FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
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Commission file number
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FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
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(Exact name of registrant as specified in its charter)
New York 93-1225432
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
125 Wolf Road, Albany, New York 12205
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(Address of principal executive offices)
(Zip Code)
[518] 437-1816
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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As of March 31, 1998, 2,500 shares of the registrant's common stock were
outstanding, all of which were owned by the registrant's parent company.
NOTE:This Form 10-Q is filed by the registrant only as a consequence of the
sale by the registrant of a market value adjusted annuity product.
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TABLE OF CONTENTS
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Page
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Part I FINANCIAL INFORMATION
Item 1 Financial Statements
Statement of Income 3
Balance Sheets 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Part II OTHER INFORMATION
Item 1 Legal Proceeding 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
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<TABLE>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
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FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF INCOME
(Dollars in Thousands)
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(Unaudited) Three Months
Ended
March 31,
1998
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REVENUES:
<S> <C>
Premium and fee income $ 24
Net investment income 85
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109
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BENEFITS AND EXPENSES:
Interest paid or credited to contractholders 1
Commissions 12
Operating expenses 75
Premium taxes 3
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91
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INCOME BEFORE INCOME TAXES 18
PROVISION FOR INCOME TAXES:
Current 27
Deferred (19)
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8
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NET INCOME $ 10
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See notes to financial statements.
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<TABLE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(Dollars in Thousands)
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March 31, December 31,
ASSETS 1998 1997
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--------------- --------------
(Unaudited)
INVESTMENTS:
<S> <C> <C>
Fixed maturities, available-for-sale, at fair value $ 4,999 $ 4,995
(amortized cost $4,994 and $4,987)
Short-term investments, available-for-sale 391 386
(cost approximates fair value)
--------------- --------------
Total Investments 5,390 5,381
Cash 1,190 1,648
Investment income due and accrued 90 24
Other assets 11 6
Deferred income taxes 69 50
Separate account assets 13,650 9,045
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TOTAL ASSETS $ 20,400 $ 16,154
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LIABILITIES AND STOCKHOLDER'S EQUITY
POLICY BENEFIT LIABILITIES:
Policy reserves $ 85 $ 84
GENERAL LIABILITIES:
Due to Parent Corporation 26 155
Other liabilities 93 332
Separate account liabilities 13,650 9,045
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Total Liabilities 13,854 9,616
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STOCKHOLDER'S EQUITY:
Common stock, $1,000 par value,
2,500 shares authorized, issued and outstanding 2,500 2,500
Additional paid-in capital 4,000 4,000
Accumulated other comprehensive income 3 5
Retained earnings 43 33
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Total Stockholder's Equity 6,546 6,538
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 20,400 $ 16,154
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</TABLE>
See notes to financial statements.
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FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
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(Unaudited) Three Months
Ended
March 31,
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1998
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OPERATING ACTIVITIES:
<S> <C>
Net income $ 10
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of investments (7)
Deferred income taxes (19)
Changes in assets and liabilities:
Accrued interest and other receivables (66)
Other, net (242)
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Net cash used in operating activities (324)
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INVESTING ACTIVITIES:
Purchases of fixed maturity investments:
Available-for-sale (5)
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Net cash used in investing activities (5)
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FINANCING ACTIVITIES:
Due to Parent Corporation (129)
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Net cash used in financing activities (129)
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NET DECREASE IN CASH (458)
CASH, BEGINNING OF YEAR 1,648
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CASH, END OF PERIOD $ 1,190
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</TABLE>
See notes to financial statements.
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<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
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(Unaudited)
1. GENERAL
First Great-West Life & Annuity Insurance Company (the Company) is a
wholly-owned subsidiary of Great-West Life & Annuity Insurance Company
(the Parent Corporation). The Company was incorporated as a stock life
insurance company in the State of New York and was capitalized on April
4, 1997. The Company was licensed as an insurance company in the State
of New York on May 28, 1997.
The financial statements and related notes of First Great-West Life &
Annuity Insurance Company (the Company) have been prepared in accordance
with generally accepted accounting principles applicable to interim
financial reporting and do not include all of the information and
footnotes required for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. These
financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31,
1997. The results of operations for the quarter ended are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998.
2. NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
This Statement establishes 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 shareholders'
equity. This Statement requires unrealized gains or losses on the
Company's available-for-sale securities, which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
During the first quarter of 1998 total other comprehensive loss amounted
to $2 thousand.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months
Ended
March 31,
Operating Summary (Thousands) 1998
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Premiums and fee income $ 24
Net investment income 85
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Total Revenues 109
Total benefits and expenses 91
Income tax expense 8
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Net income $ 10
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March 31, December 31,
Balance Sheet (Thousands) 1998 1997
-------------- -------------
Investment assets $ 5,390 $ 5,381
Separate account assets 13,650 9,045
Total assets 20,400 16,154
Total policyholder liabilities 13,854 9,616
Total shareholder's equity 6,546 6,538
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The Company's operations during the three months ended March 31, 1998
have been focused on preliminary marketing activities. Sales have been
limited to individual annuity products - both fixed income annuities
with a market value adjustment and variable annuities sold through a
marketing agreement with Charles Schwab & Co.
There were no sales of the fixed income annuities without significant
life contingencies during the three months ended March 31, 1998. The
contributions received for the variable annuities included in the
Separate Account are over $3.5 million. The net income of $10 thousand
reflects fees associated with variable business, investment income on
surplus less the operating expenses associated with the new operations.
In the months ahead, the Company will continue to focus its efforts on
variable sales while continuing to develop other products for submission
to the New York Department of Insurance for approval.
General Account Investments - The Company's investment strategies and
portfolios are intended to match the duration of the related liabilities
and provide sufficient cash flow to meet obligations while maintaining a
competitive rate of return. The duration of these investments is
monitored, and investment purchases and sales are executed with the
objective of having adequate funds available to satisfy the Company's
maturing liabilities.
It is management's philosophy that the portfolio of fixed maturities be
of high quality. The fixed maturities in the Company's portfolio are
generally rated by external rating agencies, and if not externally
rated, are rated by the Company on a basis believed to be similar to
that used by rating agencies. The credit rating on the fixed maturity
portfolio at March 31, 1998 is AAA.
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<PAGE>
During the three months ended March 31, 1998, net unrealized gains on
fixed maturities included in stockholders' equity, which is net of
policyholder-related amounts and deferred income taxes, decreased
surplus by $2 thousand resulting in accumulated other comprehensive
income of $3 thousand.
Liquidity and Capital Resources - Liquidity for the Company has remained
strong as evidenced by significant amounts of cash. Generally, the
Company has met its operating requirements by maintaining appropriate
levels of liquidity in its investment portfolio.
The Company's capital resources represent funds available for long-term
business commitments and primarily consist of stockholder's equity.
Capital resources provide protection for policyholders and the financial
strength to support the underwriting of insurance risks, and allow for
continued business growth. The amount of capital resources that may be
needed is determined by the Company's senior management and Board of
Directors, as well as by regulatory requirements. The allocation of
resources to new long-term business commitments is designed to achieve
an attractive return, tempered by considerations of risk and the need to
support the Company's existing business.
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<PAGE>
Part II OTHER INFORMATION
Item 1 Legal Proceedings
There are no material pending legal proceedings to which the
Company is a party or of which any of their property is the
subject.
Item 6 Exhibits and Reports on Form 8-K
(a) Index to Exhibits
Exhibit Title Page
Number
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27 Financial Data 11
Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the first
quarter of 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
DATE: ________________ BY: /s/______________________________________________
Glen R. Derback, Vice President and Controller
(Duly authorized officer and chief accounting
officer)
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<ARTICLE> 7
<LEGEND>
Exhibit 27 Financial Data Schedule
First Great-West Life & Annuity Insurance Company as of and for the period ended
March 31, 1998 (000s)
</LEGEND>
<CIK> 0001036213
<NAME> First Great-West Life & Annuity Insurance Company
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 4999
<DEBT-CARRYING-VALUE> 0
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<TOTAL-INVEST> 5390
<CASH> 1190
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<DEFERRED-ACQUISITION> 0
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<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 85
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0
0
<COMMON> 2500
<OTHER-SE> 4046
<TOTAL-LIABILITY-AND-EQUITY> 20400
24
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<UNDERWRITING-OTHER> 90
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</TABLE>
