As filed with the Securities and Exchange Commission on April 25,
1996
Registration No. 33-82610
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ( )
POST-EFFECTIVE AMENDMENT NO. 2 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 13 (X)
(Check appropriate box or boxes)
MAXIM SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Officers) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check
appropriate space):
Immediately upon filing pursuant to paragraph
(b) of Rule 485
X On April 30, 1996 , pursuant to paragraph (b) of
Rule 485.
60 days after filing pursuant to paragraph
(a)(1) of Rule 485.
On , pursuant to paragraph (a)(1)
of Rule 485.
75 days after filing pursuant to paragraph
(a)(2) of Rule 485.
On , pursuant to paragraph (a)(2)
of Rule 485.
If appropriate, check the following:
This post-effective amendment designates a new
effective date for a previously filed post-
effective amendment.
The Registrant has chosen to register an indefinite number of
securities in accordance with Rule 24f-2. The Rule 24f-2 Notice
for Registrant's most recent fiscal year was filed on February 27,
1996.
MAXIM SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page..................... Cover Page
2. Definitions.................... Glossary of
Special Terms
3. Synopsis....................... Fee Table;
Questions and
Answers about
the Series
Account
Variable
Annuity
4. Condensed Financial Information... Condensed
Financial
Information
5. General Description of
Registrant, Depositor and
Portfolio Companies.......... Great-West Life
& Annuity
Insurance
Company; Maxim
Series Account;
Investments of
the Series
Account; Voting
Rights
6. Deductions..................... Administrative
Charges; Risk
Charges,
Premium Taxes
and Other
Deductions;
Appendix A;
Distribution of
the Contracts
7. General Description of
Variable Annuity Contracts... The Contracts;
Investments of
the Series
Account;
Statement of
Additional
Information
8. Annuity Period................. Annuity Options
9. Death Benefit.................. The Contracts-
Accumulation
Period - Death
Benefit; Prior
to Retirement
Date; Annuity
Payments
10. Purchases and Contract Value... The Contracts-
General; The
Contracts-
Accumulation
Period;
Distribution of
the Contracts;
Cover Page;
Great-West Life
& Annuity
Insurance
Company
11. Redemptions.................... The Contracts-
Accumulation
Period - Total
and Partial
Surrenders;
Return
Privilege
12. Taxes.......................... Federal Tax
Consequences
13. Legal Proceedings.............. Legal
Proceedings
14. Table of Contents of
Statement of Additional
Information.................. Statement of
Additional
Information
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page..................... Cover Page
16. Table of Contents.............. Table of
Contents
17. General Information and
History...................... Not Applicable
18. Services....................... Custodian and
Accountants
19. Purchase of Securities
Being Offered................ Not Applicable
20. Underwriters................... Underwriter
21. Calculation of
Performance Data............. Calculation of
Performance
Data
22. Annuity Payments............... Not Applicable
23. Financial Statements........... Financial
Statements
PART A
INFORMATION REQUIRED IN A PROSPECTUS
MAXIM SERIES ACCOUNT
of Great-West Life & Annuity Insurance Company
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACTS
MAXIMUM VALUE PLAN (MVP)
Distributed by: The Great-West Life Assurance Company
8515 E. Orchard Road, Englewood, Colorado 80111
The individual flexible premium variable annuity contracts
described in this prospectus (Variable Annuity Contracts or
Contracts) are designed and offered to provide retirement
programs for individuals. The Contracts are issued by Great-West
Life & Annuity Insurance Company (GWL and A), a wholly-owned
subsidiary of The Great-West Life Assurance Company (Great-
West). Great-West is the principal underwriter and distributor
of the Contracts. The Contracts may be issued under retirement
plans which qualify for Federal tax benefits under Sections 401
and 408 of the Internal Revenue Code as individual retirement
accounts (IRAs), and under other retirement plans which do not
qualify under the Internal Revenue Code (non-qualified plans).
The Contracts may be purchased by a minimum initial Purchase
Payment of $5,000 for non-qualified plans and $2,000 for IRAs.
Additional Purchase Payments of at least $500 ($50 for automatic
contribution plans) may be made at any time before Annuity
payments begin, subject to certain limitations.
GWL&A believes that the annuity contracts will qualify for
tax treatment under Section 72 of the Internal Revenue Code.
Pursuant to that Section, as amended, surrenders prior to the
Annuity Commencement Date are subject to possible current taxation
as well as the possible imposition of a penalty tax as described
more fully under Federal Tax Status.
The value of the Contract prior to annuitization, and thus
the amount accumulated to provide annuity payments will depend
upon the investment performance of the Series Account. Likewise,
the amount of the initial annuity payment will also depend upon
the prior investment performance of the Series Account.
Subsequent annuity payments may vary based upon the investment
experience of the Series Account. However, the Contract Owner may
elect before the first annuity payment, a fixed annuity payment
which is not affected by such experience. Charges imposed under
the Contracts include contract maintenance charges, deductions for
mortality and expense risk guarantees and a surrender charge. See
Administrative Charges, Risk Charges and Premium Taxes.
Purchase Payments will be allocated to the Maxim Series
Account of GWL&A (the Series Account), a segregated investment
account of GWL&A. The Series Account currently has fourteen
Investment Divisions available to which Purchase Payments may be
allocated. Twelve of the Investment Divisions invest in shares of
Maxim Series Fund, Inc. (The Fund), a series, open-end
management investment company. The Series Account also has two
Investment Divisions which invest in shares of TCI Portfolios,
Inc., (TCI) a diversified, series, open-end management
investment company which is a member of the Twentieth Century
family of mutual funds. The Investment Divisions are more fully
described on page 2 of this prospectus.
This prospectus is accompanied by a current prospectus for the Maxim Series
Fund, Inc., TCI Growth and TCI Balanced. These prospectuses provide
information a prospective investor should know before investing and should be
kept for future reference. Additional information about the contracts has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information, dated april 30, 1996, which is incorporated herein by reference.
The Statement of Additional Information, the Table of Contents of which is set
forth on the last page of this prospectus, is available without charge upon
request by writing or telephoning GWL&A at the address or telephone number set
forth on the last page of this prospectus. These securities have not been
approved or disapproved by the Securities and Exchange Commission nor has the
Commission passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is April 30, 1996 .
Following is a description of the Portfolios of the Fund and TCI
available under this Series Account:
the Money Market Portfolio, which seeks preservation of
capital, liquidity and the highest possible current income
consistent with the foregoing objectives, through investments in
short-term money market securities. Shares of the Money Market
Portfolio are neither insured nor guaranteed by the U.S.
Government. Further, there is no assurance that the Portfolio
will be able to maintain a stable net asset value of $1.00 per
share;
the Bond Portfolio, which seeks to achieve maximum total return,
consistent with the preservation of capital, through investment in
an actively managed portfolio of debt securities;
the Stock Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of the
S&P 500 Index and the S&P MidCap Index, weighted according to
their respective pro rata share of the market;
the U.S. Government Securities Portfolio, which seeks the
highest level of return consistent with preservation of capital
and substantial credit protection by investing primarily in mort-
gage-related securities issued or guaranteed by an agency or
instrumentality of the U.S. Government, other U.S. agency and
instrumentality obligations, and in U.S. Treasury obligations;
the Total Return Portfolio, which seeks to obtain the highest
possible total return, through a combination of income and capital
appreciation, consistent with reasonable risk;
the Small-Cap Index Portfolio, which seeks investment results,
before fees, that correspond to the total return of the Russell
2000 Index;
the Mid-Cap Portfolio (Growth Fund I), which seeks long-term
growth of capital through investment in at least 65% of the
Portfolio's assets in medium sized companies;
the Maxim INVESCO Small-Cap Growth Portfolio, which seeks long-
term capital growth by investing its assets principally in a
diversified group of equity securities of emerging growth
companies with market capitalizations of $1 billion or less at the
time of initial purchase;
the Maxim INVESCO ADR Portfolio, which seeks to achieve a high
total return on investment through capital appreciation and
current income, while reducing risk through diversification by
investing substantially all its assets in foreign securities that
are issued in the form of American Depository Receipts (ADRs) or
foreign stocks that are registered with the Securities and
Exchange Commission and traded in the U.S.;
the Maxim T. Rowe Price Equity/Income Portfolio, which seeks to
provide substantial dividend income and also capital appreciation
by investing primarily in dividend-paying common stocks of
established companies;
the Corporate Bond Portfolio, which seeks high total investment
return by investing primarily in debt securities (including
convertibles), although up to 20% of its assets, at the time of
acquisition, may be invested in preferred stocks;
the Small-Cap Value Portfolio (Ariel Value), which seeks to
achieve long-term capital appreciation by investing primarily in
common stocks, although the Portfolio may also invest in other
securities, including restricted and preferred stocks;
TCI Growth, which seeks capital growth by investment in common
stocks (including securities convertible to common stocks) and
other securities that meet certain fundamental and technical
standards and, in the opinion of TCI's management, have better
than average potential for appreciation;
TCI Balanced, which seeks capital growth and current income and
it is the intention of TCI management to have better-than-average
prospects for appreciation and the remaining assets in bonds and
other fixed income securities.
TABLE OF CONTENTS
Page
FEE TABLE 4
EXAMPLES 5
FINANCIAL HIGHLIGHTS 6
GLOSSARY OF SPECIAL TERMS 9
QUESTIONS AND ANSWERS
ABOUT THE SERIES ACCOUNT VARIABLE ANNUITY 11
PERFORMANCE RELATED INFORMATION 13
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (GWL&A) 14
MAXIM SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY (THE SERIES ACCOUNT) 15
THE CONTRACTS 15
INVESTMENTS OF THE SERIES ACCOUNT 20
ADMINISTRATIVE CHARGES, RISK CHARGES
AND PREMIUM TAXES 23
PERIODIC PAYMENT OPTION 24
ANNUITY OPTIONS 25
FEDERAL TAX STATUS 27
VOTING RIGHTS 31
DISTRIBUTION OF THE CONTRACTS 31
RETURN PRIVILEGE 31
STATE REGULATION 32
REPORTS 32
LEGAL PROCEEDINGS 32
LEGAL MATTERS 32
REGISTRATION STATEMENT 32
STATEMENT OF ADDITIONAL INFORMATION 32
The Contracts are not available in all states
NO PERSON IS AUTHORIZED BY GREAT-WEST LIFE &
ANNUITY INSURANCE COMPANY TO PROVIDE INFORMATION OR
TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERS CONTAINED IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF, OR SOLICITATION OF AN OFFER TO ACQUIRE, ANY
INTEREST OR PARTICIPATION IN THE VARIABLE ANNUITY CONTRACTS
OFFERED BY THIS PROSPECTUS TO ANYONE IN ANY STATE OR
JURISDICTION IN WHICH SUCH SOLICITATION OR OFFER MAY NOT
BE MADE LAWFULLY.
FEE TABLE
Contract Owner Transaction Expenses
Deferred Sales Load (as a percentage of purchase payments
or amount surrendered, as applicable) . . . . . 7% maximum
Surrender Fees . . . . . . . . . . . . . . . . . . . None
Annual Contract Fee . . . . . . . . . . . . . . . . $27.00
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality Risk Fees . . . . . . . . . . . . . . . . . 0.85%
Expense Risk Fees . . . . . . . . . . . . . . . . . . 0.40%
Total Separate Account Annual Expenses . . . . . . . 1.25%
Maxim Series Fund, Inc. (the Fund) Annual Expenses
(as a percentage of Fund average net assets)
Money Market Bond Stock Index U.S. Govt. Securities
Total Return Small-Cap Index
Management Fees
.46% .60% .60% .60% .60% .60%
Other Expenses
None None None None None None
TOTAL Maxim Series Fund Expenses
.46% .60% .60% .60% .60% .60%
Mid-Cap Corporate Bond Small-Cap Value Maxim T.Rowe Price
Equity/Income
Maxim INVESCO ADR Maxim INVESCO Small-Cap Growth
Management Fees
.95% .90% 1.00% .80% 1.00% .95%
Other Expenses
.15% None .35% .15% .30% .15%
TOTAL Maxim Series Fund Expenses
1.10% .90% 1.35% .95% 1.30% 1.10%
TCI Portfolios Annual Expenses
(as a percentage of Fund average net assets)
TCI Growth TCI Balanced
Management Fees
1.00% 1.00%
Other Expenses
None None
TOTAL Maxim Series Fund Expenses
1.00% 1.00%
Any premium or other taxes levied by any governmental entity
with respect to the Contracts will presently be paid by GWL&A.
GWL&A reserves the right to, in the future, deduct the premium tax
from Contract Values instead of GWL&A making the premium tax
payments. The applicable premium tax rates that states and other
governmental entities impose currently range from 0% to 3.50% and
are subject to change by the respective state legislatures, by
administrative interpretations, or by judicial act. (See
Administrative Charges, Risk Charges and Premium Taxes.)
EXAMPLES
If you do not take a distribution from your Contract, or if you
annuitize at the end of the applicable time period, you would pay
the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
1 Year 3 Year 5 Year 10 Year
Money Market Investment Division
$18.42 $ 59.86 $108.09 $264.21
Bond, Stock Index, U.S. Government Securities, Total Return and
Small-Cap Index Investment Divisions
$19.86 $64.46 $116.23 $283.18
Mid-Cap (Growth Fund I) and Maxim INVESCO Small-Cap Growth
Investment Divisions
$25.00 $80.73 $144.87 $348.81
TCI Balanced and TCI Growth Investment Divisions
$23.97 $77.50 $139.20 $335.95
Small-Cap Value (Ariel Value) Investment Division
$27.56 $88.78 $158.93 $380.41
Maxim INVESCO ADR Investment Division
$29.09 $93.58 $167.28 $399.00
Maxim T. Rowe Price Equity/Income
Investment Division
$23.46 $75.88 $136.36 $329.47
Corporate Bond Investment Division
$22.95 $74.25 $133.50 $322.95
If you take a distribution from your Contract at the end of the
application time period, you would pay the following expenses on a
$1,000 investment, assuming a 5% annual return on assets:
1 Year 3 Year 5 Year 10 Year
Money Market Investment Division
$90.63 $114.75 $143.13 $264.21
Bond, Stock Index, U.S. Government Securities, Total Return and
Small-Cap Index Investment Divisions
$91.97 $119.12 $151.04 $283.18
Mid-Cap (Growth Fund I) and Maxim INVESCO Small-Cap Growth
Investment Divisions
$96.75 $134.58 $178.82 $348.81
TCI Balanced and TCI Growth Investment Divisions
$95.80 $131.51 $173.32 $335.95
Small-Cap (Ariel Value) Investment Division
$99.13 $142.22 $192.45 $380.41
Maxim INVESCO ADR Investment Division
$100.56 $146.78 $200.55 $399.00
Maxim T. Rowe Price Equity/Income
Investment Division
$95.32 $129.97 $170.55 $329.47
Corporate Bond Investment Division
$94.84 $128.42 $167.79 $322.95
The above Examples should not be considered a representation
of past or future expenses. Actual expenses may be greater or
less than those shown, subject to the guarantees in the Contracts.
The purpose of the tables shown above is to assist the
Contract Owner in understanding the various costs and expenses
that a Contract Owner will bear directly or indirectly. For more
information pertaining to these costs and expenses see
Administrative Charges, Risk Charges and Premium Taxes.
FINANCIAL HIGHLIGHTS
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
Investment Division
1995 1994
BOND a
Value at beginning of period
$9.76 $10.00
Value at end of period
$ 11.10 $ 9.76
Increase (decrease) in value of accumulation units
$1.34 $ (0.24)
Number of accumulation units outstanding at end of period
1,676 456
STOCK INDEX a
Value at beginning of period
$9.74 $10.00
Value at end of period
$ 13.05 $ 9.74
Increase (decrease) in value of accumulation units
$3.31 $ (0.26)
Number of accumulation units outstanding at end of period
17,200 2,306
GROWTH FUND I a
Value at beginning of period
$10.80 $10.00
Value at end of period
$ 13.49 $10.80
Increase (decrease) in value of accumulation units
$2.69 $ .80
Number of accumulation units outstanding at end of period
24,467 4,508
SMALL-CAP INDEX a
Value at beginning of period
$9.77 $10.00
Value at end of period
$ 12.18 $ 9.77
Increase (decrease) in value of accumulation units
$2.41 $ (0.23)
Number of accumulation units outstanding at end of period
2,706 986
TOTAL RETURN a
Value at beginning of period
$9.67 $10.00
Value at end of period
$ 11.72 $ 9.67
Increase (decrease) in value of accumulation units
$2.05 $ (0.33)
Number of accumulation units outstanding at end of period
9,695 2,085
TCI BALANCED a
Value at beginning of period
$9.85 $10.00
Value at end of period
$ 11.79 $ 9.85
Increase (decrease) in value of accumulation units
$1.94 $ (0.15)
Number of accumulation units outstanding at end of period
7,745 200
a The Investment Division commenced operations on September
19, 1994, at a unit value of $10.00
Investment Division
1995
CORPORATE BOND f
Value at beginning of period
$10.00
Value at end of period
$ 12.03
Increase (decrease) in value of accumulation units
$ 2.03
Number of accumulation units outstanding at end of period
799
MAXIM INVESCO ADR b
Value at beginning of period
$10.00
Value at end of period
$ 11.25
Increase (decrease) in value of accumulation units
$ 1.25
Number of accumulation units outstanding at end of period
2,623
MAXIM INVESCO SMALL-CAP GROWTH b
Value at beginning of period
$10.00
Value at end of period
$ 13.09
Increase (decrease) in value of accumulation units
$ 3.09
Number of accumulation units outstanding at end of period
4,511
MONEY MARKET e
Value at beginning of period
$10.00
Value at end of period
$ 10.17
Increase (decrease) in value of accumulation units
$ .17
Number of accumulation units outstanding at end of period
15,499
SMALL-CAP VALUE (ARIEL VALUE) d
Value at beginning of period
$10.00
Value at end of period
$ 11.60
Increase (decrease) in value of accumulation units
$1.60
Number of accumulation units outstanding at end of period
698
MAXIM T. ROWE PRICE EQUITY/INCOME b
Value at beginning of period
$10.00
Value at end of period
$ 12.92
Increase (decrease) in value of accumulation units
$2.92
Number of accumulation units outstanding at end of period
19,500
b The Investment Division commenced operations on
January 6, 1995, at a unit value of $10.00.
c The Investment Division commenced operations on
January 18, 1995, at a unit value of $10.00.
d The Investment Division commenced operations on March
9, 1995, at a unit value of $10.00.
e The Investment Division commenced operations on August
4, 1995, at a unit value of $10.00.
f The Investment Division commenced operations on August
8, 1995, at a unit value of $10.00.
Investment Division 1995
U.S. GOVERNMENT SECURITIES c
Value at beginning of period
$10.00
Value at end of period
$ 11.12
Increase (decrease) in value of accumulation units
$1.12
Number of accumulation units outstanding at end of period
14,813
TCI GROWTH c
Value at beginning of period
$10.00
Value at end of period
$ 12.94
Increase (decrease) in value of accumulation units
$2.94
Number of accumulation units outstanding at end of period
6,111
Current Accumulation Unit Values can be obtained by calling GWL&A
toll-free at 1-800-523-4106
b The Investment Division commenced operations on
January 6, 1995, at a unit value of $10.00.
c The Investment Division commenced operations on
January 18, 1995, at a unit value of $10.00.
d The Investment Division commenced operations on March
9, 1995, at a unit value of $10.00.
e The Investment Division commenced operations on August
4, 1995, at a unit value of $10.00.
f The Investment Division commenced operations on August
8, 1995, at a unit value of $10.00.
GLOSSARY OF SPECIAL TERMS
As used in this prospectus, the following terms have the
indicated meanings.
Accumulation Period: The period before the Annuity Commencement
Date.
Accumulation Unit: An accounting measure used to determine the
Contract Value before the Annuity Commencement Date.
Annuitant:The person upon whose life the annuity payments will be
based.
Annuity: A series of payments made in respect of an Annuitant for
life with a minimum number of payments certain or an ascertainable
sum guaranteed, or for the joint lifetime of annuitants and
thereafter during the lifetime of the survivor.
Annuity Account: A record that reflects the total value of the
Contract Owner's Contract Value.
Annuity Commencement Date: The date on which annuity payments
commence.
Annuity Period: The period after the Annuity Commencement Date.
Annuity Unit: An accounting measure used to determine the dollar
value of the variable annuity payment.
Automatic Contribution Plan: A plan provided to the Contract Owner
to allow for automatic payment of Purchase Payments. The Purchase
Payment amount will be withdrawn from the Contract Owner's pre-
authorized bank account and automatically credited to the Annuity
Account.
Beneficiary: The person(s) entitled to receive the amount payable
upon death when the Annuitant dies before the Annuity Commencement
Date and there is no secondary annuitant; or any annuity payments
or unpaid proceeds payable under a method of payment option where
the Annuitant dies after the Annuity Commencement Date.
Contract:An agreement between GWL&A and the Contract Owner
providing a variable annuity. The agreement consists of the
contract form and the application.
Contract Owner: The Contract Owner is the person to whom a
Contract, as described herein, is issued.
Contract Value: The sum of the dollar values of all the
Accumulation Units credited to the Contract during the
Accumulation Period.
Executive Offices: 8515 East Orchard Road, Englewood, Colorado
80111.
Fixed Annuity: An annuity with payments which remain the same
throughout the payment period and which do not reflect the
investment experience of the Series Account.
Investment Division: The Series Account is divided into Investment
Divisions, one for each designated Portfolio maintained by the
Fund and/or TCI and made available to the Series Account.
Partial Surrender: A Partial Surrender is a partial redemption of
the Contract Value prior to the Annuity Commencement Date.
Purchase Payment(s): The total dollar amount paid (including the
initial payment and any additional payments made during the
Accumulation Period) to purchase an annuity by or on behalf of a
Contract Owner.
Request: Any request in a form, either written, telephoned or
computerized, satisfactory to GWL&A and received by GWL&A at its
Executive Office, from the Contract Owner, or the Contract Owner's
designee as required by any provisions of the Contract, or as
required by GWL&A.
Series Account: The segregated investment account called Maxim
Series Account of Great-West Life & Annuity Insurance Company
existing under Colorado law and registered as a unit investment
trust under the Investment Company Act of 1940, as amended.
Sub-Account: Each Investment Division is divided into six Sub-
Accounts, two for allocations under the individual flexible
premium contracts issued in connection with IRAs and non-qualified
plans and four for allocations under other variable annuity
contracts previously offered by GWL&A in connection with IRAs and
non-qualified plans.
Surrender: A surrender of the Contract is a total redemption of
the Contract Value prior to the Annuity Commencement Date.
Surrender Charge: An amount equal to a percentage of the amount
surrendered based on the table shown under Administrative
Charges, Risk Charges and Premium Tax. This charge may also be
referred to as a Contingent Deferred Sales Charge.
Transfer:The moving of money from one Investment Division to
another Investment Division.
Valuation Date: The date on which the net asset value of the Fund
and/or TCI is determined. For more information on how shares are
valued see The Contracts - Valuation of Accumulation Units.
Variable Annuity: An annuity providing for payments, the amount of
which will vary in accordance with the changing values of
securities held in the Series Account.
QUESTIONS AND ANSWERS ABOUT
THE SERIES ACCOUNT VARIABLE ANNUITY
What is a variable annuity?
The Variable Annuity Contract offered in this prospectus is
a flexible payment contract, with the option to make additional
Purchase Payments during the Accumulation Period. The Contract
provides for annuity payments commencing at a future date
specified by the Contract Owner. The value of the Contract and
the amount of the annuity payments will vary according to the
investment results of the Fund and/or TCI.
Who can invest and what is the minimum payment?
Any individual of legal age who is not older than age 90,
may purchase a Contract in the states where the Variable Annuity
Contract may be sold lawfully. In the case of IRAs, the
individual must also be eligible to participate in an IRA for
which the Contracts are designed.
The minimum initial Purchase Payment necessary to purchase a
Contract is $5,000 for a non-qualified plan and $2,000 for an IRA.
The Contract Owner may make additional Purchase Payments during
the Accumulation Period. Each additional Purchase Payment must
equal at least $500 unless payments are made through an Automatic
Contribution Plan which is subject to a $50 minimum.
What is the objective of the contracts offered in this Prospectus?
The objective of the Contracts, which may or may not be
realized, is to provide level annuity payments during periods when
the economy is relatively stable and to provide increased annuity
payments during inflationary and growth periods. GWL&A seeks to
assist the Contract Owner in accomplishing this objective by
agreeing to make annuity payments continuously for the life of the
Annuitant(s) under the Contracts even if such Annuitant(s) outlive
the life expectancy used in computing his/her or their annuity.
While GWL&A is obligated to make annuity payments regardless of
the longevity of the Annuitant(s), the amount of variable annuity
payments is not guaranteed. Fixed (guaranteed amount) annuity
options are available under the Contracts at the time of
annuitization. The market risk factors under the Contracts are
borne by the Contract Owner. No assurance can be given that the
value of the Contracts during the years before maturity, or the
aggregate amount of annuity payments under the Contracts after
maturity, will equal or exceed Purchase Payment(s) made under such
Contracts. Nevertheless, GWL&A guarantees that, in the event of
the Annuitant's death before the Contract anniversary nearest his
75th birthday and before the Annuity Commencement Date, the Death
Benefit payable will not be less than the total Purchase
Payment(s) made under the contract less any partial surrenders and
surrender charges. (See The Contracts - Death Benefit Prior to
Annuity Commencement Date.)
What are the Fund and/or TCI?
The Purchase Payment(s) are allocated to the Series Account.
The assets of the Series Account are invested at net asset value
in shares of the Fund and/or TCI. The Fund is an open-end
management investment company of the series type. TCI is also a
diversified, open-end management investment company of the series
type. The Series Account currently invests in twelve of the
Fund's investment Portfolios and two of TCI's investment
Portfolios.
A more complete description of the Fund and its Portfolios
and TCI and its Portfolios can be found in the accompanying
prospectuses which should be read together with this prospectus.
The Fund and TCI are required to redeem shares at GWL&A's request.
GWL&A reserves the right to add, delete or substitute investment
Portfolios subject to the approval, as necessary, by the
Securities and Exchange Commission.
How will the Contracts be distributed?
The Contracts will be distributed through Great-West and
will be sold by duly licensed insurance agents of Great-West,
independent insurance brokers, and various other registered
broker-dealers. (See Distribution of the Contracts.)
Is there a short-term cancellation right?
Yes. Within 10 days (longer in some states) after the
Contract is first received, it may be canceled by the Contract
Owner for any reason by delivering or mailing it along with a
written request to cancel, to GWL&A's Executive Offices or to an
authorized agent of GWL&A. (See Return Privilege.)
What are the charges?
GWL&A deducts a Contract Maintenance Charge of $27
annually from the Contract Value. GWL&A also deducts from the net
asset value of the Series Account an amount, computed daily, equal
to an annual rate of 0.85% for mortality and 0.40% for expense
risk guarantees. There are no deductions made from the Purchase
Payment(s). There are also charges associated with the total or
partial surrender of a Contract prior to the Annuity Commencement
Date. The maximum Surrender Charge is 7%. (See Administrative
Charges, Risk Charges and Premium Taxes.)
In addition to the charges set forth above, Great-West,
which serves as investment adviser to the Fund, imposes a charge
against the net asset value of the Fund, computed daily, for
investment advisory services and certain administrative expenses.
Investors Research Corporation, which serves as investment adviser
to TCI, also imposes a charge against the net asset value of TCI,
computed monthly, for investment advisory services and certain
administrative expenses. (See Investments of the Series Account
- - Investment Advisers.)
What Annuity Options are available?
The Contract Owner may select any of several Annuity
Options, payable on a fixed or variable basis. See Annuity
Options.
Can I surrender the Contract in whole or in part?
Contract Owners may surrender their Contracts in whole or in
part prior to the Annuity Commencement Date, subject to the
following charges: (a) a Contingent Deferred Sales Charge may be
incurred for the total or partial surrender of Contract Value
attributable to Purchase Payments which have been credited to a
Contract for less than 7 contract years, see Administrative
Charges, Risk Charges and Premium Taxes and (b) the Contract
Maintenance Charge in the amount of $27 is incurred for total
surrender of the Contract in any contract year. These surrender
rights may be limited by a retirement plan under which the
Contracts are issued. (See The Contracts-Accumulation Period -
Total and Partial Surrenders, for a description of surrender
procedures). Upon a total or partial surrender, a penalty tax may
be imposed pursuant to Section 72 of the Internal Revenue Code of
1986, as amended (the Code). (See Federal Tax Status.)
Can I change the Investment Division selected for my variable
annuity?
Yes. All or a portion of the Contract Value may be
transferred at any time prior to the Annuity Commencement Date by
Request without charge. If a Transfer Request is made within 30
days of the Annuity Commencement Date, GWL&A may delay the Annuity
Commencement Date by 30 days. (See The Contracts - Transfers
Among Investment Divisions.)
What voting rights will I have?
Contract Owners will be entitled to instruct GWL&A to vote a
proportional number of Fund and/or TCI shares held in the Series
Account based upon the value of their Contract. See Voting
Rights.
PERFORMANCE RELATED INFORMATION
From time to time, the Series Account may advertise certain
performance related information concerning its Investment
Divisions. Performance information about an Investment Division
is based on the Investment Division's historical performance only
and is not intended to indicate future performance. Below is a
table of performance related information for stated periods ended
December 31, 1995 .
Investment Divisions
Yield Effective Yield
Money Market
4.17% 4.26%
Yield and effective yield for the Money Market Investment Division
is for the 7-day period ended December 31, 1995. Yield
calculations take into account recurring charges against the
Series Account and the Money Market Portfolio. All yield and
effective yield information is annualized.
Investment Divisions
Portfolio Inception Portfolio Inception in Contract
Total Return for One Year total Return for Five Years
Total Return for Ten Years or Since Inception
Money Market
2/25/82 8/4/95 -3.04% 2.57% 4.46%
Bond
7/1/82 9/19/94 5.78% 6.49% 7.35%
Stock Index
7/1/82 9/19/94 24.53% 12.37% 10.73%
U.S. Government Securities
4/8/85 1/18/95 6.59% 7.08% 7.49%
Small-Cap Index
12/1/93 9/19/94 15.92% N/A 5.98%
Mid-Cap (Growth Fund I)
12/31/93 9/19/94 16.15% N/A 14.06%
Total Return
8/6/87 9/19/94 12.68% 9.67% 7.72%
TCI Balanced
5/1/91 9/19/94 11.24% N/A 7.73%
TCI Growth
11/20/87 1/18/95 20.39% 12.98% 11.40%
Small-Cap Value (Ariel Value)
12/1/93 3/9/95 6.06% N/A 3.58%
Maxim INVESCO Small-Cap Growth
11/1/94 1/6/95 21.02% N/A 19.53%
Maxim T. Rowe Price Equity/Income
11/1/94 1/6/95 22.51% N/A 18.55%
Maxim INVESCO ADR
11/1/94 1/6/95 6.02% N/A 4.87%
Corporate Bond
11/1/94 8/8/95 19.53% N/A 15.93%
The table above shows the total return for each Investment
Division of the Series Account calculated on the basis of the
historical performance of the corresponding Maxim and TCI
Portfolios available under the Contracts (calculated from
inception for each corresponding Portfolio or ten years, as
applicable) and assumes that the Portfolios were available under
the Contract for all of the periods shown (which they were not).
Actual total return is shown for periods after which the
respective Portfolios became available under Contract. The
returns shown reflect deductions for all Series Account expenses
and Portfolio expenses. The inception dates of each Investment
Division and the corresponding Maxim and TCI Portfolios are also
listed in the table above.
The Series Account may include total return advertisements
or other sales material regarding the various Investment Divisions
available through the Series Account. When the Series Account
advertises total return, it will be calculated for one year, five
years and ten years or some other relevant period if the Portfolio
has not been in existence for at least ten years. Total return is
measured by comparing the value of an investment at the beginning
of the relevant period to the value of the investment at the end
of the period (assuming immediate reinvestment of any dividends or
capital gains distributions).
"Total return" refers to the compounded annual income
generated by an investment in the respective Investment Divisions
over a stated one year or longer period (which longer period will
be for five years and ten, years, or the length of time since the
Investment Division's inception, if less). In calculating total
return, it is assumed that the entire value of the Investment
Division will be distributed on the last day of the period and any
Surrender Charge will be deducted.
For the Money Market Investment Division, "yield" refers to
the income generated by an investment in the Money Market
Investment Division over a stated seven-day period. This income
is then "annualized." That is, the amount of income generated by
the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" of the Money Market Investment
Division is calculated similarly but, when annualized, the income
earned by an investment is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because
of the compounding effect of this assumed reinvestment.
The yield and effective yield calculations for the Money
Market Investment Division includes all recurring charges under
the Contracts (but does not include any Surrender Charges), and is
lower than yield and effective yield for the Fund and TCI which do
not have comparable charges.
For more complete information regarding the method used to
calculate yields, effective yields, and total return of the
respective Investment Divisions, see the Statement of Additional
Information.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (GWL&A)
GWL&A is a stock life insurance company originally organized
under the laws of the state of Kansas as the National Interment
Association. Its name was changed to Ranger National Life
Insurance Company in 1963 and to Insuramerica Corporation prior to
changing to its current name in February of 1982. In September of
1990, GWL&A redomesticated and is now organized under the laws of
the state of Colorado.
GWL&A is authorized to engage in the sale of life insurance,
accident and health insurance and annuities. It is qualified to
do business in Puerto Rico, the District of Columbia and 49 states
in the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a
subsidiary of Great-West Lifeco Inc., a holding company. Great-
West Lifeco Inc. is in turn a subsidiary of Power Financial
Corporation, a financial services company. Power Corporation of
Canada, a holding and management company, has voting control of
Power Financial Corporation. Mr. Paul Desmarais, through a group
of private holding companies, which he controls, has voting
control of Power Corporation of Canada.
GWL&A has primary responsibility for administration of the
Contracts and the Series Account. Its Executive Offices are
located at 8515 E. Orchard Road, Englewood, Colorado 80111.
MAXIM SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY ("THE SERIES ACCOUNT")
The Series Account was originally established by GWL&A under
Kansas law on June 24, 1981. The Series Account now exists
pursuant to Colorado law as a result of the redomestication of
GWL&A. The Series Account has been registered with the Securities
and Exchange Commission as a unit investment trust pursuant to
the provisions of the Investment Company Act of 1940, as amended.
Such registration does not involve supervision of the management
of the Series Account or GWL&A by the Securities and Exchange
Commission
The Series Account currently has fourteen Investment
Divisions available to Contract Owners. If, in the future, GWL&A
determines that marketing needs and investment conditions warrant,
it may establish additional Investment Divisions which will be
made available to existing Contract Owners to the extent and on a
basis to be determined by GWL&A. Each Investment Division will
invest solely in shares of the Fund or TCI. Each Investment
Division is subdivided into six Sub-Accounts. Two sub-accounts
are for allocations under this individual flexible premium
Contract issued in connection with IRAs and non-qualified plans.
The four remaining sub-accounts are for allocations under other
variable annuity contracts previously offered by GWL&A in
connection with qualified plans and non-qualified plans.
GWL&A does not guarantee the investment performance of the
Series Account. The value of a Contract and the amount of
variable annuity payments depend on the investment performance of
the Fund and/or TCI. Thus, the Contract Owner bears the full
investment risk for all amounts allocated to the Series Account.
The Series Account is administered and accounted for as part
of the general business of GWL&A; but the income, capital gains,
or capital losses of each Sub-Account of each Investment Division
are credited to or charged against the assets held in that Sub-
Account in accordance with the terms of each Contract, without
regard to other income, capital gains or capital losses of any
other Sub-Account or arising out of any other business GWL&A may
conduct. Under Colorado law, the assets of the Series Account are
not chargeable with liabilities arising out of any other business
GWL&A may conduct. Nevertheless, all obligations arising under
the contracts are general corporate obligations of GWL&A.
GWL&A has primary responsibility with respect to the
administration of the affairs of the Series Account. In addition,
GWL&A has entered into an administrative services agreement with
Great-West, under which Great-West has agreed to perform certain
administrative services relating to the Contracts. Great-West
will be compensated by GWL&A for performing these services.
THE CONTRACTS
Purchase Payment(s)
Persons wishing to purchase a Contract must complete an
application form to be forwarded to GWL&A for acceptance. The
minimum initial Purchase Payment for a Contract is $5,000 for a
non-qualified Contract and $2,000 for an IRA Contract.
Prior to the Annuity Commencement Date, the Contract Owner
may make additional Purchase Payments either directly or through
an Automatic Contribution Plan. The minimum amount of an
additional Purchase Payment is $500 except if made by an Automatic
Contribution Plan in which case the minimum additional Purchase
Payment amount is $50. Nevertheless, for purposes of calculating
the Surrender Charge (See Administrative Charges, Risk Charges
and Premium Taxes - Surrender Charge) that is incurred for
partial or total surrenders of Contract Value, the initial
Purchase Payment under a Contract determines the status of any
additional Purchase Payments.
Purchase of Contracts
No sales load is deducted from the Contract Purchase
Payment(s); however, upon total or partial surrender of the
Contract Value, GWL&A may deduct certain charges as reimbursement
for sales and administrative expenses. (See Administrative
Charges, Risk Charges and Premium Taxes.)
The initial Purchase Payment will be applied after receipt
by GWL&A within two business days, if the application form is
complete. If an incomplete application form is completed within
five business days of GWL&A's receipt, the initial Purchase
Payment will be applied within two business days of the
application's completion. If the initial Purchase Payment cannot
be so applied, it will be returned at once unless the prospective
purchaser specifically consents to GWL&A retaining the Purchase
Payment until the application is completed . Subsequent Purchase
Payments will be applied upon receipt by GWL&A on the day
received.
Amendment of Contracts
GWL&A reserves the right to amend the contracts to meet the
requirements of the Investment Company Act of 1940 or other
applicable federal or state laws or regulations. GWL&A will
notify the Contract Owners of any such changes.
Ownership
The Contract Owner has all rights under the Contract. Under
law, the assets of the Series Account are held for the exclusive
benefit of Contract Owners and their designated Beneficiaries and
are not chargeable with liabilities arising out of any other
business that GWL&A may conduct.
Contracts issued to non-qualified plans may be assigned to
another person, but such assignment or transfer shall not be
effective until written notification is received and recorded by
GWL&A. Contracts issued for IRAs may not be assigned. GWL&A
assumes no responsibility for the validity or effect of any
assignment. Contract Owners should consult their tax advisors
regarding the consequences of an assignment.
Transfers Among Investment Divisions
Where permitted by state law and the applicable retirement
plan, Investment Division transfers are permitted as described
below, while the Annuitant is living. No charge is made by GWL&A
for effecting any transfer.
Contract Owners who contemplate making a transfer should
carefully consider their annuity objectives and those of their
current and proposed Investment Division(s) before electing a
transfer. Frequent transfers may be inconsistent with the long-
term objective of the Contract. Prior to the Annuity Commencement
Date, a Contract Owner may transfer all or a portion of the
Contract Value allocated to an Investment Division of the Series
Account to another or other Investment Divisions subject to the
limitations described below. A Transfer will result in the
purchase of Accumulation Units in one Investment Division, and a
surrender of Accumulation Units in the other Investment
Division(s). Such Transfer will be accomplished at relative
Accumulation Unit values next computed immediately following
GWL&A's receipt of a Contract Owner's Request unless a later date
is designated. Transfer Requests received after 4:00 p.m.,
EST/EDT, shall be deemed to have been received on the next
following valuation date. Transfers among Investment Divisions
generally may be made without incurring any Federal income taxes.
For Requests made by telephone, GWL&A will use reasonable
procedures such as requiring certain identifying information from
the caller, tape recording the telephone instructions, and
providing written confirmation of the transactions, in order to
confirm that instructions communicated are genuine. Any telephone
instructions reasonably believed by GWL&A to be genuine will be
the responsibility of the Contract Owner, including losses arising
from any errors in the communication of instructions. As a
result, the Contract Owner will bear the risk of loss. If GWL&A
does not employ reasonable procedures to confirm that instructions
communicated are genuine, GWL&A may be liable for any losses due
to unauthorized or fraudulent instructions.
No Transfers are permitted after annuitization.
Dollar Cost Averaging (Automatic Transfers)
A Contract Owner may, by Request, automatically Transfer
amounts from one Investment Division selected from among those
being allowed under this option to any of the other Investment
Divisions at regular intervals. The intervals between Transfers
may be monthly, quarterly, semi-annually or annually. The
Transfer will be initiated one frequency period following the date
of the Request, and thereafter Transfers will continue on the same
day each interval unless terminated by you, or for other reasons
as set forth in the Contract. Transfers can only occur on dates
the New York Stock Exchange ("NYSE") is open. If there are
insufficient funds in the applicable Investment Division on the
date of Transfer, no Transfer will be made; however, Dollar Cost
Averaging will resume once there are sufficient funds in the
applicable Investment Division.
Automatic Transfers must meet the following conditions:
1. The minimum amount that can be Transferred out of the
selected Investment Division is $100 per month.
2. The Contract Owner must specify the percentage or
dollar amount to be Transferred, the Accumulation Unit
Values will be determined on each Transfer date.
Dollar Cost Averaging may be used to purchase Accumulation
Units of the Investment Divisions over a period of time so fewer
Accumulation Units are purchased when prices are greater and more
Accumulation Units when prices are lower. Participation in Dollar
Cost Averaging does not, however, assure a greater profit, nor
will it prevent or necessarily alleviate losses in a declining
market. The Contract Owner, by Request, may cease Dollar Cost
Averaging at any time. The Company reserves the right to modify,
suspend or terminate Dollar Cost Averaging at any time.
The Rebalancer Option
The Contract Owner may, by Request, automatically Transfer
among the Investment Divisions on a periodic basis by electing the
Rebalancer Option. This option automatically reallocates the
Variable Account Value to maintain a particular allocation among
Investment Divisions selected by the Contract Owner. The amounts
allocated in each Investment Division will increase or decrease at
different rates depending on the investment experience of the
Investment Division.
The Contract Owner may Request that the rebalancing occur
one time only, in which case the Transfer will take place after it
has been received and processed by the Company as provided in the
Contract. Rebalancing may also be set up on a quarterly, semi-
annual or annual basis, in which case the first Transfer will be
initiated one frequency period following the date of the Request.
On the Transfer date for the specified Request, assets will be
automatically reallocated to the selected funds. Rebalancing will
continue on the same day each interval unless terminated by you,
or for other reasons as set forth in the Contract. Transfers can
only occur on dates the NYSE is open. In order to participate in
the Rebalancer Option, the Contract Owner's entire Variable
Account Value must be included.
The Contract Owner must specify the percentage of Variable
Account Value to be allocated to each Investment Division and the
frequency of rebalancing. The Contract Owner, by Request, may
modify the allocations or cease the Rebalancer Option at any time.
Participation in the Rebalancer Option and Dollar Cost Averaging
at the same time is not allowed. Participation in the Rebalancer
Option does not assure a greater profit, nor will it prevent or
necessarily alleviate losses in a declining market. The Company
reserves the right to modify, suspend, or terminate the Rebalancer
Option at any time.
ACCUMULATION PERIOD
Allocation of Purchase Payment(s)
Purchase Payment(s) are allocated according to instructions
of the Contract Owner to one of two Sub-Accounts of each existing
Investment Division, one for allocations under a Contract issued
in connection with an IRA and the other for a Contract issued in
connection with a non-qualified plan. Upon allocation to the
appropriate Sub-Account, the Purchase Payment is converted into
Accumulation Units. The number of Accumulation Units credited
with respect to the initial Purchase Payment under a Contract is
determined by dividing the amount allocated to each Sub-Account by
the value of an Accumulation Unit for that Sub-Account. The
number of Accumulation Units with respect to any additional
Purchase Payments under a Contract is determined by dividing the
amount allocated to the appropriate Sub-Account by the value of an
Accumulation Unit for that Sub-Account on the valuation date the
Purchase Payment is accepted. Purchase Payments received after
4:00 p.m., EST/EDT , shall be deemed to have been received on the
next following valuation date. The number of Accumulation Units
so determined shall not be changed by any subsequent change in the
value of an Accumulation Unit, but the dollar value of an
Accumulation Unit will vary in amount depending upon the
investment experience of the Fund and/or TCI .
Valuation of Contracts
The value of a Contract Owner's Contract at any time prior
to the Annuity Commencement Date equals the sum of the values of
the Accumulation Units credited under the Contract.
Valuation of Accumulation Units
A Valuation Date is the date on which the net asset values
of the shares of the Fund and/or TCI are determined. Purchasers
should refer to the Fund and/or TCI prospectuses for information
concerning pricing. The Fund and TCI currently compute the net
asset value per share of each Portfolio as of 4:00 p.m., EST/EDT
daily, Monday through Friday, except on (i) days on which changes
in the value of the Fund's and/or TCI's portfolio securities will
not materially affect the current net asset value of the shares of
the Portfolio of the Fund; (ii) days during which no shares of a
Portfolio of the Fund or TCI were tendered for redemption and no
order to purchase or sell such shares is received by the Fund or
TCI; (iii) holidays on which the New York Stock Exchange is
closed; (iv) or if Independence Day, or Christmas is on a
Saturday, then the preceding Friday; (v) or if either holiday is
on a Sunday the following Monday; and (vi) the day after
Thanksgiving. A Valuation Period is the period between the
ending of two successive Valuation Dates.
Accumulation Units for each Sub-Account are valued
separately, but the method used for valuing Accumulation Units in
each Sub-Account is the same. Initially, the value of each
Accumulation Unit was set at $10.00. Thereafter, the value of an
Accumulation Unit in any Sub-Account on any Valuation Date equals
the value of an Accumulation Unit in that Sub-Account as of the
immediately preceding Valuation Date multiplied by the Net
Investment Factor of that Sub-Account for the current Valuation
Period. Accumulation Unit Values are valued once each day in
which the Fund and/or TCI shares are valued.
The Net Investment Factor for each Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and
subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value per share of the Fund and/or TCI
shares held in the Sub-Account determined as of the end of
the current Valuation Period, plus
(2) the per share amount of any dividend (or, if applicable,
capital gain) distributions made by the Fund and/or TCI , on
shares held in the Sub-Account if the ex-dividend date
occurs during the current Valuation Period, minus or plus
(3) a per unit charge or credit for any taxes incurred by,
or provided for, in the Sub-Account, which is determined by
GWL&A to have resulted from the maintenance of the Sub-
Account; and
(b) is the net result of:
(1) the net asset value per share of the Fund and/or TCI
shares held in the Sub-Account determined as of the end of
the immediately preceding Valuation Period, minus or plus
(2) the per unit charge or credit for any taxes provided for
the immediately preceding Valuation Period; and
(c) is a factor representing the charges deducted from the
Series Account on a daily basis for mortality and expense risks.
Such factor is equal on an annual basis to 1.25% of the daily net
asset value of the Series Account.
The Net Investment Factor may be greater or less than one
and, therefore, the value of an Accumulation Unit in any Sub-
Account may increase or decrease from Valuation Period to
Valuation Period.
The net asset value per share referred to in paragraphs
(a)(1) and (b)(1), above, reflect the investment performance of
the Fund and/or TCI as well as the payment of Fund expenses. (See
Investments of the Series Account.)
Death Benefit Prior to Annuity Commencement Date
In the event of the death of an Annuitant prior to the
Annuity Commencement Date and before age 75, a Death Benefit will
be paid to the Beneficiary in amount which is the greater of
either (1) the Contract Value as of the date notice of death is
received, less Premium Tax, if any; or (2) the total Purchase
Payment(s) made under the Contract less the amount of any partial
surrenders of Contract Value and any Surrender Charges for such
partial surrenders (See Administrative Charges, Risk Charges and
Premium Taxes - Surrender Charge) and periodic payments, less
Premium Tax, if any. If the Annuitant dies before the Annuity
Commencement Date, and after age 75, the Contract Value as of the
date of death, less Premium Tax, if any, will be paid to the
Beneficiary.
If the Contract Owner has not elected an annuity option, the
Beneficiary may make an election during a 60 day period commencing
with the date of death of the Annuitant. The Annuity Commencement
Date shall be the date specified in the election, but no later
than 60 days after receipt of notification of death by GWL&A.
Contract Value for purposes of exercising the annuity option will
be the same as reflected in the preceding paragraph. If no
election is made, a variable life annuity with a guaranteed period
of 20 years will be provided.
The Contract Owner may designate or change a Beneficiary
during the life of the Annuitant by filing a Request in a form
acceptable to GWL&A. Each change of Beneficiary revokes any
previous designation. GWL&A reserves the right to require
presentation of the Contract for endorsement of a change of
Beneficiary.
Unless otherwise provided in the Beneficiary designation,
one of the following procedures will take place on the death of a
Beneficiary: (1) if any Beneficiary dies before the Annuitant,
that Beneficiary's interest will pass to any other surviving
Beneficiaries to be shared equally; or (2) if no other Beneficiary
survives the Annuitant, the Beneficiary's interest will pass to
the Contract Owner. There are no restrictions on a Beneficiary's
use of the proceeds unless previously so limited by the Contract
Owner.
Total and Partial Surrenders
The Contract provides that a Contract Owner may, upon
Request, surrender the Contract, in whole or in part, prior to the
Annuity Commencement Date (unless prohibited by any applicable
retirement plan) subject to the limitations described below.
After any partial surrender, the Contract Value must be at least
$2,000. The Contract Value available upon surrender is the
current value of the contract at the end of the Valuation Period
during which the Request for total or partial surrender is
received by GWL&A. Requests for total or partial surrender
received after 4:00 p.m., EST/EDT, shall be deemed to have been
received on the next following Valuation Date. If a partial
surrender is made within 30 days prior to the Annuity Commencement
Date, GWL&A may delay the Annuity Commencement Date by 30 days.
The amount of any partial surrender requested, plus any Surrender
Charges, will be deducted from the Contract Value. The contract
Owner must elect the Sub-Account(s) from which a partial surrender
is to be made. If no election is made, the Request for partial
surrender will be denied. The proceeds will be paid in one sum
within seven days after GWL&A receives the Request at its
Executive Offices at 8515 East Orchard Road, Englewood, Colorado
80111. The payment may be postponed as permitted by the
Investment Company Act of 1940.
There are certain charges associated with the total or
partial surrender of a Contract prior to the Annuity Commencement
Date. See Administrative Charges, Risk Charges and Premium
Taxes.
The tax consequences of total and partial surrenders are
discussed under the section entitled Federal Tax Status.
INVESTMENTS OF THE SERIES ACCOUNT
Purchase Payments made under a Contract are allocated by
GWL&A in accordance with the direction of the Contract Owner to
the appropriate Sub-Account of the designated Investment Division
of the Series Account, depending upon whether the Contract is
issued in connection with an IRA or a non-qualified plan. Each
Investment Division invests in shares of the Fund or TCI at net
asset value.
Investment Advisers
The investment adviser (the Investment Adviser) for the
Fund is Great-West, which is registered with the Securities and
Exchange Commission as an investment adviser. The Investment
Adviser provides portfolio management and investment advice to the
Fund and administers its other affairs subject to the supervision
of the Fund's Board of Directors.
The Investment Advisory Agreement obligates the Investment
Adviser to provide investment advisory services and to pay all
compensation of and furnish office space for officers and
employees of the Investment Adviser connected with investment and
economic research, trading and investment management of the Fund.
The Investment Advisory Agreement also obligates the Investment
Adviser to pay all other expenses incurred in the Fund's operation
and all of its general administrative expenses, except
extraordinary expenses. As compensation for its services to the
Fund, the Investment Adviser receives monthly compensation at the
annual rate of 0.46% of the average daily net assets of the Money
Market Portfolio of the Fund; 0.60% of the average daily net
assets of each of the following: the Bond Portfolio; the U.S.
Government Securities Portfolio; the Stock Index Portfolio; the
Total Return Portfolio; and the Small-Cap Index Portfolio. The
Investment Adviser also receives monthly compensation at the
annual rate 0.90% of the average daily net asset of the Corporate
Bond Portfolio.
With respect to the remaining Portfolios, the Investment
Adviser receives monthly compensation at the annual rate of 0.80%
of the average daily net assets of the T. Rowe Price Equity/Income
Portfolio; 0.95% of the average daily net assets of each of the
INVESCO Small-Cap Growth and Mid-Cap Portfolios; and, 1.00% of the
average daily net assets of the INVESCO ADR Portfolio and the
Small-Cap Value Portfolio respectively as compensation for its
services in connection with these Portfolios. The Investment
Adviser is responsible for all expenses incurred in performing
investment advisory services. The Fund pays other expenses
incurred in its operation with respect to these Portfolios,
including general administrative and extraordinary expenses. The
Investment Adviser has agreed to pay any expenses of the Fund
which exceed an annual rate of 0.95% of the average daily net
assets of the T. Rowe Price Equity/Income Portfolio; 1.10% of the
average daily net assets of the INVESCO Small-Cap Growth and Mid-
Cap Portfolios respectively; 1.35% of the average daily net assets
of the Small-Cap Value Portfolio and 1.30% of the average daily
net assets of the INVESCO ADR Portfolio.
Investors Research Corporation (Investors Research) is the
investment adviser for TCI. Investors Research has been the
investment adviser of Twentieth Century Investors, Inc., a
registered investment company, since 1958. Additionally, it acts
as the investment adviser for Twentieth Century World Investors,
Inc., a registered investment company, and as an investment
adviser to employee benefit plans and endowment funds.
Investors Research supervises and manages the investment
Portfolios of TCI and directs the purchase and sale of its
investment securities, subject only to any directions of TCI's
Board of Directors. Investors Research pays all the expenses of
TCI except brokerage, taxes, interest, fees and expenses of non-
interested directors (including counsel fees) and extraordinary
expenses. Twentieth Century Services, Inc., Twentieth Century
Tower, 4500 Mail Street, Kansas City, Missouri 64111, is transfer
agent of TCI. It provides facilities, equipment and personnel to
TCI, and is paid for such services by Investors Research. Certain
administrative services that would otherwise be performed by
Twentieth Century Services, Inc., may be performed by the
insurance company that purchases TCI shares, and Investors
Research may pay it for such services.
For the foregoing services, Investors Research is paid a fee
of 1.00% of the average net assets of each series of TCI during
the year. The fee is paid and computed each month by multiplying
1.00% of the average daily closing net asset values of the shares
of each series of TCI during the previous month by a fraction, the
numerator of which is the number of days in the previous month and
the denominator of which is 365 (366 in leap years). Many
investment companies pay smaller investment management fees,
however, most companies also pay in addition certain of their own
expenses, while TCI expenses specified above are paid by Investors
Research.
Investors Research and Twentieth Century Services, Inc. are
both wholly owned by Twentieth Century Companies, Inc. James E.
Stowers, Jr., President of TCI, controls Twentieth Century
Companies, Inc. by virtue of his ownership of a majority of its
common stock.
Sub-Advisers
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as
the sub-advisor to the T. Rowe Price Equity/Income Portfolio. T.
Rowe Price is a Maryland corporation, registered as an investment
adviser with the Securities and Exchange Commission. Its
principal business address is 100 East Pratt Street, Baltimore,
Maryland 21202. T. Rowe Price receives monthly compensation from
the Investment Adviser at the annual rate of 0.50% on the first
$20 million of average daily net assets, .40% on the next $30
million of average daily net assets and 0.40% on all assets once
total average daily net assets exceed $50 million.
INVESCO Trust Company (ITC) serves as the sub-adviser of
the INVESCO Small-Cap Growth Portfolio. ITC is a Colorado Trust
Company and an indirect wholly-owned subsidiary of INVESCO PLC.
ITC is registered as an investment adviser with the Securities and
Exchange Commission. Its principal business address is 7800 E.
Union Avenue, Denver, Colorado 80237. ITC receives monthly
compensation from the Investment Adviser at the rate of 0.55% on
the first $25 million of average daily net assets, 0.50% on the
next $50 million of average daily net assets, 0.40% on the next
$25 million of average daily net assets, and 0.35% on all amounts
over $100 million of average daily net assets.
INVESCO Capital Management, Inc. (ICMI) serves as the sub-
adviser to the INVESCO ADR Portfolio. ICMI is a Delaware
corporation and an indirect wholly-owned subsidiary of INVESCO
PLC. ICMI is registered as an investment adviser with the
Securities and Exchange Commission. Its principal business
address is 1315 Peachtree Street, Atlanta, Georgia 30309. ICMI
receives monthly compensation from the Investment Adviser at the
annual rate of 0.55% on the first $50 million of average daily net
assets, 0.50% on the next $50 million of average daily net assets,
and 0.40% on assets over $100 million of average daily net assets.
Loomis, Sayles & Company, LP (Loomis Sayles) serves as the
sub-adviser to the Corporate Bond Portfolio. Loomis Sayles is a
Delaware limited partnership and is an indirect, majority-owned
subsidiary company of New England Mutual Life Insurance Company.
Loomis Sayles is registered as an investment adviser with the
Securities and Exchange Commission. Its principal business
address is One Financial Center, Boston, Massachusetts 02111.
Loomis Sayles receives monthly compensation from the Investment
Adviser at the annual rate of 0.30% on all assets of the Corporate
Bond Portfolio.
Ariel Capital Management, Inc. (Ariel) serves as the sub-
adviser to the Small-Cap Value Portfolio. Ariel is a privately
held minority-owned money manager registered with the Securities
and Exchange Commission as an investment adviser. Its principal
business address is 307 North Michigan Avenue, Chicago, Illinois
60601. Ariel receives monthly compensation from the Investment
Adviser at the annual rate of 0.40% on assets up to $5 million of
average daily net assets, 0.35% on the next $10 million of average
daily net assets, 0.30% on the next $10 million of average daily
net assets, and 0.25% on assets over $25 million of average daily
net assets.
Janus Capital Corporation (Janus) serves as the Sub-
Adviser to the Mid-Cap (Growth Fund I) Portfolio. As such, Janus
is responsible for managing the investment and reinvestment of
assets of the Growth Fund I, subject to review and supervision of
the Investment Adviser and the Board of Directors. Janus bears
all expenses in connection with the performance of its services,
such as compensating and furnishing office space for its officers
and employees connected with investment and economic research,
trading and investment management of the Mid-Cap Portfolio. Janus
is a Colorado corporation, registered as an investment adviser
with the Securities and Exchange Commission. Its principal
address is 100 Fillmore Street, Suite 300, Denver, Colorado 80206.
The Investment Adviser is responsible for compensating Janus,
which receives monthly compensation from the Investment Adviser at
the annual rate of 0.60% on the first $100 million and 0.55% on
all amounts over $100 million of the Mid-Cap Portfolio assets.
Participating Mutual Funds
The investment objectives and policies of the Fund and TCI
are summarized on page 2 of this prospectus. Information about
the Fund and TCI, their investment objectives, restrictions,
policies, expenses and other information of interest to Contract
Owners may be found in the accompanying Fund and TCI prospectuses,
which should be read together with this prospectus before
investing. The investment objectives and policies of the Fund and
TCI are fundamental and cannot be changed without the affirmative
vote of a majority of the outstanding voting securities of the
Fund or TCI. The portfolio investments of the Fund and TCI are
subject to risks of changing market and economic conditions and
the ability of the Fund's and TCI's management to anticipate such
changes. THERE IS NO ASSURANCE THAT THE FUND OR TCI WILL ACHIEVE THEIR
STATED OBJECTIVES.
Reinvestment and Redemption
All dividend distributions of the Fund and TCI will be
automatically reinvested in shares of the Fund and TCI at their
net asset value on the date of distribution; all capital gains
distributions of the Fund and TCI, if any, will likewise be
reinvested at the net asset value on the record date. GWL&A will
redeem Fund and TCI shares at their net asset value to the extent
necessary to make annuity or other payments under the Contracts.
Substitution of Investments
GWL&A reserves the right, subject to compliance with the law
as currently applicable or subsequently changed, to make additions
to, deletions from or substitutions for the investments held by
the Series Account. In the future, GWL&A may establish additional
Investment Divisions within the Series Account. These Investment
Divisions will be established if and when, in the sole discretion
of GWL&A, marketing needs and investment conditions warrant, and
will be made available to existing Contract Owners to the extent
and on the basis to be determined by GWL&A.
If the shares of the Fund or TCI should no longer be
available for investment, or, in the judgment of GWL&A's
management, further investment in Fund or TCI shares should become
inappropriate in view of the purposes of the Contract, then GWL&A
may substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future, under the Contract.
No substitution of securities in any Contract Owner's account may
take place without prior approval of the Securities and Exchange
Commission.
Mixed and Shared Funding
The Series Account invests in shares of the Fund and TCI,
both of which are diversified open-end management investment
companies, which are registered with the Securities and Exchange
Commission. Such registration does not involve supervision of the
management of the Fund or TCI by the Securities and Exchange
Commission. Shares of the Fund are also sold to the other
separate accounts established by GWL&A to receive and invest
premiums paid under variable annuity contracts and variable life
policies issued by GWL&A. The Fund is also sold to other
insurance companies to fund the benefits of variable annuity or
variable life insurance contracts. Shares of TCI are also sold to
other separate accounts established by GWL&A and to other
insurance companies to fund the benefits of variable annuity or
variable life insurance contracts. In the future, shares of the
Fund or TCI may be sold to other separate accounts of GWL&A or
its affiliates. It is conceivable that, in the future, it may be
disadvantageous for variable life insurance separate accounts and
variable annuity separate accounts to invest in the Fund and/or
TCI simultaneously. Although neither GWL&A nor the Fund nor TCI
currently foresee any such disadvantages, either to variable life
insurance policy owners or to variable annuity contract owners,
the Boards of Directors of both the Fund and TCI intend to monitor
events in order to identify any material conflicts between such
policy owners and contract owners and to determine what action, if
any, should be taken in response thereto. Such action could
include the sale of Fund shares by one or more of GWL&A's separate
accounts or other insurance companies, or the sale of TCI shares
by GWL&A or other insurance companies, which could have adverse
consequences. Material conflicts between policy owners and
contract owners could result from, for example, (1) changes in
state insurance laws, (2) changes in federal income tax laws, (3)
changes in the investment management of any Portfolio of the Fund
or TCI, or (4) differences in voting instructions between those
given by policy owners and those given by contract owners.
ADMINISTRATIVE CHARGES, RISK CHARGES AND PREMIUM TAXES
Contract Maintenance Charge
Prior to the Annuity Commencement Date, GWL&A will deduct a
Contract Maintenance Charge in the amount of $27 annually from the
Contract Value to compensate GWL&A for the administrative services
provided to Contract Owners. This charge will be prorated among
the Investment Divisions in which the Contract is invested based
upon the portion of the Contract Value allocated to the Investment
Division.
Surrender Charge
In the circumstances described below, a Surrender Charge
will be deducted on any total or partial surrender. However, a
Surrender Charge Free Amount may be applied in some circumstances.
The Surrender Charge Free Amount is an amount against which the
Surrender Charge will not be assessed. The Surrender Charge Free
Amount shall not exceed 10% of the Contract Value at December 31
of the calendar year prior to the year in which the amount is
being surrendered. Only one Surrender Charge Free Amount is
available in each calendar year. The Surrender Charge Free Amount
will be applied on the first surrender made in that year.
On any total or partial surrender, a Surrender Charge will
be deducted on the amount in excess of the Surrender Charge Free
Amount except when the Contract Owner elects: (a) a payment
option with an annuity payment period of at least thirty-six (36)
months; or (b) a periodic payment option (unless there is a
partial surrender, see Periodic Payment Option ) ; or (c) a
surrender due to a medical condition requiring the Contract
Owner's confinement to an eligible nursing home for 90 consecutive
days. The Surrender Charge will be equal to a percentage of the
amount distributed based on the table shown below:
Year Completed Percentage of Distribution
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7+ 0%
Deductions for Assumption of Mortality and Expense Risks
GWL&A deducts, from the daily net asset value of the Series
Account attributable to the Contracts , an amount, computed daily,
which is equal to an annual rate of 1.25%, 0.85% allocable to
mortality risk and 0.40% allocable to expense risk. This charge
is designed to compensate GWL&A for its assumption of certain
mortality, death benefit and expense risks described below. The
level of this charge is guaranteed and will not change.
GWL&A's assumption of mortality risks guarantees that the
variable annuity payments made to the Beneficiary or other payee
will not be affected by the mortality experience (life span) of
persons receiving such payments, or of the general population.
GWL&A assumes this mortality risk by virtue of annuity rates
incorporated in the Contract which cannot be changed. In
addition, if the Annuitant should die prior to the Contract
anniversary nearest his 75th birthday, GWL&A is at risk to the
extent that the amount of Purchase Payment(s) made exceed the
Contract Value less any partial surrenders and Surrender Charges
as of the date notice of death is received.
GWL&A also assumes the risk that the charges for
administrative expenses, which cannot be increased by GWL&A, will
be insufficient to cover actual administrative costs. The
administrative services which GWL&A provides to Contract Owners
include processing of application for and issuance of the
Contracts, processing of transfers among Investment Division as
requested, purchase and redemption of Fund and/or TCI shares as
required, maintenance of records, administration of annuity
payments, accounting and valuation services, and regulatory and
reporting services.
If the 1.25% charge proves insufficient to cover
administrative costs in excess of the Contract Maintenance Charge
made for administrative expenses, plus any losses from the
mortality risk, the loss will be borne by GWL&A; conversely, if
the amount deducted proves more than sufficient, the excess will
be a profit to GWL&A.
Deductions for Premium Taxes
Any premium tax or other tax (herein collectively referred
to as premium taxes) levied by any government entity as a result
of the existence of the Contracts or the Series Account is
currently paid when due by GWL&A in accordance with applicable
law. Because GWL&A is a Colorado corporation a tax of up to 3.50%
could apply if a tax is levied.
The applicable premium tax rates that states and other
governmental entities impose on the purchase of an annuity are
subject to change by the respective state legislatures, by
administrative interpretations or by judicial acts. Such premium
taxes will depend, among other things, on the state of residence
of the Contract Owner and the insurance tax laws and status of
GWL&A in these states when the premium taxes are incurred.
PERIODIC PAYMENT OPTION
The periodic payment option is a distribution option that is
not considered an Annuity option. Since the periodic payment
option is not an Annuity option, the Contract remains in the
Accumulation Period and retains all rights and flexibility
described in this prospectus except that no Purchase Payments may
be made while the Contract Owner is receiving periodic payments.
The Surrender Charge does not apply to periodic payments but if a
partial surrender from the periodic payment option is made, a
Surrender Charge will be deducted and the Surrender Charge Free
Amount will not apply. If periodic payments cease, the Contract
Owner may resume making Purchase Payments at which time the
Surrender Charge Free Amount again becomes effective.
For distributions from a periodic payment option, all or a
portion of such distributions will be includable in the Contract
Owner's gross income in the year in which the distribution is
taken. In addition, an early withdrawal penalty may apply if
such distribution is taken prior to age 59-1/2.
To elect the periodic payment option, the Contract Owner
must Request that all or part of the Contract Value be applied to
the periodic payment option. The Contract Owner must specify: (1)
the payment frequency (either 12, 6,3 or 1 month intervals); (2)
the payment amount (a minimum of $50 is required); (3) the
calendar day of the month on which payments will be made; (4) one
payment option; and, (5) the allocation of payments among Sub-
Accounts. Once a Sub-Account has been depleted, GWL&A will
automatically prorate the remaining payments among all Sub-
Accounts unless the Contract Owner Requests the selection of
another Sub-Account.
Payments will cease the earlier of: (1) the date the amount
elected to be paid under the option selected has been reduced to
zero; (2) the Contract Owner Requests the payments to stop; (3)
the death of the Annuitant or Contract Owner; or, (4) the Contract
Value is zero.
The Contract Owner must elect one of the following 3 payment
options: (1) Income for a Specified Period for at least thirty-six
(36) months - The Contract Owner elects the duration over which
payments will be made. This amount may vary based on the
duration; or, (2) Income of a Specified Amount for at least
thirty-six (36) months - The Contract Owner elects the dollar
amount of the payments. Based on the amount elected, the duration
may vary; or, (3) Minimum Distribution - The Contract Owner may
Request minimum distributions, on IRAs only , as specified under
Section 401(a)(9) of the Code.
ANNUITY OPTIONS
A Contract Owner selects an Annuity Commencement Date prior
to issuance of the Contract, except that Contracts issued in
connection with individual retirement annuity plans (described in
Section 408(b) of the Code) provide for annuity payments to
commence at the date and under the option specified in the plan.
Upon Request, the Contract Owner may change a previously
selected Annuity Commencement Date by postponing or accelerating
the Annuity Commencement Date. The Contract Owner must give GWL&A
at least 30 days notice before effecting the commencement of
annuity payments.
The Contract provides for four annuity payment options
(Annuity Options) described below, as well as any such other
Annuity Options as the Company may choose to make available in the
future. The Contract Owner may choose a combination of any of the
Annuity Options. A Contract Owner may change his selection of an
Annuity Option upon Request at least 30 days prior to the Annuity
Commencement Date. The Contract also provides that the Contract
Owner may elect to receive the Contract Value in one sum at the
Annuity Commencement Date. However, a one sum amount and annuity
payment periods of less of than thirty-six (36) months will be
subject to any applicable Surrender Charge.
If a Contract Owner does not elect otherwise, the Contract
automatically provides for a variable life annuity (with respect
to the variable portion of the Contract Value) and/or a fixed life
annuity (with respect to the fixed portion of the Contract Value)
with a guaranteed period of 20 years.
The level of annuity payments under the following options is
based upon the option selected and, depending on the option
chosen, such factors as the age at which payments begin and the
frequency and duration of payments.
Option No. 1: Income of Specified Amount (available solely as
fixed dollar payments)
The amount applied under this Option may be paid to the
payee in equal annual, semiannual, quarterly or monthly
installments of the dollar amount elected of not more than 240
months. Since payments under this Option will not vary with the
investment performance of the Investment Division(s) of the Series
Account, no deduction will be made by GWL&A after the Annuity
Commencement Date for the assumption of mortality and expense
risks.
Option No. 2: Income for Specified Period (available solely as
fixed dollar payments)
Annuity Payments are paid to a payee annually, semiannually,
quarterly or monthly, as elected, for a selected number of years.
Since payments under this Option will not vary with the investment
performance of Investment Division(s) of the Series Account, no
deduction will be made by GWL&A after the Annuity Commencement
Date for assumption of mortality and expense risks.
Option No. 3: Life Annuity with Payments Guaranteed for Designated
Period
This option provides for monthly payments during a
designated period and thereafter throughout the lifetime of the
payee. The designated period may be 5, 10, 15 or 20 years. This
option is available on either a variable or a fixed dollar payment
basis.
Option No. 4: Life Annuity
This option provides for monthly payments for the
Annuitant's lifetime, without a guaranteed period. This option is
available on either a variable or fixed dollar payment basis.
Variable Annuity Payments
Variable annuity payments will be determined on the basis of
(i) the value of the Contract prior to the Annuity Commencement
Date; (ii) the Annuity Tables contained in the Contract which
reflect the adjusted age of the Annuitant, (iii) the type of
Annuity Option selected; and (iv) the investment performance of
the Fund. The Annuitant receives the value of a fixed number of
Annuity Units each month.
The dollar amount of the first monthly variable annuity
payment is determined by applying the total value of the
Accumulation Units credited under the Contract valued as the fifth
Valuation Period prior to the Annuity Commencement Date (less any
premium taxes) to the Annuity Tables contained in the Contract.
Amounts shown in the tables are based on the 1983 Table (a) for
Individual Annuity Valuation with an assumed investment return at
the rate of 2.5% per annum. The first annuity payment is
determined by multiplying the benefit per $1,000 of value shown in
the Contract tables by the number of thousands of dollars of value
accumulated under the Contract. These Annuity Tables vary
according to the form of annuity selected and according to the age
of the Annuitant at the Annuity Commencement Date.
At the Annuity Commencement Date, the Annuitant is credited
with Annuity Units for the Sub-Account on which variable annuity
payments are based. The number of Annuity Units to be credited is
determined by dividing the amount of the first monthly payment by
the value of an Annuity Unit as of the fifth Valuation Period
prior to the Annuity Commencement Date in each Investment Division
SubAccount selected. Although the number of Annuity Units is
fixed by this process, the value of such Units will vary with the
value of the Fund. (See also Administrative Charges, Risk
Charges and Premium Taxes.)
The 2.5% interest rate stated above is the measuring point
for subsequent annuity payments. If the actual Net Investment
Rate (annualized) exceeds 2.5%, the payment will increase at a
rate equal to the amount of such excess. Conversely, if the
actual rate is less than 2.5%, annuity payments will decrease. If
the assumed rate of interest were to be increased, annuity
payments would start at a higher level but would increase more
slowly or decrease more rapidly.
The amount of the second and subsequent payments is
determined by multiplying the Contract Owner's fixed number of
Annuity Units by the appropriate Annuity Unit value for the fifth
Valuation Period preceding the date that payment is due.
The Annuity Unit value at the end of any Valuation Period is
determined by multiplying the Annuity Unit value for the
immediately preceding Valuation Period by the product of:
( a) the Net Investment Factor of the Sub-Account for the
Valuation Period for which the Annuity Unit value is being
determined, and
(b) a factor of .999932 to neutralize the assumed investment
return of 2.5% per year in the annuity table.
The value of each Sub-Account's Annuity Unit was set
initially at $10.00 .
The value of the Annuity Units is determined as of a
Valuation Period five days prior to the payment in order to permit
calculation of amounts of annuity payments and mailing of checks
in advance of their due dates. Such checks will normally be
issued and mailed at least 3 days before the due date.
Fixed Annuity Payments
Contract Owners may elect an Annuity Option that provides
for annuity payments on a fixed basis. GWL&A guarantees the
dollar amount of payments made on a fixed basis throughout the
payment period. The amount applied to purchase an annuity will be
the Contract Value of that portion of the Contract Value applied,
less any applicable premium tax, based on the Accumulation Unit
Value for the fifth Valuation Period preceding the Annuity
Commencement Date.
Proof of Age and Survival
GWL&A may require proof of age or survival of any payee upon
whose age, sex or survival payments depend.
Frequency and Amount of Annuity Payments
Annuity payments, both fixed and variable will be paid
annually, semiannually, quarterly or monthly, as requested.
However, if the net amount available in the Series Account to
apply under any Annuity Option is less than $2,000, GWL&A shall
have the right to pay such amount in one lump sum in lieu of the
payment otherwise requested. In addition, if the payments from
the Series Account would be or become less than $50, GWL&A shall
have the right to change the frequency of payments to such
intervals (at least once a year) as will result in payments of at
least $50. The maximum amount that may be applied under any
Annuity Option, or any combination thereof, without GWL&A's prior
written consent is $1,000,000.
FEDERAL TAX STATUS
Introduction
The Contracts are designed for use by individuals who wish
to purchase non-qualified annuities pursuant to Section 72 of the
Code or individual retirement annuities which may qualify for
special tax treatment under Section 408 of the Code.
The ultimate effect of federal income taxes on the amount
held under a Contract, on annuity payments and on the economic
benefit to the Contract Owner, Annuitant or Beneficiary depends
upon GWL&A's tax status, on the type of Contract purchased and
upon the tax and employment status of the individual concerned.
Maxim Series Account is taxed as a part of GWL&A; not as a
"regulated investment company" under Part I of Subchapter M of the
Code. GWL&A is taxed as a life insurance company as described
below.
It should be understood that the following discussion is not
exhaustive, and is not intended as tax advice. Special rules may
apply to certain situations not discussed here. GWL&A intends to
comply with all rules and regulations, including but not limited
to the diversification requirements of the Code to assure that the
Contracts will continue to be treated as annuity contracts for
federal income tax purposes. However, this discussion is based
upon GWL&A's understanding of current federal income tax law and
no representation is made regarding the likelihood of continuation
of current law or of the current interpretations by the Internal
Revenue Service. No attempt is made to consider state or other
tax laws. The Contract Owner, Annuitant and Beneficiary are
responsible for determining that contributions, distributions and
other transactions with respect to the Contract comply with
applicable laws. For further information, consult a qualified tax
adviser.
Taxation of GWL&A
GWL&A is taxed on its insurance business in the United
States as a life insurance company in accordance with Part I of
Subchapter L of the Code. Investment income and realized capital
gains on the assets of the Series Account are reinvested and are
taken into account in determining the Series Account Value. Under
existing federal income tax law, such amounts do not result in any
tax on GWL&A which will be chargeable to the Contract Owner or the
Series Account. GWL&A reserves the right to make a deduction from
the Contract for taxes, if any, imposed with respect to such items
in the future.
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in
general. A Contract Owner who is a natural person generally is
not taxed on increases (if any) in the value of the Contract until
a total or partial distribution from the Contract occurs.
However, the Contract Owner may be subject to taxation currently
under certain circumstances. In addition, an assignment, pledge,
or agreement to assign or pledge any portion of the Contract
generally will be treated as a distribution. The taxable portion
of a distribution (in the form of a single sum payment or an
annuity) is taxable as ordinary income.
The Contract Owner of any annuity contract who is not a
natural person (e.g. a corporation) generally must include in
income any increase in the excess of the value in the Contract
over the "investment in the contract" during each taxable year.
The investment in the contract is the amount of after-tax premiums
paid for a non-qualified annuity contract or any non-deductible
amounts contributed to an IRA. The rule does not apply where the
non-natural person is the nominal owner of a Contract and the
beneficial owner is a natural person. Certain other exceptions
may apply. A prospective owner that is not a natural person may
wish to discuss these matters with a competent tax adviser. The
following discussion generally applies to a Contract owned by a
natural person.
Partial or Total Distributions
Under Section 72 of the Code, partial distributions are
generally treated as taxable income to the extent that the value
in the Contract immediately before the distribution exceeds the
"investment in the contract" at that time. Total distributions
are taxed as ordinary income to the extent that the amount
received exceeds the "investment in the contract."
Annuity Payments
The tax consequences may vary depending upon the annuity
form elected under the Contract. In general, however, only the
portion of the annuity payment that represents the amount by which
the value in the Contract exceeds the investment in the contract
will be taxed. Once the investment in the contract is recovered,
the full amount of any additional annuity payments is taxable.
For fixed annuity payments there is no tax on the portion of each
payment which represents the same ratio that the investment in the
contract bears to the total expected value of the annuity payments
for the term of the payments; the remainder of each annuity
payment is taxable. Once the investment in the Contract has been
fully recovered, the full amount of any additional annuity
payments is taxable. If the annuity payments cease as a result of
an Annuitant's death before full recovery of the investment in the
contract, a competent tax adviser should be consulted regarding
the deductibility of the unrecovered amount.
Transfer of Ownership
The transfer of ownership of a Contract, the designation of
an Annuitant, Payee or Beneficiary who is not also the Owner may
result in adverse tax consequences to the Contract Owner that are
not discussed here. A Contract Owner contemplating any such
designation, transfer or assignment should contact a competent tax
adviser with respect to the potential tax effects of such a
transaction.
Exchanges
Code Section 1035 provides that no gain or loss will be
recognized on the exchange of one annuity contract for another.
Contracts issued on or after January 19, 1985 in exchange for
another annuity contract are treated as new contracts for purposes
of the penalty and distribution at death rules. Special rules
apply to contracts issued prior to August 14, 1982. Prospective
Contract Owners wishing to take advantage of a Section 1035
exchange should consult their tax adviser.
Multiple Contracts
All non-qualified deferred annuity contracts issues by the
same insurer (or affiliates) to the same Contract Owner during any
calendar year will be treated as one annuity contract in
determining the amount includable in gross income under Section
72(e) of the Code and any regulations which may be issued
thereunder. Amounts received under any such Contract may be
taxable (and may be subject to the 10% penalty tax) to the extent
of the combined income in all such Contracts.
Individual Retirement Annuities (IRAs)
The Contract may be purchased as an IRA as described in
Section 408 of the Code. Section 408 permits eligible individuals
to contribute to an IRA. The annuitant must at all times be the
Contract Owner. The entire interest of the Contract Owner is
nonforfeitable and nontransferable. Contributions, except for
rollover contributions, may not exceed the limitations allowable
under the Code. This IRA may be purchased with retirement
savings distributed from another IRA, a tax-qualified employer
pension or profit-sharing plan, or a Code Section 403(b) tax
sheltered annuity which are rolled over into this IRA. The
amounts rolled over are not taxable in the year of transfer.
Rollover IRAs are subject to additional requirements not discussed
here. Please consult a competent tax adviser regarding these
rules.
The Contract Owner may not borrow from the contract or
pledge the annuity or any portion of it as security for a loan.
If the Contract Owner borrows money under the Contract, including
a policy loan, or pledges any portion of the Contract as security
for a loan, the Contract ceases to qualify as an IRA as of the
first day of the year and the fair market value of the Contract is
includable in the Contract Owner's gross income for the year.
Required Beginning Date/Minimum Distribution Requirements
The Contract Owner's entire interest in the IRA must be
distributed, or begin to be distributed, by the Contract Owner's
required beginning date, which is April 1 following the calendar
year in which the Contract Owner reaches age 70 1/2. For each
succeeding year, a distribution must be made on or before December
31.
All distributions must satisfy the requirements of Section
401(a)(9) of the Code, including the incidental death benefit
requirements of Section 401(a)(9)(G) and the regulations
thereunder. If the amount distributed does not meet the minimum
requirements, a 50% penalty tax on the amount which was required
to be, but was not distributed may be imposed upon the Contract
Owner under Section 4974.
Federal Taxation of IRAs
A Contract Owner is generally not taxed on increases (if
any) in the value of the Contract until distribution occurs. Code
Section 408(d)(1) provides that distributions from IRAs, unless
rolled over to another IRA as provided in the Code, are generally
taxed for federal income tax purposes under Code Section 72.
Under these rules, a portion of the distribution may be excludable
from income if any non-deductible contributions were made.
However, if the IRA was funded entirely from deductible (pre-tax)
contributions, the entire amount distributed will be taxable to
the Contract Owner as ordinary income in the year distributed.
There is no special averaging treatment for lump sum
distributions.
Penalty Taxes
Distributions made before the Contract Owner attains age 59
1/2 are premature distributions and subject to an additional tax
equal to 10% of the amount of the distributions which is
includable in gross income in the tax year. However, under Code
Section 72(t), the penalty tax will not apply to distributions:
(1) made to a beneficiary on or after the death of the Contract
Owner; (2) attributable to the Contract Owner's being disabled
within the meaning of Code Section 72(m)(7); or (3) made as a part
of a series of substantially equal periodic payments (at least
annually) for the life or life expectancy of the Contract Owner or
the joint lives or life expectancies of the Contract Owner and his
or her designated beneficiary.
If the penalty tax does not apply to a distribution as a
result of the application of item (3) above, and the series of
payments are subsequently modified (other than by reason of death
or disability), (a) before the close of the period which is five
(5) years from the date of the first payment and after the
Contract Owner attains age 59 1/2, or (b) before the Contract
Owner attains age 59 1/2, the tax for the first year when the
modification occurs will be increased by an amount (determined by
the regulations) equal to the tax that would have been imposed but
for item (3) above, plus interest for the deferral period.
If the aggregate of all retirement distributions from
qualified plans and IRAs in a calendar year exceeds $150,000, a
penalty tax of 15% may be imposed on the Contract Owner on the
excess portion of the distributions in addition to any ordinary
tax. If the penalty tax on excessive distributions and the
penalty tax on premature distributions apply to the same
distribution, the penalty tax on excessive distributions is
reduced by the amount of penalty tax on the premature
distribution.
Distributions on Death of Contract Owner
Distributions made to a Beneficiary upon the Contract
Owner's death must be made pursuant to the rules contained in
Section 401(a)(9) of the Code. Generally, if the Contract Owner
dies while receiving annuity payments or other required minimum
distribution, but before the entire interest in the annuity has
been distributed, the remainder of his interest must generally be
distributed to the Beneficiary at least as rapidly as under the
method in effect as of the Contract Owner's date of death.
If the Contract Owner dies before payments have begun, his
entire interest must generally be distributed in full on or before
December 31 of the calendar year that contains the fifth
anniversary of the date of the Contract Owner's death, unless the
Contract Owner has named an individual beneficiary. If an
individual other than the surviving spouse has been designated as
Beneficiary, payments may be made over the life of that individual
or over a period not extending beyond the life expectancy of the
Beneficiary so long as payments begin on or before December 31 of
the year following the year of death. If the Beneficiary is the
Contract Owner's spouse, distributions are not required to begin
until the date the Contract Owner would have attained age 70 1/2.
If the spouse dies before distributions begin, the rules discussed
above will apply as if the spouse were the Contract Owner.
However, the surviving spouse, if the Beneficiary, may elect
to treat the entire annuity as his or her own IRA regardless of
whether distributions had begun to the deceased Contract Owner or
have begun to the surviving spouse. As the new Contract Owner,
the surviving spouse may make contributions to the IRA and make
rollovers from it. Such an election is deemed made if any amounts
required to be distributed on the Contract Owner's death under
these rules have not been distributed or any additional amounts
are contributed to the IRA.
Contract Owners and beneficiaries should seek competent tax
or legal advice about the tax consequences of distributions.
Federal Income Tax Withholding on Distributions
Taxable distributions from an IRA are subject to income tax
withholding; if the distribution is in the form of an annuity or
similar periodic payments, amounts are withheld as though each
distribution were a payment of wages pursuant to the recipient's
Form W-4; in the case of any other kind of distribution, a flat
10% is withheld, unless the recipient elects not to have the tax
withheld.
VOTING RIGHTS
GWL&A will vote the shares held by the Investment Divisions
of the Series Account at regular and special meetings of
stockholders of the Fund or TCI. The Investment Company Act of
1940 (the 1940 Act) and the regulations thereunder as presently
interpreted, require that the shares of the applicable underlying
mutual fund be voted in accordance with instructions received from
Contract Owners having voting interests in the Sub-Accounts and,
accordingly, GWL&A will do so. However, if the 1940 Act or any
regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result GWL&A
determines that it is permitted to vote the Fund and TCI shares in
its own right, it may elect to do so.
The number of votes which a Contract Owner has the right to
cast will be determined by applying his percentage interest in a
Sub-Account to the total number of votes attributable to the sub-
Account. In determining the number of votes, fractional shares
will be recognized. After the Annuity Commencement Date the votes
attributable to a Contract will decrease.
Fund or TCI shares held in a Sub-Account as to which no
timely instructions are received, and shares that are not
otherwise attributable to Contract Owners, will be voted by GWL&A
in proportion to the voting instructions which are received with
respect to all Contracts participating in that Sub-Account of this
Series Account. Voting instructions to abstain on any item to be
voted upon will be applied on a pro-rata basis to reduce the votes
eligible to be cast.
Each person having a voting interest will receive proxy
materials, reports and other materials relating to the applicable
underlying mutual fund.
DISTRIBUTION OF THE CONTRACTS
Great-West is the principal underwriter and the distributor
of the Contracts. Great-West is registered with the Securities
and Exchange Commission under the Securities Exchange Act of 1934
as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. Applications for the Contracts will be
solicited by duly licensed insurance agents of Great-West, as well
as independent registered insurance brokers who must also be NASD
registered broker-dealers or representatives thereof.
The maximum commission as a percentage of the Purchase
Payment(s) made under a Contract payable to Great-West agents is
6.25% . In addition, Great-West may reimburse portions of expenses
incurred pursuant to Great-West's expense reimbursement allowance
program.
RETURN PRIVILEGE
Within 10 days (may be longer in some states) after the
Contract is first received, it may be canceled for any reason by
delivering or mailing it together with a written request to cancel
to GWL&A's Executive Offices or to an authorized agent of GWL&A.
Upon cancellation, GWL&A will pay the owner the Contract Values as
of the date of surrender. No Surrender Charge or other charge
will be deducted.
STATE REGULATION
As a life insurance company organized and operated under
Colorado law, GWL&A is subject to provisions governing such
companies and to regulation by the Commissioner of Insurance.
GWL&A's books and accounts are subject to review and
examination by the Colorado Insurance Department at all times and
a full examination of its operations is conducted by the National
Association of Insurance Commissioners (NAIC) at least once every
3 years.
REPORTS
As presently required by the Investment Company Act of 1940
and regulations promulgated thereunder, GWL&A will mail to the
Contract Owner, at the last known address of record at GWL&A's
Executive Offices, at least semi-annually after the first contract
year, reports containing such information as may be required under
that Act or by any other applicable law or regulation.
LEGAL PROCEEDINGS
The Series Account is not engaged in any litigation. GWL&A
is not involved in any litigation which would have a material
adverse effect on the ability of GWL&A to perform its contract
with the Series Account.
LEGAL MATTERS
The organization of GWL&A, its authority to issue variable
annuity contracts and the validity of the Contracts have been
passed upon by Ruth B. Lurie, Vice-President, Counsel and
Associate Secretary . Certain legal matters relating to the Federal
securities laws have been passed upon for GWL&A by Jorden Burt
Berenson & Johnson, LLP. , Washington, D.C.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities
and Exchange Commission , under the Securities Act of 1933 as
amended, with respect to the Contracts offered hereby. This
prospectus does not contain all the information set forth in the
Registration Statement and amendments thereto and exhibits filed
as a part thereof, to all of which reference is hereby made for
further information concerning the Series Account, GWL&A and the
Contracts offered hereby. Statements contained in this prospectus
as to the content of Contracts and other legal instruments are
summaries. For a complete statement of the terms thereof
reference is made to such instruments as filed.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more
specific information and financial statements relating to the
Separate Account and GWL&A. The Table of Contents of the
Statement of Additional Information is set forth below:
1. Custodian and Independent Auditors
2. Underwriter
3. Financial Statements
Inquiries and requests for a Statement of Additional
Information should be directed to GWL&A in writing at 8515 E.
Orchard Road, Englewood, Colorado 80111, or by telephoning GWL&A
at (800) 228-8706 (Outside Colorado) or (303) 689-4538 (Colorado).
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
MAXIM SERIES ACCOUNT
Individual Flexible Premium Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (Outside Colorado)
(800) 547-4957 (Colorado)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a
Prospectus and should be read in conjunction with the
Prospectus, dated April 30, 1996 , which is available
without charge by contacting Great-West Life & Annuity
Insurance Company ("GWL&A") at the above address or at
the above telephone number.
April 30, 1996
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITORS B-3
UNDERWRITER B-3
CALCULATION OF PERFORMANCE DATA B-3
FINANCIAL STATEMENTS B-5
CUSTODIAN AND INDEPENDENT AUDITORS
A. Custodian
The assets of Maxim Series Account (the
"Series Account") are held by GWL&A. The assets of the
Series Account are kept physically segregated and held
separate and apart from the general account of GWL&A.
GWL&A maintains records of all purchases and
redemptions of shares of the Fund. Additional
protection for the assets of the Series Account is
afforded by blanket fidelity bonds issued to The Great-
West Life Assurance Company ("Great-West") in the
amount of $30 million ( Canadian ), which covers all
officers and employees of GWL&A.
B. Independent Auditors
The accounting firm of Deloitte & Touche LLP
performs certain accounting and auditing services for
GWL&A and the Series Account. The principal business
address of Deloitte & Touche LLP is 555 Seventeenth
Street, Suite 3600, Denver, Colorado 80202-3942.
The statement of assets and liabilities of
Maxim Series Account as of December 31, 1995, the
related statement of operations for the year or period
then ended, the statements of changes in net asset for
each of the two years or periods then ended and the
consolidated financial statements of GWL&A at December
31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995, included in this
Statement of Additional Information have been audited
by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein and are
included in reliance upon the reports of such firm
given upon their authority as experts in accounting and
auditing.
UNDERWRITER
The offering of the Contracts is made on a
continuous basis by Great-West, an affiliate of GWL&A.
No payments were made to Great-West for the years 1992
through 1995 .
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money
Market Investment Division
The yield quotation for the Money Market
Investment Division set forth in the Prospectus is for
the seven-day period ended December 31, 1995 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 Investment Division 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
Investment Division set forth in the Prospectus is for
the seven-day period ended December 31, 1995 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 Investment Division 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
Investment Division'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 Administrative Charges, Risk Charges
and Premium Taxes in the prospectus.) No deductions
or sales loads are assessed upon annuitization under
the Contracts. Realized gains and losses from the sale
of securities and unrealized appreciation and
depreciation of the Money Market Investment Division
and the Fund are excluded from the calculation of
yield.
B. Total Return Quotations for All Investment
Divisions
The total return quotations for all Investment
Divisions set forth in the Prospectus are average
annual total return quotations for the one-year period
ended December 31, 1995 . 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 Investment Divisions, 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 Investment Divisions' mean account size.
The calculations also assume a complete redemption as
of the end of the particular period.
FINANCIAL STATEMENTS
The financial statements of GWL&A as contained
herein should be considered only as bearing upon
GWL&A's ability to meet its obligations under the
Contracts, and they should not be considered as bearing
on the investment performance of the Series Account.
The interest of Contract Owners under the Contracts are
affected solely by the investment results of the Series
Account.
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Financial Statements for the Years
Ended December 31, 1995 and 1994
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners
of Maxim Series Account
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying statements of assets
and liabilities of Maxim Series I, Maxim Series II and
Maxim Series III of Maxim Series Account of Great-West
Life & Annuity Insurance Company as of December 31,
1995, the related statements of operations for the year
or period then ended and the statements of changes in
net assets for each of the two years or periods in the
period then ended, including each of the investment
divisions. 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.
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 Maxim Series I, Maxim Series II and Maxim
Series III of Maxim Series Account of Great-West Life &
Annuity Insurance Company at December 31, 1995, the
results of its operations for the year or period then
ended, and the changes in its net assets for each of
the two years or periods in the period then ended in
conformity with generally accepted accounting
principles.
February 7, 1996
MAXIM SERIES ACCOUNT OFGREAT-WEST LIFE & ANNUITY
INSURANCE COMPANYSTATEMENT OF ASSETS AND
LIABILITIESDECEMBER 31, 1995
Maxim Series I ASSETS:
Shares Cost Value
Investments in mutual funds:
Maxim Series Fund, Inc. (Affiliate):
Money Market\Non-Qualified
42,283$42,350$42,312
Bond\Non-Qualified
72,73491,30089,467
Bond\Qualified
12,62215,27215,526
Stock Index\Qualified
3,73820,2717,399
Total Return\Non-Qualified
31,51435,97040,871
Total investments
$205,163195,575
Other assets and liabilities:
Other assets
381
Due to Great-West Life & Annuity Insurance Company(92)
Other liabilities(31)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL
(Note 5)
$195,833
See notes to financial statements.
MAXIM SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
Maxim Series II
ASSETS:
Shares Cost Value
Investments in mutual funds:
Maxim Series Fund, Inc. (Affiliate):
Money Market\Non-Qualified
1,616,598$1,616,824$1,617,692
Money Market\Qualified
1,712,4811,723,7091,713,640
Bond\Non-Qualified
1,568,6931,953,8701,929,590
Bond\Qualified
2,110,7462,657,8692,596,349
Stock Index\Non-Qualified
2,994,3624,598,1545,927,735
Stock Index\Qualified
3,978,6795,920,1057,876,319
U.S. Government Securities/Non-Qualified
6,769,155 7,486,7647,447,081
U.S. Government Securities/Qualified
4,695,0745,196,0785,165,282
Total Return/Non-Qualified
3,368,3543,874,5294,368,479
TCI Portfolios, Inc. - TCI Growth
29,437298,689355,010
TCI Portfolios, Inc. - TCI Balanced
44,211266,930311,248
Total investments
$35,593,52139,308,425
Other assets and liabilities:
Other assets472
Due to Great-West Life & Annuity Insurance
Company(3,893)
Other liabilities(155)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL
(Note 5)
$39,304,849
See notes to financial statements.
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
Maxim Series III
ASSETS:
Shares
Cost
Value
Investments in mutual funds:
Maxim Series Fund, Inc. (Affiliate):
Bond
9,157$10,874$11,264
Corporate Bond
8,3579,4419,629
INVESCO ADR
26,21325,99829,502
INVESCO Small-Cap Growth
39,962 45,929 50,887
Mid-Cap
231,945278,602314,019
Money Market
157,557157,664157,664
Small-Cap Index
28,21529,55732,954
Small-Cap Value
7,5897,6558,097
Stock Index
95,903176,253189,853
Total Return
87,620111,118113,636
T. Rowe Price Equity/Income
193,126225,132243,969
U.S. Government Securities
120,741131,360132,833
TCI Portfolios, Inc. - TCI Balanced
6,35443,69444,735
TCI Portfolios, Inc. - TCI Growth
5,93668,89571,592
Total investments
$1,322,1721,410,634
Other assets and liabilities:
Premiums due and accrued
160,319
Due to Great-West Life & Annuity Insurance Company
(160)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL
(Note 5)
$1,570,793
See notes to financial statements.
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Stock IndexTotal ReturnMoney
MarketBondInvestmentInvestment Investment
DivisionInvestment
DivisionDivisionDivisionTotalNon-QualifiedQualifiedNon-
QualifiedQualifiedQualifiedNon-Qualified
Maxim I
Maxim Series I
INVESTMENT INCOME
$2,292$1,801$5,223$1,923$434$2,393$14,066
EXPENSES- mortality and expense risks (Note 3)
5174191,0574073764693,245
NET INVESTMENT INCOME
1,7751,3824,1661,516581,92410,821
NET REALIZED AND UNREALIZEDGAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments
(1,240)14227324,8388624,099
Net change in unrealized appreciation (depreciation) on
investments
1,2056,5543,641(15,183)5,1481,365
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(35)6,6963,9149,6555,23425,464
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$1,775$1,347$10,862$5,430$9,713$7,158$36,285
See notes to financial statements.
(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Money MarketBondStock IndexInvestment
DivisionInvestment DivisionInvestment
DivisionNon-QualifiedQualifiedNon-QualifiedQualifiedNon
- -QualifiedQualified
Maxim Series II
INVESTMENT INCOME
$104,187$102,199$122,928$154,975$150,169$193,560
EXPENSES- mortality and expense risks (Note 3)
26,32625,83628,16435,23180,434101,991
NET INVESTMENT INCOME
77,86176,36394,764119,74469,73591,569
NET REALIZED AND UNREALIZEDGAIN ON INVESTMENTS:
Net realized gain (loss) on investments
(20)2(34,133)(25,169)375,768276,168
Net change in unrealized appreciation (depreciation) on
investments
20(2)195,592224,1901,224,9001,745,244
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
161,459199,0211,600,6682,021,412
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$77,861$76,363$256,223$318,765$1,670,403$2,112,981
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
U.S. GovernmentTotal
ReturnTCITCISecuritiesInvestmentGrowthBalancedInvestmen
t
DivisionDivisionInvestmentInvestmentTotalNon-QualifiedQ
ualifiedNon-QualifiedDivisionDivision
Maxim II
Maxim Series II
INVESTMENT INCOME
$513,416$352,846$268,841$263$7,981$1,971,365
EXPENSES- mortality and expense risks (Note 3)
106,90173,42364,0043,5604,485550,355
NET INVESTMENT INCOME (LOSS)
406,515279,423204,837(3,297)3,4961,421,010
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (loss) on investments
(77,528)(22,695)295,3226,17818,902812,795
Net change in unrealized appreciation on investments
715,762460,001385,88958,01037,9515,047,557
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
638,234437,306681,21164,18856,8535,860,352
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$1,044,749$716,729$886,048$60,891$60,349$7,281,362
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
CorporateINVESCOINVESCO SmallMoneyBondBondADRCap
GrowthMid-CapMarketInvestmentInvestmentInvestmentInvest
mentInvestmentInvestmentDivisionDivisionDivisionDivisio
nDivisionDivision
Maxim Series III
INVESTMENT INCOME
$352$383$287$1,823$8,104$1,123
EXPENSES- mortality and expense risks (Note 3)
67342732741,719252
NET INVESTMENT INCOME
285349141,5496,385871
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments
94336669
Net change in unrealized appreciation on investments
4001883,5044,95833,444
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
4002823,8404,96433,513
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$685$631$3,854$6,513$39,898$871
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Small-CapSmall-CapStockTotal T. Rowe PriceU.S.
GovernmentIndexValueIndexReturnEquity/IncomeSecuritiesI
nvestmentInvestmentInvestmentInvestmentInvestmentInvest
mentDivisionDivisionDivisionDivisionDivisionDivision
Maxim Series III
INVESTMENT INCOME
$900$591$3,078$4,736$4,431$2,625
EXPENSES- mortality and expense risks (Note 3)
23976868509956355
NET INVESTMENT INCOME
6615152,2104,2273,4752,270
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (loss) on investments
922,14493(54)
Net change in unrealized appreciation on investments
3,80144214,3342,87518,8371,473
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
3,81044416,4782,88418,8401,419
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$4,471$959$18,688$7,111$22,315$3,689
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
TCITCITotalBalancedGrowthMaximInvestmentInvestmentSerie
sDivisionDivisionIII
Maxim Series III
INVESTMENT INCOME
$375$$28,808
EXPENSES- mortality and expense risks (Note 3)
952295,946
NET INVESTMENT INCOME (LOSS)
280(229)22,862
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (loss) on investments
3(150)2,471
Net change in unrealized appreciation on investments
9982,69787,951
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
1,0012,54790,422
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$1,281$2,318$113,284
See notes to financial statements.(Concluded)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
Money MarketBondInvestment DivisionInvestment
DivisionNon-QualifiedQualifiedNon-QualifiedQualified
19951994199519941995199419951994
Maxim Series I
FROM OPERATIONS:
Net investment income
$1,775$1,023$1,382$362$4,166$3,306$1,516$2,198
Net realized gain (loss) on investments
(1,240)14290273(15)
Net change in unrealized appreciation (depreciation)
on investments
1,2056,554(6,320)3,641(4,130)
Increase (decrease) in net assets resulting from
operations
1,7751,0231,34736210,862(2,924)5,430(1,947)
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
451
Redemptions(90)(90)(115,413)(39)(91)(90)(57)(71)
Net transfers from (to) other annuity contracts
99,248(42,248)
(Decrease) in net assets resulting from unit
transactions
(90)(90)(15,714)(39)(91)(90)(42,305)(71)
INCREASE (DECREASE) IN NET ASSETS
1,685933(14,367)32310,771(3,014)(36,875)(2,018)
NET ASSETS:
Beginning of period
40,62839,69514,36714,04478,68781,70152,47154,489
End of period
$42,313$40,628$0$14,367$89,458$78,687$15,596$52,471
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
Stock IndexTotal ReturnInvestment DivisionInvestment
DivisionTotalQualifiedNon-Qualified
Maxim I
199519941995199419951994
Maxim Series I
FROM OPERATIONS:
Net investment income
$58$1,454$1,924$1,092$10,821$9,435
Net realized gain on investments
24,8381,585864524,0991,705
Net change in unrealized appreciation (depreciation)
on investments
(15,183)(3,615)5,148(2,546)1,365(16,611)
Increase (decrease) in net assets resulting from
operations
9,713(576)7,158(1,409)36,285(5,471)
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
451
Redemptions(24)(40)(30)(30)(115,705)(360)
Net transfers from (to) other annuity contracts
(57,000)(17,012)17,012
Increase (decrease) in net assets resulting from unit
transactions
(57,024)(17,052)(30)16,982(115,254)(360)
INCREASE (DECREASE) IN NET ASSETS
(47,311)(17,628)7,12815,573(78,969)(5,831)
NET ASSETS:
Beginning of period
54,90772,53533,74218,169274,802280,633
End of period
$7,596$54,907$40,870$33,742$195,833$274,802
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
Money MarketBondInvestment DivisionInvestment
DivisionNon-QualifiedQualifiedNon-QualifiedQualified
19951994199519941995199419951994
Maxim Series II
FROM OPERATIONS:
Net investment income
$77,861$50,064$76,363$40,179$94,764$110,629$119,744
$111,543
Net realized gain (loss) on investments
(20)(26)2(30)(34,133)(83,600)(25,169)(30,992)
Net change in unrealized appreciation (depreciation) on
investments
2026(2)30195,592(146,511)224,190(196,563)
Increase (decrease) in net assets resulting from
operations
77,86150,06476,36340,179256,223(119,482)318,765
(116,012)
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
10,33211,43318,18035,9694,59620,36741,00868,452
Redemptions
(648,752)(1,083,139)(678,802)(665,037)(327,662)(1,306,6
83)(376,661)(656,469)
Net transfers from (to) other annuity contracts
183,205915,618288,908984,658(42,026)7,834171,834(144,28
4) Increase (decrease) in net assets resulting from
unit transactions
(455,215)(156,088)(371,714)355,590(365,092)(1,278,482)
(163,819)(732,301)
INCREASE (DECREASE) IN NET ASSETS
(377,354)(106,024)(295,351)395,769(108,869)(1,397,964)
154,946(848,313)
NET ASSETS:
Beginning of period
1,994,8052,100,8292,008,8591,613,0902,038,2513,436,2152
,441,1813,289,494
End of period
$1,617,451$1,994,805$1,713,508$2,008,859$1,929,382
$2,038,251$2,596,127$2,441,181
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
Stock IndexU.S. Government SecuritiesInvestment
DivisionInvestment
DivisionNon-QualifiedQualifiedNon-QualifiedQualified
19951994199519941995199419951994
Maxim Series II
FROM OPERATIONS:
Net investment income
$69,735$149,467$91,569$178,926$406,515$401,409$279,423
$268,740
Net realized gain (loss) on investments
375,768164,278276,168186,157(77,528)(72,024)(22,695)
(16,846)
Net change in unrealized appreciation (depreciation) on
investments
1,224,900(429,160)1,745,244(482,796)715,762(909,552)
460,001(619,548)
Increase (decrease) in net assets resulting from
operations
1,670,403(115,415)2,112,981(117,713)1,044,749(580,167)
716,729(367,654)
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
45,499111,17779,742115,3926,12522,836
69,02847,017
Redemptions(1,475,317)(1,649,833)(1,143,409)(1,632,798)
(1,914,411)(3,904,695)(1,229,287)(2,241,491)
Net transfers (to) other annuity contracts
19,699(125,827)(66,192)(298,160)10,477(826,443)(20,243)
(458,749)
(Decrease) in net assets resulting from unit
transactions
(1,410,119)(1,664,483)(1,129,859)(1,815,566)(1,897,809)
(4,708,302)(1,180,502)(2,653,223)
INCREASE (DECREASE) IN NET ASSETS
260,284(1,779,898)983,122(1,933,279)(853,060)
(5,288,469)(463,773)(3,020,877)
NET ASSETS:
Beginning of period
5,666,9577,446,8556,892,5508,825,8298,299,33613,587,805
5,628,6138,649,490
End of period
$5,927,241$5,666,957$7,875,672$6,892,550$7,446,276
$8,299,336$5,164,840$5,628,613
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
Total ReturnTCI GrowthTCI BalancedInvestment
DivisionInvestmentInvestmentTotalNon-QualifiedDivisionD
ivision
Maxim II
19951994199519941995199419951994
Maxim Series II
FROM OPERATIONS:
Net investment income (loss)
$204,837$156,761$(3,297)$(5,484)$3,496$3,215$1,421,010$
1,465,449
Net realized gain on investments
295,322299,5706,17816,57418,9022,389812,795465,450
Net change in unrealized appreciation (depreciation) on
investments
385,889(715,438)58,010(31,640)37,951(10,199)5,047,557
(3,541,351)
Increase (decrease) in net assets resulting from
operations
886,048(259,107)60,891(20,550)60,349(4,595)7,281,362
(1,610,452)
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
85,20168,0863,93716,65927,60011,340391,248528,728
Redemptions(961,238)(1,670,299)(53,950)(150,447)
(94,347)(99,144)(8,903,836)(15,060,035)
Net transfers from (to) other annuity contracts
(690,616)40,936115,510(112,581)29,44416,998
Increase (decrease) in net assets resulting from unit
transactions
(1,566,653)(1,561,277)65,497(246,369)(37,303)(70,806)
(8,512,588)(14,531,307)
INCREASE (DECREASE) IN NET ASSETS
(680,605)(1,820,384)126,388(266,919)23,046(75,401)
(1,231,226)(16,141,759)
NET ASSETS:
Beginning of period
5,048,7496,869,133228,595495,514288,179363,58040,536,07
556,677,834
End of period
$4,368,144$5,048,749$354,983$228,595$311,225$288,179
$39,304,849$40,536,075
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
INVESCOCorporateINVESCOSmall-CapMoneyBondADRGrowthMarke
tBondInvestmentInvestmentInvestmentMid-CapInvestmentInv
estment Division
(A)Division(F)Division(B)Division(B)Investment Division
(A)Division(E)
19951994199519951995199519941995
Maxim Series III
FROM OPERATIONS:
Net investment income
$285$19$349$14$1,549$6,385$61$871
Net realized gain on investments
943366692
Net change in unrealized appreciation (depreciation) on
investments
400(11)1883,5044,95833,4441,973
Increase in net assets resulting from operations
68586313,8546,51339,8982,036871
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
13,4734,4378,98936,40252,547235,97646,639156,777
Redemptions
(6,451)
Net transfers from (to) other annuity contracts
(10,757)12,021
Increase in net assets resulting from unit transactions
13,4734,4378,98925,64552,547241,54646,639156,777
INCREASE IN NET ASSETS
14,1584,4459,62029,49959,060281,44448,675157,648
NET ASSETS:
Beginning of period
4,44548,675
End of period
$18,603$4,445$9,620$29,499$59,060$330,119$48,675
$157,648(A)
The Investment Division commenced operations on
September 19, 1994.(B) The Investment Division
commenced operations on January 6, 1995.(E) The
Investment Division commenced operations on August 4,
1995.(F) The Investment Division commenced operations
on August 8, 1995.
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
T. RoweSmall-CapPriceValueEquity/IncomeSmall-Cap
IndexInvestmentStock IndexTotal
ReturnInvestmentInvestment Division
(A)Division(D)Investment Division (A)Investment
Division (A)Division(B)
19951994199519951994199519941995
Maxim Series III
FROM OPERATIONS:
Net investment income
$661$34$515$2,210$498$4,227$373$3,475
Net realized gain (loss) on investments
9(1)22,1441913
Net change in unrealized appreciation (depreciation) on
investments
3,801(404)44214,334(734)2,875(357)18,837
Increase (decrease) in net assets resulting from
operations
4,471(371)95918,688(235)7,1111722,315
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
8,86610,0037,138177,47622,70386,35020,145221,192
Redemptions(1,506)
Net transfers from other annuity contracts
9,9815,84210,022
Increase in net assets resulting from unit transactions
18,84710,0037,138183,31822,70386,35020,145229,708
INCREASE IN NET ASSETS
23,3189,6328,097202,00622,46893,46120,162252,023
NET ASSETS:
Beginning of period
9,63222,46820,162
End of period
$32,950$9,632$8,097$224,474$22,468
$113,623$20,162$252,023(A)
The Investment Division commenced operations on
September 19, 1994.(B) The Investment Division
commenced operations on January 6, 1995.(D) The
Investment Division commenced operations on March 9,
1995.
See notes to financial statements.(Continued)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 and 1994
U.S.GovernmentTCISecuritiesTCIGrowthInvestmentBalancedI
nvestmentTotalDivision(C)Investment Division
(A)Division(C)
Maxim Series III
199519951994199519951994
Maxim Series III
FROM OPERATIONS:
Net investment income (loss)
$2,270$280$14$(229)$22,862$999
Net realized gain (loss) on investments
(54)3(150)2,4713
Net change in unrealized appreciation on investments
1,473998432,69787,951510
Increase in net assets resulting from operations
3,6891,281572,318113,2841,512
FROM UNIT TRANSACTIONS:
Variable annuity contract:
Purchase payments
173,65467,0611,90983,2371,329,138105,836
Redemptions(6,452)(14,409)
Net transfers from (to) other annuity contracts
(12,684)21,00735,432
Increase in net assets resulting from unit transactions
160,97088,0681,90976,7851,350,161105,836
INCREASE IN NET ASSETS
164,65989,3491,96679,1031,463,445107,348
NET ASSETS:
Beginning of period
1,966107,348
End of period
$164,659$91,315$1,966$79,103$1,570,793$107,348(A)
The Investment Division commenced operations on
September 19, 1994.(C) The Investment Division
commenced operations on January 18, 1995.
See notes to financial statements.(Concluded)
MAXIM SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31,
1995 AND 1994(1).
HISTORY OF THE SERIES ACCOUNT
The Maxim Series Account of Great-West Life & Annuity
Insurance Company (the Series Account) is a separate
account of Great-West Life & Annuity Insurance Company
(the Company) and was established under Kansas law on
June 24, 1981. In 1990 the Series Account was amended
to conform to and comply with Colorado law in
connection with the Company's redomestication to the
State of Colorado. 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.
The Series Account has various investment divisions
which invest in shares of an open-end management
investment companies as follows:
Investment Division
Mutual Fund Investment
Maxim Series I: Money Market Maxim Series Fund, Inc.
- - Money Market
Bond Maxim Series Fund, Inc. - Bond
Stock Index Maxim Series Fund, Inc. - Stock Index
Total Return Maxim Series Fund, Inc. - Total Return
U.S. Government Securities Maxim Series Fund, Inc. -
U.S. Government Securities
Maxim Series II:
Money Market Maxim Series Fund, Inc. - Money Market
Bond Maxim Series Fund, Inc. - Bond
Stock Index Maxim Series Fund, Inc. - Stock Index
U.S. Government Securities Maxim Series Fund, Inc. -
U.S. Government Securities
Total Return Maxim Series Fund, Inc. - Total Return
TCI Growth TCI Portfolios, Inc. - TCI Growth TCI
Balanced
TCI Portfolios, Inc. - TCI Balanced
Maxim Series III:
Bond Maxim Series Fund, Inc. - Bond
Corporate Bond Maxim Series Fund, Inc. - Corporate
Bond INVESCO ADR Maxim Series Fund, Inc. - INVESCO
ADR INVESCO Small-Cap Growth Maxim Series Fund,
Inc. - INVESCO Small-Cap Growth
Mid-Cap Maxim Series Fund, Inc. - Mid-Cap
Money Market Maxim Series Fund, Inc. - Money Market
Small-Cap Index Maxim Series Fund, Inc. - Small-Cap
Index
Small-Cap Value Maxim Series Fund, Inc. - Small-Cap
Value
Stock Index Maxim Series Fund, Inc. - Stock Index
Total Return Maxim Series Fund, Inc. - Total Return
T. Rowe Price Equity/Income Maxim Series Fund, Inc. -
T. Rowe Price Equity/Income
U.S. Government Securities Maxim Series Fund, Inc. -
U.S. Government Securities
TCI Balanced TCI Portfolios, Inc. - TCI Balanced
TCI Growth TCI Portfolios, Inc. - TCI Growth
As of September 24, 1984, the administrative charges of
the Series Account were changed by a vote of the Board
of Directors. Contracts purchased prior to September
24, 1984 (Maxim I Series) were and will remain on the
previous charges while contracts purchased after
September 24, 1984 (Maxim II Series) are charged with
the new amounts (see Note 3). As a result of changes
in the administrative charges, the contracts purchased
after September 24, 1984 are being accounted for
separately.
As of September 19, 1994, the Company began offering a
new contract in the Series Account (Maxim III Series).
The administrative charges for these contracts differ
from the administrative charges for contracts in the
Maxim I Series and the Maxim II Series (see Note 3) and
are therefore, accounted for separately.
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:
a. 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.
b. Security Valuation - The investments in shares of
the Funds are valued at the closing net asset value per
share as determined by each portfolio at year end.
The cost of investments represents shares of the 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 Funds.
c. Federal Income Taxes - The Series Account income
is automatically applied to increase contract reserves.
Under existing federal income tax law, this income is
not taxed to the extent 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.
3. CHARGES UNDER THE CONTRACTS
a. Contract Maintenance Charge - On the last
valuation date of each contract year before the
retirement date, the Company deducts from each
participant account a maintenance charge of $30 for
contracts purchased before September 24, 1984 and $35
for contracts purchased after September 24, 1984, as
compensation for the administrative services provided
to contract owners. To compensate the Company for
administrative services for contracts issued after
September 19, 1994, a contract maintenance charge of
$27 is deducted from each participant account on the
first day of each calendar year. If the account is
established after the beginning of the year, the charge
is deducted on the first day of the next calendar
quarter and prorated for the portion of the year
remaining.
b. Charges Incurred for Total or Partial Surrenders -
Certain contracts contain provisions relating to a
contingent deferred sales charge. In such contracts,
charges will be made for total or partial surrender of
a participant annuity account in excess of the "free
amount" before the retirement date by a deduction from
a participant's account. The "free amount" for
contracts purchased after September 19, 1994, is an
amount equal to 10% of the participant account value at
December 31 of the calendar year prior to the partial
or total surrender.
c. Deductions for Assumption of Mortality and Expense
Risks - The Company deducts an amount, computed daily,
from the net asset value of the Series Account
investments, equal to an annual rate of 1.25% (1.00%
allocable to mortality risk and .25% allocable to
expense risk) for the contracts purchased before
September 24, 1984. For contracts purchased after
September 24, 1984 and through September 19, 1994, the
annual rate is 1.4% (1.0% allocable to the mortality
risk and .4% allocable to the expense risk). For
contracts purchased after September 19, 1994, the
annual rate is 1.25% (.85% allocable to the mortality
risk and .4% allocable to the expense risk). This
charge is designed to compensate the Company for its
assumption of certain mortality, death benefit and
expense risks. The level of this charge is guaranteed
and will not change.
d. Deductions for Premium Taxes - The Company
currently will pay any applicable premium tax or other
tax, levied by any government, when due. If the
contract value is used to purchase an annuity under the
annuity options, the dollar amount of any premium tax
previously paid or payable upon annuitization by the
Company will be charged against the contract value.
4. RELATED-PARTY SERVICES
The Company's parent, The Great-West Life Assurance
Company, serves as investment advisor to Maxim Series
Fund, Inc. Fees are assessed against the average daily
net asset value of the Funds to compensate The
Great-West Life Assurance Company for investment
advisory services.
5. COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL
The following is a summary of the net assets applicable
to outstanding units of capital at December 31, 1995,
for each investment division.
Total Maxim IVariableAnnuityMaxim Series
IContractUnitsUnit ValueLiabilitiesNET ASSETS
APPLICABLE TOOUTSTANDING UNITS OF CAPITAL:Investment
Division: Money Market\Non-Qualified
2,022.8635$20.917450$42,313
Bond\Non-Qualified
2,732.240932.74163189,458
Bond\Qualified
523.121829.81419815,596
Stock Index\Qualified
176.421543.0535227,596
Total Return\Non-Qualified
2301.961117.75422640,870TOTAL$195,833
Total Maxim II
VariableAnnuity
Maxim Series II
Contract Units
Unit Value
Liabilities
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL:
Investment Division:
Money Market\Non-Qualified
97,581.5613$16.575379$1,617,451
Money Market\Qualified104,679.986716.3690111,713,508
Bond\Non-Qualified
79,442.168924.2866281,929,382
Bond\Qualified
106,047.411124.4808192,596,127
Stock Index\Non-Qualified171,678.121134.5253145,927,241
Stock Index\Qualified224,763.463335.0398247,875,672
U.S. Government Securities/Non-Qualified
325,518.954922.8750927,446,276
U.S. Government Securities/Qualified
228,062.150022.6466325,164,840
Total Return/Non-Qualified
239,974.080018.2025644,368,144
TCI Growth
25,359.370013.998108354,983
TCI Balanced
24,517.398712.694029311,225TOTAL$39,304,849
Total Maxim III
VariableAnnuity
Maxim Series III
Contract Units
Unit Value
Liabilities
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL:
Investment Division:
Bond
1,675.7464 11.101086$18,603
Corporate Bond
799.345312.0348439,620
INVESCO ADR
2,623.005711.24614729,499
INVESCO Small-Cap Growth
4,511.192713.09183659,060
Mid-Cap
24,467.206713.492314330,119
Money Market
15,499.451710.171228157,648
Small-Cap Index
2,705.627612.17832532,950
Small-Cap Value
697.922511.6011158,097
Stock Index
17,200.316113.050552224,474
Total Return
9,694.707111.720092113,623
T. Rowe Price Equity/Income
19,500.366912.924009252,023
U.S. Government Securities
14,812.671811.116098164,659
TCI Balanced
7,745.099711.79006391,315
TCI Growth
6,110.860812.94458579,103
TOTAL
$1,570,793
6. SELECTED DATA The following is a summary of
selected data for a unit of capital of the Series
Account at the beginning and end of the year and the
number of units outstanding at December 31, 1995, 1994,
1993, 1992 and 1991, by investment division:Money
MarketMoney MarketBondBond
Stock IndexTotal ReturnMaxim Series
INon-QualifiedQualifiedNon-QualifiedQualifiedQualifiedN
on-Qualified1995Beginning Unit Value$ 20.04$
20.01$ 28.77$ 26.21$ 32.29$ 14.65Ending
Unit Value$ 20.92$ 0.0$ 32.74$ 29.81$
43.05$ 17.75Number of Units
Outstanding2,022.8602,732.24523.12176.422,301.961994Beg
inning Unit Value$ 19.54$ 19.51$ 29.84$
27.18$ 32.65$ 15.24Ending Unit Value$
20.04$ 20.01$ 28.77$ 26.21$ 32.29$
14.65Number of Units
Outstanding2,027.25718.032,735.022,001.771,700.612,303.
691993Beginning Unit Value$ 19.23$ 19.21$
27.83$ 25.36$ 30.10$ 13.75Ending Unit
Value$ 19.54$ 19.51$ 29.84$ 27.18$
32.65$ 15.24Number of Units
Outstanding2,031.80720.032,738.152,004.452,221.731,192.
301992
Beginning Unit Value$ 18.82$ 18.79$ 26.52$
24.17$ 28.79$ 13.21Ending Unit Value$
19.23$ 19.21$ 27.83$ 25.36$ 30.10$
13.75Number of Units
Outstanding1,003.501,892.893,360.642,300.772,651.871,51
0.031991Beginning Unit Value$ 18.00$ 17.97$
23.41$ 21.34$ 23.64$ 10.96Ending Unit
Value$ 18.82$ 18.79$ 26.52$ 24.17$
28.79$ 13.21Number of Units
Outstanding1,006.661,896.423,363.882,304.073,867.943,18
4.91(Continued)
6. SELECTED DATA (continued) The following is a
summary of selected data for a unit of capital of the
Series Account at the beginning and end of the year and
the number of units outstanding at December 31, 1995,
1994, 1993, 1992 and 1991, by investment
division:U.S. GovernmentU.S. GovernmentMoney
MarketMoney MarketBondBondStock IndexStock
IndexSecuritiesSecuritiesTotal ReturnTCITCIMaxim Series
IINon-QualifiedQualifiedNon-QualifiedQualifiedNon-Quali
fiedQualifiedNon-QualifiedQualifiedNon-QualifiedGrowthB
alanced(A)(A)1995Beginning Unit Value$ 15.90$
15.71$ 21.37$ 21.54$ 25.81$
26.19$ 19.98$ 19.78$
15.04$ 10.82$ 10.62Ending Unit Value$
16.58$ 16.37$ 24.29$ 24.48$
34.53$ 35.04$ 22.88$
22.65$ 18.20$ 14.00$ 12.69Number
of Units
Outstanding97,581.56104,679.9979,442.17106,047.41171,67
8.12224,763.46325,518.95228,062.15239,974.0825,359.3724
,517.401994Beginning Unit Value$ 15.53$
15.33$ 22.20$ 22.38$ 26.13$
26.52$ 20.93$ 20.72$
15.67$ 11.11$ 10.71Ending Unit Value$
15.90$ 15.71$ 21.37$ 21.54$
25.81$ 26.19$ 19.98$ 19.78$
15.04$ 10.82$ 10.62Number of Units
Outstanding125,420.05127,897.7795,366.99113,313.38219,5
88.42263,158.31415,446.66284,597.25335,713.5721,121.892
7,124.381993Beginning Unit Value$ 15.31$
15.12$ 20.74$ 20.90$ 24.12$
24.48$ 19.41$ 19.21$
14.16$ 10.20$ 10.08Ending Unit Value$
15.53$ 15.33$ 22.20$ 22.38$
26.13$ 26.52$ 20.93$
20.72$ 15.67$ 11.11$ 10.71Number
of Units
Outstanding135,293.72105,196.10154,786.15147,002.74284,
941.95332,747.75649,198.60417,423.10438,337.9944,619.57
33,951.491992Beginning Unit Value$ 15.00$
14.82$ 19.79$ 19.95$ 23.11$
23.45$ 18.06$ 17.88$
13.62 $ 10.00$ 10.00Ending Unit Value$
15.31$ 15.12$ 20.74$ 20.90$
24.12$ 24.48$ 19.41$
19.21$ 14.16$ 10.20$ 10.08Number
of Units
Outstanding178,042.42183,558.09186,256.95173,575.16331,
096.23414,325.07816,505.97505,474.92542,293.1015,624.73
2,641.92
1991Beginning Unit Value$ 14.37$ 14.19$
17.50$ 17.64$ 18.99$ 19.28$
16.02$ 15.86$ 11.32 Ending
Unit Value$ 15.00$ 14.82$ 19.79$
19.95$ 23.11$ 23.45$
18.06$ 17.88$ 13.62 Number of Units
Outstanding284,668.71363,738.75252,185.60212,576.52388,
401.51472,092.051,053,158.69654,340.84618,231.93 (A)
The Investment Divisions commenced operations on
December 1, 1992, at a unit value of $10.00.(Continued)
6. SELECTED DATA (continued) The following is a
summary of selected data for a unit of capital of the
Series Account at the beginning and end of the year and
the number of units outstanding at December 31, 1995,
1994, 1993, 1992 and 1991, by investment division:T.
RoweINVESCOPriceU.S.CorporateINVESCOSmall-CapMoney
Small-CapSmall-CapStockTotalEquity/GovernmentTCITCIMaxi
m Series
IIIBondBondADRGrowthMid-CapMarketIndexValueIndexReturnI
ncomeSecuritiesBalancedGrowth(A)(F)(B)(B)(A)(E)(A)(D)(A
)(A)(B)(C)(A)(C)1995Beginning Unit Value$ 9.76$
10.00$ 10.00$ 10.00$ 10.80$ 10.00$
9.77$ 10.00$ 9.74$ 9.67$ 10.00$
10.00$ 9.85$ 10.00Ending Unit Value$
11.10$ 12.03$ 11.25$ 13.09$ 13.49$
10.17$ 12.18$ 11.60$ 13.05$ 11.72$
12.92$ 11.12$ 11.79$ 12.94Number of Units
Outstanding1,675.75799.352,623.014,511.1924,467.2115,49
9.452,705.63697.9217,200.329,694.7119,500.3714,812.677,
745.106,110.861994Beginning Unit Value$ 10.00$
10.00$ 10.00$ 10.00$ 10.00$ 10.00Ending
Unit Value$ 9.76$ 10.80
$ 9.77$ 9.74$ 9.67$ 9.85Number of
Units
Outstanding455.624,508.26986.292,306.482,085.24199.55(A
) The Investment Division commenced operations on
September 19, 1994, at a unit value of $10.00.(B) The
Investment Division commenced operations on January 6,
1995, at a unit value of $10.00.(C) The Investment
Division commenced operations on January 18, 1995, at a
unit value of $10.00.(D) The Investment Division
commenced operations on March 9, 1995, at a unit value
of $10.00.(E) The Investment Division commenced
operations on August 4, 1995, at a unit value of
$10.00.(F) The Investment Division commenced
operations on August 8, 1995, at a unit value of
$10.00.
(Concluded)
7. CHANGE IN SHARES
The following is a summary of the net change in the
total investment shares held in each of the respective
mutual funds:For the year ended December
31,19951994Maxim Series IMaxim Series Fund, Inc.- Money
Market/Non-Qualified1,683932Maxim Series Fund, Inc.-
Money Market/Qualified(14,386)323Maxim Series Fund,
Inc.- Bond/Non-Qualified3,4102,749Maxim Series Fund,
Inc.- Bond/Qualified(33,538)1,821Maxim Series Fund,
Inc.- Stock Index/Qualified(32,792)(9,920)Maxim Series
Fund, Inc.- Total Return/Non-Qualified1,48914,965Maxim
Series IIMaxim Series Fund, Inc.- Money
Market/Non-Qualified(377,128)(106,043)Maxim Series
Fund, Inc.- Money Market/Qualified(295,173)395,470Maxim
Series Fund, Inc.-
Bond/Non-Qualified(226,940)(1,004,256)Maxim Series
Fund, Inc.- Bond/Qualified(39,815)(529,750)Maxim Series
Fund, Inc.- Stock
Index/Non-Qualified(789,596)(997,954)Maxim Series Fund,
Inc.- Stock Index/Qualified(623,632)(1,065,089)Maxim
Series Fund, Inc.- U.S. Government
Securities/Non-Qualified(1,418,380)(4,098,228)Maxim
Series Fund, Inc.- U.S. Government
Securities/Qualified(857,605)(2,267,884)Maxim Series
Fund, Inc.- Total
Return/Non-Qualified(1,124,372)(1,201,319)TCI
Portfolios, Inc.- TCI Growth4,615(28,351)
TCI Portfolios, Inc.- TCI Balanced(4,145)(11,549)Maxim
Series IIIMaxim Series Fund, Inc.- Bond5,2583,899Maxim
Series Fund, Inc.- Corporate Bond8,357Maxim Series
Fund, Inc.- INVESCO ADR26,213Maxim Series Fund, Inc.-
INVESCO Small-Cap Growth39,962Maxim Series Fund, Inc.-
Mid-Cap187,69044,255Maxim Series Fund, Inc.- Money
Market157,557Maxim Series Fund, Inc.- Small-Cap
Index18,07510,140Maxim Series Fund, Inc.- Small-Cap
Value7,589Maxim Series Fund, Inc.- Stock
Index80,92214,981Maxim Series Fund, Inc.- Total
Return69,61618,004Maxim Series Fund, Inc.- T. Rowe
Price Equity/Income193,126Maxim Series Fund, Inc.- U.S.
Government Securities120,741TCI Portfolios, Inc.- TCI
Balanced6,024330TCI Portfolios, Inc.- TCI Growth5,936
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 1995, 1994 AND 1993
AND INDEPENDENT AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance
sheets of
Great-West Life & Annuity Insurance Company (a
wholly-owned
subsidiary of The Great-West Life Assurance Company)
and
subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income,
stockholder's equity, and cash flows for each of the
three years in the period ended December 31, 1995.
These financial statements are the responsibility of
the Company's management. Our responsibility is to
express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial
position of Great-West Life & Annuity Insurance Company
and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows
for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 19, 1996
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(Dollars in Thousands)
ASSETS
1995
1994
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost
(fair value $2,158,043 and $4,135,248)
$ 2,054,204
$4,293,985
Available for sale, at fair value
(amortized cost $6,087,969 and $2,997,087)
6,263,187
2,824,703
Common stock
9,440
5,222
Mortgage loans on real estate
1,713,195
2,011,059
Real estate
60,454
43,663
Policy loans
2,237,745
1,905,013
Short-term investments
134,835
706,920
Total Investments
12,473,060
11,790,565
Cash
90,939
131,621
Reinsurance receivable
333,924
295,148
Deferred policy acquisition costs
278,526
297,092
Investment income due and accrued
211,922
195,817
Other assets
40,038
55,579
Premiums in course of collection
85,990
84,478
Deferred income taxes
168,941
210,407
Separate account assets
3,998,878
2,554,836
TOTAL ASSETS
$17,682,218
$15,615,543
See notes to consolidated financial statements.
LIABILITIES AND STOCKHOLDER'S EQUITY
1995
1994
POLICY BENEFIT LIABILITIES:
Policy reserves
$10,845,935
$10,334,456
Policy and contract claims
359,791
338,515
Policyholders' funds
154,872
144,262
Experience refunds
83,562
70,359
Provision for policyholders'dividends
47,760
41,840
GENERAL LIABILITIES:
Due to Parent Corporation
149,974
159,117
Repurchase agreements
372,965
564,160
Commercial paper
84,854
89,686
Other liabilities
453,889
420,154
Undistributed earnings on
participating business
136,617
120,927
Separate account liabilities
3,998,878
2,554,836
Total Liabilities
16,689,097
14,838,312
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value,
50,000,000 shares authorized:
Series A, cumulative,
1500 shares authorized, liquidation value of
$100,000 per share, 600 shares issued and
outstanding 60,000 60,000
Series B, cumulative,
1500 shares authorized, liquidation value of
$100,000 per share, 200 shares issued and
outstanding 20,000 20,000
Series C, cumulative,
1500 shares authorized, none outstanding
Series D, cumulative,
1500 shares authorized, none outstanding
Series E, non-cumulative,
2,000,000 shares authorized,
liquidation value of $20.90
41,800 41,800
per share, issued, and outstanding
Common stock, $1 par value;
50,000,000 shares authorized;
7,032,000 shares issued and
outstanding 7,032 7,032
Additional paid-in capital
657,265
657,265
Net unrealized gains (losses) on
securities available-for-sale
58,763
(78,427)
Retained earnings
148,261
69,561
Total Stockholder's Equity
993,121
777,231
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY
$17,682,218
$15,615,543
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995
1994
1993
REVENUES:
Annuity contract charges and
premiums
$79,816
$61,122
$63,210
Life, accident, and health premiums
earned (net of premiums ceded totaling
$60,880,
$48,115
and $254,969)
987,611
938,947
632,961
Net investment income
835,046
767,646
791,424
Net realized gains (losses) on
investments
7,465
(71,939)
25,342
1,909,938
1,695,776
1,512,937
BENEFITS AND EXPENSES:
Life and other policy benefits (net
of reinsurance recoveries totaling
$43,574,
$18,937,
and $151,598)
557,469
548,950
390,562
Increase in reserves
98,797
64,834
59,873
Interest paid or credited to
contractholders
562,263
529,118
623,417
Provision for policyholders' share
of earnings (losses)
on participating business
2,027
(725)
(1,498)
Dividends to policyholders
48,150
42,094
34,474
1,268,706
1,184,271
1,106,828
Commissions
122,926
120,058
90,472
Operating expenses
314,810
261,311
196,820
Premium taxes
26,884
27,402
23,129
1,733,326
1,593,042
1,417,249
INCOME BEFORE INCOME TAXES
176,612
102,734
95,688
PROVISION FOR INCOME TAXES:
Current
88,366
65,070
76,672
Deferred
(39,434)
(36,614)
(45,620)
48,932
28,456
31,052
NET INCOME
$127,680
$74,278
$64,636
See notes to consolidated financial
statements.
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S
EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND
1993 (Dollars in Thousands)
Net Additional
Unrealized Retained
Preferred Stock
Common Stock
Paid-In
Gains
Earnings
Shares
Amount
Shares
Amount
Capital
(Losses)
(Deficit)
Total
BALANCE, JANUARY 1, 1993
2,000,800
$121,800
7,028,217
$7,028
$647,199
$0
$(7,063)
$768,964
Issuance of common stock
3,783
4
496
500
Capital contributions
9,098
9,098
Dividends
(21,852)
(21,852)
Net income
64,636
64,636
BALANCE, DECEMBER 31, 1993
2,000,800
121,800
7,032,000
7,032
656,793
0
35,721
821,346
Adjustment to beginning
balance for change in
accounting method for investment
securities
6,515
6,515
Change in net unrealized
gains (losses)
(84,942)
(84,942)
Capital contributions
472
472
Dividends
(40,438)
(40,438)
Net income
74,278
74,278
BALANCE, DECEMBER 31, 1994
2,000,800
121,800
7,032,000
7,032
657,265
(78,427)
69,561
777,231
Change in net unrealized
gains (losses)
137,190
137,190
Dividends
(48,980)
(48,980)
Net income
127,680
127,680
BALANCE, DECEMBER 31,
1995
2,000,800
$121,800
7,032,000
$7,032
$657,265
$58,763
$148,261
$993,121
See notes to consolidated financial
statements.
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995
1994
1993
OPERATING ACTIVITIES:
Net income
$127,680
$74,278
$64,636
Adjustments to reconcile net
income to net cash provided by
operating activities:
Gain (loss) allocated to
par policyholders
2,027
(725)
(1,498)
Amortization of
investments
26,725
36,978
36,782
Realized losses (gains) on
disposal of investments
and write-downs of
mortgage loans and real estate
(7,465)
71,939
(25,342)
Amortization
49,464
29,197
34,115
Deferred income taxes
(39,763)
(38,631)
(56,959)
Changes in assets and
liabilities:
Policy benefit
liabilities
346,975
93,998
438,809
Reinsurance receivable
(38,776)
(25,868)
352,106
Accrued interest and
other receivables
(17,617)
(26,032)
(19,817)
Other, net
8,834
96,950
119,284
Net cash provided by operating activities
458,084
312,084
942,116
INVESTING ACTIVITIES:
Proceeds from sales,
maturities, and redemptions of
investments:
Fixed maturities
4,744,309
Held-to-maturity
Sales
18,821
16,014
Maturities and redemptions
655,993
1,034,324
Available-for-sale
Sales
4,211,649
1,753,445
Maturities and redemptions
253,747
141,299
Mortgage loans
260,960
291,102
339,406
Real estate
4,401
29,868
22,974
Common stock
178
Purchases of investments:
Fixed maturities
(5,494,534)
Held-to-maturity
(490,228)
(673,567)
Available-for-sale
(4,932,566)
(2,606,028)
Mortgage loans
(683)
(9)
(52,917)
Real estate
(5,302)
(9,253)
(14,303)
Common stock
(4,218)
(2,063)
Net cash used in
investing activities
(27,426)
(24,690)
(455,065)
(Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995
1994
1993
FINANCING ACTIVITIES:
Contract withdrawals, net of
deposits
$(217,190)
$(238,166)
$(590,118)
Due to Parent Corporation
(9,143)
(13,078)
(149,510)
Dividends paid
(48,980)
(40,438)
(21,852)
Net commercial paper (repayments)
borrowings
(4,832)
89,686
Net repurchase agreements
(repayments) borrowings
(191,195)
(39,244)
311,937
Net cash used in
financing activities
(471,340)
(241,240)
(449,543)
NET INCREASE IN CASH
(40,682)
46,154
37,508
CASH, BEGINNING OF YEAR
131,621
85,467
47,959
CASH, END OF YEAR
$90,939
$131,621
$85,467
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes
$83,841
$68,892
$87,778
Interest
17,016
12,229
7,438
See notes to consolidated financial
statements.
(Concluded)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance
Company
(the Company) is a wholly-owned subsidiary of The
Great-West Life
Assurance Company (the Parent Corporation). The
Company is an
insurance company domiciled in the State of Colorado.
The Company
offers a wide range of life insurance, health
insurance, and
retirement and investment products to individuals,
businesses,
and other private and public organizations throughout
the United States.
Basis of Presentation - The preparation of
financial
statements in conformity with generally accepted
accounting principles equires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates. The
consolidated financial statements include the accounts
of the Company and its subsidiaries. All material
intercompany transactions and balances have been
eliminated.
Certain reclassifications have been made to the
1994 and 1993
financial statements to conform with the basis of
presentation
used in 1995.
Investments - Investments are reported as follows:
1. Management determines the classification of
fixed
maturities at the time of purchase. Fixed maturities
are classified as held-to-maturity when the Company has
the positive intent and ability to hold the securities
to maturity.
Held-to-maturity securities are stated at amortized
cost unless fair value is less than cost and the
decline is deemed to be other than temporary, in which
case they are written down to fair
value and a new cost basis is established. Fixed
maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the net
unrealized gains and losses reported as a separate
component of stockholder's equity. The net unrealized
gains and losses in derivative financial instruments
used to hedge
available-for-sale securities is included in the
separate component of stockholder's equity.
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 life of
the related bonds. Such
amortization is included in interest income from
investments. Realized gains and losses, and declines in
value judged to be other-than-temporary are included in
net realized gains (losses) on investments.
2. Mortgage loans on real estate are carried at
their unpaid balances adjusted for any unamortized
premiums or discounts and any valuation reserves.
Interest income is accrued on the unpaid principal
balance. Discounts and premiums are amortized to
income using the effective interest method. Accrual of
interest is discontinued on any impaired loans where
collection of interest is doubtful.
The Company maintains an allowance for credit
losses at
a level that, in management's opinion, is sufficient to
absorb possible credit losses on its impaired loans and
to provide adequate provision for any possible future
losses in the portfolio. Management's judgement is
based on past loss experience, current and projected
economic conditions, and extensive situational analysis
of each individual loan.
Effective January 1, 1995, the Company
adopted Statement
of Financial Accounting Standards (SFAS) No. 114
"Accounting by Creditors for Impairment of a Loan" and
SFAS No. 118 "Accounting by Creditors for Impairment of
a Loan-Income Recognition and Disclosures". In
accordance with these standards, a mortgage loan is
considered to be impaired when it is probable that the
Company will be unable to collect all amounts due
according to the contractual terms of the loan
agreement. The measurement of impaired loans is based
on the fair value of the collateral. As the Company
was already providing for impairment of loans through
an allowance for credit losses, the implementation of
these statements had no material effect on the
Company's financial statements.
3. Real estate is carried at the lower of cost
or fair value. In March 1995, the FASB issued SFAS No.
121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" to be effective for fiscal
years beginning after December 15, 1995. The effect of
adopting this statement is not expected to be material.
4. Policy loans are carried at their unpaid
balances.
5. 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.
Gains and losses realized on disposal of
investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand
deposit accounts.
Deferred Policy Acquisition Costs - Policy
acquisition costs,
which consist of sales commissions and other costs that
vary with
and are primarily 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 totalled $48,054, $28,199, and
$32,611 in 1995, 1994, and 1993, respectively.
Separate Account - Separate account assets and
related liabilities are carried at fair value. The
Company's separate accounts invest in shares of Maxim
Series Fund, Inc., a diversified, open-end management
investment company which is an affiliate of the
Company, shares of other external mutual funds, or
government or corporate bonds.
Life Insurance and Annuity Reserves - Life
insurance and annuity policy reserves with life
contingencies of $4,675,175, and $3,995,927 at December
31, 1995 and 1994, respectively, are computed on the
basis of estimated mortality, investment yield,
withdrawals, future maintenance and settlement
expenses, and retrospective experience rating premium
refunds. Annuity contract reserves without life
contingencies of $6,170,760, and $6,338,529 at December
31, 1995 and 1994, respectively, are established
at the contractholder's account value.
Reinsurance - Policy reserves ceded to other
insurance companies are carried as reinsurance
receivable on the balance sheet (See Note 3).
The cost of reinsurance related to long-duration
contracts is accounted for over the life of the
underlying reinsured policies using assumptions
consistent with those used to account for the
underlying policies.
Policy and Contract Claims - Policy and contract
claims include provisions for reported claims in
process of settlement,
valued in accordance with the terms of the related
policies and
contracts, as well as provisions for claims incurred
and unreported based primarily on prior experience of
the Company.
Participating Fund Account - Participating life
and annuity
policy reserves are $3,339,316 and $2,917,273 at
December 31, 1995
and 1994, respectively. Participating business
approximates 46%
of the Company's ordinary life insurance in force and
84% of ordinary life insurance premium income at
December 31, 1995.
The liability for undistributed earnings on
participating
business was increased by $15,690 in 1995, which
represented $2,027 of earnings on participating
business and adjustments of $13,663
to reflect the net unrealized gains on securities
classified as available-for-sale, net of certain
adjustments to policy reserves and income taxes.
The amount of dividends to be paid from
undistributed earnings
on participating business is determined annually by the
Board of Directors. Amounts allocable to participating
policyholders are consistent with established Company
practice.
The Company has established a Participating
Policyholder Experience Account (PPEA) for the benefit
of all participating policyholders which is included in
the accompanying consolidated balance sheet. Earnings
associated with the operation of the PPEA are credited
to the benefit of all participating policyholders. In
the event that the assets of the PPEA are insufficient
to provide contractually guaranteed benefits, the
Company must provide such benefits from its general
assets.
The Company has also established a Participation
Fund Account
(PFA) for the benefit of the participating
policyholders previously transferred to the Company
from the Parent under an assumption reinsurance
transaction. The PFA is part of the PPEA. The assets
and liabilities associated with these policies are
segregated in the accounting records of the Company to
assure the continuation of current policyholder
dividend expectations. Earnings derived
from the operation of the PFA accrue solely for the
benefit of the acquired participating policyholders.
Recognition of Premium Income and Benefits and
Expenses - Life insurance premiums are recognized as
earned. Annuity premiums
with life contingencies are recognized as received.
Accident and
health premiums are earned on a monthly pro rata basis.
Revenues for annuity and other contracts without
significant life
contingencies consist of contract charges for the cost
of insurance, contract administration, and surrender
fees that have been assessed against the contract
account balance during the period. Benefits and
expenses on policies with life contingencies are
associated with premium income by means of the
provision for future policy benefit reserves, resulting
in recognition of profits over the life of the
contracts. The average crediting rate on annuity
products was approximately 7.2% in 1995.
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. Deferred tax assets are
recorded net of a valuation allowance to the extent
that management estimates that recovery of the asset is
not more likely than not.
Repurchase Agreements - The Company enters into
repurchase agreements with third-party broker-dealers
in which the Company sells securities and agrees to
repurchase substantially similar securities at a
specified date and price. Such agreements are
accounted for as collateralized borrowings. Interest
expense on repurchase agreements is recorded at the
coupon interest rate on the underlying securities. The
repurchase fee received or paid is amortized over the
term of the related agreement and recognized as an
adjustment to investment income.
Derivatives - The Company engages in hedging
activities to
manage interest rate and foreign exchange risk (See
Note 6).
2. RELATED-PARTY TRANSACTIONS
Reinsurance Transactions - The Company entered
into a series of reinsurance transactions with the
Parent Corporation during 1993 and prior years intended
to make the Company the underwriter and administrator
of all life and health insurance, annuity products, and
related services with respect to United States
policyholders.
A May 1, 1993, reinsurance transaction resulted in
the Company recapturing certain group life and health
business previously ceded to the Parent under a
coinsurance agreement, as follows:
Assets
Liabilities and
Stockholder's Equity
Bonds
$217,254
Policy reserves
$253,479
Mortgage loans
27,182
Cash and short-term
investments
5,607
Investment income
due & accrued
3,436
$253,479
$253,479
In addition, effective December 31, 1993, the
Company recaptured certain participating life business
also previously ceded to the Parent Corporation, as
follows:
Assets
Liabilities and
Stockholder's Equity
Bonds
$171,005
Policy reserves
$180,000
Cash and short-term
investments
8,087
Investment income
due & accrued
908
$180,000
$180,000
From 1989 to 1993, the Company has assumed most of
the United States business of the Parent Corporation.
During this period, the Parent Corporation had recorded
estimated tax liabilities for certain United States
federal income taxes in its financial statements. On
December 31, 1993 and December 30, 1994, the Parent
Corporation transferred assets with an estimated fair
value of $82,800 and $9,391, respectively, to the
Company in exchange for the Company agreeing to assume
the estimated tax liabilities of the Parent
Corporation, and the issuance of shares of the
Company's common stock.
Fees and Expenses - The Company and the Parent
Corporation have a number of service agreements whereby
the Parent Corporation administers, distributes, and
underwrites business for the Company and administers
the Company's investment portfolio. Certain operating
expenses represent allocations made by the Parent
Corporation to the Company for services provided
pursuant to these service agreements. These
transactions are summarized as follows:
Years Ended December 31,
1995
1994
1993
Investment management expense
(included in net
investment income)
$15,182
$13,841
$17,767
Administrative and underwriting
payments (included
in operating expenses)
301,529
269,020
199,947
Other - At December 31, 1995 and 1994, due to
Parent Corporation includes $27,814 and $35,388 due on
demand and $122,160 and $123,729 of notes payable which
bear interest and mature at
various dates. These notes may be prepaid in whole or
in part at any time without penalty; the issuer may not
demand payment before the maturity date. The Company
also has available an arrangement to obtain advances
from the Parent Corporation to fund short-term
liquidity needs. The due on demand to the Parent
Corporation bears interest at the public bond rate
(6.4% and 8.5% at December 31, 1995 and 1994,
respectively) while the remainder bear interest at
various rates.
3. REINSURANCE
In the normal course of business, the Company
seeks to limit
its exposure to loss on any single insured and to
recover a
portion of benefits paid by ceding risks to other
insurance enterprises under excess coverage and
co-insurance contracts. The Company retains a maximum
of $1.5 million of coverage per individual life.
Reinsurance contracts do not relieve the Company
from its obligations to policyholders. Failure of
reinsurers to honor their obligations could result in
losses to the Company; 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,
1995 and 1994, reinsurance
receivables with a carrying value of $333,924, and
$295,148, respectively, were due primarily from the
Parent Corporation.
Total reinsurance premiums assumed from the Parent
Corporation
were $1,606 and $2,438, and $0, in 1995, 1994, and
1993, respectively.
The Company considers all accident and health
policies to be
short-duration contracts. The following schedule
details life insurance in force and life and
accident/health premiums:
Assumed
Ceded
Primarily
Percentage
Primarily to
From
of
Amount
Gross
the Parent
Other
Net
Assumed
to
Amount
Corporation
Companies
Amount
Net
December 31, 1995:
Life insurance in force:
Individual
$22,388,520
$7,200,882
$3,476,784
$18,664,422
18.6%
Group
48,415,592
1,954,313
50,369,905
3.9%
Total
$70,804,112
$7,200,882
$5,431,097
$69,034,327
Premiums:
Life insurance
$339,342
$51,688
$21,028
$308,682
6.8%
Accident/health
623,626
9,192
64,495
678,929
9.5%
Total
$962,968
$60,880
$85,523
$987,611
December 31, 1994:
Life insurance in force:
Individual
$21,461,590
$7,411,811
$3,415,596
$17,465,375
19.6%
Group
48,948,669
2,102,228
51,050,897
4.1%
Total
$70,410,259
$7,411,811
$5,517,824
$68,516,272
Premiums:
Life insurance
$322,263
$42,946
$22,009
$301,326
7.3%
Accident/health
579,650
5,169
63,140
637,621
9.9%
Total
$901,913
$48,115
$85,149
$938,947
December 31, 1993:
Life insurance in force:
Individual
$17,131,994
$7,797,389
$3,142,723
$12,477,328
25.2%
Group
37,789,859
2,108,314
39,898,173
5.3%
Total
$54,921,853
$7,797,389
$5,251,037
$52,375,501
Premiums:
Life insurance
$283,707
$112,798
$18,753
$189,662
9.9%
Accident/health
524,747
142,171
60,723
443,299
13.7%
Total
$808,454
$254,969
79,476
$632,961
4. NET INVESTMENT INCOME
Net investment income is summarized as follows:
Years Ended December 31,
1995
1994
1993
Investment income:
Bonds and short-term
investments
$592,062
$555,103
$545,926
Mortgage loans on real
estate
171,008
182,544
220,477
Real estate
3,936
5,700
9,265
Policy loans
163,547
116,060
91,529
930,553
859,407
867,197
Investment expenses,
including interest on
amounts charged by the
Parent Corporation
of $10,778, $11,145, and
$7,250
95,507
91,761
75,773
Net investment income
$835,046
$767,646
$791,424
5. NET REALIZED GAINS (LOSSES) ON
INVESTMENTS
Net realized gains (losses) on
investments are as follows:
Years Ended December 31,
1995
1994
1993
Net realized gains
(losses):
Bonds
$28,166
$(39,775)
$68,884
Mortage loans on real
estate
1,309
2,120
(98)
Real estate
(10)
(102)
(102)
Bond provisions
(5,000)
(3,200)
(4,456)
Mortgage loan provisions
(15,877)
(27,918)
(38,089)
Real estate provisions
(1,123)
(3,064)
(797)
Net realized gains
(losses) on investments
$7,465
$(71,939)
$25,342
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31,
1995 are summarized as follows:
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair
Carrying Cost
Gains
Losses
Value
Value
Held-to-Maturity:
U.S. Treasury
Securities and
obligations of U.S.
Government Agencies:
Collateralized
mortgage obligations
$
$
$
$
$
Direct mortgage pass-through
certificates
Other
11,107
1,093
12,200
11,107
Collateralized
mortgage obligations
Public utilities
269,671
22,084
95
291,660
269,671
Corporate bonds
1,732,046
83,583
5,867
1,809,762
1,732,046
Foreign governments
18,596
1,087
12
19,671
18,596
State and
municipalities
22,784
1,966
24,750
22,784
$2,054,204
$109,813
$5,974
$2,158,043
$2,054,204
Available-for-Sale:
U.S. Treasury
Securities and
obligations
of U.S.
Government Agencies:
Collateralized
mortgage obligations
$561,475
$9,983
$1,948
$569,510
$569,510
Direct mortgage pass-through
certificates
794,056
11,980
2,233
803,803
803,803
Other
561,736
7,703
39
569,400
569,400
Collateralized
mortgage obligations
490,074
18,044
3,304
504,814
504,814
Public utilities
581,482
16,607
2,425
595,664
595,664
Corporate bonds
2,943,918
121,537
26
3,065,429
3,065,429
Foreign governments
141,362
5,021
5,644
140,739
140,739
State and
municipalities
13,866
22
60
13,828
13,828
$6,087,969
$190,897
$15,679
$6,263,187
$6,263,187
6.SUMMARY OF INVESTMENTS (Continued)
Fixed maturities owned at December 31, 1994 are
summarized as
follows:
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair Carrying Cost
Gains
Losses
Value
Value
Held-to-Maturity:
U.S. Treasury
Securities and
obligations
of U.S.
Government Agencies:
Collateralized
mortgage obligations
$521,408
$389
$33,018
$488,779
$521,408
Direct
mortgage pass-through
certificates
69,559
617
1,001
69,175
69,559
Other
85,406
246
923
84,729
85,406
Collateralized
mortgage obligations
309,869
1,205
14,208
296,866
309,869
Public utilities
457,758
2,898
14,340
446,316
457,758
Corporate bonds
2,757,612
14,701
111,410
2,660,903
2,757,612
Foreign governments
90,690
47
3,950
86,787
90,690
State and
municipalities
1,683
10
1,693
1,683
$4,293,985
$20,113
$178,850
$4,135,248
$4,293,985
Available-for-Sale:
U.S. Treasury
Securities and
obligations
of U.S.
Government Agencies:
Collateralized
mortgage obligations
$80,531
$
$3,798
$76,733
$76,733
Direct
mortgage pass-through
certificates
759,815
871
49,462
711,224
711,224
Other
198,651
9
2,654
196,006
196,006
Collateralized
mortgage obligations
203,036
6,379
196,657
196,657
Public utilities
325,383
193
26,379
299,197
299,197
Corporate bonds
1,119,726
3,253
65,398
1,057,581
1,057,581
Foreign governments
298,597
17
21,826
276,788
276,788
State and
municipalities
11,348
831
10,517
10,517
$2,997,087
$4,343
$176,727
$2,824,703
$2,824,703
Most of the collateralized mortgage obligations
consist of
planned amortization classes with final stated
maturities of three to thirty years and average lives
of less than one to twelve
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.
The cumulative effect as of January 1, 1994 of
adopting SFAS
No. 115 "Accounting for Certain Investments in Debt and
Equity Securities," increased the opening balance of
stockholders'
equity by $6,515 to reflect the net unrealized gains on
securities classified as available-for-sale (previously
carried at the
lower of aggregate amortized cost or fair value) and
the
corresponding adjustments to deferred policy
acquisition costs, policy reserves, and amounts
allocable to the liability for undistributed earnings
on participating business, all net of income taxes.
In November 1995, the Financial Accounting
Standards Board
issued a special report entitled A Guide to
Implementation of SFAS
115 on Accounting for Certain Investments in Debt and
Equity
Securities. In accordance with the adoption of this
guidance, the Company reassessed the classification of
its investment portfolio in December 1995 and reclassed
securities totalling $2,119,814
from held-to-maturity to available-for-sale. In
connection with
this reclassification, an unrealized gain, net of
related
adjustments (see above), of $23,449 was recognized in
stockholder's equity at the date of transfer.
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 at determined current market
spread rates on investments of similar quality and
term.
The amortized cost and estimated fair value of
fixed maturity investments at December 31, 1995, 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.
Held-to-
Maturity
Available-
for-Sale
Amortized
Estimated
Amortized
Estimated
Cost
Fair Value Cost
Fair Value Due in one year or
less
$287,565
$293,666
$326,032
$337,792
Due after one year
through five years
838,993
877,949
1,452,442
1,495,755
Due after five years
through ten years
537,365
575,896
1,023,894
1,064,871
Due after ten years
159,064
173,487
522,002
542,559
Mortgage-backed
securities
1,845,605
1,878,127
Asset-backed
securities
231,217
237,045
917,994
944,083
$2,054,204
$2,158,043
$6,087,969
$6,263,187
During the years ended December 31, 1995 and 1994,
available-for-sale securities with a fair value at the
date of sale of $4,211,649 and $1,753,445 were sold.
The realized gains and losses on such sales totaled
$39,755 and $15,516 for 1995 and $7,030 and $50,612 for
1994. During 1995 and 1994, held-to-maturity
securities with an amortized cost of $18,087 and
$15,300 were sold due to credit deterioration with
insignificant realized gains and losses. Gains on
securities which were called for redemption by the
respective issuers prior to maturity were $2,990 and
$3,093 in 1995 and 1994, respectively.
At December 31, 1995 and 1994, pursuant to fully
collateralized securities lending arrangements, the
Company had loaned $343,351 and $0 of fixed maturities,
respectively.
The Company makes limited use of derivative
financial
instruments to manage interest rate and foreign
exchange risk. Such hedging activity consists of
interest rate swap agreements, interest rate floors and
caps, and foreign currency exchange contracts.
Interest rate floors and caps are interest rate
protection instruments that require the payment by a
counter-party to the Company of an interest
differential. This differential represents the
difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a
notional principal amount. Interest rate swap
agreements are used to convert the interest rate on
certain fixed maturities from a floating rate to a
fixed rate. Interest rate swap transactions generally
involve the exchange of fixed and floating rate
interest payment obligations without the exchange of
the underlying principal amounts. Foreign currency
exchange contracts are used to hedge the foreign
exchange rate risk associated with bonds denominated in
other than U.S. dollars. The differential paid or
received on interest rate and amounts received under
interest rate floor and cap agreements are recognized
as an adjustment to net investment income on the
accrual method. Gains and losses on foreign exchange
contracts are deferred and recognized in net investment
income when the hedged transactions are realized.
Although derivative financial instruments taken
alone may
expose the Company to varying degrees of market and
credit risk when used solely for hedging purposes,
these instruments typically
reduce overall market and interest rate risk. The
Company controls
the credit risk of its financial contracts through
credit
approvals, limits, and monitoring procedures. As the
Company generally enters nto transactions only with
high quality institutions, no losses associated with
non-performance on derivative financial instruments
have occurred or are expected to occur.
The following table summarizes the financial hedge
instruments:
Notional
Strike/Swap
December 31, 1995
Amount
Rate
Maturity
Interest Rate Floor
$100,000
4.5%
[LIBOR]
1999
Interest Rate Cap
100,000
11.0% [CMT]
2000
Interest Rate Swaps
165,000
6.203% to
9.35%
01/98 to
2/2002
Foreign Currency
Exchange Contracts
66,650
N/A
10/96 to
09/98
Notional
Strike
December 31, 1994
Amount
Rate
Maturity
Interest Rate Floor
$100,000
4.5%
[LIBOR]
1999
Interest Rate Swaps
150,000
6.275% to
10.644%
01/95 -
01/2000
Foreign Currency
Exchange Contracts
70,991
N/A
10/96 -
09/98
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment
guidelines
designed to emphasize a diversified and geographically
dispersed
portfolio of mortgages collateralized by commercial and
industrial
properties located in the United States. The Company's
policy is to obtain collateral sufficient to provide
loan-to-value ratios of not greater than 75% at the
inception of the mortgages. At
December 31, 1995 approximately 28% and 11% of the
Company's mortgage loans were collateralized by real
estate located in California and Illinois,
respectively.
At December 31, 1995, the recorded investment in
loans that
were considered to be impaired under SFAS No. 114 was
$23,678 including $3,254 of loans with a related
allowance for credit losses of $654. Additionally,
loans totaling $6,481 were on a non-accrual basis. The
average recorded investment in impaired loans during
the year ended December 31, 1995 was approximately
$29,150. For the year ended December 31, 1995, the
Company recognized interest income on those impaired
loans of $675. Interest income received and recorded
using the cash basis method of recognition during 1995
totalled $857.
As part of an active loan management policy and in
the
interest of maximizing the future return of each
individual loan, the Company may from time to time
alter the original terms of certain loans. These
restructured loans, all performing in accordance with
their modified terms, aggregated $89,160 and $102,538
at December 31, 1995 and 1994, respectively.
The following table presents changes in the
allowance for
credit losses since January 1, 1995 (date of the
adoption of SFAS No. 114):
Balance at January 1, 1995
$57,987
Provision for loan losses
15,877
Direct chargeoffs
(10,480)
Recoveries
610
Balance at December 31, 1995
$63,994
7. COMMERCIAL PAPER
The Company has a commercial paper program which
is partially supported by a $50,000 standby
letter-of-credit. At December 31, 1995, commercial
paper outstanding has maturities ranging from 25 to 160
days and interest rates ranging from 5.7% to 5.9%. At
December 31, 1994, maturities ranged from 40 to 120
days and interest rates ranged from 5.4% to 6.4%
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides estimated fair value
for all
assets and liabilities and hedge contracts considered
to be financial instruments:
December 31,
1995
1994
Estimated
Carrying
Estimated
Carrying
Fair
Amount
Fair
Value
Amount
Value
ASSETS:
Fixed maturities
and short-term
investments
$8,452,226
$8,556,065
$7,825,608
$7,666,871
Mortgage loans
on real estate
1,713,195
1,749,514
2,011,059
2,037,694
Policy loans
2,237,745
2,237,745
1,905,013
1,905,013
Common stock
9,440
9,440
5,222
5,222
LIABILITIES:
Annuity contract
reserves
without life
contingencies
6,170,760
6,268,749
6,338,529
6,286,966
Policyholders'
funds
154,872
154,872
144,262
144,262
Due to Parent
Corporation
149,974
152,347
159,117
159,334
Repurchase agreements
372,965
372,965
564,160
564,160
Commercial paper
84,854
84,854
89,686
89,686
HEDGE CONTRACTS:
Interest rate
floor
84
1,320
88
76
Interest rate cap
90
90
Interest rate swaps
10,052
10,052
(771)
(771)
Foreign currency
exchange contracts
(4,604)
(4,604)
(4,345)
(4,345)
The estimated fair value of financial instruments
has been determined using available market information
and appropriate valuation methodologies. However,
considerable judgement is necessarily required to
interpret market data to develop the 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.
Mortgage loans fair value estimates generally are
based on a discounted cash flow basis. A discount rate
"matrix" is incorporated whereby the discount rate used
in valuing a specific mortgage generally corresponds to
that mortgage's remaining
term. The rates selected for inclusion in the discount
rate "matrix" reflect rates that the Company would
quote if placing loans representative in size and
quality to those currently in the portfolio.
Policy loans accrue interest generally at variable
rates with
no fixed maturity dates and, therefore, estimated fair
value approximates carrying value.
The fair value of annuity contract reserves
without life contingencies is estimated by discounting
the cash flows to maturity of the contracts, utilizing
current credited rates for similar products.
The estimated fair value of policyholder's funds
is the same
as the carrying amount as the Company can change the
crediting rates with 30 days notice.
The estimated fair value of due to Parent
Corporation is based
on discounted cash flows at current market spread rates
on high quality investments.
The carrying value of repurchase agreements and
commercial
paper is a reasonable estimate of fair value due to the
short-term
nature of the liabilities.
The estimated fair value of financial hedge
instruments, all
of which are held for other than trading purposes, is
the
estimated amount the Company would receive or pay to
terminate the
agreement at each year-end, taking into consideration
current interest rates and other relevant factors.
Included in the net gain (loss) position for interest
rates swaps are $0 and $2,985 of
unrealized losses in 1995 and 1994, respectively.
Included in the net loss position for foreign
currencies exchange contracts are $5,497 and $4,504
loss exposures in 1995 and 1994, respectvely.
See note 6 for additional information on policies
regarding estimated fair value of fixed maturities.
9. FEDERAL INCOME TAXES
The following is a reconciliation between the
federal income
tax
rate and the Company's effective rate:
1995
1994
1993
Federal tax rate
35.0%
35.0%
35.0%
Change in tax rate resulting
from:
Investment income not
subject to federal tax
(0.5)
(1.0)
(1.2)
Effect of tax rate change
on net deferred tax assets
(1.8)
Change in valuation
allowance
(7.8)
(6.9)
1.0
State and environmental
taxes
0.7
0.9
Other, net
0.3
(0.3)
(0.5)
Total
27.7%
27.7%
32.5%
Temporary differences which give rise to the
deferred tax
assets
and liabilities as of December 31, 1995 and 1994
are as
follows:
1995
1994
Deferred Tax
Asset
Deferred Tax
Liability
Deferred Tax
Asset
Deferred Tax
Liability
Policyholder
reserves
$162,073
$
$119,764
$
Deferred policy
acquisition costs
55,542
62,040
Deferred acquisition
cost proxy tax
58,481
45,422
Investment assets
16,372
97,249
Net operating loss
carryforwards
17,588
22,666
Tax credits and
other
4,786
2,564
Subtotal
242,928
71,914
287,665
62,040
Valuation allowance
(2,073)
(15,218)
Total Deferred Taxes
$240,855
$71,914
$272,447
$62,040
Amounts related to investment assets above include
$33,735 and $(47,493) related to the unrealized gains
(losses) on the Company's fixed maturities
available-for-sale at December 31, 1995 and 1994,
respectively.
The Company files a separate tax return and,
therefore, losses incurred by subsidiaries cannot be
offset against operating income of the Company. At
December 31, 1995, the Company's subsidiaries have
approximately $50,251 of net operating loss
carryforwards, expiring through the year 2010. The tax
benefit of subsidiaries' net operating loss
carryforwards, net of a valuation allowance of $419
are included in the deferred tax assets.
The Company's valuation allowance was decreased in
1995 and
1994 by $13,145 and $6,278, respectively, primarily as
a result of
taxable income in subsidiaries which was greater than
expected and the resulting re-evaluation by management
of future estimated
taxable income in the subsidiaries.
Under pre-1984 life insurance company income tax
laws, a portion of life insurance company gain from
operations was not subject to current income taxation
but was accumulated, for tax purposes, in a memorandum
account designated as "policyholders' surplus account."
The aggregate accumulation in the account is $7,742 and
the Company does not anticipate any transactions which
would cause any part of the amount to become taxable.
Accordingly, no provision has been made for possible
future federal income
taxes on this accumulation.
The Internal Revenue Service is currently auditing
tax years
1988 to 1991, inclusive. In the opinion of Company
management, amounts paid or accrued are adequate,
however, it is possible that the Company's estimate may
change as a result of the completion of the IRS audits.
10. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND
OTHER MATTERS
All of the Company's outstanding series of
preferred stock are owned by the Parent Corporation.
The dividend rate on the Series A Stated Rate Auction
Preferred Stock (STRAPS) is 7.3% through December 30,
2002. The Series A STRAPS are redeemable at the option
of the Company on or after December 29, 2002 at a price
of $100,000 per share, plus accumulated and unpaid
dividends.
Through December 30, 1995, the Series B STRAPS had
a 7%
dividend rate. Thereafter, the Company will, at its
option, select
future dividend periods. Future dividend rates will be
fixed by a
market auction process with dividend rates dependent
upon the
Company. If auctions are undersubscribed or otherwise
unsuccessful, the dividend rate is fixed by formula.
The Company has the flexibility of specifying, before
each auction, the rights of redemption which it has
during the succeeding dividend period. These
redemption rights are factored into the auctions which
set dividend rates.
The Series B STRAPS are redeemable at the option
of the
Company at a price of $100,000 per share, plus
accumulated and unpaid dividends.
The Company's Series E 7.5% non-cumulative
preferred shares
are redeemable by the Company after April 1, 1999. The
shares are
not redeemable at the option of the holder at any time.
The
shares are convertible into common shares at the option
of the holder on or after September 30, 1999, at a
conversion price negotiated between the holder and the
Company or at a formula determined conversion price in
accordance with the share conditions.
On December 31, 1993, the Company issued 3,783
shares of
common stock to the Parent Corporation in connection
with an
assumption of estimated tax liabilities. The Company
also received $472 and $9,098 of contributed capital in
the form of deferred tax
assets from the Parent Corporation during 1994 and
1993,
respectively, in connection with the 1993 reinsurance
transactions (see Note 2).
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:
1995
1994
1993
(Unaudited)
Net Income
$114,931
$70,091
$55,995
Capital and Surplus
653,479
621,589
628,944
The maximum amount of dividends which can be paid
to
stockholders by insurance companies domiciled in the
State of Colorado is subject to restrictions relating
to statutory surplus and statutory net gain from
operations. Statutory surplus and net gains from
operations at December 31, 1995 were $524,647 and
$119,299 (unaudited), respectively. The Company should
be able to pay up to $119,299 (unaudited) of dividends
without regulatory approval in 1996.
Dividends of $9,217, $7,475, and $9,335, were paid
on
preferred stock in 1995, 1994, and 1993, respectively.
In addition, dividends of $39,763, $32,963, and $12,517
were paid on common stock in 1995, 1994 and 1993,
respectively. Dividends are
paid as determined by the Board of Directors.
The Company is involved in various legal
proceedings which
arise in the ordinary course of its business. In the
opinion of
management, after consultation with counsel, the
resolution of these proceedings should not have a
material adverse effect on its financial position or
yresults of operations.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements for Maxim Series
Account for the years ended December 31, 1995
and 1994 and the consolidated financial
statements for Great-West Life & Annuity
Insurance Company for the years ended December
31, 1995, 1994 and 1993 are included in Part B.
(b) Exhibits
Items (1), (2), and (8) are incorporated by
reference to registrant's Form S-6 Registration
Statement filed February 21, 1984 and Pre-
Effective Amendment No. 1 thereto filed June 29,
1984.
(3) Copy of Underwriting Agreement is
incorporated by reference to Registrant's
Pre-Effective Amendment No. 2 to its Form
S-6 Registration Statement filed on March
10, 1982.
(4) Form of variable annuity contracts no
longer being offered by Registrant are
incorporated by reference to Registrant's
Pre-Effective Amendment No. 2 to its Form
S-6 Registration Statement filed March 10,
1982. Copy of variable annuity contract
currently being offered by Registrant is
incorporated by reference to Registrant's
Post-Effective Amendment No. 9.
(5) Form of application used with variable
annuity contracts no longer being offered
by Registrant are incorporated by
reference to Registrant's Pre-Effective
Amendment No. 2 to its Form S-6
Registration Statement filed March 10,
1982. Copy of application used with
variable annuity contract currently is
incorporated by reference to Registrant's
Post-Effective Amendment No. 9.
(6) Copy of Articles of Redomestication and
Bylaws of Depositor is incorporated by
reference to Registrant's Post-Effective
Amendment No. 9.
(7) Not Applicable
(9) Copy of opinion of counsel for contracts
no longer being offered by Registrant are
incorporated by reference to Registrant's
Post-Effective Amendment No. 14 to its
Registration Statement filed April 30,
1987. Copy of opinion of counsel for
contracts currently being offered by
Registrant is incorporated by reference to
Registrant's Post-Effective Amendment No.
9.
(10) (a) Written Consent of Jorden Burt
Berenson & Johnson, LLP
(b) Written Consent of Deloitte & Touche
LLP
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
(13) Calculations of Performance Data is
incorporated by reference to Registrant's
Post-Effective Amendment No. 9.
Item 25. Directors and Officers of the Depositor
Position and Offices
Name Principal Business Address with Depositor
James Balog 2205 North Southwinds Boulevard Director
Vero Beach, Florida 39263
James W. Burns, O.C. (4) Director
Orest T. Dackow (3) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 77 Avenue Road Director
Penthouse No. 6
Toronto, Ontario M5R 3R8
Robert Gratton ( 5 ) Chairman
N. Berne Hart 2552 East Alameda Avenue Director
Denver, Colorado 80209
Kevin P. Kavanagh (1) Director
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 053
William T. McCallum (3) Director,
President
and Chief
Executive
Officer
Jerry E.A. Nickerson H.B. Nickerson & Sons LimitedDirector
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4) Director
Michel Plessis-Belair, F.C.A. (4) Director
Ross J. Turner Genstar Investment Corporation Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, California 94404
Brian E. Walsh Trinity L.P. Director
115 Putnam Avenue
Greenwich, Connecticut 06830
Robert D. Bond (3) Senior Vice-
President
Financial
Services
John T. Hughes (3) Senior Vice-
President,
Chief
Investment
Officer
D. Craig Lennox (3) Senior Vice-
President,
General
Counsel and
Secretary
Dennis Low (3) Executive
Vice-
President,
Financial
Services
Alan D. MacLennan (2) Executive
Vice-
President,
Employee
Benefits
James D. Motz (2) Senior Vice-
President,
Employee
Benefits
Operations
Douglas L. Wooden (3) Senior Vice-
President,
Chief
Financial
Officer and
Treasurer
______________________________________
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C
3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
Item 26. Persons controlled by or under common control with the
Depositor or Registrant
See attached organizational chart.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
ORGANIZATIONAL CHART
Power Corporation of Canada
100% - 171263 Canada Inc.
68.4% - Power Financial Corporation
86.4% - Great-West Lifeco Inc.
99.4% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - GW Capital Management, Inc.
100% - Financial Administrative Services Corporation
100% - Employee Benefit Services, Inc.
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
94% - Maxim Series Fund, Inc.
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
Item 27. Number of Contract Owners
As of February 29, 1996 , there were 107 Contract
Owners.
Item 28. Indemnification
Provisions exist under the Colorado General
Corporation Code and the Bylaws of GWL&A whereby GWL&A
may indemnify a director, officer, or controlling
person of GWL&A against liabilities arising under the
Securities Act of 1933. The following excerpts
contain the substance of these provisions:
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign
entity that is a predecessor of the corporation by
reason of a merger, consolidation, or other
transaction in which the predecessor's existence
ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while
a director of a corporation, is or was serving at the
corporation's request as a director, officer, partner,
trustee, employee, fiduciary or agent of another
domestic or foreign corporation or other person or
employee benefit plan. A director is considered to be
serving an employee benefit plan at the corporation's
request if his or her duties to the corporation also
impose duties on or otherwise involve services by, the
director to the plan or to participants in or
beneficiaries of the plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with
respect to a proceeding to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable
expenses.
(5) "Official capacity" means, when used with
respect to a director, the office of director in the
corporation and, when used with respect to a person
other than a director as contemplated in Section 7-
109-107, means the office in the corporation held by
the officer or the employment, fiduciary, or agency
relationship undertaken by the employee, fiduciary, or
agent on behalf of the corporation. "Official
capacity" does not include service for any other
domestic or foreign corporation or other person or
employee benefit plan.
(6) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether
formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this
section, a corporation may indemnify a person made a
party to the proceeding because the person is or was a
director against liability incurred in any proceeding
if:
(a) The person conducted himself or herself in
good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an
official capacity with the corporation,
that his or her conduct was in the
corporation's best interests; or
(II) In all other cases, that his or her
conduct was at least not opposed to the
corporation's best interests; and
(c) In the case of any criminal proceeding,
the person had no reasonable cause to believe
his or her conduct was unlawful.
(2) A director's conduct with respect to an employee
benefit plan for a purpose the director reasonably
believed to be in the interests of the participants in
or beneficiaries of the plan is conduct that satisfies
the requirements of subparagraph (II) of paragraph (b)
of subsection (1) of this section. A director's
conduct with respect to an employee benefit plan for a
purpose that the director did not reasonably believe
to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to
satisfy the requirements of subparagraph (a) of
subsection (1) of this section.
(3) The termination of any proceeding by judgment,
order, settlement, or conviction, or upon a plea of
nolo contendere or its equivalent, is not, of itself,
determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under
this section:
(a) In connection with a proceeding by or in
the right of the corporation in which the
director was adjudged liable to the corporation;
or
(b) In connection with any proceeding charging
that the director derived an improper personal
benefit, whether or not involving action in his
official capacity, in which proceeding the
director was adjudged liable on the basis that
he or she derived an improper personal benefit.
(5) Indemnification permitted under this section in
connection with a proceeding by or in the right of a
corporation is limited to reasonable expenses incurred
in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by the articles of incorporation,
a corporation shall be required to indemnify a person
who is or was a director of the corporation and who
was wholly successful, on the merits or otherwise, in
defense of any proceeding to which he was a party,
against reasonable expenses incurred by him in
connection with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a
party to a proceeding in advance of the final
disposition of the proceeding if:
(a) The director furnishes the corporation a
written affirmation of his good-faith belief
that he has met the standard of conduct
described in Section 7-109-102;
(b) The director furnishes the corporation a
written undertaking, executed personally or on
the director's behalf, to repay the advance if
it is ultimately determined that he or she did
not meet such standard of conduct; and
(c) A determination is made that the facts
then know to those making the determination
would not preclude indemnification under this
article.
(2) The undertaking required by paragraph (b) of
subsection (1) of this section shall be an unlimited
general obligation of the director, but need not be
secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments
under this section shall be made in the manner
specified in Section 7-109-106.
Section 7-109-105. Court-Ordered Indemnification of
Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to a
proceeding may apply for indemnification to the court
conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application,
the court, after giving any notice the court considers
necessary, may order indemnification in the following
manner:
(a) If it determines the director is entitled
to mandatory indemnification under section 7-
109-103, the court shall order indemnification,
in which case the court shall also order the
corporation to pay the director's reasonable
expenses incurred to obtain court-ordered
indemnification.
(b) If it determines that the director is
fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not the director met
the standard of conduct set forth in section 7-
109-102 (1) or was adjudged liable in the
circumstances described in Section 7-109-102
(4), the court may order such indemnification as
the court deems proper; except that the
indemnification with respect to any proceeding
in which liability shall have been adjudged in
the circumstances described Section 7-109-102
(4) is limited to reasonable expenses incurred
in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered
indemnification.
Section 7-109-106. Determination and Authorization of
Indemnification of Directors.
(1) A corporation may not indemnify a director under
Section 7-109-102 unless authorized in the specific
case after a determination has been made that
indemnification of the director is permissible in the
circumstances because he has met the standard of
conduct set forth in Section 7-109-102. A
corporation shall not advance expenses to a director
under Section 7-109-104 unless authorized in the
specific case after the written affirmation and
undertaking required by Section 7-109-104(1)(a) and
(1)(b) are received and the determination required by
Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made
subsection (1) of this section shall be made:
(a) By the board of directors by a majority
vote of those present at a meeting at which a
quorum is present, and only those directors not
parties to the proceeding shall be counted in
satisfying the quorum.
(b) If a quorum cannot be obtained, by a
majority vote of a committee of the board of
directors designated by the board of directors,
which committee shall consist of two or more
directors not parties to the proceeding; except
that directors who are parties to the proceeding
may participate in the designation of directors
for the committee.
(3) If a quorum cannot be obtained as contemplated
in paragraph (a) of subsection (2) of this section,
and the committee cannot be established under
paragraph (b) of subsection (2) of this section, or
even if a quorum is obtained or a committee
designated, if a majority of the directors
constituting such quorum or such committee so directs,
the determination required to be made by subsection
(1) of this section shall be made:
(a) By independent legal counsel selected by a
vote of the board of directors or the committee
in the manner specified in paragraph (a) or (b)
of subsection (2) of this section or, if a
quorum of the full board cannot be obtained and
a committee cannot be established, by
independent legal counsel selected by a majority
vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation
as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification
is permissible; except that, if the determination that
indemnification is permissible is made by independent
legal counsel, authorization of indemnification and
advance of expenses shall be made by the body that
selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees,
Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of
incorporation:
(a) An officer is entitled to mandatory
indemnification under section 7-109-103, and is
entitled to apply for court-ordered
indemnification under section 7-109-105, in each
case to the same extent as a director;
(b) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or
agent of the corporation to the same extent as a
director; and
(c) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or
agent who is not a director to a greater extent,
if not inconsistent with public policy, and if
provided for by its bylaws, general or specific
action of its board of directors or
shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain
insurance on behalf of a person who is or was a
director, officer, employee, fiduciary, or agent of
the corporation and who, while a director, officer,
employee, fiduciary, or agent of the corporation, is
or was serving at the request of the corporation as a
director, officer, partner, trustee, employee,
fiduciary, or agent of any other domestic or foreign
corporation or other person or of an employee benefit
plan against any liability asserted against or
incurred by the person in that capacity or arising out
of his or her status as a director, officer, employee,
fiduciary, or agent whether or not the corporation
would have the power to indemnify the person against
such liability under the Section 7-109-102, 7-109-103
or 7-109-107. Any such insurance may be procured from
any insurance company designated by the board of
directors, whether such insurance company is formed
under the laws of this state or any other jurisdiction
of the United States or elsewhere, including any
insurance company in which the corporation has an
equity or any other interest through stock ownership
or otherwise.
Section 7-109-109. Limitation of Indemnification of
Directors.
(1) A provision concerning a corporation's
indemnification of, or advance of expenses to,
directors that is contained in its articles of
incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract,
except for an insurance policy or otherwise, is valid
only to the extent the provision is not inconsistent
with Sections 7-109-101 to 7-109-108. If the articles
of incorporation limit indemnification or advance of
expenses, indemnification or advance of expenses are
valid only to the extent not inconsistent with the
articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses
incurred by a director in connection with an
appearance as a witness in a proceeding at a time when
he or she has not been made a named defendant or
respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of
Indemnification of Director.
If a corporation indemnifies or advances
expenses to a director under this article in
connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice
of the indemnification or advance to the shareholders
with or before the notice of the next shareholders'
meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of
directors, such notice shall be given to the
shareholders at or before the time the first
shareholder signs a writing consenting to such action.
Bylaws of GWL&A
Article II, Section 11. Indemnification of Directors.
The Company may, by resolution of the Board of
Directors, indemnify and save harmless out of the
funds of the Company to the extent permitted by
applicable law, any director, officer, or employee of
the Company or any member or officer of any committee,
and his heirs, executors and administrators, from and
against all claims, liabilities, costs, charges and
expenses whatsoever that any such director, officer,
employee or any such member or officer sustains or
incurs in or about any action, suit, or proceeding
that is brought, commenced, or prosecuted against him
for or in respect of any act, deed, matter or thing
whatsoever made, done, or permitted by him in or about
the execution of his duties of his office or
employment with the Company, in or about the execution
of his duties as a director or officer of another
company which he so serves at the request and on
behalf of the Company, or in or about the execution of
his duties as a member or officer of any such
Committee, and all other claims, liabilities, costs,
charges and expenses that he sustains or incurs, in or
about or in relation to any such duties or the affairs
of the Company, the affairs of such Committee, except
such claims, liabilities, costs, charges or expenses
as are occasioned by his own willful neglect or
default. The Company may, by resolution of the Board
of Directors, indemnify and save harmless out of the
funds of the Company to the extent permitted by
applicable law, any director, officer, or employee of
any subsidiary corporation of the Company on the same
basis, and within the same constraints as, described
in the preceding sentence.
Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) The Great-West Life Assurance Company ("Great-
West") currently distributes securities of FutureFunds
Series Account, Retirement Plan Series Account and
Pinnacle Series Account in addition to those of the
Registrant.
(b) Directors and Officers of Great-West
Position and Offices
Name Principal Business Address with Underwriter
James W. Burns, O.C. (4) Chairman
Orest T. Dackow (3) Director
Andre Desmarais (4) Director
Paul Desmarais,P.C., C.C. (4) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 77 Avenue Road Director
Penthouse No. 6
Toronto, Ontario M5R 3R8
Robert Gratton ( 5 ) Director
N. Berne Hart 2552 East Alameda Avenue Director
Denver, Colorado 80209
Charles H. Hollenberg, Ontario Cancer Treatment Director
M.D., O.C. and Research Foundation
620 University Avenue
Toronto, Ontario M5G 2L7
Kevin P. Kavanagh (1) Director
J. Blair MacAulayFraser & Beatty Director
Barristers & Solicitors
P.O. Box 100
First Canadian Place
Toronto, Ontario M5X 1B2
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 053
The Right Hon. 5238 45 B Avenue Director
D.F. MazankowskiVegreville, Alberta T9C 1S5
William T. McCallum (3) Director,
President
and Chief
Executive
Officer,
U.S.
Operations
Raymond L. McFeetors (1) Director,
President
and Chief
Executive
Officer;
President
and Chief
Executive
Officer,
Canadian
Operations
Randall L. Moffatt Moffat Communications LimitedDirector
3rd Floor, CKY Building
Winnipeg, Manitoba R3G 0L7
Jerry E.A. Nickerson H.B. Nickerson & Sons LimitedDirector
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, (4) Director
P.C., Q.C.
Michel Plessis-Belair, (4) Director
F.C.A.
Guy St-Germain, C.M. Placements Laugerma Inc. Director
48 Robert Street
Outremont, Quebec H3S 2P2
Robert D. Bond (3) Senior Vice-
President,
Financial
Services,
(U.S.)
Dennis J. Devos (1) Senior Vice-
President,
Individual
Insurance
and
Investments
(Canada)
James R. Grant (1) Senior Vice-
President,
Group
(Canada)
Mitchell T.G. Graye (1) Senior Vice-
President,
Chief
Financial
Officer
(Canada)
John T. Hughes (3) Senior Vice-
President,
Chief
Investment
Officer
(U.S.)
D. Craig Lennox (3) Senior Vice-
President,
General
Counsel and
Secretary
Dennis Low (3) Executive
Vice-
President,
Financial
Services
(U.S.)
Alan D. MacLennan (2) Executive
Vice-
President,
Employee
Benefits
(U.S.)
David E. Morrison (1) Senior Vice-
President
and Actuary
(Canada)
James D. Motz (2) Senior Vice-
President,
Employee
Benefits
Operations
(U.S.)
Peter G. Munro (1) Senior Vice-
President,
Chief
Investment
Officer
(Canada)
Douglas L. Wooden (3) Senior Vice-
President,
Chief
Financial
Officer
(U.S.)
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C
3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
Great-West -0- -0- -0- -0-
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be
maintained by Section 31(a) of the 1940 Act and the
rules promulgated thereunder are maintained by the
registrant through GWL&A, 8515 E. Orchard Road,
Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective
amendment to this Registration Statement as
frequently as is necessary to ensure that the
audited financial statements in the Registration
Statement are never more than 16 months old for
so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes to include either (1) as
part of any application to purchase a contract
offered by the Prospectus, a space that an
applicant can check to request a Statement of
Additional Information, or (2) a postcard or
similar written communication affixed to or
included in the Prospectus that the applicant
can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement
of Additional Information and any financial
statements required to be made available under
this form promptly upon written or oral request.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant certifies that it meets the requirements of
Rule 485(b) for effectiveness and has caused this Post-
Effective Amendment No. 2 to the Registration
Statement to be signed on its behalf, in the City of
Englewood, State of Colorado, on this 19 day of
April, 1996 .
MAXIM SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer of
Great-West Life & Annuity
Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer
As required by the Securities Act of 1933, this
Post-Effective Amendment No. 2 has been signed by
the following persons in the capacities with Great-West
Life & Annuity Insurance Company and on the dates
indicated:
Signature and Title Date
/s/ Robert Gratton* April 19 , 1996
Director and Chairman of the
Board (Robert Gratton)
/s/ William T. McCallum April 19 , 1996
Director, President and Chief Executive
Officer (William T. McCallum)
S-1
Signature and Title Date
/s/ Douglas L. Wooden April 19 , 1996
Principal Financial Officer
(Douglas L. Wooden)
/s/ Douglas L. Wooden April 19 , 1996
Senior Vice-President and
Treasurer (Douglas L. Wooden)
/s/ James Balog* April 19 , 1996
Director, (James Balog)
/s/ James W. Burns* April 19 , 1996
Director, (James W. Burns)
/s/ Orest T. Dackow* April 19 , 1995
Director (Orest T. Dackow)
/s/ Paul Desmarais, Jr.* April 19 , 1996
Director (Paul Desmarais, Jr.)
/s/ Robert G. Graham* April 19 , 1996
Director (Robert G. Graham)
/s/ N. Berne Hart* April 19 , 1996
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* April 19 , 1996
Director (Kevin P. Kavanagh)
S-2
Signature and Title Date
/s/ William Mackness* April 19 , 1996
Director (William Mackness)
/s/ Jerry E.A. Nickerson* April 19 , 1996
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield* April 19 , 1996
Director (P. Michael Pitfield)
April , 1996
Director (Michel Plessis-Belair)
/s/ Ross J. Turner* April 19 , 1996
Director (Ross J. Turner)
/s/ Brian E. Walsh* April 19 , 1996
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox April 19 , 1996
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney
filed under Post-Effective Amendment Nos. 16 and
19 to this Registration Statement and pursuant to
the Powers of Attorney filed under this Post-
Effective Amendment to the Registration Statement.
S-3
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, B.E.Walsh, a
Member of the Board of Directors of Great-West Life &
Annuity Insurance Company, a Colorado corporation, do
hereby constitute and appoint each of D.C. Lennox and
G.R. Derback as my true and lawful attorney and agent
for me and in my name and on my behalf to do,
individually and without the concurrence of the other
attorney and agent, any and all acts and things and to
execute any and all instruments which either said
attorney and agent may deem necessary or desirable to
enable Great-West Life & Annuity Insurance Company and
Maxim Series Account, a separate and distinct fund
governed under the provisions of the Colorado Insurance
Code by Great-West Life & Annuity Insurance Company, to
comply with the Securities Act of 1933 and the
Investment Company Act of 1940 and any rules,
regulations, and requirements of the Securities and
Exchange Commission thereunder, in connection with the
registration under said Acts of variable annuity
contracts, including specifically, but without limiting
the generality of the foregoing, power and authority to
sign my name, in my capacity as a Member of the Board
of Directors of Great-West Life & Annuity Insurance
Company, to the Registration Statement (Form N-4) of
Great-West Life & Annuity Insurance Company and Maxim
Series Account (Registration No. 2-73879), and to any
and all amendments thereto, and I hereby ratify and
confirm all that either said attorney and agent shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and
seal this
20 day of October , 1995.
/s/ Brian E. Walsh
Member , Board of Directors
Great-West Life & Annuity
Insurance Company
Witness:
/s/ M. Canty
M. Canty
EXHIBIT 10 (a)
WRITTEN CONSENT OF JORDEN BURT BERENSON & JOHNSON, LLP
April 15, 1996
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We hereby consent to the use of our name under the
caption "Legal Matters" in the Prospectus contained in
Post-Effective Amendment No. 2 to the Registration
Statement on Form N-4 (File No. 33-82610) filed by
Great-West Life & Annuity Insurance Company and Maxim
Series Account with the Securities and Exchange
Commission under the Securities Act of 1933 and the
Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt Berenson & Johnson LLP
JORDEN BURT BERENSON & JOHNSON LLP
EXHIBIT 10 (b)
WRITTEN CONSENT OF DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment
No. 2 to Registration Statement No. 33-82610 of Maxim
Series Account on Form N-4 of our report dated February
7, 1996 on the financial statements of Maxim Series
Account and our report dated January 19, 1996 on the
consolidated financial statements of Great-West Life &
Annuity Insurance Company appearing in the Statement of
Additional Information, which is part of such
Registration Statement, and to the reference to us
under the caption "Independent Auditors" in such
Statement of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 25, 1996
EXHIBIT 10 (c)
WRITTEN CONSENT OF RUTH B. LURIE
April 23, 1996
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Re: Maxim Series Account
Ladies and Gentlemen:
I hereby consent to the use of my name under the
caption "Legal Matters" in the Prospectus for Maxim
Series Account contained in Post-Effective Amendment
No. 2 to the Registration Statement on Form N-4 (File
No. 33-82610) filed by Great-West Life & Annuity
Insurance Company and Maxim Series Account with the
Securities and Exchange Commission under the Securities
Act of 1933, the Investment Company Act of 1940 and the
amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
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