As filed with the Securities and Exchange Commission on February 25, 2000
Registration No. 333-01153
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(X)
PRE-EFFECTIVE AMENDMENT NO. ( )
-----
POST-EFFECTIVE AMENDMENT NO. 5 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 (X)
Amendment No. 7 (X)
(Check appropriate box or boxes)
VARIABLE ANNUITY-1 SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
Title of securities being registered: Flexible Premium Deferred Variable Annuity
It is proposed that this filing will become effective (check appropriate space)
X Immediately upon filing pursuant to paragraph (b) of Rule 485. On May 1,
2000, pursuant to paragraph (b) of Rule 485. 60 days after filing pursuant
to paragraph (a) of Rule 485. On , pursuant to paragraph (a)(i) of Rule 485.
75 days after filing pursuant to paragraph (a)(ii)of Rule 485. On , pursuant
to paragraph (a)(ii) of Rule 485.
If appropriate, check the following:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
This post-effective amendment no. 5 to the registration statement on Form N-4
(the "Registration Statement") is being filed pursuant to Rule 485(b) under the
Securities Act of 1933, as amended, to supplement the Registration Statement
(post-effective amendment no. 4) with a supplement to the prospectus, dated May
1, 1999. This post-effective amendment no. 5 relates only to the supplement
filed herein and does not otherwise delete, amend, or supersede any information
contained in the Registration Statement, except as expressly provided in the
supplement.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
4
SCHWAB SELECT ANNUITY(TM)
Issued by Great-West Life & Annuity Insurance Company
Variable Annuity-1 Series Account
Supplement dated February 25, 2000 to the
Prospectus for the Schwab Select Annuity
dated May 1, 1999
Effective March 1, 2000, the INVESCO VIF-Technology Sub-Account was added as a
new investment option under your Contract. As a result, please note the
following changes to your prospectus and retain this supplement for future
reference.
On Page 1 of the prospectus, the following should be added to the list of
Portfolios:
INVESCO VIF-Technology Fund.
On Page 8 under the heading "Portfolio Annual Expenses," please add the
following:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Portfolio Management Other 12b-1 Total Total Fee Total
fees expenses1 fees Portfolio Waivers1 Portfolio
expenses expenses
before fee after fee
waivers waivers
INVESCO VIF-Technology Fund 0.75% 0.78% 0.00% 1.53% 0.21% 1.32%
</TABLE>
1 For the INVESCO VIF-Technology Fund, certain expenses are being absorbed
voluntarily by INVESCO Funds Group, Inc., the Fund's investment adviser,
pursuant to a commitment to the Fund. This commitment may be changed at any time
following consultation with the board of directors.
On Page 9 under the heading "Fee Examples," please add the following:
If you retain, annuitize or surrender the Contract at the end of the applicable
time period, you would pay the following fees and expenses on a $1,000
investment, assuming a 5% annual return on assets. This example assumes no
Premium Taxes have been assessed.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
INVESCO VIF-Technology Fund $23 $73 $132 $319
</TABLE>
On Page 12 under the heading "INVESCO Variable Investment Funds, Inc.," please
add the following:
INVESCO VIF-Technology Fund seeks capital appreciation and normally invests at
least 80% of its total assets in equity securities of companies engaged in
technology-related industries. These include, but are not limited to,
communications, computers, video, electronics, oceanography, office and factory
automation, and robotics. Many of these products and services are subject to
rapid obsolescence, which may lower the market value of the securities of the
companies in this sector. The Fund's investments are diversified across the
technology sector. However, because the investments are limited to a
comparatively narrow segment of the economy, the Fund's investments are not as
diversified as most mutual funds, and far less diversified than the broad
securities markets. This means that the Fund tends to be more volatile than
other mutual funds, and the value of its portfolio investments tends to go up
and down more rapidly. As a result, the value of a Fund share may rise or fall
rapidly.
On Page 29 under the heading Performance Data," please add the table on the
attached page 2.
Because the INVESCO-VIF Technology Sub-Account is a new investment option under
your Contract, there is no Sub-Account performance information to report.
However, the fund in which the Sub-Account invests has been in existence since
May 21, 1997, the fund does have a performance history. Accordingly, the
information below illustrates how the Sub-Account would have performed had it
been available under your Contract for the time periods shown ended December 31,
1999, using the Portfolio's average annual total return and reflecting the
deduction of all fees and charges under your Contract. Please remember that past
performance is no guarantee of future results.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sub-Account 1 3 5 Since Inception Since Inception Inception
Year Years Years Inception Date of of Underlying Date of
of Sub-Account Portfolio (if Underlying
Sub-Account less than 10 Portfolio
years)
INVESCO VIF-Technology Fund 156.79% N/A N/A N/A 3/1/00 64.13% 5/21/97
</TABLE>
Many equity securities, including technology stocks in particular, have
experienced significant gains in recent years. There is no assurance that the
gains will continue.
On Page 52, the Condensed Financial Information should be deleted entirely and
replaced with the following:
<PAGE>
APPENDIX A - Condensed Financial Information
Selected data for accumulation units
Outstanding through each period ending December 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Alger Alger American Berger Dreyfus
American American Century American Bankers Bankers IPT Small VIF
Growth Small-Cap VP Century Trust Trust Baron Company Capital
Portfolio Portfolio Capital VP EAFE Small Cap Capital Growth Appreciation
AppreciatiInternationEquity Index Fund Asset Fund Fund
Index Fund
Fund
-----------------------------------------------------------------------------------------------
Date Commenced 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99 05/03/99 05/03/99 05/01/97 05/03/99
Operations
1999
Beginning Unit $18.74 $12.76 $8.94 $14.54 $10.00 $10.00 $10.00 $13.89 $10.00
Value
========= ======== ========= ========= ========= ========= ========= ========= =========
Ending Unit Value $24.84 $18.15 $14.59 $23.66 $12.00 $11.65 $11.40 $26.37 $10.24
========= ======== ========= ========= ========= ========= ========= ========= =========
Number of Units 2,200,774.98 201,220.60 88,278.89 602,866.81 161,395.99 203,338.02 502,097.27 1,072,037.44 245,395.21
Outstanding
========= ======== ========= ========= ========= ========= ========= ========= =========
Net Assets (000's) $54,671 $3,652 $1,288 $14,264 $1,937 $2,369 $5,723 $28,268 $2,513
========= ======== ========= ========= ========= ========= ========= ========= =========
1998
Beginning Unit $12.76 $11.14 $9.22 $12.35 $13.75
Value
========= ======== ========= ========= =========
Ending Unit Value $18.74 $12.76 $8.94 $14.54 $13.89
========= ======== ========= ========= =========
Number of Units 1,306,503.46 643,786.69 99,034.37 560,116.89 428,982.88
Outstanding
========= ======== ========= ========= =========
Net Assets (000's) $8,217 $886 $8,147 $5,959
$24,487
========= ======== ========= ========= =========
========= ======== ========= ========= =========
1997
Beginning Unit $10.24 $10.09 $9.61 $10.49 $10.00
Value
========= ======== ========= ========= =========
========= ======== ========= ========= =========
Ending Unit Value $12.76 $11.14 $9.22 $12.35 $13.75
========= ======== ========= ========= =========
========= ======== ========= ========= =========
Number of Units 417,162.09 337,576.93 82,255.58 298,156.62 124,653.31
Outstanding
========= ======== ========= ========= =========
Net Assets (000's) $5,325 $3,761 $758 $3,683 $1,714
========= ======== ========= ========= =========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00
Value
========= ======== ========= =========
========= ========
Ending Unit Value $10.24 $10.09 $9.61 $10.49
========= ======== ========= =========
========= ======== ========= =========
Number of Units 1,166.64 4,080.46 30,139.13 13,399.99
Outstanding
========= ======== ========= =========
Net Assets (000's) $12 $41 $290 $141
========= ======== ========= =========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Federated INVESCO Janus
Dreyfus Federated Fund for INVESCO VIF INVESCO Aspen Janus
VIF American U.S. Federated VIF High IndustrialVIF Total AggressiveAspen
Growth & Leaders GovernmentUtility Yield Income Return Growth Flexible
Income Fund II Securities Fund II Portfolio Portfolio Portfolio Portfolio Income
Fund II Fund
-----------------------------------------------------------------------------------------------
Date Commenced 05/03/99 11/01/96 11/01/96 05/01/97 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99
Operations
1999
Beginning Unit $10.00 $15.95 $11.43 $14.07 $12.13 $13.61 $14.71 $10.00
Value $15.18
======== ========= ========= ======== ========= ======== ========= ======== =========
Ending Unit Value $10.73 $16.87 $11.27 $14.18 $13.14 $17.28 $13.03 $32.87 $ 9.95
======== ========= ========= ======== ========= ======== ========= ======== =========
Number of Unit 49,768.32 1,443,381.49 2,809,026.83 280,956.86 2,003,862.84
1,753,290.18 573,788.59 458,029.90 838,444.84
Outstanding
======== ========= ========= ======== ========= ======== ========= ======== =========
Net Assets (000's) $534 $24,346 $31,648 $3,985 $26,326 $30,299 $7,477 $15,057 $8,347
======== ========= ========= ======== ========= ======== ========= ======== =========
1998
Beginning Unit $13.67 $10.71 $12.45 $12.09 $13.27 $12.52 $11.05
Value
========= ========= ======== ========= ======== ========= ========
Ending Unit Value $15.95 $11.43 $14.07 $12.13 $15.18 $13.61 $14.71
========= ========= ======== ========= ======== ========= ========
Number of Units 1,763,028.09 2,136,709.11 416,024.23 1,867,861.60
1,639,584.27 1,269,709.44 759,487.48
Outstanding
========= ========= ======== ========= ======== ========= ========
Net Assets (000's) $28,117 $24,427 $5,852 $22,654 $24,882 $17,275 $11,169
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
1997
Beginning Unit $10.42 $9.97 $10.00 $10.39 $10.44 $10.27 $9.89
Value
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
Ending Unit Value $13.67 $10.71 $12.45 $12.09 $13.27 $12.52 $11.05
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
Number of Units 1,426,437.13 815,966.27 168,289.28 1,360,680.67 1,271,028.35
996,949.40 331,141.90
Outstanding
========= ========= ======== ========= ======== ========= ========
Net Assets (000's) $19,505 $8,737 $2,095 $16,450 $16,867 $12,482 $
3,658
========= ========= ======== ========= ======== ========= ========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Ending Unit Value $10.42 $9.97 $10.39 $10.44 $10.27 $ 9.89
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Number of Units 65,888.88 9,330.15 52,043.52 68,873.87 3,927.31 6,698.73
Outstanding
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Net Assets (000's) $686 $93 $541 $719 $40 $66
========= ========= ======== ======== ========= ========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Montgomery
Janus Janus Janus Lexington Montgomery Variable Safeco
Aspen Aspen Aspen Emerging Variable Series: Prudential Safeco RST
Growth InternationWorldwide Markets Series: InternatioEquity RST Growth
Portfolio Growth Growth Fund Growth Small-Cap Portfolio Equity Portfolio
Fund Portfolo Fund Fund Portfolio
----------------------------------------------------------------------------------------------
Date Commenced 11/01/96 05/03/99 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99 05/01/97 05/03/99
Operations
1999
Beginning Unit $16.79 $10.00 $16.13 $6.40 $13.47 $9.56 $10.00 $14.65 $10.00
Value
========= ========= ========= ========= ========= ========= ========= ========= =========
Ending Unit Value $23.98 $17.04 $26.30 $14.48 $16.13 $9.87 $9.85 $15.88 $11.44
========= ========= ========= ========= ========= ========= ========= ========= =========
Number of Units 3,396,880.63 772,937.37 4,259,932.25 133,859.68 410,660.04 0.00 32,427.58 1,065,918.62 155,642.93
Outstanding
========= ========= ========= ========= ========= ========= ========= ========= =========
Net Assets (000's) $81,453 $13,174 $112,048 $1,938 $6,625 $320 $16,928 $1,780
-
========= ========= ========= ========= ========= ========= ========= ========= =========
1998
Beginning Unit $12.49 $12.62 $9.00 $13.20 $9.89 $11.83
Value
========= ========= ========= ========= ========= =========
Ending Unit Value $16.79 $16.13 $6.40 $13.47 $9.56 $14.65
========= ========= ========= ========= ========= =========
Number of Units 1,979,274.19 3,616,796.56 260,704.11 601,168.28 8.53 1,168,093.71
Outstanding
========= ========= ========= ========= ========= =========
Net Assets (000's) $33,242 $58,337 $1,670 $8,097 $0 $17,116
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
1997
Beginning Unit $10.26 $10.42 $10.26 $10.35 $10.51 $10.00
Value
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
Ending Unit Value $12.49 $12.62 $9.00 $13.20 $9.89 $11.83
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
Number of Units 1,335,813.25 2,208,663.79 309,521.91 643,624.38 208,496.59 357,176.26
Outstanding
========= ========= ========= ========= ========= =========
Net Assets (000's) $16,678 $27,868 $2,785 $8,495 $2,061 $4,226
========= ========= ========= ========= ========= =========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Ending Unit Value $10.26 $10.42 $10.26 $10.35 $10.51
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Number of Units 93,598.79 51,982.38 18,281.42 11,226.77 3,230.28
Outstanding
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Net Assets (000's) $960 $541 $188 $116 $34
========= ========= ======== ========= =========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Schwab Van Eck
MarketTraSchwab Scudder Strong Strong Worldwide
Growth Money Schwab Scudder Growth & SteinRoe Discovery VF Hard
PortfolioMarket S&P 500 Capital Income Special Fund II Schafer Assets
II Portfolio Portfolio Growth Fund A Venture Value Fund
Fund A Fund Fund
---------------------------------------------------------------------------------------------
Date Commenced 11/01/96 11/01/96 11/01/96 05/03/99 05/03/99 11/01/96 11/01/96 05/03/99 11/01/96
Operations
1999
Beginning Unit $14.34 $10.93 $17.54 $10.00 $10.00 $ $12.26 $10.00 $
Value 9.00 6.88
======= ========= ========= ======== ======= ======= ======== ====== =======
Ending Unit Value $17.01 $11.35 $20.95 $12.64 $ $13.22 $12.78 $8.64 $
9.36 8.25
======= ========= ========= ======== ======= ======= ======== ====== =======
Number of Units 560,532.64 9,861,519.25 5,457,967.10 186,640.12 61,409.25 246,948.62 57,792.53 94,499.34 29,113.72
Outstanding
======= ========= ========= ======== ======= ======= ======== ====== =======
Net Assets (000's) $9,532 $111,967 $114,346 $2,360 $575 $3,265 $739 $817 $240
======= ========= ========= ======== ======= ======= ======== ====== =======
1998
Beginning Unit $12.79 $10.49 $13.81 $10.98 $11.53 $10.04
Value
======= ========= ========= ======= ======== =======
Ending Unit Value $14.34 $10.93 $17.54 $ $12.26 $
9.00 6.88
======= ========= ========= ======= ======== =======
Number of Units 447,514.11 6,649,980.31 4,084,834.46 769,185.90 199,701.97 80,398.85
Outstanding
======= ========= ========= ======= ======== =======
Net Assets (000's) $6,416 $72,692 $71,644 $6,926 $2,449 $553
======= ========= ========= ======= ======== =======
======= ========= =======
1997
Beginning Unit $10.35 $10.07 $10.52 $10.27 $10.44 $10.31
Value
======= ========= =======
======= ========= ========= ======= ======== =======
Ending Unit Value $12.79 $10.49 $13.81 $10.98 $11.53 $10.04
======= ========= =======
======= ========= ========= ======= ======== =======
Number of Units 284,530.36 4,114,002.58 2,115,859.53 952,879.99 211,488.12 132,622.35
Outstanding
========
======= ========= ========= ======= =======
Net Assets (000's) $3,638 $43,163 $29,224 $10,465 $2,439 $1,332
======= ========= ========= ======= ======== =======
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Ending Unit Value $10.35 $10.07 $10.52 $10.27 $10.44 $10.31
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Number of Units 16,525.39 297,045.95 62,674.08 70,715.11 24,613.07 2,220.85
Outstanding
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Net Assets (000's) $171 $2,991 $ 659 $727 $257 $23
======= ========= ========= ======= ======== =======
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Van Kampen
American
Capital L.I.T.
- Morgan
Stanley Real
Estate
Securities
Portfolio
----------------
Date Commenced 09/17/97
Operations
1999
Beginning Unit $9.25
Value
=========
Ending Unit Value $8.86
=========
Number of Units 347,935.46
Outstanding
=========
Net Assets (000's) $3,083
=========
1998
Beginning Unit $10.56
Value
=========
=========
Ending Unit Value $9.25
=========
=========
Number of Units 308,475.29
Outstanding
=========
=========
Net Assets (000's) $2,854
=========
1997
=========
Beginning Unit $10.00
Value
=========
=========
Ending Unit Value $10.56
=========
=========
Number of Units 176,075.27
Outstanding
=========
=========
Net Assets (000's) $1,859
=========
</TABLE>
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
VARIABLE ANNUITY-1 SERIES ACCOUNT
Contracts Under
Flexible Premium Deferred
Combination Variable and Fixed Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (Outside Colorado)
(800) 547-4957 (Colorado)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the Prospectus, dated May 1, 1999 and as
supplemented on February 25, 2000, which is available without charge by
contacting the Schwab Insurance & Annuity Service Center, P.O. Box 7666, San
Francisco, California 94120-9420 or at 1-800-838-0650.
Thedate of this Statement of Additional Information is May 1, 1999
as supplemented on February 25, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Page
GENERAL INFORMATION.............................................................................................B-3
GREAT-WEST LIFE & ANNUITY
AND THE VARIABLE ANNUITY-1 SERIES ACCOUNT.....................................................................B-3
CALCULATION OF ANNUITY PAYMENTS.................................................................................B-3
POSTPONEMENT OF PAYMENTS........................................................................................B-4
SERVICES........................................................................................................B-4
- Safekeeping of Series Account Assets.................................................................B-4
- Experts..............................................................................................B-4
- Principal Underwriter................................................................................B-5
WITHHOLDING.....................................................................................................B-5
CALCULATION OF PERFORMANCE DATA.................................................................................B-6
FINANCIAL STATEMENTS............................................................................................B-7
</TABLE>
<PAGE>
GENERAL INFORMATION
In order to supplement the description in the Prospectus, the following provides
additional information about the Contracts and other matters which may be of
interest to you. Terms used in this Statement of Additional Information have the
same meanings as are defined in the Prospectus under the heading "Definitions."
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND THE VARIABLE ANNUITY-1 SERIES ACCOUNT
Great-West Life & Annuity Insurance Company (the "Company"), the issuer of the
Contract, is a Colorado corporation qualified to sell life insurance and annuity
contracts in Puerto Rico, U.S. Virgin Islands, Guam, the District of Columbia
and all states except New York. The Company is an indirect wholly-owned
subsidiary of The Great-West Life Assurance Company, a stock life insurance
company incorporated under the laws of Canada. The Great-West Life Assurance
Company is in turn wholly owned by Great-West Lifeco Inc., a holding company.
Great-West Lifeco Inc. is owned 80.9% by Power Financial Corporation of Canada,
a financial services company. Power Corporation of Canada, a holding and
management company, has voting control of Power Financial Corporation of Canada.
Mr. Paul Desmarais, through a group of private holding companies, which he
controls, has voting control of Power Corporation of Canada.
The assets allocated to the Series Account are the exclusive property
of the Company. Registration of the Series Account under the Investment Company
Act of 1940 does not involve supervision of the management or investment
practices or policies of the Series Account or of the Company by the Securities
and Exchange Commission. The Company may accumulate in the Series Account
proceeds from charges under the Contracts and other amounts in excess of the
Series Account assets representing reserves and liabilities under the Contract
and other variable annuity contracts issued by the Company. The Company may from
time to time transfer to its general account any of such excess amounts. Under
certain remote circumstances, the assets of one Sub-Account may not be insulated
from liability associated with another Sub-Account
Best's Insurance Reports has assigned the Company its highest financial
strength and operating performance rating of A++. Duff & Phelps Corporation has
assigned the Company their highest claims paying ability rating of AAA. Standard
& Poor's Corporation has assigned the Company its second highest rating of AA+
for claims paying ability. Moody's Investors Service has assigned the Company an
insurance and financial strength rating of Aa2.
CALCULATION OF ANNUITY PAYMENTS
A. Fixed Annuity Options
The amount of each annuity payment under a fixed annuity
option is fixed and guaranteed by the Company. On the Payment Commencement Date,
the Annuity Account Value held in the Fixed Sub-Account(s), with a Market Value
Adjustment, if applicable, less Premium Tax, if any, is computed and that
portion of the Annuity Account Value which will be applied to the fixed annuity
option selected is determined. The amount of the first monthly payment under the
fixed annuity option selected will be at least as large as would result from
using the annuity tables contained in the Contract to apply to the annuity
option selected. The dollar amounts of any fixed annuity payments will not vary
during the entire period of annuity payments and are determined according to the
provisions of the annuity option selected.
B. Variable Annuity Options
To the extent a variable annuity option has been selected, the
Company converts the Accumulation Units for each of Sub-Account held by you into
Annuity Units at their values determined as of the end of the Valuation Period
which contains the Payment Commencement Date. The number of Annuity Units paid
for each Sub-Account is determined by dividing the amount of the first monthly
payment by the Annuity Unit Value on the fifth Valuation Date preceding the date
the first payment is due. The number of Annuity Units used to calculate each
payment for a Sub-Account remains fixed during the annuity payment period.
The first payment under a variable annuity payment option will
be based on the value of each Sub-Account on the fifth Valuation Date preceding
the Payment Commencement Date. It will be determined by applying the appropriate
rate to the amount applied under the Payment Option. Payments after the first
will vary depending upon the investment experience of the Sub-Accounts. The
subsequent amount paid is determined by multiplying (a) by (b) where (a) is the
number of Annuity Units to be paid and (b) is the Annuity Unit value on the
fifth Valuation Date preceding the date the annuity payment is due. The total
amount of each Variable Annuity Payment will be the sum of the Variable Annuity
Payments for each Sub-Account.
POSTPONEMENT OF PAYMENTS
With respect to amounts allocated to the Series Account,
payment of any amount due upon a total or partial surrender, death or under an
annuity option will ordinarily be made within seven days after all documents
required for such payment are received by the Schwab Insurance & Annuity Service
Center. However, the determination, application or payment of any death benefit,
Transfer, full surrender, partial withdrawal or annuity payment may be deferred
to the extent dependent on Accumulation or Annuity Unit Values, for any period
during which the New York Stock Exchange is closed (other than customary weekend
and holiday closings) or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, for any period during
which any emergency exists as a result of which it is not reasonably practicable
for the Company to determine the investment experience, of such Accumulation or
Annuity Units or for such other periods as the Securities and Exchange
Commission may by order permit for the protection of investors.
SERVICES
A. Safekeeping of Series Account Assets
The assets of Variable Annuity-1 Series Account (the "Series
Account") are held by Great-West Life & Annuity Insurance Company ("GWL&A"). The
assets of the Series Account are kept physically segregated and held separate
and apart from the general account of GWL&A. GWL&A maintains records of all
purchases and redemptions of shares of the underlying funds. Additional
protection for the assets of the Series Account is afforded by blanket fidelity
bonds issued to The Great-West Life Assurance Company in the amount of $50
million (Canadian), which covers all officers and employees of GWL&A.
B. Experts
The accounting firm of Deloitte & Touche LLP performs certain
accounting and auditing services for GWL&A and the Series Account. The principal
business address of Deloitte & Touche LLP is 555 Seventeenth Street, Suite 3600,
Denver, Colorado 80202.
The consolidated financial statements of GWL&A at December 31,
1998 and 1999 and for each of the three years in the period ended December 31,
1999, included in the prospectus and the financial statements of Variable
Annuity-1 Series Account for the years ended December 31, 1998 and 1999 included
in this Statement of Additional Information have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their reports appearing
therein and are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
C. Principal Underwriter
The offering of the Contracts is made on a continuous basis by Charles
Schwab & Co., Inc. ("Schwab"). Schwab is a California corporation and is a
member of the National Association of Securities Dealers ("NASD"). The Company
does not anticipate discontinuing the offering of the Contract, although it
reserves the right to do so. The Contract generally will be issued for
Annuitants from birth to age ninety.
WITHHOLDING
Annuity payments and other amounts received under the Contract
are subject to income tax withholding unless the recipient elects not to have
taxes withheld. The amounts withheld will vary among recipients depending on the
tax status of the individual and the type of payments from which taxes are
withheld.
Notwithstanding the recipient's election, withholding may be
required with respect to certain payments to be delivered outside the United
States and, with respect to certain distributions from certain types of
qualified retirement plans, unless the proceeds are transferred directly to
another qualified retirement plan. Moreover, special "backup withholding" rules
may require the Company to disregard the recipient's election if the recipient
fails to supply the Company with a "TIN" or taxpayer identification number
(social security number for individuals), or if the Internal Revenue Service
notifies the Company that the TIN provided by the recipient is incorrect.
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money Market Sub-Account
---------------------------------------------------------------------
The yield quotation for the Money Market Sub-Account will be for the
seven-day period and is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one Accumulation Unit in the Money Market Sub-Account at the
beginning of the period, subtracting a hypothetical charge reflecting deductions
from Participant accounts, and dividing the difference by the value of the
account at the beginning of the base period to obtain the base period return,
and then multiplying the base period return by (365/7) with the resulting yield
figure carried to the nearest hundredth of one percent.
The effective yield quotation for the Money Market Sub-Account will be
for the seven-day period and is carried to the nearest hundredth of one percent,
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one
Accumulation Unit in the Money Market Sub-Account at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Participant
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1)365/7]-1.
For purposes of the yield and effective yield computations, the
hypothetical charge reflects all deductions that are charged to all Participant
accounts in proportion to the length of the base period, and for any fees that
vary with the size of the account, the account size is assumed to be the Money
Market Sub-Account's mean account size. The specific percentage applicable to a
particular withdrawal would depend on a number of factors including the length
of time the Contract Owner has participated under the Contracts. (See "Charges
and Deductions" in the Prospectus.) No deductions or sales loads are assessed
upon annuitization under the Contracts. Realized gains and losses from the sale
of securities and unrealized appreciation and depreciation of the Money Market
Sub-Account and the Fund are excluded from the calculation of yield.
B. Total Return and Yield Quotations for All Sub-Accounts
(Other than Money Market)
The total return quotations for all Sub-Accounts, other than the Money
Market, will be average annual total return quotations for the one-year period.
The quotations are computed by finding the average annual compounded rates of
return over the relevant periods that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the particular
period at the end of the particular
period
For purposes of the total return quotations for these Sub-Accounts, the
calculations take into effect all fees that are charged to the Contract Value ,
and for any fees that vary with the size of the account, the account size is
assumed to be the respective Sub-Accounts' mean account size. The calculations
also assume a complete redemption as of the end of the particular period.
The yield quotations for these Sub-Accounts set forth in the Prospectus
are based on the thirty-day period ended on December 31, 1998, and are computed
by dividing the net investment income per Accumulation Unit earned during the
period by the maximum offering price per unit on the last day of the period,
according to the following formula:
YIELD = 2[((a-b)cd +1)6 -1]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Where: a = net investment income earned during the period by the corresponding portfolio
of the Fund attributable to shares owned by the Sub-Account.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units outstanding during the period.
d = the maximum offering price per Accumulation Unit on the last day of the period.
</TABLE>
For purposes of the yield quotations for these Sub-Accounts, the calculations
take into effect all fees that are charged to the Contract Value, and for any
fees that vary with the size of the account, the account size is assumed to be
the respective Sub-Accounts' mean account size.
FINANCIAL STATEMENTS
The consolidated financial statements of GWL&A as contained in the
prospectus should be considered only as bearing upon GWL&A's ability to meet its
obligations under the Contracts, and they should not be considered as bearing on
the investment performance of the Series Account. The variable interest of
Contract Owners under the Contracts are affected solely by the investment
results of the Series Account.
<PAGE>
VARIABLE ANNUITY-1 SERIES ACCOUNT
Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners of
Variable Annuity-1 Series Account of
Great-West Life & Annuity Insurance Company
We have audited the accompanying statement of assets and liabilities of Variable
Annuity-1 Series Account of Great-West Life & Annuity Insurance Company (the
"Series Account") as of December 31, 1999, and the related statements of
operations for the year then ended, by investment division, and the statements
of changes in net assets for each of the two years in the period then ended, by
investment division. These financial statements are the responsibility of the
Series 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. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the custodian. 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 financial position of Variable Annuity-1 Series
Account of Great-West Life & Annuity Insurance Company as of December 31, 1999,
the results of its operations for the year then ended, by investment division,
and the changes in its net assets for each of the two years in the period then
ended, by investment division, in conformity with generally accepted accounting
principles.
February 22, 2000
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in underlying funds: Shares Cost Value
------ ----- -----
Alger American Fund American Growth Portfolio $ 47,438,012 $ 54,500,967
846,551
Alger American Fund American Small-Cap Portfolio 2,826,886
66,252 3,653,819
American Century VP Funds VP Capital Appreciation
86,823 826,998 1,288,455
American Century VP Funds VP International 11,209,677 14,258,934
1,140,715
Bankers Trust Funds EAFE Equity Index Fund 1,819,919
142,273 1,934,910
Bankers Trust Funds Small Cap Index Fund 2,191,587
205,366 2,384,304
Baron Funds Capital Asset Fund 4,952,692
321,681 5,717,169
Berger Funds IPT Small Company Growth Fund 20,106,547 27,998,388
1,190,914
Dreyfus Family of Funds VIF Capital Appreciation Fund 2,358,704
61,933 2,469,275
Dreyfus Family of Funds VIF Growth & Income Fund
20,541 504,623 523,373
Federated Services Company American Leaders Fund II 23,812,258 24,373,694
1,170,687
Federated Services Company Fund for U.S. Government Securities II 32,554,126 31,642,758
2,996,473
Federated Services Company Utility Fund II 3,946,370
275,828 3,958,129
INVESCO Variable Investment Funds High Yield Portfolio 27,089,040 26,397,830
2,292,575
INVESCO Variable Investment Funds Industrial Income Portfolio 27,356,788 30,339,113
1,444,032
INVESCO Variable Investment Funds Total Return Portfolio 7,918,033
480,137 7,480,360
Janus Aspen Funds Aggressive Growth Portfolio 8,494,000 15,063,430
252,361
Janus Aspen Funds Flexible Income Portfolio 8,461,381
728,554 8,320,085
Janus Aspen Funds Growth Portfolio 59,816,823 81,114,507
2,410,534
Janus Aspen Funds International Growth Portfolio 11,115,873 13,044,467
337,328
Janus Aspen Funds Worldwide Growth Portfolio 76,007,239 110,628,877
2,316,835
Lexington Management Corp Emerging Markets Fund 1,134,392
151,338 1,938,636
Montgomery Funds Variable Series Growth Fund 6,183,880
361,210 6,642,648
Prudential Series Fund Inc. Equity Portfolio
10,942 347,326 316,433
Safeco RST Equity Portfolio 17,155,416 16,950,321
546,432
Safeco RST Growth Portfolio 1,543,123
78,787 1,772,719
Schwab MarketTrack Growth Portfolio II 8,615,375
601,980 9,529,346
Schwab Money Market Portfolio 113,840,114 113,840,114 113,840,114
Schwab S&P 500 Portfolio 92,408,695 114,298,569
5,376,226
Scudder Funds Capital Growth Fund A 2,131,776
80,665 2,349,768
Scudder Funds Growth & Income Fund A
52,480 567,236 575,181
SteinRoe Funds Special Venture Fund 2,217,654
161,918 3,265,877
Strong Capital Mgmt Inc. Discovery Fund II
64,923 658,965 738,825
Strong Capital Mgmt Inc. VF Schafer Value Fund
89,183 872,714 813,353
Van Eck Investment Trust Worldwide Hard Assets Fund 21936
234,259 240,421
Van Kampen American Capital L.I.T. Morgan Stanley Real Estate Securities 3,283,517
---------------
Portfolio 249,192 3,082,511
---------
Total Investments $632,002,018 743,447,566
</TABLE>
Other assets and liabilities:
Premiums Due and Accrued
<TABLE>
<S> <C>
746,319
Due to First Great-West Life & Annuity Insurance Company
(300,607)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 4) $743,893,278
=============
</TABLE>
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
American
Alger Alger Century VP American Bankers Bankers
American American Capital Century VP Trust EAFE Trust Small Baron
Growth Small-Cap Appreciation International Equity Cap Index Capital
Portfolio Portfolio Index Fund Fund Asset Fund
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
--------------------------------------------------------------------------------------
INVESTMENT INCOME $ $ $ $ 87,081 $100,769 $ 48,426
3,245,892 735,785 - $
-
EXPENSES - mortality and expense 8,462 8,727 23,511
------ -------- ------------ ------ ------ ------------ ---------
risks: (Note 3) 337,801 38,799 82,946 6,448
-------- ------- ------- -----
NET INVESTMENT INCOME (LOSS) (8,462) 80,633 92,042 24,915
--- ------ ----------- ----- ----------- ----------- ---------
2,908,091 696,986 (82,946)
---------- -------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments 4,703,329 683,422 138,330 3,225,176 169,851 24,251 (47,187)
Net change in unrealized
appreciation
(depreciation) on investments 381,250 114,991 192,717 764,477
--- ---- ----------- -- ----------- ---------- ---------
3,879,533 (124,124) 2,699,939
---------- --------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 519,580 284,842 216,968 717,290
--- ----- ----------- -- ----------- ---------- ---------
8,582,862 559,298 5,925,115
---------- -------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $11,490,953 $1,256,284 $511,118 $5,842,169 $365,475 $309,010 $742,205
============ =========== ========== =========== ========= ========= =========
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Dreyfus Federated Federated
Berger VIF Dreyfus American Fund for INVESCO
IPT Small Capital VIF Growth Leaders U.S. Federated VIF High
Company Appreciation & Income Fund II Government Utility Yield
Growth Fund Fund Securities Fund II Portfolio
Fund II
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
------------------------------------------------------------------------------------
INVESTMENT INCOME $ 22,486 $17,062 $2,669,483 $1,333,324 $ 392,670
$ $1,744,677
-
EXPENSES - mortality and expense 11,101 1,874 43,328
-------- ---------- -------------- ----- ----------
risks: (Note 3) 79,055 224,140 248,378 204,498
------- -------- -------- -------
NET INVESTMENT INCOME (LOSS) 11,385 15,188 349,342
------- ---------- ---------- -- ---------
(79,055) 2,445,343 1,084,946 1,540,179
-------- ---------- ---------- ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments 2,440,028 (7,535) 517 1,843,925 (127,836) (7,804) (1,461,371)
Net change in unrealized
appreciation
(depreciation) on investments 110,571 18,750 (384,504)
--- ---------- ----------- -- -----------
7,015,363 (2,845,838)(1,350,525) 1,697,681
---------- ---------------------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 103,036 19,267 (392,308)
--- ---------- ----------- - -----------
9,455,391 (1,001,913)(1,478,361) 236,310
---------- ---------------------- -------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $114,421 $34,455 $ (393,415) $ (42,966)
= ========= ========== =========== ===========
$9,376,336 $1,443,430 $1,776,489
=========== =========== ==========
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
INVESCO Janus Janus Janus Janus
VIF INVESCO Aspen Aspen Janus Aspen Aspen
Industrial VIF Total Aggressive Flexible Aspen InternationalWorldwide
Income Return Growth Income Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
------------------------------------------------------------------------------------
INVESTMENT INCOME $ $207,041 $ 510,769 $324,330 $ $ $
518,266 380,817 5,198 121,343
EXPENSES - mortality and expense 109,480 28,291
----- ----------- ----- ---------
risks: (Note 3) 237,684 114,508 422,861 27,685 584,266
-------- -------- -------- ------- -------
NET INVESTMENT INCOME (LOSS) 296,039
----- ------ ------ --------
280,582 97,561 396,261 (42,044) (22,487) (462,923)
-------- ------- -------- -------- -------- ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments 2,196,382 1,064,606 5,455,243 (28,763) 4,896,811 2,712,325 10,089,158
Net change in unrealized
appreciation
(depreciation) on investments
1,049,479 (1,145,466) 4,373,621 (141,296)14,809,266 1,928,594 30,998,850
--------------------- ---------- -------------------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 4,640,919
-- ----- --- --- -- -----------
3,245,861 (80,860) 9,828,864 (170,059)19,706,077 41,088,008
---------- -------- ---------- -------------------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $3,526,443 $16,701 $ 125,980 $19,664,033 $4,618,432 $40,625,085
=========== ========= = =================================== ===========
$10,225,125
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Schwab
Lexington Variable Safeco RST MarketTrack
Emerging Montgomery Series: Safeco Growth Growth
Markets Variable InternationalPrudential RST Equity Portfolio Portfolio
Fund Series: Small-Cap Equity Portfolio II
Growth Fund Portfolio
Fund
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
--------------------------------------------------------------------------------------
INVESTMENT INCOME $ $ $ $ $ $
8,502 74,452 $ 33,511 899,802 - 665,509
-
EXPENSES - mortality and expense 1,229 6,255
------- ------- ------------------------------ ----------
risks: (Note 3) 18,160 58,210 - 152,578 61,458
------- ------- -- -------- ------
NET INVESTMENT INCOME (LOSS) 32,282 (6,255)
------- -------- ------------------------------ -----------
(9,658) 16,242 - 747,224 604,051
------- ------- -- -------- -------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments 799,002 627,588 47 (5,125) 1,789,023 (9,390) 268,428
Net change in unrealized
appreciation
(depreciation) on investments (30,893) 229,596
----- ------ ------------- ------------- ----------
786,926 499,957 (24) (1,131,989) 513,029
-------- -------- ---- ----------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: (36,018) 220,206
-- --- -------------------------------- ----------
1,585,928 1,127,545 23 657,034 781,457
---------- ---------- --- -------- -------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ (3,736) $213,951 $1,385,508
= = = ============ ========== ==========
$1,576,270 $1,143,787 $ 23 $1,404,258
========== =========== ============= ==========
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Schwab Scudder SteinRoe Strong Strong VF
Money Schwab Scudder Growth & Special Discovery Schafer
Market S&P 500 Capital Income Fund Venture Fund II Value Fund
Portfolio Portfolio Growth Fund A Fund
A
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
--------------------------------------------------------------------------------------
INVESTMENT INCOME $ $ $
$4,711,697 838,785 $ $ $ 288,532 31,776
- - -
EXPENSES - mortality and expense 2,097
----- ------ -------- -----------
risks: (Note 3) 858,820 810,298 5,157 33,099 11,227 3,824
-------- -------- ------ ------- ------- -----
NET INVESTMENT INCOME (LOSS) (2,097)
-- -------- ------- ------------
3,852,877 28,487 (5,157) (33,099) 277,305 27,952
---------- ------- ------- -------- -------- ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on (58,886)
investments - 5,596,306 80,725 (6,473) (1,464,596) (228,015)
Net change in unrealized
appreciation
(depreciation) on investments 217,992 7,945 (59,361)
---------------- ------------- ------------ --- -- -----------
- 11,160,045 2,536,469 (133,237)
-- ----------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 298,717 1,472 (118,247)
---------------- ------------ ------------ --- -- -----------
- 16,756,351 1,071,873 (361,252)
-- ----------- ---------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ $293,560 $ (625) $ $ (90,295)
= === ========== =========== = ==== ===========
$3,852,877 16,784,838 $1,038,774 (83,947)
====================== =========== ========
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen
American Capital
Van Eck L.I.T. - Morgan Total
Worldwide Hard Stanley Real Variable
Assets Fund Estate Securities Annuity - 1
Portfolio
Investment Investment Series Account
Division Division
--------------------------------------------------------------------------------------
INVESTMENT INCOME $ 19,332 $ 152,191 $ 20,189,508
EXPENSES - mortality and expense 7,139 23,711 4,897,105
--------------- -------------- --------------
risks: (Note 3)
NET INVESTMENT INCOME (LOSS) 12,193 128,480 15,292,403
------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 45,416,515
investments 48,183 16,840
Net change in unrealized
appreciation
(depreciation) on investments 159,698 (293,979) 78,505,503
------------- ------------- --------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 207,881 (277,139) 123,922,018
------------ ------------ -------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 220,074 $ (148,659) $139,214,421
=========== ============ ============
See notes to financial statements. (Continued)
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Alger American American Century American Century Bankers Trust
Growth Portfolio Small-Cap VP Capital VP International EAFE Equity
Portfolio Appreciation Index Fund
Investment Division Investment Investment Division Investment Investment
Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1)
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $ $ $
(loss) 2,908,091 1,515,263 696,986 534,220 (8,462) 24,459 (82,946) 249,519 80,633$
-
Net realized gain (loss) 4,703,329 452,276 683,422 (633,481) 138,330 3,225,176 687,898 -
on investments (124,250) 169,851
Net change in unrealized
appreciation (depreciation) ___271,825___114,99_____-
--- ----- ---- -- ------ -- --- -------------------------
in investments 3,879,533 3,017,504 (124,124) 1,014,178 381,250 127,955 2,699,939
-------------------- ------------------ -------- -----------------
Increase (decrease) in net
assets resulting from 28,164 ___365,47_____-
-- ----- --- ----- ------ ---------- ---- ---------------
operations 11,490,953 4,985,043 1,256,284 914,917 511,118 5,842,169 1,209,242
------------------------------ -------- -------- ------------------
FROM UNIT TRANSACTIONS:
Purchase payments 1,791,766 1,283,536 135,079 367,459 7 22,713 161,631 388,646 64,759
-
Redemptions (1,930,065)(420,846) (312,121)(146,722) (6,516) (544,982)(145,924) (3,240) -
(109,227)
Net transfers _1,510,014-
-- -- -- --- -------------- ------- ---- ---------------
18,831,036 13,314,636 (5,643,723) 3,319,767 435 83,020 658,360 3,011,895
--------------------------------------- ---- ------- ----------------
Increase (decrease) in net
assets resulting from unit _1,571,533_____-
-- -- -- --- ----- ---- ------- ---- ---------------
transactions 18,692,737 14,177,326 (5,820,765) 3,540,504 (108,785) 99,217 275,009 3,254,617
--------------------------------------- --------- ------- ----------------
INCREASE (DECREASE) IN NET 30,183,690 19,162,369 4,455,421 402,333 127,381 6,117,178 1,937,008_____-
ASSETS (4,564,481) 4,463,859
NET ASSETS:
Beginning of period
24,487,380 5,325,011 8,216,845 3,761,424 885,624 758,243 8,146,750 3,682,891 - -
--------------------------------------- -------- --------------------------- -- -
End of period $1,937,008
= = = = = = = = ==========
$54,671,070 $24,487,380 $3,652,364 $8,216,845 $1,287,957 $885,624 $14,263,928 $8,146,750 -
=============================================================================== =
(1) The Investment Division commenced operations on May 3, 1999.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------------------------------------------------
Bankers Trust Berger IPT Small Dreyfus VIF Dreyfus VIF
Small-Cap Index Baron Capital Company Growth Capital Growth & Income
Fund Asset Fund Fund Appreciation Fund Fund
Investment Investment Investment Investment Investment
Division Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1) (1) (1) (1)
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ $ $
92,042 $ 24,915 $ (79,055) (27,774) 11,385 $ 15,188 $
- - - -
Net realized gain (loss) on 24,251 - (47,187) - 2,440,028 (7,535) - 517 -
investments (592,795)
Net change in unrealized
appreciation (depreciation) 192,717 _ ___- _ ___- __7,015,363___887,877___110,571_ ___- __18,750 _ ___-
-------------------- -------- -----------------------------------------------------
in investments 764,477
-------
Increase (decrease) in net
assets resulting 309,010 __ __- __ __- __9,376,336___267,308___114,421__ __- __34,455 __ __-
-------------------- -------- -----------------------------------------------------
From operations 742,205
-------
FROM UNIT TRANSACTIONS:
Purchase payments 32,174 - - 231,517 285,076 105,558 - 4,181 -
42,286
Redemptions - - (26,714) - (496) -
(8,271) (142,057) (354,145) (74,936)
Net transfers 2,035,607_ ___- _ ___- _13,055,611 __2,320,10_ ___- __495,976_ ___-
------------------- -------- -----------------------------------------------------
5,080,223 3,766,758
---------- ---------
Increase (decrease) in net
assets resulting from unit 2,059,510_ ___- _ ___- _12,932,983 3,976,898 __2,398,947_ ___- __499,661_ ___-
------------------- -------- -----------------------------------------------------
transactions 4,980,452
---------
INCREASE (DECREASE) IN NET 2,368,520 - 5,722,657 - 22,309,319 4,244,206 2,513,368 - 534,116 -
ASSETS
NET ASSETS:
Beginning of period ________-__ __- __ __- ________- __ __- _______- __ __-
----------------------------------- ----- - ----------------------------------
- 5,958,657 _1,714,451
-- --------------------
End of period $ $ $ $
= ========== ========== = = ========== =
$2,368,520 - $5,722,657 - $28,267,976 $5,958,657 $2,513,368 - $534,116 -
=========== == =========== == ============================== == ========= =
(1) The Investment Division commenced
operations on May 3, 1999.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Federated Federated Fund for INVESCO VIF High INVESCO VIF
American Leaders U.S. Government Federated Yield Portfolio Industrial Income
Fund II Securities II Utility Fund II Portfolio
Investment Investment Division Investment Investment Division Investment
Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $ $ $ $
(loss) 2,445,343 1,275,149 1,084,946 59,400 349,342 129,830 1,540,179 2,430,121 280,582 1,059,173
Net realized gain (loss) 1,843,925 1,095,645 702,635 (7,804) 107,360 2,196,382
on investments (127,836) (1,461,371)(428,438) 772,045
Net change in unrealized
appreciation (depreciation) (2,845,838) 1,061,906 (1,350,525) 180,590 (384,504) 217,393 1,697,681 (1,804,052) 1,049,052 963,841
------------------------------------------------------------------------------------------------
in investments
Increase (decrease) in
net assets
resulting from operations 1,443,430 3,432,700 (393,415) 942,625 (42,966) 454,583 1,776,489 197,631 3,526,443 2,795,059
- ---------------------------- --------------------------------- ---------------------- ----------------------
FROM UNIT TRANSACTIONS:
Purchase payments 369,617 1,512,001 584,681 928,399 78,981 153,017 530,886 1,461,264 497,978 1,006,911
Redemptions (576,318)
(1,323,824)(1,042,797)(2,040,836((700,215)(425,974)(146,119) (741,035) (1,238,202)(545,102)
Net transfers (4,259,742) 4,709,549__9,070,226 _14,518,744 __3,295,579 __2,105,390__5,121,598 __2,630,329__4,758,483
---------------------------------------------- --------------------------------------------------------
(1,477,377)
Increase (decrease)
in net assets
resulting from unit
transactions (5,213,949) 5,178,753 7,614,071 14,746,928 (1,824,370) 3,302,477 1,895,241 6,006,544 1,890,105
5,220,292
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE)
IN NET ASSETS 8,611,453 7,220,656 15,689,553 3,757,060 3,671,730 6,204,175 5,416,548 8,015,351
(3,770,519) (1,867,336)
NET ASSETS:
Beginning of period 28,116,787 19,505,334 24,427,011 5,852,194 2,095,134 22,654,325 16,450,150 24,882,317 16,866,966
--------------------------------------- ---------------------------------------------------------------
8,737,458
End of period $24,346,268 $28,116,787 $31,647,667 $24,427,011
$3,984,858 $5,852,194 $26,326,055 $22,654,325 $30,298,865
$24,882,317
=================================================================== =============================================
(1) The Investment Division commenced operations on
May 3, 1999.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
INVESCO VIF Total Janus Aspen Janus Aspen Janus Aspen Janus Aspen
Return Portfolio Aggressive Growth Flexible Income Growth International
Portfolio Portfolio Portfolio Growth Portfolio
Investment Investment Investment Investment Investment Division
Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1) (1)
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $1,194,672 $ $
(loss) 97,561 590,299 396,261 (46,879) 296,039 $ (42,044) (22,487)
-
Net realized gain (loss) 650,577 5,455,243 746,122 - 4,896,811 973,919 2,712,325 -
on investments 1,064,606 (28,763)
Net change in unrealized
appreciation (depreciation) (1,145,466)(57,794) 4,373,621 1,845,886
(141,296) 14,809,266 5,062,134 1,928,594
------------------------------------------------------ ----------------------------------
in investments
Increase (decrease)
in net assets
resulting from operations 16,701 1,183,082 10,225,125 2,545,129 25,980 19,664,033 7,230,725 4,618,432 -
-------------------------------------------------------- ------- ------------------------- ------
FROM UNIT TRANSACTIONS:
Purchase payments 432,283 923,656 271,439 261,023 113,050 - 1,737,688 1,557,984 35,060 -
Redemptions (302,488) -
(710,138) (1,430,381)(196,273)(45,177) (2,425,577)(581,338) (23,134) -
Net transfers (9,536,115) 2,988,454 (5,178,011) 4,901,198 8,152,717 _29,235,580 8,356,386 8,543,662 _____-
----------------------------------------------------- ------- ---------------------------------- ------
Increase (decrease)
in net assets
resulting from unit
transactions (9,813,970) 3,609,622 (6,336,953) 4,965,948 8,220,590 - 28,547,691 9,333,032 8,555,588 _____-
-------------------------------------------------- ------- ---------------------------------- ------
INCREASE (DECREASE)
IN NET ASSETS (9,797,269) 3,888,172 - 16,563,757 13,174,020 -
4,792,704 7,511,077 8,346,570 48,211,724
NET ASSETS:
Beginning of period 17,274,519 12,481,815 11,169,275 3,658,198 33,241,649 16,677,892
------------------------------------------------------- ------- --------------------------- ------
End of period $7,477,250 $17,274,519 15,057,447 $11,169,275 $8,346,570 $ - $81,453,373 $33,241,649 $3,174,020 $ -
=================================================================== ===================================
(1) The Investment Division commenced operations on May 3,
1999.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Lexington Emerging Montgomery Montgomery Prudential Equity
Worldwide Growth Markets Fund Variable Series: Variable Series: Portfolio
Portfolio Growth Fund International
Small-Cap Fund
Investment Investment Division Investment Investment Division Investment
Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1)
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $ $ $ $
(loss) (462,923) 1,404,095 (9,658) 155,915 16,242 (4,010) - 7,387 32,282 -
Net realized gain (loss) 10,089,155 5,319,970 799,002 128,427 47 (669,136) -
on investments (1,292,668)627,588 (5,125)
Net change in unrealized
appreciation (depreciation) 30,998,850 2,538,860 786,926 436,953 (114,193) (24) 639,595 (30,893) -
----------------------------------------- ----------- ---------------- --------------
in investments 499,957
-------
Increase (decrease) in net
assets resulting from __9,262,925__1,576,270_(699,800) 10,224 __23 __(22,154) __(3,736)_____-
---- ------------------------------- ---------- --------------- --------------
operations 40,625,085 1,143,787
----------- ---------
FROM UNIT TRANSACTIONS:
Purchase payments 3,374,712 35,968 123,730 722,954 - 84,813 572 -
1,906,431 296,960
Redemptions (1,790,811) (126) (102,208) -
(3,123,656) (539,900)(107,025) (297,599)(487,587) (1,098)
Net transfers _19,622,729 (804,133)(432,184) __(643,413) _ __- __323,764_____-
------------------------------ ----------- ------ - --------------
_14,303,510 (2,615,141) (2,021,840)
------------ ----------- -----------
Increase (decrease) in net
assets resulting from unit _13,086,285 21,206,630 (1,308,065)(415,479) __(408,046) _(126) __323,238___-
---------------------------------------- ----------- -------- --------------
transactions (2,615,780) (2,039,235)
----------- -----------
INCREASE (DECREASE) IN NET 53,711,370 268,205 (103) 319,502 -
ASSETS 30,469,555 (1,115,279)(1,471,993)(397,822) (2,061,389)
NET ASSETS:
Beginning of period _27,867,556 _____-
-- -------------
_58,337,111 1,669,660 2,784,939 8,097,350 8,495,172 103 2,061,492 -
------------ -------------------------------------- -------------- -
End of period $112,0481 $58,337,111 $1,937,865 $1,669,660 $6,625,357 $8,097,350
=================================================================
103 319,502 -
== ====
(1) The Investment Division commenced operations on May
3, 1999.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Safeco RST Equity Safeco RST Schwab MarketTrack Schwab Money Market Schwab S&P 500
Portfolio Growth Growth Portfolio II Portfolio Portfolio
Portfolio
Investment Investment Investment Division Investment Division Investment Division
Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1)
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $ $ $ $
(loss) 747,224 716,593 (6,255) - 604,051 129,202 3,852,877 2,615,255 28,487 (116,657)
Net realized gain (loss) 1,789,023 132,269 (9,390) - 268,428 308,226 - 5,596,306 3,270,918
on investments
Net change in unrealized
appreciation (depreciation) (1,131,989) 1,171,030 229,596 - 114,738 ________- _________ 11,160,04 8,167,700
------------------------------------ -------------------------------------------------
in investments __513,029
---------
Increase (decrease) in net
assets resulting from _1,404,258__2,019,892___213,951_____- __2,615,255 _11,321,961
------------------------------------- ----- ----- --------------- -----------
operations 1,385,508 552,166 3,852,877 16,784,838
---------- ------------------ ----------
FROM UNIT TRANSACTIONS:
Purchase payments 24,551 - 205,797 265,743 188,630,192 172,028,684 3,669,430
526,588 844,486 3,599,256
Redemptions - (354,823)
(1,960,507)(350,149) (14,790) (108,929)(34,687,797)(15,631,612)(6,206,767)(2,516,402)
Net transfers __(158,436)_10,375,678 _1,556,658 _____- _1,879,981 2,068,270 28,454,339 _30,015,102
---------------------------------- ------- --------- ---------- ----------------------
(118,520,305)(129,483,500)
Increase (decrease)
in net assets
resulting from unit _(1,592,355)_10,870,015 _1,566,419 _____- _25,917,002 _31,097,956
---------------------------------- ------- --- -------- --- -----------------------
transactions 1,730,955 2,225,084 35,422,090 26,913,572
---------- --------------------- ----------
INCREASE (DECREASE)
IN NET (188,097)12,889,907 1,780,370 - 3,116,463 2,777,250 39,274,967 29,528,827 42,701,840 42,419,917
ASSETS
NET ASSETS:
Beginning of period 17,116,046 4,226,139 ______- _____- 6,415,509 3,638,259 72,691,549 43,162,722 71,643,854
--------------------------------- ------- ----------- ----------------------------------------------
29,223,937
End of period $16,927,949 $17,116,046 $1,780,370 $ $9,531,972 $6,415,509
$111,966,516 $72,691,549 $114,345,694 $71,643,854
=========================================== =========== ==============================================
-
(1) The Investment Division commenced
operations on May 3, 1999.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Scudder Capital Scudder Growth & SteinRoe Special Strong Discovery Strong VF Schafer
Growth Income Fund A Venture Fund II Value Fund
Fund A Fund
Investment Investment Investment Investment Division Investment
Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1) (1) (1)
FROM OPERATIONS:
Net investment income $ $ $ $ $ $ $ $
(loss) (5,157)$ (2,097)$ (33,099) 820,757 277,305 14,317 27,952 -
- -
Net realized gain (loss) 80,725 - (6,473) - (1,156,854) 60,416 (58,886) -
on investments (1,464,596) (228,015)
Net change in unrealized
appreciation (depreciation) ___217,992_____- __7,945 _____- (1,246,798)(133,237)___116,065(59,361) _____-
----------------- --------------- -- ------------------------------------- ------
in investments 2,536,469
---------
Increase (decrease) in net
assets resulting from ___293,560_____- ___(625)_____- _1,038,774(1,582,895)(83,947) _(90,295) _____-
----------------- --------------- ----------------------------------- --------- ------
operations 190,798
-------
FROM UNIT TRANSACTIONS:
Purchase payments - 15,816 - 5,400 122,675 42,395 -
30,246 66,281 423,896
Redemptions - (439) - (1,020) -
(859) (641,466) (292,366) (175,976) (81,385)
Net transfers _2,036,935_____- _560,191 _____- _(221,738)865,597 _____-
----------------- ---------------- -- -- - ------------------ ------
(4,125,424)(2,087,176)(1,456,074)
Increase (decrease) in net
assets resulting from unit _____- _575,568 _____- (1,626,650)(180,448)_906,972 _____-
-- ------- ---------------- -- - ---------------------------- ------
transactions 2,066,322 (4,700,609)(1,955,646)
---------- ---------------------
INCREASE (DECREASE) IN NET 2,359,882 - 574,943 - 10,350 816,677 -
ASSETS (3,661,835)(3,538,541)(1,710,597)
NET ASSETS:
Beginning of period ________- _____- _______- _____- _6,926,430 10,464,971 _2,438,778______- _____-
----------------- ---------------- ---------------------- ----------------- ------
2,449,128
End of period $2,359,882$ $ $ $3,264,595$ $ $ $
===================== ========= ============ ==== == = =
- 574,943 - 6,926,430 738,531 2,449,128 $816,677 -
== ======== == ========== ========================== =
(1) The Investment Division commenced operations on May
3, 1999.
</TABLE>
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Hard Van Kampen American Capital Total Variable Annuity - 1
Assets Fund L.I.T. - Morgan Stanley Series Account
Real Estate Securities
Portfolio
Investment Division Investment Division Investment Division
------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
FROM OPERATIONS:
Net investment income (loss) $ 12,193 $ 172,811 $ 128,480 $ 15,853 $ 15,292,403 $ 14,918,970
Net realized gain (loss) on investments 48,183 (500,578) 16,840 45,416,515 9,521,275
(489,228)
Net change in unrealized appreciation
(depreciation) in investments _159,698 __(20,836) __(293,979) 205,297 __78,505,503 __24,797,654
--------- ---------- ----------- -------------- ------------- ------------
Increase (decrease) in net assets
resulting from operations _220,074 _(348,603) __(148,659) (268,078) _139,214,421 __49,237,899
--------- ---------- ----------- -------------- ------------- ------------
FROM UNIT TRANSACTIONS:
Purchase payments 10,411 103,320 56,972 100,477 202,744,631 191,946,431
Redemptions (28,243) (20,338) (124,009) (109,723) (61,994,671) (26,484,129)
Net transfers (515,113) _(513,068) 444,897 _1,272,829 _ __(138,453) ______97,756
--------- ---------- ------------- ----------- ------------- ------------
Increase (decrease) in net assets
resulting from unit transactions (532,945) _(430,086) __377,860 _1,263,583 140,611,507 165,560,058
--------- ---------- ---------- ----------- --------------- -------------
INCREASE (DECREASE) IN NET ASSETS (312,871) (778,689) 229,201 995,505 279,825,928 214,797,957
NET ASSETS:
Beginning of period 553,195 1,331,884 _2,854,082 1,858,577 464,067,350 _249,269,393
-------- ---------- ----------- ------------ --------------- ------------
End of period $240,324 $ 553,195 $3,083,283 $2,854,082 $ 743,893,278 $464,067,350
========= =========== =========== =========== ============== =============
(1) The Investment Division commenced operations on May 3,
1999.
</TABLE>
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. HISTORY OF THE SERIES ACCOUNT
The Variable Annuity - 1 Series Account of Great-West Life & Annuity
Insurance Company (the Series Account) is a separate account of Great-West
Life & Annuity Insurance Company (the Company) established under Colorado
law. The Series Account commenced operations on November 1, 1996. The
Series Account is registered with the Securities and Exchange Commission
as a unit investment trust under the provisions of the Investment Company
Act of 1940, as amended.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the
Series Account, which are in accordance with the accounting principles
generally accepted in the investment company industry.
Security Transactions - Security transactions are recorded on the trade
date. Cost of investments sold is determined on the basis of identified
cost.
Dividend income is accrued as of the ex-dividend date and expenses are
accrued on a daily basis.
Security Valuation - The investments in shares of the underlying funds are
valued at the closing net asset value per share as determined by the
appropriate fund/portfolio at the end of each day.
The cost of investments represents shares of the underlying funds, which
were purchased by the Series Account. Purchases are made at the net asset
value from net purchase payments or through reinvestment of all
distributions from the Fund.
Federal Income Taxes - The Series Account income is automatically applied
to increase contract reserves. Under the existing federal income tax law,
this income is not taxed to the extent that it is applied to increase
reserves under a contract. The Company reserves the right to charge the
Series Account for federal income taxes attributable to the Series Account
if such taxes are imposed in the future.
Net Transfers - Net transfers include transfers between investment
divisions of the Series Account as well as transfers between other
investment options of the Company.
3. CHARGES UNDER THE CONTRACT
Contract Maintenance Charge - On the last day of each contract year before
the retirement date, the Company deducts from each participant account a
maintenance charge of $25.
Deductions for Variable Asset Charge - The Company deducts an amount,
computed daily, from the net asset value of the Series Account
investments, equal to annual rate of .85%. This charge is designed to
compensate the Company for its assumption of certain mortality, death
benefit and expense risks.
Premium Taxes - The Company presently intends to pay any premium tax
levied by any governmental entity as a result of the existence of the
participant accounts or the Series Account.
If the above charges prove insufficient to cover actual costs and assumed
risks, the loss will be borne by the Company; conversely, if the amounts
deducted prove more than sufficient, the excess will be a profit to the
Company.
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Alger Alger American Berger Dreyfus
American American Century American Bankers Bankers IPT Small VIF
Growth Small-Cap VP Century Trust Trust Baron Company Capital
Portfolio Portfolio Capital VP EAFE Small Cap Capital Growth Appreciation
AppreciatiInternationEquity Index Fund Asset Fund Fund
Index Fund
Fund
-----------------------------------------------------------------------------------------------
Date Commenced 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99 05/03/99 05/03/99 05/01/97 05/03/99
Operations
1999
Beginning Unit $18.74 $12.76 $8.94 $14.54 $10.00 $10.00 $10.00 $13.89 $10.00
Value
========= ======== ========= ========= ========= ========= ========= ========= =========
Ending Unit Value $24.84 $18.15 $14.59 $23.66 $12.00 $11.65 $11.40 $26.37 $10.24
========= ======== ========= ========= ========= ========= ========= ========= =========
Number of Units 2,200,774.98 201,220.60 88,278.89 602,866.81 161,395.99 203,338.02 502,097.27 1,072,037.44 245,395.21
Outstanding
========= ======== ========= ========= ========= ========= ========= ========= =========
Net Assets (000's) $54,671 $3,652 $1,288 $14,264 $1,937 $2,369 $5,723 $28,268 $2,513
========= ======== ========= ========= ========= ========= ========= ========= =========
1998
Beginning Unit $12.76 $11.14 $9.22 $12.35 $13.75
Value
========= ======== ========= ========= =========
Ending Unit Value $18.74 $12.76 $8.94 $14.54 $13.89
========= ======== ========= ========= =========
Number of Units 1,306,503.46 643,786.69 99,034.37 560,116.89 428,982.88
Outstanding
========= ======== ========= ========= =========
Net Assets (000's) $8,217 $886 $8,147 $5,959
$24,487
========= ======== ========= ========= =========
========= ======== ========= ========= =========
1997
Beginning Unit $10.24 $10.09 $9.61 $10.49 $10.00
Value
========= ======== ========= ========= =========
========= ======== ========= ========= =========
Ending Unit Value $12.76 $11.14 $9.22 $12.35 $13.75
========= ======== ========= ========= =========
========= ======== ========= ========= =========
Number of Units 417,162.09 337,576.93 82,255.58 298,156.62 124,653.31
Outstanding
========= ======== ========= ========= =========
Net Assets (000's) $5,325 $3,761 $758 $3,683 $1,714
========= ======== ========= ========= =========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00
Value
========= ======== ========= =========
========= ========
Ending Unit Value $10.24 $10.09 $9.61 $10.49
========= ======== ========= =========
========= ======== ========= =========
Number of Units 1,166.64 4,080.46 30,139.13 13,399.99
Outstanding
========= ======== ========= =========
Net Assets (000's) $12 $41 $290 $141
========= ======== ========= =========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Federated INVESCO Janus
Dreyfus Federated Fund for INVESCO VIF INVESCO Aspen Janus
VIF American U.S. Federated VIF High IndustrialVIF Total AggressiveAspen
Growth & Leaders GovernmentUtility Yield Income Return Growth Flexible
Income Fund II Securities Fund II Portfolio Portfolio Portfolio Portfolio Income
Fund II Fund
-----------------------------------------------------------------------------------------------
Date Commenced 05/03/99 11/01/96 11/01/96 05/01/97 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99
Operations
1999
Beginning Unit $10.00 $15.95 $11.43 $14.07 $12.13 $13.61 $14.71 $10.00
Value $15.18
======== ========= ========= ======== ========= ======== ========= ======== =========
Ending Unit Value $10.73 $16.87 $11.27 $14.18 $13.14 $17.28 $13.03 $32.87 $ 9.95
======== ========= ========= ======== ========= ======== ========= ======== =========
Number of Unit 49,768.32 1,443,381.49 2,809,026.83 280,956.86 2,003,862.84
1,753,290.18 573,788.59 458,029.90 838,444.84
Outstanding
======== ========= ========= ======== ========= ======== ========= ======== =========
Net Assets (000's) $534 $24,346 $31,648 $3,985 $26,326 $30,299 $7,477 $15,057 $8,347
======== ========= ========= ======== ========= ======== ========= ======== =========
1998
Beginning Unit $13.67 $10.71 $12.45 $12.09 $13.27 $12.52 $11.05
Value
========= ========= ======== ========= ======== ========= ========
Ending Unit Value $15.95 $11.43 $14.07 $12.13 $15.18 $13.61 $14.71
========= ========= ======== ========= ======== ========= ========
Number of Units 1,763,028.09 2,136,709.11 416,024.23 1,867,861.60
1,639,584.27 1,269,709.44 759,487.48
Outstanding
========= ========= ======== ========= ======== ========= ========
Net Assets (000's) $28,117 $24,427 $5,852 $22,654 $24,882 $17,275 $11,169
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
1997
Beginning Unit $10.42 $9.97 $10.00 $10.39 $10.44 $10.27 $9.89
Value
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
Ending Unit Value $13.67 $10.71 $12.45 $12.09 $13.27 $12.52 $11.05
========= ========= ======== ========= ======== ========= ========
========= ========= ======== ========= ======== ========= ========
Number of Units 1,426,437.13 815,966.27 168,289.28 1,360,680.67 1,271,028.35
996,949.40 331,141.90
Outstanding
========= ========= ======== ========= ======== ========= ========
Net Assets (000's) $19,505 $8,737 $2,095 $16,450 $16,867 $12,482 $
3,658
========= ========= ======== ========= ======== ========= ========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Ending Unit Value $10.42 $9.97 $10.39 $10.44 $10.27 $ 9.89
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Number of Units 65,888.88 9,330.15 52,043.52 68,873.87 3,927.31 6,698.73
Outstanding
========= ========= ======== ======== ========= ========
========= ========= ======== ======== ========= ========
Net Assets (000's) $686 $93 $541 $719 $40 $66
========= ========= ======== ======== ========= ========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Montgomery
Janus Janus Janus Lexington Montgomery Variable Safeco
Aspen Aspen Aspen Emerging Variable Series: Prudential Safeco RST
Growth InternationWorldwide Markets Series: InternatioEquity RST Growth
Portfolio Growth Growth Fund Growth Small-Cap Portfolio Equity Portfolio
Fund Portfolo Fund Fund Portfolio
----------------------------------------------------------------------------------------------
Date Commenced 11/01/96 05/03/99 11/01/96 11/01/96 11/01/96 11/01/96 05/03/99 05/01/97 05/03/99
Operations
1999
Beginning Unit $16.79 $10.00 $16.13 $6.40 $13.47 $9.56 $10.00 $14.65 $10.00
Value
========= ========= ========= ========= ========= ========= ========= ========= =========
Ending Unit Value $23.98 $17.04 $26.30 $14.48 $16.13 $9.87 $9.85 $15.88 $11.44
========= ========= ========= ========= ========= ========= ========= ========= =========
Number of Units 3,396,880.63 772,937.37 4,259,932.25 133,859.68 410,660.04 0.00 32,427.58 1,065,918.62 155,642.93
Outstanding
========= ========= ========= ========= ========= ========= ========= ========= =========
Net Assets (000's) $81,453 $13,174 $112,048 $1,938 $6,625 $320 $16,928 $1,780
-
========= ========= ========= ========= ========= ========= ========= ========= =========
1998
Beginning Unit $12.49 $12.62 $9.00 $13.20 $9.89 $11.83
Value
========= ========= ========= ========= ========= =========
Ending Unit Value $16.79 $16.13 $6.40 $13.47 $9.56 $14.65
========= ========= ========= ========= ========= =========
Number of Units 1,979,274.19 3,616,796.56 260,704.11 601,168.28 8.53 1,168,093.71
Outstanding
========= ========= ========= ========= ========= =========
Net Assets (000's) $33,242 $58,337 $1,670 $8,097 $0 $17,116
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
1997
Beginning Unit $10.26 $10.42 $10.26 $10.35 $10.51 $10.00
Value
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
Ending Unit Value $12.49 $12.62 $9.00 $13.20 $9.89 $11.83
========= ========= ========= ========= ========= =========
========= ========= ========= ========= ========= =========
Number of Units 1,335,813.25 2,208,663.79 309,521.91 643,624.38 208,496.59 357,176.26
Outstanding
========= ========= ========= ========= ========= =========
Net Assets (000's) $16,678 $27,868 $2,785 $8,495 $2,061 $4,226
========= ========= ========= ========= ========= =========
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Ending Unit Value $10.26 $10.42 $10.26 $10.35 $10.51
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Number of Units 93,598.79 51,982.38 18,281.42 11,226.77 3,230.28
Outstanding
========= ========= ======== ========= =========
========= ========= ======== ========= =========
Net Assets (000's) $960 $541 $188 $116 $34
========= ========= ======== ========= =========
<PAGE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
Schwab Van Eck
MarketTraSchwab Scudder Strong Strong Worldwide
Growth Money Schwab Scudder Growth & SteinRoe Discovery VF Hard
PortfolioMarket S&P 500 Capital Income Special Fund II Schafer Assets
II Portfolio Portfolio Growth Fund A Venture Value Fund
Fund A Fund Fund
---------------------------------------------------------------------------------------------
Date Commenced 11/01/96 11/01/96 11/01/96 05/03/99 05/03/99 11/01/96 11/01/96 05/03/99 11/01/96
Operations
1999
Beginning Unit $14.34 $10.93 $17.54 $10.00 $10.00 $ $12.26 $10.00 $
Value 9.00 6.88
======= ========= ========= ======== ======= ======= ======== ====== =======
Ending Unit Value $17.01 $11.35 $20.95 $12.64 $ $13.22 $12.78 $8.64 $
9.36 8.25
======= ========= ========= ======== ======= ======= ======== ====== =======
Number of Units 560,532.64 9,861,519.25 5,457,967.10 186,640.12 61,409.25 246,948.62 57,792.53 94,499.34 29,113.72
Outstanding
======= ========= ========= ======== ======= ======= ======== ====== =======
Net Assets (000's) $9,532 $111,967 $114,346 $2,360 $575 $3,265 $739 $817 $240
======= ========= ========= ======== ======= ======= ======== ====== =======
1998
Beginning Unit $12.79 $10.49 $13.81 $10.98 $11.53 $10.04
Value
======= ========= ========= ======= ======== =======
Ending Unit Value $14.34 $10.93 $17.54 $ $12.26 $
9.00 6.88
======= ========= ========= ======= ======== =======
Number of Units 447,514.11 6,649,980.31 4,084,834.46 769,185.90 199,701.97 80,398.85
Outstanding
======= ========= ========= ======= ======== =======
Net Assets (000's) $6,416 $72,692 $71,644 $6,926 $2,449 $553
======= ========= ========= ======= ======== =======
======= ========= =======
1997
Beginning Unit $10.35 $10.07 $10.52 $10.27 $10.44 $10.31
Value
======= ========= =======
======= ========= ========= ======= ======== =======
Ending Unit Value $12.79 $10.49 $13.81 $10.98 $11.53 $10.04
======= ========= =======
======= ========= ========= ======= ======== =======
Number of Units 284,530.36 4,114,002.58 2,115,859.53 952,879.99 211,488.12 132,622.35
Outstanding
========
======= ========= ========= ======= =======
Net Assets (000's) $3,638 $43,163 $29,224 $10,465 $2,439 $1,332
======= ========= ========= ======= ======== =======
1996
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Ending Unit Value $10.35 $10.07 $10.52 $10.27 $10.44 $10.31
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Number of Units 16,525.39 297,045.95 62,674.08 70,715.11 24,613.07 2,220.85
Outstanding
======= ========= ========= ======= ======== =======
======= ========= ========= ======= ======== =======
Net Assets (000's) $171 $2,991 $ 659 $727 $257 $23
======= ========= ========= ======= ======== =======
</TABLE>
4. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets of the Series Account.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Van Kampen American
Capital L.I.T. -
Morgan Stanley Real
Estate Securities
Portfolio
-----------------------
Date Commenced Operations 09/17/97
1999
Beginning Unit Value $9.25
=============
Ending Unit Value $8.86
=============
Number of Units Outstanding 347,935.46
=============
Net Assets (000's) $3,083
=============
1998
Beginning Unit Value $10.56
=============
=============
Ending Unit Value $9.25
=============
=============
Number of Units Outstanding 308,475.29
=============
=============
Net Assets (000's) $2,854
=============
1997
=============
Beginning Unit Value $10.00
=============
=============
Ending Unit Value $10.56
=============
=============
Number of Units Outstanding 176,075.27
=============
=============
Net Assets (000's) $1,859
=============
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
-------------------------------------------
(An indirect wholly-owned subsidiary of
The Great-West Life Assurance Company)
-------------------------------------
Consolidated Financial Statements for the Years Ended
December 31, 1999, 1998, and 1997 and
Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets of Great-West Life
& Annuity Insurance Company (an indirect wholly-owned subsidiary of The
Great-West Life Assurance Company) and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, stockholder's equity,
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company'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. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Great-West Life & Annuity Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1999, the Company adopted Statement of Position No. 98-1, "Accounting
for the Cost of Computer Software Developed or Obtained for Internal Use" and,
accordingly, changed its method of accounting for software development costs.
DELOITE & TOUCHE LLP
Denver, Colorado
January 31, 2000
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================
1999 1998
---------------------- -----------------------
ASSETS
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value
$2,238,581 and $2,298,936) $ 2,260,581 $ 2,199,818
Available-for-sale, at fair value (amortized cost
$6,953,383 and $6,752,532) 6,727,922 6,936,726
Common stock, at fair value (cost $43,978 and 69,240 48,640
$41,932)
Mortgage loans on real estate, net 974,645 1,133,468
Real estate, net 103,731 73,042
Policy loans 2,681,132 2,858,673
Short-term investments, available-for-sale (cost
approximates fair value) 240,804 420,169
---------------------- -----------------------
Total Investments 13,058,055 13,670,536
Cash 257,840 176,119
Reinsurance receivable
Related party 5,015 5,006
Other 168,307 187,952
Deferred policy acquisition costs 282,295 238,901
Investment income due and accrued 137,810 157,587
Other assets 308,419 311,078
Premiums in course of collection 142,199 84,940
Deferred income taxes 253,323 191,483
Separate account assets 12,780,016 10,099,543
---------------------- -----------------------
TOTAL ASSETS $ 27,393,279 $ 25,123,145
====================== =======================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================
1999 1998
----------------- -----------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
POLICY BENEFIT LIABILITIES:
Policy reserves
Related party $ 555,783 $ 555,300
Other 11,181,900 11,347,548
Policy and contract claims 391,968 428,798
Policyholders' funds 185,623 181,779
Provision for policyholders' dividends 70,726 69,530
GENERAL LIABILITIES:
Due to Parent Corporation 35,979 52,877
Due to GWL&A Financial 175,035
Repurchase agreements 80,579 244,258
Commercial paper 39,731
Other liabilities 638,469 761,505
Undistributed earnings on participating business 130,638 143,717
Separate account liabilities 12,780,016 10,099,543
----------------- -----------------
Total Liabilities 26,226,716 23,924,586
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value, 50,000,000 shares authorized, 0 shares issued
and outstanding Common stock, $1 par value; 50,000,000 shares
authorized; 7,032,000 shares issued and outstanding 7,032 7,032
Additional paid-in capital 700,316 699,556
Accumulated other comprehensive income (loss) (84,861) 61,560
Retained earnings 544,076 430,411
----------------- -----------------
Total Stockholder's Equity 1,166,563 1,198,559
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 27,393,279 $ 25,123,145
================= =================
</TABLE>
<PAGE>
3
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
REVENUES:
Premiums
Related party (including premiums
recaptured totaling $0,
$0, and $155,798) $ $ 46,191 $ 155,798
Other (net of premiums ceded totaling
$85,803, $86,511 and $61,194) 1,163,183 948,672 677,381
Fee income 635,147 516,052 420,730
Net investment income
Related party (10,923) (9,416) (8,957)
Other 886,869 906,776 890,630
Net realized gains on investments 1,084 38,173 9,800
---------------- ---------------- ----------------
2,675,360 2,446,448 2,145,382
---------------- ---------------- ----------------
BENEFITS AND EXPENSES:
Life and other policy benefits (net of
reinsurance recoveries totaling $80,681,
$81,205, and $44,871) 970,250 768,474 543,903
Increase in reserves
Related party 46,191 155,798
Other 33,631 78,851 90,013
Interest paid or credited to contractholders 494,081 491,616 527,784
Provision for policyholders' share of earnings
on participating business 13,716 5,908 3,753
Dividends to policyholders 70,161 71,429 63,799
---------------- ---------------- ----------------
1,581,839 1,462,469 1,385,050
Commissions 173,405 144,246 102,150
Operating expenses (income):
Related party (768) (5,094) (6,292)
Other 593,575 518,228 431,714
Premium taxes 38,329 30,848 24,153
---------------- ---------------- ----------------
2,386,380 2,150,697 1,936,775
INCOME BEFORE INCOME TAXES 288,980 295,751 208,607
---------------- ---------------- ----------------
PROVISION FOR INCOME TAXES:
Current 72,039 81,770 61,644
Deferred 11,223 17,066 (11,797)
---------------- ---------------- ----------------
83,262 98,836 49,847
---------------- ---------------- ----------------
NET INCOME $ 205,718 $ 196,915 $ 158,760
================ ================ ================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
==============================================================================
Accumulated
Additional Other
Preferred Stock Common Stock Paid-in Comprehensive Retained
--------------------- ---------------------
Shares Amount Shares Amount Capital Income Earnings Total
(Loss)
---------- --------- ---------- --------- ---------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 2,000,800 $ 121,800 7,032,000 $ 7,032 $ 664,265 $ 14,951 $ 226,166 $ 1,034,214
Net income 158,760 158,760
Other comprehensive 37,856 37,856
income
---------
Total comprehensive income 196,616
---------
Capital contributions 26,483 26,483
Dividends (71,394) (71,394)
---------- --------- ---------- --------- ---------- ------------ --------- ---------
BALANCE, DECEMBER 31, 1997 2,000,800 121,800 7,032,000 7,032 690,748 52,807 313,532 1,185,919
Net income 196,915 196,915
Other comprehensive 8,753 8,753
income
---------
Total comprehensive income 205,668
---------
Capital contributions 8,808 8,808
Dividends (80,036) (80,036)
Purchase of preferred (2,000,800) (121,800) (121,800)
shares
---------- --------- ---------- --------- ---------- ------------ --------- ---------
BALANCE, DECEMBER 31, 1998 0 $ 0 7,032,000 $ 7,032 $ 699,556 $ 61,560 $ 430,411 $ 1,198,559
Net income 205,718 205,718
Other comprehensive (146,421) (146,421)
loss
---------
Total comprehensive loss 59,297
---------
Capital contributions
Dividends (92,053) (92,053)
Income tax benefit on
stock
compensation 760 760
---------- --------- ---------- --------- ---------- ------------ --------- ---------
BALANCE, DECEMBER 31, 1999 0 $ 0 7,032,000 $ 7,032 $ 700,316 $ (84,861) $ 544,076 $ 1,166,563
========== ========= ========== ========= ========== ============ ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
3
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
OPERATING ACTIVITIES:
Net income $ 205,718 $ 196,915 $ 158,760
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain allocated to participating
policyholders 13,716 5,908 3,753
Amortization of investments (22,514) (15,068) 409
Net realized gains on investments (1,084) (38,173) (9,800)
Depreciation and amortization 47,339 55,550 46,929
Deferred income taxes 11,223 17,066 (11,824)
Changes in assets and liabilities:
Policy benefit liabilities 650,959 938,444 498,114
Reinsurance receivable 19,636 (43,643) 112,594
Accrued interest and other receivables (37,482) 28,467 30,299
Other, net (146,150) (184,536) 64,465
---------------- ---------------- ----------------
Net cash provided by operating activities 741,361 960,930 893,699
---------------- ---------------- ----------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to maturity
Sales 9,920
Maturities and redemptions 520,511 471,432 359,021
Available-for-sale
Sales 3,176,802 6,169,678 3,174,246
Maturities and redemptions 822,606 1,268,323 771,737
Mortgage loans 165,104 211,026 248,170
Real estate 5,098 16,456 36,624
Common stock 18,116 3,814 17,211
Purchases of investments:
Fixed maturities
Held-to-maturity (563,285) (584,092) (439,269)
Available-for-sale (4,019,465) (7,410,485) (4,314,722)
Mortgage loans (2,720) (100,240) (2,532)
Real estate (41,482) (4,581) (64,205)
Common stock (19,698) (10,020) (29,608)
---------------- ---------------- ----------------
Net cash provided by (used in)
investing activities $ 61,587 $ 41,231 $ (243,327)
================ ================ ================
(Continued)
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits $ (583,900) $ (507,237) $ (577,538)
Due to Parent Corporation (16,898) (73,779) (19,522)
Due to GWL&A Financial 175,035
Dividends paid (92,053) (80,036) (71,394)
Net commercial paper repayments (39,731) (14,327) (30,624)
Net repurchase agreements (repayments)
borrowings (163,680) (81,280) 38,802
Capital contributions 8,808 11,000
Purchase of preferred shares (121,800)
Acquisition of subsidiary (82,669)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net cash used in financing activities (721,227) (952,320) (649,276)
---------------- ---------------- ----------------
NET INCREASE IN CASH 81,721 49,841 1,096
CASH, BEGINNING OF YEAR 176,119 126,278 125,182
---------------- ---------------- ----------------
CASH, END OF YEAR $ 257,840 $ 176,119 $ 126,278
================ ================ ================
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 76,150 $ 111,493 $ 86,829
Interest 14,125 13,849 15,124
</TABLE>
See notes to consolidated financial statements. (Concluded)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999, 1998,
AND 1997 (Amounts in Thousands, except Share Amounts)
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance Company (the
Company) is a wholly-owned subsidiary of GWL&A Financial Inc., a
holding company formed in 1998 (GWL&A Financial) and an indirect
wholly-owned subsidiary of The Great-West Life Assurance Company (the
Parent Corporation). The Company is an insurance company domiciled in
the State of Colorado. The Company offers a wide range of life
insurance, health insurance, and retirement and investment products to
individuals, businesses, and other private and public organizations
throughout the United States.
Basis of Presentation - 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. The consolidated
financial statements include the accounts of the Company and its
subsidiaries. All material inter-company transactions and balances have
been eliminated in consolidation.
Certain reclassifications have been made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.
Investments - Investments are reported as follows:
1. Management determines the classification of fixed maturities at
the time of purchase. Fixed maturities are classified as
held-to-maturity when the Company has the positive intent and
ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost unless fair value is
less than cost and the decline is deemed to be other than
temporary, in which case they are written down to fair value and
a new cost basis is established.
Fixed maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the net unrealized gains and
losses reported as accumulated other comprehensive income (loss)
in stockholder's equity. The net unrealized gains and losses on
derivative financial instruments used to hedge
available-for-sale securities are also included in other
comprehensive income (loss).
The amortized cost of fixed maturities classified as
held-to-maturity or available-for-sale is adjusted for
amortization of premiums and accretion of discounts using the
effective interest method over the estimated life of the related
bonds. Such amortization is included in net investment income.
Realized gains and losses, and declines in value judged to be
other-than-temporary are included in net realized gains (losses)
on investments.
2. Mortgage loans on real estate are carried at their unpaid
balances adjusted for any unamortized premiums or discounts and
any valuation reserves. Interest income is accrued on the unpaid
principal balance. Discounts and premiums are amortized to net
investment income using the effective interest method. Accrual
of interest is discontinued on any impaired loans where
collection of interest is doubtful.
The Company maintains an allowance for credit losses at a level
that, in management's opinion, is sufficient to absorb credit
losses on its impaired loans. Management's judgement is based on
past loss experience, current and projected economic conditions,
and extensive situational analysis of each individual loan. The
measurement of impaired loans is based on the fair value of the
collateral.
3. Real estate is carried at cost.The carrying value of real estate
is subject to periodic evaluation of recoverability.
4. Investments in common stock are carried at fair value.
5. Policy loans are carried at their unpaid balances.
6. Short-term investments include securities purchased with initial
maturities of one year or less and are carried at amortized
cost. The Company considers short-term investments to be
available-for-sale and amortized cost approximates fair value.
7. Gains and losses realized on disposal of investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit accounts.
Internal Use Software - Effective January 1, 1999, the Company adopted
Statement of Position (SOP) No. 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use". SOP 98-1
provides guidance on accounting for costs associated with computer
software developed or obtained for internal use. As a result of the
adoption of SOP 98-1, the Company capitalized $18,373 in internal use
software development costs for the year ended December 31, 1999.
Deferred Policy Acquisition Costs - Policy acquisition costs, which
primarily consist of sales commissions related to the production of new
and renewal business, have been deferred to the extent recoverable.
Other costs capitalized include expenses associated with the Company's
group sales representatives. These costs are variable in nature and are
dependent upon sales volume. Deferred costs associated with the annuity
products are being amortized over the life of the contracts in
proportion to the emergence of gross profits. Retrospective adjustments
of these amounts are made when the Company revises its estimates of
current or future gross profits. Deferred costs associated with
traditional life insurance are amortized over the premium paying period
of the related policies in proportion to premium revenues recognized.
Amortization of deferred policy acquisition costs totaled $43,512,
$51,724, and $44,298 in 1999, 1998, and 1997, respectively.
<PAGE>
Separate Accounts - Separate account assets and related liabilities are
carried at fair value. The Company's separate accounts invest in shares
of Maxim Series Fund, Inc. and Orchard Series Fund, Inc., both
diversified, open-end management investment companies which are
affiliates of the Company, shares of other external mutual funds, or
government or corporate bonds. Investment income and realized capital
gains and losses of the separate accounts accrue directly to the
contractholders and, therefore, are not included in the Company's
statements of income. Revenues to the Company from the separate
accounts consist of contract maintenance fees, administrative fees, and
mortality and expense risk charges.
Life Insurance and Annuity Reserves - Life insurance and annuity policy
reserves with life contingencies of $7,169,885 and $6,866,478 at
December 31, 1999 and 1998, respectively, are computed on the basis of
estimated mortality, investment yield, withdrawals, future maintenance
and settlement expenses, and retrospective experience rating premium
refunds. Annuity contract reserves without life contingencies of
$4,468,685 and $4,908,964 at December 31, 1999 and 1998, respectively,
are established at the contractholder's account value.
Reinsurance - Policy reserves ceded to other insurance companies are
carried as a reinsurance receivable on the balance sheet (see Note 3).
The cost of reinsurance related to long-duration contracts is accounted
for over the life of the underlying reinsured policies using
assumptions consistent with those used to account for the underlying
policies.
Policy and Contract Claims - Policy and contract claims include
provisions for reported life and health claims in process of
settlement, valued in accordance with the terms of the related policies
and contracts, as well as provisions for claims incurred and unreported
based primarily on prior experience of the Company.
Participating Fund Account - Participating life and annuity policy
reserves are $4,297,823 and $4,108,314 at December 31, 1999 and 1998,
respectively. Participating business approximates 31.0%, 32.7%, and
50.5% of the Company's ordinary life insurance in force and 94.0%,
71.9% and 91.1% of ordinary life insurance premium income for the years
ended December 31, 1999, 1998 and 1997, respectively.
The amount of dividends to be paid from undistributed earnings on
participating business is determined annually by the Board of
Directors. Amounts allocable to participating policyholders are
consistent with established Company practice.
The Company has established a Participating Policyholder Experience
Account (PPEA) for the benefit of all participating policyholders which
is included in the accompanying consolidated balance sheet. Earnings
associated with the operation of the PPEA are credited to the benefit
of all participating policyholders. In the event that the assets of the
PPEA are insufficient to provide contractually guaranteed benefits, the
Company must provide such benefits from its general assets.
The Company has also established a Participation Fund Account (PFA) for
the benefit of the participating policyholders previously transferred
to the Company from the Parent under an assumption reinsurance
transaction. The PFA is part of the PPEA. Earnings derived from the
operation of the PFA net of a management fee paid to the Company accrue
solely for the benefit of the participating policyholders.
<PAGE>
Recognition of Premium and Fee Income and Benefits and Expenses - Life
insurance premiums are recognized when due. Annuity premiums with life
contingencies are recognized as received. Accident and health premiums
are earned on a monthly pro rata basis. Revenues for annuity and other
contracts without significant life contingencies consist of contract
charges for the cost of insurance, contract administration, and
surrender fees that have been assessed against the contract account
balance during the period. Fee income is derived primarily from
contracts for claim processing or other administrative services and
from assets under management. Fees from contracts for claim processing
or other administrative services are recorded as the services are
provided. Fees from assets under management, which consist of contract
maintenance fees, administration fees and mortality and expense risk
charges, are recognized when due. Benefits and expenses on policies
with life contingencies impact income by means of the provision for
future policy benefit reserves, resulting in recognition of profits
over the life of the contracts. The average crediting rate on annuity
products was approximately 6.2%, 6.3%, and 6.6% in 1999, 1998, and
1997.
Income Taxes - Income taxes are recorded using the asset and liability
approach, which requires, among other provisions, the recognition of
deferred tax assets and liabilities for expected future tax
consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax
consequences, all expected future events (other than the enactments or
changes in the tax laws or rules) are considered. Although realization
is not assured, management believes it is more likely than not that the
deferred tax asset, net of a valuation allowance, will be realized.
Repurchase Agreements and Securities Lending - The Company enters into
repurchase agreements with third-party broker/dealers in which the
Company sells securities and agrees to repurchase substantially similar
securities at a specified date and price. Such agreements are accounted
for as collateralized borrowings. Interest expense on repurchase
agreements is recorded at the coupon interest rate on the underlying
securities. The repurchase fee received or paid is amortized over the
term of the related agreement and recognized as an adjustment to
investment income.
The Company requires collateral in an amount greater than or equal to
102% of the borrowing for all securities lending transactions.
Derivatives - The Company makes limited use of derivative financial
instruments to manage interest rate, market, and foreign exchange risk.
Such hedging activity consists primarily of interest rate swap
agreements, interest rate floors and caps, foreign currency exchange
contracts, options and equity swaps. The differential paid or received
under the terms of these contracts is recognized as an adjustment to
net investment income on the accrual method. Gains and losses on
foreign exchange contracts are deferred and recognized in net
investment income when the hedged transactions are realized.
<PAGE>
Interest rate swap agreements are used to convert the interest rate on
certain fixed maturities from a floating rate to a fixed rate. Interest
rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amount. Interest rate floors and caps are interest
rate protection instruments that require the payment by a counter-party
to the Company of an interest rate differential. The differential
represents the difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a notional principal
amount. Foreign currency exchange contracts are used to hedge the
foreign exchange rate risk associated with bonds denominated in other
than U.S. dollars. Written call options are stock conversion protection
agreements that require the counter-party to automatically call the
bond for cash when the issuer elects to convert the bond to common
stock. Equity swap transactions generally involve the exchange of
variable market performance of a basket of securities for a fixed
interest rate.
Although derivative financial instruments taken alone may expose the
Company to varying degrees of market and credit risk when used solely
for hedging purposes, these instruments typically reduce overall market
and interest rate risk. The Company controls the credit risk of its
financial contracts through credit approvals, limits, and monitoring
procedures. As the Company generally enters into transactions only with
high quality institutions, no losses associated with non-performance on
derivative financial instruments have occurred or are expected to
occur.
The Financial Accounting Standards Board has issued Statement No. 133,
"Accounting for Derivative Instruments and for Hedging Activities",
which, as amended, is required to be adopted in years beginning after
June 15, 2000. This Statement provides a comprehensive and consistent
standard for the recognition and measurement of derivatives and hedging
activities. Although management has not completed its analysis of the
impact of this Statement, management does not anticipate that the
adoption of the new Statement will have a significant effect on
earnings or the financial position of the Company because of the
Company's minimal use of derivatives.
Stock Options - The Company applies the intrinsic value measurement
approach under APB Opinion No. 25 to stock-based compensation awards to
employees.
2. ACQUISITION
On July 8, 1998, the Company paid $82,669 in cash to acquire all of the
outstanding shares of Alta Health & Life Insurance Company (Alta),
formerly known as Anthem Health & Life Insurance Company. The purchase
price was based on Alta's adjusted book value, and was subject to
further minor adjustments. The results of Alta's operations, which had
an insignificant effect on net income in 1998, have been combined with
those of the Company since the date of acquisition.
<PAGE>
The acquisition was accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to the
net assets acquired based on their estimated fair values. The fair
value of tangible assets acquired and liabilities assumed was $379,934
and $317,440, respectively. The goodwill representing the purchase
price in excess of fair value of net assets acquired is included in
other assets and is being amortized over 30 years on a straight-line
basis.
3. RELATED-PARTY TRANSACTIONS
On December 31, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $859 in
premium income and increase in reserves, associated with certain
policies, as a result of this transaction. Of the $137,638 in reserves
that was recorded as a result of this transaction, $136,779 was
recorded under SFAS No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments" ("SFAS No. 97"), accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
December 31, 1998 as a result of this transaction:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Assets Liabilities and Stockholder's Equity
Cash $ 24,600 Policy reserves $ 137,638
Deferred income taxes 3,816
Policy loans 82,649
Due from Parent Corporation 19,753
Other 6,820
------------ ------------
$ 137,638 $ 137,638
============ ============
</TABLE>
================================================================================
In connection with this transaction, the Parent Corporation made a
capital contribution of $5,608 to the Company.
On September 30, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $45,332
in premium income and increase in reserves as a result of this
transaction. Of the $428,152 in reserves that was recorded as a result
of this transaction, $382,820 was recorded under SFAS No. 97 accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
September 30, 1998 as a result of this transaction:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Assets Liabilities and Stockholder's Equity
===========================================
===========================================
Bonds $ 147,475 Policy reserves $ 428,152
===========================================
Mortgages 82,637 Due to Parent Corporation 20,820
===========================================
Cash 134,900
===========================================
Deferred policy acquisition costs 9,724
===========================================
Deferred income taxes 15,762
===========================================
Policy loans 56,209
===========================================
Other 2,265
===========================================
------------ ------------
$ 448,972 $ 448,972
=========================================== ============ ============
</TABLE>
In connection with this transaction, the Parent Corporation made a
capital contribution of $3,200 to the Company.
On September 30, 1998, the Company purchased furniture, fixtures and
equipment from the Parent Corporation for $25,184. In February 1997,
the Company purchased its corporate headquarters properties from the
Parent Corporation for $63,700.
On June 30, 1997, the Company recaptured all remaining pieces of an
individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The Company
recorded $155,798 in premium income and increase in reserves as a
result of this transaction. The Company recorded, at the Parent
Corporation's carrying amount, which approximates estimated fair value,
the following at June 30, 1997 as a result of this transaction:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Assets Liabilities and Stockholder's Equity
====================================
====================================
Cash $ 160,000 Policy reserves $ 155,798
====================================
Bonds 17,975 Due to Parent Corporation 20,373
====================================
Other 60 Deferred income taxes 2,719
====================================
Undistributed earnings on
====================================
participating business (855)
====================================
---------------- ----------------
$ 178,035 $ 178,035
==================================== ================ ================
</TABLE>
In connection with this transaction, the Parent Corporation made a
capital contribution of $11,000 to the Company.
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to
the Company. All related employee benefit plan assets and liabilities
were also transferred to the Company (see Note 9). The transfer did not
have a material effect on the Company's operating expenses as the
actual costs associated with the employees and the benefit plans were
charged previously to the Company under administrative service
agreements between the Company and the Parent Corporation.
The Company performs administrative services for the U.S. operations of
the Parent Corporation. The following represents revenue from the
Parent Corporation for services provided pursuant to these service
agreements. The amounts recorded are based upon management's best
estimate of actual costs incurred and resources expended based upon
number of policies and/or certificates in force.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Investment management revenue $ 130 $ 475 $ 801
Administrative and underwriting revenue 768 5,094 6,292
</TABLE>
At December 31, 1999 and 1998, due to Parent Corporation includes
$10,641 and $17,930 due on demand and $25,338 and $34,947 of notes
payable which bear interest and mature on October 1, 2006. These notes
may be prepaid in whole or in part at any time without penalty; the
issuer may not demand payment before the maturity date. The amounts due
on demand to the Parent Corporation bear interest at the public bond
rate (6.7% and 6.1% at December 31, 1999 and 1998, respectively) while
the note payable bears interest at 5.4%.
On May 4, 1999, the Company issued a $175,000 subordinated note to
GWL&A Financial, the proceeds of which were used for general corporate
purposes. The subordinated note bears interest at 7.25% and is due June
30, 2048. Payments of principal and interest under this subordinated
note shall be made only with prior written approval of the Commissioner
of Insurance of the State of Colorado. Payments of principal and
interest on this subordinated note are payable only out of surplus
funds of the Company and only at such time as the financial condition
of the Company is such that at the time of payment of principal or
interest, its surplus after the making of any such payment would exceed
the greater of $1,500 or 1.25 times the company action level amount as
required by the most recent risk based capital calculations.
Interest expense attributable to these related party obligations was
$11,053, $9,891, and $9,758 for the years ended December 31, 1999, 1998
and 1997, respectively.
4. 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 to other insurance enterprises under
excess coverage and co-insurance contracts. The Company retains a
maximum of $1.5 million of 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 arising from similar geographic regions, activities, or
economic characteristics of the reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. At December 31, 1999
and 1998, the reinsurance receivable had a carrying value of $173,322
and $192,958, respectively.
<PAGE>
The following schedule details life insurance in force and life and
accident/health premiums:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ceded Assumed Percentage
Primarily to Primarily of Amount
Gross the Parent from Other Net Assumed
Amount Corporation Companies Amount to Net
--------------- ---------------- ---------------- --------------- -------------
December 31, 1999:
Life insurance in force:
Individual $ 35,362,934 $ 5,195,961 $ 8,467,877 $ 38,634,850 21.9%
Group 80,717,198 2,212,741 82,929,939 2.7%
--------------- ---------------- ---------------- ----------------
Total $ 116,080,132 $ 5,195,961 $ 10,680,618 $ 121,564,789
=============== ================ ================ ================
Premium Income:
Life insurance $ 306,101 $ 27,399 $ 46,715 $ 325,417 14.4%
Accident/health 801,755 58,247 79,753 823,261 9.7%
--------------- ---------------- ---------------- ----------------
Total $ 1,107,856 $ 85,646 $ 126,468 $ 1,148,678
=============== ================ ================ ================
December 31, 1998:
Life insurance in force:
Individual $ 34,017,379 $ 4,785,079 $ 8,948,442 $ 38,180,742 23.4%
Group 81,907,539 2,213,372 84,120,911 2.6%
--------------- ---------------- ---------------- ----------------
Total $ 115,924,918 $ 4,785,079 $ 11,161,814 $ 122,301,653
=============== ================ ================ ================
Premium Income:
Life insurance $ 352,710 $ 24,720 $ 65,452 $ 393,442 16.6%
Accident/health 571,992 61,689 74,284 584,587 12.7%
--------------- ---------------- ---------------- ----------------
Total $ 924,702 $ 86,409 $ 139,736 $ 978,029
=============== ================ ================ ================
December 31, 1997:
Life insurance in force:
Individual $ 24,598,679 $ 4,040,398 $ 3,667,235 $ 24,225,516 15.1%
Group 51,179,343 2,031,477 53,210,820 3.8%
--------------- ---------------- ---------------- ----------------
Total $ 75,778,022 $ 4,040,398 $ 5,698,712 $ 77,436,336
=============== ================ ================ ================
Premium Income:
Life insurance $ 320,456 $ (127,388) $ 19,923 $ 467,767 4.3%
Accident/health 341,837 32,645 34,994 344,186 10.2%
--------------- ---------------- ---------------- ----------------
Total $ 662,293 $ (94,743) $ 54,917 $ 811,953
=============== ================ ================ ================
</TABLE>
<PAGE>
5. NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON INVESTMENTS
<PAGE>
Net investment income is summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Investment income:
Fixed maturities and short-term investments $ 636,946 $ 638,079 $ 633,975
Mortgage loans on real estate 88,033 110,170 118,274
Real estate 19,618 20,019 20,990
Policy loans 167,109 180,933 194,826
Other 138 285 18
--------------- --------------- ---------------
911,844 949,486 968,083
Investment expenses, including interest on
amounts charged by the related parties
of $11,053, $9,891, and $9,758 35,898 52,126 86,410
--------------- --------------- ---------------
Net investment income $ 875,946 $ 897,360 $ 881,673
=============== =============== ===============
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Realized gains (losses):
Fixed maturities $ (7,858) $ 38,391 $ 15,966
Mortgage loans on real estate 1,429 424 1,081
Real estate 513 363
Provisions 7,000 (642) (7,610)
--------------- --------------- ---------------
Net realized gains on investments $ 1,084 $ 38,173 $ 9,800
=============== =============== ===============
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1999 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ------------- ------------ ------------- ------------
Held-to-Maturity:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies $ 63,444 $ 448 $ 687 $ 63,205 $ 63,444
Collateralized mortgage
obligations 115,357 9,360 105,997 115,357
Public utilities 223,705 2,773 3,011 223,467 223,705
Corporate bonds 1,724,915 19,179 30,753 1,713,341 1,724,915
Foreign governments 10,000 213 10,213 10,000
State and municipalities 123,160 738 1,540 122,358 123,160
------------ ------------- ------------ ------------- ------------
$ 2,260,581 $ 23,351 $ 45,351 $ 2,238,581 $ 2,260,581
============ ============= ============ ============= ============
<PAGE>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ------------- ------------ ------------- ------------
Available-for-Sale:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations $ 752,130 $ 2,342 $ 21,459 $ 733,013 $ 733,013
Direct mortgage pass-
through certificates 304,099 1,419 11,704 293,814 293,814
Other 178,142 77 1,431 176,788 176,788
Collateralized mortgage
obligations 909,105 1,183 39,980 870,308 870,308
Public utilities 468,087 1,106 14,242 454,951 454,951
Corporate bonds 3,929,160 24,287 148,923 3,804,524 3,804,524
Foreign governments 41,224 654 1,256 40,622 40,622
State and municipalities 371,436 108 17,642 353,902 353,902
------------ ------------- ------------ ------------- ------------
$ 6,953,383 $ 31,176 $ 256,637 $ 6,727,922 $ 6,727,922
============ ============= ============ ============= ============
Fixed maturities owned at December 31, 1998 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ------------- ------------ ------------- ------------
Held-to-Maturity:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies $ 34,374 $ 1,822 $ $ 36,196 $ 34,374
Collateralized mortgage
obligations 10,135 194 9,941 10,135
Public utilities 213,256 12,999 460 225,795 213,256
Corporate bonds 1,809,957 78,854 3,983 1,884,828 1,809,957
Foreign governments 10,133 782 10,915 10,133
State and municipalities 121,963 9,298 131,261 121,963
------------ ------------- ------------ ------------- ------------
$ 2,199,818 $ 103,755 $ 4,637 $ 2,298,936 $ 2,199,818
============ ============= ============ ============= ============
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ------------- ------------ ------------- ------------
Available-for-Sale:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations $ 863,479 $ 39,855 $ 1,704 $ 901,630 $ 901,630
Direct mortgage pass-
through certificates 467,100 4,344 692 470,752 470,752
Other 191,138 1,765 788 192,115 192,115
Collateralized mortgage
obligations 926,797 16,260 1,949 941,108 941,108
Public utilities 464,096 14,929 36 478,989 478,989
Corporate bonds 3,557,209 123,318 17,420 3,663,107 3,663,107
Foreign governments 56,505 2,732 59,237 59,237
State and municipalities 226,208 4,588 1,008 229,788 229,788
------------ ------------- ------------ ------------- ------------
$ 6,752,532 $ 207,791 $ 23,597 $ 6,936,726 $ 6,936,726
============ ============= ============ ============= ============
</TABLE>
<PAGE>
The collateralized mortgage obligations consist primarily of sequential
and planned amortization classes with final stated maturities of two to
thirty years and average lives of less than one to fifteen years.
Prepayments on all mortgage-backed securities are monitored monthly and
amortization of the premium and/or the accretion of the discount
associated with the purchase of such securities is adjusted by such
prepayments.
See Note 8 for additional information on policies regarding estimated
fair value of fixed maturities.
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1999, by projected maturity, are shown
below. Actual maturities will likely differ from these projections
because borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Held-to-Maturity Available-for-Sale
------------------------------------- ------------------------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
----------------- ----------------- ----------------- ----------------
Due in one year or less $ 221,172 $ 220,644 $ 323,466 $ 334,701
Due after one year
through five years 945,199 941,685 1,286,402 1,251,690
Due after five years
through ten years 684,729 677,531 716,353 684,513
Due after ten years 118,170 121,921 690,073 650,432
Mortgage-backed
securities 115,357 105,997 1,965,334 1,897,135
Asset-backed securities 175,954 170,803 1,971,755 1,909,451
----------------- ----------------- ----------------- ----------------
$ 2,260,581 $ 2,238,581 $ 6,953,383 $ 6,727,922
================= ================= ================= ================
</TABLE>
Proceeds from sales of securities available-for-sale were $3,176,802,
$6,169,678, and $3,174,246 during 1999, 1998, and 1997, respectively.
The realized gains on such sales totaled $10,080, $41,136, and $20,543
for 1999, 1998, and 1997, respectively. The realized losses totaled
$19,720, $8,643, and $10,643 for 1999, 1998, and 1997, respectively.
During the years 1999, 1998, and 1997, held-to-maturity securities with
and amortized cost of $0, $9,920 and $0 were sold due to deterioration
with insignificant gains and losses.
At December 31, 1999 and 1998, pursuant to fully collateralized
securities lending arrangements, the Company had loaned $0 and $115,168
of fixed maturities, respectively.
<PAGE>
The Company engages in hedging activities to manage interest rate,
market and foreign exchange risk. The following table summarizes the
1999 financial hedge instruments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Notional Strike/Swap
December 31, 1999 Amount Rate Maturity
----------------------------- --------------- ------------------------------ -------------------------
Interest Rate Caps $ 1,362,000 7.64% - 11.82% (CMT) 6/00 - 12/04
Interest Rate Swaps 217,528 4.94%-6.8% 02/00 - 12/06
Foreign Currency
Exchange Contracts 19,478 N/A 03/00 - 07/06
Equity Swap 104,152 5.15% - 5.93% 01/01
Options 54,100 various 01/02 - 12/02
The following table summarizes the 1998 financial hedge instruments:
Notional Strike/Swap
December 31, 1998 Amount Rate Maturity
----------------------------- ---------------- ------------------------------ -------------------------
Interest Rate Floor $ 100,000 4.50% (LIBOR) 11/99
Interest Rate Caps 1,070,000 6.75% - 11.82% (CMT) 12/99 - 10/03
Interest Rate Swaps 242,451 4.95% - 9.35% 08/99 - 02/03
Foreign Currency
Exchange Contracts 34,123 N/A 05/99 - 07/06
Equity Swap 95,652 4.00% 12/99
</TABLE>
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment guidelines designed to
emphasize a diversified and geographically dispersed portfolio of
mortgages collateralized by commercial and industrial properties
located in the United States. The Company's policy is to obtain
collateral sufficient to provide loan-to-value ratios of not greater
than 75% at the inception of the mortgages. At December 31, 1999,
approximately 34% of the Company's mortgage loans were collateralized
by real estate located in California.
The following represents impairments and other information with respect
to impaired mortgage loans:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998
====================================================================== ---------------- ----------------
======================================================================
Loans with related allowance for credit losses of
======================================================================
$14,727 and $2,492 $ 25,877 $ 13,192
======================================================================
Loans with no related allowance for credit losses 17,880 10,420
======================================================================
Average balance of impaired loans during the year 43,866 31,193
======================================================================
Interest income recognized (while impaired) 1,877 2,308
======================================================================
Interest income received and recorded (while impaired)
======================================================================
using the cash basis method of recognition 1,911 2,309
======================================================================
</TABLE>
<PAGE>
As part of an active loan management policy and in the interest of
maximizing the future return of each individual loan, the Company may
from time to time modify the original terms of certain loans. These
restructured loans, all performing in accordance with their modified
terms, aggregated $75,691 and $52,913 at December 31, 1999 and 1998,
respectively.
The following table presents changes in allowance for credit losses:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
--------------- --------------- ---------------
Balance, beginning of year $ 67,242 $ 67,242 $ 65,242
Provision for loan losses (7,000) 642 4,521
Chargeoffs - (787) (2,521)
Recoveries 1,000 145
--------------- --------------- ---------------
Balance, end of year $ 61,242 $ 67,242 $ 67,242
=============== =============== ===============
</TABLE>
7. COMMERCIAL PAPER
The Company has a commercial paper program that is partially supported
by a $50,000 standby letter-of-credit. At December 31, 1999, no
commercial paper was outstanding. At December 31, 1998, commercial
paper outstanding had maturities ranging from 69 to 118 days and
interest rates ranging from 5.10% to 5.22%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
December 31,
---------------------------------------------------------------------
1999 1998
--------------------------------- --------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- -------------- -------------- --------------
ASSETS:
Fixed maturities and
short-term investments $ 9,229,307 $ 9,207,307 $ 9,556,713 $ 9,655,831
Mortgage loans on real
Estate 974,645 968,964 1,133,468 1,160,568
Policy loans 2,681,132 2,681,132 2,858,673 2,858,673
Common stock 69,240 69,240 48,640 48,640
LIABILITIES:
Annuity contract reserves
without life contingencies 4,468,685 4,451,465 4,908,964 4,928,800
Policyholders' funds 185,623 185,623 181,779 181,779
Due to Parent Corporation 35,979 33,590 52,877 52,877
Due to GWL&A Financial 175,035 137,445 - - - -
Repurchase agreements 80,579 80,579 244,258 244,258
Commercial paper - - - - 39,731 39,731
<PAGE>
December 31,
---------------------------------------------------------------------
1999 1998
--------------------------------- --------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- -------------- -------------- --------------
HEDGE CONTRACTS:
Interest rate floor - - - - 17 17
Interest rate caps 4,140 4,140 971 971
Interest rate swaps (1,494) (1,494) 6,125 6,125
Foreign currency exchange
contracts (10) (10) 689 689
Equity swap (7,686) (7,686) (8,150) (8,150)
Options (6,220) (6,220) - - - -
</TABLE>
The estimated fair values of financial instruments have been determined
using available information and appropriate valuation methodologies.
However, considerable judgement is required to interpret market data to
develop estimates of fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company could realize
in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
The estimated fair value of fixed maturities that are publicly traded
are obtained from an independent pricing service. To determine fair
value for fixed maturities not actively traded, the Company utilized
discounted cash flows calculated at current market rates on investments
of similar quality and term.
Mortgage loans fair value estimates generally are based on discounted
cash flows. A discount rate "matrix" is incorporated whereby the
discount rate used in valuing a specific mortgage generally corresponds
to that mortgage's remaining term. The rates selected for inclusion in
the discount rate "matrix" reflect rates that the Company would quote
if placing loans representative in size and quality to those currently
in the portfolio.
Policy loans accrue interest generally at variable rates with no fixed
maturity dates and, therefore, estimated fair value approximates
carrying value.
The fair value of annuity contract reserves without life contingencies
is estimated by discounting the cash flows to maturity of the
contracts, utilizing current crediting rates for similar products.
The estimated fair value of policyholders' funds is the same as the
carrying amount as the Company can change the crediting rates with 30
days notice.
The estimated fair value of due to Parent Corporation is based on
discounted cash flows at current market rates on high quality
investments.
The fair value of due to GWL&A Financial reflects the price determined
in the public market at December 31, 1999.
<PAGE>
The carrying value of repurchase agreements and commercial paper is a
reasonable estimate of fair value due to the short-term nature of the
liabilities.
The estimated fair value of financial hedge instruments, all of which
are held for other than trading purposes, is the estimated amount the
Company would receive or pay to terminate the agreement at each
year-end, taking into consideration current interest rates and other
relevant factors. Included in the net loss position for interest rates
swaps are $772 and $0 of unrealized losses in 1999 and 1998,
respectively. Included in the net gain position for foreign currency
exchange contracts are $518 and $932 of loss exposures in 1999 and
1998, respectively.
The carrying amounts for receivables and liabilities reported in the
balance sheet approximate fair value due to their short term nature.
9. EMPLOYEE BENEFIT PLANS
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to
the Company. See Note 3 for further discussion.
The Company's Parent had previously accounted for the pension plan
under the Canadian Institute of Chartered Accountants (CICA) guidelines
and had recorded a prepaid pension asset of $19,091. As U.S. generally
accepted accounting principles do not materially differ from these CICA
guidelines and the transfer was between related parties, the prepaid
pension asset was transferred at carrying value. As a result, the
Company recorded the following effective January 1, 1997:
<TABLE>
<S> <C> <C>
Prepaid pension cost $ 19,091 Undistributed earnings on $ 3,608
====================================
Participating business
====================================
Stockholder's equity 15,483
====================================
---------------- ----------------
$ 19,091 $ 19,091
==================================== ================ ================
</TABLE>
The following table summarizes changes for the three years December 31,
1999, in the benefit obligations and in plan assets for the Company's
defined benefit pension plan and post-retirement medical plan. There is
no additional minimum pension liability required to be recognized.
There were no amendments to the plans due to the acquisition of Alta.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post-Retirement
Pension Benefits Medical Plan
---------------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
--------- -------- --------- -------- --------- --------
Change in benefit obligation
Benefit obligation at beginning of $ 131,305 $ 115,057 $ 96,417 $ 19,944 $ 19,454 $ 16,160
year
Service cost 7,853 6,834 5,491 2,186 1,365 1,158
Interest cost 8,359 7,927 7,103 1,652 1,341 1,191
Addition of former Alta employees 4,155
Actuarial (gain) loss (22,363) 5,117 9,470 3,616 (1,613) 1,500
Prior service for former Alta
employees 2,471
Benefits paid (3,179) (3,630) (3,424) (641) (603) (555)
--------- -------- --------- -------- --------- --------
Benefit obligation at end of year 126,130 131,305 115,057 29,228 19,944 19,454
--------- -------- --------- -------- --------- --------
Change in plan assets
Fair value of plan assets at
beginning of year $ 183,136 $ 162,879 $ 138,221 $ $ $
Actual return on plan assets 12,055 23,887 28,082
Addition of former Alta employees
and other adjustments 81
Benefits paid (3,179) (3,630) (3,424)
--------- -------- --------- -------- --------- --------
Fair value of plan assets at end 192,093 183,136 162,879
of year
--------- -------- --------- -------- --------- --------
Funded status 65,963 51,831 47,822 (29,228) (19,944) (19,454)
Unrecognized net actuarial (gain) (30,161) (11,405) (6,326) 3,464 (113) 1,500
loss
Unrecognized prior service cost 3,614 2,310
Unrecognized net obligation or
(asset)
at transition (18,170) (19,684) (21,198) 13,736 14,544 15,352
--------- -------- --------- -------- --------- --------
Prepaid (accrued) benefit cost $ 21,246 $ 20,742 $ 20,298 $ (9,718) $ (5,513) $ (2,602)
========= ======== ========= ======== ========= ========
Weighted-average assumptions as of
December 31
Discount rate 7.50% 6.50% 7.00% 7.50% 6.50% 7.00%
Expected return on plan assets 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Rate of compensation increase 5.00% 4.00% 4.50% 5.00% 4.00% 4.50%
Components of net periodic benefit
Cost
Service cost $ 7,853 $ 6,834 $ 5,491 $ 2,186 $ 1,365 $ 1,158
Interest cost 8,360 7,927 7,103 1,652 1,341 1,191
Expected return on plan assets (15,664) (13,691) (12,286)
Amortization of transition (1,514) (1,514) (1,514) 808 808 808
obligation
Amortization of unrecognized prior
service cost 541 162
Amortization of gain from earlier
periods (80) 38
--------- -------- -------- --------- --------
--------- -------- --------- -------- --------- --------
Net periodic (benefit) cost $ (504) $ (444) $ (1,206) $ 4,846 $ 3,514 $ 3,157
========= ======== ========= ======== ========= ========
</TABLE>
The Company-sponsored post-retirement medical plan (medical plan)
provides health benefits to retired employees. The medical plan is
contributory and contains other cost sharing features, which may be
adjusted annually for the expected general inflation rate. The
Company's policy will be to fund the cost of the medical plan benefits
in amounts determined at the discretion of management. The Company made
no contributions to this plan in 1999, 1998, or 1997.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the medical plan. For measurement purposes, a 7.5%
annual rate of increase in the per capita cost of covered health care
benefits was assumed. A one-percentage-point change in assumed health
care cost trend rates would have the following effects:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1-Percentage 1-Percentage
Point Point
Increase Decrease
-------------------- --------------------
Increase (decrease) on total of service and interest cost
on components $ 1,678 $ (1,285)
Increase (decrease) on post-retirement benefit obligation 7,897 (6,186)
</TABLE>
The Company sponsors a defined contribution 401(k) retirement plan
which provides eligible participants with the opportunity to defer up
to 15% of base compensation. The Company matches 50% of the first 5% of
participant pre-tax contributions. For employees hired after January 1,
1999, the Company matches 50% of the first 8% of participant pre-tax
contributions. Company contributions for the years ended December 31,
1999, 1998, and 1997 totaled $5,504, $3,915, and $3,475, respectively.
The Company has a deferred compensation plan providing key executives
with the opportunity to participate in an unfunded, deferred
compensation program. Under the program, participants may defer base
compensation and bonuses, and earn interest on their deferred amounts.
The program is not qualified under Section 401 of the Internal Revenue
Code. The total of participant deferrals, which is reflected in other
liabilities, was $17,367, $16,102, and $13,952 for years ending
December 31, 1999, 1998, and 1997, respectively. The participant
deferrals earn interest at a rate based on the average ten-year
composite government securities rate plus 1.5%. The interest expense
related to the plan for the years ending December 31, 1999, 1998, and
1997 were $1,231, $1,185, and $1,019, respectively.
The Company also provides a supplemental executive retirement plan
(SERP) to certain key executives. This plan provides key executives
with certain benefits upon retirement, disability, or death based upon
total compensation. The Company has purchased individual life insurance
policies with respect to each employee covered by this plan. The
Company is the owner and beneficiary of the insurance contracts. The
incremental expense for this plan for 1999, 1998, and 1997 was $3,002,
$2,840, and $2,531, respectively. The total liability of $14,608,
$11,323, and $8,288 as of December 31, 1999, 1998, and 1997 is included
in other liabilities.
10. FEDERAL INCOME TAXES
The following is a reconciliation between the federal income tax rate
and the Company's effective rate:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
------------ ------------- ------------
Federal tax rate 35.0 % 35.0 % 35.0 %
Change in tax rate resulting from:
Settlement of Parent tax exposures (5.9) (20.2)
Provision for contingencies (0.5) 7.7
Policyholder share of earnings 1.7 0.7 0.6
Other, net (1.5) (2.3) 0.8
------------ ------------- ------------
Total 28.8 % 33.4 % 23.9 %
============ ============= ============
</TABLE>
The Company's income tax provision was favorably impacted in 1999 and
1997 by releases of contingent liabilities relating to taxes of the
Parent Corporation's U.S. branch associated with blocks of business
that were transferred from the Parent Corporation's U.S. branch to the
Company from 1989 to 1993; the Company had agreed to the transfer of
these tax liabilities as part of the transfer of this business. The
release recorded in 1999 reflected the resolution of certain tax issues
with the Internal Revenue Service (IRS) relating to the 1992 - 1993
audit years. The release recorded in 1997 reflected the resolution of
certain tax issues with the IRS relating to the 1990-1991 audit years.
The release totaled $17,150 for 1999 and $42,150 for 1997; however,
$8,900 of the 1999 release and $15,100 of the 1997 release was
attributable to participating policyholders and therefore had no effect
on the net income of the Company since that amount was credited to the
provision for policyholders' share of earnings (losses).
In addition to this release of contingent tax liabilities, the
Company's income tax provision for 1997 also reflects increases for
other contingent items relating to open tax years where the Company
determined it was probable that additional taxes could be owed based on
changes in facts and circumstances. The increase in 1997 was $16,000,
of which $10,100 was attributable to participating policyholders and
therefore had no effect on the net income of the Company. This increase
in contingent tax liabilities has been reflected as a component of the
deferred income tax provisions as the Company does not expect near term
resolution of these contingencies.
Excluding the effect of the 1999 and 1997 tax items discussed above,
the effective tax rate for 1999 and 1997 was 35.2% and 36.4%.
Temporary differences which give rise to the deferred tax assets and
liabilities as of December 31, 1999 and 1998 are as follows:
<TABLE>
<S> <C> <C>
1999 1998
--------------------------------- ------------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Asset Liability Asset Liability
--------------- --------------- -------------- -------------
Policyholder reserves $ 131,587 $ $ 143,244 $
Deferred policy acquisition costs 49,455 39,933
Deferred acquisition cost proxy
tax 103,529 100,387
Investment assets 69,561 19,870
Net operating loss carryforwards 444 2,867
Other 582 6,566
--------------- --------------- -------------- -------------
Subtotal 305,121 50,037 253,064 59,803
Valuation allowance (1,761) (1,778)
--------------- --------------- -------------- -------------
Total Deferred Taxes $ 303,360 $ 50,037 $ 251,286 $ 59,803
=============== =============== ============== =============
</TABLE>
Amounts included in investment assets above include $58,711 and
$(34,556) related to the unrealized gains/(losses) on the Company's
fixed maturities available-for-sale at December 31, 1999 and 1998,
respectively.
<PAGE>
The Company will file a consolidated tax return for 1999. Losses
incurred by subsidiaries in prior years cannot be offset against
operating income of the Company. At December 31, 1999, the Company's
subsidiaries had approximately $1,271 of net operating loss
carryforwards, expiring through the year 2014. The tax benefit of
subsidiaries' net operating loss carryforwards are included in the
deferred tax assets at December 31, 1999 and 1998, respectively.
The Company's valuation allowance was increased (decreased) in 1999,
1998, and 1997 by $(17), $(1,792), and $34, respectively, as a result
of the re-evaluation by management of future estimated taxable income
in its subsidiaries.
Under pre-1984 life insurance company income tax laws, a portion of
life insurance company gain from operations was not subject to current
income taxation but was accumulated, for tax purposes, in a memorandum
account designated as "policyholders' surplus account." The aggregate
accumulation in the account is $7,742 and the Company does not
anticipate any transactions which would cause any part of the amount to
become taxable. Accordingly, no provision has been made for possible
future federal income taxes on this accumulation.
11. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income".
This Statement established new rules for reporting and display of
comprehensive income and its components; however, the adoption of this
Statement had no impact on the Company's net income or stockholder's
equity. This Statement requires unrealized gains or losses on the
Company's available-for-sale securities and related offsets for
reserves and deferred policy acquisition costs, which prior to adoption
were reported separately in stockholder's equity, to be included in
other comprehensive income. The 1997 financial statements have been
reclassified to conform to the requirements of Statement No. 130.
Other comprehensive loss at December 31, 1999 is summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Before-Tax Tax (Expense) Net-of-Tax
==================================================
Amount or Benefit Amount
================================================== ---------------- ---------------- -----------------
Unrealized gains on available-for-sale
==================================================
securities:
==================================================
Unrealized holding gains (losses) arising
==================================================
during the period $ (303,033) $ 106,061 $ (196,972)
==================================================
Less: reclassification adjustment for
==================================================
(gains) losses realized in net income (9,958) 3,485 (6,473)
==================================================
---------------- ---------------- -----------------
Net unrealized gains (losses) (312,991) 109,546 (203,445)
==================================================
==================================================
Reserve and DAC adjustment 87,729 (30,705) 57,024
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Other comprehensive loss $ (225,262) $ 78,841 $ (146,421)
================================================== ================ ================ =================
</TABLE>
<PAGE>
Other comprehensive income at December 31, 1998 is summarized as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
---------------- ---------------- -- -----------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising
during the period $ 39,430 $ (13,800) $ 25,630
Less: reclassification adjustment for
(gains) losses realized in net income (14,350) 5,022 (9,328)
---------------- ---------------- -----------------
Net unrealized gains 25,080 (8,778) 16,302
Reserve and DAC adjustment (11,614) 4,065 (7,549)
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Other comprehensive income $ 13,466 $ (4,713) $ 8,753
================ ================ =================
</TABLE>
Other comprehensive income at December 31, 1997 is summarized as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Before-Tax Tax (Expense) Net-of-Tax
==================================================
Amount or Benefit Amount
================================================== ---------------- ---------------- -----------------
Unrealized gains on available-for-sale
==================================================
securities:
==================================================
Unrealized holding gains (losses) arising
==================================================
during the period $ 80,821 $ (28,313) $ 52,508
==================================================
Less: reclassification adjustment for
==================================================
(gains) losses realized in net income 2,012 (704) 1,308
==================================================
---------------- ---------------- -----------------
Net unrealized gains 82,833 (29,017) 53,816
==================================================
==================================================
Reserve and DAC adjustment (24,554) 8,594 (15,960)
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Other comprehensive income $ 58,279 $ (20,423) $ 37,856
================================================== ================ ================ =================
</TABLE>
12. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND OTHER MATTERS
Effective September 30, 1998, the Company purchased all of its
outstanding series of preferred stock, which were owned by the Parent
Corporation, for $121,800. At December 31, 1999 and 1998, the Company
has 1,500 authorized shares each of Series A, Series B, Series C and
Series D cumulative preferred stock; and 2,000,000 authorized shares of
non-cumulative preferred stock.
The Company's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for
December 31 are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
---------------- --------------- ---------------
(Unaudited)
Net income $ 253,123 $ 225,863 $ 181,312
Capital and surplus 1,007,245 727,124 759,429
</TABLE>
The maximum amount of dividends which can be paid to stockholders by
insurance companies domiciled in the State of Colorado are subject to
restrictions relating to statutory surplus and statutory net gain from
operations. Statutory surplus and net gains from operations at December
31, 1999 were $1,007,245 and $245,148 (unaudited), respectively. The
Company should be able to pay up to $245,148 (unaudited) of dividends
in 2000.
<PAGE>
Dividends of $0, $6,692, and $8,854 were paid on preferred stock in
1999, 1998, and 1997, respectively. In addition, dividends of $92,053,
$73,344, and $62,540 were paid on common stock in 1999, 1998, and 1997,
respectively. Dividends are paid as determined by the Board of
Directors.
13. STOCK OPTIONS
Great-West Lifeco Inc. (Lifeco) is the parent of the Parent
Corporation. Lifeco has a stock option plan (the Lifeco plan) that
provides for the granting of options for common shares of Lifeco to
certain officers and employees of Lifeco and its subsidiaries,
including the Company. Options may be awarded at no less than the
market price on the date of the grant. Termination of employment prior
to vesting results in forfeiture of the options, unless otherwise
determined by a committee that administers the Lifeco plan. As of
December 31, 1999, 1998, and 1997, stock available for award to Company
employees under the Lifeco plan aggregated 885,150, 1,424,400, and
3,440,000 shares.
The plan provides for the granting of options with varying terms and
vesting requirements. The basic options under the plan become
exercisable twenty percent per year commencing on the first anniversary
of the grant and expire ten years from the date of grant. Options
granted in 1998 and 1997 to Company employees totaling 278,000 and
1,832,000, respectively, become exercisable if certain long-term
cumulative financial targets are attained. If exercisable, the exercise
period runs from April 1, 2002 to June 26, 2007. Additional options
granted in 1998 totaling 380,000 become exercisable if certain sales or
financial targets are attained. During 1999 and 1998, 11,250 and 30,000
of these options vested and accordingly, the Company recognized
compensation expense of $23 and $116, respectively. If exercisable, the
exercise period runs from the date that the particular options become
exercisable until January 27, 2008.
The following table summarizes the status of, and changes in, Lifeco
options granted to Company employees which are outstanding and the
weighted-average exercise price (WAEP) for the years ended December 31.
As the options granted relate to Canadian stock, the values, which are
presented in U.S. dollars, will fluctuate as a result of exchange rate
fluctuations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
-------------------------- -------------------------- -------------------------
Options WAEP Options WAEP Options WAEP
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Jan. 1, 6,544,824 $ 8.07 5,736,000 $ 7.71 4,104,000 $ 6.22
Granted 575,500 16.48 988,000 13.90 1,932,000 11.56
Exercised 234,476 5.69 99,176 5.93 16,000 5.95
Expired or canceled 318,750 13.81 80,000 13.05 284,000 6.17
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Dec. 31, 6,567,098 9.04 6,544,824 8.07 5,736,000 7.71
============= ========== ============= ========== ============= =========
Options exercisable
at year-end 2,215,998 $ 6.31 1,652,424 $ 5.72 760,800 $ 5.96
============= ========== ============= ========== ============= =========
Weighted average fair
value of options
granted during year $ 5.23 $ 4.46 $ 2.83
============= ============= =============
</TABLE>
<PAGE>
The following table summarizes the range of exercise prices for
outstanding Lifeco common stock options granted to Company employees at
December 31, 1999:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Outstanding Exercisable
======================== ------------------------------------------------ ---------------------------------
Average Average
========================
Exercise Average Exercise Exercise
========================
Price Range Options Life Price Options Price
------------------------ ---------------- ------------ ------------- ---------------- --------------
$ 5.87 - 7.80 3,554,348 6.63 $ 5.95 2,108,748 $ 5.92
========================
$11.25 - 15.81 2,842,000 7.86 $ 12.37 107,250 $ 14.03
========================
$16.53 - 18.65 170,500 9.18 17.93 - -
========================
</TABLE>
Of the exercisable Lifeco options, 2,174,748 relate to basic option
grants and 41,250 relate to variable grants.
Power Financial Corporation (PFC), which is the parent corporation of
Lifeco, has a stock option plan (the PFC plan) that provides for the
granting of options for common shares of PFC to key employees of PFC
and its affiliates. Prior to the creation of the Lifeco plan in April
1996, certain officers of the Company participated in the PFC plan in
Canada. Under the PFC plan, options may be awarded at no less than the
market price on the date of the grant. Termination of employment prior
to vesting results in forfeiture of the options, unless otherwise
determined by a committee that administers the PFC plan. As of December
31, 1999, 1998 and 1997, stock available for award under the PFC plan
aggregated 4,340,800, 4,400,800, and 4,400,800 shares.
Options granted to officers of the Company under the PFC plan became
exercisable twenty percent per year commencing on the date of the grant
and expire ten years from the date of grant.
The following table summarizes the status of, and changes in, PFC
options granted to Company officers which remain outstanding and the
weighted-average exercise price (WAEP) for the years ended December 31.
As the options granted relate to Canadian stock, the values, which are
presented in U.S. dollars, will fluctuate as a result of exchange rate
fluctuations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
-------------------------- -------------------------- -------------------------
Options WAEP Options WAEP Options WAEP
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Jan. 1, 355,054 $ 2.89 1,076,000 $ 3.05 1,329,200 $ 3.14
Exercised 70,000 2.28 720,946 2.98 253,200 2.93
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Dec. 31, 285,054 3.23 355,054 2.89 1,076,000 3.05
============= ========== ============= ========== ============= =========
Options exercisable
at year-end 285,054 $ 3.23 355,054 $ 2.89 1,076,000 $ 3.05
============= ========== ============= ========== ============= =========
</TABLE>
As of December 31, 1999, the PFC options outstanding have exercise
prices between $2.38 and $3.65 and a weighted-average remaining
contractual life of 1.7 years.
<PAGE>
The Company accounts for stock-based compensation using the intrinsic
value method prescribed by APB No. 25, "Accounting for Stock Issued to
Employees", under which compensation expenses for stock options are
generally not recognized for stock option awards granted at or above
fair market value. Had compensation expense for the Company's stock
option plan been determined based upon fair values at the grant dates
for awards under the plan in accordance with SFAS No. 123, "Accounting
for Stock-Based Compensation", the Company's net income would have been
reduced by $1,039, $727, and $608, in 1999, 1998, and 1997,
respectively. The fair value of each option grant was estimated on the
date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for those options granted
in 1999, 1998, and 1997, respectively: dividend yields of 3.63%, 3.0%
and 3.0%, expected volatility of 32.4%, 34.05%, and 24.04%, risk-free
interest rates of 6.65%, 4.79%, and 4.72%, and expected lives of 7.5
years.
14. SEGMENT INFORMATION
The Company has two reportable segments: Employee Benefits and
Financial Services. The Employee Benefits segment markets group life
and health and 401(k) products to small and mid-sized corporate
employers. The Financial Services segment markets and administers
savings products to public and not-for-profit employers and individuals
and offers life insurance products to individuals and businesses.
The accounting policies of the segments are the same as those described
in Note 1. The Company evaluates performance based on profit or loss
from operations after income taxes.
The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately as
each segment has unique distribution channels.
The Company's operations are not materially dependent on one or a few
customers, brokers or agents.
<PAGE>
Summarized segment financial information for the year ended and as of
December 31 was as follows:
<PAGE>
Year ended December 31, 1999
Operations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Revenue:
================================================
Premium income $ 990,449 $ 172,734 $ 1,163,183
================================================
Fee income 548,580 86,567 635,147
================================================
Net investment income 80,039 795,907 875,946
================================================
Realized investment gains (losses) (1,224) 2,308 1,084
================================================ ----------------- ----------------- -----------------
Total revenue 1,617,844 1,057,516 2,675,360
================================================
Benefits and Expenses:
================================================
Benefits 789,084 792,755 1,581,839
================================================
Operating expenses 661,119 143,422 804,541
================================================ ----------------- ----------------- -----------------
Total benefits and expenses 1,450,203 936,177 2,386,380
================================================ ----------------- ----------------- -----------------
----------------- ----------------- -----------------
================================================
================================================
Net operating income before income taxes 167,641 121,339 288,980
================================================
Income taxes 51,003 32,259 83,262
----------------- ----------------- -----------------
Net income $ 116,638 $ 89,080 $ 205,718
================================================ ================= ================= =================
Assets:
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Investment assets $ 1,467,464 $ 11,590,591 $ 13,058,055
================================================
Other assets 646,036 909,172 1,555,208
================================================
Separate account assets 7,244,145 5,535,871 12,780,016
================================================ ----------------- ----------------- -----------------
Total assets $ 9,357,645 $ 18,035,634 $ 27,393,279
================================================ ================= ================= =================
</TABLE>
<PAGE>
Year ended December 31, 1998
Operations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Revenue:
================================================
Premium income $ 746,898 $ 247,965 $ 994,863
================================================
Fee income 444,649 71,403 516,052
================================================
Net investment income 95,118 802,242 897,360
================================================
Realized investment gains (losses) 8,145 30,028 38,173
================================================ ----------------- ----------------- -----------------
Total revenue 1,294,810 1,151,638 2,446,448
================================================
Benefits and Expenses:
================================================
Benefits 590,058 872,411 1,462,469
================================================
Operating expenses 546,959 141,269 688,228
================================================ ----------------- ----------------- -----------------
Total benefits and expenses 1,137,017 1,013,680 2,150,697
================================================ ----------------- ----------------- -----------------
----------------- ----------------- -----------------
================================================
================================================
Net operating income before income taxes 157,793 137,958 295,751
================================================
Income taxes 50,678 48,158 98,836
----------------- ----------------- -----------------
Net income $ 107,115 $ 89,800 $ 196,915
================================================ ================= ================= =================
</TABLE>
<PAGE>
Assets:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Investment assets $ 1,434,691 $ 12,235,845 $ 13,670,536
================================================
Other assets 567,126 785,940 1,353,066
================================================
Separate account assets 5,704,313 4,395,230 10,099,543
================================================ ----------------- ----------------- -----------------
Total assets $ 7,706,130 $ 17,417,015 $ 25,123,145
================================================ ================= ================= =================
</TABLE>
<PAGE>
Year ended December 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Operations:
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Revenue:
================================================
Premium income $ 465,143 $ 368,036 $ 833,179
================================================
Fee income 358,005 62,725 420,730
================================================
Net investment income 100,067 781,606 881,673
================================================
Realized investment gains (losses) 3,059 6,741 9,800
================================================ ----------------- ----------------- -----------------
Total revenue 926,274 1,219,108 2,145,382
================================================
Benefits and Expenses:
================================================
Benefits 371,333 1,013,717 1,385,050
================================================
Operating expenses 427,969 123,756 551,725
================================================ ----------------- ----------------- -----------------
Total benefits and expenses 799,302 1,137,473 1,936,775
================================================ ----------------- ----------------- -----------------
----------------- ----------------- -----------------
================================================
================================================
Net operating income before income taxes 126,972 81,635 208,607
================================================
Income taxes 28,726 21,121 49,847
----------------- ----------------- -----------------
Net income $ 98,246 $ 60,514 $ 158,760
================================================ ================= ================= =================
</TABLE>
The following table, which summarizes premium and fee income by segment,
represents supplemental information.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997
====================================== ---------------- ---------------- -----------------
----------------
Premium Income:
======================================
======================================
Employee Benefits
======================================
Group Life & Health $ 990,449 $ 746,898 $ 465,143
====================================== ---------------- ---------------- -----------------
Total Employee Benefits 990,449 746,898 465,143
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Financial Services
======================================
======================================
Savings 14,344 16,765 22,634
======================================
Individual Insurance 158,390 231,200 345,402
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Financial Services 172,734 247,965 368,036
====================================== ---------------- ---------------- -----------------
Total premium income $ 1,163,183 $ 994,863 $ 833,179
====================================== ================ ================ =================
----------------
Fee Income:
======================================
======================================
Employee Benefits
======================================
Group Life & Health $ 454,071 $ 366,805 $ 305,302
======================================
(uninsured plans)
======================================
401(k) 94,509 77,844 52,703
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Employee Benefits 548,580 444,649 358,005
====================================== ---------------- ---------------- -----------------
---------------- ---------------- -----------------
Financial Services
======================================
======================================
Savings 81,331 71,403 62,725
======================================
Individual Insurance 5,236
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Financial Services 86,567 71,403 62,725
====================================== ---------------- ---------------- -----------------
Total fee income $ 635,147 $ 516,052 $ 420,730
====================================== ================ ================ =================
</TABLE>
<PAGE>
15. COMMITMENTS AND CONTINGENCIES
On October 6, 1999, the Company entered into a purchase and sale
agreement (the Agreement) with Allmerica Financial Corporation
(Allmerica) to acquire Allmerica's group life and health insurance
business on March 1, 2000. This business primarily consists of
administrative services only and stop loss policies. The in-force
business is expected to be underwritten and retained by the Company
upon each policy renewal date. The purchase price, as defined in the
Agreement, will be based on a percentage of the amount in-force at
March 1, 2000 contingent on the persistency of the block of business
through March 2001. The Company anticipates the purchase price to be
approximately $35,000 of which $25,000 will be due on March 1, 2000
with the remaining amount due on March 1, 2001.
The Company is involved in various legal proceedings, which arise in
the ordinary course of its business. In the opinion of management,
after consultation with counsel, the resolution of these proceedings
should not have a material adverse effect on its financial position or
results of operations.
16. SUBSEQUENT EVENTS
Effective January 1, 2000, the Company coinsured the majority of
General American Life Insurance Company's (General American) group life
and health insurance business which primarily consists of
administrative services only and stop loss policies. The agreement is
expected to convert to an assumption reinsurance agreement by January
1, 2001, pending regulatory approval. The Company assumed approximately
$150,000 of policy reserves and miscellaneous liabilities in exchange
for an equal amount of cash and miscellaneous assets from General
American.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certified that it meets the
requirements for effectiveness under Rule 485(b) and has duly caused this
Post-Effective Amendment No. 5 to the Registration Statement on Form N-4 to be
signed on its behalf, in the City of Englewood, State of Colorado, on this 24th
day of February, 2000.
VARIABLE ANNUITY-1 SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer of
Great-West Life & Annuity
Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities with Great-West Life
& Annuity Insurance Company and on the dates indicated:
Signature and Title Date
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
/s/ Robert Gratton* February 25 , 2000
- --------------------------------------
Director and Chairman of the
Board (Robert Gratton)
/s/ William T. McCallum February 25 , 2000
- -------------------------------------- --------------
Director, President and Chief Executive
Officer (William T. McCallum)
<PAGE>
Signature and Title Date
/s/ M.T.G. Graye February 25 , 2000
- ------------------------------------- -------------
Senior Vice President, Chief
Financial Officer(M.T.G. Graye)
/s/ James Balog* February 25 , 2000
- -------------------------------------- -------------
Director, (James Balog)
/s/ James W. Burns* February 25 , 2000
- -------------------------------------- -------------
Director, (James W. Burns)
/s/ Orest T. Dackow* February 25 , 2000
- -------------------------------------- -------------
Director (Orest T. Dackow)
, 2000
- ------------------------------------- -------
Director (Andre Desmarais)
/s/ Paul Desmarais, Jr.* February 25 , 2000
- -------------------------------------- -------------
Director (Paul Desmarais, Jr.)
/s/ Robert G. Graham* February 25 , 2000
- -------------------------------------- -------------
Director (Robert G. Graham)
/s/ N. Berne Hart* February 25 , 2000
- -------------------------------------- -------------
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* February 25 , 2000
- -------------------------------------- -------------
Director (Kevin P. Kavanagh)
<PAGE>
Signature and Title Date
/s/ William Mackness* February 25 , 2000
- -------------------------------------- -------------
Director (William Mackness)
/s/ Jerry E.A. Nickerson* February 25 , 2000
- -------------------------------------- -------------
Director (Jerry E.A. Nickerson)
/s/ P.M. Pitfield* February 25 , 2000
- -------------------------------------- -------------
Director (P. Michael Pitfield)
/s/ Michel Plessis-Belair February 25 , 2000
- -------------------------------------------- -------------
Director (Michel Plessis-Belair)
/s/ Brian E. Walsh* February 25 , 2000
- ----------------------------------------- -------------
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox February 25 , 2000
---------------------------------- -------------
D. C. Lennox
</TABLE>
Attorney-in-fact pursuant to Powers of Attorney filed with the Registration
Statement and Pre-Effective Amendment No. 1 thereto.
