOCATIONS  MADE BY AN OWNER AND RATES OF RETURN  FOR THE
PORTFOLIOS.  THE DEATH  BENEFIT,  POLICY VALUE AND CASH  SURRENDER  VALUE FOR A POLICY WOULD BE DIFFERENT  FROM THOSE SHOWN IF THE
ACTUAL GROSS RATES OF RETURN  AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS,  BUT FLUCTUATED  ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL  POLICY YEARS.  NO  REPRESENTATIONS  CAN BE MADE BY ALLIANZ LIFE OR THE FUND THAT THIS ASSUMED  INVESTMENT  RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
APPENDIX B
---------------------------------------------------------------------------------------------------------------------------


TABLE OF NET SINGLE PREMIUM FACTORS

  ATTAINED            FACTORS            ATTAINED          FACTORS            ATTAINED           FACTORS
                      -------                              -------                               -------
     AGE        MALE*       FEMALE*         AGE       MALE*       FEMALE*        AGE        MALE*        FEMALE*
---------------------------------------------------------------------------------------------------------------------------
     <S>      <C>          <C>              <C>      <C>          <C>            <C>       <C>           <C>
      0       12.62467     14.69383         35       4.30327      4.82748        70        1.52757       1.66607
      1       12.50646     14.48692         36       4.16038      4.66752        71        1.49533       1.62425
      2       12.16372     14.08281         37       4.02237      4.51338        72        1.46481       1.58427
      3       11.82118     13.67851         38       3.88934      4.36506        73        1.43608       1.54629
      4       11.48209     13.27838         39       3.76113      4.22232        74        1.40915       1.51041
      5       11.14463     12.88451         40       3.63755      4.08498        75        1.38398       1.47664
      6       10.80849     12.49577         41       3.51861      3.95303        76        1.36040       1.44488
      7       10.47450     12.11263         42       3.40410      3.82624        77        1.33828       1.41498
      8       10.14347     11.73553         43       3.29382      3.70425        78        1.31741       1.38673
      9        9.81784     11.36605         44       3.18765      3.58674        79        1.29764       1.35999
     10        9.49960     11.00434         45       3.08543      3.47344        80        1.27888       1.33468
     11        9.19034     10.65053         46       2.98710      3.36425        81        1.26112       1.31079
     12        8.89337     10.30762         47       2.89249      3.25897        82        1.24440       1.28836
     13        8.61119      9.97611         48       2.80143      3.15749        83        1.22879       1.26746
     14        8.34507      9.65635         49       2.71381      3.05962        84        1.21434       1.24807
     15        8.09470      9.34852         50       2.62950      2.96530        85        1.20100       1.22998
     16        7.85593      9.04683         51       2.54845      2.87445        86        1.18868       1.21335
     17        7.62788      8.75962         52       2.47062      2.78696        87        1.17723       1.19789
     18        7.40829      8.48131         53       2.39595      2.70281        88        1.16647       1.18342
     19        7.19529      8.21157         54       2.32443      2.62191        89        1.15617       1.16975
     20        6.98773      7.95007         55       2.25594      2.54404        90        1.14612       1.15668
     21        6.78427      7.69599         56       2.19040      2.46904        91        1.13609       1.14399
     22        6.58380      7.44915         57       2.12767      2.39670        92        1.12581       1.13142
     23        6.38615      7.20889         58       2.06757      2.32674        93        1.11497       1.11871
     24        6.19122      6.97553         59       2.01001      2.25900        94        1.10328       1.10559
     25        5.99922      6.74889         60       1.95494      2.19345        95        1.09064       1.09192
     26        5.81010      6.52878         61       1.90230      2.13013        96        1.07717       1.07777
     27        5.62462      6.31538         62       1.85199      2.06916        97        1.06337       1.06359
     28        5.44313      6.10815         63       1.80404      2.01067        98        1.05029       1.05034
     29        5.26593      5.90723         64       1.75842      1.95479        99        1.04000       1.04000
     30        5.09324      5.71269         65       1.71504      1.90144
     31        4.92522      5.52403         66       1.67380      1.85048
     32        4.76215      5.34132         67       1.63456      1.80168
     33        4.60408      5.16433         68       1.59713      1.75478
     34        4.45114      4.99306         69       1.56150      1.70960
<FN>
*In states requiring unisex rates, male rates should apply.
</FN>
</TABLE>








                                   PART II

                          UNDERTAKINGS TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities  Exchange
Act of 1934,  the  undersigned  registrant  hereby  undertakes  to file with the
Securities and Exchange Commission such supplementary and periodic  information,
documents,  and reports as may be  prescribed  by any rule or  regulation of the
Commission theretofore or hereafter duly adopted pursuant to authority conferred
in that section.

                             REPRESENTATION

Allianz Life Insurance  Company of North America  ("Company")  hereby represents
that the fees and charges deducted under the Policy described in the Prospectus,
in the  aggregate,  are  reasonable  in relation to the services  rendered,  the
expenses to be incurred and the risks assumed by the Company.

                            INDEMNIFICATION

Under its Bylaws,  Article XI, the Company indemnifies,  to the extent permitted
by the laws of the State of  Minnesota,  each person (and the heirs,  executors,
and  administrators of such person) made or threatened to be made a party to any
action, civil or criminal, by reason of being or having been a director, officer
or employee of the  Company (or by reason of serving any other  organization  at
the request of the Company).

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to such provisions of the bylaws or statutes or otherwise,  the
Company has been  advised  that in the opinion of the  Securities  and  Exchange
Commission,  such  indemnification is against public policy as expressed in said
Act  and  is,  therefore,   unenforceable.   In  the  event  that  a  claim  for
indemnification  against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the  successful  defense of any such action,  suit or  proceeding) is
asserted by such director,  officer or controlling person in connection with the
Policies issued by the Variable Account, the Company will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate  jurisdiction the question whether such  indemnification by
it is against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.


                       CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

The facing sheet

The Prospectus consisting of 122 pages

The undertaking to file reports

The signatures

Written consents of the following persons:
     Counsel
     Actuary
     Independent Auditor

Part II
Other Information
Page 2


The following exhibits:

A.   Copies of all exhibits required by paragraph A of instructions for
     Exhibits in Form N-8B-2.


     1.      Resolution of the Board of Directors of the Company (2)
     2.      Not Applicable
     3.a.    Principal Underwriter's Agreement (4)
     3.b.    General Agency Agreement
     4.      Not Applicable
     5.      Individual Single Premium Variable Life Insurance Policy (3)
     6.a.    Articles of Incorporation of the Company (2)
     6.b.    Bylaws of the Company (2)
     7.      Not Applicable
     8.      Not Applicable
     9.a.    Administrative Agreement (1)
     9.b.(1) Form of Fund Participation Agreement between North American
             Life and Casualty Company and Franklin Valuemark Funds(3)
     9.b.(2) Form of Fund Participation Agreement between AIM Variable
             Insurance Funds, Inc., Allianz Life Insurance Company of North
             America and NALAC Financial Plans LLC(6)
     9.b.(3) Form of Fund Participation Agreement between Alger American
             Fund, Allianz Life Insurance Company of North America and Fred
             Alger and Company(6)
     9.b.(4) Form of Fund Participation Agreement between USAllianz Variable
             Insurance Products Trust, Allianz Life Insurance Company of
             North America and BISYS Fund Services Limited Partnership(6)
     10.     Application Form (3)
     12.     Illustrative Calculations for the Exchange of the Single Premium
             Variable Life Insurance Policy for a Whole Life Policy (5)
     13.     Powers of Attorney (6)
     27.     Not Applicable


B.   Opinion and Consent of Counsel



C.   Consent of Actuary



D.   Independent Auditors' Consent



(1) incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6, File
    No. 33-11158 filed on October 19, 1987

(2) incorporated by reference to Post-Effective  Amendment No. 14 to Registrants
    Form S-6 electronically filed on November 1, 1995.

(3) incorporated by reference to Post-Effective  Amendment No. 15 to Registrants
    Form S-6 electronically filed on April 23, 1996.

(4) incorporated by reference to Post-Effective  Amendment No. 17 to Registrants
    Form S-6 electronically filed on April 29, 1997.

(5) incorporated by reference to Post-Effective  Amendment No. 19 to Registrants
    Form S-6 electronically filed on April 29, 1998.

(6) incorporated by reference to Post-Effective Amendment No. 23 to Registrants
    Form S-6 electronically filed on November 12, 1999.


                                   SIGNATURES

As required by the  Securities  Act of 1933,  the  Registrant  certifies that it
meets all of the requirements for effectiveness of this  Registration  Statement
pursuant to Rule 485(b) under the  Securities Act of 1933 and it has duly caused
this  Registration  Statement  to be  signed on its  behalf  by the  undersigned
thereunto duly authorized in the City of Minneapolis and State of Minnesota,  on
this 17th day of April, 2000.



                                         ALLIANZ LIFE
                                         VARIABLE ACCOUNT A
                                                                    (Registrant)


                                    By:  ALLIANZ LIFE INSURANCE COMPANY
                                         OF NORTH AMERICA
                                                                     (Depositor)



                                    By:  /S/ Michael T. Westermeyer
                                         ------------------
                                         Michael T. Westermeyer



Attest: /S/  Steven A. Friedman
        ---------------------------






Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
dates indicated.


Signature and Title

<TABLE>
<CAPTION>

<S>                      <C>                          <C>

Lowell C. Anderson*      Chairman of the Board        04-17-00
Lowell C. Anderson

Robert W. MacDonald*     Director and                 04-17-00
Robert W. MacDonald      Chief Executive Officer

Margery G. Hughes        President and                04-17-00
Margery G. Hughes        Chief Administrative Officer

Mark A. Zesbaugh         Chief Financial Officer      04-17-00
Mark A. Zesbaugh         Senior Vice President

Herbert F. Hansmeyer*    Director                     04-17-00
Herbert F. Hansmeyer

Michael P. Sullivan*     Director                     04-17-00
Michael P. Sullivan

Dr. Gerhard Rupprecht*   Director                     04-17-00
Dr. Gerhard Rupprecht

Rev. Dennis Dease*       Director                     04-17-00
Rev. Dennis Dease

James R. Campbell*       Director                     04-17-00
James R. Campbell

Robert M. Kimmitt*       Director                     04-17-00
Robert M. Kimmitt

</TABLE>




                                        *By Power of Attorney


                                        By: /S/ Michael T. Westermeyer
                                            ---------------------------------
                                            Michael T. Westermeyer
                                            Attorney-in-Fact





                                    EXHIBITS

                                       TO

                     POST-EFFECTIVE AMENDMENT NO.    24

                                       TO

                                    FORM S-6

                         ALLIANZ LIFE VARIABLE ACCOUNT A

               ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA







                                INDEX TO EXHIBITS

Exhibit

EX99.A.3.b General Agency Agreement

EX99.B     Opinion and Consent of Counsel

EX99.C     Consent of Actuary

EX99.D     Independent Auditors' Consent