<PAGE> 1
'33 Act File No. 33-22940
'40 Act File No. 811-5606
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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. 14 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 16 [X]
NATIONWIDE VA SEPARATE ACCOUNT-A
(Exact Name of Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
DENNIS W. CLICK
SECRETARY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective amendment amends the Registration Statement in respect of
the Prospectus, Statement of Additional Information, and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate
space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on September 24, 1999 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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NATIONWIDE VA SEPARATE ACCOUNT-A
REFERENCE TO ITEMS REQUIRED BY FORM N-4
Caption in Prospectus and Statement of Additional Information and Other
Information
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.....................................................................................4
Item 2. Definitions....................................................................................5
Item 3. Synopsis or Highlights........................................................................11
Item 4. Condensed Financial Information...............................................................12
Item 5. General Description of Registrant, Depositor, and Portfolio Companies.........................16
Item 6. Deductions and Expenses.......................................................................18
Item 7. General Description of Variable Annuity Contracts.............................................22
Item 8. Annuity Period................................................................................29
Item 9. Death Benefit and Distributions...............................................................31
Item 10. Purchases and Contract Value..................................................................22
Item 11. Redemptions...................................................................................25
Item 12. Taxes.........................................................................................35
Item 13. Legal Proceedings.............................................................................42
Item 14. Table of Contents of the Statement of Additional Information..................................45
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page....................................................................................49
Item 16. Table of Contents.............................................................................49
Item 17. General Information and History...............................................................49
Item 18. Services......................................................................................49
Item 19. Purchase of Securities Being Offered..........................................................50
Item 20. Underwriters..................................................................................50
Item 21. Calculation of Performance Information........................................................50
Item 22. Annuity Payments..............................................................................51
Item 23. Financial Statements..........................................................................52
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.............................................................84
Item 25. Directors and Officers of the Depositor.......................................................86
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant................88
Item 27. Number of Contract Owners....................................................................100
Item 28. Indemnification..............................................................................100
Item 29. Principal Underwriter........................................................................100
Item 30. Location of Accounts and Records.............................................................102
Item 31. Management Services..........................................................................102
Item 32. Undertakings.................................................................................103
</TABLE>
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SUPPLEMENT DATED SEPTEMBER 24, 1999 TO
PROSPECTUS DATED MAY 1, 1999 FOR
DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VA SEPARATE ACCOUNT-A
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE
READ IT AND KEEP IT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE.
1. AN APPLICATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") FOR AN ORDER PERMITTING THE SUBSTITUTION OF THE SHARES OF THE
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP ADVANTAGE
("VP ADVANTAGE") CURRENTLY HELD IN SUB-ACCOUNTS BY CONTRACT OWNERS WITH
SHARES OF THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY
VP BALANCED ("VP BALANCED"). UNTIL AN ORDER IS GRANTED BY THE SEC, BOTH
INVESTMENT OPTIONS WILL BE AVAILABLE TO ALL CONTRACT OWNERS AS UNDERLYING
INVESTMENT OPTIONS. IF AN ORDER IS GRANTED, INFORMATION WILL BE SENT TO ALL
CONTRACT OWNERS REGARDING THE "EXCHANGE DATE" ON WHICH VP ADVANTAGE WILL BE
ELIMINATED AS AN INVESTMENT OPTION AND VP BALANCED WILL BE SUBSTITUTED FOR
VP ADVANTAGE.
2. EFFECTIVE SEPTEMBER 1, 1999, "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS" LOCATED ON PAGES 43 THROUGH 45 OF YOUR PROSPECTUS IS AMENDED AS
FOLLOWS:
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end
management investment company created under the laws of Massachusetts. NSAT
offers shares in the mutual funds listed below, each with its own
investment objectives. Shares of NSAT will be sold primarily to separate
accounts to fund the benefits under variable life insurance policies and
variable annuity contracts issued by life insurance companies. Effective
September 1, 1999, the investment advisory services previously performed by
Nationwide Advisory Services ("NAS") were transferred to Villanova Mutual
Fund Capital Trust ("VMF"), an affiliate of NAS and an indirect subsidiary
of Nationwide Financial Services, Inc. The portfolio managers and
subadvisers for each of the Funds continue to manage the Funds after the
transfer to VMF.
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life and Annuity Insurance Company
through its Nationwide VA Separate Account-A
The date of this prospectus is May 1, 1999.
- --------------------------------------------------------------------------------
This prospectus contains basic information you should know about the contracts
before investing.
Please read it and keep it for future reference.
The following underlying mutual funds are available under the contracts:
AVAILABLE FOR ALL CONTRACTS
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- - American Century VP Balanced
NATIONWIDE SEPARATE ACCOUNT TRUST
- - Capital Appreciation Fund
- - Government Bond Fund
- - Money Market Fund
- - Total Return Fund
AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER MAY 1, 1991
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- - American Century VP Advantage
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- - VIP Growth Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- - Balanced Portfolio
Purchase payments not invested in the underlying mutual fund options of the
Nationwide VA Separate Account-A ("variable account") may be allocated to the
fixed account.
The Statement of Additional Information (dated May 1, 1999) which contains
additional information about the contracts and the variable account, has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
Information is on page 42.
For general information or to obtain FREE copies of the:
- Statement of Additional Information
- prospectus for any underlying mutual fund
- required Nationwide forms,
call: 1-800-533-5622
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 182008
COLUMBUS, OHIO 43218-2008
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
THIS ANNUITY IS NOT:
- - A BANK DEPOSIT - FEDERALLY INSURED
- - ENDORSED BY A BANK OR - AVAILABLE IN EVERY
GOVERNMENT AGENCY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
These contracts are offered to customers of various financial institutions and
brokerage firms. No financial institution or brokerage firm is responsible for
the guarantees under the contracts. Guarantees under the contracts are the sole
responsibility of Nationwide.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total of all accumulation units in a contract and any amount
held in the fixed account.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs.
NATIONWIDE- Nationwide Life and Annuity Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA,
or Tax Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
SEP IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408(k) of the Internal Revenue Code.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units and annuity units are
separately maintained.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide VA Separate Account-A, a separate account of
Nationwide that contains variable account allocations. The variable account is
divided into sub-accounts, each of which invests in shares of a separate
underlying mutual fund.
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<PAGE> 6
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.........................2
SUMMARY OF CONTRACT EXPENSES......................5
UNDERLYING MUTUAL FUND ANNUAL
EXPENSES.....................................6
EXAMPLE...........................................7
SYNOPSIS OF THE CONTRACTS.........................8
FINANCIAL STATEMENTS..............................8
CONDENSED FINANCIAL INFORMATION...................9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY....13
NATIONWIDE ADVISORY SERVICES, INC................13
INVESTING IN THE CONTRACT........................13
The Variable Account and Underlying
Mutual Funds
The Fixed Account
STANDARD CHARGES AND DEDUCTIONS..................15
Contract Maintenance Charge
Mortality and Expense Risk Charge
Administration Charge
Contingent Deferred Sales Charge
Premium Taxes
CONTRACT OWNERSHIP...............................17
Joint Ownership
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT........................19
Minimum Initial and Subsequent Purchase Payments
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfers
RIGHT TO REVOKE..................................22
SURRENDER (REDEMPTION)...........................22
Surrenders Under a Texas Optional
Retirement Program
Surrenders Under a Qualified Plan or Tax
Sheltered Annuity
LOAN PRIVILEGE...................................23
Minimum & Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions & Annuity Payments
Transferring the Contract
Grace Period & Loan Default
ASSIGNMENT.......................................25
CONTRACT OWNER SERVICES..........................25
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE........................26
ANNUITIZING THE CONTRACT.........................26
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
Frequency and Amount of Annuity Payments
Annuity Payment Options
DEATH BENEFITS...................................28
Death of Contract Owner - Non-Qualified
Contracts
Death of Annuitant - Non-Qualified
Contracts
Death of Contract Owner/Annuitant
Death Benefit Payment
REQUIRED DISTRIBUTIONS...........................29
Required Distributions for Non-Qualified
Contracts
Required Distributions for Qualified Plans
and Tax Sheltered Annuities
Required Distributions for IRAs and SEP
IRAs
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS.......................32
Federal Income Taxes
Qualified Plans, IRAs, SEP IRAs and Tax
Sheltered Annuities
Roth IRAs
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Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation
Skipping Transfer Taxes
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS...........................38
YEAR 2000 COMPLIANCE ISSUES......................38
LEGAL PROCEEDINGS................................39
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY..40
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION......................42
APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS................................43
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<PAGE> 8
SUMMARY OF CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless the contract owner
meets an available exception.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................7%(1)
Range of CDSC over time:
Number of Completed Years from CDSC
Date of Purchase Payment Percentage
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
1 Each contract year, the contract owner may withdraw without a CDSC any amount
in order for the contract to meet minimum distribution requirements under the
Internal Revenue Code. Starting with the second contract year, the contract
owner may withdraw without a CDSC the greater of:
a) 10% of all purchase payments made to the contract; or
b) any amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
This free withdrawal privilege is non-cumulative. Free amounts not taken during
any given contract year cannot be taken as free amounts in a subsequent contract
year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued to fund a Tax Sheltered
Annuity plan or other Qualified Plan.
MAXIMUM ANNUAL CONTRACT
MAINTENANCE CHARGE.............................$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of average account value)
Mortality and Expense Risk Charge.............1.25%
Administration Charge.........................0.05%
Total Variable Account Charges...........1.30%
2 The Contract Maintenance Charge is deducted on each contract anniversary and
on the date of surrender when a contract is surrendered in full.
3 These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis at
the annual rate noted above.
Nationwide may assess a loan processing fee at the time each new loan is
processed. Loans are only available for contracts issued as Qualified Contracts
and Tax Sheltered Annuities. Loans are not available in all states. In addition,
some states may not allow Nationwide to assess a loan processing fee (see "Loan
Privilege").
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UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER EXPENSE
REIMBURSEMENT)
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 1.00% 0.00% 0.00% 1.00%
Century VP Advantage
American Century Variable Portfolios, Inc. - American 0.97% 0.00% 0.00% 0.97%
Century VP Balanced
Fidelity VIP Growth Portfolio 0.59% 0.07% 0.00% 0.66%
Neuberger Berman AMT Balanced Portfolio 0.85% 0.18% 0.00% 1.03%
NSAT Capital Appreciation Fund 0.60% 0.07% 0.00% 0.67%
NSAT Government Bond Fund 0.50% 0.07% 0.00% 0.57%
NSAT Money Market Fund 0.40% 0.06% 0.00% 0.46%
NSAT Total Return Fund 0.59% 0.06% 0.00% 0.65%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value to calculate the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
<S> <C> <C> <C> <C>
Fidelity VIP Growth Portfolio 0.59% 0.09% 0.00% 0.68%
</TABLE>
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<PAGE> 10
EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return, and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the maximum amount of variable account
charges that could be assessed to a contract (1.30%).
The example reflects the Contract Maintenance Charge, expressed as a percentage
of average account value. Since the average account value is greater than
$1,000, the expense effect of the Contract Maintenance Charge is reduced
accordingly. Deductions for premium taxes are not reflected but may apply.
The summary of contract expenses and example are to help contract owners
understand the expenses associated with the contract.
<TABLE>
<CAPTION>
If you surrender your contract If you do not surrender your If you annuitize your contract at
the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
1 Yr. 3 Yrs 5 Yrs 10 Yrs 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> <C> <C> <C> <C>
American Century Variable 95 122 159 281 25 77 132 281 * 77 132 281
Portfolios, Inc. - American
Century VP Advantage
American Century Variable 95 121 157 278 25 76 130 278 * 76 130 278
Portfolios, Inc. - American
Century VP Balanced
Fidelity VIP Growth Portfolio 92 111 141 245 22 66 114 245 * 66 114 245
Neuberger Berman AMT 95 123 160 284 25 78 133 284 * 78 133 284
Balanced Portfolio
NSAT Capital Appreciation 92 112 141 246 22 67 114 246 * 67 114 246
Fund
NSAT Government Bond Fund 91 109 136 235 21 64 109 235 * 64 109 235
NSAT Money Market Fund 89 105 130 223 19 60 103 223 * 60 103 223
NSAT Total Return Fund 91 111 140 244 21 66 113 244 * 66 113 244
</TABLE>
* The contracts sold under this prospectus do not permit annuitization during
the first two contract years.
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<PAGE> 11
SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are flexible purchase payment
contracts.
The contracts can be categorized as:
- Non-Qualified;
- Individual Retirement Annuities;
- Roth IRAs;
- SEP IRAs;
- Tax Sheltered Annuities; and
- Qualified.
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE SUBSEQUENT
TYPE PAYMENT PAYMENTS
Non-Qualified $1,500 $0
IRA $0 $0
Roth IRA $0 $0
SEP IRA $0 $0
Tax Sheltered $0 $0
Annuity
Qualified $0 $0
CHARGES AND EXPENSES
Nationwide deducts a Mortality and Expense Risk Charge equal to an annual rate
of 1.25% of the daily net assets of the variable account. Nationwide assesses
this charge in return for bearing certain mortality and administrative risks
(see "Mortality and Expense Risk Charge").
Nationwide deducts an Administration Charge equal to an annual rate of 0.05% of
the daily net assets of the variable account. Nationwide assesses this charge to
reimburse it for administrative expenses related to contract issuance and
maintenance (see "Administration Charge").
A $30 Contract Maintenance Charge is assessed against each contract on the
contract anniversary and on the date of surrender when the contract is
surrendered in full (see "Contract Maintenance Charge").
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contract. However, Nationwide may deduct a CDSC if any amount is
withdrawn from the contract. This CDSC reimburses Nationwide for sales expenses.
The amount of the CDSC will not exceed 7% of purchase payments surrendered.
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How the contracts are taxed depends on the type of contract issued. Nationwide
will charge against the contract any premium taxes levied by any governmental
authority (see "Federal Tax Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or the amount required by
law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained without charge by contacting Nationwide's home
office at the telephone number listed on page 1 of this prospectus.
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CONDENSED FINANCIAL INFORMATION
Accumulation unit values for accumulation units outstanding throughout the
period.
<TABLE>
<CAPTION>
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENTAGE NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END CHANGE IN ACCUMULATION
BEGINNING OF OF PERIOD ACCUMULATION UNITS AT END OF
PERIOD UNIT VALUE PERIOD
<S> <C> <C> <C> <C> <C>
American Century 15.665795 18.120337 15.67% 422,481 1998
Variable Portfolios, 14.067634 15.665795 11.36% 489,435 1997
Inc. - American 13.047149 14.067634 7.82% 554,216 1996
Century VP Advantage - 11.322395 13.047149 15.23% 579,792 1995
Q 11.353606 11.322395 -0.27% 637,521 1994
10.766992 11.353606 5.45% 631,100 1993
11.335232 10.766992 -5.01% 567,361 1992
10.000000 11.335232 13.35% 81,644 1991
American Century 15.665795 18.120337 15.67% 292,874 1998
Variable Portfolios, 14.067634 15.665795 11.36% 338,288 1997
Inc. - American 13.047149 14.067634 7.82% 361,130 1996
Century VP Advantage - 11.322395 13.047149 15.23% 381,019 1995
NQ 11.353606 11.322395 -0.27% 435,585 1994
10.766992 11.353606 5.45% 394,569 1993
11.335232 10.766992 -5.01% 381,308 1992
10.000000 11.335232 13.35% 74,095 1991
American Century 17.013707 19.938436 17.19% 25,000 1998
Variable Portfolios, 15.079515 17.013707 12.83% 25,000 1997
Inc. - American 13.802855 15.079515 9.25% 25,000 1996
Century VP Advantage - 11.822996 13.802855 16.75% 25,000 1995
Initial Funding by 11.701906 11.822996 1.03% 25,000 1994
Depositor 10.953160 11.701906 6.84% 25,000 1993
11.380926 10.953160 -3.76% 25,000 1992
10.000000 11.380926 13.81% 25,000 1991
Fidelity VIP Growth 23.814680 32.787648 37.68% 1,927,875 1998
Portfolio - Q 19.539984 23.814680 21.88% 2,108,887 1997
17.260484 19.539984 13.21% 2,179,554 1996
12.918431 17.260484 33.61% 2,115,940 1995
13.090637 12.918431 -1.32% 2,002,526 1994
11.110754 13.090637 17.82% 1,261,476 1993
10.000000 11.110754 11.11% 230,277 1992
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENTAGE NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END CHANGE IN ACCUMULATION
BEGINNING OF OF PERIOD ACCUMULATION UNITS AT END OF
PERIOD UNIT VALUE PERIOD
<S> <C> <C> <C> <C> <C>
Fidelity VIP Growth 23.814680 32.787648 37.68% 1,322,563 1998
Portfolio - NQ 19.539984 23.814680 21.88% 2,108,887 1997
17.260484 19.539984 13.21% 1,424,891 1996
12.918431 17.260484 33.61% 1,355,537 1995
13.090637 12.918431 -1.32% 1,277,932 1994
11.110754 13.090637 17.82% 774,591 1993
10.000000 11.110754 11.11% 106,598 1992
Neuberger Berman AMT 17.698323 19.595500 10.72% 804,995 1998
Balanced Portfolio - Q 15.011108 17.698323 17.90% 881,853 1997
14.230121 15.011108 5.49% 972,426 1996
11.649194 14.230121 22.16% 1,005,274 1995
12.212412 11.649194 -4.61% 1,054,136 1994
11.622919 12.212412 5.07% 865,795 1993
10.898230 11.622919 6.65% 340,227 1992
10.000000 10.898230 8.98% 75,420 1991
Neuberger Berman AMT 17.698323 19.595500 10.72% 618,690 1998
Balanced Portfolio - NQ 15.011108 17.698323 17.90% 677,902 1997
14.230121 15.011108 5.49% 692,598 1996
11.649194 14.230121 22.16% 720,442 1995
12.212412 11.649194 -4.61% 750,875 1994
11.622919 12.212412 5.07% 585,961 1993
10.898230 11.622919 6.65% 220,551 1992
10.000000 10.898230 8.98% 60,640 1991
NSAT Capital 23.867569 30.616503 28.28% 341,118 1998
Appreciation Fund - Q 17.979967 23.867569 32.75% 304,490 1997
14.442619 17.979967 24.49% 266,039 1996
11.311683 14.442619 27.68% 225,959 1995
11.564256 11.311683 -2.18% 208,910 1994
10.689287 11.564256 8.19% 147,387 1993
10.000000 10.689287 6.89% 76,891 1992
NSAT Capital 23.867569 30.616503 28.28% 275,617 1998
Appreciation Fund - NQ 17.979967 23.867569 32.75% 248,251 1997
14.442619 17.979967 24.49% 203,910 1996
11.311683 14.442619 27.68% 150,819 1995
11.564256 11.311683 -2.18% 133,507 1994
10.689287 11.564256 8.19% 83,313 1993
10.000000 10.689287 6.89% 26,931 1992
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENTAGE NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END CHANGE IN ACCUMULATION
BEGINNING OF OF PERIOD ACCUMULATION UNITS AT END OF
PERIOD UNIT VALUE PERIOD
<S> <C> <C> <C> <C> <C>
NSAT Government Bond 19.674364 21.148524 7.49% 765,133 1998
Fund - Q 18.176386 19.674364 8.24% 829,592 1997
17.796519 18.176386 2.13% 980,638 1996
15.183984 17.796519 17.21% 1,126,015 1995
15.897022 15.183984 -4.49% 1,239,363 1994
14.70659 15.897022 8.09% 1,367,157 1993
13.813851 14.706659 6.46% 752,340 1992
11.992728 13.813851 15.19% 274,658 1991
11.097621 11.992728 8.07% 57,830 1990
10.000000 11.097621 10.98% 20,484 1989
NSAT Government Bond 19.674364 21.148524 7.49% 717,431 1998
Fund - NQ 18.176386 19.674364 8.24% 811,841 1997
17.796519 18.176386 2.13% 925,418 1996
15.183984 17.796519 17.21% 1,070,693 1995
15.897022 15.183984 -4.49% 1,252,040 1994
14.706659 15.897022 8.09% 1,621,366 1993
13.813851 14.706659 6.46% 907,407 1992
11.992728 13.813851 15.19% 273,526 1991
11.097621 11.992728 8.07% 26,224 1990
10.000000 11.097621 10.98% 12,219 1989
NSAT Money Market Fund 14.217123 14.772116 3.90% 158,971 1998
- - Q* 13.684658 14.217123 3.89% 140,599 1997
13.190835 13.684658 3.74% 198,448 1996
12.648732 13.190835 4.29% 198,306 1995
12.335970 12.648732 2.54% 243,508 1994
12.163583 12.335970 1.42% 219,425 1993
11.918088 12.163583 2.06% 81,507 1992
11.409868 11.918088 4.45% 30,026 1991
10.697214 11.409868 6.66% 12,581 1990
10.000000 10.697214 6.97% 7,499 1989
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENTAGE NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END CHANGE IN ACCUMULATION
BEGINNING OF OF PERIOD ACCUMULATION UNITS AT END OF
PERIOD UNIT VALUE PERIOD
<S> <C> <C> <C> <C> <C>
NSAT Money Market Fund 14.217123 14.772116 3.90% 155,307 1998
- - NQ* 13.684658 14.217123 3.89% 116,206 1997
13.190835 13.684658 3.74% 77,424 1996
12.648732 13.190835 4.29% 116,648 1995
12.335970 12.648732 2.54% 201,493 1994
12.163583 12.335970 1.42% 22,994 1993
11.918088 12.163583 2.06% 17,994 1992
11.409868 11.918088 4.45% 17,458 1991
10.697214 11.409868 6.66% 7,048 1990
10.000000 10.697214 6.97% 5,810 1989
NSAT Total Return Fund 29.258290 34.097665 16.54% 1,467,465 1998
- - Q 22.903028 29.258290 27.75% 1,599,168 1997
19.046261 22.903028 20.25% 1,595,854 1996
14.947703 19.046261 27.42% 1,532,690 1995
14.983077 14.947703 -0.24% 1,489,726 1994
13.685960 14.983077 9.48% 940,099 1993
12.817934 13.685960 6.77% 422,454 1992
9.377328 12.817934 36.69% 211,385 1991
10.331410 9.377328 -9.23% 104,570 1990
10.000000 10.331410 3.31% 36,803 1989
NSAT Total Return Fund 29.258290 34.097665 16.54% 1,111,401 1998
- - NQ 22.903028 29.258290 27.75% 1,225,202 1997
19.046261 22.903028 20.25% 1,212,306 1996
14.947703 19.046261 27.42% 1,144,873 1995
14.983077 14.947703 -0.24% 1,101,155 1994
13.685960 14.953077 9.48% 695,447 1993
12.817934 13.685960 6.77% 260,054 1992
9.377328 12.817934 36.69% 134,155 1991
10.331410 9.377328 -9.23% 69,634 1990
10.000000 10.331410 3.31% 9,802 1989
</TABLE>
*The 7-day yield on the NSAT Money Market Fund as of December 31, 1998, was
3.52%.
The American Century Variable Portfolios, Inc. - American Century VP Balanced
was added to the variable account on May 1, 1999. Therefore, no Condensed
Financial Information is available.
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<PAGE> 16
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in
February, 1981. Nationwide is a member of the "Nationwide Insurance Enterprise"
with its home office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide
is a provider of life insurance, annuities and retirement products. It is
admitted to do business in 48 states and the District of Columbia.
NATIONWIDE ADVISORY SERVICES, INC.
The contracts are distributed by the general distributor, Nationwide Advisory
Services, Inc. ("NAS"), Three Nationwide Plaza, Columbus, Ohio 43215. NAS is a
wholly owned subsidiary of Nationwide Life Insurance Company.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide VA Separate Account-A is a separate account that invests in the
underlying mutual funds listed in Appendix A. Nationwide established the
separate account on May 6, 1987, pursuant to Ohio law. The variable account was
originally established as the "Financial Horizons VA Separate Account - 1."
Subsequently, the name was changed to "Nationwide VA Separate Account - A" by a
Board of Directors resolution. Although the separate account is registered with
the SEC as a unit investment trust pursuant to the Investment Company Act of
1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or
the variable account.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts. Nationwide uses the assets of
each sub-account to buy shares of the underlying mutual funds based on contract
owner instructions. There are two sub-accounts for each underlying mutual fund.
One sub-account contains shares attributable to accumulation units under
Non-Qualified Contracts. The other contains shares attributable to accumulation
units under Individual Retirement Accounts, Roth IRAs, SEP IRAs, Tax Sheltered
Annuities, and Qualified Contracts.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies, or in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Contract owners should not compare the performance of a publicly traded
fund with the performance of underlying mutual funds participating in the
variable account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is
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<PAGE> 17
allowed to vote in its own right, it may elect to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC and state insurance departments.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to accuracy
and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rates(s) depending on the following
categories of fixed account allocations:
- - New Money Rate - The rate credited on the fixed account allocation when
the contract is purchased or when subsequent purchase payments are made.
Subsequent purchase payments may receive different New Money Rates than the
rate when the contract was issued, since the New Money Rate is subject to
change based on market conditions.
- - Variable Account to Fixed Rate - Allocations transferred from any of the
underlying mutual funds in the variable account to the fixed account may
receive a
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<PAGE> 18
different rate. The rate may be lower than the New Money Rate.
There may be limits on the amount and frequency of movements from the
variable account to the fixed account.
- - Renewal Rate - The rate available for maturing fixed account allocations
that are entering a new guarantee period. The contract owner will be
notified of this rate in a letter issued with the quarterly statements when
any of the money in the contract owner's fixed account matures. At that
time, the contract owner will have an opportunity to leave the money in the
fixed account and receive the Renewal Rate or the contract owner can move
the money to any of the underlying mutual fund options.
- - Dollar Cost Averaging - From time to time, Nationwide may offer a more
favorable rate for an initial purchase payment into a new contract when
used in conjunction with a Dollar Cost Averaging program.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until the end of the
calendar quarter during the 12 month anniversary in which the fixed account
allocation occurs.
Credited interest rates are annualized rates - the effective yield of interest
over a one-year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
The guaranteed rate for any purchase payment will be effective for not less than
twelve months. Nationwide guarantees that the rate will not be less than 3.0%
per year.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less any applicable charges including
CDSC.
STANDARD CHARGES AND DEDUCTIONS
CONTRACT MAINTENANCE CHARGE
On each contract anniversary (and upon a full surrender of the contract),
Nationwide deducts a Contract Maintenance Charge. This charge reimburses
Nationwide for administrative expenses involved in issuing and maintaining the
contract.
The charges are as follows:
ANNUAL CONTRACT TYPE OF
MAINTENANCE CHARGE CONTRACT
ISSUED
- Non-Qualified Contracts
- IRAs
- Tax Sheltered Annuities sold
$30.00 before May 1, 1992
- Qualified Contracts sold
before May 1, 1992.(1)
$12.00 - Tax Sheltered Annuities sold
on or after May 1, 1992.(2)
$30.00 to $0.00 - Qualified Contracts and
SEP-IRA Contracts sold on or
after May 1, 1992.(3)
1 If an Internal Revenue Code Section 401 plan funded by the contracts was
established before May 1, 1992, all contracts subsequently issued under that
plan will have an annual Contract Maintenance Charge of $30.00.
2 The Contract Maintenance Charge for these plans may be lowered to reflect
administrative savings.
3 Nationwide uses internal underwriting guidelines to determine the Contract
Maintenance Charge for these contract types. These guidelines include: the
size of the group, the average participant account balance to be transferred,
if any, and administrative savings. Contract Maintenance Charges for these
contracts will vary in $5.00 increments between $0 and $30.
The deduction of the Contract Maintenance Charge will be taken proportionately
from each sub-account and the fixed account based on the
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<PAGE> 19
value in each option as compared to the total contract value.
Nationwide will not increase the Contract Maintenance Charge. Nationwide will
not reduce or eliminate the Contract Maintenance Charge where it would be
discriminatory or unlawful.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide deducts Mortality and Expense Risk Charge from the variable account.
This amount is computed on a daily basis, and is equal to an annual rate of
1.25% of the daily net assets of the variable account.
The mortality risk charges (0.80%) compensate Nationwide for guaranteeing the
annuity rate of the contracts. This guarantee ensures that the annuity rates
will not change regardless of the death rates of annuity payees or the general
population.
The expense risk charges (0.45%) compensate Nationwide for guaranteeing that
administration charges will not increase regardless of actual expenses.
If the Mortality and Expense Risk Charge is insufficient to cover actual
expenses, the loss is borne by Nationwide.
ADMINISTRATION CHARGE
Nationwide deducts an Administration Charge from the variable account. This
amount is computed on a daily basis, and is equal to an annual rate of 0.05% of
the daily net assets of the variable account.
The Administration Charge compensates Nationwide for administrative expenses
related to contract issuance and maintenance.
If this charge is insufficient to cover actual expenses, the loss is borne by
Nationwide.
CONTINGENT DEFERRED SALES CHARGE
No sales charge deduction is made from the purchase payments when amounts are
deposited into the contracts. However, if any part of the contract is
surrendered, Nationwide will deduct a CDSC. The CDSC will not exceed 7% of
purchase payments surrendered.
The CDSC is calculated by multiplying the applicable CDSC percentage (noted
below) by the amount of purchase payments surrendered.
For purposes of calculating the CDSC, surrenders are considered to come first
from the oldest purchase payment made to the contract, then the next oldest
purchase payment, and so forth. For tax purposes, a surrender is usually treated
as a withdrawal of earnings first.
The CDSC applies as follows:
Number of Years from Date CDSC
of Purchase Payment Percentage
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
The CDSC is used to cover sales expenses, including commissions (maximum of
6.08% of purchase payments), production of sales material, and other promotional
expenses. If expenses are greater than the CDSC, the shortfall will be made up
from Nationwide's general account, which may indirectly include portions of the
Contract Maintenance Charge and other variable account charges, since Nationwide
may generate a profit from these charges.
Contract owners taking withdrawals before age 59 1/2 may be subject to a 10% tax
penalty. In addition, all or a portion of the withdrawal may be subject to
federal income taxes (see "Non-Qualified Contracts - Natural Persons as Contract
Owners").
Waiver of Contingent Deferred Sales Charge
Each contract year, the contract owner may withdraw without a CDSC any amount
withdrawn to meet minimum distribution requirements under the Internal Revenue
Code. Starting with the second contract year, a
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<PAGE> 20
contract owner may withdraw without a CDSC the greater of:
(a) 10% of all purchase payments; or
(b) any amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
This CDSC-free privilege is non-cumulative. Free amounts not taken during any
given contract year cannot be taken as free amounts in a subsequent contract
year.
In addition, no CDSC will be deducted:
(1) upon the annuitization of contracts which have been in force for at least
two years;
(2) upon payment of a death benefit; or
(3) from any values which have been held under a contract for at least 7
years.
No CDSC applies to transfers among sub-accounts or between or among the fixed
account and the variable account. Nationwide may waive the CDSC if a contract
described in this prospectus is exchanged for another Nationwide contract (or a
contract of any of its affiliated insurance companies). A CDSC may apply to the
contract received in the exchange.
Nationwide will waive the CDSC on Qualified Contracts, Tax Sheltered Annuities,
and SEP IRAs when:
- - the plan participant experiences a hardship (as provided in Internal
Revenue Code Section 403(b) and as defined for purposes of Section 401(k));
- - the plan participant becomes disabled (within the meaning of Internal
Revenue Code Section 72(m)(7));
- - the plan participant reaches age 591/2 and has participated in the
contract for least 5 years (as determined from the previous contract
anniversary);
- - the plan participant has participated in the contract for at least 15 years
(as determined from the previous contract anniversary);
- - the plan participant dies; or
- - the contract is annuitized after 2 years from the date of contract
issuance.
Nationwide will waive the CDSC on Non-Qualified Contracts and IRAs other than
SEP IRAs when:
- - the annuitant dies; or
- - the contract is annuitized after 2 years from the date of contract
issuance.
Nationwide may waive or reduce the CDSC for Non-Qualified Contracts when sales
are made without commission or other standard distribution expenses, resulting
in savings of distribution costs.
The CDSC will not be eliminated if to do so would be unfairly discriminatory or
prohibited by state law.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
3.5%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract. Purchasers who name
someone other than themselves as the contract owner will have no rights under
the contract.
Contract owners of Non-Qualified Contracts may name a new contract owner at any
time before the annuitization date. Any change of contract owner automatically
revokes any prior contract owner
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<PAGE> 21
designation. Changes in contract ownership may result in federal income taxation
and may be subject to state and federal gift taxes.
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect any payments made or actions
taken by Nationwide before it was recorded.
The contract owner may also request a change in the annuitant, beneficiary, or
contingent beneficiary before the annuitization date. These changes must be:
- on a Nationwide form;
- signed by the contract owner; and
- received at Nationwide's home office before the annuitization date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
On the annuitization date, the annuitant will become the contract owner.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract.
Contract owners can name a joint owner at any time before annuitization subject
to the following conditions:
- Joint owners can only be named for Non-Qualified Contracts;
- Joint owners must be spouses at the time joint ownership is requested,
unless state law requires Nationwide to allow non-spousal joint owners;
- The exercise of any ownership right in the contract will generally require
a written request signed by both joint owners;
- Nationwide will not be liable for any loss, liability, cost, or expense
for acting in accordance with the instructions of either joint owner;
- An election in writing signed by both contract owners must be made to
authorize Nationwide to allow the exercise of ownership rights
independently by either joint owner.
ANNUITANT
The annuitant is the person who will receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 78 or younger at the time of contract issuance, unless
Nationwide approves a request for an annuitant of greater age. The annuitant may
be changed before the annuitization date with Nationwide's consent.
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person(s) who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's lifetime by submitting a written request to Nationwide. Once
recorded, the change will be effective as of the date it was signed, whether or
not the annuitant was living at the time it was recorded. The change will not
affect any action taken by Nationwide before the change was recorded.
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<PAGE> 22
OPERATION OF THE CONTRACT
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE SUBSEQUENT
TYPE PAYMENT PAYMENTS
Non-Qualified $1,500 $0
IRA $0 $0
Roth IRA $0 $0
SEP IRA $0 $0
Tax Sheltered $0 $0
Annuity
Qualified $0 $0
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received. The cumulative total of
all purchase payments under contracts on the life of any one annuitant cannot
exceed $1,000,000 without Nationwide's prior consent.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- - New Year's Day - Independence Day
- - Martin Luther King, Jr. Day - Labor Day
- - Presidents Day - Thanksgiving
- - Good Friday - Christmas
- - Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value may be affected since the contract owner would
not have access to their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to sub-accounts and/or the fixed account
as instructed by the contract owner. Shares of the underlying mutual funds
allocated to the sub-accounts are purchased at net asset value, then converted
into accumulation units. Contract owners can change allocations or make
exchanges among the sub-accounts and the fixed account. However, no change may
be made that would result in an amount less than 1% of the purchase payments
being allocated to any sub-account. Certain transactions may be subject to
conditions imposed by the underlying mutual funds, as well as those set forth in
the contract.
DETERMINING THE CONTRACT VALUE
The contract value is the sum of:
1) the value of amounts allocated to the sub-accounts of the variable account;
and
2) amounts allocated to the fixed account.
If part or all of the contract value is surrendered, or charges are assessed
against the contract value, Nationwide will deduct a proportionate amount from
each sub-account and the fixed account based on current cash values.
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation
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<PAGE> 23
units. Accumulation unit values (for each sub-account) are determined by
calculating the net investment factor for the underlying mutual funds for the
current valuation period and multiplying that result with the accumulation unit
values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the end of
the current valuation period; and
(2) the per share amount of any dividend or income distributions made by
the underlying mutual fund (if the ex-dividend date occurs during the
current valuation period).
(b) is the net asset value of the underlying mutual fund determined as of the
end of the preceding valuation period.
(c) is a factor representing the daily variable account charges. The factor
is equal to an annual rate of 1.30% of the daily net assets of the
variable account.
Based on the change in the net investment factor, the value of an accumulation
unit may increase or decrease. Changes in the net investment factor may not be
directly proportional to changes in the net asset value of the underlying mutual
fund shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
2) adding any interest earned on the amounts allocated.
TRANSFERS
Transfers from the Fixed Account to the Variable Account
Fixed account allocations may be transferred to the variable account only upon
reaching the end of an interest rate guarantee period. Normally, Nationwide will
permit 100% of such fixed account allocations to be transferred to the variable
account; however Nationwide may, under certain economic conditions and at its
discretion, limit the maximum transferable amount. Under no circumstances will
the maximum transferable amount be less than 10% of the fixed account allocation
reaching the end of an interest rate guarantee period. Transfers of the fixed
account allocations must be made within 45 days after reaching the end of an
interest rate guarantee period.
Contract owners who use Dollar Cost Averaging may transfer from the fixed
account to the variable account under the terms of that program (see "Dollar
Cost Averaging").
Transfers to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account; however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account. Except as noted below, under no
circumstances will the transfer limit be less than
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10% of the current value of the variable account, less any transfers made in the
12 months preceding the date the transfer is requested, but not including
transfers made prior to the imposition of the transfer limit. However, where
permitted by state law, Nationwide reserves the right to refuse transfers or
purchase payments to the fixed account when the fixed account value is greater
than or equal to 30% of the contract value at the time the purchase payment is
made or the transfer is requested.
Transfer Requests
Nationwide will accept transfer requests in writing or, in those states that
allow them, over the telephone. Nationwide will use reasonable procedures to
confirm that telephone instructions are genuine and will not be liable for
following telephone instructions that it reasonably determined to be genuine.
Nationwide may withdraw the telephone exchange privilege upon 30 days written
notice to contract owners.
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same. Within 45 days of the end of an
interest rate guarantee period, transfers may be made from the fixed account to
the variable account. Nationwide will determine the amount that may be
transferred and will declare this amount at the end of the guarantee period.
This amount will not be less than 10% of the amount in the fixed account that is
maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account, this period begins on the date of
deposit or transfer and ends on the one year anniversary of the deposit or
transfer. The guaranteed interest rate period may last for up to 3 months beyond
the 1 year anniversary because guaranteed terms end on the last day of a
calendar quarter.
During an interest rate guarantee period, transfers cannot be made from the
fixed account, and amounts transferred to the fixed account must remain on
deposit.
Market Timing Firms
Some contract owners may use market timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market-timing firms will submit transfer or exchange requests on
behalf of multiple contract owners at the same time. Sometimes this can result
in unusually large transfers of funds. These large transfers might interfere
with the ability of Nationwide or the underlying mutual fund to process
transactions. This can potentially disadvantage contract owners not using
market-timing firms. To avoid this, Nationwide may modify transfer and exchange
rights of contract owners who use market timing firms (or other third parties)
to transfer or exchange funds on their behalf.
The exchange and transfer rights of individual contract owners will not be
modified in any way when instructions are submitted directly by the contract
owner, or by the contract owner's representative (as authorized by the execution
of a valid Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse exchange and transfer
requests:
- - submitted by any agent acting under a power of attorney on behalf of more
than one contract owner; or
- - submitted on behalf of individual contract owners who have executed
pre-authorized exchange forms which are submitted by market timing firms
(or other third parties) on behalf of more than one contract owner at the
same time.
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Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. The refunded contract value will reflect the deduction of any contract
charges, unless otherwise required by law. All IRA, SEP IRA and Roth IRA refunds
will be a return of purchase payments. State and/or federal law may provide
additional free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
Nationwide will pay any amounts surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer.
PARTIAL SURRENDERS (PARTIAL REDEMPTIONS)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account. The amount withdrawn from each investment option will be
in proportion to the value in each option at the time of the surrender request.
A CDSC may apply. The contract owner may direct Nationwide to deduct the CDSC
from either:
a) the amount requested; or
b) the contract value remaining after the contract owner has received the
amount requested.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the contract value remaining after the contract owner has
received the amount requested.
FULL SURRENDERS (FULL REDEMPTIONS)
The contract value upon full surrender may be more or less than the total of all
purchase payments made to the contract. The contract value will reflect variable
account charges, underlying mutual fund charges and the investment performance
of the underlying mutual funds. A CDSC may apply.
SURRENDERS UNDER A TEXAS OPTIONAL RETIREMENT PROGRAM
Redemption restrictions apply to contracts issued under the Texas Optional
Retirement Program.
The Texas Attorney General has ruled that participants in contracts issued under
the Texas Optional Retirement Program may only take withdrawals if:
- - the participant dies;
- - the participant retires;
- - the participant terminates employment due to total disability; or
- - the participant that works in a Texas public institution of higher
education terminates employment.
Due to the restrictions described above, a participant under this plan will not
be able to withdraw cash values from the contract unless one of the applicable
conditions is met. However, contract value may be transferred to other carriers,
subject to any CDSC.
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Nationwide issues this contract to participants in the Texas Optional Retirement
Program in reliance upon and in compliance with Rule 6c-7 of the Investment
Company Act of 1940.
SURRENDERS UNDER A QUALIFIED PLAN OR TAX SHELTERED ANNUITY
Contract owners of a Qualified Plan or Tax Sheltered Annuity may surrender part
or all of their contract value before the earlier of the annuitization date or
the annuitant's death, except as provided below:
A. Contract value attributable to contributions made under a qualified cash or
deferred arrangement (within the meaning of Internal Revenue Code Section
402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal
Revenue Code Section 402(g)(3)(C)), or transfers from a Custodial Account
(described in Section 403(b)(7) of the Internal Revenue Code), may be
surrendered only:
1. when the contract owner reaches age 59 1/2, separates from service,
dies, or becomes disabled (within the meaning of Internal Revenue Code
Section 72(m)(7)); or
2. in the case of hardship (as defined for purposes of Internal Revenue
Code Section 401(k)), provided that any such hardship surrender may NOT
include any income earned on salary reduction contributions.
B. The surrender limitations described in Section A also apply to:
1. salary reduction contributions to Tax Sheltered Annuities made for plan
years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year beginning
before January 1, 1989, on amounts attributable to salary reduction
contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts (except that
earnings and employer contributions as of December 31, 1988 in such
Custodial Accounts may be withdrawn in the case of hardship).
C. Any distribution other than the above, including a ten day free look
cancellation of the contract (when available) may result in taxes,
penalties, and/or retroactive disqualification of a Qualified Contract or
Tax Sheltered Annuity.
In order to prevent disqualification of a Tax Sheltered Annuity after a ten day
free look cancellation, Nationwide will transfer the proceeds to another Tax
Sheltered Annuity upon proper direction by the contract owner.
These provisions explain Nationwide's understanding of current withdrawal
restrictions. These restrictions may change.
Distributions pursuant to Qualified Domestic Relations Orders will not violate
the restrictions stated above.
Plan terms and the Internal Revenue Code may modify surrender provisions when
the contract is issued to fund a Qualified Plan.
LOAN PRIVILEGE
The loan privilege is ONLY available to owners of Qualified Contracts and Tax
Sheltered Annuities. These contract owners can take loans from the contract
value beginning 30 days after the contract is issued up to the annuitization
date. Loans are subject to the terms of the contract, the plan, and the Internal
Revenue Code. Nationwide may modify the terms of a loan to comply with changes
in applicable law.
MINIMUM & MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer. Loans may be taxable if
a participant has
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additional loans from other plans. The total of all outstanding loans must not
exceed the following limits:
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
NON-ERISA up to up to 80% of contract
PLANS $20,000 value (not more than
$10,000)
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
*The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
For salary reduction Tax Sheltered Annuities, loans may be secured only by the
contract value.
LOAN PROCESSING FEE
Nationwide may charge a loan processing fee at the time each new loan is
processed. If assessed, this fee compensates Nationwide for expenses related to
administering and processing loans.
The fee is taken from the sub-accounts and the fixed account in proportion to
the contract value at the time the loan is processed.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. No CDSC
will be deducted on transfers related to loan processing.
INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The interest rate will be 2.25% less
than the loan interest rate fixed by Nationwide. It is guaranteed never to fall
below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
DISTRIBUTIONS & ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
- the contract is surrendered;
- the contract owner/annuitant dies;
- the contract owner who is not the annuitant dies prior to annuitization; or
- annuity payments begin.
TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD & LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early
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withdrawal tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
ASSIGNMENT
Contract rights are personal to the contract owner and may not be assigned
without Nationwide's written consent.
A Non-Qualified Contract owner may assign some or all rights under the contract.
An assignment must occur before annuitization while the annuitant is alive. Once
proper notice of assignment is recorded by Nationwide's home office, the
assignment will become effective as of the date the written request was signed.
IRAs, Roth IRAs, SEP IRAs, Qualified Contracts and Tax Sheltered Annuities may
not be assigned, pledged or otherwise transferred except where allowed by law.
Nationwide is not responsible for the validity or tax consequences of any
assignment. Nationwide is not liable for any payment or settlement made before
the assignment is recorded. Assignments will not be recorded until Nationwide
receives sufficient direction from the contract owner and the assignee regarding
the proper allocation of contract rights.
Amounts pledged or assigned will be treated as distributions and will be
included in gross income to the extent that the cash value exceeds the
investment in the contract for the taxable year in which it was pledged or
assigned. Amounts assigned may be subject to a tax penalty equal to 10% of the
amount included in gross income.
Assignment of the entire contract value may cause the portion of the contract
value exceeding the total investment in the contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect.
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account. Requests for asset rebalancing
must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Qualified Plan or Tax Sheltered Annuity plan. Contract
owners should consult a financial adviser to discuss the use of asset
rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Contract owners may participate in this program if their contract
value is $15,000 or more. Nationwide does not guarantee that this program will
result in profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the following underlying mutual funds: NSAT
Government Bond Fund and NSAT Money Market Fund to any other underlying mutual
fund. The minimum monthly
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transfer is $100. Transfers from the fixed account must be equal to or less than
1/30th of the fixed account value when the Dollar Cost Averaging program is
requested.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new Dollar Cost Averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners to receive a specified amount (of
at least $100) on a monthly, quarterly, semi-annual, or annual basis. Requests
for systematic withdrawals and requests to discontinue systematic withdrawals
must be in writing.
The withdrawals will be taken from the sub-accounts and the fixed account
proportionately unless Nationwide is instructed otherwise. A CDSC may apply.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a
Qualified Plan or Tax Sheltered Annuity plan, annuitization may occur during the
first 2 years subject to Nationwide's approval.
ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or an available
combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payment
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an age last birthday basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to the
fixed payment annuity table for the annuity payment option elected.
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Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
The first payment under a variable payment annuity is determined on the
annuitization date on an age last birthday basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to the
variable payment annuity table for the annuity payment option elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
Assumed Investment Rate
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment
and to calculate the investment performance of an underlying mutual fund in
order to determine subsequent payments under a variable payment annuity. An
assumed investment rate is the percentage rate of return required to maintain
level variable annuity payments. Subsequent variable annuity payments may be
more or less than the first payment based on whether actual investment
performance is higher or lower than the assumed investment rate of 3.5%.
Value of an Annuity Unit
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
Exchanges among Underlying Mutual Funds
Exchanges among underlying mutual funds during annuitization must be in writing.
Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
- the amount to be distributed is less than $500, in which case Nationwide
may make one lump sum payment of the contract value; or
- an annuity payment would be less than $20, in which case Nationwide can
change the frequency of payments to intervals that will result in payments
of at least $20. Payments will be made at least annually.
ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually, for
the lifetime of the
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annuitant. Payments will end upon the annuitant's death. For example, if
the annuitant dies before the second annuity payment date, the annuitant
will receive only one annuity payment. The annuitant will only receive two
annuity payments if he or she dies before the third annuity payment date,
and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but at
least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments will
continue for the lifetime of the survivor. As is the case under option 1,
there is no guaranteed number of payments. Payments end upon the death of
the last surviving party, regardless of the number of payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant dies
before all of the guaranteed payments have been made, payments will
continue to the end of the guaranteed period and will be paid to a designee
chosen by the annuitant at the time the annuity payment option was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed as of
the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified Contracts will be made until an annuity
payment option has been elected. IRAs, SEP IRAs, and Tax Sheltered Annuities are
subject to the "minimum distribution" requirements set forth in the plan,
contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER - NON-QUALIFIED CONTRACTS
If the contract owner who is not the annuitant dies before the annuitization
date, the joint owner becomes the contract owner. If no joint owner is named,
the annuitant becomes the contract owner.
Distributions under Non-Qualified Contracts will be made pursuant to the
"Required Distributions for Non-Qualified Contracts" provision.
DEATH OF ANNUITANT - NON-QUALIFIED CONTRACTS
If the annuitant who is not the contract owner dies before the annuitization
date, a death benefit is payable to the beneficiary unless a contingent
annuitant is named. If a contingent annuitant is named, the contingent annuitant
becomes the annuitant and no death benefit is payable.
The beneficiary may elect to receive the death benefit:
(1) in a lump sum;
(2) as an annuity; or
(3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
If no beneficiaries survive the annuitant, the contingent beneficiary(ies)
receives the death benefit. Contingent beneficiaries will share the death
benefit equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
DEATH OF CONTRACT OWNER/ANNUITANT
If a contract owner who is also the annuitant dies before the annuitization
date, a death benefit is
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payable according to the "Death of the Annuitant - Non-Qualified Contracts"
provision.
If the contract owner/annuitant dies after the annuitization date, any benefit
that may be payable will be paid according to the selected annuity payment
option.
DEATH BENEFIT PAYMENT
The death benefit value is determined as of the date Nationwide receives:
(1) proper proof of the annuitant's death;
(2) an election specifying the distribution method; and
(3) any state required form(s).
For contracts issued BEFORE May 1, 1991, the death benefit will be the greater
of:
1) the contract value; or
2) the total of all purchase payments, less any amounts surrendered.
For contracts issued ON OR AFTER May 1, 1991 UP TO the later of May 1, 1998 or a
date insurance authorities approve applicable contract modifications, if the
annuitant dies before his or her 75th birthday, the death benefit will be the
greater of:
1) the contract value; or
2) the total of all purchase payments, increased at an annual rate of 5%
simple interest for each year the purchase payment is in force, less any
amounts previously surrendered.
For contracts issued ON OR AFTER the later of May 1, 1998 or the date state
insurance authorities approve applicable contract modifications, the death
benefit will be the greater of:
1) the contract value; or
2) the total of all purchase payments, increased at an annual rate of 5%
simple interest for each year the purchase payment is in force, less an
adjustment for amounts previously surrendered.
The adjustment for amounts surrendered will reduce item (2) above in the same
proportion that the contract value was reduced on the date(s) of the partial
surrender(s).
Some states prohibit the use of the death benefit described in this provision
(e.g. North Carolina). For contracts issued in NORTH CAROLINA BEFORE May 1,
1998, the death benefit will be the greater of:
1) the contract value; or
2) the total of all purchase payments, less any amounts surrendered.
For contracts issued in NORTH CAROLINA ON OR AFTER May 1, 1998, the death
benefit will be the greater of:
1) the contract value; or
2) the total of all purchase payments, less an adjustment for amounts
surrendered.
The adjustment for amounts surrendered will reduce item (2) above in the same
proportion that the contract value was reduced on the date(s) of the partial
surrender(s).
For all contracts, if the annuitant dies on or after his or her 75th birthday,
the death benefit will be the contract value.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CONTRACTS
Internal Revenue Code Section 72(s) requires Nationwide to make certain
distributions when a contract owner dies. The following distributions will be
made according to those requirements:
1) If any contract owner dies on or after the annuitization date and before
the entire interest in the contract has been distributed, then the
remaining interest must be distributed at least as rapidly as the
distribution method in effect on the contract owner's death.
2) If any contract owner dies before the annuitization date, then the entire
interest in the contract (consisting of either the
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death benefit or the contract value reduced by charges set forth
elsewhere in the contract) will be distributed within 5 years of the
contract owner's death, provided however:
a) any interest payable to or for the benefit of a natural person
(referred to herein as a "designated beneficiary"), may be
distributed over the life of the designated beneficiary or over a
period not longer than the life expectancy of the designated
beneficiary. Payments must begin within one year of the contract
owner's death unless otherwise permitted by federal income tax
regulations;
b) if the designated beneficiary is the surviving spouse of the deceased
contract owner, the spouse can choose to become the contract owner
instead of receiving a death benefit. Any distributions required
under these distribution rules will be made upon that spouse's death.
In the event that the contract owner is NOT a natural person (e.g., a trust or
corporation), then, for purposes of these distribution provisions:
a) the death of the annuitant will be treated as the death of a contract
owner;
b) any change of annuitant will be treated as the death of a contract owner;
and
c) in either case, the appropriate distribution will be made upon the death
or change, as the case may be.
These distribution provisions do not apply to any contract exempt from Section
72(s) of the Internal Revenue Code by reason of Section 72(s)(5) or any other
law or rule.
The designated beneficiary must elect a method of distribution and notify
Nationwide of this election within 60 days of the contract owner's death.
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS AND TAX SHELTERED ANNUITIES
Distributions from Qualified Plans and Tax Sheltered Annuities will be made
according to the Minimum Distribution and Incidental Benefit ("MDIB") provisions
of Section 401(a)(9) of the Internal Revenue Code. Distributions will be made to
the annuitant according to the selected annuity payment option over a period not
longer than
a) the life of the annuitant or the joint lives of the annuitant and the
annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant or the
joint life expectancies of the annuitant and the annuitant's designated
beneficiary.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Tax Sheltered Annuity of the annuitant.
If the annuitant's entire interest in a Qualified Plan or Tax Sheltered Annuity
will be distributed in equal or substantially equal payments over a period
described in a) or b), the payments will begin on the required beginning date.
The required beginning date is the later of:
a) April 1 of the calendar year following the calendar year in which the
annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Distribution commencing on the required distribution date must satisfy minimum
distribution and incidental benefit provisions set forth in the Internal Revenue
Code. Those provisions require that distributions cannot be less than the amount
determined by dividing the annuitant's interest in the Tax Sheltered
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Annuity determined by the end of the previous calendar year by (a) the
annuitant's life expectancy; or, if applicable, (b) the joint and survivor life
expectancy of the annuitant and the annuitant's beneficiary. The life
expectancies and joint life expectancies are determined by reference to Treasury
Regulation 1.72-9.
If the annuitant dies before distributions begin, the interest in the Qualified
Contract or Tax Sheltered Annuity must be distributed by December 31 of the
calendar year in which the fifth anniversary of the annuitant's death occurs
unless:
a) the annuitant names his or her surviving spouse as the beneficiary and
the spouse chooses to receive distribution of the contract in
substantially equal payments over his or her life (or a period not longer
than his or her life expectancy) and beginning no later than December 31
of the year in which the annuitant would have attained age 70 1/2; or
b) the annuitant names a beneficiary other than his or her surviving spouse
and the beneficiary elects to receive distribution of the contract in
substantially equal payments over his or her life (or a period not longer
than his or her life expectancy) beginning no later than December 31 of
the year following the year in which the annuitant dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
REQUIRED DISTRIBUTIONS FOR IRAS AND SEP IRAS
Distributions from an IRA or SEP IRA must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner reaches
age 70 1/2. Distribution may be paid in a lump sum or in substantially equal
payments over:
a) the contract owner's life or the lives of the contract owner and his or
her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract owner or the
joint life expectancy of the contract owner and the contract owner's
designated beneficiary.
If the contract owner dies before distributions begin, the interest in the IRA
or SEP IRA must be distributed by December 31 of the calendar year in which the
fifth anniversary of the contract owner's death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and such spouse chooses to:
1) treat the contract as an IRA or SEP IRA established for his or her
benefit; or
2) receive distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her life
expectancy) and beginning no later than December 31 of the year in
which the contract owner would have reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and such beneficiary elects to receive a distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year of the contract owner's
death.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another IRA or SEP IRA of the contract owner.
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If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(i) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
purchase payments exceed prior non-taxable distributions and total account
balances at the time of the distribution. The owner of an IRA or SEP IRA must
annually report the amount of non-deductible purchase payments, the amount of
any distribution, the amount by which non-deductible purchase payments for all
years exceed non-taxable distributions for all years, and the total balance of
all Individual Retirement Annuities.
IRA and SEP IRA distributions will not receive the favorable tax treatment of a
lump sum distribution from a Qualified Plan. If the contract owner dies before
the entire interest in the contract has been distributed, the balance will also
be included in his or her gross estate.
REQUIRED DISTRIBUTIONS FOR ROTH IRAS
The rules for Roth IRAs do not require distributions to begin during the
contract owner's lifetime.
When the contract owner dies, the interest in the Roth IRA must be distributed
by December 31 of the calendar year in which the fifth anniversary of his or her
death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and the spouse chooses to:
1) treat the contract as a Roth IRA established for his or her benefit;
or
2) receive distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her life
expectancy) and beginning no later than December 31 of the year
following the year in which the contract owner would have reached age
70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and the beneficiary chooses to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the contract
owner dies.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon
whether they are "qualified distributions" or "nonqualified distributions" (see
"Federal Tax Considerations").
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
Contract owners should consult a financial consultant, legal counsel or tax
advisor to discuss in detail the taxation and the use of the contracts.
Nationwide does not guarantee the tax status of the contracts or any
transactions involving the contracts.
Section 72 of the Internal Revenue Code governs federal income taxation of
annuities in general. That section sets forth different rules for: (1) IRAs,
including SEP IRAs; (2) Roth IRAs; (3) Qualified Contracts; (4) Tax Sheltered
Annuities; and (5) Non-Qualified Contracts. Each type of annuity is discussed
below.
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IRAs, SEP IRAs, and Individual Retirement Accounts
Distributions from IRAs, SEP IRAs, and contracts owned by Individual Retirement
Accounts are generally taxed when received. The excludable portion of each
payment is based on the ratio between the amount by which non-deductible
purchase payments to all the contracts exceeds prior non-taxable distributions
from the contracts, and the total account balances in the contracts at the time
of the distribution. The owner of the IRA or SEP IRA, or the annuitant under
contracts held by Individual Retirement Accounts must annually report to the
Internal Revenue Service:
- the amount of nondeductible purchase payments;
- the amount of any distributions;
- the amount by which nondeductible purchase payments for all years exceed
non-taxable distributions for all years; and
- the total balance in all Individual Retirement Annuities and Individual
Retirement Accounts.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or nontaxable, depending
upon whether they are "qualified distributions" or "nonqualified distributions."
A "qualified distribution" is one that satisfies the five-year rule and meets
one of the following requirements:
(i) it is made on or after the date on which the contract owner attains age
59 1/2;
(ii) it is made to a beneficiary (or the contract owner's estate) on or
after the death of the contract owner;
(iii) it is attributable to the contract owner's disability; or
(iv) it is a qualified first-time homebuyer distribution (as defined in
Section 72(t)(2)(F) of the Internal Revenue Code).
If the Roth IRA does not have any qualified rollover contributions from a
retirement plan other than a Roth IRA (or income allocable thereto), the five
year rule is satisfied if the distribution is not made within the five year
period beginning with the first contribution to the Roth IRA. If the Roth IRA
contains qualified rollover contributions from a retirement plan other than a
Roth IRA (or income allocable thereto), the five year rule is satisfied if the
distribution is not made within the five taxable year period commencing with the
taxable year in which the qualified rollover contribution was made.
A nonqualified distribution is any distribution that is not a qualified
distribution.
A qualified distribution is not included in gross income for federal income tax
purposes. A nonqualified distribution is not includible in gross income to the
extent that the distribution, when added to all previous distributions, does not
exceed that total amount of contributions made to the Roth IRA. Any nonqualified
distribution in excess of the aggregate amount of contributions will be included
in the contract owner's gross income in the year that is distributed to the
contract owner.
Taxable distributions will not receive the same favorable tax treatment of a
lump sum distribution from a Qualified Plan. If the contract owner dies before
the contract is completely distributed, the balance will also be included in the
contract owner's gross estate for tax purposes.
A change of the annuitant or contingent annuitant may be treated by the Internal
Revenue Service as a taxable transaction.
Qualified Contracts and Tax Sheltered Annuities
Distributions from Qualified Contracts and Tax Sheltered Annuities are generally
taxed when received. A portion of each distribution is excludable from income
based on a formula required by the Internal Revenue Code. The formula excludes
from income the amount invested in the contract divided by the number
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of anticipated payments (as determined pursuant to Section 72(d) of the Internal
Revenue Code) until the full investment in the contract is recovered. Thereafter
all distributions are fully taxable.
Non-Qualified Contracts - Natural Persons as Contract Owners
The rules applicable to Non-Qualified Contracts provide that a portion of each
annuity payment is excludable from taxable income based on the ratio between the
contract owner's investment in the contract and the expected return on the
contract until the investment has been recovered. Thereafter the entire amount
is includible in income. The maximum amount excludable from income is the
investment in the contract. If the annuitant dies before the entire investment
in the contract has been excluded from income, his or her final tax return may
be entitled to a deduction for the balance of the investment.
Distributions before the annuitization date are taxable to the contract owner to
the extent that the cash value of the contract exceeds the contract owner's
investment at the time of the distribution. Distributions, for this purpose,
include partial surrenders, dividends, loans, or any portion of the contract
that is assigned or pledged; or for contracts issued after April 22, 1987, any
portion of the contract transferred by gift. For these purposes, a transfer by
gift may occur upon annuitization if the contract owner and the annuitant are
not the same individual.
In determining the taxable amount of a distribution, all annuity contracts
issued after October 21, 1988 by the same company to the same contract owner
during any 12-month period will be treated as one annuity contract. Additional
limitations on the use of multiple contracts may be imposed by Treasury
Regulations.
Distributions before the annuitization date allocable to a portion of the
contract invested prior to August 14, 1982, are treated first as a recovery of
the investment in the contract as of that date. A distribution in excess of the
amount of the investment in the contract as of August 14, 1982, will be treated
as taxable income.
The Tax Reform Act of 1986 has changed the tax treatment of certain
Non-Qualified Contracts held by entities other than individuals. Such entities
are taxed currently on earnings from contributions made to the contract after
February 28, 1986. There are exceptions for immediate annuities and certain
contracts owned for the benefit of an individual. An immediate annuity, for
purposes of this discussion, is a single premium contract on which payments
begin within one year of purchase. If this contract is issued as the result of
an exchange described in Section 1035 of the Internal Revenue Code, for purposes
of determining whether the contract is an immediate annuity, it will generally
be considered to have been purchased on the purchase date of the contract given
up in the exchange.
Internal Revenue Code Section 72 also assesses a penalty tax if a distribution
is made before the contract owner reaches age 59 1/2. The amount of the penalty
is 10% of the portion of any distribution that is includible in gross income.
The penalty tax does not apply if the distribution
1) is the result of a contract owner's death;
2) is the result of a contract owner's disability;
3) is one of a series of substantially equal periodic payments made over
the life or life expectancy of the contract owner (or the joint lives
or joint life expectancies of the contract owner and the beneficiary
selected by the contract owner to receive payment under the annuity
payment option selected by the contract owner),
4) is for the purchase of an immediate annuity;
5) is allocable to an investment in the contract before August 14, 1982.
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A contract owner that wants to begin taking distributions to which the 10% tax
penalty does not apply should forward a written request to Nationwide. Upon
receipt of this written request, Nationwide will inform the contract owner of
Nationwide's policies and procedures, as well as contract limitations. An
election to begin taking these withdrawals will be irrevocable and may not be
amended or changed.
In order to qualify as an annuity contract under Section 72 of the Internal
Revenue Code, the contract must provide for distribution of the entire contract
upon a contract owner's death.
The Internal Revenue Code requires that any election to receive an annuity
instead of a lump sum payment be made within 60 days after the lump sum becomes
payable (generally, within 60 days of the death of a contract owner or the
annuitant). As long as the election is made within the 60 day period, each
distribution will be taxable when it is paid. Upon the end of this 60 day
period, if no election has been made, the entire amount of the lump sum will be
subject to immediate tax, even if the payee decides at a later date to take the
distribution as an annuity.
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
The previous discussion related to the taxation of Non-Qualified Contracts owned
(or, pursuant to Section 72(u) of the Internal Revenue Code, deemed to be owned)
by individuals. Different rules apply if the contract owner is not a natural
person.
Generally, contracts owned by corporations, partnerships, trusts, and similar
entities ("non-natural persons") are not treated as annuity contracts under the
Internal Revenue Code. Specifically, they are not treated as annuity contracts
for purposes of Section 72. Therefore, income earned under a Non-Qualified
Contract that is owned by a non-natural person is taxed as ordinary income
during the taxable year that it is earned. Taxation is not deferred, even if the
income is not distributed out of the contract to the contract owner.
This non-natural person rule does not apply to all entity-owned contracts. A
contract that is owned by a non-natural person as an agent for an individual is
treated as owned by the individual. This would put the contract back under
Section 72, allowing tax deferral. However, this exception does not apply when
the non-natural person is an employer that holds the contract under a
non-qualified deferred compensation arrangement for one or more employees.
The non-natural person rule also does not apply to contracts that are:
a) acquired by the estate of a decedent by reason of the death of the
decedent;
b) issued in connection with certain qualified retirement plans and
individual retirement plans;
c) used in connection with certain structured settlements;
d) purchased by an employer upon the termination of certain qualified
retirement plans; or
e) an immediate annuity.
QUALIFIED PLANS, IRAS, SEP IRAS AND TAX SHELTERED ANNUITIES
Contract owners looking for information on eligibility, limitations on
permissible amounts of purchase payments, and the tax consequences of
distributions from Qualified Plans, IRAs, SEP IRAs, and Tax Sheltered Annuities
should contact a qualified adviser. The terms of each plan may limit the rights
available under the contracts.
Section 403(b)(1)(E) of the Internal Revenue Code requires a contract issued as
a Tax Sheltered Annuity to limit purchase payments for any year to an amount
that does not exceed the limit set forth in Section 402(g) of the Internal
Revenue Code. This limit is increased from time to time to reflect increases in
the cost of living. This limit may be reduced by deposits, contributions or
payments made to another Tax Sheltered Annuity or other plan,
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contract or arrangement by or on behalf of the contract owner.
The Internal Revenue Code allows most distributions from Qualified Plans to be
rolled into other Qualified Plans, IRAs, or SEP IRAs. Most distributions from
Tax Sheltered Annuities may be rolled into another Tax Sheltered Annuity, IRA,
or SEP IRA. Distributions that may NOT be rolled over are those that are:
a) one of a series of substantially equal annual (or more frequent) payments
made:
1) over the life (or life expectancy) of the contract owner;
2) over the joint lives (or joint life expectancies) of the contract
owner and the contract owner's designated beneficiary;
3) for a specified period of ten years or more; or
b) a required minimum distribution.
Any distribution that is eligible for rollover will be subject to federal tax
withholding of 20% if the distribution is not rolled into an appropriate plan as
described above.
IRAs and SEP IRAs may not provide life insurance benefits. If the death benefit
exceeds the greater of the contract's cash value or the sum of all purchase
payments (less any surrenders), the contract could be considered life insurance.
Consequently, the Internal Revenue Service could determine that the IRA or SEP
IRA does not qualify for the desired tax treatment.
The contract may be purchased for Qualified Plans electing to comply with
section 404(c) of ERISA. The plan and the plan's fiduciaries are responsible for
determining and satisfying the requirements of section 404(c).
ROTH IRAS
The contract may be purchased as a Roth IRA. For detailed information on
purchasing and holding this contract as a Roth IRA, the contract owner should
contact a financial adviser.
The Internal Revenue Code allows distributions from Individual Retirement
Accounts and Individual Retirement Annuities to be rolled into Roth IRAs. The
rollovers are subject to federal income tax as distributions from the Individual
Retirement Account or Individual Retirement Annuity.
For rollovers from Individual Retirement Accounts or Individual Retirement
Annuities, all of the income from the rollover is required to be included in
income in the year of the rollover distribution from the Individual Retirement
Account or Individual Retirement Annuity.
A distribution from a Roth IRA that contains the proceeds of a rollover from an
Individual Retirement Account or Individual Retirement Annuity within the
preceding five years could be subject to a 10% penalty, even if the distribution
is not taxable. In addition, if the rollover from the Individual Retirement
Account or Individual Retirement Annuity was made in 1998, and the income from
that rollover was included in income ratably over a four year period, a
distribution from the Roth IRA within four years of the rollover may result in
the loss of the four year spread, subject to the amount deferred under the four
year election to be taxed immediately.
WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise. Contract owners may not waive withholding if the
distribution is subject to mandatory back-up withholding (if no mandatory
taxpayer identification number is given or if the Internal Revenue Service
notifies Nationwide that mandatory back-up withholding is required), or if it is
an eligible rollover distribution. Mandatory back-up withholding rates are 31%
of income that is distributed.
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NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in
accordance with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's conduct of
business in the United States; and
2) the distribution is includible in the non-resident alien's gross
income for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
- a transfer of the contract from one contract owner to another; or
- a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may be subject to
estate taxes, even if all or a portion of the value is also subject to federal
income taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the contract
owner; or
b) certain trusts, as described in Section 2613 of the Internal Revenue
Code (generally, trusts that have no beneficiaries who are not 2 or
more generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
- who would be required to include the contract, death benefit,
distribution, or other payment in his or her federal gross estate at
his or her death; or
- who is required to report the transfer of the contract, death benefit,
distribution, or other payment for federal gift tax purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
PUERTO RICO
Under the Puerto Rico tax code, distributions from a Non-Qualified Contract
before annuitization are treated as nontaxable return of principal until the
principal is fully recovered. Thereafter all distributions are fully taxable.
Distributions after annuitization are treated as part taxable income and part
nontaxable return of principal. The amount excluded from gross income after
annuitization is equal to the amount of the distribution in excess of 3% of the
total purchase payments paid, until an
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amount equal to the total purchase payments paid has been excluded. Thereafter,
the entire distribution is included in gross income. Puerto Rico does not impose
an early withdrawal penalty tax. Generally, Puerto Rico does not require income
tax to be withheld from distributions of income. A personal adviser should be
consulted in these situations.
CHARGE FOR TAX
Nationwide is not required to maintain a capital gain reserve liability on
Non-Qualified Contracts. If tax laws change requiring a reserve, Nationwide may
implement and adjust a tax charge.
DIVERSIFICATION
Internal Revenue Code Section 817(h) contains rules on diversification
requirements for variable annuity contracts. A variable annuity contract that
does not meet these diversification requirements will not be treated as an
annuity, unless
- the failure to diversify was accidental;
- the failure is corrected; and
- a fine is paid to the Internal Revenue Service.
The amount of the fine will be the amount of tax that would have been paid by
the contract owner if the income, for the period the contract was not
diversified, had been received by the contract owner.
If the violation is not corrected, the contract owner will be considered the
owner of the underlying securities and will be taxed on the earnings of his or
her contract. Nationwide believes that the investments underlying this contract
meet these diversification requirements.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
- statements showing the contract's quarterly activity;
- confirmation statements showing transactions that affect the
contract's value. Confirmation statements will not be sent for
recurring transactions (i.e., Dollar Cost Averaging or salary
reduction programs). Instead, confirmation of recurring transactions
will appear in the contract's quarterly statements;
- annual and semi-annual reports containing all applicable information
and financial statements or their equivalent, which must be sent to
the underlying mutual fund beneficial shareholders as required by the
rules under the Investment Company Act of 1940 for the variable
account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide immediately to assure proper
crediting to the contract. Unless Nationwide is notified within 30 days of
receipt of the statement, Nationwide will assume statements and confirmation
statements are correct.
YEAR 2000 COMPLIANCE ISSUES
Nationwide has developed and implemented a plan to address issues related to the
Year 2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing
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information dated after December 31, 1999. Like many organizations, Nationwide
is required to renovate or replace computer systems so that the systems will
function properly after December 31, 1999.
Nationwide has completed an inventory and assessment of all computer systems and
has implemented a plan to renovate or replace all applications that were
identified as not Year 2000 compliant. Nationwide has renovated all applications
that required renovation. Testing of the renovated programs included running
each application in a Year 2000 environment and was completed as planned during
1998. For applications being replaced, Nationwide had all replacement systems in
place and functioning as planned by year-end 1998. Conversions of existing
traditional life policies will continue through second quarter, 1999. In
addition, the shareholder services system that supports our mutual fund products
will be fully deployed in the first quarter of 1999.
Nationwide has completed an inventory and assessment of all vendor products and
has tested and certified that each vendor product is Year 2000 compliant. Any
vendor products that could not be certified as Year 2000 compliant were replaced
or eliminated in 1998.
Nationwide has also addressed issues associated with the exchange of electronic
data with external organizations. Nationwide has completed an inventory and
assessment of all business partners including electronic interfaces. Processes
have been put into place and programs initiated to process data irrespective of
the format by converting non-compliant data into a Year 2000 compliant format.
Systems supporting Nationwide's infrastructure such as telecommunications, voice
and networks will be compliant by March 1999. Nationwide's assessment of Year
2000 issues has also included non-information technology systems with embedded
computer chips. Nationwide's building systems such as fire, security, and
elevators and escalators supporting facilities in Columbus, Ohio have been
tested and are Year 2000 compliant.
In addition to resolving internal Year 2000 readiness issues, Nationwide is
surveying significant external organizations (business partners) to assess if
they will be Year 2000 compliant and be in a position to do business in the Year
2000 and beyond. Specifically, Nationwide has contacted mutual fund
organizations that provide funds for our variable annuity and life products. The
same action will continue during the first quarter of 1999 with wholesale
producers. Nationwide continues its efforts to identify external risk factors
and is planning to develop contingency plans as part of its ongoing risk
management strategy.
Operating expenses in 1998 and 1997 for Nationwide Life Insurance Company
("NLIC"), parent company to Nationwide, included approximately $44.7 million and
$45.4 million, respectively, for technology projects, including costs related to
Year 2000. NLIC anticipates spending approximately $5 million on Year 2000
activities in 1999. These expenses do not have an effect on the assets of the
variable account and are not charged through to the contract owner.
Management does not anticipate that the completion of Year 2000 renovation and
replacement activities will result in a reduction in operating expenses. Rather,
personnel and resources currently allocated to Year 2000 issues will be assigned
to other technology-related projects.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
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On October 29, 1998, Nationwide and certain of its subsidiaries were named in a
lawsuit filed in Ohio state court related to the sale of deferred annuity
products for use as investments in tax-deferred contributory retirement plans
(Mercedes Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company). The
plaintiff in such lawsuit seeks to represent a national class of Nationwide's
customers and seeks unspecified compensatory and punitive damages. Nationwide
currently is evaluating this lawsuit, which has not been certified as a class.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NAS, is not engaged in any litigation of any material
nature.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
ADVERTISING
A "yield" and "effective yield" may be advertised for the NSAT Money Market
Fund. "Yield" is a measure of the net dividend and interest income earned over a
specific seven-day period (which period will be stated in the advertisement)
expressed as a percentage of the offering price of the NSAT Money Market Fund's
units. Yield is an annualized figure, which means that it is assumed that the
NSAT Money Market Fund generates the same level of net income over a 52-week
period. The "effective yield" is calculated similarly but includes the effect of
assumed compounding, calculated under rules prescribed by the SEC. The effective
yield will be slightly higher than yield due to this compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
- precious metals;
- real estate;
- stocks and bonds;
- closed-end funds;
- bank money market deposit accounts and passbook savings;
- CDs; and
- the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
- S&P 500;
- Shearson/Lehman Intermediate Government/Corporate Bond Index;
- Shearson/Lehman Long-Term Government/Corporate Bond Index;
- Donoghue Money Fund Average;
- U.S. Treasury Note Index;
- Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and Dow Jones
- Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
- Lipper Analytical Services, Inc.;
- CDA/Wiesenberger;
- Morningstar;
- Donoghue's;
- magazines such as:
- Money;
- Forbes;
- Kiplinger's Personal Finance Magazine;
- Financial World;
- Consumer Reports;
- Business Week;
- Time;
- Newsweek;
- National Underwriter; and
- News and World Report;
- LIMRA;
- Value;
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<PAGE> 44
- Best's Agent Guide;
- Western Annuity Guide;
- Comparative Annuity Reports;
- Wall Street Journal;
- Barron's;
- Investor's Daily;
- Standard & Poor's Outlook; and
- Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized "average annual total return,"
calculated in a manner prescribed by the SEC, and nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects all charges be made to the
contracts, except premium taxes, which may be imposed by certain states.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," shows the percentage rate of return of a hypothetical
initial investment of $10,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges except the CDSC) had they been available
in the variable account for one of the periods. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. An initial investment
of $10,000 is assumed because that amount is closer to the size of a typical
contract than $1,000, which was used in calculating the standardized average
annual total return.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1998.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
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<PAGE> 45
SUB-ACCOUNT PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
10 Years
or Date Fund
Available in Date Fund
the Variable Available in
1 Year 5 Years Account the Variable
Sub-Account Option to 12/31/98 to 12/31/98 to 12/31/98 Account
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - 5.67% 6.59% 5.35% 09/09/91
American Century VP Advantage
Fidelity VIP Growth Portfolio 27.68% 17.32% 16.96% 05/01/92
Neuberger Berman AMT Balanced Portfolio 0.72% 6.71% 6.35% 05/01/91
NSAT Capital Appreciation Fund 18.28% 18.70% 15.50% 05/01/92
NSAT Government Bond Fund -2.51% 2.45% 5.64% 11/01/88
NSAT Money Market Fund -6.10% 0.17% 1.27% 11/01/88
NSAT Total Return Fund 6.54% 15.06% 11.22% 06/30/89
</TABLE>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
10 Years
to 12/31/98
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/98 to 12/31/98 Fund Effective
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - 15.37% 9.53% 8.06% 08/01/91
American Century VP Advantage
Fidelity VIP Growth Portfolio 37.38% 19.91% 17.68% 10/09/86
Neuberger Berman AMT Balanced Portfolio 10.42% 9.65% 9.65% 02/28/89
NSAT Capital Appreciation Fund 27.98% 21.25% 17.55% 04/15/92
NSAT Government Bond Fund 7.19% 5.60% 7.71% 11/08/82
NSAT Money Market Fund 3.60% 3.39% 3.80% 11/10/81
NSAT Total Return Fund 16.24% 17.63% 13.74% 11/08/82
</TABLE>
The American Century Variable Portfolios, Inc. - American Century VP Balanced
was added to the variable account on May 1, 1999. Therefore, no sub-account
performance is available.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History...................................................................................1
Services..........................................................................................................1
Purchase of Securities Being Offered..............................................................................2
Underwriters......................................................................................................2
Calculations of Performance.......................................................................................2
Annuity Payments..................................................................................................3
Financial Statements..............................................................................................4
</TABLE>
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<PAGE> 46
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
There is no guarantee that the investment objectives will be met.
AVAILABLE FOR ALL CONTRACTS
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management investment company
which offers its shares only as investment vehicles for variable annuity and
variable life insurance products of insurance companies. American Century
Variable Portfolios, Inc. is managed by American Century Investment Management,
Inc.
AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will seek
to achieve its objective by maintaining approximately 60% of the assets of
the Fund in common stocks (including securities convertible into common
stocks and other equity equivalents) that are considered by management to
have better-than-average prospects for appreciation and approximately 40%
in fixed income securities. A minimum of 25% of the fixed income portion of
the Fund will be invested in fixed income senior securities. There can be
no assurance that the Fund will achieve its investment objective.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the funds listed below, each with its own investment objectives. Shares of
NSAT will be sold only to life insurance company separate accounts to fund the
benefits under variable life insurance policies and variable annuity contracts
issued by life insurance companies. The assets of NSAT are managed by Nationwide
Advisory Services, Inc. ("NAS"), a wholly-owned subsidiary of Nationwide Life
Insurance Company.
CAPITAL APPRECIATION FUND
Investment Objective: Long-term capital appreciation.
GOVERNMENT BOND FUND
Investment Objective: As high a level of income as is consistent with the
preservation of capital by investing in a diversified portfolio of
securities issued or backed by the U.S. Government, its agencies or
instrumentalities.
MONEY MARKET FUND
Investment Objective: As high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity.
TOTAL RETURN FUND
Investment Objective: To obtain a reasonable, long-term total return on
invested capital.
AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER MAY 1, 1991
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management investment company
which offers its shares only as investment vehicles for variable annuity and
variable life insurance products of insurance companies. American Century
Variable Portfolios, Inc. is managed by American Century Investment Management,
Inc.
AMERICAN CENTURY VP ADVANTAGE
Investment Objective: To seek current income and capital growth by
investing in three types of securities. The Fund's investment manager
intends to invest
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<PAGE> 47
approximately (i) 20% of the Fund's assets in securities of the United
States government and its agencies and instrumentalities and repurchase
agreements collateralized by such securities with a weighted average
maturity of six months or less, i.e., cash or cash equivalents; (ii) 40% of
the Fund's assets in fixed income securities of the United States
government and its agencies and instrumentalities with a weighted average
maturity of three to ten years; and (iii) 40% of the Fund's assets in
equity securities that are considered by management to have
better-than-average prospects for appreciation. Assets will be purchased or
sold, as the case may be, as is necessary in response to changes in market
value to maintain the asset mix of the Fund's portfolio at approximately
60% cash, cash equivalents and fixed income securities and 40% equity
securities. There can be no assurance that the Fund will achieve its
investment objective.
(Although the Statement of Additional Information for American Century
Variable Portfolios, Inc. refers to redemptions of securities in kind under
certain conditions, all surrendering or redeeming contract owners will
receive cash from Nationwide.)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fidelity Variable Insurance Products Fund (VIP) is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. Shares of VIP are purchased by insurance companies to fund
benefits under variable life insurance policies and variable annuity contracts.
Fidelity Management & Research Company ("FMR") is the manager for the VIP and
its portfolios.
VIP GROWTH PORTFOLIO
Investment Objective: Capital appreciation. This Portfolio will invest in
the securities of both well-known and established companies, and smaller,
less well-known companies which may have a narrow product line or whose
securities are thinly traded. These latter securities will often involve
greater risk than may be found in the ordinary investment security. FMR's
analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many
securities which FMR believes would have the greatest potential may be
regarded as speculative, and investment in the Portfolio may involve
greater risk than is inherent in other mutual funds. It is also important
to point out that this Portfolio makes the most sense for you if you can
afford to ride out changes in the stock market, because it invests
primarily in common stocks. FMR can also make temporary investments in
securities such as investment-grade bonds, high-quality preferred stocks
and short-term notes, for defensive purposes when it believes market
conditions warrant.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger and Berman Advisers Management Trust ("NB AMT") is an open-end,
diversified management investment company consisting of several series. Shares
of the series of NB AMT are offered in connection with certain variable annuity
contracts and variable life insurance policies issued through life insurance
company separate accounts and are also offered directly to qualified pension and
retirement plans outside of the separate account context.
BALANCED PORTFOLIO
Investment Objective: To provide long-term capital growth and reasonable
current income without undue risk to principal. This Portfolio will seek to
achieve its objective through investment of a portion of its assets in
common stocks and a portion of its assets in debt securities. The
investment adviser anticipates that the Balanced Portfolio's investments
will normally be managed so that approximately 60% of the Portfolio's total
assets will be invested in common stocks and the remaining assets will be
invested in debt securities. However, depending on the investment adviser's
views
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<PAGE> 48
regarding current market trends, the common stock portion of the
Portfolio's investments may be adjusted downward to as low as 50% or upward
to as high as 70%. At least 25% of the Portfolio's assets will be invested
in fixed income senior securities.
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<PAGE> 49
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH NATIONWIDE VA SEPARATE ACCOUNT-A
This Statement of Additional Information is not a prospectus. It contains
additional information than set forth in the prospectus and should be read in
conjunction with the prospectus dated May 1, 1999. The prospectus may be
obtained from Nationwide Life and Annuity Insurance Company by writing P.O. Box
182008, Columbus, Ohio 43218-2008, or by calling 1-800-533-5622, TDD
1-800-238-3035.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History...............................................................................1
Services......................................................................................................1
Purchase of Securities Being Offered..........................................................................2
Underwriters..................................................................................................2
Calculations of Performance...................................................................................2
Annuity Payments..............................................................................................3
Financial Statements..........................................................................................4
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide VA Separate Account-A is a separate investment account of
Nationwide Life and Annuity Insurance Company ("Nationwide"). All of the
Nationwide's common stock is owned by Nationwide Financial Services, Inc.
("NFS"), a holding company. NFS has two classes of common stock outstanding with
different voting rights enabling Nationwide Corporation (the holder of all of
the outstanding Class B Common Stock) to control NFS. Nationwide Corporation is
a holding company, as well. All of its common stock is held by Nationwide Mutual
Insurance Company (95.24%) and Nationwide Mutual Fire Insurance Company (4.76%),
the ultimate controlling persons of Nationwide Insurance Enterprise. The
Nationwide Insurance Enterprise is one of America's largest insurance and
financial services family of companies, with combined assets of over $98.28
billion as of December 31, 1998.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each contract owner and records
with respect to the contract value of each contract.
The custodian of the assets of the variable account is Nationwide. Nationwide
will maintain a record of all purchases and redemptions of shares of the
underlying mutual funds. Nationwide, or affiliates of Nationwide may have
entered into agreements with either the investment adviser or distributor for
several of the underlying mutual funds. The agreements relate to administrative
services furnished by Nationwide or an affiliate of Nationwide and provide for
an annual fee based on the average aggregate net assets of the variable account
(and other separate accounts of Nationwide or life insurance company
subsidiaries of Nationwide) invested in particular underlying mutual funds.
These fees in no way affect the net asset value of the underlying mutual funds
or fees paid by the contract owner.
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<PAGE> 50
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, Two Nationwide
Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in
accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in the states where the
contracts may be lawfully sold. The agents will be registered representatives of
broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD").
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Advisory Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio 43215, an
affiliate of Nationwide. During the year ended December 31, 1998, no
underwriting commissions have been paid by Nationwide to NAS.
CALCULATIONS OF PERFORMANCE
All performance advertising will include quotations of standardized average
annual total return, calculated in accordance with standard method prescribed by
rules of the SEC. Standardized average annual total return is found by first
taking a hypothetical $1,000 investment in each of the sub-accounts' units on
the first day of the period at the offering price, which is the accumulation
unit value per unit ("initial investment") and computing the ending redeemable
value ("redeemable value") of that investment at the end of the period. The
redeemable value is then divided by the initial investment and this quotient is
taken to the Nth root (N represents the number of years in the period) and 1 is
subtracted from the result which is then expressed as a percentage, carried to
at least the nearest hundredth of a percent. Standardized average annual total
return reflects the deduction of a maximum $30 Contract Maintenance Charge and a
1.30% Mortality and Expense Risk and Administration Charge. The redeemable value
also reflects the effect of any applicable CDSC that may be imposed at the end
of the period (see "Contingent Deferred Sales Charge" located in the
prospectus). No deduction is made for premium taxes which may be assessed by
certain states.
Nonstandardized average annual total return may also be advertised, and is
calculated in a manner similar to standardized average annual total return
except the nonstandardized average annual total return is based on a
hypothetical initial investment of $10,000 and does not reflect the deduction of
any applicable CDSC. Reflecting the CDSC would decrease the level of the
performance advertised. The CDSC is not reflected because the contract is
designed for long term investment. An assumed initial investment of $10,000 will
be used because that figure more closely approximates the size of a typical
contract than does the $1,000 figure used in calculating the standardized
average annual total return quotations. The amount of the hypothetical initial
investment used affects performance because the Contract Maintenance Charge is a
fixed per contract charge.
The standardized average annual total return and nonstandardized average annual
total return quotations will be current to the last day of the calendar quarter
preceding the date on which an advertisement is submitted for publication. Both
the standardized average annual total return and the nonstandardized average
annual total return will be based on the rolling calendar quarters and will
cover at least periods of one, five, and ten years, or a period covering the
time the underlying mutual fund has been in existence. For those underlying
mutual fund options which have not been held as sub-accounts for one of the
quoted periods, the average annual total return and nonstandardized average
annual total return quotations will show the investment performance underlying
mutual fund options would have achieved (reduced by the applicable charges) had
they been held as sub-accounts for the period quoted.
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<PAGE> 51
Quotations of standardized average annual total return and non-standardized
average annual total return are based upon historical earnings and will
fluctuate. Any quotation of performance is not a guarantee of future
performance. Factors affecting a sub-account's performance include general
market conditions, operating expenses and investment management. A contract
owner's account when redeemed may be more or less than the original cost.
Any current yield quotations of the NSAT Money Market Fund, subject to Rule 482
of the Securities Act of 1933, shall consist of a seven calendar day historical
yield, carried at least to the nearest hundredth of a percent. The yield shall
be calculated by determining the net change, exclusive of capital changes, in
the value of a hypothetical pre-existing account having a balance of one
accumulation unit at the beginning of the base period, subtracting a
hypothetical charge reflecting deductions from contract owner accounts, and
dividing the net change in account value by the value of the account at the
beginning of the period to obtain a base period return, and multiplying the base
period return by (365/7) or (366/7) in a leap year. At December 31, 1998, the
NSAT Money Market Fund's seven-day current unit value yield was 3.52%. The NSAT
Money Market Fund effective yield is computed similarly, but includes the effect
of assumed compounding on an annualized basis of the current unit value yield
quotations of the NSAT Money Market Fund. At December 31, 1998, the NSAT Money
Market Fund's effective yield was 3.58%.
The NSAT Money Market Fund yield and effective yield will fluctuate daily.
Actual yields will depend on factors such as the type of instruments in the
fund's portfolio, portfolio quality and average maturity, changes in interest
rates, and the fund's expenses. Although the NSAT Money Market Fund determines
its yield on the basis of a seven calendar day period, it may use a different
time period on occasion. The yield quotes may reflect the expense limitation
described "Investment Manager and Other Services" in the fund's Statement of
Additional Information. There is no assurance that the yields quoted on any
given occasion will remain in effect for any period of time and there is no
guarantee that the net asset values will remain constant. It should be noted
that a contract owner's investment in the NSAT Money Market Fund is not
guaranteed or insured. Yields of other money market funds may not be comparable
if a different basis or another method of calculation is used.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
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<PAGE> 1
================================================================================
Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VA Separate Account-A:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VA Separate Account-A as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide VA Separate
Account-A as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for each of the years in the two year period
then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
================================================================================
<PAGE> 2
================================================================================
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
1,951,829 shares (cost $11,170,293)....................................................... $ 13,545,696
Federated IS - Federated American Leaders Fund II (FedAmLead)
1,446 shares (cost $24,252)............................................................... 31,352
Federated IS - Federated High Income Bond Fund II (FedHiInc)
13,495 shares (cost $139,561)............................................................. 147,361
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
8,563 shares (cost $184,689).............................................................. 217,669
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,377,861 shares (cost $62,054,856)....................................................... 106,694,632
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,369 shares (cost $27,404)............................................................... 27,453
MFS(R) VIT - Emerging Growth Series (MFSEmGrSe)
7,653 shares (cost $112,689).............................................................. 164,318
MFS(R) VIT - Total Return Series (MFSTotReSe)
1,514 shares (cost $22,243)............................................................... 27,431
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
710,119 shares (cost $12,488,770)......................................................... 18,882,054
Nationwide SAT - Government Bond Fund (NSATGvtBd)
2,682,541 shares (cost $30,127,453)....................................................... 31,358,899
Nationwide SAT - Money Market Fund (NSATMyMkt)
4,724,961 shares (cost $4,724,961)........................................................ 4,724,961
Nationwide SAT - Total Return Fund (NSATTotRe)
4,784,022 shares (cost $57,449,682)....................................................... 88,026,006
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
1,710,702 shares (cost $26,303,122)....................................................... 27,952,864
-------------
Total investments.................................................................... 291,800,696
Accounts receivable............................................................................ 22,494
-------------
Total assets......................................................................... 291,823,190
Accounts payable.................................................................................... 82,678
-------------
Contract owners' equity............................................................................. $ 291,740,512
=============
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN*
-------- --------- ---------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
VA contracts:
American Century VP - American Century
VP Advantage:
Tax qualified .............................. 422,481 $18.120337 $ 7,655,498 16%
Non-tax qualified .......................... 292,874 18.120337 5,306,976 16%
Initial Funding by Depositor (Note 1a) 25,000 19.938436 498,461 17%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 1,927,875 32.787648 63,210,487 38%
Non-tax qualified .......................... 1,322,563 32.787648 43,363,730 38%
Nationwide SAT - Capital Appreciation Fund:
Tax qualified .............................. 341,118 30.616503 10,443,840 28%
Non-tax qualified .......................... 275,617 30.616503 8,438,429 28%
Nationwide SAT - Government Bond Fund:
Tax qualified .............................. 765,133 21.148524 16,181,434 7%
Non-tax qualified .......................... 717,431 21.148524 15,172,607 7%
Nationwide SAT - Money Market Fund:
Tax qualified .............................. 158,971 14.772116 2,348,338 4%
Non-tax qualified .......................... 155,307 14.772116 2,294,213 4%
Nationwide SAT - Total Return Fund:
Tax qualified .............................. 1,467,465 34.097665 50,037,130 17%
Non-tax qualified .......................... 1,111,401 34.097665 37,896,179 17%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified .............................. 804,995 19.595500 15,774,280 11%
Non-tax qualified .......................... 618,690 19.595500 12,123,540 11%
VA-II Eagle Choice contracts:
Federated IS - Federated American Leaders Fund II:
Non-tax qualified .......................... 1,743 17.987623 31,352 16%
Federated IS- Federated High Income Bond Fund II:
Non-tax qualified .......................... 11,514 12.798283 147,359 1%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 870 21.089978 18,348 10%
Non-tax qualified .......................... 9,450 21.089978 199,300 10%
Fidelity VIP - Overseas Portfolio:
Non-tax qualified .......................... 2,025 13.556393 27,452 11%
MFS(R) VIT - Emerging Growth Series:
Non-tax qualified .......................... 8,948 18.364204 164,323 32%
MFS(R) VIT - Total Return Series:
Non-tax qualified .......................... 1,840 14.903861 27,423 11%
========= =========
Reserves for annuity contracts in payout phase:
Tax qualified .............................. 287,218
Non-tax qualified .......................... 92,595
------------
$291,740,512
============
</TABLE>
* The annual return does not include contract charges satisfied by surrendering
units.
See accompanying notes to financial statements.
================================================================================
<PAGE> 4
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL ACVPADV
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 4,323,281 4,588,429 292,829 205,268
Mortality, expense and administration
charges (note 2):
VA ...................................... (3,566,159) (3,151,072) (169,541) (169,983)
VA II Convertible ....................... (7,761) (4,435) -- --
------------- ------------- ------------- -------------
Net investment activity ..................... 749,361 1,432,922 123,288 35,285
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 47,150,221 30,083,967 2,219,938 1,849,764
Cost of mutual fund shares sold ............... (34,852,430) (24,191,559) (1,802,163) (1,535,624)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 12,297,791 5,892,408 417,775 314,140
Change in unrealized gain (loss) on investments 20,267,908 30,561,366 311,134 381,839
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 32,565,699 36,453,774 728,909 695,979
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 20,912,139 6,932,717 1,101,845 712,416
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 54,227,199 44,819,413 1,954,042 1,443,680
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 10,088,676 12,333,986 354,994 441,982
Transfers between funds ....................... -- -- (481,562) (573,695)
Redemptions ................................... (28,935,591) (19,747,846) (1,643,694) (1,138,381)
Annuity benefits .............................. (16,464) (9,441) (1,666) --
Annual contract maintenance charge (note 2) ... (257,516) (264,125) (15,108) (16,785)
Contingent deferred sales charges (note 2) .... (291,222) (306,609) (13,666) (18,458)
Adjustments to maintain reserves .............. 22,883 5,099 2,936 197
------------- ------------- ------------- -------------
Net equity transactions ................... (19,389,234) (7,988,936) (1,797,766) (1,305,140)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 34,837,965 36,830,477 156,276 138,540
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 256,902,547 220,072,070 13,392,281 13,253,741
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 291,740,512 256,902,547 13,548,557 13,392,281
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FEDAMLEAD FEDHIINC
------------------------------ -------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 134 39 2,448 4,248
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- -- --
VA II Convertible ....................... (412) (218) (1,945) (1,182)
------------- ------------- ------------- -------------
Net investment activity ..................... (278) (179) 503 3,066
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 418 187 1,948 1,144
Cost of mutual fund shares sold ............... (311) (156) (1,782) (1,086)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 107 31 166 58
Change in unrealized gain (loss) on investments 2,772 4,328 (737) 7,211
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 2,879 4,359 (571) 7,269
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 1,720 -- 664 215
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 4,321 4,180 596 10,550
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 22,852 42,431 39,000
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. (3) 2 (2) --
------------- ------------- ------------- -------------
Net equity transactions ................... (3) 22,854 42,429 39,000
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 4,318 27,034 43,025 49,550
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 27,034 -- 104,334 54,784
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 31,352 27,034 147,359 104,334
============= ============= ============= =============
</TABLE>
<PAGE> 5
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FIDVIPEI FIDVIPGR
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 2,235 959 426,238 475,032
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- (1,214,243) (1,025,283)
VA II Convertible ....................... (2,798) (1,542) -- --
------------ ------------ ------------ ------------
Net investment activity ..................... (563) (583) (788,005) (550,251)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 2,806 11,629 10,807,056 5,907,035
Cost of mutual fund shares sold ............... (2,271) (11,126) (6,175,412) (3,439,457)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 535 503 4,631,644 2,467,578
Change in unrealized gain (loss) on investments 7,490 21,674 15,101,345 11,226,583
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 8,025 22,177 19,732,989 13,694,161
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 7,955 4,824 11,149,500 2,126,335
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 15,417 26,418 30,094,484 15,270,245
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 42,431 77,284 2,737,406 3,552,724
Transfers between funds ....................... -- -- (1,599,924) (227,550)
Redemptions ................................... -- -- (8,019,362) (5,192,521)
Annuity benefits .............................. -- -- (6,308) (3,902)
Annual contract maintenance charge (note 2) ... -- -- (92,392) (92,656)
Contingent deferred sales charges (note 2) .... -- -- (89,886) (94,463)
Adjustments to maintain reserves .............. (6) (23) 11,502 2,905
------------ ------------ ------------ ------------
Net equity transactions ................... 42,425 77,261 (7,058,964) (2,055,463)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 57,842 103,679 23,035,520 13,214,782
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 159,806 56,127 83,670,246 70,455,464
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 217,648 159,806 106,705,766 83,670,246
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FIDVIPOV MFSEMGRSE
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 488 -- -- --
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- -- --
VA II Convertible ....................... (376) (176) (1,863) (1,108)
------------ ------------ ------------ ------------
Net investment activity ..................... 112 (176) (1,863) (1,108)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 383 153 1,882 1,058
Cost of mutual fund shares sold ............... (342) (136) (1,411) (955)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 41 17 471 103
Change in unrealized gain (loss) on investments 1,171 (1,122) 34,283 19,110
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 1,212 (1,105) 34,754 19,213
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 1,439 -- 1,215 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,763 (1,281) 34,106 18,105
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 25,973 36,369 24,000
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. (4) 1 3 (2)
------------ ------------ ------------ ------------
Net equity transactions ................... (4) 25,974 36,372 23,998
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 2,759 24,693 70,478 42,103
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 24,693 -- 93,845 51,742
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 27,452 24,693 164,323 93,845
============ ============ ============ ============
</TABLE>
(Continued)
================================================================================
<PAGE> 6
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MFSTOTRESE NSATCAPAP
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 360 -- 132,292 118,424
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- (214,106) (145,398)
VA II Convertible ....................... (367) (209) -- --
----------- ----------- ----------- -----------
Net investment activity ..................... (7) (209) (81,814) (26,974)
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 374 186 2,729,182 1,086,868
Cost of mutual fund shares sold ............... (299) (163) (1,227,260) (569,027)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 75 23 1,501,922 517,841
Change in unrealized gain (loss) on investments 2,175 3,013 2,064,271 2,288,294
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 2,250 3,036 3,566,193 2,806,135
----------- ----------- ----------- -----------
Reinvested capital gains ...................... 423 -- 523,967 278,879
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,666 2,827 4,008,346 3,058,040
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 21,939 1,199,816 1,215,488
Transfers between funds ....................... -- -- 2,037,217 1,306,249
Redemptions ................................... -- -- (1,527,306) (811,974)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- (13,152) (10,550)
Contingent deferred sales charges (note 2) .... -- -- (15,416) (14,584)
Adjustments to maintain reserves .............. (2) (7) 180 248
----------- ----------- ----------- -----------
Net equity transactions ................... (2) 21,932 1,681,339 1,684,877
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 2,664 24,759 5,689,685 4,742,917
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 24,759 -- 13,192,584 8,449,667
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 27,423 24,759 18,882,269 13,192,584
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATGVTBD NSATMYMKT
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 1,706,933 2,003,916 221,645 188,948
Mortality, expense and administration
charges (note 2):
VA ...................................... (422,247) (430,628) (56,566) (48,170)
VA II Convertible ....................... -- -- -- --
----------- ----------- ----------- -----------
Net investment activity ..................... 1,284,686 1,573,288 165,079 140,778
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 7,141,556 6,063,749 8,576,339 6,132,122
Cost of mutual fund shares sold ............... (6,953,482) (6,121,368) (8,576,339) (6,132,122)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 188,074 (57,619) -- --
Change in unrealized gain (loss) on investments 708,425 1,069,495 -- --
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 896,499 1,011,876 -- --
----------- ----------- ----------- -----------
Reinvested capital gains ...................... 151,117 -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,332,302 2,585,164 165,079 140,778
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,335,263 960,685 314,840 521,896
Transfers between funds ....................... 412,520 (2,417,365) 2,154,594 649,313
Redemptions ................................... (4,948,454) (3,397,263) (1,620,690) (1,416,420)
Annuity benefits .............................. (4,265) (4,041) -- --
Annual contract maintenance charge (note 2) ... (29,309) (35,429) (3,873) (4,045)
Contingent deferred sales charges (note 2) .... (42,231) (46,119) (18,281) (15,466)
Adjustments to maintain reserves .............. 296 38 (146) (242)
----------- ----------- ----------- -----------
Net equity transactions ................... (3,276,180) (4,939,494) 826,444 (264,964)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... (943,878) (2,354,330) 991,523 (124,186)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 32,302,892 34,657,222 3,651,028 3,775,214
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 31,359,014 32,302,892 4,642,551 3,651,028
=========== =========== =========== ===========
</TABLE>
<PAGE> 7
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NSATTOTRE NBAMTBAL
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 891,027 1,133,579 646,652 458,016
Mortality, expense and administration
charges (note 2):
VA ...................................... (1,131,746) (984,801) (357,710) (346,809)
VA II Convertible ....................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ..................... (240,719) 148,778 288,942 111,207
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 12,121,959 5,765,462 3,546,380 3,264,610
Cost of mutual fund shares sold ............... (6,698,872) (3,486,615) (3,412,486) (2,893,724)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 5,423,087 2,278,847 133,894 370,886
Change in unrealized gain (loss) on investments 4,268,306 12,881,367 (2,232,727) 2,659,574
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 9,691,393 15,160,214 (2,098,833) 3,030,460
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 3,430,335 2,634,473 4,541,959 1,175,575
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 12,881,009 17,943,465 2,732,068 4,317,242
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 3,144,831 4,254,140 880,295 1,176,023
Transfers between funds ....................... (1,943,493) 1,564,750 (579,352) (301,702)
Redemptions ................................... (8,549,939) (5,283,668) (2,626,146) (2,507,619)
Annuity benefits .............................. (3,182) (1,498) (1,043) --
Annual contract maintenance charge (note 2) ... (76,335) (74,653) (27,347) (30,007)
Contingent deferred sales charges (note 2) .... (80,993) (74,498) (30,749) (43,021)
Adjustments to maintain reserves .............. 5,185 1,705 2,944 277
------------ ------------ ------------ ------------
Net equity transactions ................... (7,503,926) 386,278 (2,381,398) (1,706,049)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 5,377,083 18,329,743 350,670 2,611,193
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 82,653,997 64,324,254 27,605,048 24,993,855
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 88,031,080 82,653,997 27,955,718 27,605,048
============ ============ ============ ============
</TABLE>
================================================================================
See accompanying notes to financial statements.
<PAGE> 8
================================================================================
NATIONWIDE VA SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VA Separate Account-A (the Account) was established pursuant
to a resolution of the Board of Directors of Nationwide Life and
Annuity Insurance Company (the Company) on May 6, 1987. The Account has
been registered as a unit investment trust under the Investment Company
Act of 1940. On August 21, 1991, the Company transferred to the
Account, 50,000 shares of the American Century VP - American Century VP
Advantage fund for which the Account was credited with 25,000
accumulation units. The value of the accumulation units purchased by
the Company on August 21, 1991 was $250,000.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts through the Account. The primary
distribution for the contracts is through banks and other financial
institutions; however, other distributors may be utilized.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees are offered for purchase.
See note 2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in any of the following funds:
Portfolio of the American Century Variable Portfolios, Inc.
(American Century VP);
American Century VP - American Century VP Advantage
(ACVPAdv)
Funds of the Federated Insurance Series (Federated IS)
(available for VA-II Eagle Choice contracts);
Federated IS - Federated American Leaders Fund II
(FedAmLead)
Federated IS - Federated High Income Bond Fund II
(FedHiInc)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
(available for VA-II Eagle Choice contracts)
Fidelity VIP - Growth Portfolio (FidVIPGr) (available for
VA contracts)
Fidelity VIP - Overseas Portfolio (FidVIPOv) (available for
VA-II Eagle Choice contracts)
Funds of the MFS(R) Variable Insurance Trust (MFS(R) VIT)
(available for VA-II Eagle Choice contracts);
MFS(R) VIT - Emerging Growth Series (MFSEmGrSe)
MFS(R) VIT - Total Return Series (MFSTotReSe)
Funds of the Nationwide Separate Account Trust (Nationwide
SAT) (managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
(available for VA contracts)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
(available for all contracts)
Nationwide SAT - Money Market Fund (NSATMyMkt) (available
for all contracts)
Nationwide SAT - Small Company Fund (NSATSmCo) (available
for VA-II Eagle Choice contracts)
Nationwide SAT - Total Return Fund (NSATTotRe) (available
for VA contracts)
Portfolio of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman AMT) (available for VA contracts);
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
<PAGE> 9
At December 31, 1998, contract owners have invested in all of the above
funds except the Nationwide SAT Small Company Fund. The contract
owners' equity is affected by the investment results of each fund,
equity transactions by contract owners and certain contract expenses
(see note 2). The accompanying financial statements include only
contract owners' purchase payments pertaining to the variable portions
of their contracts and exclude any purchase payments for fixed dollar
benefits, the latter being included in the accounts of the Company.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1998. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions,
deduct from a contract owners' contract value a contingent deferred sales
charge not to exceed 7% of the lesser of purchase payments or the amount
surrendered, such charge declining 1% per year, to 0%, after the purchase
payment has been held in the contract for 84 months. No sales charges are
deducted on redemptions used to purchase units in the fixed investment
options of the Company.
The following contract charges are deducted by the Company: (a) for the VA
contracts an annual contract maintenance charge of up to $30, dependent
upon contract type and issue date, which is satisfied by surrendering
units; for the VA II Convertible contracts a one-time contract maintenance
charge of up to $50, dependent upon the initial purchase payment and
contract type; and (b) for the VA contracts a mortality risk charge, an
expense risk charge and an administration charge assessed through the daily
unit value calculation equal to an annual rate of 0.80%, 0.45% and 0.05%,
respectively; for the VA II Convertible contracts a mortality risk charge,
an expense risk charge and an administration charge assessed through the
daily unit value calculation equal to an annual rate of 0.80%, 0.45% and
0.15%, respectively. No charges were deducted from the initial funding, or
from earnings thereon.
<PAGE> 10
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
================================================================================
<PAGE> 53
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life and Annuity Insurance Company:
We have audited the accompanying balance sheets of Nationwide Life and Annuity
Insurance Company, a wholly owned subsidiary of Nationwide Life Insurance
Company, as of December 31, 1998 and 1997, and the related statements of income,
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nationwide Life and Annuity
Insurance Company as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
KPMG LLP
Columbus, Ohio
January 29, 1999
<PAGE> 2
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Balance Sheets
($000's omitted, except per share amounts)
<TABLE>
<CAPTION>
December 31,
Assets 1998 1997
---- ----
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $ 904,946 $ 796,919
Equity securities 20,853 14,767
Mortgage loans on real estate, net 268,894 218,852
Real estate, net 2,250 2,824
Policy loans 332 215
Short-term investments 2,277 18,968
---------- ----------
1,199,552 1,052,545
---------- ----------
Cash 2 5,163
Accrued investment income 11,645 10,778
Deferred policy acquisition costs 53,007 30,087
Other assets 41,542 15,624
Assets held in separate accounts 1,533,690 891,101
---------- ----------
$2,839,438 $2,005,298
========== ==========
Liabilities and Shareholder's Equity
Future policy benefits and claims $1,163,829 $ 986,191
Other liabilities 25,933 29,426
Liabilities related to separate accounts 1,533,690 891,101
---------- ----------
2,723,452 1,906,718
---------- ----------
Commitments and contingencies (note 7 and 11)
Shareholder's equity:
Common stock, $40 par value. Authorized, issued and outstanding 66,000 shares 2,640 2,640
Additional paid-in capital 52,960 52,960
Retained earnings 50,331 35,812
Accumulated other comprehensive income 10,055 7,168
---------- ----------
115,986 98,580
---------- ----------
$2,839,438 $2,005,298
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Income
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Policy charges $ 28,549 $ 11,244 $ 6,656
Life insurance premiums 63 363 246
Net investment income 11,314 11,577 51,045
Realized gains (losses) on investments 696 (246) (3)
Other income 1,165 1,057 --
-------- -------- --------
41,787 23,995 57,944
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 4,881 3,948 34,711
Other benefits and claims 1,586 433 813
Amortization of deferred policy acquisition costs 4,348 1,402 7,380
Other operating expenses 8,952 1,860 7,247
-------- -------- --------
19,767 7,643 50,151
-------- -------- --------
Income before federal income tax expense 22,020 16,352 7,793
Federal income tax expense 7,501 5,749 2,707
-------- -------- --------
Net income $ 14,519 $ 10,603 $ 5,086
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Shareholder's Equity
Years ended December 31, 1998, 1997 and 1996
($000's omitted)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
----- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
December 31, 1995 $ 2,640 $ 52,960 $ 20,123 $ 4,454 $ 80,177
Comprehensive income:
Net income -- -- 5,086 -- 5,086
Net unrealized losses on securities
available-for-sale arising during the -- -- -- (1,226) (1,226)
year
---------
Total comprehensive income 3,860
--------- --------- --------- --------- ---------
December 31, 1996 2,640 52,960 25,209 3,228 84,037
Comprehensive income:
Net income -- -- 10,603 -- 10,603
Net unrealized gains on securities
available-for-sale arising during the -- -- -- 3,940 3,940
year
---------
Total comprehensive income 14,543
--------- --------- --------- --------- ---------
December 31, 1997 2,640 52,960 35,812 7,168 98,580
Comprehensive income:
Net income -- -- 14,519 -- 14,519
Net unrealized gains on securities
available-for-sale arising during the -- -- -- 2,887 2,887
year
---------
Total comprehensive income 17,406
--------- --------- --------- --------- ---------
December 31, 1998 $ 2,640 $ 52,960 $ 50,331 $ 10,055 $ 115,986
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Cash Flows
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 14,519 $ 10,603 $ 5,086
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to policyholder account balances 4,881 3,948 34,711
Capitalization of deferred policy acquisition costs (29,216) (20,099) (19,987)
Amortization of deferred policy acquisition costs 4,348 1,402 7,380
Commission and expense allowances under coinsurance
agreement with affiliate -- -- 26,473
Amortization and depreciation (479) 250 1,721
Realized (gains) losses on invested assets, net (696) 246 3
Increase in accrued investment income (867) (1,589) (725)
(Increase) decrease in other assets (25,919) 21,858 (32,539)
Increase (decrease) in policy liabilities and funds withheld
on coinsurance agreement with affiliate 139,991 228,898 (7,101)
(Decrease) increase in other liabilities (3,883) (7,488) 23,198
--------- --------- ---------
Net cash provided by operating activities 102,679 238,029 38,220
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 117,228 95,366 73,966
Proceeds from sale of securities available-for-sale 17,403 30,431 2,480
Proceeds from repayments of mortgage loans on real estate 28,180 15,199 10,975
Proceeds from sale of real estate 707 -- --
Proceeds from repayments of policy loans 99 67 23
Cost of securities available-for-sale acquired (242,516) (267,899) (179,671)
Cost of mortgage loans on real estate acquired (78,180) (84,736) (57,395)
Cost of real estate acquired (3) (13) --
Policy loans issued (216) (155) (55)
Short-term investments, net 16,691 (18,476) 4,352
--------- --------- ---------
Net cash used in investing activities (140,607) (230,216) (145,325)
--------- --------- ---------
Cash flows from financing activities:
Increase in investment product and universal life insurance
product account balances 74,828 6,952 200,575
Decrease in investment product and universal life insurance
product account balances (42,061) (13,898) (89,174)
--------- --------- ---------
Net cash provided by (used in) financing activities 32,767 (6,946) 111,401
--------- --------- ---------
Net (decrease) increase in cash (5,161) 867 4,296
Cash, beginning of year 5,163 4,296 --
--------- --------- ---------
Cash, end of year $ 2 $ 5,163 $ 4,296
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements
December 31, 1998, 1997 and 1996
($000's omitted)
(1) Organization and Description of Business
Nationwide Life and Annuity Insurance Company (the Company) is a wholly
owned subsidiary of Nationwide Life Insurance Company (NLIC).
The Company provides long-term savings and retirement products,
including variable annuities, fixed annuities and life insurance.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which differ from statutory
accounting practices prescribed or permitted by regulatory authorities.
An Annual Statement, filed with the Department of Insurance of the
State of Ohio (the Department), is prepared on the basis of accounting
practices prescribed or permitted by the Department. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as
state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not
so prescribed. The Company has no material permitted statutory
accounting practices.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent assets and
liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses for the reporting period. Actual
results could differ significantly from those estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) Valuation of Investments and Related Gains and Losses
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of shareholder's equity. The adjustment to
deferred policy acquisition costs represents the change in
amortization of deferred policy acquisition costs that would have
been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed
maturity securities classified as held-to-maturity or trading as
of December 31, 1998 or 1997.
<PAGE> 7
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Impairment losses are recorded on long-lived
assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(b) Revenues and Benefits
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual variable and
fixed deferred annuities. Universal life insurance products
include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of certain annuities with life
contingencies. Premiums for traditional life insurance products
are recognized as revenue when due. 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.
(c) Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs
are adjusted to reflect the impact of unrealized gains and losses
on fixed maturity securities available-for-sale as described in
note 2(a).
(d) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses
of these accounts accrue directly to the contractholders. The
activity of the separate accounts is not reflected in the
statements of income and cash flows except for the fees the
Company receives.
<PAGE> 8
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(e) Future Policy Benefits
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 5.1%, 5.1% and 5.6% for the years ended
December 31, 1998, 1997 and 1996, respectively.
(f) Federal Income Tax
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC). The members of the
consolidated tax return group have a tax sharing agreement which
provides, in effect, for each member to bear essentially the same
federal income tax liability as if separate tax returns were
filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(g) Reinsurance Ceded
Reinsurance revenues ceded and reinsurance recoveries on benefits
and expenses incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(h) Statements of Cash Flows
The Company routinely invests its available cash balances in
highly liquid, short-term investments with affiliated companies.
See note 10. As such, the Company had no cash balance as of
December 31, 1995.
(i) Recently Issued Accounting Pronouncements
On January 1, 1998 the Company adopted SFAS No. 131 - Disclosures
about Segments of an Enterprise and Related Information (SFAS
131). SFAS 131 supersedes SFAS No. 14 - Financial Reporting for
Segments of a Business Enterprise. SFAS 131 establishes standards
for public business enterprises to report information about
operating segments in annual financial statements and selected
information about operating segments in interim financial reports.
SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The
adoption of SFAS 131 did not affect results of operations or
financial position, nor did it affect the manner in which the
Company defines its operating segments. The segment information
required for annual financial statements is included in note 12.
On January 1, 1998, the Company adopted SFAS No. 132 - Employers'
Disclosures about Pensions and Other Postretirement Benefits. SFAS
132 revises employers' disclosures about pension and other
postretirement benefit plans. The Statement does not change the
measurement or recognition of benefit plans in the financial
statements. The revised disclosures required by SFAS 132 are
included in note 8.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
In June 1998, the FASB issued SFAS No. 133 - Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities. Contracts that contain
embedded derivatives, such as certain insurance contracts, are
also addressed by the Statement. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. The Statement is effective for fiscal years beginning
after June 15, 1999. It may be implemented earlier provided
adoption occurs as of the beginning of any fiscal quarter after
issuance. The Company plans to adopt this Statement in first
quarter 2000 and is currently evaluating the impact on results of
operations and financial condition.
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position 98-1 - Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SOP 98-1). SOP
98-1 provides guidance intended to standardize accounting
practices for costs incurred to develop or obtain computer
software for internal use. Specifically, SOP 98-1 provides
guidance for determining whether computer software is for internal
use and when costs incurred for internal use software are to be
capitalized. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company does
not expect the adoption of SOP 98-1, which occurred on January 1,
1999, to have a material impact on the Company's financial
statements.
(j) Reclassification
Certain items in the 1997 and 1996 financial statements have been
reclassified to conform to the 1998 presentation.
(3) Investments
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1998 and
1997 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
---- ----- ------ ----------
<S> <C> <C> <C> <C>
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 15,577 $ 232 $ (11) $ 15,798
Obligations of states and political subdivisions 332 1 -- 333
Debt securities issued by foreign governments 4,015 23 -- 4,038
Corporate securities 602,925 15,446 (358) 618,013
Mortgage-backed securities 261,225 5,605 (66) 266,764
--------- --------- --------- ---------
Total fixed maturity securities 884,074 21,307 (435) 904,946
Equity securities 15,323 5,530 -- 20,853
--------- --------- --------- ---------
$ 899,397 $ 26,837 $ (435) $ 925,799
========= ========= ========= =========
December 31, 1997:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 5,923 $ 109 $ (27) $ 6,005
Obligations of states and political subdivisions 267 5 -- 272
Debt securities issued by foreign governments 6,077 57 (1) 6,133
Corporate securities 482,478 10,964 (509) 492,933
Mortgage-backed securities 285,224 6,458 (106) 291,576
--------- --------- --------- ---------
Total fixed maturity securities 779,969 17,593 (643) 796,919
Equity securities 11,704 3,063 -- 14,767
--------- --------- --------- ---------
$ 791,673 $ 20,656 $ (643) $ 811,686
========= ========= ========= =========
</TABLE>
<PAGE> 10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1998, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
---- ----------
<S> <C> <C>
Fixed maturity securities available-for-sale:
Due in one year or less $121,769 $122,931
Due after one year through five years 606,626 621,349
Due after five years through ten years 126,215 130,402
Due after ten years 29,464 30,264
-------- --------
$884,074 $904,946
======== ========
</TABLE>
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Gross unrealized gains $ 26,402 $ 20,013
Adjustment to deferred policy acquisition costs (10,933) (8,985)
Deferred federal income tax (5,414) (3,860)
-------- --------
$ 10,055 $ 7,168
======== ========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale follows for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ 3,922 $ 9,177 $ (8,764)
Equity securities 2,467 1,663 249
-------- -------- --------
$ 6,389 $ 10,840 $ (8,515)
======== ======== ========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1998,
1997 and 1996 were $17,403, $30,431 and $2,480, respectively. During
1998, gross gains of $509 ($825 and $181 in 1997 and 1996,
respectively) and gross losses of $0 ($1,124 and none in 1997 and 1996,
respectively) were realized on those sales. See note 10.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1998 was $890 (none as of December 31,
1997). No valuation allowance has been recorded for these loans as of
December 31, 1998. During 1998, the average recorded investment in
impaired mortgage loans on real estate was approximately $178 ($386 in
1997) and interest income recognized on those loans was $15 (none in
1997), which is equal to interest income recognized using a cash-basis
method of income recognition.
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Allowance, beginning of year $ 750 $ 934
Reductions credited to operations -- (53)
Direct write-downs charged against the allowance -- (131)
----- -----
Allowance, end of year $ 750 $ 750
===== =====
</TABLE>
<PAGE> 11
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Real estate is presented at cost less accumulated depreciation of $105
as of December 31, 1998 ($153 as of December 31, 1997). There was a
valuation allowance of $229 as of December 31, 1997.
The Company has no investments which were non-income producing for the
twelve month periods preceding December 31, 1998 and 1997.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $56,398 $53,491 $40,552
Equity securities -- 375 598
Mortgage loans on real estate 21,124 14,862 9,991
Real estate 379 318 214
Short-term investments 1,361 899 507
Other 178 90 57
------- ------- -------
Total investment income 79,440 70,035 51,919
Less:
Investment expenses 1,773 1,386 874
Net investment income ceded (note 9) 66,353 57,072 --
------- ------- -------
Net investment income $11,314 $11,577 $51,045
======= ======= =======
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fixed maturity securities available-for-sale $ 509 $(299) $ 181
Mortgage loans on real estate -- 53 (184)
Real estate and other 187 -- --
----- ----- -----
$ 696 $(246) $ (3)
===== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $3,562 and $3,383
as of December 31, 1998 and 1997, respectively, were on deposit with
various regulatory agencies as required by law.
<PAGE> 12
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(4) Federal Income Tax
The Company's current federal income tax liability was $1,522 and $806
as of December 31, 1998 and 1997, respectively.
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 16,670 $ 13,168
Liabilities in Separate Accounts 12,477 8,080
Mortgage loans on real estate and real estate 263 336
Other assets and other liabilities -- 48
-------- --------
Total gross deferred tax assets 29,410 21,632
-------- --------
Deferred tax liabilities:
Fixed maturity securities 8,669 7,186
Deferred policy acquisition costs 8,103 6,159
Equity securities 1,935 1,072
Other 10,422 7,892
-------- --------
Total gross deferred tax liabilities 29,129 22,309
-------- --------
$ 281 $ (677)
======== ========
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. The
Company has determined that valuation allowances are not necessary as
of December 31, 1998, 1997 and 1996 based on its analysis of future
deductible amounts.
Federal income tax expense for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Currently payable $ 10,014 $ 2,458 $ 9,612
Deferred tax (benefit) expense (2,513) 3,291 (6,905)
-------- -------- --------
$ 7,501 $ 5,749 $ 2,707
======== ======== ========
</TABLE>
Total federal income tax expense for the years ended December 31, 1998,
1997 and 1996 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1998 1997 1996
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 7,707 35.0 $ 5,723 35.0 $ 2,728 35.0
Tax exempt interest and dividends
received deduction (223) (1.0) -- (0.0) (175) (2.3)
Other, net 17 0.1 26 (0.2) 154 2.0
------- ------ ------- ------ ------- ------
Total (effective rate of each year) $ 7,501 34.1 $ 5,749 35.2 $ 2,707 34.7
======= ====== ======= ====== ======= ======
</TABLE>
Total federal income tax paid was $9,298, $9,566 and $2,335 during the
years ended December 31, 1998, 1997 and 1996, respectively.
<PAGE> 13
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(5) Comprehensive Income
Pursuant to SFAS No. 130 - Reporting Comprehensive Income, which the
Company adopted January 1, 1998, the Consolidated Statements of
Shareholder's Equity include a new measure called "Comprehensive
Income". Comprehensive Income includes net income as well as certain
items that are reported directly within separate components of
shareholders' equity that bypass net income. Currently, the Company's
only component of Other Comprehensive Income is unrealized gains
(losses) on securities available-for-sale. The related before and after
federal tax amounts are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale arising during the period:
Gross $ 6,898 $ 10,541 $ (8,334)
Adjustment to deferred policy acquisition costs (1,947) (4,778) 6,628
Related federal income tax (expense) benefit (1,733) (2,017) 362
-------- -------- --------
Net 3,218 3,746 (1,344)
-------- -------- --------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross (509) 299 (181)
Related federal income tax expense (benefit) 178 (105) 63
-------- -------- --------
Net (331) 194 118
-------- -------- --------
Total Other Comprehensive Income $ 2,887 $ 3,940 $ (1,226)
======== ======== ========
</TABLE>
(6) Fair Value of Financial Instruments
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
<PAGE> 14
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
Fixed maturity and equity securities: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices.
Mortgage loans on real estate: The fair value for mortgage loans
on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgages in default is the estimated fair value of
the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the balance sheets for these instruments approximates
their fair value.
Separate account assets and liabilities: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
Investment contracts: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
Policy reserves on life insurance contracts: The estimated fair
value is the amount payable on demand. Also included are
disclosures for the Company's limited payment policies, which the
Company has used discounted cash flow analyses similar to those
used for investment contracts with known maturities to estimate
fair value.
Commitments to extend credit: Commitments to extend credit have
nominal value because of the short-term nature of such
commitments. See note 7.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
------------------------- --------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $ 904,946 $ 904,946 $ 796,919 $ 796,919
Equity securities 20,853 20,853 14,767 14,767
Mortgage loans on real estate, net 268,894 276,387 218,852 229,881
Policy loans 332 332 215 215
Short-term investments 2,277 2,277 18,968 18,968
Cash 2 2 5,163 5,163
Assets held in separate accounts 1,533,690 1,533,690 891,101 891,101
Liabilities:
Investment contracts 1,153,930 1,113,584 980,263 950,105
Policy reserves on life insurance contracts 9,899 10,517 5,928 6,076
Liabilities related to separate accounts 1,533,690 1,501,255 891,101 868,056
</TABLE>
<PAGE> 15
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(7) Risk Disclosures
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
Credit Risk: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties which owe the Company money, will
not pay. The Company minimizes this risk by adhering to a conservative
investment strategy, by maintaining credit and collection policies and
by providing for any amounts deemed uncollectible.
Interest Rate Risk: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
Legal/Regulatory Risk: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by operating throughout the
United States, thus reducing its exposure to any single jurisdiction,
and also by employing underwriting practices which identify and
minimize the adverse impact of this risk.
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans. These instruments involve, to varying
degrees, elements of credit risk in excess of amounts recognized on the
balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $9,500 extending into
1999 were outstanding as of December 31, 1998.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 33% (29% in 1997) in any geographic area and no more than 6% (3%
in 1997) with any one borrower as of December 31, 1998. As of December
31, 1998 36% (37% in 1997) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed apartment
building properties.
<PAGE> 16
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(8) Pension Plan and Postretirement Benefits Other Than Pensions
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC and
Employers Life Insurance Company of Wausau (ELICW).
Pension costs charged to operations by the Company during the years
ended December 31, 1998, 1997 and 1996 were $235, $257 and $189,
respectively.
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1998 and 1997 was $1,008 and $891, respectively, and the net periodic
postretirement benefit cost (NPPBC) for 1998, 1997 and 1996 was $130,
$94 and $78, respectively.
<PAGE> 17
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1998 and 1997 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 2,033,800 $ 1,847,800 $ 237,900 $ 200,700
Service cost 87,600 77,300 9,800 7,000
Interest cost 123,400 118,600 15,400 14,000
Actuarial loss 123,200 60,000 15,600 24,400
Plan curtailment in 1998/merger in 1997 (107,200) 1,500 -- --
Benefits paid (75,800) (71,400) (8,600) (8,200)
----------- ----------- ----------- -----------
Benefit obligation at end of year 2,185,000 2,033,800 270,100 237,900
----------- ----------- ----------- -----------
Change in plan assets:
Fair value of plan assets at beginning of year 2,212,900 1,947,900 69,200 63,000
Actual return on plan assets 300,700 328,100 5,000 3,600
Employer contribution 104,100 7,200 12,100 10,600
Plan merger -- 1,100 -- --
Benefits paid (75,800) (71,400) (8,400) (8,000)
----------- ----------- ----------- -----------
Fair value of plan assets at end of year 2,541,900 2,212,900 77,900 69,200
----------- ----------- ----------- -----------
Funded status 356,900 179,100 (192,200) (168,700)
Unrecognized prior service cost 31,500 34,700 -- --
Unrecognized net (gains) losses (345,700) (330,700) 16,000 1,600
Unrecognized net (asset) obligation at transition (11,000) 33,300 1,300 1,500
----------- ----------- ----------- -----------
Prepaid (accrued) benefit cost $ 31,700 $ (83,600) $ (174,900) $ (165,600)
=========== =========== =========== ===========
</TABLE>
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average discount rate 5.50% 6.00% 6.65% 6.70%
Rate of increase in future compensation levels 3.75% 4.25% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 12.13%
Ultimate rate -- -- 8.00% 6.12%
Uniform declining period -- -- 15 Years 12 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 87,600 $ 77,300 $ 75,500
Interest cost on projected benefit obligation 123,400 118,600 105,500
Expected return on plan assets (159,000) (139,000) (116,100)
Recognized gains (3,800) -- --
Amortization of prior service cost 3,200 3,200 3,200
Amortization of unrecognized transition obligation 4,200 4,200 4,100
--------- --------- ---------
$ 55,600 $ 64,300 $ 72,200
========= ========= =========
</TABLE>
<PAGE> 18
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with the Nationwide Insurance Enterprise and employees of
WSC ended participation in the plan. A curtailment gain of $67,100
resulted (consisting of a $107,200 reduction in the projected benefit
obligation, net of the write-off of the $40,100 remaining unamortized
transition obligation related to WSC). The Company anticipates that the
plan will settle the obligation related to WSC employees with a
transfer of assets during 1999.
Basis for measurements, net periodic pension cost for the
pension plan:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 6.00% 6.50% 6.00%
Rate of increase in future compensation levels 4.25% 4.75% 4.25%
Expected long-term rate of return on plan assets 7.25% 7.25% 6.75%
</TABLE>
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits attributed to employee service
during the year) $ 9,800 $ 7,000 $ 6,500
Interest cost on accumulated postretirement benefit obligation 15,400 14,000 13,700
Actual return on plan assets (5,000) (3,600) (4,300)
Amortization of unrecognized transition obligation of affiliates 200 200 200
Net amortization and deferral 1,200 (500) 1,800
-------- -------- --------
$21,600 $ 17,100 $ 17,900
======== ======== ========
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
NPPBC:
Discount rate 6.70% 7.25% 6.65%
Long term rate of return on plan
assets, net of tax 5.83% 5.89% 4.80%
Assumed health care cost trend rate:
Initial rate 12.00% 11.00% 11.00%
Ultimate rate 6.00% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1998 and have no impact
on the NPPBC for the year ended December 31, 1998.
(9) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings
and Dividend Restrictions
Ohio, the Company's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within
<PAGE> 19
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
certain levels, each of which requires specified corrective action. The
Company exceeds the minimum risk-based capital requirements.
The statutory capital and surplus of the Company as reported to
regulatory authorities as of December 31, 1998, 1997 and 1996 was
$70,135, $74,820 and $71,390, respectively. The statutory net (loss)
income of the Company as reported to regulatory authorities for the
years ended December 31, 1998, 1997 and 1996 was $(3,371), $7,446 and
$670, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1998,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $7,013.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends
in the future.
(10) Transactions With Affiliates
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1998, 1997 and 1996, the
Company made lease payments to NMIC and its subsidiaries of $430, $703
and $410, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $2,933, $2,564 and $2,682 in 1998, 1997
and 1996, respectively. The allocations are based on techniques and
procedures in accordance with insurance regulatory guidelines. Measures
used to allocate expenses among companies include individual employee
estimates of time spent, special cost studies, salary expense,
commissions expense and other methods agreed to by the participating
companies that are within industry guidelines and practices. The
Company believes these allocation methods are reasonable. In addition,
the Company does not believe that expenses recognized under the
inter-company agreements are materially different than expenses that
would have been recognized had the Company operated on a stand alone
basis. Amounts payable to NMIC from the Company under the cost sharing
agreement were $2,750 and $4,981 as of December 31, 1998 and 1997,
respectively.
Effective December 31, 1996, the Company entered into an intercompany
reinsurance agreement with NLIC whereby certain inforce and
subsequently issued fixed individual deferred annuity contracts are
ceded on a 100% coinsurance with funds withheld basis. On December 31,
1997, the agreement was amended to a modified coinsurance basis. Under
modified coinsurance agreements, invested assets and liabilities for
future policy benefits are retained by the ceding company and net
investment earnings on the invested assets are paid to the assuming
company. Under terms of the Company's agreement, the investment risk
associated with changes in interest rates is borne by NLIC. Risk of
asset default is retained by the Company, although a fee is paid by
NLIC to the Company for the Company's retention of such risk. The
agreement will remain inforce until all contract obligations are
settled. The ceding of risk does not discharge the original insurer
from its primary obligation to the contractholder. The Company believes
that the terms of the modified coinsurance agreement are consistent in
all material respects with what the Company could have obtained with
unaffiliated parties. Amounts ceded to NLIC in 1998 are included in
NLIC's results of operations for 1998 and include premiums of $241,503,
net investment income of $66,353 and benefits, claims and other
expenses of $296,659. In consideration for the initial inforce business
reinsured, NLIC paid the Company $26,473 in commission and expense
allowances which were applied to the Company's deferred policy
acquisition costs as of December 31, 1996. No significant gain or loss
was recognized as a result of the agreement.
<PAGE> 20
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
During 1997, the Company sold fixed maturity securities
available-for-sale at fair value of $27,253 to NLIC. The Company
recognized a $693 gain on the transactions.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $2,277 and $18,968 as of December 31,
1998 and 1997, respectively, and are included in short-term investments
on the accompanying balance sheets.
(11) Contingencies
On October 29, 1998, the Company and certain of its affiliates were
named in a lawsuit filed in the Common Pleas Court of Franklin County,
Ohio related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
The plaintiff in such lawsuit seeks to represent a national class of
the Company's customers and seeks unspecified compensatory and punitive
damages. The Company is currently evaluating this lawsuit, which is in
an early stage and has not been certified as a class. The Company
intends to defend this lawsuit vigorously.
(12) Segment Information
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
The Variable Annuities segment consists of annuity contracts that
provide the customer with the opportunity to invest in mutual funds
managed by independent investment managers and the Company, with
investment returns accumulating on a tax-deferred basis. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate, fixed for a
prescribed period, with returns accumulating on a tax-deferred basis.
Such contracts consist of single premium deferred annuities, flexible
premium deferred annuities and single premium immediate annuities. The
Fixed Annuities segment includes the fixed option under variable
annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
and all realized gains and losses on investments in a Corporate and
Other segment.
<PAGE> 21
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (1,417) $ 6,792 $ 4098 $ 5,531 $ 11,314
Other operating revenue 18,209 3,182 8,386 -- 29,777
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 16,792 9,974 8,794 5,531 41,091
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 4,660 221 -- 4,881
Amortization of deferred policy
acquisition costs 3,466 508 374 -- 4,348
Other benefits and expenses 4,442 2,087 4,009 -- 10,538
----------- ----------- ----------- ----------- -----------
Total expenses 7,908 7,255 4,604 -- 19,767
----------- ----------- ----------- ----------- -----------
Operating income (loss) before
federal income tax 8,884 2,719 4,190 5,531 21,324
Realized gains on investments -- -- -- 696 696
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 8,884 $ 2,719 $ 4,190 $ 6,227 $ 22,020
=========== =========== =========== =========== ===========
Assets as of year end $ 1,502,829 $ 1,162,040 $ 92,482 $ 82,087 $ 2,839,438
=========== =========== =========== =========== ===========
1997:
Net investment income (1) $ (873) $ 5,927 $ 166 $ 6,357 $ 11,577
Other operating revenue 10,823 1,825 16 -- 12,664
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 9,950 7,752 182 6,357 24,241
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 3,856 92 -- 3,948
Amortization of deferred policy
acquisition costs 1,035 347 20 -- 1,402
Other benefits and expenses 1,648 347 298 -- 2,293
----------- ----------- ----------- ----------- -----------
Total expenses 2,683 4,550 410 -- 7,643
----------- ----------- ----------- ----------- -----------
Operating income before federal
income tax 7,267 3,202 (228) 6,357 16,598
Realized losses on investments -- -- -- (246) (246)
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 7,267 $ 3,202 $ (228) $ 6,111 $ 16,352
=========== =========== =========== =========== ===========
Assets as of year end $ 925,021 $ 989,116 $ 2,228 $ 88,933 $ 2,005,298
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1996:
Net investment income (1) $ (849) $ 50,197 $ 149 $ 1,548 $ 51,045
Other operating revenue 5,440 1,445 16 1 6,902
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 4,591 51,642 165 1,549 57,947
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 34,711 -- -- 34,711
Amortization of deferred policy
acquisition costs 1,473 5,888 19 -- 7,380
Benefits and expenses 2,024 5,889 147 -- 8,060
----------- ----------- ----------- ----------- -----------
Total expenses 3,497 46,488 166 -- 50,151
----------- ----------- ----------- ----------- -----------
Operating income before federal
income tax 1,094 5,154 (1) 1,549 7,796
Realized losses on investments -- -- -- (3) (3)
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 1,094 $ 5,154 $ (1) $ 1,546 $ 7,793
=========== =========== =========== =========== ===========
Assets as of year end $ 503,111 $ 787,682 $ 2,597 $ 73,031 $ 1,366,421
=========== =========== =========== =========== ===========
</TABLE>
(1) The Company's method of allocating net investment income
results in a charge (negative net investment income) to the
Variable Annuities segment which is recognized in the
Corporate and Other segment. The charge relates to
non-invested assets which support this segment on a statutory
basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside
of the United States nor does the Company have any significant
long-lived assets located outside the United States.
<PAGE> 54
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<S> <C>
(a) To be filed by Financial Statements:
(1) Financial statements included PAGE
in Prospectus
(Part A):
Condensed Financial Information.
(2) Financial statements included N/A
in Part B:
Those financial statements required by Item 23
to be included in Part B have been incorporated
therein by reference to the Statement of
Additional Information
(Part A).
Nationwide VA Separate Account-A:
Independent Auditors' Report. 52
Statements of Assets, Liabilities 53
and Contract Owners' Equity as of
December 31, 1998.
Statements of Operations and Changes
in Contract Owners' Equity for the years
ended December 31, 1998 and 1997. 54
Notes to Financial Statements. 55
Nationwide Life and Annuity Insurance Company:
Independent Auditors' Report. 65
Balance Sheets as of December 31, 1998 66
and 1997.
Statements of Income for the years 67 ended
December 31, 1998, 1997 and 1996.
Statements of Shareholder's Equity for the 68
years ended December 31, 1998, 1997 and
1996.
Statements of Cash Flows for the years 69 ended
December 31, 1998, 1997 and 1996.
Notes to Financial Statements. 70
</TABLE>
84 of 106
<PAGE> 55
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant - Filed previously with
this Registration Statement and hereby
incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution contracts
between the Registrant and Principal
Underwriter - Filed previously with this
Registration Statement and hereby
incorporated by reference.
(4) The form of the variable annuity contract
- Filed previously with this Registration
Statement and hereby incorporated
herein by reference.
(5) Variable Annuity Application - Filed
previously with this Registration
Statement and hereby incorporated herein
by reference.
(6) Articles of Incorporation of Depositor
Filed previously with this Registration
Statement and hereby incorporated herein
by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with
this Registration Statement and hereby
incorporated herein by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation
Schedule - Filed previously with this
Registration Statement and hereby
incorporated herein by reference.
85 of 106
<PAGE> 56
<TABLE>
<CAPTION>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
300 East Marshall Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer
One Nationwide Plaza and Director
Columbus, OH 43215
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
2859 Paces Ferry Road
Atlanta, GA 30339
Ralph M. Paige, Executive Director Director
Federation of Southern
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
86 of 106
<PAGE> 57
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1733A Westwood Avenue
Alliance, OH 44601
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate
One Nationwide Plaza Development
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
Phillip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary
Columbus, OH 43215
Richard D. Headley Senior Vice President - Chief
One Nationwide Plaza Information Technology Officer
Columbus, OH 43215
Donna A James Senior Vice President - Human
One Nationwide Plaza Resources
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
</TABLE>
87 of 106
<PAGE> 58
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Douglas C. Robinette Senior Vice President-
One Nationwide Plaza Marketing and Product
Columbus, OH 43215 Management Nationwide
Financial Services of the
Nationwide Insurance Enterprise
Susan A. Wolken Senior Vice President - Life
One Nationwide Plaza Company Operations
Columbus, OH 43215
Bruce C. Barnes Vice President - Technology
One Nationwide Plaza Strategy and Planning
Columbus, OH 43215
Dennis W. Click Vice President - Secretary
One Nationwide Plaza
Columbus, OH 43215
David A. Diamond Vice President - Enterprise
One Nationwide Plaza Controller
Columbus, OH 43215
Matthew S. Easley Vice President -
One Nationwide Plaza Investment Life Actuarial
Columbus, OH 43215
R. Dennis Noice Vice President - Systems
One Nationwide Plaza
Columbus, OH 43215
Joseph P. Rath
One Nationwide Plaza Vice President - Product
Columbus, OH 43215 and Market Compliance
Mark Thresher Vice President - Finance and
One Nationwide Plaza Treasurer
Columbus, OH 43215
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
88 of 106
<PAGE> 59
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
The 401K Companies, Inc. Texas Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
The 401(K) Company Texas Third-party administrator for 401(k)
plans
-------------------------------------- ------------------------- ------------------ ---------------------------------------
401K Investment Advisors, Inc. Texas Investment Advisor registered with the
SEC
-------------------------------------- ------------------------- ------------------ ---------------------------------------
401K Investments Services, Inc. Texas NASD registered Broker-Dealer
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Affiliate Agency, Inc. Delaware Life Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
AID Finance Services, Inc. Iowa Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED General Agency Company Iowa Managing General Agent and Surplus
Lines Broker (P&C)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Group, Inc. Iowa Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Group Insurance Marketing Iowa Direct Marketer (P&C)
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Group Mortgage Company Iowa Mortgage Lender
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Life Brokerage Agency, Inc. Iowa Insurance Broker
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Life Financial Corporation Iowa Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Life Insurance Company Iowa Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
ALLIED Property and Casualty Iowa Underwrites General P&C Insurance
Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Allnations, Inc. Ohio Promotes international cooperative
insurance organizations
-------------------------------------- ------------------------- ------------------ ---------------------------------------
AMCO Insurance Company Iowa Underwrites General P&C Insurance
-------------------------------------- ------------------------- ------------------ ---------------------------------------
American Marine Underwriters, Inc. Florida Underwriting Manager
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Auto Direkt Insurance Company Germany Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
CalFarm Insurance Company California Stock Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Caliber Funding Corporation Delaware Stock Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Colonial County Mutual Insurance Texas Insurance Company
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Colonial Insurance Company of Wisconsin Insurance Company
Wisconsin
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Columbus Insurance Brokerage and Germany Insurance Broker
Service GmbH
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
89 of 106
<PAGE> 60
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Cooperative Service Company Nebraska Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Depositors Insurance Company Iowa Underwrites P&C insurance
-------------------------------------- ------------------------- ------------------ ---------------------------------------
*Employers Life Insurance Company Wisconsin Life Insurance Company
of Wausau
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Excaliber Funding Corporation Delaware Limited purpose corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
F&B, Inc. Iowa Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Financial Horizons Distributors Alabama Insurance Agency
Agency of Alabama, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Financial Horizons Distributors Oklahoma Insurance Agency
Agency of Oklahoma, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Financial Horizons Distributors Texas Insurance Agency
Agency of Texas, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
*Financial Horizons Investment Trust Massachusetts Investment Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Financial Horizons Securities Oklahoma Broker-Dealer
Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
GatesMcDonald Health Plus, Inc. Ohio Managed Care Organization
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Gates, McDonald & Company Ohio Cost Control
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Gates, McDonald & Company of Nevada Nevada Self-insurance administration, claims
examinations and data processing
services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Gates, McDonald & Company of New New York Workers' compensation claims
York, Inc. administration
-------------------------------------- ------------------------- ------------------ ---------------------------------------
MedPro Solutions, Inc. Massachusetts Third-party administration services
for workers' compensation, automobile
injury and disability claims
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Irvin L. Schwartz and Associates, Ohio Insurance Agency
Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Leben Direkt Insurance Company Germany Life Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
90 of 106
<PAGE> 61
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Lone Star General Agency, Inc. Texas Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Midwest Printing Services, Inc. Iowa General Printing Services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Morley & Associates Oregon Insurance Broker
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Morley Capital Management, Inc. Oregon Investment Adviser and stable value
money management
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Morley Financial Services, Inc. Oregon Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Morley Research Associates, Ltd. Delaware Credit research consulting
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**MRM Investments, Inc. Ohio Owns and operates a recreational ski
facility
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**National Casualty Company Wisconsin Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
National Casualty Company of America, Great Britain Insurance Company
Ltd.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
National Deferred Compensation, Inc. Ohio Administers deferred compensation
plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Advisory Services, Inc. Ohio Investment Management and
Administrative Services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**Nationwide Agency, Inc. Ohio Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Asset Allocation Trust Massachusetts Investment Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Cash Management Company Ohio Investment Securities Agent
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Community Urban Ohio Special purpose real estate corporation
Redevelopment Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Corporation Ohio Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Financial Services Bermuda Life Insurance Company
(Bermuda) Ltd.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Financial Services Delaware Statutory Business Trust
Capital Trust
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Financial Services Delaware Statutory Business Trust
Capital Trust II
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
91 of 106
<PAGE> 62
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Nationwide Financial Services, Inc. Delaware Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide General Insurance Company Ohio Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Global Holdings, Inc. Ohio Holding Company for International
Operations
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Health Plans, Inc. Ohio Health Maintenance Organization
-------------------------------------- ------------------------- ------------------ ---------------------------------------
*Nationwide Indemnity Company Ohio Reinsurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Insurance Company of California Underwriter
America
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Insurance Company of Ohio Insurance Company
Florida
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Services Company, LCC Ohio Shared services functions
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation
Inc.
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide International Underwriters California Underwriting Manager
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Investing Foundation Michigan Provide investors with continuous
source of investment
-------------------------------------- ------------------------- ------------------ ---------------------------------------
*Nationwide Investing Foundation II Massachusetts Common Law Trust
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Investment Services Oklahoma Registered Broker-Dealer in deferred
Corporation compensation market
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**Nationwide Life Insurance Company Ohio Life Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Lloyds Texas Property Insurance
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Management Systems, Inc. Ohio Preferred provider organization,
products and related services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Mutual Funds Ohio Investment Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
92 of 106
<PAGE> 63
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Nationwide Properties, Ltd. Ohio Develop, own and operate real estate
and real estate investments
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Realty Investors, Inc. Ohio Develop, own and operate real estate
and real estate investments
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Inc. Delaware Market and administer deferred
compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Alabama Market and administer deferred
Inc. of Alabama compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Arizona Market and administer deferred
Inc. of Arizona compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Arkansas Market and administer deferred
Inc. of Arkansas compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Montana Market and administer deferred
Inc. of Montana compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Nevada Market and administer deferred
Inc. of Nevada compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, New Mexico Market and administer deferred
Inc. of New Mexico compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Ohio Market variable annuity contracts to
Inc. of Ohio members of the National Education
Association in the state of Ohio
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Oklahoma Market variable annuity contracts to
Inc. of Oklahoma members of the National Education
Association in the state of Oklahoma
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, South Dakota Market and administer deferred
Inc. of South Dakota compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Texas Market and administer deferred
Inc. of Texas compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Retirement Solutions, Wyoming Market variable annuity contracts to
Inc. of Wyoming members of the National Education
Association in the state of Wyoming
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
93 of 106
<PAGE> 64
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public employees
-------------------------------------- ------------------------- ------------------ ---------------------------------------
*Nationwide Separate Account Trust Massachusetts Investment Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nationwide Trust Company, FSB United States of America Federal Savings Bank
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Neckura Holding Company Germany Administrative services for Neckura
Insurance Group
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Neckura Insurance Company Germany Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Neckura Life Insurance Company Germany Life Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nevada Independent Nevada Workers' compensation administrative
Companies-Construction services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nevada Independent Companies-Health Nevada Workers' compensation administrative
and Nonprofit services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nevada Independent Companies- Nevada Workers' compensation administrative
Hospitality and Entertainment services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Nevada Independent Companies- Nevada Workers' compensation administrative
Manufacturing services
-------------------------------------- ------------------------- ------------------ ---------------------------------------
NFS Distributors, Inc. Delaware Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
NWE, Inc. Ohio Special Investments
-------------------------------------- ------------------------- ------------------ ---------------------------------------
PanEuroLife Luxembourg Life Insurance
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Pension Associates, Inc. Wisconsin Pension plan administration
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Portland Investment Services, Inc. Oregon NASD Registered Broker-Dealer
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Premier Agency, Inc. Iowa Insurance Agency
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Riverview Agency, Inc. Texas Stock Corporation
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Scottsdale Indemnity Company Ohio Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Scottsdale Insurance Company Ohio Insurance Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Scottsdale Surplus Lines Insurance Arizona Excess and Surplus Lines Insurance
Company Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance
Group Group
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Union Bond and Trust Company Oregon Oregon state bank with trust powers
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Villanova Capital, Inc. Delaware Holding Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
94 of 106
<PAGE> 65
<TABLE>
<CAPTION>
-------------------------------------- ------------------------- ------------------ ---------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------------------- ------------------------- ------------------ ---------------------------------------
<S> <C> <C> <C>
Villanova Mutual Fund Capital Trust Delaware Business Trust
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Villanova SA Capital Trust Delaware Business Trust
-------------------------------------- ------------------------- ------------------ ---------------------------------------
**Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
Western Heritage Insurance Company Arizona Excess and Surplus Lines Insurance
Company
-------------------------------------- ------------------------- ------------------ ---------------------------------------
</TABLE>
95 of 106
<PAGE> 66
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
-------------------------------------------------------------------------------------------------------------------------------
Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
-------------------------------------------------------------------------------------------------------------------------------
Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VL Separate Account-A Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
96 of 106
<PAGE> 67
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide VL Separate Account-B Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VL Separate Account-C Ohio Nationwide Life and Annuity Issuer of Life Insurance
- Separate Account Policies
-------------------------------------------------------------------------------------------------------------------------------
Nationwide VL Separate Account -D Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
-------------------------------------------------------------------------------------------------------------------------------
* Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
-------------------------------------------------------------------------------------------------------------------------------
Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
97 of 106
<PAGE> 68
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
-------------------------------------------------------------------------------------------------------------------------
| | |
- --------------------------- --------------------------- ----------------------------
| ALLIED LIFE | | ALLIED | | AID FINANCE |
| FINANCIAL | | GROUP, INC. | | SERVICES, INC. |
| CORPORATION | | (AGI) | | (AID FINANCE) |
| (ALFC) | | | | |
|Common Stock: 850 | |Common Stock: 850 Shares | |Common Stock: 10,000 |
|------------ Shares | |------------ | |------------ Shares |
| |---| | |---| | |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
|Casualty- | | |Casualty- | | |Casualty- |
|100% $47,286,429 | | |100% $1,049,237,226| | |100% $19,545,634 |
- --------------------------- | --------------------------- | ----------------------------
| | |
- --------------------------- | --------------------------- | ----------------------------
| ALLIED GROUP | | | AMCO | | | ALLIED |
| MERCHANT BANKING | | | INSURANCE COMPANY | | | GROUP INSURANCE |
| CORPORATION | | | (AMCO) | | | MARKETING COMPANY |
|Common Stock: 10,000 | | |Common Stock: 155,991 | | |Common Stock: 20,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| |----| |---| | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
| | | | | | | |Aid Finance- |
|AFLC-100% $100,000 | | | |AGI-100% $95,925,450| | |100% $16,059,469 |
- --------------------------- | | --------------------------- | ----------------------------
| | |
- --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | WESTERN | | | DEPOSITORS |
| BROKERAGE | | | | HERITAGE INSURANCE | | | INSURANCE COMPANY |
| AGENCY, INC. | | | | COMPANY | | | (DEPOSITORS) |
|Common Stock: 500,000 | | | |Common Stock: 4,776,076 | | |Common Stock: 199,991 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|AFLC-100% $442,695 | | | |AMCO-100% $11,686,037| | |AGI-100% $15,251,842 |
- --------------------------- | | --------------------------- | ----------------------------
| | |
- --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | ALLIED | | | ALLIED PROPERTY |
| INSURANCE | | | | GENERAL AGENCY | | | AND CASUALTY |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 250,000 | | | |Common Stock: 5,000 | | |Common Stock: 156,822 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AFLC-100% $41,732,343| |AMCO-100% $135,342 | | |AGI-100% $33,018,634 |
- --------------------------- --------------------------- | ----------------------------
|
--------------------------- | ----------------------------
| PREMIER | | | ALLIED |
| AGENCY, | | | GROUP MORTGAGE |
| INC. | | | COMPANY |
|Common Stock: 100,000 | | |Common Stock: 9,500 |
|------------ Shares | | |------------ Shares |
| |---|---| |
| Cost | | | Cost |
| ---- | | | ---- |
|AGI-100% $100,000 | | |AGI-100% $213,976 |
--------------------------- | ----------------------------
|
| ----------------------------
| | MIDWEST |
| | PRINTING SERVICES |
| | LTD. |
| |Common Stock: 10,000 |
| |------------ Shares |
|---| |
| Cost |
| ---- |
|AFLC-100% $610,000 |
----------------------------
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |============================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
| || |--------------------------------------------------------------------| |--------------------------
- --| || |
|| |--------------------------------------------------------------|----------------
|| | |
|| -------------------------------- | -------------------------------- --------------------------------
|| | | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| | NATIONWIDE LLOYDS | | | | | |
|| | | | |Common Stock: 20,000 | |Common Stock: 10,000 |
||==| | |---|------------ Shares | |--|------------ Shares |
|| | A TEXAS LLOYDS | | | | | | |
|| | | | | Cost | | | Cost |
|| | | | | ---- | | | ---- |
|| | | | |Casualty-100% $5,944,422 | | |Casualty-100% $87,943,140 |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE PROPERTY | | | NECKURA |
|| | INSURANCE COMPANY | | | AND CASUALTY | | | INSURANCE COMPANY |
|| |Guaranty Fund | | | INSURANCE COMPANY | | | |
|| |------------ | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
||==|Certificate |---| |---|------------ Shares | | |------------ Shares |
|----------- Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | |Neckura- ---- |
|Casualty $500,000 | | | |Casualty-100% $6,000,000 | | |100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | COLONIAL INSURANCE | | | NECKURA LIFE |
| | | | | COMPANY OF WISCONSIN | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | (COLONIAL) | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| Cost | | | |------------ Shares | | |------------ Shares |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | SCOTTSDALE | | | NECKURA GENERAL |
| COMPANY | | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | (SIC) | | | |
|------------ | | | |Common Stock: 30,136 | | |Common Stock: 1,500 |
| Cost |---- |---|------------ Shares | ---- |--|------------ Shares |
| ---- | | | Cost | | | | Cost |
|Farmland $3,506,173 | | | ---- | | | | ---- |
|Mutual-100% | | |Casualty-100% $150,000,000 | | | |Neckura-100% DM 1,656,925 |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONWIDE AGRIBUSINESS | | | SCOTTSDALE | | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | SURPLUS LINES | | | | BROKERAGE AND SERVICE |
|Common Stock: 1,000,000 | | | INSURANCE COMPANY | | | | GmbH |
|------------ Shares | | | Common Stock: 10,000 | | | |Common Stock: 1 Share |
| |--------| | ------------ Shares | ---| |--|------------ |
| Cost | | | | | | | |
|Casualty-99.9% ---- | | | Cost | | | | Cost |
|Other Capital: $26,714,335 | | | ---- | | | | ---- |
|------------- | | | SIC-100% $6,000,000 | | | |Neckura-100% DM 51,639 |
|Casualty-Ptd. $ 713,576 | | | | | | | |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONAL CASUALTY | | | NATIONAL PREMIUM & | | | | LEBEN DIREKT |
| COMPANY | | | BENEFIT ADMINISTRATION | | | | INSURANCE COMPANY |
| (NC) | | | COMPANY | | | | |
|Common Stock: 100 Shares | | |Common Stock: 10,000 | | | |Common Stock: 4,000 Shares |
|------------ |--------| |------------ Shares |----| |--|------------ |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|Casualty-100% $67,442,439 | |Scottsdale-100% $10,000 | | |Neckura-100% DM 4,000,000 |
-------------------------------- -------------------------------- | --------------------------------
| |
-------------------------------- -------------------------------- | --------------------------------
| NCC OF AMERICA, LTD. | | SVM SALES | | | AUTO DIREKT |
| (INACTIVE) | | GmbH | | | INSURANCE COMPANY |
| | | | | | |
| | |Common Stock: 50 Shares | | |Common Stock: 1500 Shares |
| | |------------ |------------|------------ |
| | | Cost | | Cost |
|NC-100% | | ---- | | ---- |
| | |Neckura-100% DM 50,000 | |Neckura-100% DM 1,643,149 |
| | | | | |
| | | | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION|
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
- -----------------------------------------------------------------------|
|
- --------------- --------------------------------------------------
| |
- -----------------------------------------------------------------------------------------|----------------------- |
| | | | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | SCOTTSDALE | | | NATIONWIDE | | | NATIONWIDE |
| | INDEMNITY COMPANY | | | COMMUNITY URBAN | | | CORPORATION |
| | | | | REDEVELOPMENT | | | |
| | | | | CORPORATION | | |Common Stock: Control: |
| |Common Stock: 50,000 | | |Common Stock: 10 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | Cost | | | Cost | | | Shares Cost |
| | ---- | | | ---- | | | ------ ---- |
| |Casualty-100% $8,800,000 | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $751,352,485|
| | | | | | | |Fire 649,510 24,007,936|
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | NATIONWIDE | | | INSURANCE | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | INTERMEDIARIES, INC. | | |Common Stock: 10,330 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 1,615 | |--------| ---- |
| |------------ Shares | | |------------ Shares | | |Casualty-18.6% $88,320 |
| | Cost | | | Cost | | |Fire-18.6% $88,463 |
| | ---- | | | ---- | | |Preferred Stock 1466 Shares |
| |Casualty-100% $294,529,000 | | |Casualty-100% $1,615,000 | | |--------------- Cost |
| | | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | LONE STAR | | | NATIONWIDE CASH | | | PENSION ASSOCIATES |
| | GENERAL AGENCY, INC. | | | MANAGEMENT COMPANY | | | OF WAUSAU, INC. |
| | | | |Common Stock: 100 Shares | | |Common Stock: 1,000 Shares |
------|Common Stock: 1,000 | |----|------------ | |--------|------------- |
| |------------ Shares | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-90% $9,000 | | | |
| |Casualty-100% $5,000,000 | | |NW Adv. Serv. 1,000 | | |Casualty-100% $2,839,392 |
| -------------------------------- | -------------------------------- | ----------------------------------
| || | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | COLONIAL COUNTY MUTUAL | | | NATIONWIDE INSURANCE | | | AMERCIAN MARINE |
| | INSURANCE COMPANY | | | COMPANY OF FLORIDA | | | UNDERWRITERS, INC. |
| | | | |Common Stock: 10,000 | | |Common Stock: 20 Shares |
| |Surplus Debentures | | |------------- Shares | | |------------- |
| |------------------ | |----| | |--------| Cost |
| | Cost | | | Cost | | ---- |
| | ---- | | | ---- | | |
| |Colonial $500,000 | | |Casualty-100% $300,000,000 | |Casualty-100% $5,020 |
| |Lone Star 150,000 | | | | | |
| -------------------------------- | -------------------------------- ----------------------------------
| |
| -------------------------------- | --------------------------------
| | TIG COUNTRYWIDE | | | WAUSAU INTERNATIONAL |
| | INSURANCE COMPANY | | | UNDERWRITERS |
| |Common Stock 12,000 | | | |
| |------------ Shares | | |Common Stock: 1,000 Shares |
|-----| | -----|------------ |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $215,273,000 | | |Casualty-100% $10,000 |
| | | | | |
| -------------------------------- | | |
| | --------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE INSURANCE | | | NATIONWIDE |
| | ENTERPRISE SERVICES, LTD. | | | ARENA LLC |
| | | | | |
| |Single Member Limited | | | |
|.....|Liability Company | |....| |
| | | |
| | | |
|Casualty-100% | |Casualty-90% |
| | | |
-------------------------------- --------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
</TABLE>
Page 1
<PAGE> 71
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-------------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | INSTITUTION DISTRIBUTORS |
| | | CAPITAL TRUST | | AGENCY, INC. (NFIDAI) |
| Common Stock: 3,814,779 | | Preferred Stock: | | Common Stock: 1,000 |
| ------------ Shares | | --------------- | | ------------ Shares |
| | | | | |
| NFS--100% | | NFS--100% | | NFS--100% |
----------------|------------ ----------------------------- ---------------||------------
| ||
- ----------------------------- | ----------------------------- ----------------------------- || ----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | FINANCIAL HORIZONS | || | |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC. | | DISTRIBUTORS AGENCY | || | |
| | | | (NW ADV. SERV.) | | OF ALABAMA, INC. | || | |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--|--| ------------ Shares |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OHIO, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $58,070,003 | | | NW Life -100% $5,996,261 | || | NFIDAI -100% $100 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NWE, INC. | | | NATIONWIDE | || | LANDMARK FINANCIAL | || | |
| | | | INVESTORS SERVICES, INC. | || | SERVICES OF | || | |
| | | | | || | NEW YORK, INC. | || | |
| Common Stock: 100 | | | Common Stock: 5 Shares | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | ------------ |--|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OKLAHOMA, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $35,971,375 | | | NW Adv. Serv. -100% $5,000| || | NFIDAI -100% $10,100 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE INVESTMENT | | | FINANCIAL HORIZONS | || | FINANCIAL HORIZONS | || | |
| SERVICES CORPORATION | | | INVESTMENT TRUST | || | SECURITIES CORP. | || | |
| | | | | || | | || | |
| Common Stock: 5,000 | | | | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF TEXAS, INC. |
| Cost | | | | || | Cost | || | |
| ---- | | | | || | ---- | || | |
| NW Life -100% $529,728 | | | COMMON LAW TRUST | || | NFIDAI -100% $153,000 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | || | |
| INVESTORS, LTD. | | | INVESTING | || | | || | |
| | | | FOUNDATION | || | | || | |
| Units: | | | | || | Common Stock: 100 | || | AFFILIATE |
| ------ |..| | |==|| | ------------ Shares |--||==| AGENCY OF |
| | | | | || | | | OHIO, INC. |
| | | | | || | Cost | | |
| NW Life -90% | | | | || | ---- | | |
| NW Mutual-10% | | | COMMON LAW TRUST | || | NFIDAI -100% $100 | | |
- ----------------------------- | ----------------------------- || ----------------------------- ----------------------------
| ||
- ----------------------------- | ----------------------------- || -----------------------------
| NATIONWIDE | | | NATIONWIDE | || | NATIONWIDE |
| PROPERTIES, LTD. | | | INVESTING | || | INVESTING |
| | | | FOUNDATION II | || | FOUNDATION III |
| Units: |..| | | || | |
| ------ | | |==||==| |
| | | | || | |
| | | | || | | ----------------------
| NW Life -97.6% | | | || | | | MORLEY RESEARCH |
| NW Mutual -2.4% | | COMMON LAW TRUST | || | OHIO BUSINESS TRUST | | ASSOCIATES, LTD. |
- ----------------------------- ----------------------------- || ----------------------------- | |
|| |Common Stock: 1,000 |
----------------------------- || ----------------------------- |------------- Shares|------
| NATIONWIDE | || | NATIONWIDE | | Cost |
| SEPARATE ACCOUNT | || | ASSET ALLOCATION TRUST | | ---- |
| TRUST | || | | |Morley-100% $1,000|
| | || | | ----------------------
| |==||==| |
| | | |
| | | |
| | | MASSACHUSETTS |
| COMMON LAW TRUST | | BUSINESS TRUST |
----------------------------- -----------------------------
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
(Center)
NATIONWIDE INSURANCE ENTERPRISE (R)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------- --------------------------------------------------
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | | (FIRE) |
- -------------------------------------------------- | --------------------------------------------------
|
-----------------------------------------
| NATIONWIDE CORPORATION (NW CORP) |
| Common Stock: Control: |
| ------------ ------- |
| 13,642,432 100% |
| Shares Cost |
| ------ ---- |
|Casualty 12,992,922 $751,352,485 |
|Fire 649,510 24,007,936 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- -----------------|-------------------------------|-------------------|--------------------------------|-----------------------------
| | | |
-------------|--------------- --------------|-------------- | ---------------|-------------
| MORLEY FINANCIAL | | THE 401(k) COMPANIES, INC.| | | NATIONWIDE RETIREMENT |
| SERVICES, INC. (MORLEY) | | (401(k)) | | | SOLUTIONS, INC. |
|Common Stock: 82,343 | |Common Stock: Control: | | |Common Stock: 236,494 |
|---|------------- Shares | |------------- ------- |--| | |------------- Shares |
| | | |Class A Other-100% | | | | |
| |NFS-100% | |Class B NFS -100% | | | |NRS-100% |
| ----------------------------- ----------------------------- | | ---------------|-------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY & | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | ASSOCIATES, INC. | | SERVICES, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF NEW |
| | | | | | | | ALABAMA | | | MEXICO |
| |Common Stock: 3,500 | | Common Stock: 1,000,000 | | | | Common Stock: 10,000 | | | Common Stock: 1,000 |
|---|------------- Shares | | ------------- Shares |--| | | ------------- Shares |--|--| ------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $1,000 | |401(k)-100% $7,800 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY CAPITAL | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | MANAGEMENT | | ADVISORS, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARIZONA | | | SO. DAKOTA |
| |Common Stock: 500 | |Common Stock: 1,000 | | | |Common Stock: 1,000 | | |Common Stock: 1,000 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $5,000 | |401(k)-100% $1,000 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | UNION BOND | | 401(k) ICOMPANY | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | & TRUST COMPANY | | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARKANSAS | | | WYOMING |
| |Common Stock: 2,000 | |Common Stock: 855,000 | | | |Common Stock: 50,000 | | |Common Stock: 500 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | Cost | | | Cost |
| | ---- | | ---- | | | ---- | | | ---- |
| |Morley-100% $50,000 | |401(k)-100% $1,000 | | |NRS-100% $500 | | |NRS-100% $500 |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | PORTLAND INVESTMENT | | NATIONWIDE TRUST | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | SERVICES, INC. | | COMPANY, FSB | | | SOLUTIONS, INS. AGENCY, | | | SOLUTIONS, INC. OF |
| | | | | | | INC. | | | OHIO |
| |Common Stock: 1,000 | |Common Stock: 2,800,000 | | |Common Stock: 1,000 | | | |
|---|------------- Shares | |------------- Shares |-----| |------------- Shares |--|==| |
| | Cost | | Cost | | | Cost | | | |
| | ---- | | ---- | | | ---- | | | |
| |Morley-100% $25,000 | |NFS-100% $3,500,000 | | |NRS -100% $1,000 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ---------------------------- | ---------------------------
| | EXCALIBER FUNDING | | NATIONWIDE FINANCIAL | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | SERVICES CAPITAL TRUST II | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | MONTANA | | | OKLAHOMA |
| |Common Stock: 1,000 | | | | |Common Stock: 500 | | | |
|---|------------- Shares | | |-----| |------------- Shares |--|==| |
| | Cost | | | | | Cost | | | |
| | ---- | | | | | ---- | | | |
| |Morley-100% $1,000 | |NFS-100% | | |NRS-100% $500 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | CALIBER FUNDING | | NFS DISTRIBUTORS INC. | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | NEVADA | | | TEXAS |
| | | | | | | Common Stock: 1,000 | | | |
|---| | | |-----| | ------------- Shares |--|==| |
| | | | | Cost | | |
| | | | | ---- | | |
|Morley-100% | |NFS-100% | | NRS-100% $1,000 | | |
----------------------------- ----------------------------- ----------------------------- ---------------------------
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------|--------------------|---------------------------------------|
| | |
| ---------------|---------------- --------------|----------------
| | EMPLOYERS LIFE INSURANCE CO. | | GATES MCDONALD |
| | OF WAUSAU (ELIOW) | | & COMPANY (GATES) |
| | | | |
| |Common Stock: 250,000 | |Common Stock: 254 |
| |--|------------- Shares | |--|------------- Shares |
| | | | | | |
| | | Cost | | | Cost |
| | | ---- | | | ---- |
| | |NW CORP. -100% $126,509,480 | | |NW CORP. -100% $25,683,532 |
| | -------------------------------- | -------------------------------
- ------------ | | |
| -------------------------------- | | -------------------------------- | --------------------------------
| | NATIONWIDE TRUST | | | | WAUSAU PREFERRED | | | HEALTHCARE |
| | COMPANY | | | | HEALTH INSURANCE CO. | | | FIRST, INC. |
| | | | | | | | | |
| |Common Stock: 2,800,000 | | | |Common Stock: 200 | | | |
|--|------------- Shares | | |--|------------- Shares | |--| |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |ELIOW -100% $57,413,193 | | |Gates-100% $6,700,000 |
| -------------------------------- | -------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE FINANCIAL | | | NATIONWIDE GLOBAL | | | GATES MCDONALD & COMPANY |
| | SERVICES (BERMUDA) INC. | | | HOLDINGS, INC. (NGH) | | | OF NEW YORK, INC. |
| | | | | | | | |
| |Common Stock: 250,000 | | |Common Stock: 1 | | |Common Stock: 3 |
|--|------------- Shares | |-----|------------- Share | |--|------------- Shares |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |NW CORP.-100% $7,000,000 | | |Gates-100% $106,947 |
| -------------------------------- | -------------------------------- | -------------------------------
| | | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE DEFERRED | | | NATIONWIDE GLOBAL HOLDINGS | | | GATES MCDONALD & COMPANY |
| | COMPENSATION, INC. | | | -HONG KONG, LIMITED | | | OF NEVADA |
| | | | | | | | |
| | | | |Common Stock: 2 | | |Common Stock: 40 |
|--| | | |------------- Shares | |--|------------- Shares |
| | | | | | | | |
| | | | | | | | Cost |
| | | | | | | | ---- |
| |NFS-100% | | |NGH-100% | | |Gates-100% $93,750 |
| -------------------------------- | -------------------------------- | -------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | IRVIN L. SCHWARTZ | | | NATIONWIDE | | | GATES McDONALD |
| | AND ASSOCIATES, INC. | | | HEALTH PLANS, INC. (NHP) | | | HEALTH PLUS, INC. |
| | | | | | | | |
| |Common Stock: Control | | |Common Stock: 100 | | |Common Stock: 200 |
|--|------------- ------- | |-----|------------- Shares |--| |--|------------- Shares |
| | | | | | | |
| | | | Cost | | | Cost |
|Class A Other-100% | | | ---- | | | ---- |
|Class B NFS -100% | | |NW CORP.-100% $14,603,732 | | |Gates-100% $2,000,000 |
-------------------------------- | -------------------------------- | -------------------------------
| |
-------------------------------- | -------------------------------- |
| MRM INVESTMENTS, INC. | | | NATIONWIDE MANAGEMENT | |
| | | | SYSTEMS, INC. | |
| | | | | |
|Common Stock: 1 | | |Common Stock: 100 | |
|------------- Share |--| |------------- Shares |--|
| | | | |
| Cost | | Cost | |
| ---- | | ---- | |
|NW CORP.-100% $7,000,000 | |NHP Inc.-100% $25,149 | |
-------------------------------- -------------------------------- |
|
-------------------------------- |
| NATIONWIDE | |
| AGENCY, INC. | |
| | |
|Common Stock: 100 | |
|------------ Shares |--|
| |
| Cost |
| ---- |
|NHP Inc.-99% $116,077 |
--------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
Page 2
</TABLE>
<PAGE> 74
Item 27. NUMBER OF CONTRACT OWNERS
The number of contract owners of Qualified and Non-Qualified
Contracts as of January 31, 1999 was 6,142 and 3,020,
respectively.
Item 28. INDEMNIFICATION
Provision is made in Nationwide's Amended and Restated Code of
Regulations and expressly authorized by the General Corporation
Law of the State of Ohio, for indemnification by Nationwide of any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was a
director, officer or employee of Nationwide, against expenses,
including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law
of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling Nationwide pursuant to the
foregoing provisions, Nationwide has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Advisory Services, Inc. ("NAS") acts as principal
underwriter and general distributor for the Nationwide
Variable Account, Nationwide Multi-Flex Variable Account,
Nationwide Variable Account-II, Nationwide Variable
Account-5, Nationwide Variable Account-6, Nationwide
Variable Account-8, Nationwide Variable Account-9,
Nationwide VA Separate Account-A, Nationwide VA Separate
Account-B, Nationwide VA Separate Account-C, Nationwide VL
Separate Account-A, Nationwide VL Separate Account-B,
Nationwide VL Separate Account-C, Nationwide VL Separate
Account-D, Nationwide VLI Separate Account-2, Nationwide VLI
Separate Account-3, Nationwide VLI Separate Account-4, and
the Nationwide VLI Separate Account-5, all of which are
separate investment accounts of Nationwide or its
affiliates.
NAS also acts as principal underwriter for Nationwide Mutual
Funds, Nationwide Separate Account Trust, and Nationwide
Asset Allocation Trust, which are open-end management
investment companies.
100 of 106
<PAGE> 75
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Dimon R. McFerson Chairman of the Board of Directors and Chairman and Chief Executive
One Nationwide Plaza Officer and Director
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President - Chief Financial Officer and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Paul J. Hondros Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Edwin P. McCausland, Jr. Senior Vice President-Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Charles S. Bath Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
William G. Goslee Vice President
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
James F. Laird, Jr. Vice President and General Manager
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Joseph P. Rath Vice President - Compliance
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Christopher A. Cray Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Elizabeth A. Davin Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
David E. Simaitis Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Patricia J. Smith Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(c)
- ------------------------------ ------------------------ ----------------------- ------------------ -------------------
NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION
DISCOUNTS AND REDEMPTION OR COMMISSIONS
COMMISSIONS ANNUITIZATION
- ------------------------------ ------------------------ ----------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Nationwide Advisory N/A N/A N/A N/A
Services, Inc.
- ------------------------------ ------------------------ ----------------------- ------------------ -------------------
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215
Item 31. MANAGEMENT SERVICES
Not Applicable
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<PAGE> 77
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) File a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) Include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) Deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant represents that any of the contracts which are
issued pursuant to Section 403(b) of the Internal Revenue Code are
issued by Nationwide through the Registrant in reliance upon, and
in compliance with a no-action letter issued by the staff of the
Securities and Exchange Commission to the American Council of Life
Insurance (publicly available November 28, 1988) permitting
withdrawal restrictions to the extent necessary to comply with
Section 403(b)(11) of the Internal Revenue Code.
Nationwide 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 Nationwide.
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<PAGE> 78
Offered by
Nationwide Life and Annuity Insurance Company
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide VA Separate Account-A
Deferred Variable Annuity Contract
PROSPECTUS
May 1, 1999
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<PAGE> 79
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of the Nationwide VA Separate Account-A:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG LLP
Columbus, Ohio
April 29, 1999
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<PAGE> 80
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE VA SEPARATE ACCOUNT-A certifies that it meets
the requirements of Securities Act Rule 485(b) for effectiveness of this
Post-Effective Amendment, and has caused this Post-Effective Amendment to be
signed on its behalf in the City of Columbus, and State of Ohio, on this 21st
day of September, 1999.
NATIONWIDE VA SEPARATE ACCOUNT-A
---------------------------------------------
(Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
---------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------------------
Joseph P. Rath
Vice President- Product and Market Compliance
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 21st day
of September, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
- ---------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ---------------------------------------
A. I. Bell
KENNETH D. DAVIS Director
- ---------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- ---------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ---------------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ---------------------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
- ---------------------------------------
Joseph J. Gasper Officer and Director
DIMON R. MCFERSON Chairman and Chief Executive
- ---------------------------------------
Dimon R. McFerson Officer and Director
DAVID O. MILLER Chairman of the Board and
- ---------------------------------------
David O. Miller Director
YVONNE L. MONTGOMERY Director
- ---------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
- ---------------------------------------
Robert A. Oakley Financial Officer
RALPH M. PAIGE Director
- ---------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- ---------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ JOSEPH P. RATH
- --------------------------------------- --------------------------------------
Arden L. Shisler Joseph P. Rath
ROBERT L. STEWART Director Attorney-in-Fact
- ---------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ---------------------------------------
Nancy C. Thomas
</TABLE>
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