AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 2000
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FILE NO. 333-95995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NORTHBROOK LIFE INSURANCE COMPANY
(Exact Name of Registrant)
ARIZONA 36-3001527
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
847-402-2400
(Address and Phone Number of Principal Executive Office)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
NORTHBROOK LIFE INSURANCE COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
BRUCE A. TEICHNER, ESQ. DANIEL J. FITZPATRICK, ESQ.
ALLSTATE LIFE INSURANCE COMPANY DEAN WITTER REYNOLDS INC.
3100 SANDERS ROAD, SUITE J5B TWO WORLD TRADE CENTER, 74TH FLOOR
NORTHBROOK, ILLINOIS 60062 NEW YORK, NY 10048
Approximate date of commencement of proposed sale to the public: The annuity
contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
<PAGE>
THE SCHEDULED ANNUITY MANAGER
Northbrook Life Insurance Company Prospectus dated May 1, 2000
3100 Sanders Road, Northbrook, IL 60062
Telephone Number: 1-800-654-2397
Northbrook Life Insurance Company ("Northbrook") is offering The Scheduled
Annuity Manager, a group and individual flexible premium deferred annuity
contract ("Contract"). This prospectus contains information about the Contract
that you should know before investing. Please keep it for future reference.
The Contracts are available exclusively through Dean Witter Reynolds Inc., the
principal underwriter for the Contracts.
The Securities and Exchange Commission has not approved or
IMPORTANT passed on the accuracy or the adequacy of this prospectus.
NOTICES Anyone who tells you otherwise is committing a federal crime.
Investment in the Contracts involves investment risks, including
possible loss of principal.
<PAGE>
TABLE OF CONTENTS
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Page
Overview
Important Terms..............................
The Contract At A Glance.....................
How the Contract Works.......................
Contract Features
The Contract.................................
Purchases and Contract Value.................
Guarantee Periods............................
Expenses.....................................
Access To Your Money.........................
Income Payments..............................
Death Benefit................................
Other Information
More Information About:
Northbrook.............................
The Contract...........................
Qualified Plans........................
Legal Matters..........................
Year 2000..............................
Taxes........................................
Experts......................................
Annual Reports and Other Documents...........
Appendix A - Market Value Adjustment.........
<PAGE>
IMPORTANT TERMS
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This prospectus uses a number of important terms with which you may not be
familiar. The index below identifies the page that describes each term. The
first use of each term in this prospectus appears in highlighted text.
Page
Accumulation Phase.........................
Annuitant..................................
Automatic Additions Program................
Beneficiary................................
Cancellation Period........................
Cash Surrender Value.......................
Contract *.................................
Contract Owner ("You").....................
Contract Value.............................
Due Proof of Death........................
Guarantee Periods.........................
Income Plan................................
Issue Date.................................
Market Value Adjustment....................
Northbrook ("We")..........................
Payout Phase...............................
Payout Start Date..........................
Preferred Withdrawal Amount................
Qualified Contracts................... ....
SEC........................................
Systematic Withdrawal Program..............
*In certain states, the Contract is only available as a group Contract. In these
states, we will issue you a certificate that represents your ownership and
summarizes the provisions of the group Contract. References to "Contract" in
this prospectus include certificates, unless the context requires otherwise.
<PAGE>
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
Flexible Payments
You can purchase a Contract with as little as $1,000 ($2,000 for a
Qualified Contract) (we may increase the minimum to $4,000 in the
future,other than for "Qualified Contracts," which are Contracts
issued with qualified plans). You can add to your Contract as often
and as much as you like, but each payment must be at least $1,000. You
must maintain a minimum account size of $1,000.
Right to Cancel
You may cancel your Contract within 20 days of receipt or any longer
period your state may require ("Cancellation Period") and receive a
full refund of your purchase payments.
Expenses
You will bear the following expenses:
o withdrawal charge of 6% on amounts withdrawn (with exceptions);
o state premium tax (if your state imposes one).
Guaranteed Interest
The Contract offers fixed interest rates that we guarantee for
specified periods we call "Guarantee Periods." To find out what the
current rates are on the Guarantee Periods, please call us at
1-800-654-2397.
Special Services
For your convenience, we offer these special services:
o Automatic Additions Program;
o Systematic Withdrawal Program.
Income Payments
The Contract offers three income payment plans:
o life income with or without guaranteed payments (5 to 30 years);
o a joint and survivor life income with or without guaranteed
payments(5 to 30 years); or
o guaranteed payments for a specified period (5 to 30
years).
Death Benefits
If you or the Annuitant dies before the Payout Start Date, we will pay
benefits as described in the Contract.
Withdrawals
You may withdraw some or all of your Contract value ("Contract Value")
at any time prior to the Payout Start Date. If you withdraw Contract
Value from a Guarantee Period before its maturity, a withdrawal
charge, Market Value Adjustment, and taxes (including a 10% penalty
tax for withdrawals made before age 59 1/2) may apply.
<PAGE>
HOW THE CONTRACT WORKS
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The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner)
save for retirement because you can invest in the Contract and pay no federal
income taxes on any earnings until you withdraw them. You do this during what we
call the "Accumulation Phase" of the Contract. The Accumulation Phase begins on
the date we issue your Contract (we call that date the "Issue Date") and
continues until the Payout Start Date, which is the date we apply your money to
provide income payments. During the Accumulation Phase, you may allocate your
purchase payments to our Fixed Account for one or more Guarantee Periods. During
each Guarantee Period, your money will earn a fixed rate of interest that we
declare periodically.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/or for a pre-set number of years, by
selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last income payment provided by the Income Plan you
select. During the Payout Phase, we guarantee the amount of your payments, which
will remain fixed. The amount of money you accumulate under your Contract during
the Accumulation Phase and apply to an Income Plan will determine the amount of
your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
<TABLE>
<CAPTION>
Issue Date Accumulation Phase Payout Start Date Payout Phase
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<S> <C> <C> <C> <C>
You buy a You save for retirement You elect to receive You can receive Or you can receive
Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
</TABLE>
As the Contract owner, you exercise all of the rights and privileges
provided by the Contract. If you die, any surviving Contract owner or, if there
is none, the Beneficiary will exercise the rights and privileges provided by the
Contract. See "The Contract." In addition, if you die before the Payout Start
Date we will pay a death benefit to any surviving Contract owner or, if there is
none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-654-2397 if you have any question about how the Contract
works.
<PAGE>
THE CONTRACT
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CONTRACT OWNER
The Scheduled Annuity Manager is a contract between you, the Contract owner, and
Northbrook, a life insurance company. As the Contract owner, you may exercise
all of the rights and privileges provided to you by the Contract. That means it
is up to you to select or change (to the extent permitted):
o the amount and timing of your purchase payments and withdrawals;
o the programs you want to use to invest or withdraw money;
o the income payment plan you want to use to receive retirement income;
o the Annuitant (either yourself or someone else) on whose life the
income payments will be based;
o the Beneficiary or Beneficiaries who will receive the benefits that
the Contract provides when the last surviving Contract owner dies; and
o any other rights that the Contract provides.
If you die, any surviving Contract owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person.
You can use the Contract with or without a qualified plan. A qualified plan is a
retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the
requirements of the Internal Revenue Code. Qualified plans may limit or modify
your rights and privileges under the Contract. We use the term "Qualified
Contract" to refer to a Contract issued with a qualified plan. See "Qualified
Plans" on page __.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). The Contract requires that there be an Annuitant at all times
during the Accumulation Phase and on the Payout Start Date. The Annuitant must
be a natural person.
You initially designate an Annuitant in your application. If the Contract owner
is a natural person, you may change the Annuitant at any time prior to the
Payout Start Date. Once we receive your change request, any change will be
effective at the time you sign the written notice. We are not liable for any
payment we make or other action we take before receiving any written request
from you. You may designate a joint Annuitant, who is a second person on whose
life income payments depend. If the Annuitant dies prior to the Payout Start
Date, the new Annuitant will be the youngest Contract owner, unless the Contract
owner names a different annuitant.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
<PAGE>
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly. If the Contract owner is a natural
person, we will determine the Beneficiary from the most recent request of the
Contract owner.
If the Contract owner is a grantor trust, then the Beneficiary will be that same
trust. If the Contract owner is a non-natural person other than a grantor trust,
the Contract owner is also the Beneficiary, unless a different Beneficiary is
named.
If you did not name a Beneficiary or if the named Beneficiary is no longer
living, the Beneficiary will be:
o your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you, we will divide the death benefit
among your Beneficiaries according to your most recent written instructions. If
you have not given us written instructions, we will pay the death benefit in
equal amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Northbrook officer may approve a change in or waive any provision of the
Contract. Any change or waiver must be in writing. None of our agents has the
authority to change or waive the provisions of the Contract. We may not change
the terms of the Contract, without your consent, except to conform the Contract
to applicable law or changes in the law. If a provision of the Contract is
inconsistent with state law, we will follow state law.
ASSIGNMENT
You may assign an interest in your Contract. No Beneficiary may assign benefits
under the Contract until they are due. We will not be bound by any assignment
until you sign it and file it with us. We are not responsible for the validity
of any assignment. Federal law prohibits or restricts the assignment of benefits
under many types of retirement plans and the terms of such plans may themselves
contain restrictions on assignments. An assignment may also result in taxes or
tax penalties. You should consult with an attorney before assigning your
Contract.
<PAGE>
PURCHASES AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $1,000 ($2,000 for a Qualified
Contract). We may increase the minimum purchase payment to $4,000 in our sole
discretion. (The higher minimum would not apply to Qualified Contracts that are
issued under plans that qualify for special federal income tax treatment.) Each
subsequent purchase payment must be at least $1,000. You may make purchase
payments at any time prior to the Payout Start Date. We reserve the right to
limit the maximum amount and number of purchase payments we will accept. We
also reserve the right to reject any application in our sole discretion.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchases payments by automatically transferring money
from your bank account or your Morgan Stanley Dean Witter Active Assets(TM)
Account. Please call or write us for an enrollment form.
ALLOCATION OF PURCHASE PAYMENTS
For each purchase payment, you must select a Guarantee Period. A Guarantee
Period is a period of years during which you will earn a guaranteed interest
rate on your money. You must allocate at least $1,000 to any one Guarantee
Period at the time you make your purchase payment or select a renewal Guarantee
Period.
We will apply your purchase payment to the Guarantee Period you select within 7
days of the receipt of the payment and required information.
RIGHT TO CANCEL
You may cancel your Contract within the Cancellation Period, which is 20 days
following receipt of your Contract or any longer period your state may require.
You may return it by delivering or mailing it to us. If you exercise this right
to cancel, the Contract terminates and we will pay you the full amount of your
purchase payments or any greater amount that your state may require.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
purchase payments you have invested in the Guarantee Periods, plus earnings
thereon, and less any amounts previously withdrawn.
<PAGE>
GUARANTEE PERIODS
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Each payment allocated to a Guarantee Period earns interest at a specified rate
that we guarantee. We are currently offering Guarantee Periods of 5 years in
length. In the future we may offer Guarantee Periods of different lengths
ranging from 1 to 10 years or stop offering some Guarantee Periods.
Amounts allocated to Guarantee Periods become part of our general account, which
supports our insurance and annuity obligations. The general account consists of
our general assets other than those in segregated asset accounts. We have sole
discretion to invest the assets of the general account, subject to applicable
law. Any money you allocate to a Guarantee Period does not entitle you to share
in the investment experience of the general account.
You must allocate at least $1,000 to a Guarantee Period at the time you make a
purchase payment or select a renewal Guarantee Period.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular investment until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. We determine the interest
rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your Morgan Stanley Dean Witter Financial Advisor or
Northbrook at 1-800-654-2397.
HOW WE CREDIT INTEREST
We will credit interest to your initial purchase payment from the Issue Date. We
will credit interest to your additional purchase payments from the date we
receive them. We will credit interest daily to each amount allocated to a
Guarantee Period at a rate that compounds to the annual interest rate that we
declared at the beginning of the applicable Guarantee Period.
The following example illustrates how a purchase payment would grow, given an
assumed Guarantee Period and annual interest rate:
Example
Purchase Payment....................$10,000
Guarantee Period....................5 years
Annual Interest Rate................4.50%
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
------ ------ ------ ------ ------
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X 1.045
-------
.................. $10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X 1.045
-------
.................. $10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X 1.045
-------
.................. $11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X 1.045
-------
.................. $11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X 1.045
-------
.................. $12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82-$10,000)
</TABLE>
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. The hypothetical interest rate
is for illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for any
given Guarantee Period may be more or less than shown above.
RENEWALS
Prior to the end of each Guarantee Period, we will mail you a notice that lists
your renewal and withdrawal options. During the 30-day period after the end of
the Guarantee Period, you may:
1) take no action. We will automatically apply your money to a new
Guarantee Period of the same length as the expired Guarantee Period.
The new Guarantee Period will begin on the day the previous Guarantee
Period ends. The new interest rate will be our then current declared
rate for a Guarantee Period of that length; or
2) instruct us to apply your money to one or more new Guarantee Periods
that may be available. The new Guarantee Period(s) will begin on the
day the previous Guarantee Period ends. The new interest rate will be
our then current declared rate for those Guarantee Periods; or
3) withdraw all or a portion of your money without incurring a
withdrawal charge or a Market Value Adjustment. In this case, the
amount withdrawn will be deemed to have been renewed at the shortest
Guarantee Period then being offered with current interest credited from
the date the Guarantee Period expired. Amounts not withdrawn will be
applied to a new Guarantee Period of the same length as the previous
Guarantee Period. The new Guarantee Period will begin on the day the
previous Guarantee Period ends.
<PAGE>
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken within the first
30 days of a renewal Guarantee Period, are subject to a Market Value Adjustment.
A Market Value Adjustment also applies upon payment of a death benefit under
Contracts and when you apply amounts currently invested in a Guarantee Period to
an Income Plan (other than during the 30-day period described above).
We will not apply the Market Value Adjustment to withdrawals you make:
o to satisfy IRS minimum distribution rules for the Contract; or
o within the "Preferred Withdrawal Amount," described under
"Expenses" below.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the Treasury Rate for a period equal to the Guarantee Period at its
inception to the Treasury Rate for a period equal to the time remaining in the
Guarantee Period when you remove your money. "Treasury Rate" means the U.S.
Treasury Note Constant Maturity Yield as reported in Federal Reserve Bulletin
Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than the purchase payments plus interest earned under your Contract.
Generally, if the Treasury Rate at the time you allocate money to a Guarantee
Period is lower than the applicable current Treasury Rate for a period equal to
the time remaining in the Guarantee Period, then the Market Value Adjustment
will result in a lower amount payable to you. Conversely, if the Treasury Rate
at the time you allocate money to a Guarantee Period is higher than the
applicable current Treasury Rate, then the Market Value Adjustment will result
in a higher amount payable to you.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years and the Treasury Rate for that duration is 4.50%. Assume that
at the end of 3 years, you make a partial withdrawal. If, at that later time,
the current Treasury Rate for a 2 year period is 4.00%, then the Market Value
Adjustment will be positive, which will result in an increase in the amount
payable to you. Conversely, if the current Treasury Rate for the 2 year period
is 5.00%, then the Market Value Adjustment will be negative, which will result
in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
EXPENSES
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As a Contract owner, you will bear the charges and expenses described below.
WITHDRAWAL CHARGE
We may assess a withdrawal charge equal to 6% of the amounts you withdraw.
However, each year you may withdraw up to 10% of the funds initially allocated
to the Guarantee Period from which you are making the withdrawal without paying
a withdrawal charge. We measure each year from the commencement of the relevant
Guarantee Period. Unused portions of this 10% "Preferred Withdrawal Amount" are
not carried forward to future years or other Guarantee Periods. We will deduct
withdrawal charges, if applicable, from the amount paid unless you instruct
otherwise.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date;
o the death of the Contract owner or the Annuitant;
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; or
o withdrawals made within 30 days of their renewal Guarantee Periods.
Withdrawals may be subject to tax penalties, income tax, and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may discontinue this practice some time in the future, and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from the total
Contract Value before applying the Contract Value to an Income Plan.
<PAGE>
ACCESS TO YOUR MONEY
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You can withdraw some or all of your money at any time prior to the Payout Start
Date. You may not make any withdrawals or surrender your Contract once the
Payout Phase has begun.
You must specify the Guarantee Period from which you would like to withdraw your
money. If the amount you withdraw reduces the amount invested in any Guarantee
Period to less than $1,000, we will treat the withdrawal request as a request to
withdraw the entire amount in that Guarantee Period.
The amount you receive may be reduced by a withdrawal charge, income tax
withholding, 10% tax penalty, and any applicable premium taxes. The amount you
receive may be increased or reduced by a Market Value Adjustment.
If you request a total withdrawal, we may require you to return your Contract to
us.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $100. We will deposit
systematic withdrawal payments into the Contract owner's bank account or Morgan
Stanley Dean Witter Active Assets(TM) Account. Please consult with your Morgan
Stanley Dean Witter Financial Advisor for details.
Income taxes may apply to systematic withdrawals. Please consult your tax
advisor before taking any withdrawal.
We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to six months from the date we
receive your withdrawal request.
MINIMUM CONTRACT VALUE
If a withdrawal would reduce your Contract Value to less than $1,000, we will
treat the request as a request to withdraw the entire Contract Value. Your
Contract will terminate if you withdraw all of your Contract Value. We will,
however, ask you to confirm your withdrawal request before terminating your
Contract. If you surrender your Contract, we will pay you its Contract Value
adjusted by any applicable Market Value Adjustment, less any applicable
withdrawal charges and taxes.
<PAGE>
INCOME PAYMENTS
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PAYOUT START DATE
The Payout Start Date is the day that we apply your Contract Value, adjusted by
the Market Value Adjustment, less any applicable taxes, to an Income Plan. The
Payout Start Date must be:
o at least one month after the Issue Date; and
o no later than the Annuitant's 90th birthday, or the 10th Contract
anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date as stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years. After the Payout Start Date, you may not make withdrawals or change your
choice of Income Plan.
The three Income Plans available under the Contract are:
Income Plan 1 -- Life Income With or Without Guaranteed Payments. Under
this plan, we make periodic income payments for as long as the
Annuitant lives. In addition, for plans with guaranteed income
payments, if the Annuitant dies before we have made all of the
guaranteed income payments, we will continue to pay the remainder of
such payments as required by the Contract.
Income Plan 2 -- Joint and Survivor Life Income With or Without
Guaranteed Payments. Under this plan, we make periodic income payments
for at least as long as either the Annuitant or the joint Annuitant is
alive. In addition, for plans with guaranteed income payments, if both
the Annuitant and the joint Annuitant die before we have made all of
the guaranteed income payments, we will continue to pay the remainder
of such payments as required by the Contract.
Income Plan 3 -- Guaranteed Payments for a Specified Period. Under this
plan, we make periodic income payments for the period you have chosen.
These payments do not depend on the Annuitant's life.
You may elect to receive guaranteed payments under each of the above Income
Plans for periods ranging from 5 to 30 years.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
<PAGE>
We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant is still alive
before we make each payment. Please note that under such Income Plans, if you
elect to take no minimum guaranteed payments, it is possible that the payee
could receive only 1 income payment if the Annuitant and any joint Annuitant
both die before the second income payment, or only 2 income payments if they die
before the third income payment, and so on.
We will apply your Contract Value, adjusted by a Market Value Adjustment, less
applicable taxes, to your Income Plan on the Payout Start Date. If the amount
available to apply under an Income Plan is not enough to provide an initial
payment of at least $20, and state law permits, we may:
o pay you the Contract Value, adjusted by any Market Value Adjustment
and less any applicable taxes, in a lump sum instead of the periodic
payments you have chosen, or
o we may reduce the frequency of your payments so that each payment will
be at least $20.
INCOME PAYMENTS
We guarantee income payment amounts for the duration of the Income Plan. We
calculate income payments by:
1) adjusting the value of your Contract on the Payout Start Date by any
applicable Market Value Adjustment;
2) deducting any applicable premium tax; and
3) applying the resulting amount to the greater of (a) the appropriate
value from the income payment table in your Contract or (b) such other
value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or such
shorter time state law may require. If we defer payments for 30 days or more, we
will pay interest as required by law from the date we receive the withdrawal
request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is to be used in connection with an employment-related retirement
or benefit plan and we do not offer unisex annuity tables in your state, you
should consult with legal counsel as to whether the purchase of a Contract is
appropriate.
<PAGE>
DEATH BENEFITS
- -------------------------------------------------------------------------------
We will pay a death benefit if, prior to the Payout Start Date:
1) the Contract owner dies; or
2) the Annuitant dies.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greater of:
(1) the Contract Value, and (2) the "Cash Surrender Value," which is the
Contract Value, adjusted by any Market Value Adjustment, less withdrawal charges
and premium taxes. We will calculate the death benefit as of the date we receive
a complete request for payment of the death benefit.
A claim for a distribution on death must include "Due Proof of Death." We will
accept the following documentation as Due Proof of Death:
o a certified original copy of the death certificate;
o a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or
o any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
Upon death of the Contract owner, the new Contract owner generally has the
following 3 options:
1) receive the Cash Surrender Value within 5 years of the date of death;
2) receive the Death Benefit in a lump sum. The "Death Benefit" is equal
to the greater of the Contract Value and the Cash Surrender Value
computed as of the date we receive a complete request for payment of
Death Benefit; or
3) apply the Death Benefit to an Income Plan, with income payments
beginning within one year of the date of death. Income payments must
be made over the life of the new Contract owner, or a period not to
exceed the life expectancy of the new Contract owner.
Options 2 and 3 above are not available if we do not receive notice of death
within 180 days of the date of death. We are currently waiving the 180 day
limitation but may enforce it in the future. Please refer to your Contract for
more details on the above options, including terms that apply to grantor trusts.
If the new Contract owner is a non-natural person (other than a grantor trust),
the new Contract owner must elect to receive the Death Benefit in a lump sum.
If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect Options 2 or 3 listed above or may continue the
Contract in the Accumulation Phase as if the death had not occurred. If the
Contract is continued in the Accumulation Phase, the surviving spouse may make a
single withdrawal of any amount within 1 year of the date of death without
incurring a withdrawal charge.
<PAGE>
However, any applicable Market Value Adjustment,determined as of the date of the
withdrawal, will apply. The single withdrawal amount is in addition to the
annual Preferred Withdrawal Amount.
If the Contract owner is not the Annuitant and the Annuitant dies, then the
Contract owner has the following 3 options:
1) continue the Contract as if the death had not occurred;
2) receive the Death Benefit in a lump sum; or
3) apply the Death Benefit to an Income Plan, which must begin within 1
year of the date of death and must be for a period equal to or less
than the life expectancy of the Contract owner.
For Options 1 and 3, the new Annuitant will be the youngest Contract owner
unless the Contract owner names a different Annuitant. Options 1 and 3 are not
available if the Contract owner is a non-natural person (other than a grantor
trust).
Options 2 and 3 above are not available if we do not receive notice of death
within 180 days of the date of death. We are currently waiving the 180 day
limitation but may enforce it in the future. Please refer to your Contract for
more details on the above options, including terms that apply to grantor trusts.
<PAGE>
MORE INFORMATION
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NORTHBROOK
Northbrook is the issuer of the Contract. Northbrook is a stock life insurance
company organized under the laws of the State of Arizona in 1998. Previously,
from 1978 to 1998, Northbrook was organized under the laws of the State of
Illinois.
Northbrook is currently licensed to operate in the District of Columbia, Puerto
Rico, and all states except New York. We intend to offer the Contract in those
jurisdictions in which we are licensed. Our headquarters are located at 3100
Sanders Road, Northbrook, Illinois, 60062.
Northbrook is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company, a stock property-liability insurance company incorporated
under the laws of the State of Illinois. All of the outstanding capital stock of
Allstate Insurance Company is owned by The Allstate Corporation.
Northbrook and Allstate Life entered into a reinsurance agreement effective
December 31, 1987. Under the reinsurance agreement, Allstate Life reinsures all
of Northbrook's liabilities under its various insurance Contracts. The
reinsurance agreement provides us with financial backing from Allstate Life.
However, it does not create a direct contractual relationship between Allstate
Life and you. In other words, the obligations of Allstate Life under the
reinsurance agreement are to Northbrook; Northbrook remains the sole obligor
under the Contract to you.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns A+ (Superior) to Allstate Life which automatically reinsures all
net business of Northbrook. A.M. Best Company also assigns Northbrook the rating
of A+(r) because Northbrook automatically reinsures all net business with
Allstate Life. Standard & Poor's Insurance Rating Services assigns an AA+ (Very
Strong) financial strength rating and Moody's assigns an Aa2 (Excellent)
financial strength rating to Northbrook. Northbrook shares the same ratings of
its parent, Allstate Life. We may from time to time advertise these ratings in
our sales literature.
THE CONTRACT
Dean Witter Reynolds Inc. ("Dean Witter"), located at Two World Trade Center,
74th Floor, New York, NY 10048, serves as principal underwriter of the
Contracts. Dean Witter is a wholly owned subsidiary of Morgan Stanley Dean
Witter & Co. Dean Witter is a registered broker-dealer under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and is a member of the
National Association of Securities Dealers, Inc. Dean Witter is also registered
with the Securities and Exchange Commission ("SEC") as an investment adviser.
We may pay broker-dealers up to a maximum sales commission of 8% both upon sale
of the Contract and upon renewal of a Guarantee Period. In addition, sale of the
Contract may count towards incentive program awards for broker-dealers.
The underwriting agreement with Dean Witter provides that we will reimburse Dean
Witter for any liability to Contract owners arising out of services rendered or
Contracts issued.
<PAGE>
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Northbrook on
certain federal securities law matters. All matters of state law pertaining to
the Contracts, including the validity of the Contracts and Northbrook's right to
issue such Contracts under state insurance law, have been passed upon by Michael
J. Velotta, General Counsel of Northbrook.
YEAR 2000
Northbrook is heavily dependent upon complex computer systems for all phases of
its operations, including customer service, and policy and contract
administration. Since many of Northbrook's older computer software programs
recognized only the last two digits of the year in any date, some software may
have failed to operate properly in or after the year 1999 if the software had
not been reprogrammed or replaced ("Year 2000 Issue"). Northbrook believes that
many of its counterparties and suppliers also had Year 2000 Issues which could
have affected Northbrook. In 1995, Allstate Insurance Company commenced a four
phase plan intended to mitigate and/or prevent the adverse effects of Year 2000
Issues. These strategies included normal development and enhancement of new and
existing systems, upgrading operating systems already covered by maintenance
agreements, and modifying existing systems to make them Year 2000 compliant. The
plan also included Northbrook actively working with its major external
counterparties and suppliers to assess their compliance efforts and Northbrook's
exposure to them. As of the date of this prospectus, Northbrook believes that
the Year 2000 Issue was successfully resolved and that such resolution will not
materially affect its results of operations, liquidity or financial position.
<PAGE>
TAXES
- --------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice. We make
no guarantee regarding the tax treatment of any Contract or transaction
involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax advisor.
TAXATION OF NORTHBROOK
Northbrook is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code ("Tax Code").
TAXATION OF ANNUITIES IN GENERAL
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the owner is a natural
person. As a general rule, annuity contracts owned by non-natural persons such
as corporations, trusts, or other entities are not treated as annuity contracts
for federal income tax purposes. The income on such contracts is taxed as
ordinary income received or accrued by the owner during the taxable year.
Contracts will generally be treated as held by a natural person if the nominal
owner is a trust that holds the Contract for the benefit of a natural person.
Please see a competent tax advisor to discuss other possible exceptions to the
nonnatural owner rule.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that is not taxable is
equal to the payment times the ratio of the investment in the contract (i.e.,
nondeductible IRA contributions, after tax contributions to qualified plans) to
the Contract Value.
You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments. If you make a full withdrawal under a
non-Qualified Contract or a Qualified Contract, the amount received will be
taxable only to the extent it exceeds the investment in the Contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are taxable only to the extent that distributions exceed
contributions. "Qualified distributions" from Roth IRAs are not taxable.
"Qualified distributions" are any distributions made more than 5 taxable years
after the taxable year of the first contribution to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2;,
o made to a beneficiary after the Contract owner's death;
o attributable to the Contract owner being disabled; or
o for a first time home purchase (first time home purchases are subject
to a lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
<PAGE>
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. The amount excluded from income
is determined by multiplying the payment by the ratio of the investment in the
Contract (adjusted for any refund feature or period certain) to the total
expected value of annuity payments for the term of the Contract. The annuity
payments will be fully taxable after the total amount of the investment in the
Contract is excluded using these ratios. If you die, and annuity payments cease
before the total amount of the investment in the Contract is recovered, the
unrecovered amount will be allowed as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
1) if distributed in a lump sum, the amounts are taxed in the same manner
as a full withdrawal; or
2) if distributed under an Income Plan, the amounts are taxed in the same
manner as an annuity payment.
IRS Required Distribution at Death Rules. To qualify as an annuity contract for
federal income tax purposes, a non-Qualified Contract must provide:
1) if any Contract owner dies on or after the Payout Start Date, but
before the entire interest in the Contract has been distributed,
the remaining portion of such interest must be distributed at
least as rapidly as under the method of distribution being used
as of the date of the owner's death; and
2) if any Contract owner dies prior to the Payout Start Date, the
entire interest in the Contract must be distributed within 5
years after the date of the owner's death.
The 5-year requirement is satisfied if:
o any portion of the Contract owner's interest which is payable to
a designated Beneficiary is distributed over the life of such
Beneficiary (or over a period not extending beyond the life
expectancy of the Beneficiary); and
o the distributions begin within 1 year of the Contract owner's
death.
If the Contract owner's designated Beneficiary is a surviving spouse, the
Contract may be continued with the surviving spouse as the new Contract owner.
If the owner of the Contract is a non-natural person, the Annuitant is treated
as the Contract owner for purposes of applying the distribution at death rules.
In addition, a change in the Annuitant on a Contract owned by a non-natural
person is treated as the death of the Contract owner.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
o made on or after the date the owner attains age 59 1/2;
o made as a result of the owner's death or disability;
o made in substantially equal periodic payments over the owner's life
or life expectancy;
o made under an immediate annuity; or
o attributable to investment in the Contract before August 14, 1982.
<PAGE>
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Northbrook (or its affiliates) to the same owner during any calendar
year will be aggregated and treated as one annuity contract for purposes of
determining the taxable amount of a distribution.
TAX QUALIFIED CONTRACTS
The Contract may be used with several types of qualified plans. The income on a
qualified plan and IRA investments is tax deferred and annuities held by such
plans do not receive any additional tax deferral. You should review the annuity
features, including all benefits and expenses, prior to purchasing an annuity in
a qualified plan or IRA. Northbrook reserves the right to limit the availability
of the Contract for use with any of the Qualified Plans listed below. The tax
rules applicable to participants in qualified plans vary according to the type
of plan and the terms and conditions of the plan. Qualified plan participants,
and Contract owners, Annuitants and Beneficiaries under the Contract may be
subject to the terms and conditions of the qualified plan regardless of the
terms of the Contract.
TYPES OF QUALIFIED PLANS
IRAs. Section 408 of the Code permits eligible individuals to contribute to an
individual retirement plan known as an IRA. IRAs are subject to limitations on
the amount that can be contributed and on the time when distributions may
commence. Certain distributions from other types of qualified plans may be
"rolled over" on a tax-deferred basis into an IRA. An IRA generally may not
provide life insurance, but it may provide a death benefit that equals the
greater of the premiums paid or the Contract value. The Contract provides a
death benefit that in certain situations, may exceed the greater of the payments
or the contract value. If the IRS treats the death benefit as violating the
prohibition on investment in life insurance contracts, the Contract would not
qualify as an IRA.
Roth IRAs. Section 408A of the Code permits eligible individuals to make
nondeductible contributions to an individual retirement plan known as a Roth
IRA. Roth IRAs are subject to limitations on the amount that can be contributed.
In certain instances, distributions from Roth IRAs are excluded from gross
income. Subject to certain limits, a traditional Individual Retirement Account
or Annuity may be converted or "rolled over" to a Roth IRA. The taxable portion
of a conversion or rollover distribution is included in gross income, but is
exempt from the 10% penalty tax on premature distributions.
Simplified Employee Pension Plans. Section 408(k) of the Code allows employers
to establish simplified employee pension plans for their employees using the
employees' IRAs if certain criteria are met. Under these plans the employer may,
within limits, make deductible contributions on behalf of the employees to their
individual retirement annuities. Employers intending to use the contract in
connection with such plans should seek competent advice.
Savings Incentive Match Plans for Employees (SIMPLE Plans). Sections 408(p) and
401(k) of the Tax Code allow employers with 100 or fewer employees to establish
SIMPLE retirement plans for their employees. SIMPLE plans may be structured as a
SIMPLE retirement account using an employee's IRA to hold the assets, or as a
Section 401(k) qualified cash or deferred arrangement. In general, a SIMPLE plan
consists of a salary deferral program for eligible employees and matching or
nonelective contributions made by employers. Employers intending to use the
Contract in conjunction with SIMPLE plans should seek competent tax and legal
advice.
Tax Sheltered Annuities. Section 403(b) of the Tax Code permits public school
employees and employees of certain types of tax-exempt organizations (specified
in Section 501(c)(3) of the Code) to have their employers purchase Contracts for
them. Subject to certain limitations, a Section 403(b) plan allows an employer
to exclude the purchase payments from the employees' gross income. A Contract
used for a Section 403(b) plan must provide that distributions attributable to
salary reduction contributions made after 12/31/88, and all earnings on salary
reduction contributions, may be made only:
<PAGE>
1) on or after the date the employee:
o attains age 59 1/2;
o separates from service;
o dies; or
o becomes disabled; or
2) on account of hardship (earnings on salary reduction contributions may
not be distributed for hardship).
These limitations do not apply to withdrawals where Northbrook is directed to
transfer some or all of the Contract Value to another 403(b) plan.
Corporate and Self-Employed Pension and Profit Sharing Plans. Sections 401(a)
and 403(a) of the Tax Code permit corporate employers to establish various types
of tax favored retirement plans for employees. The Tax Code permits
self-employed individuals to establish tax favored retirement plans for
themselves and their employees. Such retirement plans may permit the purchase of
Contracts to provide benefits under the plans.
State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current income taxes. The employees must be participants in an eligible
deferred compensation plan. Employees with Contracts under the plan are
considered general creditors of the employer. The employer, as owner of the
Contract, has the sole right to the proceeds of the Contract. Under these plans,
contributions made for the benefit of the employees will not be taxable to the
employees until distributed from the plan. However, all compensation deferred
under a 457 plan must remain the sole property of the employer. As property of
the employer, the assets of the plan are subject only to the claims of the
employer's general creditors, until such time as the assets become available to
the employee or a beneficiary.
INCOME TAX WITHHOLDING
Northbrook is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
o required minimum distributions; or
o a series of substantially equal periodic payments made over a period
of at least 10 years; or
o over the life (joint lives) of the participant (and beneficiary).
Northbrook may be required to withhold federal and state income taxes on any
distributions from non-Qualified Contracts, or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election to not
have taxes withheld.
<PAGE>
EXPERTS
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The financial statements and the related financial statement schedule of
Northbrook incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
Northbrook's annual report on Form 10-K for the year ended December 31, 1999
("Form 10-K Annual Report") is incorporated herein by reference, which means
that it is legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act are also incorporated herein by reference, which means
that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically on the SEC's
"EDGAR" system using the identifying number CIK No. 0000716791. The SEC
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The address of the site is http://www.sec.gov. You also can view these materials
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of the SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at 3100 Sanders Road, Northbrook, Illinois 60062 (telephone:
1-800-654-2397).
ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your Morgan Stanley Dean Witter Financial Advisor or
call our customer support unit at 1-800-654-2397.
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I= the Treasury Rate for a maturity equal to the Guarantee Period for
the week preceding the establishment of the Guarantee Period.
N= the number of complete days from the date we receive the withdrawal
request to the end of the Guarantee Period; and
J= the Treasury Rate for a maturity of N days for the week preceding
the receipt of the withdrawal request on the date we determine the
Market Value Adjustment.
If a Treasury Rate for a maturity of N days is not available, we will
use a weighted average. If N is less than or equal to 365 days, J will
be the 1-year Treasury Rate.
The Market Value Adjustment factor is determined from the following formula:
.9 x (I-J) x (N/365)
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Preferred Withdrawal
Amount) or applied to an Income Plan, from a Guarantee Period other than amounts
withdrawn or applied from a renewal Guarantee Period during the first 30 days
thereof.
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment:. $10,000
Guarantee Period:. 5 years
Interest Rate:.... 4.50%
Full Surrender:... End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
EXAMPLE 1: (Assumes declining interest rates)
<TABLE>
<S> <C> <C> <C>
Step 1. Calculate Contract Value at 10,000.00 X (1.0450)3 = $11,411.66
End of Contract Year 3:
Step 2. Calculate the Amount in excess of Preferred Withdrawal Amount (.10 X 10,000) = $1,000
the Preferred Withdrawal Amount
Amount in Excess: $11,411.66 - 1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .06 X $10,411.66 = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.2%
N = 730 days
Market Value Adjustment Factor:
.9 X (I-J) X N/365
=.9 X (.o45 - .042) X (730/365) = .0054
Market Value Adjustment = Market Value Adjustment
Factor X Amount Subject to Market Value Adjustment:
= .0054 X $10,411.66 = $56.22
Step 5. Calculate the amount received by a
Contract owner as a result of full
withdrawal at the end of Contract Year 3: $11,411.66 - $624.70 + $56.22 = $10,843.18
EXAMPLE 2: (Assumes rising interest rates)
Step 1. Calculate Contract Value at 10,000.00 X (1.045)3 = $11,411.66
End of Contract Year 3:
Step 2. Calculate the Amount in excess of Free Withdrawal Amount (.10 X 10,000) =$1,000
the Preferred Withdrawal Amount: Amount in Excess: $11,411.66 - 1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .06 X $10,411.66 = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.8%
N = 730 days
Market Value Adjustment Factor:
.9 X (I-J) X N/365
= .9 X (.045 - .048) X (730/365) = -.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to
Market Value Adjustment
= -.0054 X $10,411.66 = - $56.22
Step 5. Calculate the amount received by a
Contract owner as a result of full
withdrawal at the end of Contract
Year 3: $11,411.66 - $624.70 - $56.22 = $10,730.74
</TABLE>
<PAGE>
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Northbrook Life Insurance Company ("Registrant") provide that
Registrant will indemnify its officers and directors for certain damages and
expenses that may be incurred in the performance of their duty to Registrant. No
indemnification is provided, however, when such person is adjudged to be liable
for negligence or misconduct in the performance of his or her duty, unless
indemnification is deemed appropriate by the court upon application.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description
(1) Form of Underwriting Agreement (Incorporated herein by reference to
Post-Effective Amendment No. 13 to the Form N-4 Registration Statement of
Northbrook Variable Annuity Account II of Northbrook Life Insurance Company
(File No. 033-35412) dated December 31, 1996.)
(2) None
(4) Form of Northbrook Life Insurance Company Flexible Premium Deferred Annuity
Certificate and Application (Incorporated herein by reference to
Post-Effective Amendment No. 4 to Registrant's Registration Statement (File
No. 033-90272) dated April 29, 1999.
(5)(a) Opinion and Consent of General Counsel re: Legality (Incorporated herein
by reference to the initial filing to Registrant's Registration Statement
(File No. 033-90272) dated March 13, 1995.)
(5)(b) Opinion and Consent of General Counsel re: Legality (Incorporated herein
by reference Post-Effective Amendment No. 4 to Registrant's Registration
Statement (File No. 033-90272) dated April 29, 1999.
(8) None
(11) None
(12) None
(15) None
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24) Power of Attorney for Thomas J. Wilson, II. Michael J. Velotta, Marla G.
Friedman, Karen C. Gardner, John R. Hunter, Samuel H. Pilch, Kevin R.
Slawin, Casey J. Sylla, James P. Zils, Sarah R. Donahue, and Timothy N.
Vander Pas.
(25) None
(26) None
(27) Not applicable
(99) Form of Resolution of Board of Directors (Incorporated herein by reference
to the Post-Effective Amendment No. 3 to Registrant's Registration
Statement (File No. 033-84480) dated April 1, 1997.)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof ) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Northbrook Life Insurance Company, pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this amended registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Northfield, State of Illinois on the 3rd day of April, 2000.
NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
*/THOMAS J. WILSON, II President, Chief Operating Officer
Thomas J. Wilson, II and Director,
(Principal Executive Officer)
/s/ MICHAEL J. VELOTTA Vice President, Secretary,
Michael J. Velotta General Counsel and Director
*/JOHN R. HUNTER Vice President and Director
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
Kevin R. Slawin (Principal Financial Officer)
*/SAMUEL H. PILCH Controller
Samuel H. Pilch (Principal Accounting Officer)
*/CASEY J. SYLLA Chief Investment Officer and Director
Casey J. Sylla
*/SARAH R. DONAHUE Assistant Vice President and Director
Sarah R. Donahue
*/TIMOTHY N. VANDER PAS Assistant Vice President and Director
Timothy N. Vander Pas
*/By Michael J. Velotta, pursuant to Powers of Attorney filed herewith
<PAGE>
EXHIBIT LIST
The following exhibits are filed herewith:
Exhibit No. Description
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24) Powers of Attorney for Thomas J. Wilson, II,
Michael J. Velotta, John R. Hunter, Samuel H. Pilch,
Kevin R. Slawin, Casey, J. Sylla, Sarah R. Donahue, and
Timothy N. Vander Pas.
(23)(a) Independent Auditors' Consent
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement 333-95995 of Northbrook Life Insurance Company
on Form S-3 of our report dated February 25, 2000, appearing in the Annual
Report on Form 10-K of Northbrook Life Insurance Company for the year ended
December 31, 1999, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
April 3, 2000
<PAGE>
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
FREEDMAN, LEVY, KROLL & SIMONDS
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 1 to the
Form S-3 Registration Statement of Northbrook Life Insurance Company (File No.
333-95995).
/s/ FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 3, 2000
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Thomas J. Wilson, II, whose signature
appears below, constitutes and appoints Michael J. Velotta, his
attorney-in-fact, with power of substitution, in any and all capacities, to sign
any Form S-3 registration statements and amendments thereto for the Northbrook
Life Insurance Company (Registrant) 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 said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
----------------------------
Date
/s/THOMAS J. WILSON, II
------------------------
Thomas J. Wilson, II
President, Chief Operating Officer,
(Principal Executive Officer) and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Michael J. Velotta, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, his
attorney-in-fact, with power of substitution, in any and all capacities, to sign
any Form S-3 registration statements and amendments thereto for the Northbrook
Life Insurance Company (Registrant) 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 said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/MICHAEL J. VELOTTA
---------------------------
Michael J. Velotta
Vice President, Secretary,
General Counsel, and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that John R. Hunter, whose signature appears
below, constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta,
and each of them, his attorney-in-fact, with power of substitution, and him in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/JOHN R. HUNTER
---------------------------
John R. Hunter
Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Samuel H. Pilch, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution, and
him in any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/SAMUEL H. PILCH
---------------------------
Samuel H. Pilch
Controller
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Kevin R. Slawin, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution, and
him in any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/KEVIN R. SLAWIN
---------------------------
Kevin R. Slawin
Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Casey J. Sylla, whose signature appears
below, constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta,
and each of them, his attorney-in-fact, with power of substitution, and him in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
--------------------------
Date
/s/CASEY J. SYLLA
--------------------------
Casey J. Sylla
Chief Investment Officer and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Sarah R. Donahue, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, her attorney-in-fact, with power of substitution, and
him in any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/SARAH R. DONAHUE
---------------------------
Sarah R. Donahue
Assistant Vice President
and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO NORTHBROOK LIFE INSURANCE COMPANY
(REGISTRANT)
THE SCHEDULED ANNUITY MANAGER
Know all men by these presents that Timothy N. Vander Pas, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution, and
him in any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Northbrook Life Insurance Company (Registrant) 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 attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 3, 2000
---------------------------
Date
/s/TIMOTHY N. VANDER PAS
---------------------------
Timothy N. Vander Pas
Assistant Vice President
and Director
