Post-Effective Amendment No. 30
Registration Nos. 2-74906
811-3323
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
POST-EFFECTIVE AMENDMENT No. 30 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
AMENDMENT No. 19 |X|
(Check appropriate box or boxes)
--------------------
THE GUARDIAN SEPARATE ACCOUNT A
(Exact Name of Registrant as Specified in Charter)
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
(Name of Depositor)
7 Hanover Square, New York, New York 10004
(Address of Principal Executive Offices)
Depositor's Telephone Number: (212) 598-8359
RICHARD T. POTTER, JR., Vice President and Counsel
The Guardian Insurance & Annuity Company, Inc.
7 Hanover Square
New York, New York 10004
(Name and address of agent for service)
--------------------
It is proposed that this filing will be effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|X| on May 1, 2000 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(1) of Rule 485
|_| on (date) pursuant to paragraph (a)(1) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(2) of Rule 485
|_| on (date)pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
------------------------
The Registrant has registered an indefinite number of its securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The notice required by such rule for the Registrant's most fiscal year
was filed on March 24, 2000.
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<PAGE>
THE GUARDIAN SEPARATE ACCOUNT A
Registration Statement on Form N-4
<TABLE>
<CAPTION>
Form N-4 Item No. Location
Part A
<S> <C> <C>
Item 1. Cover Page.................................... Cover
Item 2. Definitions................................... Special Terms Used in This Prospectus
Item 3. Synopsis...................................... Summary: What is a variable annuity contract
and how does it work? Costs and Expenses
Item 4. Condensed Unit Information.................... Summary Financial Information about the
Separate Account; Performance Results
Item 5. General Description of Registrant,
Depositor and Portfolio Companies......... The Guardian Insurance & Annuity Company, Inc.;
Variable Investment Options; Fixed Rate
Investment Option; Voting Rights
Item 6. Deductions.................................... Expenses; Costs and Expenses; Distribution of
the Contracts
Item 7. General Description of Variable Annuity
Contracts.................................. Summary: What is a variable annuity
contract and how does it work?
Item 8. Annuity Period................................ The Annuity Period
Item 9. Death Benefit................................. Death Benefits; Enhanced Death Benefits
Item 10. Purchases and Contract Value.................. Buying a Contract; the Accumulation Period
Item 11. Redemptions................................... Surrenders and Partial Withdrawals
Item 12. Taxes......................................... Federal Tax Matters
Item 13. Legal Proceedings............................. Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information..................... Where to get more information
Part B
Item 15. Cover Page.................................... Cover Page
Item 16. Table of Contents............................. Table of Contents
Item 17. General Information and History............... Not Applicable
Item 18. Services...................................... Services to the Separate Account
Item 19. Purchase of Securities Being Offered.......... Valuation of Assets of the Separate
Account; Transferability Restrictions
Item 20. Underwriters.................................. Services to the Separate Account
Item 21. Calculation of Performance Data............... Calculation of Yield Quotations for The
Guardian Cash Fund
Item 22. Annuity Payments.............................. Annuity Payments
Item 23. Financial Statements.......................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
Value Guard II Individual and Group Deferred Variable
Annuity Contracts Prospectus
May 1, 2000
This prospectus describes both Individual Deferred Variable Annuity Contracts
and Group Deferred Variable Annuity Contracts. It contains important information
that you should know before investing in the contracts. Please read this
prospectus carefully, along with the accompanying fund prospectuses, and keep
them for future reference.
The contracts are issued by The Guardian Insurance & Annuity Company, Inc.
(GIAC) through its Separate Account A. They are designed to provide tax deferred
annuity benefits under retirement programs which qualify for federal income tax
benefits, either for individual purchasers or group pension or profit sharing
plans. Individual contracts can also be purchased through deferred compensation
plans and other retirement plans which do not qualify for federal income tax
benefits under the Internal Revenue Code.
There are two types of individual contracts. The Single Premium Payment Contract
requires a single payment of at least $3,000. The Flexible Premium Payment
Contract requires an initial premium payment of at least $500, and regular
premium payments throughout the accumulation period of the contract.
The group contract is designed to be used with various types of tax-qualified
plans, and other plans that receive favorable federal tax treatment. These
include retirement plans established by corporate employers under Section 401 of
the Internal Revenue Code, and certain deferred compensation plans under Section
457. Group contracts require a minimum payment of $5,000.
Your premiums may be invested in up to twenty variable investment options or, if
you have bought an Individual Single Premium Payment Contract, you may also
choose to invest in nineteen variable investment options and the fixed-rate
option. Special limits apply to transfers from the fixed-rate option. The
contracts will pay a death benefit if the owner or annuitant dies before annuity
payments begin. The variable investment options invest in the mutual funds
listed below. The prospectuses for these funds accompany this prospectus. Some
of these Funds may not be available in your state.
The Guardian Variable Contract Funds, Inc.
The Guardian Stock Fund
The Guardian VC 500 Index Fund
The Guardian VC Asset Allocation Fund
The Guardian VC High Yield Bond Fund
The Guardian Bond Fund, Inc.
The Guardian Cash Fund, Inc.
GIAC Funds, Inc.
The Guardian Small Cap Stock Fund
Baillie Gifford International Fund
Baillie Gifford Emerging Markets Fund
Value Line Centurion Fund
Value Line Strategic Asset
Management Trust
Gabelli Capital Series Fund, Inc.
Gabelli Capital Asset Fund
MFS Variable Insurance Trust
MFS Growth With Income Series
MFS Emerging Growth Series
MFS New Discovery Series
MFS Research Series
MFS Total Return Series
AIM Variable Insurance Funds Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. Global Utilities Fund
AIM V.I. Value Fund
Davis Variable Account Fund
Davis Financial Portfolio
Davis Real Estate Portfolio
Davis Value Portfolio
Fidelity VIP III Growth Opportunities Portfolio
Fidelity VIP Equity Income Portfolio
Fidelity VIP II Contrafund Portfolio
Fidelity VIP III Mid Cap Portfolio
Janus Aspen Series
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Capital Appreciation Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
A Statement of Additional Information about the contracts and the Separate
Account is available free of charge by writing to GIAC at its Customer Service
Office, P.O. Box 26210, Lehigh Valley, Pennsylvania 18002, or by calling
1-800-221-3253. Its contents are noted on the last page of this prospectus.
The Statement of Additional Information, which is also dated May 1, 2000, is
incorporated by reference into this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of this
prospectus.
The contracts are not a deposit or obligation of or guaranteed or endorsed by,
any bank or depository institution, and the contracts are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency, and involves investment risk, including possible loss of the
principal amount invested.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 1 of 41
<PAGE>
Contents
Value Guard II Individual and Group Deferred Variable
Annuity Contracts Prospectus ................................................1
Summary......................................................................4
What is a variable annuity contract and how does it work?..................4
The accumulation period....................................................4
The annuity period.........................................................5
Other contract features....................................................5
Expenses...................................................................5
Deciding to purchase a contract............................................6
The Guardian Insurance & Annuity Company, Inc................................9
Buying a contract...........................................................10
The application form......................................................10
Payments..................................................................11
The accumulation period.....................................................11
The Separate Account......................................................12
Variable investment options...............................................12
Fixed-rate option.........................................................14
Transfers.................................................................15
Surrenders and partial withdrawals........................................16
Managing your annuity.....................................................18
The annuity period..........................................................18
When annuity payments begin...............................................18
How your annuity payments are calculated..................................18
Annuity payout options....................................................19
Other contract features.....................................................20
Death benefits............................................................20
Enhanced death benefits...................................................21
Financial information.......................................................21
How we calculate unit values..............................................21
Summary financial information about the Separate Account..................22
Contract costs and expenses...............................................25
Your rights and responsibilities............................................32
Voting rights.............................................................32
Your right to cancel the contract.........................................32
Distribution of the contracts.............................................32
Special terms used in this prospectus.......................................33
Other information...........................................................34
Legal Proceedings.........................................................34
Where to get more information.............................................34
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 2 of 41
<PAGE>
Summary
What is a variable annuity contract and how does it work?
A variable annuity contract allows you to accumulate tax-deferred savings which
are invested in options that you choose. This is the accumulation period of the
contract.
On an agreed date, you or someone else you have named as the annuitant will
start receiving regular payments from the amount you have saved and any
investment earnings. This is the annuity period.
The amount of the annuity payments will depend on earnings during the
accumulation period, and afterward if you select a variable annuity option.
That's why this product is called a variable annuity.
The accumulation period
During the accumulation period, these contracts allow you to allocate your net
premium payments and accumulation value to as many as twenty variable investment
options, or if you have bought an Individual Single Premium Payment Contract,
you may also choose to invest in nineteen variable investment options and the
fixed-rate option.
When you allocate your premiums to the variable investment options, you bear the
risk of any investment losses. No assurance can be given that the value of the
contracts during the accumulation period, or the total amount of annuity
payments made under the contracts, will equal or exceed the net premium payments
allocated to the variable investment options. When you allocate your net premium
payments to the fixed-rate option, the contracts guarantee that they will earn a
minimum rate of interest and the investment risk is borne by GIAC.
GIAC has established The Guardian Separate Account A to hold the variable
investments in its annuity contracts. The Separate Account has 31 investment
divisions, corresponding to 31 variable investment options, each of which
invests in a mutual fund. Your net premiums are used to buy accumulation units
in the investment divisions you have chosen, or are allocated to the fixed-rate
option.
The total value of your contract's investment in the investment divisions and in
the fixed-rate option is known as the accumulation value. It's determined by
multiplying the number of variable accumulation units credited to your account
in each investment division by the current value of the division's units, and
adding your value in the fixed-rate option.
The value of units in a variable investment division reflects the investment
experience within the division. The value of units in the fixed-rate option
reflects interest accrued at a rate not less than the guaranteed minimum
specified in the contract. For a complete explanation, please see Financial
information: How we calculate unit values.
The annuity period
Payments to the annuitant under these contracts must begin no later than his or
her 85th birthday. Distributions under the contract are taxable, and if you take
money out of the contract before age 59 1/2, you may also incur a 10% federal
tax penalty on your earnings.
You may select one or a combination of three annuity payout options under the
contract:
o Life annuity without a guaranteed period
o Life annuity with a 10-year guaranteed period
o Joint and survivor annuity
These payout options are described in more detail in the section titled The
annuity period.
Other contract features
Transfers among investment options
You can make transfers among the variable investment options at any time.
Transfers from the fixed-rate option are only permitted during the accumulation
period. Certain restrictions apply to transfers out of the fixed-rate option.
Transfers must also comply with the rules of any retirement plan that apply.
Please see The accumulation period: Transfers.
Death benefits
If you, or another person named as the annuitant, should die before annuity
payments begin, then we pay a death benefit to the beneficiary. The contract
also gives you the option of purchasing a rider that may provide a greater death
benefit. Please see Other contract features: Death benefits.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 3 of 41
<PAGE>
Surrenders and partial withdrawals
Depending on the retirement plan under which you bought your contract, you may
withdraw some or all of the amount you have saved in the contract during the
accumulation period. Taking out all you have saved is known as a surrender;
taking out part of your savings is a partial withdrawal. These options are not
available once annuity payments begin. Please see The accumulation period:
Surrenders and partial withdrawals.
Expenses
The following are expenses that you will incur as a contract owner:
o Operating expenses for mutual Funds comprising the variable investment
options
Management fees and other expenses associated with the Funds ranged from
.28% to 1.44% in 1999. Actual charges will depend on the variable
investment options you select.
o Mortality and expense risk charges
1.0% annually of the net asset value of your variable investment options.
o Administrative expenses
A $30 annual contract administration fee will be deducted from the
accumulation value of Single Premium Payment Contracts. The fee is $35 for
Flexible Premium Payment Contracts.
The following are expenses that you may incur as a contract owner:
o Contingent deferred sales charges
A charge of 1% to 5% against any amount that you withdraw that has been in
your contract for less than seven years. The actual amount will depend on
the number of years the amount has been invested.
o Enhanced death benefit rider charge
If you choose this benefit, the annual charge is up to .30% of your net
assets invested in the variable investment options, depending on the rider
chosen.
o Premium taxes
A tax on premiums or annuity payments, applicable in some states and
municipalities only, that varies from 0.5% to 3.5% of premiums paid to the
contract.
Deciding to purchase a contract
You should consider purchasing a variable annuity contract if your objective is
to invest over a long period of time and to accumulate assets on a tax-deferred
basis, generally for retirement. You have the right to examine the contract and
return it for cancellation within 10 days of receiving it. This is known as the
free-look period. The period may be longer than 10 days in some states.
Please see Special terms used in this prospectus for definitions of key terms.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 4 of 41
<PAGE>
This table will assist you in understanding the various costs and expenses of
the Separate Account and its underlying Funds. The accompanying Fund
prospectuses provide a more complete description of the various costs and
expenses.
================================================================================
EXPENSE TABLE
================================================================================
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases: None Exchange Fee: Currently, none (may
charge $25 for each exchange)
Contingent Deferred Sales Charge:
(1) Single Premium Payment Contracts:(1)
In connection with Single Premium Payment Contracts, the following charges will
be assessed upon amounts withdrawn during the first seven Contract years
measured from the date of issue.
Number of Contract Years Contingent
Completed from Date of Deferred Sales Charge Without
the Premium Payment Percentage(1)
1 ...................................................... 5%
2 ...................................................... 5%
3 ...................................................... 4%
4 ...................................................... 3%
5 ...................................................... 2%
6 ...................................................... 1%
7+...................................................... 0%
(2) Flexible Premium Payment Contracts:(2)
In connection with Flexible Premium Payment Contracts, this charge will be the
lesser of:
a) 5% of the total payments made during the 72 months immediately preceding
the date of withdrawal, or
b) 5% of the total amount being withdrawn.
Annual Contract Administration Fee:
Single Premium Payment Contract $30
Flexible Premium Payment Contract $35
Separate Account Level Annual Expenses:
<TABLE>
<CAPTION>
For Contract For Contract For Contract
Without With 7 Year With Contract
Enhanced Enhanced Anniversary Enhanced
Death Benefit Death Benefit Death Benefit
(as a percentage of daily net asset value)
Mortality and Expense Risk
<S> <C> <C> <C>
Charge 1.0% 1.0% 1.0%
Account Fees and Expenses 0% 0% 0%
Enhanced Death Benefit Charge 0% .30% .25%
- ---------------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.0% 1.30% 1.25%
</TABLE>
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 5 of 41
<PAGE>
Annual Expenses of the Funds(3):
(as a percentage of average net assets)
Total fund
Management Other operating
fees expenses expenses
================================================================================
The Guardian Cash Fund .50% .03% .53%
- --------------------------------------------------------------------------------
The Guardian Bond Fund(4) .50% .07% .57%
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The Guardian Stock Fund .50% .02% .52%
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The Guardian Small Cap Stock Fund .75% .08% .83%
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The Guardian VC 500 Index Fund(5) .25% .03% .28%
- --------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund(6) .50% .17% .67%
- --------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund(7) .60% .54% 1.14%
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Baillie Gifford International Fund .80% .16% .96%
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Baillie Gifford Emerging Markets Fund 1.00% .44% 1.44%
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Value Line Centurion Fund(8) .50% .09% .59%
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Value Line Strategic Asset Management Trust(8) .50% .08% .58%
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 1.00% .08% 1.08%
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AIM V.I. Capital Appreciation Fund .62% .11% .73%
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AIM V.I. Global Utilities Fund .65% .49% 1.14%
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AIM V.I. Value Fund .61% .15% .76%
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Davis Financial Portfolio(9) .75% .25% 1.00%
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Davis Real Estate Portfolio(9) .75% .25% 1.00%
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Davis Value Portfolio(9) .75% .25% 1.00%
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Fidelity VIP II Contrafund Portfolio(10) .59% .16% .75%
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Fidelity VIP Equity-Income Portfolio(10) .49% .17% .66%
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Fidelity VIP III Growth Opportunities
Portfolio(10) .59% .19% .78%
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Fidelity VIP III Mid Cap Portfolio(10) .59% .48% 1.07%
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Janus Aspen Aggressive Growth Portfolio(11) .65% .02% .67%
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Janus Aspen Capital Appreciation Portfolio(11) .65% .04% .69%
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Janus Aspen Growth Portfolio(11) .65% .02% .67%
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Janus Aspen Worldwide Growth Portfolio(11) .65% .05% .70%
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MFS Emerging Growth Series(12) .75% .09% .84%
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MFS Growth With Income Series .75% .13% .88%
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MFS New Discovery Series(12) .90% .27% 1.17%
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MFS Research Series(12) .75% .11% .86%
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MFS Total Return Series(12) .75% .15% .90%
================================================================================
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(1) After the first contract year, you may withdraw 10% of the amount of the
single premium payment in each contract year, without a deferred sales
charge.
(2) After the first contract year, you may withdraw 10% of the total premiums
paid under the contract in the 72 months immediately preceding the date of
your withdrawal in each contract year, without a deferred sales charge.
This charge will not exceed 5% of the total premiums paid in the 72 months
preceding the date of your withdrawal.
(3) These percentages reflect the actual fees and expenses incurred by each
Fund during the year ended December 31, 1999 except for Janus Aspen Funds
and Guardian VC 500 Index Fund whose expenses are restated as described
below.
(4) Expenses reflected include interest expense. If interest expense were not
included, total expenses would be 0.55%.
(5) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for the Fund.
Expenses for the year ended December 31, 1999 were 0.29% after applicable
waivers and expense reimbursements, and 0.36% before applicable waivers
and expense reimbursements.
(6) Expenses do not include expenses of the underlying funds in which the
Guardian VC Asset Allocation Fund invests its assets. Including the
expense of the underlying funds, the Fund's total expenses would be 0.98%.
(7) Expenses reflected have not been grossed up to include the effects of
custody credits received by the Fund. With these credits, total expenses
would have been 0.99%.
(8) Total expenses have been grossed up to include custody credit
arrangements. However, the credit received does not affect the Funds'
total expenses. The operational expenses for Value Line Strategic Asset
Management Trust and Value Line Centurion Fund reflect expense
reimbursements paid by those funds to us for certain administrative and
shareholder servicing expenses that we incur on their behalf. For the year
ended December 31, 1999, we were reimbursed $857,868 by Value Line
Strategic Asset Management Trust, and $586,401 by Value Line Centurion
Fund.
(9) Had the adviser not absorbed certain expenses, the ratio of expenses to
average net assets would have been 2.29%, 4.24%, and 11.70% for Davis
Value Portfolio, Davis Financial Portfolio and Davis Real Estate
Portfolio, respectively.
(10) The expenses shown for Fidelity VIP II Contrafund Portfolio, Fidelity VIP
Equity-Income Portfolio, Fidelity VIP III Growth Opportunities Portfolio
and Fidelity VIP III Mid Cap Portfolio reflect varying arrangements
between these Funds and third parties who have either paid or reduced a
portion of the Funds' expenses. Without these reimbursements, total
expenses would have been .78%, .67%, .79% and 1.10%, respectively.
(11) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Janus
Aspen Growth, Janus Aspen Aggressive Growth, Janus Aspen Capital
Appreciation, and Janus Aspen Worldwide Growth Portfolios. All expenses
are shown without the effect of expense offset arrangements.
(12) The MFS Funds have expense offset arrangements which reduce their
custodian fees based upon the amount of cash maintained by each Fund with
its custodian. The "Total expenses" in the table do not take into account
this expense reduction and are therefore higher than the actual expenses
of each Fund. The expenses shown for MFS New Discovery Series reflect an
agreement by the Fund's adviser to bear expenses, subject to reimbursement
by the Fund, such that the Fund's "Other Expenses" will not exceed 0.25%
of the Fund's average daily net assets during 1999. Reimbursement by the
Fund will be accomplished by the payment of an expense reimbursement fee
by the Fund to the Adviser, subject to the maximum of 0.25% described
above. Effective May 1, 2000, the adviser has contractually agreed,
subject to reimbursement, to bear expenses for the New Discovery Series
such that the New Discovery Series' "Other expenses" (after taking into
effect expense offset arrangements referred to above) will not exceed
0.15%. This arrangement will continue until at least May 1, 2001, unless
changed with the consent of the board of trustees which oversees the
Series.
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- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 6 of 41
<PAGE>
Comparison of Contract Expenses Among Underlying Funds
For Single Premium (SP) and Flexible Premium (FP) Payment Contracts*
Basic Contract
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
If you surrender your contract at If you do not surrender or you
the end of the applicable time annuitize at the end of the
period: applicable time period:
You would pay the following You would pay the following expenses
expenses on a $1,000 investment, on a $1,000 investment, assuming a
assuming a 5% annual return on 5% annual return on assets:
assets
Single Premium and Flexible Premium Single Premium and Flexible Premium
Contracts Contracts
===========================================================================
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ----------------------------------------===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund $67 SP $92 SP $110 SP $196 SP $17 SP $52 SP $90 SP $196 SP
$67 FP $103 FP $140 FP $197 FP $17 FP $53 FP $90 FP $197 FP
- ----------------------------------------===========================================================================
The Guardian Bond Fund $67 SP $93 SP $112 SP $200 SP $17 SP $53 SP $92 SP $200 SP
$67 FP $104 FP $143 FP $201 FP $17 FP $54 FP $93 FP $201 FP
- ----------------------------------------===========================================================================
The Guardian Stock Fund $67 SP $92 SP $109 SP $194 SP $17 SP $52 SP $89 SP $194 SP
$67 FP $102 FP $140 FP $196 FP $17 FP $52 FP $90 FP $196 FP
- ----------------------------------------===========================================================================
The Guardian Small Cap Stock Fund $70 SP $102 SP $126 SP $229 SP $20 SP $62 SP $106 SP $229 SP
$70 FP $112 FP $157 FP $230 FP $20 FP $62 FP $107 FP $230 FP
- ----------------------------------------===========================================================================
The Guardian VC 500 Index Fund $64 SP $84 SP $97 SP $168 SP $14 SP $44 SP $77 SP $168 SP
$64 FP $94 FP $127 FP $168 FP $14 FP $44 FP $77 FP $168 FP
- ----------------------------------------===========================================================================
The Guardian VC Asset Allocation $68 SP $97 SP $118 SP $213 SP $18 SP $57 SP $98 SP $213 SP
Fund $68 FP $107 FP $148 FP $213 FP $18 FP $57 FP $98 FP $213 FP
- ----------------------------------------===========================================================================
The Guardian VC High Yield Bond $73 SP $112 SP $143 SP $263 SP $23 SP $72 SP $123 SP $263 SP
Fund $73 FP $122 FP $173 FP $263 FP $23 FP $72 FP $123 FP $263 FP
- ----------------------------------------===========================================================================
Baillie Gifford International Fund $71 SP $106 SP $133 SP $243 SP $21 SP $66 SP $113 SP $243 SP
$71 FP $116 FP $164 FP $244 FP $21 FP $66 FP $114 FP $244 FP
- ----------------------------------------===========================================================================
Baillie Gifford Emerging Markets Fund $76 SP $121 SP $158 SP $294 SP $26 SP $81 SP $138 SP $294 SP
$76 FP $131 FP $189 FP $295 FP $26 FP $81 FP $139 FP $295 FP
- ----------------------------------------===========================================================================
Value Line Centurion Fund $67 SP $94 SP $113 SP $202 SP $17 SP $54 SP $93 SP $202 SP
$68 FP $104 FP $144 FP $204 FP $18 FP $54 FP $94 FP $204 FP
- ----------------------------------------===========================================================================
Value Line Strategic Asset Management $67 SP $94 SP $113 SP $201 SP $17 SP $54 SP $93 SP $201 SP
Trust $67 FP $104 FP $143 FP $203 FP $17 FP $54 FP $93 FP $203 FP
- ----------------------------------------===========================================================================
Gabelli Capital Asset Fund $74 SP $114 SP $147 SP $272 SP $24 SP $74 SP $127 SP $272 SP
$73 FP $120 FP $170 FP $257 FP $23 FP $70 FP $120 FP $257 FP
- ----------------------------------------===========================================================================
AIM V.I. Capital Appreciation Fund $69 SP $99 SP $121 SP $219 SP $19 SP $59 SP $101 SP $219 SP
$69 FP $109 FP $151 FP $219 FP $19 FP $59 FP $101 FP $219 FP
- ----------------------------------------===========================================================================
AIM V.I. Global Utilities Fund $73 SP $121 SP $143 SP $263 SP $23 SP $81 SP $123 SP $263 SP
$73 FP $131 FP $173 FP $263 FP $23 FP $81 FP $123 FP $263 FP
- ----------------------------------------===========================================================================
</TABLE>
* Flexible Premium Payment Contracts include Group Contracts.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 7 of 41
<PAGE>
Basic Contract (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
If you surrender your contract at If you do not surrender or you
the end of the applicable time annuitize at the end of the
period: applicable time period:
You would pay the following You would pay the following expenses
expenses on a $1,000 investment, on a $1,000 investment, assuming a
assuming a 5% annual return on 5% annual return on assets:
assets
Single Premium and Flexible Premium Single Premium and Flexible Premium
Contracts Contracts
===========================================================================
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ----------------------------------------===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Value Fund $69 SP $100 SP $123 SP $223 SP $19 SP $60 SP $103 SP $223 SP
$69 FP $110 FP $153 FP $223 FP $19 FP $60 FP $103 FP $223 FP
- ----------------------------------------===========================================================================
Davis Financial Portfolio $72 SP $107 SP $136 SP $249 SP $22 SP $67 SP $116 SP $249 SP
$72 FP $117 FP $166 FP $249 FP $22 FP $67 FP $116 FP $249 FP
- ----------------------------------------===========================================================================
Davis Real Estate Portfolio $72 SP $107 SP $136 SP $249 SP $22 SP $67 SP $116 SP $249 SP
$72 FP $117 FP $166 FP $249 FP $22 FP $67 FP $116 FP $249 FP
- ----------------------------------------===========================================================================
Davis Value Portfolio $72 SP $107 SP $136 SP $249 SP $22 SP $67 SP $116 SP $249 SP
$72 FP $117 FP $166 FP $249 FP $22 FP $67 FP $116 FP $249 FP
- ----------------------------------------===========================================================================
Fidelity VIP II Contrafund $69 SP $100 SP $122 SP $221 SP $19 SP $60 SP $102 SP $221 SP
Portfolio $69 FP $110 FP $152 FP $221 FP $19 FP $60 FP $102 FP $221 FP
- ----------------------------------------===========================================================================
Fidelity VIP Equity Income $68 SP $97 SP $117 SP $211 SP $18 SP $57 SP $97 SP $211 SP
Portfolio $68 FP $107 FP $147 FP $211 FP $18 FP $57 FP $97 FP $211 FP
- ----------------------------------------===========================================================================
Fidelity VIP III Growth Opportunities $70 SP $100 SP $124 SP $225 SP $20 SP $60 SP $104 SP $225 SP
Portfolio $70 FP $110 FP $154 FP $225 FP $20 FP $60 FP $104 FP $225 FP
- ----------------------------------------===========================================================================
Fidelity VIP III Mid Cap Portfolio $73 SP $110 SP $139 SP $256 SP $23 SP $70 SP $119 SP $256 SP
$73 FP $120 FP $169 FP $256 FP $23 FP $70 FP $119 FP $256 FP
- ----------------------------------------===========================================================================
Janus Aspen Aggressive Growth Portfolio $68 SP $97 SP $118 SP $213 SP $18 SP $57 SP $98 SP $213 SP
$68 FP $107 FP $148 FP $213 FP $18 FP $57 FP $98 FP $213 FP
- ----------------------------------------===========================================================================
Janus Aspen Capital Appreciation $69 SP $98 SP $119 SP $215 SP $19 SP $58 SP $99 SP $215 SP
Portfolio $69 FP $108 FP $149 FP $215 FP $19 FP $58 FP $99 FP $215 FP
- ----------------------------------------===========================================================================
Janus Aspen Growth Portfolio $68 SP $97 SP $118 SP $213 SP $18 SP $57 SP $98 SP $213 SP
$68 FP $107 FP $148 FP $213 FP $18 FP $57 FP $98 FP $213 FP
- ----------------------------------------===========================================================================
Janus Aspen Worldwide Growth Portfolio $69 SP $98 SP $120 SP $216 SP $19 SP $58 SP $100 SP $216 SP
$69 FP $108 FP $150 FP $216 FP $19 FP $58 FP $100 FP $216 FP
- ----------------------------------------===========================================================================
MFS Emerging Growth Series $70 SP $102 SP $127 SP $231 SP $20 SP $62 SP $107 SP $231 SP
$70 FP $112 FP $157 FP $231 FP $20 FP $62 FP $107 FP $231 FP
- ----------------------------------------===========================================================================
MFS Growth With Income Series $70 SP $103 SP $129 SP $234 SP $20 SP $63 SP $109 SP $234 SP
$71 FP $114 FP $159 FP $236 FP $21 FP $64 FP $109 FP $236 FP
- ----------------------------------------===========================================================================
MFS New Discovery Series $74 SP $113 SP $145 SP $267 SP $24 SP $73 SP $125 SP $267 SP
$74 FP $123 FP $175 FP $267 FP $24 FP $73 FP $125 FP $267 FP
- ----------------------------------------===========================================================================
MFS Research Series $70 SP $103 SP $128 SP $233 SP $20 SP $63 SP $108 SP $233 SP
$70 FP $113 FP $158 FP $233 FP $20 FP $63 FP $108 FP $233 FP
- ----------------------------------------===========================================================================
MFS Total Return Series $71 SP $104 SP $130 SP $238 SP $21 SP $64 SP $110 SP $238 SP
$71 FP $114 FP $160 FP $238 FP $21 FP $64 FP $110 FP $238 FP
- ----------------------------------------===========================================================================
</TABLE>
* Flexible Premium Payment Contracts include Group Contracts.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 8 of 41
<PAGE>
CONTRACT WITH 7 YEAR ENHANCED DEATH BENEFIT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
If you surrender your contract at If you do not surrender or you
the end of the applicable time annuitize at the end of the
period: applicable time period:
You would pay the following You would pay the following expenses
expenses on a $1,000 investment, on a $1,000 investment, assuming a
assuming a 5% annual return on 5% annual return on assets:
assets
Single Premium and Flexible Premium Single Premium and Flexible Premium
Contracts Contracts
===========================================================================
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ----------------------------------------===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund $70 SP $102 SP $126 SP $229 SP $20 SP $62 SP $106 SP $229 SP
$70 FP $112 FP $157 FP $230 FP $20 FP $62 FP $107 FP $230 FP
- ----------------------------------------===========================================================================
The Guardian Bond Fund $70 SP $103 SP $128 SP $233 SP $20 SP $63 SP $108 SP $233 SP
$71 FP $113 FP $159 FP $235 FP $21 FP $63 FP $109 FP $235 FP
- ----------------------------------------===========================================================================
The Guardian Stock Fund $70 SP $101 SP $125 SP $228 SP $20 SP $61 SP $105 SP $228 SP
$70 FP $112 FP $156 FP $229 FP $20 FP $62 FP $106 FP $229 FP
- ----------------------------------------===========================================================================
The Guardian Small Cap Stock Fund $73 SP $111 SP $142 SP $261 SP $23 SP $71 SP $122 SP $261 SP
$73 FP $122 FP $173 FP $262 FP $23 FP $72 FP $123 FP $262 FP
- ----------------------------------------===========================================================================
The Guardian VC 500 Index Fund $67 SP $94 SP $113 SP $203 SP $17 SP $54 SP $93 SP $203 SP
$67 FP $104 FP $143 FP $203 FP $17 FP $54 FP $93 FP $203 FP
- ----------------------------------------===========================================================================
The Guardian VC Asset Allocation $72 SP $107 SP $134 SP $245 SP $22 SP $67 SP $114 SP $245 SP
Fund $72 FP $117 FP $164 FP $245 FP $22 FP $67 FP $114 FP $245 FP
- ----------------------------------------===========================================================================
The Guardian VC High Yield Bond $76 SP $121 SP $159 SP $295 SP $26 SP $81 SP $139 SP $295 SP
Fund $86 FP $141 FP $199 FP $295 FP $26 FP $81 FP $139 FP $295 FP
- ----------------------------------------===========================================================================
Baillie Gifford International Fund $74 SP $115 SP $149 SP $275 SP $24 SP $75 SP $129 SP $275 SP
$75 FP $126 FP $179 FP $276 FP $25 FP $76 FP $129 FP $276 FP
- ----------------------------------------===========================================================================
Baillie Gifford Emerging Markets Fund $80 SP $130 SP $174 SP $324 SP $30 SP $90 SP $154 SP $324 SP
$80 FP $141 FP $204 FP $325 FP $30 FP $91 FP $154 FP $325 FP
- ----------------------------------------===========================================================================
Value Line Centurion Fund $71 SP $104 SP $129 SP $235 SP $21 SP $64 SP $109 SP $235 SP
$71 FP $114 FP $160 FP $237 FP $21 FP $64 FP $110 FP $237 FP
- ----------------------------------------===========================================================================
Value Line Strategic Asset Management $70 SP $103 SP $129 SP $234 SP $20 SP $63 SP $109 SP $234 SP
Trust $71 FP $114 FP $159 FP $236 FP $21 FP $64 FP $109 FP $236 FP
- ----------------------------------------===========================================================================
Gabelli Capital Asset Fund $77 SP $124 SP $163 SP $303 SP $27 SP $84 SP $143 SP $303 SP
$76 FP $129 FP $186 FP $289 FP $26 FP $79 FP $136 FP $289 FP
- ----------------------------------------===========================================================================
AIM V.I. Capital Appreciation Fund $72 SP $108 SP $137 SP $252 SP $22 SP $68 SP $117 SP $252 SP
$72 FP $118 FP $167 FP $252 FP $22 FP $68 FP $117 FP $252 FP
- ----------------------------------------===========================================================================
AIM V.I. Global Utilities Fund $76 SP $121 SP $159 SP $295 SP $26 SP $81 SP $139 SP $295 SP
$76 FP $131 FP $189 FP $295 FP $26 FP $81 FP $139 FP $295 FP
- ----------------------------------------===========================================================================
AIM V.I. Value Fund $73 SP $109 SP $139 SP $255 SP $23 SP $69 SP $119 SP $255 SP
$73 FP $119 FP $169 FP $255 FP $23 FP $69 FP $119 FP $255 FP
- ----------------------------------------===========================================================================
</TABLE>
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 9 of 41
<PAGE>
CONTRACT WITH 7 YEAR ENHANCED DEATH BENEFIT (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
If you surrender your contract at If you do not surrender or you
the end of the applicable time annuitize at the end of the
period: applicable time period:
You would pay the following You would pay the following expenses
expenses on a $1,000 investment, on a $1,000 investment, assuming a
assuming a 5% annual return on 5% annual return on assets:
assets
Single Premium and Flexible Premium Single Premium and Flexible Premium
Contracts Contracts
===========================================================================
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ----------------------------------------===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------===========================================================================
Davis Financial Portfolio $75 SP $117 SP $152 SP $280 SP $25 SP $77 SP $132 SP $280 SP
$75 FP $127 FP $182 FP $280 FP $25 FP $77 FP $132 FP $280 FP
- ----------------------------------------===========================================================================
Davis Real Estate Portfolio $75 SP $117 SP $152 SP $280 SP $25 SP $77 SP $132 SP $280 SP
$75 FP $127 FP $182 FP $280 FP $25 FP $77 FP $132 FP $280 FP
- ----------------------------------------===========================================================================
Davis Value Portfolio $75 SP $117 SP $152 SP $280 SP $25 SP $77 SP $132 SP $280 SP
$75 FP $127 FP $182 FP $280 FP $25 FP $77 FP $132 FP $280 FP
- ----------------------------------------===========================================================================
Fidelity VIP II Contrafund $72 SP $109 SP $138 SP $254 SP $22 SP $69 SP $118 SP $254 SP
Portfolio $72 FP $119 FP $168 FP $254 FP $22 FP $69 FP $118 FP $254 FP
- ----------------------------------------===========================================================================
Fidelity VIP Equity Income $71 SP $106 SP $134 SP $244 SP $21 SP $66 SP $114 SP $244 SP
Portfolio $71 FP $116 FP $164 FP $244 FP $21 FP $66 FP $114 FP $244 FP
- ----------------------------------------===========================================================================
Fidelity VIP III Growth Opportunities $73 SP $110 SP $140 SP $257 SP $23 SP $70 SP $120 SP $257 SP
Portfolio $73 FP $120 FP $170 FP $257 FP $23 FP $70 FP $120 FP $257 FP
- ----------------------------------------===========================================================================
Fidelity VIP III Mid Cap Portfolio $76 SP $119 SP $155 SP $288 SP $26 SP $79 SP $135 SP $288 SP
$76 FP $129 FP $185 FP $288 FP $26 FP $79 FP $135 FP $288 FP
- ----------------------------------------===========================================================================
Janus Aspen Aggressive Growth Portfolio $72 SP $107 SP $134 SP $245 SP $22 SP $67 SP $114 SP $245 SP
$72 FP $117 FP $164 FP $245 FP $22 FP $67 FP $114 FP $245 FP
- ----------------------------------------===========================================================================
Janus Aspen Capital Appreciation $72 SP $107 SP $135 SP $248 SP $22 SP $67 SP $115 SP $248 SP
Portfolio $72 FP $117 FP $165 FP $248 FP $22 FP $67 FP $115 FP $248 FP
- ----------------------------------------===========================================================================
Janus Aspen Growth Portfolio $72 SP $107 SP $134 SP $245 SP $22 SP $67 SP $114 SP $245 SP
$72 FP $117 FP $164 FP $245 FP $22 FP $67 FP $114 FP $245 FP
- ----------------------------------------===========================================================================
Janus Aspen Worldwide Growth Portfolio $72 SP $107 SP $136 SP $249 SP $22 SP $67 SP $116 SP $249 SP
$72 FP $117 FP $166 FP $249 FP $22 FP $67 FP $116 FP $249 FP
- ----------------------------------------===========================================================================
MFS Emerging Growth Series $73 SP $112 SP $143 SP $263 SP $23 SP $72 SP $123 SP $263 SP
$73 FP $122 FP $173 FP $263 FP $23 FP $72 FP $123 FP $263 FP
- ----------------------------------------===========================================================================
MFS Growth With Income Series $74 SP $113 SP $145 SP $266 SP $24 SP $73 SP $125 SP $266 SP
$74 FP $123 FP $175 FP $268 FP $24 FP $73 FP $125 FP $268 FP
- ----------------------------------------===========================================================================
MFS New Discovery Series $77 SP $122 SP $160 SP $298 SP $27 SP $82 SP $140 SP $298 SP
$77 FP $132 FP $190 FP $298 FP $27 FP $82 FP $140 FP $298 FP
- ----------------------------------------===========================================================================
MFS Research Series $74 SP $113 SP $144 SP $266 SP $24 SP $73 SP $124 SP $266 SP
$74 FP $123 FP $174 FP $266 FP $24 FP $73 FP $124 FP $266 FP
- ----------------------------------------===========================================================================
MFS Total Return Series $74 SP $114 SP $146 SP $270 SP $24 SP $74 SP $126 SP $270 SP
$74 FP $124 FP $176 FP $270 FP $24 FP $74 FP $126 FP $270 FP
- ----------------------------------------===========================================================================
</TABLE>
These expense comparisons assume that the expenses incurred during the periods
shown will be the same as those reported in the Expense Table above. The
comparison does not represent past or future expenses. Actual expenses may be
higher or lower than those shown. The effect of the annual contract fee was
calculated by: (1) dividing the total contract fees for the year ended December
31, 1999 by total average net assets for the year; (2) adding this percentage to
annual expenses; and (3) calculating the dollar amounts. In addition, premium
taxes ranging from .5% to 3.5% are currently imposed by certain states and
municipalities, and will reduce the amount of each premium payment available for
allocation under the contract. See Deductions and charges.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 10 of 41
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
The Guardian Insurance & Annuity Company, Inc. (GIAC) is a stock life insurance
company incorporated in the state of Delaware in 1970. GIAC, which issues the
contracts offered with this prospectus, is licensed to conduct an insurance
business in all 50 states of the United States and the District of Columbia. The
company had total assets of over $12.3 billion as of December 31, 1999. Its
financial statements appear in the Statement of Additional Information.
GIAC's executive office is located at 7 Hanover Square, New York, New York
10004. The mailing address of the GIAC Customer Service Office, which
administers these contracts, is P.O. Box 26210, Lehigh Valley, Pennsylvania
18002.
GIAC is wholly owned by The Guardian Life Insurance Company of America (Guardian
Life), a mutual life insurance company organized in the State of New York in
1860. As of December 31, 1999, Guardian Life had total assets in excess of
$31.6 billion. Guardian Life does not issue the contracts offered under this
prospectus and does not guarantee the benefits they provide.
Buying a contract
There are two types of individual annuity contracts, and one type of group
contract. Individual annuity contracts may be bought as either a Flexible
Premium Payment Contract, where you make regular payments throughout the
accumulation period, or as a Single Premium Payment Contract, where you make a
single payment when you buy the contract. The individual contracts can be
purchased as "qualified contracts" which means they qualify for special federal
income tax treatment or as "non-qualified contracts" which means they do not
qualify for such treatment. Group annuity contracts are generally bought through
retirement plans set up by your employer under Sections 401 or 457 of the
Internal Revenue Code, and are available as a Flexible Premium Payment Contract.
Both individual and group contracts allow you to direct where your net premium
payments are invested.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 11 of 41
<PAGE>
The application form
If you would like to buy a contract, you must complete and sign the application
form. You or your agent then must send it, along with your initial premium
payment, by regular U.S. mail to the following address:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210
Lehigh Valley, Pennsylvania 18002
If you wish to send your application and payment by certified, registered or
express mail, please address it to:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
3900 Burgess Place
Bethlehem, Pennsylvania 18017
Our decision to accept or reject your application is based on administrative
rules such as whether you have completed the form completely and accurately. We
have the right to reject any application or initial premium payment for any
reason.
If we accept your application as received, we will credit your net premium
payment to your new contract within two business days. If your application is
not complete within five business days of our receiving it, we will return it to
you along with your payment.
Payments
For individual contracts we require a minimum initial premium payment of $3,000
for Single Premium Payment Contracts, and $500 for Flexible Premium Payment
Contracts. Thereafter, the minimum additional flexible payment is $100. However,
if you purchase a Flexible Premium Payment Contract through an employer payroll
deduction plan, the minimum payment will be $50. The total amount paid in
flexible premium payments in any contract year after the first may not exceed,
without our written consent, the lesser of 10 times the total amount you paid in
premium payments in the first contract year, or $100,000.
For group contracts we require a minimum initial premium payment of $5,000, with
additional payments of at least $500. Thereafter, any payments in excess of
$100,000 in any contract year may only be made with our written consent.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 12 of 41
<PAGE>
The accumulation period
How we allocate your premium payments
After we receive your initial premium payment and issue a contract to you, we
will normally credit subsequent net premium payments to your contract on the
same day we receive them, provided we receive them prior to the close of our
regular business day.
If we receive your payment on a non-business day, or after our close, we will
normally credit it on the next business day. If required in your state or
municipality, premium taxes are deducted from your payment before we credit it
to your contract. We call the amount remaining after this deduction the net
premium payment.
We use your net premium payments to purchase accumulation units in the variable
investment options you have chosen, or in the fixed-rate option if you have an
Individual Single Premium Payment contract and have chosen this option,
according to your instructions in the application or as later changed. The
prices of accumulation units are set daily because they change along with the
share values of the Funds you invest in. The amount you pay for each unit will
be the next price calculated after we receive and accept your payment.
The value of accumulation units will vary as you earn interest in the fixed-rate
option or as the value of investments rises and falls in the variable investment
options.
You can change your investment option selections by notifying us in writing. We
will apply your new instructions to subsequent net premium payments after we
receive and accept them. Please remember that you cannot invest in more than
twenty variable investment options, or nineteen variable investment options and
the fixed-rate option if your contract allows you to invest in this option, at
any given time.
The Separate Account
GIAC has established The Guardian Separate Account A to receive and invest your
premium payments in the variable investment options. The Separate Account has 31
investment divisions, corresponding to the 31 Funds available to you. Each
division is divided into two sub-divisions, one for allocations made under tax
qualified contracts, the other for allocations made under non-qualified
contracts. The performance of each division is based on the Fund in which it
invests.
The Separate Account was established in 1981. It is registered as a unit
investment trust under the Investment Company Act of 1940 (the 1940 Act) and
meets the definition of a separate account under federal securities laws. State
insurance law provides that the assets of the Separate Account equal to its
reserves and other liabilities are not chargeable with GIAC's obligations except
those under annuity contracts issued through the Separate Account. Income, gains
and losses of the Separate Account are kept separate from other income, gains or
losses of the contract owner. Each investment subdivision is administered and
accounted for as part of the general business of GIAC. Under Delaware law, the
income and capital gains or capital losses of each investment
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 13 of 41
<PAGE>
subdivision are credited to or charged against the assets held in that
subdivision according to the terms of each contract, without regard to other
income, capital gains or capital losses of the other investment subdivisions or
of GIAC. Contract obligations are GIAC's responsibility. According to Delaware
insurance law, the assets of the Separate Account are not chargeable with
liabilities arising out of any other business GIAC may conduct. Please see
Financial Information: Federal tax matters.
We have the right to make changes to the Separate Account, to the investment
divisions within it, and to the fund shares they hold. These changes must be
made in a manner that is consistent with laws and regulations. When necessary,
we'll use this right to serve your best interests and to carry out the purposes
of the contract.
Variable investment options
You may choose to invest in a maximum of twenty of the 31 variable investment
options at any time. Each Fund is an open-end diversified management investment
company, registered with the Securities and Exchange Commission under the 1940
Act.
The Funds have different investment objectives which influence their risk and
return. The table below summarizes their main characteristics.
Some Funds have similar investment objectives and policies to other funds
managed by the same adviser. However, the investment returns of the Funds may be
higher or lower than those of similar funds managed by the same adviser. There
is no assurance, and we make no representation, that the performance of any Fund
will be comparable to the performance of any other fund.
All of the funds are available for investment through other variable annuity
contracts funded by the Separate Account. Some of these Funds are also
available under other separate accounts supporting variable annuity
contracts and variable life insurance policies of GIAC and other companies. We
do not anticipate any inherent conflicts with these arrangements. However, it is
possible that conflicts of interest may arise in connection with the use of the
same Funds under both variable life insurance policies and variable annuity
contracts, or issued by different companies. While the Board of Directors of
each Fund monitors activities in an effort to avoid or correct any material
irreconcilable conflicts of interest arising out of this arrangement, we may
also take actions to protect the interests of our contract owners. See the
accompanying Fund prospectuses for more information about possible conflicts of
interest.
Some investment advisers (or their affiliates) may pay us compensation for
administration, distribution or other expenses. Currently, these advisers
include Value Line, Inc., Massachusetts Financial Services Company, AIM
Advisors, Inc., Janus Capital Corporation, Fidelity Management & Research
Company and Davis Selected Advisers, LP. The amount of compensation is usually
based on assets of the relevant variable investment options from contracts that
we issue, and some advisers may pay us more than others.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 14 of 41
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVES(S) TYPICAL INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Guardian Stock Fund Long-term growth of capital U.S. common stocks and convertible
securities
- ----------------------------------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund Long-term growth of capital Common stocks and convertible
securities issued by companies with
smaller market capitalization
- ----------------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund Maximum income without undue risk of Investment grade debt obligations
principal; capital appreciation as a and U.S. government securities,
secondary objective including mortgage-backed and
asset-backed securities
- ----------------------------------------------------------------------------------------------------------------------
The Guardian Cash Fund High level of current income Money market instruments
consistent with liquidity and
preservation of capital
- ----------------------------------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund Seeks to match the investment Common stocks of companies in the
performance of the Standard & S&P Index, which emphasizes large
Poor's 500 Corporate Stock U.S. companies
Price Index (the "S&P Index")
- --------------------------------------------------------------------------------------------------------------------
The Guardian VC High Yield Current income; capital Corporate bonds and other debt
Bond Fund appreciation is a secondary securities rated below investment
objective grade
- --------------------------------------------------------------------------------------------------------------------
The Guardian VC Asset Long-term total investment return Shares of The Guardian Stock Fund,
Allocation Fund consistent with moderate The Guardian Bond Fund, and The
investment risk Guardian Cash Fund
- ----------------------------------------------------------------------------------------------------------------------
Baillie Gifford International Fund Long-term capital appreciation Common stocks and convertible
securities issued by foreign
countries
- ----------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund Long-term capital appreciation Common stocks and convertible
securities issued by companies that
are organized in, generally operate
in, or which principally sell their
securities in emerging market
countries
- ----------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund Long-term growth of capital U.S. common stocks with selections
based on rankings of the Value Line
Ranking System
- ----------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset Management High total investment return (current U.S. common stocks with selections
Trust income and capital appreciation) based on rankings of the Value Line
consistent with reasonable risk Ranking System, bonds and money market
instruments
- ----------------------------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Growth of capital; current income as U.S. common stocks and convertible
a secondary objective securities
- --------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Growth of capital Common stocks of medium and
small-sized growth companies
- --------------------------------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund High current income; growth of Common and preferred stocks of
capital as a secondary objective domestic or foreign public utilities
- --------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund Long-term growth of capital; Equity securities judged to be
income as a secondary objective undervalued by the investment
adviser
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 15 of 41
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVES(S) TYPICAL INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Davis Financial Portfolio Growth of capital Common stocks of financial companies
- --------------------------------------------------------------------------------------------------------------------
Davis Real Estate Portfolio Total return through a Securities issued by companies that
combination of growth and income are "principally engaged" in real
estate
- --------------------------------------------------------------------------------------------------------------------
Davis Value Portfolio Growth of capital U.S. common stocks of companies with
at least $5 billion market
capitalization
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Long-term capital appreciation U.S. and foreign common stocks of
Portfolio companies believed to be undervalued
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Reasonable income; also considers Income-producing equity securities
Portfolio potential for capital appreciation
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Capital growth U.S. and foreign common stocks
Opportunities Portfolio
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio Long-term growth of capital Common stocks with medium market
capitalization, both U.S. and
foreign
- --------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Long-term growth of capital Equity securities of medium-sized
Growth Portfolio companies; non-diversified
- --------------------------------------------------------------------------------------------------------------------
Janus Aspen Capital Long-term growth of capital Equity securities of companies of
Appreciation Portfolio any size; non-diversified
- --------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Long-term growth of capital in Common stocks of issuers of any size
Portfolio a manner consistent with
preservation of capital
- --------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Long-term growth of capital in Common stocks of foreign and U.S.
Growth Portfolio a manner consistent with issuers; usually invests in at least
preservation of capital five countries, including the U.S.
- --------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series Long-term growth of capital Common stocks of emerging growth
companies of any size
- ----------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Series Long-term growth of capital and income Common stocks and convertible
securities issued by the U.S. and
foreign companies
- --------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series To seek capital appreciation Equity securities of companies that
offer superior prospects for growth,
both U.S. and foreign
- --------------------------------------------------------------------------------------------------------------------
MFS Research Series Long-term growth of capital and Equity securities of companies
future income believed to possess better than
average prospects for long-term
growth
- --------------------------------------------------------------------------------------------------------------------
MFS Total Return Series Above average income consistent Broad list of securities, including
with prudent employment of a combination of equity and
capital; as a secondary fixed-income, both U.S. and foreign
objective, to provide reasonable
opportunity for growth of capital
and income
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Some of these Funds may not be available in your State.
- --------------------------------------------------------------------------------
The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 16 of 41
<PAGE>
The Funds' investment advisers and their principal business addresses are shown
in the table below.
- --------------------------------------------------------------------------------
Fund Investment Adviser
and Principal Business Address
- --------------------------------------------------------------------------------
The Guardian Stock Fund Guardian Investor Services Corporation
The Guardian Small Cap Stock Fund 7 Hanover Square
The Guardian Bond Fund New York, New York 10004
The Guardian Cash Fund
The Guardian VC 500 Index Fund
The Guardian VC Asset Allocation
Fund
The Guardian VC High Yield Bond
Fund
- --------------------------------------------------------------------------------
Baillie Gifford International Fund Guardian Baillie Gifford Limited
Baillie Gifford Emerging Markets (Adviser)
Fund Baillie Gifford Overseas Limited
(Sub-adviser)
1 Rutland Court
Edinburgh, Scotland
EH3 8EY
- --------------------------------------------------------------------------------
Value Line Centurion Fund Value Line, Inc.
Value Line Strategic Asset 220 East 42nd Street
Management Trust New York, New York 10017
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580
- --------------------------------------------------------------------------------
MFS Growth With Income Series Massachusetts Financial Services Company
MFS Emerging Growth Series 500 Boylston Street
MFS New Discovery Series Boston, MA 02116
MFS Research Series
MFS Total Return Series
- --------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
AIM V.I. Global Utilities Fund 11 Greenway Plaza -- Suite 100
AIM V.I. Value Fund Houston, Texas 77046-1173
- --------------------------------------------------------------------------------
Davis Financial Portfolio Davis Selected Advisers, LP
Davis Real Estate Portfolio 2949 East Elvira Road
Davis Value Portfolio Suite 101
Tucson, Arizona 85706
- --------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio Fidelity Management & Research Company
Fidelity VIP Equity-Income Portfolio 82 Devonshire Street
Fidelity VIP III Growth Boston, Massachusetts 02109
Opportunities Portfolio
Fidelity VIP III Mid Cap Portfolio
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Janus Aspen Aggressive Janus Capital Corporation
Growth Portfolio 100 Fillmore Street
Janus Aspen Capital Appreciation Denver, Colorado 80206-4928
Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth
Portfolio
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Before investing, please read the accompanying Fund prospectuses carefully. They
contain important information on the investment objectives, policies, charges
and expenses of the Funds.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 17 of 41
<PAGE>
Fixed-rate option
The fixed-rate option is only available to those who have bought an Individual
Single Premium Payment Contract, though it may not be available for allocation
in all states in which the contracts are available.
It is not registered under the Securities Act of 1933 or as an investment
company under the 1940 Act, and is therefore not subject to the provisions or
restrictions of these Acts. However, the following disclosure about the
fixed-rate option may be subject to certain generally applicable provisions of
the federal securities laws regarding the accuracy and completeness of
statements not in prospectuses.
In the fixed-rate option, we guarantee that the net premium payments you invest
will earn daily interest at a minimum annual rate of 3%. You can allocate all of
your net premium payments to this option, or you may choose it as one of your
twenty investment selections. The value of your net premiums invested in the
fixed-rate option does not vary with the investment experience of any Fund. The
money that you put into your fixed-rate option becomes part of GIAC's general
assets.
At certain times we may choose to pay interest at a rate higher than 3%, but we
aren't obliged to do so. Higher interest rates are determined at our discretion
and we can change them prospectively without notice. We don't use a specific
formula to determine interest rates; rather we consider such factors as general
economic trends, current rates of return on our general account investments,
regulatory and tax requirements, and competitive factors. The rate of interest
we pay hasn't been limited by our Board of Directors.
Here are some of the important conditions that apply when we pay interest on
your investments in the fixed-rate option:
o The initial interest rate that we credit to your premiums or transfers
will be whatever rate is in effect on the date the amounts are allocated
to the fixed-rate option.
o This interest rate will continue until the next contract anniversary date.
o At that time, all payments and transfers allocated to the fixed-rate
option during the previous year, together with interest earned, will be
credited with the rate of interest in effect on the renewal date, known as
the renewal rate.
o The renewal rate will be guaranteed until the next contract anniversary
date.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 18 of 41
<PAGE>
Sidebar:
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When you buy a contract, please note:
o You can choose up to twenty investment options at any one time.
o If your contract allows you to and you select the fixed-rate option, you
are limited to an additional nineteen variable options.
o There are no initial sales charges on the premium payments that you
allocate to the variable investment options. However, there may be premium
tax charges.
o All of the dividends and capital gains distributions that are payable to
variable investment options are reinvested in shares of the applicable
Fund at the current net asset value.
o When the annuity period of the contract begins, we will apply your
accumulation value to a payment option in order to make annuity payments
to you.
o You can arrange to transfer your investments among the divisions by
notifying us in writing or by telephone. Currently, there is no fee for
this, but we reserve the right to charge a fee and to limit the number of
transactions.
o You can change beneficiaries as long as the annuitant is living.
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Transfers
You can transfer money among variable investment options both before and after
the date annuity payments begin. You can also transfer part of your accumulation
value from the fixed-rate option, but only before the date annuity payments
begin. Transfers are subject to certain conditions, which are described below.
If you are considering a transfer, be sure to look into each option carefully
and make sure your decisions will help you to achieve your long-term investment
goals.
During the accumulation period and up to 30 days before the date annuity
payments are scheduled to begin, you can transfer all or part of your
accumulation value among the variable investment options. These transfers are
subject to the following rules:
o We permit transfers from the fixed-rate option to a maximum of three
variable investment options. This may be done only once each contract
year, during the 30 days beginning on the contract anniversary date.
Amounts that have been on deposit in the fixed-rate option longest will be
transferred out first. You may not make transfers into the fixed-rate
option. The maximum yearly transfer from the fixed-rate option is the
greater of the following:
- - 25% of the amount in the fixed-rate option on the applicable contract
anniversary date or
- - $2,500.
o Each transfer involving the variable investment options will be based on
the accumulation unit value that is next calculated after we have received
proper transfer instructions from you.
We will implement a transfer upon receiving your written or telephone
instructions in good order. If your request reaches our customer service office
before 3:30 p.m. Eastern time on a business day, we will normally implement it
that same day.
At this time, we do not limit the number of transfers you may make. However, we
have the right to limit the frequency of transfers to not more than once every
30 days.
At this time, we do not charge for transfers; however, we do have the right to
impose a fee of up to $25 per transfer. We will deduct any transfer charges on a
pro-rata basis from the options you transfer from.
We require proper authorization to honor telephone transfer instructions. If you
would like this privilege, please complete a transfer authorization form, or
give us authorization on your application. Once we have your authorization on
file, you can carry out a telephone transfer by calling 1-800-533-0099 between
9:00 a.m. and 3:30 p.m. Eastern time on any business day when we are open.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 19 of 41
<PAGE>
Sidebar:
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Note: When you call us, we will require identification of your contract as well
as your personal security code. We may accept transfer instructions from anyone
who can provide us with this information. Neither GIAC, Guardian Investor
Services Corporation, nor the Funds will be liable for any loss, damage, cost or
expense resulting from a telephone transfer we reasonably believe to be genuine.
As a result, you assume the risk of unauthorized or fraudulent telephone
transfers. We may record telephone conversations regarding transfers without
disclosure to the caller.
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During periods of drastic economic or market changes it may be difficult to
contact us to request a telephone transfer. At such times, please send your
transfer request by regular or express mail and we will process it using the
accumulation unit value first calculated after we receive the request. We have
the right to modify, suspend or discontinue telephone transfer privileges at any
time without prior notice.
After the date annuity payments begin, if you have a variable annuity option you
can transfer all or part of the value of your annuity among the variable
investment options only once each calendar year. We will adjust the number of
annuity units, which are used to determine your annuity payments, to reflect the
unit values of the new funds you have chosen. No fixed-rate option transfers are
permitted.
Surrenders and partial withdrawals
During the accumulation period and while the annuitant and all contract owners
are living, you can redeem your contract in whole. This is known as surrendering
the contract. If you redeem part of the contract, it's called a partial
withdrawal. We will not accept requests for surrenders or partial withdrawals
after the date annuity payments begin. Also, surrenders and partial withdrawals
may be limited by the rules of your retirement plan.
Your request for surrenders and partial withdrawals must be received in good
order. If you wish to surrender your contract, you must send us the contract or
we will not process the request. If you have lost the contract, we will require
an acceptable affidavit of loss. Surrendering your contract or making a partial
withdrawal in the first six years of your contract may trigger the contingent
deferred sales charge. See Contract costs and expenses.
To process a partial withdrawal, we will redeem enough accumulation units to
equal the dollar value of your request. When you surrender your contract, we
redeem all the units. For both transactions we use the unit value next
calculated after we receive a proper request from you. We will deduct any
applicable contract charges and deferred sales charges from the proceeds of a
surrender. In the case of a partial withdrawal, we will cash additional units to
cover these charges. If you have less than $500 left in your Single Premium
Payment Contract after a partial withdrawal, $250 left in your Flexible Premium
Payment Contract, or $1,000 in your Group Contract, we will cancel the contract
and pay you the balance of the proceeds. This is called an involuntary surrender
and it may be subject to any applicable contract charges and a deferred sales
charge. Please see Financial information: Federal tax matters.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 20 of 41
<PAGE>
Surrenders and partial withdrawals are subject to tax, and may be subject to
penalty taxes and mandatory federal income tax withholding. After the first
contract year, you are allowed to make an annual withdrawal of the following
amounts from the contract without paying a deferred sales charge:
For Single Premium Payment Contracts
o 10% of the amount of your single premium payment.
For Flexible Premium Payment and Group Contracts
o 10% of the total premiums paid during the 72 months immediately preceding
the date of your withdrawal.
We will cash accumulation units in the following order:
o all variable accumulation units attributable to the investment divisions;
this will be done on a pro-rata basis unless you instruct us differently,
then
o all fixed accumulation units attributable to the fixed-rate option.
We will send you your payment within seven days of receiving a request from you
in good order. Please see Payments later in this section.
Please note that withdrawals are restricted for qualified contracts issued in
connection with Section 403(b) of the Internal Revenue Code. If you have a
question about surrenders or withdrawals, please call us toll free at
1-800-221-3253.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 21 of 41
<PAGE>
Managing your annuity
Sidebar:
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Payments
For all transactions, we can delay payment if the contract is being contested.
We may postpone any calculation or payment from the variable investment options
if:
o the New York Stock Exchange is closed for trading or trading has been
suspended, or
o the Securities and Exchange Commission restricts trading or determines
that a state of emergency exists which may make payment or transfer
impracticable
Assigning contract interests
If the contract is part of a Keogh plan, or a corporate or individual plan under
Sections 401(a), 403(b) or 408 of the Internal Revenue Code, the contract
owner's interest in the contract cannot be assigned, unless the contract owner
is not the annuitant or the annuitant's employer. Assigned contract interests
may be treated as a taxable distribution to the contract owner. See Federal tax
matters for more information.
Reports
At least twice each year, we send a report to each contract owner that contains
financial information about the Separate Account, according to applicable laws,
rules and regulations. Additionally, at least once each year, we send a
statement to each contract owner that reports the number of accumulation units
and their value under the contract.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 22 of 41
<PAGE>
The annuity period
When annuity payments begin
You choose the month and year in which we will begin paying annuity benefits.
The first payment is made on the first day of the month. The date you choose
can't be later than the annuitant's 85th birthday, unless we have agreed. Please
note that this date may be determined by the retirement plan under which your
annuity contract was issued.
How your annuity payments are calculated
Your annuity payments will be fixed, variable or a combination of both,
depending on whether you have chosen a fixed-rate or a variable rate payment
option. Your payments are determined by the following:
o the table in your contract reflecting the nearest age and the sex of the
annuitant
o the annuity payout option you choose
o the investment returns of the variable investment options you choose, if
you choose a variable payment option.
The number and amount of your annuity payments won't be affected by the
longevity of annuitants as a group. Nor will they be affected by an increase in
our expenses over the amount we have charged in your contract.
We will make annuity payments once a month, except as follows:
o Proceeds of less than $2,000 will be delivered in a single payment.
o We may change the schedule of installment payments to avoid payments of
less than $20.
The payout options currently offered are discussed below. You can choose to have
annuity payments made under any one of the options that are available. You can
make your choice at any time before your annuity payments begin. At any time, we
may discontinue any of these options or make additional options available.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 23 of 41
<PAGE>
Annuity payout options
There are a variety of payout options for you to choose from that we've
described below. If you do not make a choice, we will automatically select
Option 2. You may change options if you wish, provided you do so before
payments begin.
Option 1 - Life Annuity Payments
We make a payment once a month during the annuitant's lifetime, ending with the
payment preceding the annuitant's death. This option allows for the maximum
monthly payment because there is neither a guaranteed minimum number of payments
nor a provision for a death benefit for beneficiaries. It is possible that an
annuitant could receive only one payment, if he or she dies before the date of
the second payment.
Option V - Life Annuity with 120 Monthly Payments Certain
We make a payment once a month during the annuitant's lifetime, but if the
annuitant dies before receiving 10 years worth of payments (120), the remaining
payments will be made to the
beneficiary. The beneficiary can then choose to take all or part of the
remaining payments in a lump sum at their current dollar value. If the
beneficiary dies while receiving the payments, the balance will be paid in one
sum at its current dollar value to the beneficiary's estate.
Option 3 - Joint and Two-Thirds Survivor Annuity
We make a payment once a month during the joint lifetimes of the annuitant and a
designated second person, the joint annuitant. If one dies, payments will
continue during the survivor's lifetime, but the amount of the payment will then
be reduced to two-thirds of the number of units paid out each month when both
parties were alive. It is possible that the joint annuitants could receive only
one payment if they both die before the date of the second payment.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 24 of 41
<PAGE>
Other contract features
Death Benefits
If the annuitant you have named dies before the date annuity payments begin, we
pay a death benefit. In addition, you have the option of buying an enhanced
death benefit rider which may provide a higher death benefit.
If the annuitant dies prior to age 85 and before the retirement date, the
regular death benefit is the greatest of:
o the accumulation value of the contract at the end of the valuation period
during which we receive proof of death;
o the total of all premiums paid, minus any partial withdrawals and any
deferred sales charges paid on any withdrawals; or
o the accumulation value of your contract as of the first contract
anniversary date following the date the Department of Insurance in your
state approves this contract feature, plus any premiums paid on or after
this anniversary, less any withdrawals and contingent deferred sales
charges made after this anniversary.
If the annuitant dies after age 85 and before the retirement date, the death
benefit will be equal to the accumulation value of the contract.
We normally pay the death benefit within seven days of receiving proof of death
in good order. However, we have the right to defer the payment of other contract
benefits under certain circumstances. These are described under Surrenders and
partial withdrawals.
Generally, your beneficiaries will be taxed on the gain in your annuity
contract. Consult your tax adviser about the estate tax and income tax
consequences of your particular situation.
Enhanced death benefits
The enhanced death benefit riders are available under current contracts that
have annuitants who are under age 75 at the time the rider is issued. If a death
benefit is payable and one of these options is in force, the beneficiary will
receive either the death benefit described above or the enhanced death benefit,
whichever is greater.
Two riders are offered:
o the 7 Year Enhanced Death Benefit Rider which has a daily charge
based on an annual rate of 0.30% of the net assets of your variable
investment options.
o the Contract Anniversary Enhanced Death Benefit Rider, which has a
daily charge based on an annual rate of 0.25% of the net assets of
your variable investment options.
These riders are available only in states where they have been approved.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 25 of 41
<PAGE>
7 Year Enhanced Death Benefit Rider
The enhanced death benefit under this rider is calculated as follows:
o The accumulation value of the contract at the end of the reset date
immediately preceding the annuitant's death:
- Plus any premiums paid after the reset date
- Minus any partial withdrawals after the reset date
- Minus any deferred sales charges and annuity taxes.
The first reset date is on the seventh contract anniversary date. After this,
each reset date will be each seventh contract anniversary date after that (i.e.,
the 14th, 21st and 28th contract anniversaries, and so on).
Contract Anniversary Enhanced Death Benefit Rider
The enhanced death benefit under this rider is calculated as follows:
o the highest accumulation value of the contract on any contract anniversary
before the annuitant's 85th birthday:
- plus any premiums paid after that contract anniversary
- minus any partial withdrawals after that contract anniversary
- minus any deferred sales charges and annuity taxes
We will terminate either enhanced death benefit rider on the earliest of the
following dates:
o the date the enhanced death benefit is paid out
o the date the contract terminates
o the date of the annuitant's 85th birthday
o the date annuity payments begin
o the date we receive a written termination request from you.
Once the rider is terminated, it cannot be reinstated. We reserve the right to
discontinue the offer of either enhanced death benefit rider at any time,
without prior notice.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 26 of 41
<PAGE>
Financial information
How we calculate unit values
When you choose a variable investment option, you accumulate variable
accumulation units. With the fixed-rate option, you accumulate fixed
accumulation units. To calculate the number of accumulation units you buy with
each payment, we divide the amount you invest in each option by the value of
units in the option. We use the unit value next calculated after we have
received and accepted your payment. We calculate unit values at the close of
business of the New York Stock Exchange, usually at 4:00 p.m. Eastern time, each
day the Exchange is open for trading and GIAC is open for business.
To determine the value of your account, we multiply the number of accumulation
units in each option by the current unit value for the option.
We determine the value of a fixed accumulation unit by adding together its value
at the end of the preceding valuation period and any interest credited to the
unit since the end of that period.
We determine the value of a variable accumulation unit by multiplying its value
at the end of the preceding valuation period by the net investment factor for
the current valuation period.
The net investment factor is a measure of the investment experience of each
variable investment option. We determine the net investment factor for a given
valuation period as follows:
o At the end of the valuation period we add together the net asset value of
a Fund share and its portion of dividends and distributions made by the
Fund during the period
o We divide this total by the net asset value of the particular Fund share
calculated at the end of the preceding valuation period
o Finally, we add up the daily charges (mortality and expense risks,
administrative expenses, and any premium taxes) and subtract them from the
above total.
Summary financial information about the Separate Account
The following unit information is derived from the financial statements of the
Separate Account, which were audited by PricewaterhouseCoopers LLP, independent
accountants, for the years ended December 31, 1992 through 1999. The data should
be read in conjunction with the financial statements, related notes and other
financial information from the Guardian Separate Account A's 1999 Annual Report
to contract owners which is incorporated by reference into the Statement of
Additional Information. A copy of the 1999 Annual Report to contract owners and
the Statement of Additional Information may be obtained by calling or writing
GIAC's Customer Service Office. The address and phone number appear on the cover
of this Prospectus.
The Funds in the tables below are only some of the variable investment options
available to you. The other Funds were not offered in 1999 and therefore are not
included in the summary financial information.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 27 of 41
<PAGE>
Summary financial information about the Separate Account
Selected data for accumulation units of the Separate Account outstanding at the
end of each period.
BASIC CONTRACT
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value at
Beginning of Period:
The Guardian Cash Fund ...... $24.979 $23.999 $23.050 $22.172 $21.217 $20.639 $20.307 $19.869 $19.003
The Guardian Stock Fund ..... 115.984 97.721 72.788 57.929 43.446 44.443 37.415 31.469 23.376
The Guardian Bond Fund ...... 34.566 32.294 29.924 29.376 25.230 26.391 24.262 22.750 19.774
The Guardian Small Cap
Stock Fund ................ 10.567 11.323 10.00** -- -- -- -- -- --
Gabelli Capital Asset Fund .. 18.478 16.705 11.832 10.763 10.000++ -- -- -- --
Baillie Gifford International
Fund ...................... 21.511 17.928 16.175 14.154 12.851 12.866 9.694 10.756 10.000*
Baillie Gifford Emerging
Markets Fund .............. 7.810 10.770 10.667 8.647 8.785 10.000+ -- -- --
Value Line Centurion Fund ... 71.182 56.396 46.920 40.383 29.115 30.069 27.807 26.511 17.593
Value Line Strategic Asset
Management Trust .......... 45.182 35.801 31.261 27.247 21.408 22.729 20.521 18.013 12.691
MFS Growth With Income
Series .................... 12.601 10.403 10.00** -- -- -- -- -- --
Accumulation Unit Value at End
of Period:
The Guardian Cash Fund ...... $25.916 $24.979 $23.999 $23.050 $22.172 $21.217 $20.639 $20.307 $19.869
The Guardian Stock Fund ..... 150.639 115.984 97.721 72.788 57.929 43.446 44.443 37.415 31.469
The Guardian Bond Fund ...... 33.940 34.566 32.294 29.924 29.376 25.230 26.391 24.262 22.750
The Guardian Small Cap
Stock Fund ................ 14.130 10.567 11.323 -- -- -- -- -- --
Gabelli Capital Asset Fund .. 21.921 18.478 16.705 11.832 10.763 -- -- -- --
Baillie Gifford International
Fund ...................... 29.631 21.511 17.928 16.175 14.154 12.851 12.866 9.694 10.756
Baillie Gifford Emerging
Markets Fund ................ 13.321 7.810 10.770 10.667 8.647 8.785 -- -- --
Value Line Centurion Fund ... 90.380 71.182 56.396 46.920 40.383 29.115 30.069 27.807 26.511
Value Line Strategic Asset
Management Trust .......... 55.619 45.182 35.801 31.261 27.247 21.408 22.729 20.521 18.013
MFS Growth With Income
Series .................... 13.312 12.601 10.403 -- -- -- -- -- --
</TABLE>
Year Ended
December 31,
------------
1990
------------
Accumulation Unit Value at
Beginning of Period:
The Guardian Cash Fund ...... $17.767
The Guardian Stock Fund ..... 26.755
The Guardian Bond Fund ...... 18.565
The Guardian Small Cap
Stock Fund ................ --
Gabelli Capital Asset Fund .. --
Baillie Gifford International
Fund ...................... --
Baillie Gifford Emerging
Markets Fund .............. --
Value Line Centurion Fund ... 16.831
Value Line Strategic Asset
Management Trust .......... 12.836
MFS Growth With Income
Series .................... --
Accumulation Unit Value at End
of Period:
The Guardian Cash Fund ...... $19.003
The Guardian Stock Fund ..... 23.376
The Guardian Bond Fund ...... 19.774
The Guardian Small Cap
Stock Fund ................ --
Gabelli Capital Asset Fund .. --
Baillie Gifford International
Fund ...................... --
Baillie Gifford Emerging
Markets Fund ................ --
Value Line Centurion Fund ... 17.593
Value Line Strategic Asset
Management Trust .......... 12.691
MFS Growth With Income
Series .................... --
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 28 of 41
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------
Number of Accumulation Units 1999 1998 1997 1996 1995 1994 1993 1992
Outstanding at End of Period: --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund ...... 2,995,641 3,345,374 3,499,421 4,509,040 4,672,497 6,438,018 6,589,218 8,191,019
The Guardian Stock Fund ..... 3,916,386 4,776,931 5,590,873 6,076,328 6,703,809 6,852,186 7,151,131 7,250,156
The Guardian Bond Fund ...... 1,565,455 1,964,675 2,214,393 2,616,670 3,423,163 3,797,375 4,624,824 5,473,752
The Guardian Small Cap Stock
Fund ...................... 472,093 568,863 651,967 -- -- -- -- --
Gabelli Capital Asset Fund .. 385,092 487,073 389,514 232,888 181,843 -- -- --
Baillie Gifford International
Fund ...................... 1,153,489 1,377,240 1,643,055 2,056,413 2,393,470 3,056,741 2,613,593 1,115,818
Baillie Gifford Emerging
Markets Fund .............. 544,584 263,502 559,108 548,268 383,253 148,085 -- --
Value Line Centurion Fund ... 2,822,201 3,076,008 3,620,476 4,202,143 4,570,242 4,790,568 5,470,792 6,370,005
Value Line Strategic Asset
Management Trust .......... 2,820,532 3,314,960 3,910,164 4,418,320 4,843,445 5,312,863 6,033,999 5,778,556
MFS Growth With Income
Series................... 333,700 427,295 73,032 -- -- -- -- --
<CAPTION>
Year Ended December 31,
-----------------------
Number of Accumulation Units 1991 1990
Outstanding at End of Period: --------- ----------
<S> <C> <C>
The Guardian Cash Fund ...... 9,820,648 12,271,296
The Guardian Stock Fund ..... 7,320,510 7,332,593
The Guardian Bond Fund ...... 5,904,703 5,963,059
The Guardian Small Cap Stock
Fund ...................... -- --
Gabelli Capital Asset Fund .. -- --
Baillie Gifford International
Fund ...................... 813,252 --
Baillie Gifford Emerging
Markets Fund .............. -- --
Value Line Centurion Fund ... 6,925,840 6,826,967
Value Line Strategic Asset
Management Trust .......... 5,321,172 4,838,757
MFS Growth With Income
Series................... -- 0
</TABLE>
- ------------
* Commencing February 8, 1991.
+ Commencing October 17, 1994.
++ Commencing May 1, 1995.
** Commencing July 16, 1997.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 29 of 41
<PAGE>
CONTRACT WITH 7 YEAR ENHANCED DEATH BENEFIT RIDER
Year Ended December 31,
-------------------------------
1999 1998 1997
---- ---- ----
Accumulation Unit Value at Beginning of Period*:
The Guardian Cash Fund ......................... $ 10.432 $ 10.502 $ 10.00
The Guardian Stock Fund ........................ 12.500 10.564 10.00
The Guardian Bond Fund ......................... 10.791 10.112 10.00
The Guardian Small Cap Stock Fund .............. 9.439 10.145 10.00
Gabelli Capital Asset Fund ..................... 11.735 10.641 10.00
Baillie Gifford International Fund ............. 12.631 10.559 10.00
Baillie Gifford Emerging Markets Fund .......... 7.877 10.895 10.00
Value Line Centurion Fund ...................... 12.849 10.211 10.00
Value Line Strategic Asset Management Trust .... 12.911 10.261 10.00
MFS Growth With Income Series .................. 12.870 10.657 10.00
Accumulation Unit Value at End of Period:
The Guardian Cash Fund ......................... $ 10.790 $ 10.432 $ 10.502
The Guardian Stock Fund ........................ 16.187 12.500 10.564
The Guardian Bond Fund ......................... 10.564 10.791 10.112
The Guardian Small Cap Stock Fund .............. 12.584 9.439 10.145
Gabelli Capital Asset Fund ..................... 13.880 11.735 10.641
Baillie Gifford International Fund ............. 17.347 12.631 10.559
Baillie Gifford Emerging Markets Fund .......... 13.395 7.877 10.895
Value Line Centurion Fund ...................... 16.266 12.849 10.211
Value Line Strategic Asset Management Trust .... 15.846 12.911 10.261
MFS Growth With Income Series .................. 13.556 12.870 10.657
* The Enhanced Death Benefit Rider was available under this Contract commencing
November 12, 1997.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 30 of 41
<PAGE>
Number of Accumulation Units Outstanding at End of Period:
Year Ended December 31,
-------------------------------
1999 1998 1997
---- ---- ----
The Guardian Cash Fund ....................... 336,117 319,565 125,260
The Guardian Stock Fund ...................... 1,609,305 1,089,755 734,279
The Guardian Bond Fund ....................... 140,479 168,909 40,479
The Guardian Small Cap Stock Fund ............ 24,963 28,315 34,958
Gabelli Capital Asset Fund ................... 69,116 82,295 4,315
Baillie Gifford International Fund ........... 144,167 104,475 85,978
Baillie Gifford Emerging Markets Fund ........ 14,343 8,161 20,597
Value Line Centurion Fund .................... 770,756 586,543 191,677
Value Line Strategic Asset Management Trust .. 421,493 295,200 177,959
MFS Growth With Income Series ................ 11,618 11,842 15
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 31 of 41
<PAGE>
Contract costs and expenses
The amount of a charge may not strictly correspond to the costs of providing the
services or benefits indicated by the name of the charge or related to a
particular contract. For example, the contingent deferred sales charge may not
fully cover all of the sales and distribution expenses actually incurred by
GIAC, and proceeds from other charges, including the mortality and expense risk
charge, may be used in part to cover these expenses.
No sales charges are deducted from your premium payments when you make them.
However, the following charges do apply:
Expenses of the Funds
The Funds you choose through your variable investment options have their own
management fees and general operating expenses. The deduction of these fees and
expenses is reflected in the per-share value of the Funds. They are fully
described in the Funds' prospectuses.
Mortality and expense risk charge
You will pay a daily charge based on an annual rate of 1.0% of the net assets of
your variable investment options to cover our mortality and expense risks.
(Approximately 0.65% covers mortality risks, while the remaining 0.35% covers
expense risks.) Mortality risks arise from our promise to pay death benefits and
make annuity payments to each annuitant for life. Expense risks arise from the
possibility that the amounts we deduct to cover sales and administrative
expenses may not be sufficient.
Administrative expenses
We deduct an annual fee of $30 for Single Premium Payment Contracts, and $35 for
Flexible Premium Payment and Group Contracts, on each anniversary date of your
contract during the accumulation period. To pay this charge, we will cancel the
number of accumulation units that is equal in value to the fee. We cancel
accumulation units in the same proportion as the percentage of the contract's
accumulation value attributable to each variable investment option and the
fixed-rate option. If you surrender your contract before the contract
anniversary date, we will still deduct the contract fee for that year. This
charge covers the cost of administering the contracts, and is not expected to
generate a profit.
In addition, the following charges may apply:
Contingent deferred sales charge
If you make a partial withdrawal from your account or surrender your contract,
you will pay a deferred sales charge on any amount that has been in your
contract for less than seven contract years. This charge compensates us for
expenses related to the sale of contracts. These include commissions to
registered representatives, as well as promotional expenses. The total deferred
sales charges are guaranteed never to exceed 9% of the premiums you have paid.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 32 of 41
<PAGE>
When we calculate the deferred sales charge, all amounts taken out are assumed
to come from the oldest premium. We do this to minimize the amount you owe. The
amount of the charge and the time period used to calculate it depend on the type
of contract you have. The deferred sales charge associated with single premium
payment contracts are listed in the table below.
- -------------------------
Contract Deferred
year sales charge
- -------------------------
1 5%
- -------------------------
2 5%
- -------------------------
3 4%
- -------------------------
4 3%
- -------------------------
5 2%
- -------------------------
6 1%
- -------------------------
7+ 0%
- -------------------------
The deferred sales charge associated with flexible premium payment contracts and
group contracts is calculated as the lesser of:
o 5% of the premium payments you have made within six contract years (72
months) before the date of your request for the withdrawal or surrender;
or
o 5% of the amount withdrawn or surrendered.
Enhanced death benefit expenses
If you choose one of the enhanced death benefit riders and it is in effect, you
will pay a daily charge based on an annual rate of up to 0.30% of the net assets
of your variable investment options.
Premium taxes
Some states and municipalities may charge premium taxes when premium payments
are made or when you begin to receive annuity payments. These taxes range from
about 0.5% to 3.5% of your premium payments. We may deduct the premium tax
either from your premium payment when made, or from the annuity payments on the
date annuity payments begin, depending on state laws.
In jurisdictions where the premium tax is incurred when a premium payment is
made, we deduct the amount from your premium payment at the time it is made.
We reserve the right to pay the premium tax on your behalf and then deduct
the same amount from the value of your contract when you surrender it, or on
your death, or on the date annuity payments begin, whichever is first. We will
do this only if permitted by applicable law.
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Page 33 of 41
<PAGE>
Transfer charge
Currently, we do not charge for transfers. However, we reserve the right to
charge up to $25 for each transfer. We will deduct this charge on a proportional
basis from the options from which amounts are transferred.
Federal tax matters
The following summary provides a general description of the Federal income tax
considerations associated with the contract. It is not intended to be complete
or to cover all tax situations. This summary is not intended as tax advice. You
should consult a tax adviser for more complete information. This summary is
based on our understanding of the present Federal income tax laws.
We make no representation as to the likelihood of continuation of the present
Federal income tax laws or as to how they may be interpreted by the Internal
Revenue Service (IRS).
We believe that our contracts will qualify as annuity contracts for Federal
income tax purposes and the following summary assumes so. Further details are
available in the Statement of Additional Information, under the heading Tax
Status of the Contracts.
When you invest in an annuity contract, you usually don't pay taxes on your
investment gains until you withdraw the money -- generally for retirement
purposes. In this way, annuity contracts have been recognized by the tax
authorities as a legitimate means of deferring tax on investment income.
We believe that if your are a natural person you won't be taxed on increases in
the accumulation value of a contract until a distribution occurs or until
annuity payments begin. For these purposes, the agreement to assign or pledge
any portion of a contact's accumulation value and, in the case of a qualified
contract (described below), any portion of an interest in the qualified plan
generally will be treated as a distribution.
When annuity payments begin, you will be taxed only on the investment gains you
have earned and not on the payments you made to purchase the contract.
Generally, withdrawals from your annuity should only be made once you reach age
59 1/2, die or are disabled, otherwise a 10% tax penalty may be applied against
any amounts included in income. Additional exceptions may apply to distributions
from a qualified contract. You should consult a tax adviser with regard to
exceptions from the penalty tax.
If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a qualified
contract. If your annuity is independent of any formal retirement or pension
plan, it is termed a non-qualified contract.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 34 of 41
<PAGE>
Taxation of non-qualified contracts
Non-natural person - If a non-natural person owns a non-qualified annuity
contract, the owner generally must include in income any increase in the excess
of the accumulation value over the investment in the contract (generally, the
premiums or other consideration paid for the contract) during the taxable year.
There are some exceptions to this rule and a prospective owner that is not a
natural person should discuss these with a tax adviser.
This following summary generally applies to contracts owned by natural persons.
Withdrawals - When a withdrawal from a non-qualified contract occurs, the amount
received will be treated as ordinary income subject to tax up to an amount equal
to any excess of the accumulation value immediately before the distribution that
exceeds the owner's investment in the contract. Generally, the owner's
investment in the contract is the amount equal to the premiums or other
consideration paid for the contract, reduced by any amounts previously
distributed from the contract that were not subject to tax at that time. In the
case of a surrender under a non-qualified contract, the amount received
generally will be taxable only to the extent it exceeds the owner's investment
in the contract.
Penalty tax on certain withdrawals - In the case of a distribution from a
non-qualified contract, a federal tax penalty may be imposed equal to 10% of the
amount treated as income. However, there is generally no penalty on
distributions that are:
o made on or after the taxpayer reaches age 59 1/2
o made on or after the death of an owner
o attributable to the taxpayer's becoming disabled, or
o made as part of a series of substantially equal periodic payments for the
life - or life expectancy - of the taxpayer.
Other exceptions may apply under certain circumstances. Special rules may also
apply to the exceptions noted above. You should consult a tax adviser with
regard to exceptions from the penalty tax.
Annuity payments - Although tax consequences may vary depending on the payout
option elected under an annuity contract, a portion of each annuity payment is
generally not taxed and the remainder is taxed as ordinary income. The
non-taxable portion of an annuity payment is generally determined so that you
recover your investment in the contract ratably on a tax-free basis over the
expected stream of annuity payments, as determined when annuity payments begin.
However, once your investment in the contract has been fully recovered, the full
amount of each annuity payment is subject to tax as ordinary income.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 35 of 41
<PAGE>
Taxation of death benefits - Amounts may be distributed from a contract because
of your death or the death of the annuitant. Generally, such amounts are
included in the income of the recipient as follows:
o if distributed in a lump sum, they are taxed in the same manner as a
surrender of the contract
o if distributed under a payout option, they are taxed in the same way as
annuity payments.
Transfers, assignments and contract exchanges - Transferring or assigning
ownership of a contract, designating an annuitant, selecting certain maturity
dates or exchanging a contract may result in certain tax consequences to you
that are not outlined here. If you are considering any such transaction, you
should consult a professional tax adviser.
Withholding tax - Annuity distributions are generally subject to withholding for
the recipient's federal income tax liability. However, recipients can generally
choose not to have tax withheld from distributions.
Multiple contracts - All annuity contracts issued by GIAC or its affiliates to
the same owner during any calendar year are treated as one annuity contract for
purposes of determining the amount included in the contract owner's income when
a taxable distribution occurs.
Taxation of qualified contracts
Your rights under a qualified contract may be subject to the terms of the
retirement plan itself, regardless of the terms of the qualified contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions with respect to the contract comply with
the law.
Individual Retirement Accounts (IRAs) - As defined in Sections 219 and 408 of
the Internal Revenue Code, individuals are allowed to make annual contributions
to an IRA of up to the lesser of $2,000 or 100% of their adjusted gross income.
All or a portion of these contributions may be deductible, depending on the
person's income. Distributions from certain pension plans may be rolled over
into an IRA on a tax-deferred basis without regard to these limits.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
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<PAGE>
Simplified Employee Pension (SEP) IRAs - Under Section 408 (k) of the Internal
Revenue Code, employers are allowed to provide IRA contributions on behalf of
their employees. In addition to the general rules governing IRAs, SEP IRAs are
subject to certain requirements regarding participation and the amounts of
contributions. Employers using this contract in connection with SEP IRAs should
consult their tax adviser.
Corporate pension and profit-sharing plans - Under Section 401(a) of the
Internal Revenue Code, corporate employers are allowed to establish various
types of retirement plans for employees, and self-employed individuals are
allowed to establish qualified plans for themselves and their employees.
Adverse tax consequences to the retirement plan, the participant or both may
result if the contract is transferred to any individual as a means of providing
benefit payments, unless the plan complies with all applicable requirements
before transferring the contract.
Deferred compensation plans - Under Section 457 of the Internal Revenue Code,
certain tax-exempt employers, such as state and local governments, or other
agencies are allowed to establish various types of deferred compensation plans
for their employees. Contributions to these plans are generally taxed when the
money is withdrawn or payments begin. In non-governmental plans, the employers
are considered the owner of the contract and may draw on its value for purposes
unrelated to the compensation plan for which it was purchased. In governmental
plans, these amounts must be held in trust for the exclusive use of the
employees participating in the plan.
Tax-sheltered annuities - Under Section 403(b) of the Internal Revenue Code,
public schools and other eligible employers are allowed to purchase annuity
contracts and mutual fund shares through custodial accounts on behalf of
employees. Generally, these purchase payments are excluded for tax purposes from
employee gross incomes. However, these payments may be subject to FICA (Social
Security) taxes.
Distributions of salary reduction contributions and earnings (other than your
salary reduction accumulation as of December 31, 1988) are not allowed before
age 59 1/2, separation from service, death or disability. Salary reduction
contributions may also be distributed upon hardship, but would generally be
subject to penalties.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 37 of 41
<PAGE>
Sidebar:
- --------------------------------------------------------------------------------
As a result of a U.S. Supreme Court ruling, employer-related plans must use rate
tables that are gender-neutral to calculate annuity purchase rates. We have
revised our tables for employer-related plans and filed them in the states where
we do business. We will continue to use our gender-distinct tables in all other
contracts, unless it is prohibited by state law. In those cases our
gender-neutral tables will be used.
- --------------------------------------------------------------------------------
Other tax issues - You should note that the annuity contract includes a death
benefit that in some cases may exceed the greater of the purchase payments or
the contract value. The death benefit could be viewed as an incidental benefit,
the amount of which is limited in any 401(a) or 403(b) plan. Because the death
benefit may exceed this limitation, employers using the contract in connection
with corporate pension and profit-sharing plans, or tax-sheltered annuities,
should consult their tax adviser.
Qualified contracts have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan, adoption
agreement or consult a tax adviser for more information about these distribution
rules.
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients generally are
provided the opportunity to elect not to have tax withheld from distributions.
"Eligible rollover distributions" from section 401(a), 403(a) and 403(b) plans
are subject to a mandatory federal income tax withholding of 20%. An eligible
rollover distribution is the taxable portion of any distribution to an employee
from such a plan, except certain distributions such as distributions required by
the Internal Revenue Code or distributions in a specified annuity form. The 20%
withholding does not apply, however, if the employee chooses a direct rollover
from the plan to another tax-qualified plan or IRA.
Our income taxes
At the present time, we make no charge for any Federal, state or local taxes
other than the charge for state and local premium taxes that we incur - that may
be attributable to the investment divisions of the Separate Account or to the
contracts. We do have the right in the future to make additional charges for any
such tax or other economic burden resulting from the application of the tax laws
that we determine is attributable to the investment divisions of the Separate
Account or the contracts.
Under current laws in several states, we may incur state and local taxes in
addition to premium taxes. These taxes are not now significant and we are not
currently charging for them. If they increase, we may deduct charges for such
taxes.
Possible tax law changes
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the contract could change by legislation
or otherwise. You should consult a tax adviser with respect to legislative
developments and their effect on the contract.
We have the right to modify the contract in response to legislative changes that
could otherwise diminish the favorable tax treatment annuity contract owners
currently receive. We make no guarantee regarding the tax status of any contract
and do not intend this summary as tax advice.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 38 of 41
<PAGE>
Your rights and responsibilities
Voting rights
We own the Fund's shares, but you may have voting rights in the various Funds.
To the extent that we are required by law, we will cast our votes according to
the instructions of those contract owners who have an interest in variable
investment options investing in Funds holding a shareholder vote, as of the
shareholder meeting record date. Those votes for which we receive no
instructions will be voted in the same proportion as those we have received
instructions for. We'll solicit instructions when the Funds hold shareholder
votes. We have the right to restrict contract owner voting instructions if the
laws change to allow us to do so.
The owner of the contract has voting rights until the date annuity payments
begin. After that date, rights switch to the annuitant. Voting rights diminish
with the reduction of your contract value. The fixed-rate option has no voting
rights.
Your right to cancel the contract
During the 10-day period after receiving your contract, the free-look period,
you have the right to examine your contract and return it for cancellation if
you change your mind about buying it. Longer periods may apply in some states.
Upon cancellation, we'll refund to you either:
o the total amount you paid for the contract; or
o the sum of the surrender value of the contract, plus the difference
between the premiums you paid (including any contract fees or other
charges) and the amounts allocated to the variable and fixed-rate
investment options under the contract.
Distribution of the contracts
The variable annuity contracts are sold by insurance agents who are licensed by
GIAC and who are either registered representatives of GISC or of broker-dealer
firms which have entered into sales agreements with GISC and GIAC. GISC and such
other broker-dealers are members of the National Association of Securities
Dealers, Inc. GIAC will generally pay commissions to these individuals or
entities for the sale of contracts. These commissions may vary, but in total are
not expected to exceed 4.5% of each contract premium payment. We reserve the
right to pay up to .45% of the value of the contract annually in additional
compensation to our agents. The principal underwriter of the contracts is GISC,
located at 7 Hanover Square, New York, New York 10004.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 39 of 41
<PAGE>
Special terms used in this prospectus
Accumulation Period: The period between the issue date of the contract and the
retirement date.
Accumulation Unit: A measure used to determine the value of a contract owner's
interest under the contract before annuity payments begin. The contract has
variable accumulation units and fixed accumulation units.
Accumulation Value: The value of all the accumulation units in the variable
investment options and/or the fixed-rate option credited to a contract.
Annuitant: The person on whose life the annuity payments are based and on whose
death, prior to the retirement date, benefits under the contract are paid.
Annuity Payments: Periodic payments, either variable or fixed in nature, made by
GIAC to the contract owner at monthly intervals after the retirement date.
Annuity Unit: A measure used to determine the amount of any variable annuity
payment.
Business day: Each day the New York Stock Exchange is open for trading and GIAC
is open for business.
Beneficiary: The person named in the contract to receive the death benefit if
the contract owner or the annuitant dies.
Contract Anniversary Date: The annual anniversary measured from the issue date
of the contract.
Contract owner: You (or your); the person(s) or entity designated as the owner
in the contract.
Funds: The diversified open-end management investment companies, each
corresponding to a variable investment option. The Funds are listed on the front
cover of this prospectus.
Good Order: Notice from any party authorized to initiate a transaction under
this contract, received in a format satisfactory to GIAC at its customer service
office, that contains all information required by GIAC to process that
transaction.
Retirement Date: The date on which annuity payments under the contact begin.
Valuation Period: The time period from the determination of one accumulation
unit and annuity unit value to the next.
Variable Investment Options: The Funds underlying the contract are the variable
investment options - as distinguished from the fixed-rate option - available for
allocations of net premium payments and accumulation values.
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 40 of 41
<PAGE>
Other information
Legal Proceedings
Neither the Separate Account nor GIAC is a party to any pending material legal
proceeding.
Where to get more information
Our Statement of Additional Information (SAI) has more details about the
contracts described in this prospectus. If you would like a free copy, please
call us toll-free at 1-800-221-3253, or write to us at the following address:
Guardian Insurance & Annuity Corporation
Customer Service Office
Box 26210
Lehigh Valley, Pennsylvania 18002
The SAI contains the following information:
o Services to the Separate Account
o Annuity payments
o Tax status of the contracts
o Calculation of yield quotations for Value Line Cash Fund
o Performance comparisons
o Valuation of assets of the Separate Account
o Transferability restrictions
o Experts
o Financial statements
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The Value Guard Individual Deferred Variable Annuity Contracts Prospectus
Page 41 of 41
<PAGE>
THE GUARDIAN SEPARATE ACCOUNT A
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
--------------
Statement of Additional Information dated May 1, 2000
--------------
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for The Guardian Separate
Account A (marketed under the name "Value Guard II") dated May 1, 2000.
A free Prospectus is available upon request by writing or calling:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210
Lehigh Valley, Pennsylvania 18002
1-800-221-3253
Read the Prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the Prospectus.
TABLE OF CONTENTS
Page
----
Services to the Separate Account................................ B-2
Annuity Payments................................................ B-2
Tax Status of the Contracts..................................... B-3
Calculation of Yield Quotations for The Guardian Cash Fund...... B-3
Performance Comparisons..........................................B-3
Valuation of Assets of the Separate Account..................... B-4
Transferability Restrictions.................................... B-4
Experts......................................................... B-4
Financial Statements............................................ B-4
B-1
<PAGE>
SERVICES TO THE SEPARATE ACCOUNT
The Guardian Insurance & Annuity Company, Inc. ("GIAC") maintains the
books and records of The Guardian Separate Account A (the "Separate Account").
GIAC, a wholly owned subsidiary of The Guardian Life Insurance Company of
America, acts as custodian of the assets of the Separate Account. GIAC bears all
expenses incurred in the operations of the Separate Account, except the
mortality and expense risk charge and the annual contract administration fee (as
described in the Prospectus), which are borne by the Contract owners.
Guardian Investor Services Corporation ("GISC"), a wholly owned subsidiary
of GIAC, serves as principal underwriter for the Separate Account pursuant to a
distribution and service agreement between GIAC and GISC. The Contracts are
offered continuously and are sold by GIAC insurance agents who are registered
representatives of GISC or of other broker-dealers which have selling agreements
with GISC and GIAC. In the years 1999, 1998 and 1997, GIAC paid commissions
through GISC with respect to the sales of variable annuity contracts in the
amount of $32,178,498, $34,195,299 and $33,206,571, respectively.
ANNUITY PAYMENTS
Determination of the First Monthly Annuity Payment: At the time Annuity
Payments begin, the value of the Contract owner's account (or if a Group
Contract, the amount applied for a participant as stated by the Contract owner)
is determined by multiplying the appropriate Accumulation Unit value on the
valuation date ten (10) days before the date the first Annuity Payment is due by
the corresponding number of Accumulation Units credited to the Contract owner's
account (or if a Group Contract, the amount applied for a participant as stated
by the Contract owner) as of the date the first Annuity Payment is due, less any
applicable premium taxes not previously deducted.
The Contracts contain tables reflecting the dollar amount of the first
monthly payment which can be purchased with each $1,000 of value accumulated
under the Contract. The amount depends on the form of Annuity, the sex (except
in those states which require "unisex" rates) and the nearest age of the
annuitant(s). 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 (or if a Group Contract, the
amount applied for a Participant as stated by the Contract owner).
Value of an Annuity Unit: The value of an Annuity Unit is determined
independently for each of the Variable Investment Options. For any Valuation
Period, the value of an Annuity Unit is equal to the value for the immediately
preceding Valuation Period multiplied by the annuity change factor for the
current Valuation Period. The Annuity Unit value for a Valuation Period is the
value determined as of the end of such period. The annuity change factor is
equal to the net investment factor for the same Valuation Period adjusted to
neutralize the assumed 4% investment return used in determining the amounts of
annuity payable. The net investment factor is reduced by the amount of the
mortality and expense risk charge on an annual basis during the life of the
Contract. The dollar amount of any monthly payment due after the first monthly
payment under an annuity option will be determined by multiplying the number of
Annuity Units by the value of an Annuity Unit for the Valuation Period ending
ten (10) days prior to the Valuation Period in which the monthly payment is due.
Determination of the Second and Subsequent Monthly Annuity Payments: The
amount of the second and subsequent Annuity Payments is determined by
multiplying the number of Annuity Units by the appropriate Annuity Unit value as
of the valuation date 10 days prior to the day such payment is due. The number
of Annuity
B-2
<PAGE>
Units under a Contract is determined by dividing the first monthly payment by
the value of the appropriate Annuity Unit on the date of such payment. This
number of Annuity Units remains fixed during the Annuity Payment period,
provided no transfers among the Variable Investment Options are made.
The assumed investment return of 4% under the Contract is the measuring
point for subsequent Annuity Payments. If the actual net investment rate (on an
annual basis) remains constant at 4%, the Annuity Payments will remain constant.
If the actual net investment rate exceeds 4%, the payment will increase at a
rate equal to the amount of such excess. Conversely, if the actual rate is less
than 4%, Annuity Payments will decrease.
The second and subsequent monthly payments made under the Fixed-Rate
Option will be equal to the amount of the first monthly fixed annuity payment.
TAX STATUS OF THE CONTRACTS
Tax law imposes several requirements that variable annuities must satisfy
in order to receive the tax treatment normally accorded to annuity contracts.
Diversification Requirements. The Code requires that the investments of
each investment division of the separate account underlying the contracts be
"adequately diversified" in order for the contracts to be treated as annuity
contracts for Federal income tax purposes. It is intended that each investment
division, through the fund in which it invests, will satisfy these
diversification requirements.
Owner Control. In certain circumstances, owners of variable annuity
contracts have been considered for Federal income tax purposes to be the owners
of the assets of the separate account supporting their contracts due to their
ability to exercise investment control over those assets. When this is the case,
the contract owners have been currently taxed on income and gains attributable
to the variable account assets. There is little guidance in this area, and some
features of our contracts, such as the flexibility of an owner to allocate
premium payments and transfer amounts among the investment divisions of the
separate account, have not been explicitly addressed in published rulings. While
we believe that the contracts do not give owners investment control over
separate account assets, we reserve the right to modify the contracts as
necessary to prevent an owner from being treated as the owner of the separate
account assets supporting the contract.
Required Distributions. In order to be treated as annuity contract for
Federal income tax purposes, section 72(s) of the Internal Revenue Code requires
any non-qualified contract to contain certain provisions specifying how your
interest in the contract will be distributed in the event of the death of a
holder of the contract. Specifically, section 72(s) requires that (a) if any
holder dies on or after the annuity starting date, but prior to the time the
entire interest in the contract has been distributed, the entire interest in the
contract will be distributed at least as rapidly as under the method of
distribution being used as of the date of such holder's death; and (b) if any
holder dies prior to the annuity starting date, the entire interest in the
contract will be distributed within five years after the date of such holder's
death. These requirements will be considered satisfied as to any portion of a
holder's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
holder's death. The designated beneficiary refers to a natural person designated
by the holder as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased holder, the contract may be continued with the surviving spouse
as the new holder.
The non-qualified contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
CALCULATION OF YIELD QUOTATIONS FOR THE GUARDIAN CASH FUND
The yield of the Investment Division of the Separate Account investing in
the Cash Fund represents the net change, exclusive of gains and losses realized
by the Cash Fund and unrealized appreciation and depreciation with respect to
the portfolio securities of the Cash Fund, in the value of a hypothetical
pre-existing Contract that is credited with one accumulation unit at the
beginning of the period for which yield is determined (the "base period"). The
base period generally will be a seven-day period. The current yield for a base
period is calculated by dividing (i) the net change in the value of the Contract
for the base period (see "Accumulation Period" in the Prospectus) by (ii) the
value of the Contract at the beginning of the base period and multiplying the
result by 365/7.
Yield also may be calculated on an effective or compound basis, which
assumes continual reinvestment by the Investment Division throughout an entire
year of net income earned by the Investment Division at the same rate as net
income is earned in the base period. The effective or compound yield for a base
period is calculated by (A) dividing (i) the net change in the value of the
Contract for the base period by (ii) the value of the Contract as of the
beginning of the base period, (B) adding 1 to the result, (C) raising the sum to
a power equal to 365 divided by the number of days in the base period, and (D)
subtracting 1 from the result.
Deductions from purchase payments (for example, any applicable premium
taxes) and any applicable contingent deferred sales charge assessed at the time
of withdrawal or annuitization are not reflected in the computation of current
yield of the Investment Division. The determination of net change in Contract
value does reflect all deductions that are charged to a Contract owner, in
proportion to the length of the base period and the Investment Division's
average Contract size.
The yield of the Cash Fund Investment Division will vary depending on
prevailing interest rates, the operating expenses and the quality, maturity and
type of instruments held in the portfolio of the Cash Fund. Consequently, no
yield quotation should be considered as representative of what the yield of the
subdivision may be for any specified period in the future. The Cash Fund
Investment Division's respective yields are not guaranteed.
The current and effective annualized yields for the Investment Division
investing in the Cash Fund for the seven-day period ending December 31, 1999
were 5.33% and 5.47%, respectively, calculated as described above.
PERFORMANCE COMPARISONS
Advertisements and sales literature for the Separate Account's Investment
Divisions and their underlying Funds may compare their performance to other
investment vehicles and the separate accounts of other insurance companies as
reflected in independent performance data furnished by sources such as Lipper
Analytical Services, Inc., Morningstar, and Variable Annuity Research & Data
Service,
B-3
<PAGE>
all of which are independent services which monitor and rank the performance of
variable annuity issuers in each of the major categories of investment
objectives on an industry-wide basis. The performance analyses prepared by such
services rank issuers on the basis of total return, assuming reinvestment of
distributions, but may not take sales charges, redemption fees, or certain
expense deductions into consideration.
We are a member of the Insurance Marketplace Standards Association (IMSA),
and may include the IMSA logo and information about IMSA membership in our
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards for sales and service of individually sold life insurance and
annuities.
VALUATION OF ASSETS OF THE SEPARATE ACCOUNT
The value of Fund shares held in each Separate Account Investment Division
at the time of each valuation is the redemption value of such shares at such
time. If the right to redeem shares of a Fund has been suspended, or payment of
redemption value has been postponed for the sole purpose of computing Annuity
Payments, the shares held in the Separate Account (and Annuity Units) may be
valued at fair value as determined in good faith by the Board of Directors of
GIAC.
TRANSFERABILITY RESTRICTIONS
Where a Contract is owned in conjunction with a retirement plan qualified
under the Internal Revenue Code, a tax-sheltered annuity program or individual
retirement account, and notwithstanding any other provisions of the Contract,
the Contract owner may not change the ownership of the Contract nor may the
Contract be sold, assigned or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose to any person
other than GIAC, unless the Contract owner is the trustee of an employee trust
qualified under the Internal Revenue Code of 1986, the custodian of a custodial
account treated as such, or the employer under a qualified non-trusteed pension
plan.
EXPERTS
The firm of PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New
York, New York 10036 currently serves as independent accountants for the
Separate Account and GIAC.
The financial statements of The Guardian Separate Account A incorporated in this
Registration Statement by reference to the Annual Report to Contractowners for
the year ended December 31, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of the Guardian Insurance & Annuity
Company, Inc., as of December 31, 1999 and 1998 and for each of three years in
the period ended December 31, 1999 included in this Registration Statement have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
FINANCIAL STATEMENTS
The consolidated financial statements of GIAC which are set forth herein
beginning on page B-5 should be considered only as bearing upon the ability of
GIAC to meet its obligations under the Contracts.
The financial statements of the Guardian Separate Account A are
incorporated herein by reference to the Separate Account's 1999 Annual Report to
Contract owners. Such financial statements, the notes thereto and the report of
independent accountants thereon are incorporated herein by reference or are
included elsewhere in this Registration Statement. A free copy of the 1999
Annual Report to Contract owners accompanies this Statement of Additional
Information.
B-4
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN INSURANCE
& ANNUITY COMPANY, INC.
- --------------------------------------------------------------------------------
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of December 31,
---------------------
1999 1998
-------- --------
(In millions)
<S> <C> <C>
Assets:
Bonds, available for sale at fair
value (cost $572.7 million; $538.6 million, respectively) ....... $ 554.8 $ 549.0
Affiliated mutual funds ............................................ 78.0 42.9
Joint ventures ..................................................... 0.5 0.4
Policy loans ....................................................... 80.1 72.9
Short-term investments ............................................. 7.1 --
--------- ---------
Total invested assets .............................................. 720.5 665.2
--------- ---------
Cash and cash equivalents .......................................... 63.6 18.5
Deferred acquisition costs ......................................... 357.5 313.6
Deferred software costs ............................................ 11.6 --
Uncollected and unpaid premiums .................................... 3.4 2.1
Amounts receivable from reinsurers ................................. 46.5 42.5
Investment income due and accrued .................................. 9.9 9.4
Other assets ....................................................... 5.1 3.3
Accounts receivable ................................................ 37.5 22.2
Separate account assets ............................................ 11,063.8 8,841.7
--------- ---------
Total Assets ....................................................... $12,319.4 $ 9,918.5
========= =========
Liabilities:
Future policy benefits and other policyholder liabilities .......... $ 547.9 $ 480.0
Due to parent and mutual fund affiliates ........................... 69.6 32.2
Current federal income taxes ....................................... 18.2 25.8
Deferred federal income taxes ...................................... 102.8 98.8
Accrued expenses and other liabilities ............................. 110.0 47.5
Separate account liabilities ....................................... 10,970.4 8,764.8
--------- ---------
Total Liabilities .................................................. 11,818.9 9,449.1
--------- ---------
Stockholder's equity:
Common stock, 1999 - $100 par value, 25,000 shares authorized,
issued and outstanding; 1998 - $100 par value, 20,000 shares
authorized, issued and oustanding ............................... 2.5 2.0
Additional paid-in capital ......................................... 136.9 137.4
Retained earnings .................................................. 347.9 310.6
Accumulated other comprehensive income ............................. 13.2 19.4
--------- ---------
Stockholder's equity ............................................... 500.5 469.4
--------- ---------
Total Liabilities & Stockholder's Equity ........................... $12,319.4 $ 9,918.5
========= =========
</TABLE>
See notes to consolidated financial statements.
B-5
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
Revenues:
<S> <C> <C> <C>
Premiums ............................................... $ 12.0 $ 9.1 $ 3.7
Net investment income .................................. 45.4 41.4 38.7
Realized capital (losses) gains on investments ......... (1.7) 2.1 0.9
Income from brokerage operations ....................... 67.1 39.7 31.1
Administrative service fees ............................ 217.1 173.6 130.5
Other income ........................................... 17.5 24.0 20.3
------ ------ ------
Total revenues ......................................... 357.4 289.9 225.2
------ ------ ------
Benefits and other deductions:
Policyholder benefits .................................. 21.2 23.7 20.3
Amortization of deferred policy acquisition costs ...... 67.1 55.3 36.6
Amortization of deferred software costs ................ 1.8 -- --
Other operating costs and expenses ..................... 165.6 105.1 73.3
------ ------ ------
Total benefits and other deductions .................... 255.7 184.1 130.2
------ ------ ------
Income before income taxes ............................. 101.7 105.8 95.0
Federal income taxes:
Current expense ........................................ 12.1 24.4 17.2
Deferred expense ....................................... 12.3 12.0 16.2
------ ------ ------
Total federal income taxes ............................. 24.4 36.4 33.4
------ ------ ------
Net income ............................................. 77.3 69.4 61.6
Other comprehensive income, net of income tax:
Change in unrealized investment (losses) gains ......... (6.2) 3.2 12.6
------ ------ ------
Comprehensive income ................................... $ 71.1 $ 72.6 $ 74.2
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
B-6
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
<S> <C> <C> <C>
Common stock at par value, beginning of year ........... $ 2.0 $ 2.0 $ 2.0
Increase in par value .................................. 0.5 -- --
------ ------ ------
Common stock at par value, end of year ................. 2.5 2.0 2.0
------ ------ ------
Capital in excess of par value, beginning of year ...... 137.4 137.4 137.4
(Decrease) in capital .................................. (0.5) -- --
------ ------ ------
Capital in excess of par value, end of year ............ 136.9 137.4 137.4
------ ------ ------
Retained earnings, beginning of year ................... 310.6 241.2 179.6
Net income ............................................. 77.3 69.4 61.6
Dividends to parent .................................... (40.0) -- --
------ ------ ------
Retained earnings, end of year ......................... 347.9 310.6 241.2
------ ------ ------
Accumulated comprehensive income,
net of deferred taxes, beginning of year ............ 19.4 16.2 3.6
Change in unrealized investment (losses) gains,
net of deferred taxes ............................... (6.2) 3.2 12.6
------ ------ ------
Accumulated comprehensive income,
net of deferred taxes, end of year .................. 13.2 19.4 16.2
------ ------ ------
Total stockholder's equity, end of year ................ $500.5 $469.4 $396.8
====== ====== ======
</TABLE>
See notes to consolidated financial statements
B-7
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
<S> <C> <C> <C>
Operating activities
Net income .............................................. $ 77.3 $ 69.4 $ 61.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in
Deferred policy acquisition costs .................... (43.9) (46.2) (45.9)
Deferred software costs .............................. (11.6) -- --
Uncollected premiums ................................. (1.3) 2.4 0.5
Amounts receivable from reinsurers ................... (4.0) (13.4) 24.9
Investment income due and accrued .................... (0.5) (0.5) (0.3)
Other assets ......................................... (1.8) 0.1 0.6
Accounts receivable .................................. (15.3) 8.6 (10.4)
Separate accounts, net ............................... (16.5) (14.8) (5.1)
Future policy benefits and policyholder liabilities .. 20.9 21.9 (17.0)
Payable to parent .................................... 10.7 5.7 8.9
Federal income taxes:
Current ............................................ (7.6) 9.1 6.9
Deferred ........................................... 4.0 14.1 19.2
Accrued expenses and other liabilities ............... 62.5 (1.5) (14.0)
Realized losses(gains) on investments ................ 1.7 (2.1) (0.9)
Other, net ........................................... (0.7) 1.0 (3.8)
------ ------ ------
Net cash provided by operating activities .......... 73.9 53.8 25.2
------ ------ ------
Investment activities
Proceeds from investments sold
Bonds ................................................ 142.2 280.9 315.4
Other items, net ..................................... -- -- (1.3)
Investments purchased
Bonds ................................................ (180.1) (331.7) (310.5)
Affiliated mutual funds .............................. (24.6) (3.3) (20.5)
------ ------ ------
Net cash used by investing activities .............. (62.5) (54.1) (16.9)
------ ------ ------
Financing activities
Additions to policyholder contract deposits ............. 107.7 54.8 61.7
Withdrawals from policyholder contract deposits ......... (60.7) (64.4) (61.8)
Dividend to parent ...................................... (13.3) -- --
------ ------ ------
Net cash provided (used) by financing activities ... 33.7 (9.6) (0.1)
------ ------ ------
(Decrease) Increase in cash ................................ 45.1 (9.9) 8.2
Cash and cash equivalents, at beginning of year ............ 18.5 28.4 20.2
------ ------ ------
Cash and cash equivalents, at end of year .................. $ 63.6 $ 18.5 $ 28.4
====== ====== ======
Supplemental disclosure:
Federal income taxes paid ............................... $ 19.7 $ 15.4 $ 10.2
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
B-8
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Guardian Insurance & Annuity Company, Inc. (GIAC or the Company) is a
wholly owned subsidiary of The Guardian Life Insurance Company of America (The
Guardian). The Company, domiciled in the state of Delaware, is licensed to
conduct life and health insurance business in all fifty states and the District
of Columbia. The Company's primary business is the sale of variable deferred
annuity contracts and variable and term life insurance policies. For variable
products, other than 401(k) products, contracts are sold by insurance agents who
are licensed by GIAC and are either Registered Representatives of Park Avenue
Securities, LLP (PAS) or of broker dealer firms that have entered into sales
agreements with GIAC. The Company's general agency distribution system is used
for the sale of other products and policies.
PAS, a wholly owned subsidiary of the Company, is a registered broker
dealer under the Securities Exchange Act of 1934. PAS was established as a
broker dealer during 1999 and has assumed the registered representatives
formally affiliated with Guardian Investor Services Corporation (GISC).
GISC, a wholly owned subsidiary of the Company, is a registered broker
dealer under the Securities Exchange Act of 1934 and is a registered investment
adviser under the Investment Adviser's Act of 1940. GISC is the distributor and
underwriter for GIAC's variable products, and is the investment adviser to
certain mutual funds sponsored by GIAC which are investment options for the
variable products.
The Company has established fourteen insurance separate accounts primarily
to support the variable annuity, universal variable life and variable life
insurance products it offers. The majority of the separate accounts are unit
investment trusts registered under the Investment Company Act of 1940. Proceeds
from the sale of variable products are invested through these separate accounts
in certain mutual funds specified by the contractholders. Of these separate
accounts the Company maintains two separate accounts whose sole purpose is to
fund certain employee benefits plans of The Guardian.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Company's consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States (GAAP). All significant intercompany balances and transactions
have been eliminated.
Accounting Changes: In March 1998, the American Institute of Certified
Public Accountants ("AICPA") issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use", which requires capitalization of external and certain internal
costs incurred to obtain or develop internal-use computer software during the
application development stage. The Company applied the provisions of SOP 98-1
prospectively effective January 1, 1999. The adoption of SOP 98-1 resulted in
$14.9 million of software costs being capitalized. Capitalized internal use
software is amortized on a straight-line basis over the estimated useful life of
the software.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES:
Bonds and common stocks are classified as available for sale and carried
at estimated fair value, with unrealized appreciation or depreciation recorded
net of applicable deferred taxes are included in a separate component of equity,
"Accumulated other comprehensive income". The investment portfolio is reviewed
for investments that may have experienced a decline in value considered to be
other than temporary.
Joint ventures are carried on the equity basis of accounting.
Policy loans are stated at unpaid principal balance. The carrying amount
approximates fair value since loans on policies have no defined maturity date
and reduce the amount payable at death or surrender of the contract.
B-9
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Securities purchase under agreements to resell and securities sold under
agreements to repurchase are treated as financing arrangements and are carried
at the amounts at which the securities will be subsequently resold or
reacquired, including accrued interest, as specified in the respective
agreements. The Company's policy is to take possession of securities purchased
under agreements to resell. The market value of securities to be repurchased or
resold is monitored, and additional collateral is requested, where appropriate,
to protect against credit exposure.
Securities repurchase and resale agreements and securities borrowed and
loaned transactions are used to generate net investment income and facilitate
trading activity. These instruments are short-term in nature (usually 30 days or
less) and are collateralized principally by U.S. Government and mortgage-backed
securities. The carrying amounts of these instruments approximate fair value
because of the relatively short period of time between the origination of the
instruments and their expected realization.
Realized investment gains, net are computed using the specific
identification method. Costs of bonds and stocks are adjusted for impairments
considered other than temporary. Allowances for losses on mortgage loans and
real estate are netted against asset categories to which they apply and
provisions for losses on investments are included in "Realized investment gains,
net." Decreases in lower of depreciated cost or fair value less selling costs of
investment real estate held for sale are recorded in "Realized investment gains,
net."
Short-term investments are stated at amortized cost and consist primarily
of investments with maturities as of purchase date of six months or less. Market
values for such investments approximate carrying value.
Cash and cash equivalents include cash on hand and highly liquid debt
instruments purchased with an original maturity of three months or less.
Deferred Policy Acquisition Costs are costs of acquiring new business,
principally commissions, underwriting, agency and policy issue expenses, all of
which vary with and are primarily related to the production of new business, are
deferred. Deferred policy acquisition costs are subject to recoverability
testing at the time of policy issue and loss recognition testing at the end of
each accounting period.
For investment-type products, deferred policy acquisition costs are
amortized over the shorter of the expected average life of the contracts or
thirty years, as a constant percentage of estimated gross profits arising
principally from investment results, mortality and expense margins and surrender
charges based on actual results and anticipated future experience, updated at
the end of each accounting period. The effect on the amortization of deferred
policy acquisition costs of revisions to estimated gross profits is reflected in
earnings in the period such estimated gross profits are revised.
For life insurance products, deferred policy acquisition costs are
amortized in proportion to anticipated premiums. Assumptions as to anticipated
premiums are estimated at the date of policy issue and are consistently applied
during the life of the contracts. Deviations from estimated experience are
reflected in earnings in the period such deviations occur. For these contracts,
the amortization periods generally are for the estimated life of the policy.
Separate account assets and liabilities are reported at market value, and
represent policyholder funds maintained in accounts having specific investment
objectives. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company.
Investment risks associated with market value changes are generally borne by the
customers, except to the extent of minimum guarantees made by the Company with
respect to certain amounts. The investment results of separate accounts are
reflected in separate account liabilities. The amounts provided by the Company
to establish separate account investment portfolios (seed money) are included in
separate account assets.
Insurance Revenue and Expense Recognition consists of premiums and
benefits. Premiums for term life and certain annuity insurance products are
recognized as revenue when due and collected. The reserve for future policy
benefits has been provided on a net-level premium method based upon estimated
investment yields, mortality, and other assumptions which were appropriate at
the time the policies were issued. Benefits and expenses are associated with
earned premiums so as to result in recognition of profits over the life of the
contract. This association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition costs.
Revenues for variable life and for individual and group variable annuity
products consist of net investment income and cost of insurance, policy
administration and surrender charges that have been earned and assessed against
policyholder account balances during the period. Policy benefits and claims that
are charged to expense include benefits and
B-10
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
claims incurred in the period in excess of related policy account balances,
maintenance costs and interest credited to policyholder account balances. The
policyholder account values represent an accumulation of gross premium payments
plus credited interest less expense and mortality charges and withdrawals.
Income Taxes for the Guardian and its life insurance and non-life
insurance subsidiaries file a consolidated federal income tax return. Current
federal taxes are charged or credited to operations based on amounts estimated
to be payable or recoverable as a result of taxable operations for the current
year. Deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax basis of
assets and liabilities using enacted income tax rates and laws.
Reclassifications of certain amounts in prior years have been adjusted to
conform to current year presentation.
NOTE 3 - INVESTMENT SECURITIES
Market values of bonds and common stocks are based on quoted prices as
available. For certain private placement debt securities where quoted market
prices are not available, management estimates fair market value by using
adjusted market prices for like securities.
The cost and estimated market values of investments by major investment
category as of December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31, 1999
(In millions)
-------------------------------------------------
Gross Gross Estimated
Cost Unrealized Unrealized Market
Basis Gains Losses Value
------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities & obligations of U.S. ....
government corporations and agencies ............ $ 24.5 $ 0.2 $ 0.7 $ 24.0
Obligations of states and political subdivisions .. 30.7 0.1 0.5 30.3
Debt securities issued by foreign governments ..... 3.8 -- 0.1 3.7
Corporate debt securities ......................... 513.7 0.5 17.4 496.8
------- ------- ------- -------
Subtotal ........................................ 572.7 0.8 18.7 554.8
Affiliated mutual funds ........................... 61.0 17.2 0.2 78.0
------- ------- ------- -------
$ 633.7 $ 18.0 $ 18.9 $ 632.8
======= ======= ======= =======
(In millions)
-------------------------------------------------
Gross Gross Estimated
Cost Unrealized Unrealized Market
Basis Gains Losses Value
------- ---------- ---------- ---------
U.S. Treasury securities & obligations of U.S. ....
government corporations and agencies ............ $ 28.4 $ 1.5 $ -- $ 29.9
Obligations of states and political subdivisions .. 60.2 1.4 -- 61.6
Debt securities issued by foreign governments ..... 8.0 0.1 -- 8.1
Corporate debt securities ......................... 442.0 10.0 2.6 449.4
------- ------- ------- -------
Subtotal ........................................ 538.6 13.0 2.6 549.0
Affiliated mutual funds ........................... 36.9 6.6 0.6 42.9
------- ------- ------- -------
$ 575.5 $ 19.6 $ 3.2 $ 591.9
======= ======= ======= =======
</TABLE>
The amortized cost and estimated market value of bonds as of December 31,
1999 and 1998 by contractual maturity is shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations.
B-11
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
<CAPTION>
As of December 31, 1999
(In millions)
-----------------------
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less ............................................ $ 61.4 $ 61.2
Due after one year through five years .............................. 296.4 290.0
Due after five years through ten years ............................. 100.1 95.5
Due after ten years ................................................ 51.7 46.7
Sinking fund bonds (including collateralized mortgage obligations) . 63.1 61.4
--------- ---------
$ 572.7 $ 554.8
========= =========
As of December 31, 1998
(In millions)
-----------------------
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less ............................................ $ 47.5 $ 47.7
Due after one year through five years .............................. 250.0 253.2
Due after five years through ten years ............................. 102.5 107.8
Due after ten years ................................................ 67.6 68.3
Sinking fund bonds (including collateralized mortgage obligations) . 71.0 72.0
--------- ---------
$ 538.6 $ 549.0
========= =========
</TABLE>
The major categories of net investment income are summarized as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities ....................................... $ 37.2 $ 33.9 $ 31.8
Affiliated mutual funds ................................ 1.6 1.5 1.1
Policy loans ........................................... 3.7 3.5 3.4
Short-term investment .................................. 2.9 2.3 2.4
Joint venture dividend ................................. 1.3 1.3 1.1
------ ------ ------
46.7 42.5 39.8
Less: Investment expenses .............................. 1.3 1.1 1.1
------ ------ ------
Net investment income .................................. $ 45.4 $ 41.4 $ 38.7
====== ====== ======
</TABLE>
Realized gains and losses are based upon specific identification of the
investments. The components of gross realized gains and losses for the year
ended December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Realized gains from dispositions:
Bonds ................................................ $ 0.6 $ 2.2 $ 1.1
Separate account seed ................................ 0.9 -- 0.9
Realized losses from dispositions:
Bonds ................................................ (3.1) (0.1) (1.1)
Affiliated mutual funds .............................. (0.1) -- --
------ ------ ------
Realized gains ......................................... $ (1.7) $ 2.1 $ 0.9
====== ====== ======
</TABLE>
B-12
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The net unrealized holding gains and losses, included in the consolidated
balance sheets as a component of comprehensive income and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year ............................. $ 19.4 $ 16.2 $ 3.6
Changes in unrealized investment gains (losses),
net of deferred taxes, attributable to:
Bonds .............................................. (20.4) 2.6 4.6
Affiliated mutual funds ............................ 9.1 (1.8) 7.3
Separate account seed .............................. 5.1 2.4 1.7
Other .............................................. -- -- (1.0)
------ ------ ------
Balance, end of year ................................... $ 13.2 $ 19.4 $ 16.2
====== ====== ======
</TABLE>
Currently, comprehensive income for the Company consists of net income and
the change in unrealized gains and losses on securities. As of December 31,
1999, 1998 and 1997, the change in unrealized gains and losses before tax was
$(12.9), $7.4 and $15.6 and after tax was $(6.2), $3.2 and $12.6, respectively.
Reclassification adjustments for the period, which include gains on
investment securities that were realized and included in net income of the
current period that also had been included in other comprehensive income as
unrealized holding gains in the period in which they arose, are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unrealized holding (losses) gains ...................... $(14.5) $ 5.7 $ 15.6
Less: Reclassification adjustments ..................... 1.6 1.7 --
------ ------ ------
Change in unrealized holding (losses) gains ............ $(12.9) $ 7.4 $ 15.6
====== ====== ======
</TABLE>
Special Deposit assets of $3.7 million and $4.1 million at December 31,
1999 and 1998, respectively, were on deposit with governmental authorities or
trustees as required by certain insurance laws.
NOTE 4 - DEFERRED POLICY ACQUISITION COSTS
The balances of and changes in deferred policy acquisition costs as of and
for the years ended December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
As of December 31,
(In millions)
-----------------------
1999 1998
<S> <C> <C>
Balance, beginning of year ......................................... $ 313.6 $ 267.4
Capitalization of deferrable expenses .............................. 93.8 77.0
Amortization of recoverable DAC balances ........................... (67.1) (55.3)
Interest on DAC .................................................... 21.7 24.2
Retrospectively applied adjustments ................................ (4.5) 0.3
--------- ---------
Balance, end of year ............................................... $ 357.5 $ 313.6
========= =========
</TABLE>
B-13
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 5 - POLICYHOLDERS' ACCOUNT BALANCES
The balances of policyholders' account balances as of and for the years
ended December 31, 1999 and 1998 are summarized as follows:
As of December 31,
(In millions)
-----------------------
1999 1998
---------- ---------
Individual annuities ................................ $ 7,617.9 $ 6,492.8
Group annuities ..................................... 3,105.7 2,104.3
Variable life ....................................... 713.7 569.6
Interest-sensitive life contracts ................... 4.2 4.5
---------- ---------
Policyholders' account balances ..................... $ 11,441.5 $ 9,171.2
========== =========
Policyholders' account balances for investment-type contracts represent an
accumulation of gross premium payments plus credited interest less withdrawals,
expenses and mortality charges.
NOTE 6 - FEDERAL INCOME TAXES
The federal income tax expense in the consolidated statements of earnings
is summarized as follows:
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
Federal Income Tax expense:
Current ................................... $ 12.1 $ 24.4 $ 17.2
Deferred .................................. 12.3 12.0 16.2
------ ------ ------
Total ....................................... $ 24.4 $ 36.4 $ 33.4
====== ====== ======
The federal income taxes attributable to consolidated operations in
certain circumstances can be different from the amounts determined by
multiplying the earnings from operations before federal income taxes by the
expected federal income tax rate of 35%. The sources of the difference and the
tax effects of each source are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Expected taxes on pre-tax income ....................... $ 35.6 $ 37.5 $ 33.3
Permanent adjustments:
Dividends received deduction on separate accounts .... (13.1) -- --
Reserve on overpayment of 1998 taxes in 1999 ........... 1.3 -- --
True-up of tax basis reserves .......................... 1.3 -- --
State and local taxes .................................. -- (0.5) 0.1
Foreign tax credit ..................................... (0.3) (0.3) --
Other .................................................. (0.4) (0.3) --
------ ------ ------
Total tax expense ...................................... $ 24.4 $ 36.4 $ 33.4
====== ====== ======
</TABLE>
B-14
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The tax effect of temporary differences which give rise to deferred
federal income tax assets and liabilities as of December 31, 1999 and 1998, are
as follows:
As of December 31,
(In millions)
-----------------------
1999 1998
--------- ---------
Deferred tax assets:
Other liabilities ................................... $ 19.5 $ 15.7
DAC Proxy ........................................... 13.7 11.1
Amounts receivable from reinsurer ................... 0.3 0.9
Other ............................................... 3.9 1.4
--------- ---------
Total deferred tax assets ........................... 37.4 29.1
Deferred tax liabilities:
Deferred acquisition costs .......................... $ 125.1 $ 109.8
Capitalized software costs .......................... 4.1 --
Reserves ............................................ 7.7 6.0
Investments ......................................... 3.3 10.3
Other ............................................... -- 1.8
--------- ---------
Total deferred tax liabilities ...................... 140.2 127.9
--------- ---------
Net deferred tax liability .......................... $ 102.8 $ 98.8
========= =========
Management has concluded that the deferred income tax assets are more
likely than not to be realized. Therefore, no valuation allowance has been
provided.
NOTE 7 - REINSURANCE
The Company has entered into cession and assumption agreements on a
coinsurance, modified coinsurance and yearly renewable term basis with
affiliated and non-affiliated companies. Ceding reinsurance is used by the
Company to limit its risk from large exposures and to permit recovery of a
portion of direct losses, although ceded reinsurance does not relieve the
originating insurer of liability.
The Company has assumed and ceded coinsurance and modified coinsurance
agreements with affiliated companies. Under these agreements, included in the
consolidated statements of income are $0.9 million, $0.9 million and $1.0
million of assumed premiums at December 31, 1999, 1998 and 1997, and $83.1
million, $65.2 million and $43.6 million of ceded premiums at December 31, 1999,
1998 and 1997, respectively.
The Company terminated, during 1997, an assumption agreement with an
unaffiliated company. Under this agreement, included in the consolidated
statements of income are $(2.3) million of premiums at December 31, 1997.
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimated fair values for fixed maturities and equity securities, other
than private placement securities, are based on quoted market prices or
estimates from independent pricing services. Fair values for private placement
securities are estimated using a discounted cash flow model which considers the
current market spreads between the U.S. Treasury yield curve and corporate bond
yield curve, adjusted for the type of issue, its current credit quality and its
remaining average life. The fair value of certain non-performing private
placement securities is based on amounts estimated by management.
B-15
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company is billed by The Guardian for all compensation and related
employee benefits for those employees of The Guardian who are engaged in the
Company's business and for the Company's use of The Guardian's centralized
services and agency force. The amounts charged for these services amounted to
$141.0 million in 1999, $100.8 million in 1998 and $72.2 million in 1997, and,
in the opinion of management, were considered appropriate for the services
rendered.
The Company had an investment in the Guardian Real Estate Account (GREA),
which was established in 1987 under Delaware Insurance law as an insurance
company separate account. GIAC had contributed capital to GREA to provide for
funds and to preserve liquidity. Effective December 19, 1997 GREA was liquidated
and, as a result, $6.7 million was returned to GIAC in the form of capital and
there was a realized gain recorded of $1.0 million.
A significant portion of the Company's separate account assets is invested
in affiliated mutual funds. Each of these funds has an investment advisory
agreement with the Company, except for The Baillie Gifford International Fund,
The Baillie Gifford Emerging Markets Fund, The Guardian Baillie Gifford
International Fund and The Guardian Baillie Gifford Emerging Markets Fund.
The separate account assets invested in affiliated mutual funds as of
December 31, 1999 and 1998 are as follows (in millions):
1999 1998
--------- ---------
The Guardian Stock Fund .............................. $ 4,153.9 $ 3,664.9
The Guardian VC 500 Index Fund ....................... 1.8 --
The Guardian VC Allocation Fund ...................... 0.8 --
The Guardian High Yield Bond Fund .................... 0.2 --
The Guardian Bond Fund ............................... 320.0 381.5
The Guardian Cash Fund ............................... 484.1 419.5
The Baillie Gifford International Fund ............... 662.3 526.4
The Baillie Gifford Emerging Markets Fund ............ 64.6 34.6
The Guardian Small Cap Stock Fund .................... 130.6 109.2
The Guardian Park Avenue Fund ........................ 621.3 511.6
The Guardian Park Avenue Small Cap Fund .............. 22.8 13.2
The Guardian Asset Allocation Fund ................... 46.0 39.8
The Guardian Baillie Gifford International Fund ...... 15.5 9.1
The Guardian Baillie Gifford Emerging Markets Fund ... 6.8 0.8
The Guardian Investment Quality Bond Fund ............ 12.7 9.3
The Guardian High Yield Bond Fund .................... 0.8 --
The Guardian Cash Management Fund .................... 126.4 57.9
--------- ---------
$ 6,670.6 $ 5,777.8
========= =========
The Company, in agreement with Baillie Gifford Overseas Ltd., has a joint
venture company -- Guardian Baillie Gifford Ltd. (GBG) -- that is organized as a
corporation in Scotland. GBG is registered in both the United Kingdom and the
United States to act as an investment advisor for the Baillie Gifford
International Fund (BGIF), the Baillie Gifford Emerging Markets Fund (BGEMF),
The Guardian Baillie Gifford International Fund (GBGIF) and The Guardian Baillie
Gifford Emerging Markets Fund (GBGEMF). The Funds are offered in the U.S. as
investment options under certain variable annuity contracts and variable life
policies.
B-16
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The Company maintains investments in affiliated mutual funds. These
investments as of December 31, 1999 and 1998 are as follows (in millions):
1999 1998
--------- ---------
The Guardian Park Avenue Fund ........................ $ 0.1 $ 0.1
The Guardian Park Avenue Small Cap Fund .............. 2.5 1.8
The Guardian Small Cap Stock Fund .................... 35.2 26.1
The Guardian Asset Allocation Fund ................... 2.8 2.5
The Guardian Baillie Gifford International Fund ...... 2.9 2.1
The Guardian Baillie Gifford Emerging Markets Fund ... 1.5 0.9
The Guardian Investment Quality Bond Fund ............ 1.6 1.6
The Guardian High Yield Bond Fund .................... 1.6 1.6
The Guardian Cash Management Fund .................... 29.8 6.2
--------- ---------
$ 78.0 $ 42.9
========= =========
NOTE 10 - STATUTORY EQUITY AND INCOME
Applicable insurance department regulations require that the Company
prepare statutory financial statements in accordance with statutory accounting
practices prescribed or permitted by the New York Department of Insurance.
Statutory accounting practices primarily differ from GAAP by charging policy
acquisition costs to expense as incurred, establishing future policy benefits
reserves using different actuarial and interest assumptions, not providing for
deferred taxes, and valuing securities on a different basis.
The following reconciles the consolidated GAAP net income of the Company
to statutory net income as reported to the regulatory authorities:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Consolidated GAAP net income ........................... $ 77.3 $ 69.4 $ 61.6
Adjustments to restate to statutory basis:
Statutory net income of subsidiaries ................. 3.3 (4.5) (4.3)
Change in deferred policy acquisition costs .......... (45.2) (43.2) (41.9)
Change in deferred software costs .................... (8.8) -- --
Deferred premiums .................................... 0.3 1.5 5.6
Re-estimation of future policy benefits .............. 13.1 9.7 3.3
Reinsurance .......................................... (3.8) (4.1) (12.4)
Deferred federal income tax expense .................. 11.2 11.9 16.2
Amortization of interest maintenance reserve ......... 0.4 0.3 0.1
Transfer to interest maintenance reserve ............. 2.4 (1.4) --
Other, net ........................................... 2.8 0.9 (0.2)
------ ------ ------
Statutory net income ................................... $ 53.0 $ 40.5 $ 28.0
====== ====== ======
</TABLE>
B-17
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The following reconciles the consolidated GAAP stockholder's equity of the
Company to statutory capital and surplus as reported to the regulatory
authorities:
<TABLE>
<CAPTION>
As of December 31,
(In millions)
----------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Consolidated GAAP stockholder's equity ................. $500.5 $469.4 $396.8
Add (deduct) cumulative effect of adjustments:
Deferred policy acquisition costs .................... (357.5) (313.6) (267.4)
Deferred software costs .............................. (11.6) -- --
Elimination of asset valuation reserve ............... (42.7) (29.6) (26.3)
Re-estimation of future policy benefits .............. (53.4) (46.9) (41.3)
Establishment of deferred income tax liability ....... 102.8 98.8 84.7
Unrealized gains on investments ...................... 19.8 (11.7) (7.9)
Other liabilities .................................... 66.7 48.1 33.5
Deferred premiums .................................... 8.2 7.8 7.0
Other, net ........................................... 5.4 5.1 3.6
------ ------ ------
Statutory capital and surplus .......................... $238.2 $227.4 $182.7
====== ====== ======
</TABLE>
B-18
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
The Guardian Insurance & Annuity Company, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and comprehensive income, of changes in equity
and of cash flows present fairly, in all material respects, the financial
position of The Guardian Insurance & Annuity Company, Inc. and its subsidiaries
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
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 of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for costs of computer software developed or
obtained for internal use in 1999.
/s/ Pricewaterhouse Coopers LLP
February 14, 2000
B-19
<PAGE>
The Guardian Separate Account A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements have been incorporated by
reference or are included in Part B:
(1) The Guardian Separate Account A (incorporated by reference
into Part B):
Statement of Assets and Liabilities as of December 31, 1999
Statement of Operations for the Year Ended December 31, 1999
Statements of Changes in Net Assets for the Two Years Ended
December 31, 1999 and 1998
Notes to Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(2) The Guardian Insurance & Annuity Company, Inc. (included in
Part B):
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income and Comprehensive Income for
the Three Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholder's Equity for
the Three Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flow for the Three Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(b) Exhibits
Number Description
1 Resolutions of the Board of Directors of The
Guardian Insurance & Annuity Company, Inc.
establishing Separate Account (2)
2 Not Applicable
3 Underwriting and Distribution Contracts:
(a) Distribution and Service Agreement between The
Guardian Insurance & Annuity Company, Inc. and
Guardian Investor Services Corporation (2)
(b) Form of Broker-Dealer Supervisory and Service
Agreement (2)
4 Specimen of Variable Annuity Contract (2)
5 Form of Application for Variable Annuity
Contract (2)
6 (a) Certificate of Incorporation of The Guardian
Insurance & Annuity Company, Inc. (2)
(b) By-laws of The Guardian Insurance & Annuity
Company, Inc. (2)
C-1
<PAGE>
7 Automatic Indemnity Reinsurance Agreement between
The Guardian Insurance & Annuity Company, Inc. and
The Guardian Life Insurance Company of America (2)
8 Amended and Restated Agreement for Services and
Reimbursement Therefore, between The Guardian Life
Insurance Company of America and The Guardian
Insurance & Annuity Company, Inc. (2)
9 Opinion and Consent of Counsel (2)
10 (a) Consent of PricewaterhouseCoopers LLP
11 Not Applicable
12 Agreement with Respect to Providing the Initial
Capital for Separate Account A(1)
13 Powers of Attorney executed by a majority of the
Board of Directors and principal officers of The
Guardian Insurance & Annuity Company, Inc.
- ----------
(1) Incorporated by reference to the Registration Statement on Form N-4 (Reg.
No. 2-74906), as previously filed.
(2) Incorporated by reference to the Registration Statement on Form N-4 (Reg.
No. 2-74906), as previously filed on April 30, 1998.
C-2
<PAGE>
Item 25. Directors and Officers of the Depositor
The following is a list of directors and officers of The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), the depositor of the Registrant. The
principal business address of each director and officer is 7 Hanover Square, New
York, New York 10004.
Name Office/Title
Joseph D. Sargent President, Chief Executive Officer
& Director
Frank J. Jones Executive Vice President, Chief
Investment Officer & Director
Edward K. Kane Executive Vice President & Director
Bruce C. Long Executive Vice President & Director
Thomas G. Sorell Senior Vice President
Philip H. Dutter Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
William C. Warren Director
Dennis P. Mosticchio Vice President, Group Pensions
Howard G. Most Vice President
Alexander M. Grant, Jr. Vice President
Howard W. Chin Vice President
Thomas M. Donahue Vice President
Robert J. Crimmins Vice President
Frank L. Pepe Vice President & Controller
Charles G. Fisher Vice President & Actuary
Donald P. Sullivan, Jr. Vice President
Richard T. Potter, Jr. Vice President & Counsel
Joseph A. Caruso Vice President & Corporate Secretary
Earl Harry Treasurer
C-3
<PAGE>
Item 26. Persons Controlled by or under Common Control with Registrant
The following list sets forth the persons directly controlled by The
Guardian Life Insurance Company of America ("Guardian Life"), as of February 29,
2000:
State of Percent of
Incorporation Voting Securities
Name of Entity or Organization Owned
------------- ------------- --------------
The Guardian Insurance & Delaware 100%
Annuity Company, Inc.
Guardian Asset Management Delaware 100%
Corporation
Guardian Trust Company, FSB Federal Savings Bank 100%
Fiduciary Insurance Company New York 100%
of America
Park Avenue Life Insurance Delaware 100%
Company
Private Healthcare Systems, Inc. Delaware 15%
Managed Dental Care, Inc. California 100%
First Commonwealth Delaware 100%
Guardian Hanover Corporation New York 100%
Managed Dental Guard, Inc. Texas 100%
Innovative Underwriters New Jersey 100%
Services
Dental Guard Preferred, Inc. Washington 100%
The Guardian Baillie Gifford Massachusetts 19%
International Fund
The Guardian Investment Quality Bond Fund Massachusetts 35%
Baillie Gifford International Fund Maryland 29%
Baillie Gifford Emerging Markets Fund Maryland 28%
The Guardian Tax-Exempt Bond Fund Massachusetts 92%
The Guardian Asset Allocation Fund Massachusetts 10%
The Guardian Park Avenue Small Cap Fund Massachusetts 24%
The Guardian Baillie Gifford Emerging Massachusetts 60%
Markets Fund
The Guardian High Yield Bond Fund Massachusetts 88%
The Guardian Small Cap Stock Fund Maryland 35%
The Guardian VC Asset Allocation Fund Maryland 94%
The Guardian VC 500 Index Fund Maryland 99%
The Guardian VC High Yield Bond Fund Maryland 99%
The following list sets forth the persons directly controlled by GIAC or
other affiliates of Guardian Life, and thereby indirectly controlled by Guardian
Life, as of February 29, 2000:
Approximate
Percentage of Voting
Place of Securities Owned
Incorporation by Guardian Life
Name of Entity or Organization Affiliates
------------- ------------- -----------------
Guardian Investor Services Corporation New York 100%
Guardian Baillie Gifford Ltd. Scotland 51%
The Guardian Cash Fund, Inc. Maryland 100%
The Guardian Bond Fund, Inc. Maryland 100%
The Guardian Variable Contract
Funds, Inc. Maryland 100%
GIAC Funds, Inc. Maryland 100%
Park Avenue Securities LLC Delaware 100%
The Guardian Park Avenue Fund Massachusetts 2%
C-4
<PAGE>
Item 27. Number of Contract owners
Type of Contract Number as of March 31, 2000
---------------- ---------------------------
Non-Qualified (Individual) ............. 5,866
Qualified (Individual) ................. 7,774
Qualified (Group) ...................... 188
------
Total ......................... 13,828
Item 28. Indemnification
Reference is made to Article VIII of GIAC's By-Laws, as supplemented
by Section 3.2 of the Certificate of Incorporation of GIAC, filed as Exhibits
6(b) and 6(a), respectively, to this Registration Statement and incorporated
herein by reference.
Item 29. Principal Underwriters
(a) Guardian Investor Services Corporation ("GISC") is the principal
underwriter of the Registrant's variable annuity contracts and it is also the
principal underwriter of shares of The Guardian Bond Fund, Inc.; The Guardian
Variable Contract Funds, Inc., a series fund consisting of the following series:
The Guardian Stock Fund, The Guardian VC Asset Allocation Fund, The Guardian VC
High Yield Bond Fund, and The Guardian VC 500 Index Fund; The Guardian Cash
Fund, Inc.; The Park Avenue Portfolio, a series trust consisting of the
following series: The Guardian Cash Management Fund, The Guardian Park Avenue
Fund, The Guardian Park Avenue Small Cap Fund, The Guardian Investment Quality
Bond Fund, The Guardian High Yield Bond Fund, The Guardian Tax-Exempt Fund, The
Guardian Asset Allocation Fund, The Guardian Baillie Gifford International Fund
and The Guardian Baillie Gifford Emerging Markets Fund and GIAC Funds, Inc., a
series fund consisting of Baillie Gifford International Fund, Baillie Gifford
Emerging Markets Fund and The Guardian Small Cap Stock Fund. All of the
aforementioned funds and the series trust are registered with the SEC as
open-end management investment companies under the Investment Company Act of
1940, as amended ("1940 Act"). In addition, GISC is the distributor of variable
annuity and variable life insurance contracts currently offered by GIAC through
its separate accounts, The Guardian/Value Line Separate Account, The Guardian
Separate Account A, The Guardian Separate Account B, The Guardian Separate
Account C, The Guardian Separate Account D, The Guardian Separate Account E and
The Guardian Separate Account K, which are all registered as unit investment
trusts under the 1940 Act.
(b) The following is a list of directors and officers of GISC. The
principal business address of each person is 7 Hanover Square, New York, New
York 10004.
Name Office/Title
---- ------------
Bruce C. Long President & Director
Thomas G. Sorell Senior Vice President
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
Philip H. Dutter Director
Joseph D. Sargent Director
William C. Warren Director
Frank J. Jones Director
John B. Murphy Vice President
Frank L. Pepe Vice President & Controller
Donald P. Sullivan, Jr. Vice President
Richard T. Potter, Jr. Vice President & Counsel
C-5
<PAGE>
Name Office/Title
---- ------------
Joseph A. Caruso Vice President & Corporate
Secretary
Earl C. Harry Treasurer
Item 30. Location of Accounts and Records
Most of the Registrant's accounts, books and other documents
required to be maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by GIAC, the depositor, at its Customer
Service Office, 3900 Burgess Place, Bethlehem, Pennsylvania 18017. Documents
constituting the Registrant's corporate records are also maintained by GIAC but
are located at its Executive Office, 7 Hanover Square, New York, New York 10004.
Item 31. Management Services
None.
Item 32. Undertakings
The Depositor, GIAC, hereby undertakes and represents that the fees
and charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred and the
risks assumed by GIAC.
C-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, The Guardian Separate Account A certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on the 21st day
of April, 2000.
The Guardian Separate Account A
(Registrant)
By: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
(Depositor)
By: /s/ Bruce C. Long
--------------------------------------
Bruce C. Long
Executive Vice President
C-7
<PAGE>
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following directors and principal officers of The Guardian
Insurance & Annuity Company, Inc. in the capacities and on the date indicated.
s/JOSEPH D. SARGENT* President, Chief Executive
- --------------------------------- Officer and Director
Joseph D. Sargent
(Principal Executive Officer)
s/FRANK J. JONES* Executive Vice President, Chief
- --------------------------------- Investment Officer and Director
Frank J. Jones
(Principal Financial Officer)
s/FRANK L. PEPE Vice President and Controller
- ---------------------------------
Frank L. Pepe
(Principal Accounting Officer)
s/BRUCE C. LONG Executive Vice President
- --------------------------------- and Director
Bruce C. Long
s/ARTHUR V. FERRARA* Director
- ---------------------------------
Arthur V. Ferrara
s/WILLIAM C. WARREN* Director
- ---------------------------------
William C. Warren
s/EDWARD K. KANE* Executive Vice President
- --------------------------------- and Director
Edward K. Kane
s/LEO R. FUTIA* Director
- ---------------------------------
Leo R. Futia
s/PHILIP H. DUTTER* Director
- ---------------------------------
Philip H. Dutter
s/PETER L. HUTCHINGS* Director
- ---------------------------------
Peter L. Hutchings
By s/ BRUCE C. LONG Date: April 21, 2000
------------------------------
Bruce C. Long
Executive Vice President
*Pursuant to a Power of Attorney
C-8
<PAGE>
The Guardian Separate Account A
Exhibit Index
Number Description
- ------ -----------
10(a) Consent of PricewaterhouseCoopers LLP
13 Powers of Attorney
C-9
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
amendment No. 30 to the registration statement on Form N-4 (the "Registration
Statement") of our report dated February 16, 2000, relating to the financial
statements appearing in the December 31, 1999 Annual Report to Contractowners of
The Guardian Separate Account A.
We also consent to the use in this Post-Effective amendment No. 30 to the
registration statement on Form N-4 (the "Registration Statement") of our report
dated February 14, 2000 relating to the consolidated financial statements of
Guardian Insurance & Annuity Company, Inc., which appears in such Registration
Statement. We also consent to the reference to us under the headings "Experts"
and "Summary Financial Information about the Separate Account" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York New York
April 21, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Joseph D. Sargent, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Joseph D. Sargent
----------------------------
Joseph D. Sargent
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Arthur V. Ferrara, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Arthur V. Ferrara
----------------------------
Arthur V. Ferrara
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Frank J. Jones, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Frank J. Jones
----------------------------
Frank J. Jones
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Edward K. Kane, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Edward K. Kane
----------------------------
Edward K. Kane
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Philip H. Dutter, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Philip H. Dutter
----------------------------
Philip H. Dutter
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Leo R. Futia, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Leo R. Futia
----------------------------
Leo R. Futia
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Peter L. Hutchings, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Peter L. Hutchings
----------------------------
Peter L. Hutchings
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that William C. Warren, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ William C. Warren
----------------------------
William C. Warren
