As filed with the Securities and Exchange Commission on February 25, 2000
Registration No. 333-25289
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. 4 (X)
-----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 ( )
Amendment No. 5 (X)
----
(Check appropriate box or boxes)
VARIABLE ANNUITY-1 SERIES ACCOUNT
(Exact name of Registrant)
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
125 Wolf Road, Suite 110
Albany, New York 12205
(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
First 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. 4 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. 3 with a supplement to the prospectus, dated May
1, 1999. This post-effective amendment no. 4 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>
SCHWAB SELECT ANNUITY(TM)
Issued by First 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 11 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.
<PAGE>
<TABLE>
<S> <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 40, 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>
American Dreyfus
Alger Alger Century American Bankers Bankers Berger VIF
American American VP Century Trust Trust Baron IPT Capital
Growth Small-Cap Capital VP EAFE Small Capital Small Appreciation
Portfolio Portfolio AppreciatiInternationEquity Cap Asset Fund Company Fund
Index Fund Index Growth
Fund Fund
======================-----------------------------------------------------------------------------------------------
======================
Date Commenced 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99 5/3/99 5/3/99 5/15/97 5/3/99
Operations
======================
======================
1999
======================
Beginning Unit $16.70 $13.68 $10.38 $12.25 $10.00 $10.00 $10.00 $12.99 $10.00
Value
====================== ========= ======== ========= ========= ======== ======== ========
======== =========
Ending Unit Value $22.15 $19.45 $16.93 $19.93 $12.00 $11.65 $11.43 $24.65 $10.24
====================== ========= ======== ========
============================== ========= ======== ========= ======== =========
Number of Units 230,184.38 18,224.97 4,280.50 38,390.73 202.32 2,509.50 31,570.23 83,554.33 36,666.42
Outstanding
========= ======== ========
============================== ========= ======== ========= ======== =========
Net Assets (000's) $5,098 $355 $72 $765 $2 $29 $361 $2,060 $376
======== ========= ======== ========= ========= ======== ======== ======== =========
======================
1998
======================
Beginning Unit $11.37 $11.94 $10.70 $10.40 $12.86
Value
====================== =========
======== ========= ======== ========
Ending Unit Value $16.70 $13.68 $10.38 $12.25 $12.99
====================== =========
======== ========= ======== ========
Number of Units 157,992.77 19,678.27 3,373.44 14,930.27 38,814.23
Outstanding
====================== =========
============================== ========= ======== ========
Net Assets (000's) $2,639 $269 $35 $183 $504
======== ========= ======== ========= ========
======================
1997
======================
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value
====================== =========
======== ========= ======== ========
Ending Unit Value $11.37 $11.94 $10.70 $10.40 $12.86
====================== =========
============================== ========= ======== ========
Number of Units 31,803.04 8,711.21 0.00 4,712.98 17,749.02
Outstanding
======== ========= ========
======== =========
Net Assets (000's) $362 $104 $ - $49 $228
============================== ========= ======== ========= ========
<PAGE>
Federated INVESCO Janus
Dreyfus Federated Fund for INVESCO VIF INVESCO Aspen Janus
VIF American U.S. Federated VIF High Industrial VIF Aggressive Aspen
Growth Leaders GovernmentUtility Yield Income Total Growth Flexible
& Fund II Securities Fund II Portfolio Portfolio Return Portfolio Income
Income II Portfolio Portfolio
Fund
---------------------------------------------------------------------------------------------
5/3/99 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99
Date Commenced
Operations
1999 $10.00 $13.60 $11.36 $13.61 $11.18 $13.35 $12.15 $16.10 $10.00
- ----
======== ======= ======= ======= ========= ======= =======
======= ========
Beginning Unit Value $10.71 $14.39 $11.19 $13.72 $12.10 $15.20 $11.64 $35.99 $9.96
======= ======== ======= ======= ======= ========= ======= ======= ========
Ending Unit Value 29,116.61 123,305.45 66,641.48 3,821.33 146,273.87 136,557.41 13,690.83 21,406.15 8,047.56
======= ======== ======= ======= ======= ========= ======= ======= ========
Number of Units $312 $1,774 $746 $52 $1,770 $2,076 $159 $770 $80
Outstanding
======= ======== ======= ======= ======= ========= ======= ======= ========
Net Assets (000's)
1998 $11.66 $10.64 $12.05 $11.11 $11.68 $11.19 $12.10
- ----
======== ======= ======= ======= ========= ======= =======
Beginning Unit Value $13.60 $11.36 $13.61 $11.18 $13.35 $12.15 $16.10
======== ======= ======= ======= ========= ======= =======
Ending Unit Value 120,058.09 88,762.96 20,842.24 118,241.11 127,823.11 48,269.37 31,869.72
======== ======= ======= ======= ========= ======= =======
Number of Units $1,633 $1,008 $284 $1,321 $1,707 $586 $513
Outstanding
======== ======= ======= ======= ========= ======= =======
Net Assets (000's)
1997 $10.00 $ $10.00 $10.00 $10.00 $10.00 $10.00
- ----
10.00
======== ======= ======= ======= ========= ======= =======
Beginning Unit Value $11.66 $10.64 $12.05 $11.11 $11.68 $11.19 $12.10
======== ======= ======= ======= ========= ======= =======
Ending Unit Value 67,881.72 32,658.92 309.83 58,930.91 66,563.10 14,507.11 9,781.52
======== ======= ======= ======= ========= ======= =======
Number of Units $792 $347 $4 $655 $777 $162 $118
Outstanding
======== ======= ======= ======= ========= ======= =======
Net Assets (000's)
<PAGE>
Janus Montgomery
Janus Aspen Janus Lexington Montgomery Variable Safeco
Aspen InternationAspen Emerging Variable Series: Prudential Safeco RST RST
Growth Growth Worldwide Markets Series: InternationaEquity Equity Growth
PortfolioPortfolio Growth Fund Growth Small-Cap Portfolio Portfolio Portfolio
Portfolio Fund Fund
---------------------------------------------------------------------------=====================
Date Commenced 5/15/97 5/3/99 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99 5/15/97 5/3/99
Operations
1999
Beginning Unit $15.09 $10.00 $13.72 $5.73 $11.95 $8.51 $10.00 $13.86 $10.00
Value
======== ========= ========== ========= ========= ========= ========== ========= =========
Ending Unit Value $21.55 $17.04 $22.37 $12.97 $14.31 $8.79 $9.85 $15.02 $11.44
======== ========= ========== ========= ========= ========= ========== ========= =========
Number of Units 235,562.17 43,282.60 234,428.34 853.03 16,395.18 0.00 0.00 77,731.57 19,507.00
Outstanding
======== ========= ========== ========= ========= ========= ========== ========= =========
Net Assets (000's) $5,076 $738 $5,244 $11 $235 $ - $ - $1,168 $223
======== ========= ========== ========= ========= ========= ========== ========= =========
1998
Beginning Unit $11.22 $10.73 $8.06 $11.71 $8.80 $11.19
Value
======== ========== ========= ========= ========= =========
Ending Unit Value $15.09 $13.72 $5.73 $11.95 $ 8.51 $ 13.86
======== ========== ========= ========= ========= =========
Number of Units 146,172.46 179,884.07 2,582.22 29,364.46 0.00 81,951.27
Outstanding
======== ========== ========= ========= ========= =========
Net Assets (000's) $2,206 $2,468 $15 $351 $- $1,136
======== ========== ========= ========= ========= =========
======== ========= ========= =========
1997
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Ending Unit Value $11.22 $10.73 $8.06 $11.71 $8.80 $11.19
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Number of Units 42,289.81 87,156.01 4,677.90 20,245.76 257.15 33,470.59
Outstanding
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Net Assets (000's) $474 $935 $38 $237 $2 $ 375
======== ========== ========= ========= ========= =========
<PAGE>
Schwab Van Eck
MarketTracSchwab Scudder SteinRoe Strong Strong Worldwide
Growth Money Schwab Scudder Growth & Special Discovery VF Hard
Portfolio Market S&P 500 Capital Income Venture Fund II Schafer Assets
II Portfolio Portfolio Growth Fund A Fund Value Fund
Fund A Fund
-----------------------------------------------------------------------------------------------
Date Commenced 5/15/97 5/15/97 5/15/97 5/3/99 5/3/99 5/15/97 5/15/97 5/3/99 5/15/97
Operations
1999
Beginning Unit $12.80 $10.69 $14.71 $10.00 $10.00 $9.07 $12.03 $10.00 $6.81
Value
======== ========= ========= ======== ======== ======== ========= ======== ========
Ending Unit Value $15.18 $11.11 $17.57 $12.64 $9.36 $12.53 $8.64 $ 8.17
$13.32
======== ========= ========= ======== ======== ======== ========= ======== ========
Number of Units 42,025.42 408,367.17 270,917.40 8,180.65 863.61 4,846.07 4,522.06 9,666.14 1,236.82
Outstanding
======== ========= ========= ======== ======== ======== ========= ======== ========
Net Assets (000's) $638 $4,537 $4,759 $103 $8 $65 $57 $84 $10
======== ========= ========= ======== ======== ======== ========= ======== ========
1998
Beginning Unit $11.42 $10.27 $11.58 $11.31 $9.94
Value $11.07
======== ========= ========= ======== =========== ========
Ending Unit Value $12.80 $10.69 $14.71 $9.07 $12.03 $6.81
======== ========= ========= ======== =========== ========
Number of Units 46,662.83 241,333.04 221,962.56 25,964.83 19,282.66 1,236.82
Outstanding
======== ========= ========= ======== =========== ========
Net Assets (000's) $597 $2,581 $3,264 $236 $232 $8
======== ========= ========= ======== =========== ========
1997
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value $10.00
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Ending Unit Value $11.42 $10.27 $11.58 $11.31 $ 9.94
$11.07
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Number of Units 17,849.53 168,197.49 73,884.33 27,112.37 24,541.58 1,195.62
Outstanding
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Net Assets (000's) $204 $1,727 $856 $300 $278 $12
======== ========= ========= ======== =========== ========
</TABLE>
<PAGE>
Van Kampen American
Capital L.I.T. -
Morgan Stanley Real
Estate Securities
Portfolio
- -------------------------------------------------------
- ----------------------------------
Date Commenced Operations 9/17/97
- ----------------------------------
- ----------------------------------
1999
- ----------------------------------
Beginning Unit Value $ 9.33
- ----------------------------------
============
Ending Unit Value $ 8.94
- ----------------------------------
============
Number of Units Outstanding 5,789.35
- ----------------------------------
- ---------------------------------- ============
Net Assets (000's) $52
============
- ----------------------------------
1998
- ----------------------------------
Beginning Unit Value $10.56
- ----------------------------------
============
Ending Unit Value $9.33
- ----------------------------------
============
Number of Units Outstanding 4,699.89
- ----------------------------------
- ---------------------------------- ============
Net Assets (000's) $44
============
- ----------------------------------
1997
- ----------------------------------
Beginning Unit Value $10.00
- ----------------------------------
============
Ending Unit Value $10.56
- ----------------------------------
- ---------------------------------- ============
Number of Units Outstanding 273.65
- ---------------------------------- ============
Net Assets (000's) $3
============
<PAGE>
VARIABLE ANNUITY-1 SERIES ACCOUNT
Contracts Under
Flexible Premium Deferred
Combination Variable and Fixed Annuity Contracts
issued by
First Great-West Life & Annuity Insurance Company
125 Wolf Road, Suite 110
Albany, New York 12205
Telephone: (800) 537-2033
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 7785, San
Francisco, California 94120-9420 or at 1-800-838-0650.
The date of this Statement of Additional Information is
May 1, 1999 as supplemented on February 25, 2000.
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
GENERAL INFORMATION.............................................................................................B-3
FIRST 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
- Administrative Services Agreement....................................................................B-5
WITHHOLDING.....................................................................................................B-5
CALCULATION OF PERFORMANCE DATA.................................................................................B-5
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."
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND THE VARIABLE ANNUITY-1 SERIES ACCOUNT
First Great-West Life & Annuity Insurance Company (the "Company"), the issuer of
the Contract, is a New York corporation qualified to sell life insurance and
annuity contracts in New York and Iowa. It was qualified to do business on May
28, 1997. The Company is a wholly-owned subsidiary of Great-West Life & Annuity
Insurance Company, a Colorado stock life insurance company, which is an indirect
wholly owned subsidiary of The Great-West Life Assurance Company, a stock life
insurance company incorporate 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
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 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 Sub-Account's 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 Variable 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 First Great-West Life & Annuity Insurance Company ("First
GWL&A"). The assets of the Series Account are kept physically segregated and
held separate and apart from the general account of First GWL&A. First 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
First GWL&A.
B. Experts
The accounting firm of Deloitte & Touche LLP performs certain
accounting and auditing services for First GWL&A and the Series Account. The
principal business address of Deloitte & Touche LLP is 555 Seventeenth Street,
Suite 3600, Denver, Colorado 80202.
The financial statements of First GWL&A at December 31, 1998
and 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 report appearing therein
and is included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
<PAGE>
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.
D. Administrative Services Agreement
First GWL&A and Great-West Life & Annuity Insurance Company ("GWL&A")
have entered into an Administrative Services Agreement dated May 15, 1997.
Pursuant to the agreement, GWL&A performs certain corporate support services,
investment services and other back office administrative services for First
GWL&A. In addition, certain of GWL&A's property, equipment, personnel and
facilities are made available for First GWL&A for its operations. All charges
for services and use of facilities to the extent practicable reflect actual
costs, and are intended to be in accordance with New York Insurance Laws.
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" on page 17 of 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]
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.
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 financial statements of First GWL&A as contained in the prospectus
should be considered only as bearing upon First 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
First Great-West Life & Annuity Insurance Company
We have audited the accompanying statement of assets and liabilities of Variable
Annuity-1 Series Account of First 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 First 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>
<TABLE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT OF
FIRST GREAT - WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- ---------------------------------------------------------------------------------------------
ASSETS
Investments in underlying Shares Cost Value
------ ----- -----
funds:
<S> <C>
Alger American Fund American Growth Portfolio $
79,222 $4,136,991 5,100,291
Alger American Fund American Small-Cap Portfolio
6,431 278,349 354,690
American Century VP Funds VP Capital Appreciation
4,885 44,221 72,491
American Century VP Funds VP International
61,233 517,382 765,407
Bankers Trust Funds EAFE Equity Index Fund
179 2,195 2,429
Bankers Trust Funds Small Cap Index Fund
2,519 27,347 29,243
Baron Funds Capital Asset Fund
20,317 315,242 361,134
Berger Funds IPT Small Company Growth Fund
87,447 1,542,370 2,055,873
Dreyfus Family of Funds VIF Capital Appreciation Fund
9,424 355,308 375,717
Dreyfus Family of Funds VIF Growth & Income Fund
12,243 301,031 311,947
Federated Services Company American Leaders Fund II
85,239 1,759,067 1,774,682
Federated Services Company Fund for U.S. Government
Securities II 70,665 772,150 746,223
Federated Services Company Utility Fund II
3,656 52,674 52,466
INVESCO Variable Investment High Yield Portfolio
Funds 153,851 1,826,685 1,770,827
INVESCO Variable Investment Industrial Income Portfolio
Funds 98,855 1,852,169 2,076,951
INVESCO Variable Investment Total Return Portfolio
Funds 10,230 167,688 159,380
Janus Aspen Funds Aggressive Growth Portfolio
12,913 446,954 770,757
Janus Aspen Funds Flexible Income Portfolio
7,018 82,097 80,147
Janus Aspen Funds Growth Portfolio
150,898 3,835,048 5,077,733
Janus Aspen Funds International Growth Portfolio
19,084 544,415 737,984
Janus Aspen Funds Worldwide Growth Portfolio
109,874 3,465,116 5,246,504
Lexington Management Corp Emerging Markets Fund
865 6,395 11,082
Montgomery Funds Variable Series Growth Fund
12,763 221,504 234,706
Safeco RST Equity Portfolio
37,662 1,179,744 1,168,266
Safeco RST Growth Portfolio
9,921 202,360 223,215
Schwab MarketTrack Growth Portfolio II
40,324 553,855 638,329
Schwab Money Market Portfolio
4,538,578 4,538,578 4,538,578
Schwab S&P 500 Portfolio
224,158 3,986,659 4,765,593
Scudder Funds Capital Growth Fund A
3,552 85,866 103,477
Scudder Funds Growth & Income Fund A
738 8,460 8,089
SteinRoe Funds Special Venture Fund
3,203 45,110 64,595
Strong Capital Mgmt Inc. Discovery Fund II
4,983 49,914 56,701
Strong Capital Mgmt Inc. VF Schafer Value Fund
9,163 91,823 83,571
Van Eck Investment Trust Worldwide Hard Assets Fund 923
9,500 10,119
Van Kampen American Capital Morgan Stanley Real Estate
L.I.T. Securities Portfolio 4,185 53,466 51,767
------- ------
Total Investments
$33,357,7339,880,964
Other assets and liabilities:
Due to First Great-West Life & Annuity Insurance Company
(16,067)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 4)
$39,864,897
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ---------------------------------------
----------------------------------------------------------------------------------
Alger Alger American Bankers Bankers
American American Century VP American Trust Trust Baron
Growth Small-Cap Capital Century VP EAFE Small Cap Capital
Portfolio Portfolio AppreciationInternationaEquity Index Fund Asset Fund
Index
Fund
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
----------------------------------------------------------------------------------
INVESTMENT INCOME $ $ $ $ 1,200 $
306,478 36,650 $ $ 111 2,398
- -
EXPENSES - mortality and expense 152 1,230
------- ------ ---------- ------ -------- ---------- ----------
risks: (Note 3) 31,454 2,385 562 3,007 188
------- ------ ---- ------ ---
NET INVESTMENT INCOME (LOSS) 34,265 (3,007) 1,048 1,168
----- ----------- -------- ----------- -------- --------- ---------
275,024 (562) (77)
-------- ----- ----
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 268,946
investments 29,637 6,666 40,935 8,617 (693) (87)
Net change in unrealized
appreciation
(depreciation) on investments 38,406 230,904 234 1,896 45,892
----- ----------- ----- ----------- ---------- --------- --------
523,035 25,170
-------- ------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 68,043 31,836 271,839 8,851 1,203 45,805
----- ----------- ---------- ----------- -------- --------- --------
791,981
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $1,067,005 $102,308 $31,274 $268,832 $ 8,774 $2,251 $46,973
=========== ========= ======== ========= ======== ======= =======
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Berger Dreyfus Federated INVESCO
IPT Small VIF Dreyfus American Federated Federated VIF High
Company Capital VIF Growth Leaders Fund for Utility Yield
Growth Appreciation & Income Fund II U.S. Fund II Portfolio
Fund Fund Fund Government
Securities
II
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
----------------------------------------------------------------------------------
INVESTMENT INCOME $ 3,527 $10,390 $158,907 $ 61,564 $9,494 $118,820
$
-
EXPENSES - mortality and expense 1,697 1,266 14,884 1,000
------- --------- ----------- ---------- ----- ------
risks: (Note 3) 4,874 7,216 13,395
------ ------ ------
NET INVESTMENT INCOME (LOSS) 1,830 9,124 144,023 8,494 105,425
------ --------- ----------- ---------- ---- -------- ----------
(4,874) 54,348
------- ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 80,632 36,499 11,373
investments 771 (335) (26,793) (87,437)
Net change in unrealized
appreciation
(depreciation) on investments 20,409 10,916 (103,725) (19,754) 103,983
---- --------- ----------- ---------- --- --------- ----------
482,984 (39,461)
-------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 21,180 10,581 (67,226) (8,381)
--- ---------- ----------- ---------- --- ----------
563,616 (66,254) 16,546
-------- -------- ------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $558,742 $23,010 $19,705 $ 76,797 $(11,906) $ 113 $121,971
========== ========= ========= ========== ==================== =========
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
INVESCO INVESCO Janus Janus Janus Janus
VIF VIF Total Aspen Aspen Janus Aspen Aspen
Industrial Return Aggressive Flexible Aspen InternationalWorldwide
Income Portfolio Growth Income Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
----------------------------------------------------------------------------------
INVESTMENT INCOME $ $ 4,338 $ 19,920 $ 3,371 $ $ $
35,744 25,651 251 5,349
EXPENSES - mortality and expense 3,348
----- ----------
risks: (Note 3) 16,328 5,303 229 29,164 1,278 27,098
------- ------ ---- ------- ------ ------
NET INVESTMENT INCOME (LOSS) 14,617 3,142
----- -------- ----------- ----------
19,416 990 (3,513) (1,027) (21,749)
------- ---- ------- ------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 42,506 26,832 217,196 33,666 328,017
investments (58) 412,810
Net change in unrealized
appreciation
(depreciation) on investments (11,643) 230,457 (1,950) 193,569
--- ----------- ----------- ----------- ------ ----------
172,620 909,372 1,541,747
-------- -------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 15,189 447,653 (2,008) 227,235
--- ----------- ---------- ----------- --- ----------
215,126 1,322,182 1,869,764
-------- ---------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $234,542 $ 16,179 $462,270 $ 1,134 $1,318,669 $226,208 $1,848,015
======== ========== ========== ========= ===================== ==========
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Schwab
Montgomery Safeco Safeco MarketTrack Schwab
Lexington Variable RST Equity RST Growth Growth Money Schwab
Emerging Series: Portfolio Portfolio Portfolio Market S&P 500
Markets Growth II Portfolio Portfolio
Fund Fund
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
----------------------------------------------------------------------------------
INVESTMENT INCOME $ $ 2,250 $ $ $ 44,397 $199,543 $
34 62,017 - 39,580
EXPENSES - mortality and expense 222 2,510 4,981
---------- ---------- ----- -------- ---------
risks: (Note 3) 11,406 385 36,397 36,984
------- ---- ------- ------
NET INVESTMENT INCOME (LOSS) (188) (260) (385) 39,416 163,146
--------------------- ----- ----------- ------------------
50,611 2,596
------- -----
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 121,904 381,532
investments (4,710) 40,081 (1,158) 17,208 -
Net change in unrealized
appreciation
(depreciation) on investments 10,596 22,596 20,855 46,174 372,141
-------- --------- ---- --------- ---------------------- ---------
(85,448) -
-------- -
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 5,886 62,677 36,456 19,697 753,673
--------- --------- ---------- -------- ---- ------------ ---------
63,382 -
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $5,698 $62,417 $87,067 $19,312 $102,798 $163,146 $756,269
======= ======== ======== ======== ========= ========= ========
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Van Kampen
American
Capital
Van Eck L.I.T. -
Scudder SteinRoe Strong Strong Worldwide Morgan
Scudder Growth & Special Discovery VF Hard Stanley
Capital Income Venture Fund II Schafer Assets Real Estate
Growth Fund A Fund Value Fund Securities
Fund A Fund Portfolio
Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Investment Division
Division
----------------------------------------------------------------------------------
INVESTMENT INCOME $ $ $ 29,291 $ $ $3,870
$ - - 3,270 128
-
EXPENSES - mortality and expense 35 758 368
---------- ----------- --------- ------- -------- --------- --------
risks: (Note 3) 412 1,069 262 120
---- ------ ---- ---
NET INVESTMENT INCOME (LOSS) (35) (758) 3,502
-------- ----------- --------- ----- ----- ------------- -------
(412) 28,222 3,008 8
----- ------- ------ -
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 3,855 (230) (53,464) (40,058) (3,352) (697) 130
investments
Net change in unrealized
appreciation
(depreciation) on investments (371) 71,731 (1,522)
----- --------- --------- ----- ---- ----- ---------
17,611 (1,202) (8,252) 3,966
------- ------- ------- -----
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 21,466 (601) 18,267 (41,260) (11,604) 3,269 (1,392)
----------- --------- --------- ---------- -------------------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $21,054 $(636) $17,509 $(13,038) $(8,596) $3,277 $2,110
======== ======= ======== ========= ======== ======== =======
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -----------------------------------------------------
Total
Variable
Annuity - 1
Series
Account
--------------
INVESTMENT INCOME $1,188,543
EXPENSES - mortality and expense 261,967
-----------
risks: (Note 3)
NET INVESTMENT INCOME (LOSS) 926,576
-----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments 1,890,741
Net change in unrealized
appreciation
(depreciation) on investments 4,823,936
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 6,714,677
-----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $7,641,253
==========
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST 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 Index
Portfolio Appreciation Fund
Investment Investment Investment Investment Investment
Division Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1)
FROM OPERATIONS:
Net investment income (loss) $ $ $ 34,265 $ $ $ $ $ $ $
275,024 115,918 21,000 (562) 6,642 (3,007) 2,499 (77) -
Net realized gain (loss) on 268,946 9,177 29,637 6,666 (21,459) 40,935 8,617 -
investments (16,642) (11,631)
Net change in unrealized
appreciation (depreciation) ___523,035__442,962__38,406 __39,845 _25,170 __3,100 _230,904 _17,376 __234 _____-
--------------------------- --------- -------- -------- --------- -------- ------ ------
in investments
Increase (decrease) in net
assets resulting from __568,057 102,308 __44,203 _31,274 _(11,717) _268,832 __8,244 _8,774 _____-
- ------------------ --------- ----------------- --------- -------- ------- ------
operations _1,067,005
----------
FROM UNIT TRANSACTIONS:
Purchase payments 118,788 114,014 2,752 71,436 33,848 3,760 6,283 669 - -
Redemptions (2,113) (1,095) (3) - (7,162) - - -
(37,405)(21,625)
Net transfers _1,311,221 1,616,422 (17,591) __50,617 _42,961 _314,242 _124,970 (6,346) _____-
--------------------------- ---------- -------- ------------------ -------- ------
(27,660)
Increase (decrease) in net
assets resulting from unit 1,392,604 1,708,811_(16,952) _120,958 __6,185 _46,721 _313,363 _125,639 _(6,346) _____-
--------------------------- --------- -------- ------- ------------------ -------- ------
transactions
INCREASE (DECREASE) IN NET 2,459,609 2,276,868 85,356 165,161 37,459 35,004 582,195 133,883 2,428 -
ASSETS
NET ASSETS:
Beginning of period 2,638,599 __361,731_269,193 104,032 _35,004 - _182,920 __49,037 _____- _______-
-- ------------------ -------- -------- -- ------------------ ------- --------
End of period $5,098,208 $2,638,599 $354,549 $269,193 $72,463 $35,004 $765,115 $182,920 $2,428 $
=========================== ========= ======== ======== ================== ========
-
(1) The Investment Division commenced
operations on May 3, 1999.
(2) The Investment Division ceased operations
in December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST 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 Growth
Small-Cap Index Baron Capital Company Growth Capital & Income Fund
Fund Asset Fund Fund Appreciation 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) $ $ $ $ $ $ $ $ $ 9,124 $
1,048 - 1,168 - (4,874) (2,499) 1,830 - -
Net realized gain (loss) on (693) - (87) - 80,632 (7,473) 771 - (335) -
investments
Net change in unrealized
appreciation (depreciation) 1,896 _____- 45,892 _____- 482,984 11,582 20,409 _____- _10,916 _____-
------------- ------- ------- -------- ------- ------- ------- -------- ------
in investments
Increase (decrease) in net
assets resulting from 2,251 _____- 46,973 _____- 558,742 1,610 23,010 _____- _19,705 _____-
------------- ------- ------- -------- ------ ------- ------- -------- ------
operations
FROM UNIT TRANSACTIONS:
Purchase payments - - 96 - 4,336 60,879 17,985 - 7,335 -
Redemptions - - - - (19,910) (5,074) - - - -
Net transfers 26,980 _____- 313,922 _____- 1,012,696 218,427 _334,564 _____- _284,783 _____-
-------------- -------- ----------------- ----------------- ---------------- ------
Increase (decrease) in net
assets resulting from unit 26,980 _____- 314,018 _____- 997,122 274,232 _352,549 _____- _292,118 _____-
-------------- -------- ------- -------- ----------------- ---------------- ------
transactions
INCREASE (DECREASE) IN NET 29,231 - 360,991 -1,555,864 275,842 375,559 - 311,823 -
ASSETS
NET ASSETS:
Beginning of period _____-__ __ ____- ___ 504,078 228,236 ___ ___- __ ___ ___- ____ __-
---------- --------- ---- -------- ----------------- --- --------- --------
____- ___- ____-
------ ----- -----
End of period $29,231$ $360,991 $ $2,059,942$ $375,559 $ $311,823 $
========================= ==================== ========= ================= =
- - 504,078 - -
== == ======== == =
(1) The Investment Division commenced
operations on May 3, 1999.
(2) The Investment Division ceased operations
in December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Federated Federated Fund INVESCO VIF High INVESCO VIF
American Leaders for U.S. Yield Portfolio Industrial Income
Fund II Government Federated Utility Portfolio
Securities II Fund II
Investment Investment Investment Investment Investment
Division Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ $ $ $ $ $ $
144,023 59,566 54,348 1,444 8,494 (301) 105,425 129,872 19,416 76,272
Net realized gain (loss) on 36,499 19,356 (26,793) 29,183 11,373 (1,100) (87,437) (8,898) 42,506 4,821
investments
Net change in unrealized
appreciation (depreciation) 93,032 (39,461)
---- ------- --------
in investments (103,725) 6,387 (19,754) 19,115 103,983 (129,609) 172,620 81,609
--------- -------------- ------- -------- --------- -------- ------
Increase (decrease) in net
assets resulting from 171,954 (11,906) 113
------- -------- -------- --- ---
operations 76,797 37,014 17,714 121,971 (8,635) 234,542 162,702
------- ------- ------- -------- ------- -------- -------
FROM UNIT TRANSACTIONS:
Purchase payments 10,221 256,413 91,941 217,330 57 10,536 15,550 121,441 27,165 295,628
Redemptions (8,097) (68) (75,176) (733) (47,529) (5,057)
(87,215) (49,765) (14,956) (19,275)
Net transfers
61,936 413,117 (266,993) 493,481 (230,683) 301,473 358,604 568,691 127,077 475,807
------------------------ ---------------- -------- -------- ------- -------- -------
Increase (decrease) in net
assets resulting from unit 669,462 (250,228)
------- -----------------
transactions 64,060 623,596 (231,359) 262,244 326,625 675,176 134,967 766,378
------- ---------------- -------- -------- -------- -------- -------
INCREASE (DECREASE) IN NET 140,857 841,416 660,610 279,958 448,596 666,541 369,509 929,080
ASSETS (262,134) (231,246)
NET ASSETS:
Beginning of period 1,008,052
--- ---- ---------
1,633,097 791,681 347,442 283,690 3,732 1,321,493 654,952 1,706,575 777,495
--------- -------- ---------------- ---------------- -------------------------
End of period $1,633,09$ $1,008,052 $283,690 $1,770,089 $1,321,493 $2,076,084 $1,706,575
= ============ =========== =================== ========= ========== =======
$1,773,954 745,918 52,444
=========== ======== ======
(1) The Investment Division commenced
operations on May 3, 1999.
(2) The Investment Division ceased operations
in December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
INVESCO VIF Janus Aspen Janus Aspen Janus Aspen Janus Aspen
Total Return Aggressive Growth Flexible Income Growth Portfolio International
Portfolio Portfolio Fund Growth Fund
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 (loss) $ $ $ $ $ $ $ $ $
$ 990 21,459 14,617 (2,085) 3,142 - (3,513) 62,784 (1,027) -
Net realized gain (loss) on 26,832 2,804 217,196 21,590 (58) - 412,810 19,280 33,666 -
investments
Net change in unrealized
appreciation (depreciation) __88,568 (1,950) _____- 909,372 340,736 _____-
- --- -- --------- -------- ------- -------- -------- -- ------
in investments (11,643) 2,603 230,457 193,569
-------- ------ -------- -------
Increase (decrease) in net
assets resulting from _108,073 1,134 _____- 1,318,669 422,800 _____-
-- --- -- --------- ------ ------- --------- -------- -- ------
operations 16,179 26,866 462,270 226,208
------- ------- -------- -------
FROM UNIT TRANSACTIONS:
Purchase payments 15,587 118,548 6,518 11,660 325 - 210,295 313,250 2,466 -
Redemptions (535) - - (893) - (10,528) - -
(45,680) (28,216)
Net transfers 324,383 275,115 79,548 _____- 1,368,935 1,006,018 509,034 _____-
- --------- -------- ------- ------- --------- ---------- --------------
(458,329) (211,493)
Increase (decrease) in net
assets resulting from unit (204,975) 78,980 _____- 1,551,014 1,308,740
- -- --------- -- ------- ------- ---------- --------
transactions (443,277) 397,251 286,775 511,500 ___-
--------- -------- -------- -------- ----
INCREASE (DECREASE) IN NET 424,117 257,295 394,848 80,114 - 2,869,683 1,731,540 737,708 -
ASSETS (427,098)
NET ASSETS:
Beginning of period __ ____-
--- -- -- -- -----------------
586,412 162,295 513,156 118,308 - 2,205,991 474,451 - _____-
-------- -------- -------- -------- -- ---------- -------- -- ------
End of period $159,314 $586,412 $770,451 $513,156 $ $ $5,075,674 $2,205,991 $737,708 $
=========================== =========== =======================================
80,114 - -
======= == =
(1) The Investment Division commenced operations on May
3, 1999.
(2) The Investment Division ceased operations in
December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Montgomery
Janus Aspen Lexington Montgomery Variable Prudential
Worldwide Growth Emerging Markets Variable Series: Equity
Portfolio Fund Series: Growth Fund International Portfolio
Small-Cap Fund
Investment Division Investment Investment Division Investment Investment
Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(2) (1)
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ 2,121 $ $ $ $ $ $
(21,749) 54,821 (188) (260) (234) - 25 - -
Net realized gain (loss) on 328,017 49,687 (4,710) (13,744) 40,081 (28,953) - (833) - -
investments
Net change in unrealized
appreciation (depreciation) 10,596 _____- _____- _____-
- ---- -------------- ---- ------- ------- ----- -------------
in investments 1,541,747 245,671 337 22,596 8,907 715
---------- -------- ---- ------- ------ ---
Increase (decrease) in net
assets resulting from (11,286) _____- _____- _____-
- ---- --- --------- ---- --- ------- ------ -------------
operations 1,848,015 350,179 5,698 62,417 (20,280) (93)
---------- -------- ------ ------- -------- ----
FROM UNIT TRANSACTIONS:
Purchase payments 92,228 311,034 141 1,211 11,888 5,345 - 2,743 - -
Redemptions (52,701) (15,501) - (37) (2,135) (1,453) - - - -
Net transfers (12,766) _____- (4,914) _____- _____-
---- ---- -- --------- - ---- ------- -------- -------------
889,190 886,730 (9,577) (188,381) 130,188
-------- -------- ------- --------- -------
Increase (decrease) in net
assets resulting from unit _____- (2,171) _____-
---- -- --- -- --- ---- ------- ------------ ------
transactions 928,717 1,182,263 (9,436) (11,592) (178,628) 134,080 ___-
-------- ---------- ------- -------- --------- -------- ----
INCREASE (DECREASE) IN NET 2,776,732 1,532,442 (3,738) (22,878) 113,800 - (2,264) - -
ASSETS (116,211)
NET ASSETS:
Beginning of period 37,684 ______- 2,264 __ _______-
-- ----- -- --------- -- -- -------- ----------- --------
2,467,741 935,299 14,806 350,823 237,023 ____-
---------- -------- ------- -------- -------- -----
End of period $5,244,473 $2,467,741 $11,068 $14,806 $234,612 $350,823 $ $ $ $
============================== ======== ========= ===================================
- - - -
== = == =
(1) The Investment Division commenced operations on May
3, 1999.
(2) The Investment Division ceased operations in
December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------
Safeco RST Safeco RST Schwab Schwab Money
Equity Portfolio Growth MarketTrack Market Portfolio Schwab S&P 500
Portfolio Growth Portfolio
Portfolio II
Investment Investment Investment Investment Division Investment Division
Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1)
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ $ $ $ $ $ $
50,611 46,481 (385) - 39,416 12,867 163,146 105,134 2,596 (4,287)
Net realized gain (loss) on 121,904 12,370 (1,158) - 17,208 2,320 - - 381,532 56,465
investments
Net change in unrealized
appreciation (depreciation) _____- _ _
---- ------- --- ----------- ---- ----- -
in investments (85,448) 94,979 20,855 46,174 31,479 ____- ____- 372,141 390,271
-------- ------- ------- ------- ------- ------ ------ -------- -------
Increase (decrease) in net
assets resulting from _____-
----- ---- --- ------
operations 87,067 153,830 19,312 102,798 46,666 163,146 105,134 756,269 442,449
------- -------- ------- -------- ------- -------- -------- -------- -------
FROM UNIT TRANSACTIONS:
Purchase payments 53,313 88,389 80 - 4,902 62,815 8,532,178 10,302,630 95,527 253,942
Redemptions (752) - (772) (1,774) (65,853) (54,693)
(16,064) (20,635) (550,883) (182,390)
Net transfers _____-
---- ---- -- ------
(92,504) 539,747 204,488 (66,149) 285,802 (6,188,644)(9,371,004) 708,778 1,766,707
-------- -------- -------- -------- ------------------- ----------- ------- ---------
Increase (decrease) in net
assets resulting from unit _____-
---- ----- -- ------
transactions (55,255) 607,501 203,816 (62,019)346,843 1,792,651 749,236 738,452 1,965,956
-------- -------- -------- -------------------------- -------- -------- ---------
INCREASE (DECREASE) IN NET 31,812 761,331 223,128 - 40,779 393,509 1,955,797 854,370 1,494,721 2,408,405
ASSETS
NET ASSETS:
Beginning of period ______-
-- ----- ----------------
1,135,970 374,639 - 597,289 203,780 2,581,019 1,726,649 3,264,011 855,606
------------------ -- ---------------------------------------------- -------
End of period $1,167,782 $1,135,970 $223,128 $ $638,068 $597,289 $4,536,816 $2,581,019 $4,758,732 $3,264,011
===========================================================================================
-
(1) The Investment Division commenced operations on May
3, 1999.
(2) The Investment Division ceased operations in
December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST 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 Fund A Income Fund A Venture Fund Fund II Value Fund
Investment Investment Investment Investment Investment
Division Division Division Division Division
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(1) (1) (1)
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ $ $ $28,222 $ $ 3,008 $
(412) - (35) - (758) 28,741 3,074 -
Net realized gain (loss) on 3,855 - (230) - (53,464) (40,058) (3,352) -
investments (68,775) (56,933)
Net change in unrealized
appreciation (depreciation) _____- _____- (1,202) _____-
--- ------- ------ ------- ---- -- --------- -- -- ------
in investments 17,611 (371) 71,731 (39,504) 26,369 (8,252)
------- ----- ------- -------- ------- -------
Increase (decrease) in net
assets resulting fro7 _____- _____- (13,038) _____-
--- ------- ------ ------- ---- -- --------- - -- ------
operations 21,054 (636) 17,509 (79,538) (27,490) (8,596)
------- ----- ------- -------- -------- -------
FROM UNIT TRANSACTIONS:
Purchase payments 20,621 - - - 3,676 11,975 2,228 128,370 200 -
Redemptions - - - (6,399) (3,581) (73) (5,392) (2,900) -
Net transfers _____- 8,722 _____- (164,385) 94,833 _____-
--- ------- -------- ------- - ---- --------- - --------------
61,759 (185,811) 6,698 (141,118)
------- --------- ------ ---------
Increase (decrease) in net
assets resulting from unit _____- _____- (188,534) (162,230) _____-
--- ------- ---- ------- --------- --- --------- - -- ------
transactions 82,380 8,722 15,092 (18,140) 92,133
------- ------ ------- -------- ------
INCREASE (DECREASE) IN NET 103,434 - 8,086 - 83,537 -
ASSETS (171,025) (64,446) (175,268) (45,630)
NET ASSETS:
Beginning of period ______- ______- 235,595 231,946 ______-
----------------- ----------------- --------- -- -------- -- ----------------
- - 300,041 277,576 -
-- -- -------- -------- -
End of period $103,434 $ $ 8,086 $ $ 64,570 $235,595 $ 56,678 $231,946 $83,537 $
========================== ================== ================== ========= =========
- - -
== == =
(1) The Investment Division commenced
operations on May 3, 1999.
(2) The Investment Division ceased operations
in December 1998.
See notes to financial statements.
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- -------------------------------------------------------------------------------------------
Van Kampen American
Capital L.I.T. -
Van Eck Morgan Stanley Real Total Variable
Worldwide Hard Estate Securities Annuity - 1 Series
Assets Fund Portfolio Account
Investment Investment Division
Division
---------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ 800 $ $
8 553 3,502 926,576 742,667
Net realized gain (loss) on (2,319) 130 (6,038) 1,890,741 (17,745)
investments (697)
Net change in unrealized
appreciation (depreciation) (1,780) (1,522) 49
--- -------- ------------------
in investments 3,966 4,823,936 1,774,799
------ -------------------
Increase (decrease) in net
assets resulting from (3,546) (5,189)
--- ----------- ----------
operations 3,277 2,110 7,641,253 2,499,721
------ ------ -------------------
FROM UNIT TRANSACTIONS:
Purchase payments - - 732 12,067 9,389,262
12,776,085
Redemptions - - - (526,519)
(14,287) (959,866)
Net transfers (1,592) 79 19,342 34,085
------- --- ----------------
(25,484) 31,716
Increase (decrease) in net
assets resulting from unit 46,152
-- ------------- ---------
transactions (1,592) 79 5,787 8,403,912 12,281,282
------- --- ------ --------------------
INCREASE (DECREASE) IN NET 1,685 (3,467) 7,897 40,963 16,045,165 14,781,003
ASSETS
NET ASSETS:
Beginning of period 11,888 2,888
---- --------- --------
8,421 43,851 23,819,732 9,038,729
------ ------- -------------------
End of period $10,106 $ 8,421 $51,748 $43,851 $39,864,897 $23,819,732
======== ======== ======== ======== =====================
(1) The Investment Division commenced
operations on May 3, 1999.
(2) The Investment Division ceased operations
in December 1998.
See notes to financial statements.
</TABLE>
<PAGE>
VARIABLE ANNUITY - 1 SERIES ACCOUNT OF
FIRST 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 First Great-West Life & Annuity
Insurance Company (the Series Account) is a separate account of First
Great-West Life & Annuity Insurance Company (the Company) established under
New York law. The Series Account commenced operations on January 15, 1997.
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>
American Dreyfus
Alger Alger Century American Bankers Bankers Berger VIF
American American VP Century Trust Trust Baron IPT Capital
Growth Small-Cap Capital VP EAFE Small Capital Small Appreciation
Portfolio Portfolio AppreciatiInternationEquity Cap Asset Fund Company Fund
Index Fund Index Growth
Fund Fund
======================-----------------------------------------------------------------------------------------------
======================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99 5/3/99 5/3/99 5/15/97 5/3/99
Operations
======================
======================
1999
======================
Beginning Unit $16.70 $13.68 $10.38 $12.25 $10.00 $10.00 $10.00 $12.99 $10.00
Value
====================== ========= ======== ========= ========= ======== ======== ========
======== =========
Ending Unit Value $22.15 $19.45 $16.93 $19.93 $12.00 $11.65 $11.43 $24.65 $10.24
====================== ========= ======== ========
============================== ========= ======== ========= ======== =========
Number of Units 230,184.38 18,224.97 4,280.50 38,390.73 202.32 2,509.50 31,570.23 83,554.33 36,666.42
Outstanding
========= ======== ========
============================== ========= ======== ========= ======== =========
Net Assets (000's) $5,098 $355 $72 $765 $2 $29 $361 $2,060 $376
======== ========= ======== ========= ========= ======== ======== ======== =========
======================
1998
======================
Beginning Unit $11.37 $11.94 $10.70 $10.40 $12.86
Value
====================== =========
======== ========= ======== ========
Ending Unit Value $16.70 $13.68 $10.38 $12.25 $12.99
====================== =========
======== ========= ======== ========
Number of Units 157,992.77 19,678.27 3,373.44 14,930.27 38,814.23
Outstanding
====================== =========
============================== ========= ======== ========
Net Assets (000's) $2,639 $269 $35 $183 $504
======== ========= ======== ========= ========
======================
1997
======================
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value
====================== =========
======== ========= ======== ========
Ending Unit Value $11.37 $11.94 $10.70 $10.40 $12.86
====================== =========
============================== ========= ======== ========
Number of Units 31,803.04 8,711.21 0.00 4,712.98 17,749.02
Outstanding
======== ========= ========
======== =========
Net Assets (000's) $362 $104 $ - $49 $228
============================== ========= ======== ========= ========
<PAGE>
4. SELECTED DATA
======================
Federated INVESCO Janus
Dreyfus Federated Fund for INVESCO VIF INVESCO Aspen Janus
VIF American U.S. Federated VIF High Industrial VIF Aggressive Aspen
Growth Leaders GovernmentUtility Yield Income Total Growth Flexible
& Fund II Securities Fund II Portfolio Portfolio Return Portfolio Income
Income II Portfolio Portfolio
Fund
---------------------------------------------------------------------------------------------
5/3/99 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99
Date Commenced
Operations
1999 $10.00 $13.60 $11.36 $13.61 $11.18 $13.35 $12.15 $16.10 $10.00
- ----
======== ======= ======= ======= ========= ======= =======
======= ========
Beginning Unit Value $10.71 $14.39 $11.19 $13.72 $12.10 $15.20 $11.64 $35.99 $9.96
======= ======== ======= ======= ======= ========= ======= ======= ========
Ending Unit Value 29,116.61 123,305.45 66,641.48 3,821.33 146,273.87 136,557.41 13,690.83 21,406.15 8,047.56
======= ======== ======= ======= ======= ========= ======= ======= ========
Number of Units $312 $1,774 $746 $52 $1,770 $2,076 $159 $770 $80
Outstanding
======= ======== ======= ======= ======= ========= ======= ======= ========
Net Assets (000's)
1998 $11.66 $10.64 $12.05 $11.11 $11.68 $11.19 $12.10
- ----
======== ======= ======= ======= ========= ======= =======
Beginning Unit Value $13.60 $11.36 $13.61 $11.18 $13.35 $12.15 $16.10
======== ======= ======= ======= ========= ======= =======
Ending Unit Value 120,058.09 88,762.96 20,842.24 118,241.11 127,823.11 48,269.37 31,869.72
======== ======= ======= ======= ========= ======= =======
Number of Units $1,633 $1,008 $284 $1,321 $1,707 $586 $513
Outstanding
======== ======= ======= ======= ========= ======= =======
Net Assets (000's)
1997 $10.00 $ $10.00 $10.00 $10.00 $10.00 $10.00
- ----
10.00
======== ======= ======= ======= ========= ======= =======
Beginning Unit Value $11.66 $10.64 $12.05 $11.11 $11.68 $11.19 $12.10
======== ======= ======= ======= ========= ======= =======
Ending Unit Value 67,881.72 32,658.92 309.83 58,930.91 66,563.10 14,507.11 9,781.52
======== ======= ======= ======= ========= ======= =======
Number of Units $792 $347 $4 $655 $777 $162 $118
Outstanding
======== ======= ======= ======= ========= ======= =======
Net Assets (000's)
<PAGE>
4. SELECTED DATA
Janus Montgomery
Janus Aspen Janus Lexington Montgomery Variable Safeco
Aspen InternationAspen Emerging Variable Series: Prudential Safeco RST RST
Growth Growth Worldwide Markets Series: InternationaEquity Equity Growth
PortfolioPortfolio Growth Fund Growth Small-Cap Portfolio Portfolio Portfolio
Portfolio Fund Fund
---------------------------------------------------------------------------=====================
Date Commenced 5/15/97 5/3/99 5/15/97 5/15/97 5/15/97 5/15/97 5/3/99 5/15/97 5/3/99
Operations
1999
Beginning Unit $15.09 $10.00 $13.72 $5.73 $11.95 $8.51 $10.00 $13.86 $10.00
Value
======== ========= ========== ========= ========= ========= ========== ========= =========
Ending Unit Value $21.55 $17.04 $22.37 $12.97 $14.31 $8.79 $9.85 $15.02 $11.44
======== ========= ========== ========= ========= ========= ========== ========= =========
Number of Units 235,562.17 43,282.60 234,428.34 853.03 16,395.18 0.00 0.00 77,731.57 19,507.00
Outstanding
======== ========= ========== ========= ========= ========= ========== ========= =========
Net Assets (000's) $5,076 $738 $5,244 $11 $235 $ - $ - $1,168 $223
======== ========= ========== ========= ========= ========= ========== ========= =========
1998
Beginning Unit $11.22 $10.73 $8.06 $11.71 $8.80 $11.19
Value
======== ========== ========= ========= ========= =========
Ending Unit Value $15.09 $13.72 $5.73 $11.95 $ 8.51 $ 13.86
======== ========== ========= ========= ========= =========
Number of Units 146,172.46 179,884.07 2,582.22 29,364.46 0.00 81,951.27
Outstanding
======== ========== ========= ========= ========= =========
Net Assets (000's) $2,206 $2,468 $15 $351 $- $1,136
======== ========== ========= ========= ========= =========
======== ========= ========= =========
1997
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Value
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Ending Unit Value $11.22 $10.73 $8.06 $11.71 $8.80 $11.19
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Number of Units 42,289.81 87,156.01 4,677.90 20,245.76 257.15 33,470.59
Outstanding
======== ========== ========= ========= =========
======== ========== ========= ========= ========= =========
Net Assets (000's) $474 $935 $38 $237 $2 $ 375
======== ========== ========= ========= ========= =========
<PAGE>
4. SELECTED DATA
Schwab Van Eck
MarketTracSchwab Scudder SteinRoe Strong Strong Worldwide
Growth Money Schwab Scudder Growth & Special Discovery VF Hard
Portfolio Market S&P 500 Capital Income Venture Fund II Schafer Assets
II Portfolio Portfolio Growth Fund A Fund Value Fund
Fund A Fund
-----------------------------------------------------------------------------------------------
Date Commenced 5/15/97 5/15/97 5/15/97 5/3/99 5/3/99 5/15/97 5/15/97 5/3/99 5/15/97
Operations
1999
Beginning Unit $12.80 $10.69 $14.71 $10.00 $10.00 $9.07 $12.03 $10.00 $6.81
Value
======== ========= ========= ======== ======== ======== ========= ======== ========
Ending Unit Value $15.18 $11.11 $17.57 $12.64 $9.36 $12.53 $8.64 $ 8.17
$13.32
======== ========= ========= ======== ======== ======== ========= ======== ========
Number of Units 42,025.42 408,367.17 270,917.40 8,180.65 863.61 4,846.07 4,522.06 9,666.14 1,236.82
Outstanding
======== ========= ========= ======== ======== ======== ========= ======== ========
Net Assets (000's) $638 $4,537 $4,759 $103 $8 $65 $57 $84 $10
======== ========= ========= ======== ======== ======== ========= ======== ========
1998
Beginning Unit $11.42 $10.27 $11.58 $11.31 $9.94
Value $11.07
======== ========= ========= ======== =========== ========
Ending Unit Value $12.80 $10.69 $14.71 $9.07 $12.03 $6.81
======== ========= ========= ======== =========== ========
Number of Units 46,662.83 241,333.04 221,962.56 25,964.83 19,282.66 1,236.82
Outstanding
======== ========= ========= ======== =========== ========
Net Assets (000's) $597 $2,581 $3,264 $236 $232 $8
======== ========= ========= ======== =========== ========
1997
Beginning Unit $10.00 $10.00 $10.00 $10.00 $10.00
Value $10.00
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Ending Unit Value $11.42 $10.27 $11.58 $11.31 $ 9.94
$11.07
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Number of Units 17,849.53 168,197.49 73,884.33 27,112.37 24,541.58 1,195.62
Outstanding
======== ========= ========= ======== =========== ========
======== ========= ========= ======== =========== ========
Net Assets (000's) $204 $1,727 $856 $300 $278 $12
======== ========= ========= ======== =========== ========
</TABLE>
<PAGE>
Van Kampen American
Capital L.I.T. -
Morgan Stanley Real
Estate Securities
Portfolio
- -------------------------------------------------------
- ----------------------------------
Date Commenced Operations 9/17/97
- ----------------------------------
- ----------------------------------
1999
- ----------------------------------
Beginning Unit Value $ 9.33
- ----------------------------------
============
Ending Unit Value $ 8.94
- ----------------------------------
============
Number of Units Outstanding 5,789.35
- ----------------------------------
- ---------------------------------- ============
Net Assets (000's) $52
============
- ----------------------------------
1998
- ----------------------------------
Beginning Unit Value $10.56
- ----------------------------------
============
Ending Unit Value $9.33
- ----------------------------------
============
Number of Units Outstanding 4,699.89
- ----------------------------------
- ---------------------------------- ============
Net Assets (000's) $44
============
- ----------------------------------
1997
- ----------------------------------
Beginning Unit Value $10.00
- ----------------------------------
============
Ending Unit Value $10.56
- ----------------------------------
- ---------------------------------- ============
Number of Units Outstanding 273.65
- ---------------------------------- ============
Net Assets (000's) $3
============
<PAGE>
First Great-West Life & Annuity Insurance Company
-------------------------------------------------
(A wholly-owned subsidiary of
Great-West Life & Annuity Insurance Company)
-------------------------------------------
Financial Statements for the Years Ended December 31,
1999, 1998, and for the period from April 4, 1997
(Inception) to December 31, 1997 and Independent
Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
First Great-West Life & Annuity Insurance Company:
We have audited the accompanying balance sheets of First Great-West Life &
Annuity Insurance Company (a wholly-owned subsidiary of Great-West Life &
Annuity Insurance Company) as of December 31, 1999 and 1998, and the related
statements of income, stockholder's equity, and cash flows for the years then
ended and for the period from April 4, 1997 (Inception) to December 31, 1997.
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 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 financial statements present fairly, in all material
respects, the financial position of First Great-West Life & Annuity Insurance
Company as of December 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended and for the period from April 7, 1997
(Inception) to December 31, 1997, in conformity with generally accepted
accounting principles.
January 31, 2000
<PAGE>
21
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
[Dollars in thousands except for share information]
ASSETS 1999 1998
- ------
-------------------- --------------------
INVESTMENTS:
Fixed maturities:
Held-to-maturity, at amortized cost
(fair value $35,335 and $15,044) $ 37,050 $ 14,500
Available-for-sale, at fair value
(amortized cost $77,740 and $63,321) 74,149 65,154
Short-term investments, available-for-sale (cost
approximates fair value) 1,600 699
-------------------- --------------------
Total Investments 112,799 80,353
Cash 5,443 705
Reinsurance receivable 1,426 123
Deferred policy acquisition costs 1,702 381
Investment income due and accrued 1,204 695
Other assets 3,366 19
Premiums in course of collection 537
Deferred income taxes 2,050 983
Due from Parent Corporation 3,302
Separate account assets 39,881 23,836
-------------------- --------------------
TOTAL ASSETS $ 171,710 $ 107,095
==================== ====================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
POLICY BENEFIT LIABILITIES:
Policy reserves $ 93,434 $ 64,320
Policy and contract claims 4,894 125
Policyholder funds 93
GENERAL LIABILITIES:
Due to Parent Corporation 2,077
Other liabilities 2,794 95
Separate account liabilities 39,881 23,836
-------------------- --------------------
Total Liabilities 141,096 90,453
-------------------- --------------------
COMMITMENTS AND CONTINGENCIES
- -----------------------------
STOCKHOLDER'S EQUITY:
Common stock, $1,000 par value, 10,000 shares
authorized, 2,500 shares issued, and outstanding 2,500 2,500
Additional paid-in capital 28,600 12,600
Accumulated other comprehensive income (loss) (2,334) 717
Retained earnings 1,848 825
-------------------- --------------------
Total Stockholder's Equity 30,614 16,642
-------------------- --------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 171,710 $ 107,095
==================== ====================
See notes to financial statements.
</TABLE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND THE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=================================================================================================================================
PERIOD FROM APRIL 4, 1997 (INCEPTION) TO DECEMBER 31, 1997 [Dollars in
thousands]
1999 1998 1997
---------------- ----------------- -----------------
REVENUES:
Premiums and fee income $ 9,836 $ 78 $ 21
Net investment income 6,278 3,367 243
Net realized gains (losses) on investments (6) 74
---------------- ----------------- -----------------
16,108 3,519 264
---------------- ----------------- -----------------
BENEFITS AND EXPENSES:
Life and other policy benefits 4,391 50
Increase in reserves 4,003
Interest paid or credited to
Contractholders 4,584 1,687
General and administrative expenses 1,466 387 213
---------------- ----------------- -----------------
14,444 2,124 213
---------------- ----------------- -----------------
INCOME BEFORE INCOME TAXES 1,664 1,395 51
PROVISION FOR INCOME TAXES:
Current 65 1,920 71
Deferred 576 (1,317) (53)
---------------- ----------------- -----------------
641 603 18
---------------- ----------------- -----------------
NET INCOME $ 1,023 $ 792 $ 33
================ ================= =================
See notes to financial statements.
</TABLE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Other
Paid-in Comprehensive Retained
Shares Amount Capital Income (Loss) Earnings Total
------------- ------------- ------------- --------------- ------------- -------------
Capital contributions 2,500 $ 2,500 $ 4,000 $ $ $ 6,500
Net income 33 33
Other comprehensive income 5 5
-------------
Comprehensive income 38
------------- ------------- ------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1997 2,500 2,500 4,000 5 33 6,538
Net income 792 792
Other comprehensive income 712 712
-------------
Comprehensive income 1,504
-------------
Capital contribution 8,600 8,600
------------- ------------- ------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1998 2,500 2,500 12,600 717 825 16,642
Net income 1,023 1,023
Other comprehensive income (3,051) (3,051)
(loss)
-------------
Comprehensive income (loss) (2,028)
-------------
Capital contribution 16,000 16,000
------------- ------------- ------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1999 2,500 $ 2,500 $ 28,600 $ (2,334) $ 1,848 $ 30,614
============= ============= ============= =============== ============= =============
See notes to financial statements.
</TABLE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND THE PERIOD
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
FROM APRIL 4, 1997 (INCEPTION) TO DECEMBER 31, 1997
[Dollars in thousands]
1999 1998 1997
-------------- -------------- --------------
OPERATING ACTIVITIES:
Net income $ 1,023 $ 792 $ 33
Adjustments to reconcile net income to net cash
Provided by operating activities
Amortization of investments 59 12 (19)
Realized losses (gains) on sale of investments 6 (74)
Deferred income taxes 576 (1,317) (53)
Changes in assets and liabilities:
Accrued interest and other receivables (1,046) (671) (24)
Policy benefit liabilities 13,389 1,859
Reinsurance receivable (1,303) (123)
Other, net (1,145) (1,361) 326
-------------- -------------- --------------
Net cash (used in) provided
by operating activities 11,559 (883) 263
-------------- -------------- --------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and redemptions of investments:
Fixed maturities:
Held-to-maturity 447
Available-for-sale 15,683 73,340
Purchases of investments:
Fixed maturities:
Held-to-maturity (23,000) (14,500)
Available-for-sale (31,066) (131,924) (5,354)
-------------- -------------- --------------
Net cash used in investing activities (37,936) (73,084) (5,354)
-------------- -------------- --------------
See notes to financial statements.
</TABLE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND THE PERIOD
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
FROM APRIL 4, 1997 (INCEPTION) TO DECEMBER 31, 1997
[Dollars in thousands]
1999 1998 1997
-------------- -------------- --------------
FINANCING ACTIVITIES:
Contract deposits, net of withdrawals 20,494 62,502 84
Due to Parent Corporation (5,379) 1,922 155
Capital contributions 16,000 8,600 6,500
-------------- -------------- --------------
Net cash provided by financing activities 31,115 73,024 6,739
-------------- -------------- --------------
NET (DECREASE) INCREASE IN CASH 4,738 (943) 1,648
CASH, BEGINNING OF PERIOD 705 1,648 0
-------------- -------------- --------------
CASH, END OF PERIOD $ 5,443 $ 705 $ 1,648
============== ============== ==============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid (received) during the year for:
Income taxes $ (1,073) $ 2,390 $ 0
See notes to financial statements.
</TABLE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND THE PERIOD
================================================================================
FROM APRIL 4, 1997 (INCEPTION) TO DECEMBER 31, 1997 [Dollars in thousands except
for share information]
1. ORGANIZATION
Organization - 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, through a $6,000 cash investment
from the Parent Corporation for 2,000 shares of common stock. On
December 29, 1997, the Company issued an additional 500 shares of
common stock to the Parent Corporation for $500. The Company was
licensed as an insurance company in the State of New York on May 28,
1997. The Company does business in New York through two business
segments.
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.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash - Cash includes only amounts in demand deposit accounts.
Investments - 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.
<PAGE>
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.
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.
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.
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 was $112, $0, and $0 in 1999, 1998, and 1997,
respectively.
Separate Accounts - Separate account assets and related liabilities are
carried at fair value. The Company's separate accounts invest in shares
of various external mutual funds. 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, administration fees, and
mortality and expense risk charges.
Due to/from Parent Corporation - Due to/from Parent Corporation
includes amounts due on demand.
Policy Reserves - Life insurance reserves of $93,315 and $64,228 at
December 31, 1999 and 1998 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 $119
and $92 are carried at contractholders' account value at December 31,
1999 and 1998, respectively.
Reinsurance - Policy reserves ceded to other insurance companies are
carried as a reinsurance receivable on the balance sheet. 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.
<PAGE>
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.
Recognition of Premium Income and Expenses - Life insurance premiums
are recognized when due. Revenues for annuity and other contracts
without significant life contingencies are recognized as received. They
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 assets under management, consisting of contract
maintenance fees, administration fees and mortality and expense risk
charges, and is 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.
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.
Regulatory Requirements - In accordance with the requirements of the
State of New York, the Company must demonstrate adequate capital. At
December 31, 1999, the Company was in compliance with the requirement.
The Company is also required to maintain an investment deposit in the
amount of $5,000 in cash or investment certificates with the New York
Insurance Commissioner for the protection of policyholders in the event
the Company is unable to satisfactorily meet its contractual
obligations. A United States Treasury obligation, whose cost
approximates market value, was designated to meet this requirement at
December 31, 1999.
<PAGE>
3. RELATED-PARTY TRANSACTIONS
The Company and the Parent Corporation have service agreements whereby
the Parent Corporation administers, distributes, and underwrites
business for the Company and administers the Company's investment
portfolio and the Company provides certain services for the Parent
Corporation. 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. These transactions are
summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Years Ended
December 31,
--------------------------------------------
1999 1998 1997
====================================================== ------------ ------------ ------------
Investment management expense
======================================================
(included in net investment income) $ 96 $ 47 $ 4
======================================================
Administrative services
======================================================
(included in operating expenses) (28) (48) (15)
======================================================
</TABLE>
================================================================================
The Company and the Parent Corporation have an agreement whereby the
Parent Corporation provides certain financial support related to
maintaining adequate regulatory surplus and liquidity.
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 100% of
the first $50 of coverage per individual life and has a maximum
retention of $250 per individual life. Life insurance policies are
first reinsured to the Parent Corporation up to a maximum of $1,250 of
coverage per individual life. Any excess amount is reinsured to a third
party.
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; consequently, allowances are
established for amounts deemed uncollectible. 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 $1,426 and
$123, respectively.
Total reinsurance premiums ceded to the Parent Corporation in 1999,
1998, and 1997 were $43, $61, and $0, respectively.
<PAGE>
On December 1, 1999, the Company entered into an assumption reinsurance
agreement with Anthem Health & Life Insurance Company of New York (AH&L
NY), to acquire a block of life and health insurance business. The
Company also agreed to the assignment of a coinsurance agreement
between the Parent and AH&L NY on certain policies that would not be
transferred to the Company via assumption reinsurance. The business
primarily consists of administration services only and stop loss
policies. The Company assumed $7,904 of policy reserves and
miscellaneous assets and liabilities in exchange for equal
consideration from AH&L NY and the Parent.
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 Other from Other Net Assumed
Amount Companies Companies Amount to Net
--------------- ---------------- ------------- ---------------- -------------
December 31, 1999:
Life insurance in force:
Individual $ 329,346 $ 125,222 $ 173,773 $ 377,897 46.0%
Group 1,075,000 1,075,000 0.0%
--------------- ---------------- ------------- ----------------
Total $ 1,404,346 $ 125,222 $ 173,773 $ 1,452,897
=============== ================ ============= ================
Premium Income:
Life insurance $ 685 $ 57 $ 93 $ 721 12.9%
Accident/health 9,471 1,064 23 8,430 0.3%
--------------- ---------------- ------------- ----------------
Total $ 10,156 $ 1,121 $ 116 $ 9,151
=============== ================ ============= ================
December 31, 1998:
Life insurance in force:
Individual $ 251,792 $ 173,773 $ $ 78,019 0.0%
Group 0.0%
--------------- ---------------- ------------- ----------------
Total $ 251,792 $ 173,773 $ $ 78,019
=============== ================ ============= ================
Premium Income:
Life insurance $ $ $ $ 0.0%
Accident/health 61 0.0%
--------------- ---------------- ------------- ----------------
Total $ $ 61 $ $ (61)
=============== ================ ============= ================
</TABLE>
<PAGE>
5. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1999 are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
----------- ------------ ------------ ------------ ------------
Held-to-Maturity:
Corporate bonds $ 30,050 $ $ 1,717 $ 28,333 $ 30,050
Public utilities 7,000 2 7,002 7,000
----------- ------------ ------------ ------------ ------------
$ 37,050 $ 2 $ 1,717 $ 35,335 $ 37,050
=========== ============ ============ ============ ============
Available-for-Sale:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations $ 17,918 $ $ 630 $ 17,288 $ 17,288
Other 4,999 5 4,994 4,994
Collateralized mortgage
obligations 19,952 1,371 18,581 18,581
Corporate bonds 34,871 1,585 33,286 33,286
----------- ------------ ------------ ------------ ------------
$ 77,740 $ $ 3,591 $ 74,149 $ 74,149
=========== ============ ============ ============ ============
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:
Corporate bonds $ 14,500 $ 544 $ $ 15,044 $ 14,500
----------- ------------ ------------ ------------ ------------
$ 14,500 $ 544 $ $ 15,044 $ 14,500
=========== ============ ============ ============ ============
Available-for-Sale:
U.S. Treasury Securities
and obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations $ 17,963 $ 1,063 $ $ 19,026 $ 19,026
Other 4,999 59 5,058 5,058
Collateralized mortgage
obligations 19,956 331 20,287 20,287
Corporate bonds 20,403 380 20,783 20,783
----------- ------------ ------------ ------------ ------------
$ 63,321 $ 1,833 $ $ 65,154 $ 65,154
=========== ============ ============ ============ ============
</TABLE>
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 6 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 $ 260 $ 247 $ 4,999 $ 4,994
Due after one year through five years 1,952 1,851
Due after five years through ten years 15,770 15,233 15,007 13,982
Due after ten years 7,302 6,817 10,000 9,920
Mortgage-backed securities 37,870 35,869
Asset-backed securities 11,766 11,187 9,864 9,384
------------ ------------ ------------ ------------
$ 37,050 $ 35,335 $ 77,740 $ 74,149
============ ============ ============ ============
</TABLE>
Proceeds from sales of securities available-for-sale were $15,158,
$68,109, and $0 during 1999, 1998, and 1997, respectively. The realized
gains on such sales totaled $15, $201, and $0 for 1999, 1998, and 1997,
respectively. The realized losses totaled $21, $127, and $0 for 1999,
1998, and 1997, respectively.
6. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<S> <C>
December 31,
------------------------------------------------------------
1999 1998
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------ ------------ ------------
ASSETS:
Fixed maturities and short-term
Investments $ 112,799 $ 111,084 $ 80,353 $ 80,897
LIABILITIES:
Annuity contract reserves without
life contingencies 119 119 92 92
</TABLE>
The estimated fair value 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.
<PAGE>
The fair value of annuity contract reserves without life contingencies
are estimated by discounting the cash flows to maturity of the
contracts, utilizing current credited rates for similar products.
The carrying amounts for receivables and liabilities reported in the
balance sheet approximate fair value due to their short term nature.
7. 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:
State taxes 4.6 6.8
Other (1.1) 1.4
------------- ------------- -------------
Total 38.5 % 43.2 % 35.0 %
============= ============= =============
</TABLE>
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
---------- ---------- ---------- ----------
Policy reserves $ 128 $ $ $ 175
Deferred policy
Acquisition costs 596 134
Deferred acquisition
cost proxy tax 1,312 1,720
Investment assets 1,254 642
State taxes 48 214
---------- ---------- ---------- ----------
Total deferred taxes $ 2,694 $ 644 $ 1,934 $ 951
========== ========== ========== ==========
</TABLE>
Amounts related to investment assets above include $(1,256) and $642
related to the unrealized gains (losses) on the Company's fixed
maturities available-for-sale at December 31, 1999, and 1998,
respectively. Although realization is not assured, management believes
it is more likely than not that all of the deferred tax asset will be
realized.
The Company and its Parent have entered into an income tax allocation
agreement whereby the Parent could file a consolidated federal income
tax return. Under the agreement the Company is responsible for and will
receive the benefits of any income tax liability or benefit computed on
a separate basis. In 1999, the Company will file on a consolidated
basis with its Parent.
<PAGE>
8. COMPREHENSIVE INCOME
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 stockholder's
equity. This Statement requires unrealized gains or losses on the
Company's available-for-sale securities, which prior to adoption were
reported separately in stockholder's equity, to be included in other
comprehensive income (loss).
Other comprehensive income (loss) at December 31, 1999 is summarized as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Tax
Before-Tax (Expense) Net-of-Tax
Amount or Benefit Amount
----------------- ----------------- ----------------
Unrealized gains on securities:
Unrealized holding gains
Arising during the period $ (5,425) $ 1,900 $ (3,525)
----------------- ----------------- ----------------
Net unrealized gains (5,425) 1,900 (3,525)
Reserve and DAC adjustment 729 (255) 474
----------------- ----------------- ----------------
Other comprehensive income (loss) $ (4,696) $ 1,645 $ (3,051)
================= ================= ================
Other comprehensive income at December 31, 1998 is summarized as
follows:
Tax
Before-Tax (Expense) Net-of-Tax
Amount or Benefit Amount
----------------- ----------------- ----------------
Unrealized gains on securities:
Unrealized holding gains
Arising during the period $ 1,826 $ (639) $ 1,187
----------------- ----------------- ----------------
Net unrealized gains 1,826 (639) 1,187
Reserve and DAC adjustment (730) 255 (475)
----------------- ----------------- ----------------
Other comprehensive income $ 1,096 $ (384) $ 712
================= ================= ================
Other comprehensive income at December 31, 1997 is summarized as
follows:
Tax
Before-Tax (Expense) Net-of-Tax
Amount or Benefit Amount
----------------- ----------------- ----------------
Unrealized gains on securities:
Unrealized holding gains
Arising during the period $ 8 $ (3) $ 5
----------------- ----------------- ----------------
Net unrealized gains 8 (3) 5
----------------- ----------------- ----------------
Other comprehensive income $ 8 $ (3) $ 5
================= ================= ================
</TABLE>
<PAGE>
9. SEGMENT INFORMATION
During 1999, the Company had two reportable segments: Employee Benefits
and Financial Services. During 1998 and 1997, the Company had only one
reportable segment, 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 primarily
markets products to public and not-for-profit employers and individuals
and offers life insurance products to individuals and businesses. In
both 1998 and 1999, large dollar bank-owned life insurance policies
were sold to a limited number of customers. Accordingly, these
transactions account for the majority of the investment assets and
reserves, and significantly impact the results of operations, of this
segment.
The accounting policies of the segments are the same as those described
in Note 2. 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.
Summarized segment financial information for the year ended and as of
December 31, 1999 was as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Operations: Employee Financial Total
Benefits Services U.S.
----------------- ----------------- ----------------
Revenue:
Premium and fee income $ 9,625 $ 211 $ 9,836
Net investment income 6,278 6,278
Realized investment gains (losses) (6) (6)
----------------- ----------------- ----------------
Total revenue 9,625 6,483 16,108
Benefits and Expenses:
Benefits 8,378 4,600 12,978
Operating expenses 505 961 1,466
----------------- ----------------- ----------------
Total benefits and expenses 8,883 5,561 14,444
Net operating income before
Income taxes 741 923 1,664
Income taxes 295 346 641
----------------- ----------------- ----------------
Net income $ 446 $ 577 $ 1,023
================= ================= ================
Assets: Employee Financial Total
Benefits Services U.S.
----------------- ----------------- ----------------
Investment assets $ $ 112,799 $ 112,799
Other assets 7,851 11,179 19,030
Separate account assets 39,881 39,881
----------------- ----------------- ----------------
Total assets $ 7,851 $ 163,859 $ 171,710
================= ================= ================
</TABLE>
<PAGE>
10. COMMITMENTS AND CONTINGENCIES
On October 6, 1999, the Parent entered into a purchase and sale agreement (the
Agreement) with First Allmerica Financial Corporation (Allmerica) to acquire,
via assumption reinsurance, Allmerica's group life and health insurance business
on March 1, 2000. The policies resident in the State of New York have been
assigned to the Company as part of the Agreement. This business primarily
consists of administrative services only and stop loss policies. The in-force
business will be immediately coinsured back to Allmerica and 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 $3,000 of which $2,000 will be due on March 1, 2000 with the
remaining amount due on March 1, 2001.
11. DIVIDEND RESTRICTIONS
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 (unaudited):
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
================================================== -------------- -------------- --------------
(Unaudited)
==================================================
Net income (loss) $ 1,407 $ (2,182) $ (19)
==================================================
Capital and surplus 29,494 12,808 6,469
==================================================
</TABLE>
As an insurance company domiciled in the State of New York, the Company
is required to maintain a minimum of $6,000 of capital and surplus. In
addition, the maximum amount of dividends, which can be paid to
stockholders, is subject to restrictions relating to statutory surplus
and statutory adjusted net investment income. The Company should be
able to pay dividends of $2,949 in 2000. The Company paid no dividends
in 1999 and 1998. Dividends are paid as determined by the Board of
Directors.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant the Registrant certifies that it
meets the requirements for effectiveness under Rules 485(b) and has duly caused
this Post-Effective Amendment No. 4 to its Registration Statement on Form N-4 to
be signed on its behalf, in the City of Englewood, State of Colorado, on this
25th day of February , 2000.
VARIABLE ANNUITY-1 SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer of
First Great-West Life &
Annuity Insurance Company
FIRST 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 First Great-West
Life & Annuity Insurance Company and on the dates indicated:
Signature and Title Date
s/ Robert Gratton* 2/25 , 2000
- ------------------------------------ -------
Director and Chairman of the
Board (Robert Gratton)
/s/ William T. McCallum 2/25 , 2000
- ------------------------------------ -------
Director, President and Chief Executive
Officer (William T. McCallum)
Signature and Title Date
/s/ M.T.G. Graye 2/25 , 2000
- ------------------------------------- ------
Senior Vice President, Chief
Financial Officer(M.T.G. Graye)
/s/ Marcia D. Alazraki* 2/25 , 2000
- ------------------------------------- -------
Director, (Marcia D. Alazraki)
/s/ James Balog* 2/25 , 2000
- ------------------------------------- -------
Director, (James Balog)
/s/ James W. Burns* 2/25 , 2000
- ------------------------------------- -------
Director, (James W. Burns)
/s/ Paul Desmarais, Jr.* 2/25 , 2000
- ------------------------------------- -------
Director (Paul Desmarais, Jr.)
/s/ N. Berne Hart* 2/25 , 2000
- ------------------------------------- -------
Director (N. Berne Hart)
/s/ Stuart Z. Katz* 2/25 , 2000
- ------------------------------------- -------
Director (Stuart Z. Katz)
/s/ Brian E. Walsh* 2/25 , 2000
- -------------------------------------- -------
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox 2/25 , 2000
------------------------------- -------
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed with the
Registration Statement.
