Registration No. 33-31755
811-5880
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 11
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 12
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THE GUARDIAN SEPARATE ACCOUNT D
(Exact Name of Registrant)
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THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
(Name of Depositor)
7 Hanover Square, New York, New York 10004
(Complete address of depositor's principal executive offices)
Depositor's Telephone Number, including Area Code: (212) 598-8359
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RICHARD T. POTTER, JR., ESQ.
The Guardian Insurance & Annuity Company, Inc.
201 Park Avenue South
New York, New York 10003
(Name and address of agent for service)
Copy to:
STEPHEN E. ROTH, ESQ.
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
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It is proposed that this filing will become effective (check
appropriate box):
|_| immediately upon filing pursuant to paragraph (b) of Rule
485
|X| on May 1, 1999 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(1) of Rule
485
|_| on (date) pursuant to paragraph (a)(1) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(2) of Rule
485
|_| on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| this Post-Effective Amendment designates a new effective
date for a previously filed Post-Effective Amendment.
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The Registrant has registered an indefinite number of its securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. The notice required by such rule for the Registrant's most fiscal
year was filed on March 26, 1999.
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<PAGE>
THE GUARDIAN SEPARATE ACCOUNT D
Cross Reference Sheet to Items In
Registration Statement on Form N-4
Form N-4 Item No. Location
Part A
Item 1. Cover Page................................ Cover
Item 2. Definitions............................... Special Terms Used in
This Prospectus
Item 3. Synopsis.................................. Summary: What is a
variable annuity
contract and how does
it work; Costs and
Expenses
Item 4. Condensed Financial Information........... Summary Financial
Information About the
Separate Account
Item 5. General Description of Registrant,
Depositor and Portfolio Companies ...... The Guardian Insurance
& Annuity Company,
Inc. Variable
Investment Options;
Fixed-Rate Option;
Voting Rights
Item 6. Deductions................................ Expenses; Costs and
Expenses; Distribution
of the Contracts
Item 7. General Description of Variable
Annuity Contracts....................... Summary: What is a
variable annuity
contract and how does
it work?
Item 8. Annuity Period............................ The Annuity Period
Item 9. Death Benefit............................. Death Benefits; Enhanced
Death Benefits
Item 10. Purchases and Contract Value.............. Buying a Contract; the
Accumulation Period
Item 11. Redemptions............................... Surrenders and Partial
Withdrawals
Item 12. Taxes..................................... Federal Tax Matters
Item 13. Legal Proceedings......................... Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information.................. Where to get more
Information
Part B
Item 15. Cover Page................................ Cover Page
Item 16. Table of Contents......................... Table of Contents
Item 17. General Information and History........... Not Applicable
Item 18. Services.................................. Services to the Separate
Account
Item 19. Purchase of Securities Being Offered...... Valuation of Assets of
the Separate Account;
Transferability
Restrictions
Item 20. Underwriters.............................. Services to the Separate
Account
Item 21. Calculation of Performance Data........... Performance Data
Item 22. Annuity Payments.......................... Annuity Payments
Item 23. Financial Statements...................... Financial Statements
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
May 1, 1999
THE GUARDIAN INVESTOR
INDIVIDUAL VARIABLE ANNUITY
CONTRACT PROSPECTUS
This prospectus describes two types of Individual Deferred Variable Annuity
Contracts, the Single Premium Payment Contract and the Flexible Premium Payment
Contract. It contains important information that you should know before
investing in the contracts. Please read this prospectus carefully, along with
the accompanying fund prospectuses, and keep them for future reference.
The contracts are issued by The Guardian Insurance & Annuity Company, Inc.
(GIAC) through its Separate Account D (the Separate Account). They are designed
to provide tax deferred annuity benefits under retirement programs. It will also
pay a death benefit if the owner or annuitant dies before annuity payments
begin.
The Single Premium Payment Contract requires a minimum investment of $5,000,
while the Flexible Premium Payment Contract requires a minimum initial premium
payment of $500 ($1,000 in New York State). Your premiums may be invested in up
to six variable investment options or five variable investment options and a
fixed-rate option. Special limits apply to transfers out of the fixed-rate
option. The variable investment options invest in the mutual funds listed below.
The prospectuses for these funds are attached.
The Guardian Stock Fund, Inc.
The Guardian Bond Fund, Inc.
The Guardian Cash Fund, Inc.
GIAC Funds, Inc.
Baillie Gifford International Fund
Baillie Gifford Emerging Markets Fund
The Guardian Small Cap Stock Fund
Value Line Strategic Asset Management Trust
Value Line Centurion Fund
Gabelli Capital Series Funds, Inc.
Gabelli Capital Asset Fund
MFS Variable Insurance Trust
MFS Growth With Income Series
A Statement of Additional Information about the contracts and the Separate
Account is available free of charge by writing to GIAC at its Customer Service
Office, P.O. Box 26210, Lehigh Valley, Pennsylvania 18002, or by calling
1-800-221-3253. Its contents are noted on the last page of this prospectus.
The Statement of Additional Information, which is also dated May 1, 1999, is
incorporated by reference into this prospectus.
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These Securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of this
prospectus.
The contracts are not a deposit or obligation of or guaranteed or endorsed by,
any bank or depository institution, and the contracts are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency, and involves investment risk, including possible loss of the
principal amount invested.
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<PAGE>
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CONTENTS
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Annuity Contract Prospectus
Summary ................................................................... 1
- -- What is a variable annuity contract and how does it work? .............. 1
- -- The accumulation period ................................................ 1
- -- The annuity period ..................................................... 1
- -- Other contract features ................................................ 1
- -- Expenses ............................................................... 2
- -- Deciding to purchase a contract ........................................ 2
The Guardian Insurance & Annuity Company, Inc. ............................ 6
Buying a contract ......................................................... 6
- -- The application form ................................................... 6
- -- Payments ............................................................... 7
The accumulation period ................................................... 7
- -- How we allocate your premium payments .................................. 7
- -- The Separate Account ................................................... 8
- -- Variable investment options ............................................ 9
- -- Fixed-rate option ...................................................... 12
- -- Transfers .............................................................. 13
- -- Surrenders and partial withdrawals ..................................... 14
- -- Managing your annuity .................................................. 15
The annuity period ........................................................ 17
- -- When annuity payments begin ............................................ 17
- -- How your annuity payments are calculated ............................... 17
- -- Variable annuity payout options ........................................ 17
- -- Fixed-rate annuity payout options ...................................... 18
Other contract features ................................................... 19
- -- Death benefits ......................................................... 19
- -- Enhanced death benefits ................................................ 19
- -- Financial information .................................................. 20
- -- How we calculate unit values ........................................... 20
- -- Summary financial information about the Separate Account ............... 21
- -- Contract costs and expenses ............................................ 27
- -- Federal tax matters .................................................... 29
- -- Our income taxes ....................................................... 33
- -- Possible tax law changes ............................................... 33
- -- Performance results .................................................... 33
Your rights and responsibilities .......................................... 35
- -- Voting rights .......................................................... 35
- -- Your right to cancel the contract ...................................... 35
- -- Distribution of the contracts .......................................... 35
Special terms used in this prospectus ..................................... 36
Other information ......................................................... 37
- -- Year 2000 compliance ................................................... 37
- -- Legal Proceedings ...................................................... 38
- -- Where to get more information .......................................... 38
<PAGE>
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SUMMARY
WHAT IS A VARIABLE ANNUITY CONTRACT AND HOW DOES IT WORK?
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A VARIABLE ANNUITY CONTRACT allows you to accumulate tax-deferred savings which
are invested in options that you choose. This is the accumulation period of the
contract. On an agreed date, you or someone else you have named as the annuitant
will start receiving regular payments from the amount you have saved and any
investment earnings. This is the annuity period. The amount of the annuity
payments will depend on earnings during the accumulation period, and afterward
if you select a variable annuity option. That's why this product is called a
variable annuity.
The accumulation period
During the accumulation period, these contracts allow you to allocate your net
premium payments and accumulation value to as many as six variable investment
options, or five variable investment options and a fixed-rate option.
When you allocate your premiums to the variable investment options, you bear the
risk of any investment losses. No assurance can be given that the value of the
contracts during the accumulation period, or the total amount of annuity
payments made under the contracts, will equal or exceed the net premium payments
allocated to the variable investment options. When you allocate your net premium
payments to the fixed-rate option, the contracts guarantee that they will earn a
minimum rate of interest and the investment risk is borne by GIAC.
GIAC has established a Separate Account to hold the variable investments in its
annuity contracts. The Separate Account has 10 investment divisions,
corresponding to 10 variable investment options, each of which invests in a
mutual fund. Your net premiums are used to buy accumulation units in the
investment divisions you have chosen, or are allocated to the fixed-rate option.
The total value of your contract's investment in the investment divisions and in
the fixed-rate option is known as the accumulation value. It's determined by
multiplying the number of variable accumulation units credited to your account
in each investment division by the current value of the division's units, and
adding your value in the fixed-rate option.
The value of units in a variable investment division reflects the investment
experience within the division. The value of units in the fixed-rate option
reflects interest accrued at a rate not less than the guaranteed minimum
specified in the contract. For a complete explanation, please see Financial
information: How we calculate unit values.
The annuity period
Payments to the annuitant under these contracts must begin no later than his or
her 85th birthday. Distributions under the contract are taxable, and if you take
money out of the contract before age 59 1/2, you may also incur a 10% federal
tax penalty on your earnings.
You may select one or a combination of three annuity payout options under the
contract:
o Life annuity without a guaranteed period
o Life annuity with a 10-year guaranteed period
o Joint and survivor annuity
These payout options are available on either a variable or fixed-rate basis.
They're described in more detail in the section titled The annuity period.
Other contract features
Transfers among investment options
You can make transfers among the variable investment options at any time.
Transfers to and from the fixed-rate option are only permitted during the
accumulation period. Certain restrictions apply to transfers out of the
fixed-rate option. Transfers must also comply with the rules of any retirement
plan that apply. Please see The accumulation period: Transfers.
Death benefits
If you, or another person named as the annuitant, should die before annuity
payments begin, then we pay a death benefit to the beneficiary. The contracts
also give you the option of purchasing a rider that may provide a greater death
benefit. Please see Other contract features: Death benefits.
Surrenders and partial withdrawals
At any time during the accumulation period, you may withdraw some or all of the
amount you have saved in the contract. Taking out all you have saved is known as
a surrender; taking out part of your savings is a partial withdrawal. These
options are not avail-
PROSPECTUS 1
<PAGE>
able once annuity payments begin. Please see The accumulation period: Surrenders
and partial withdrawals.
Expenses
The following are expenses that you will incur as a contract owner:
o Operating expenses for mutual funds comprising the variable investment
options
Management fees and other expenses associated with the Funds ranged from
.52% to 1.49% in 1998. Actual charges will depend on the variable
investment options you select.
o Mortality and expense risk charges
1.15% annually of the net asset value of your variable investment options.
o Administrative expenses
$35 annually will be deducted from the accumulation value of your
contract.
The following are expenses that you may incur as a contract owner:
o Contingent deferred sales charges
A charge of 1% to 6% against any amount that you withdraw that has been in
your contract for less than eight years. The actual amount will depend on
the number of years the amount has been invested.
o Enhanced death benefit expense
If you choose this benefit, the annual expense is 0.30% of the net asset
value of your variable investment options.
o Premium taxes
A tax on premiums or annuity payments, applicable in some states and
municipalities only, that varies from 0.5% to 3.5% of premiums paid to the
contract.
Deciding to purchase a contract
You should consider purchasing a variable annuity contract if your objective is
to invest over a long period of time and to accumulate assets on a tax-deferred
basis, generally for retirement. You have the right to examine the contract and
return it for cancellation within 10 days of receiving it. This is known as the
free look period. The period may be longer than 10 days in some states.
Please see Financial information: Summary of financial information about the
Separate Account for more information about Separate Account D and unit values.
Please see Special terms used in this prospectus for definitions of key terms.
2 PROSPECTUS
<PAGE>
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EXPENSE TABLE
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CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases: .................................... None
Transfer Fee: Currently, none (may charge $25 for each transfer)
Contingent Deferred Sales Charge:
(1) Single Premium Payment Contracts:(1)
In connection with Single Premium Payment Contracts, the following charges will
be assessed upon amounts withdrawn during the first seven Contract years
measured from the date of issue.
Number of
Contract Years Contingent
Completed from Date of Deferred Sales
the Premium Payment Charge Percentage(1)
---------------------- -----------------
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8+ 0%
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(2) Flexible Premium Payment Contracts:(2)
In connection with Flexible Premium Payment Contracts, this charge will be the
lesser of:
o 6% of the total payments made during the 84 months immediately preceding
the date of withdrawal, or
o 6% of the total amount being withdrawn.
Annual Contract Administration Fee:
Single Premium Payment Contract .......................................... $35
Flexible Premium Payment Contract ........................................ $35
Separate Account Level Annual Expenses:
For Contract For Contract
Without With
Enhanced Enhanced
Death Benefit Death Benefit
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(as a percentage of daily net asset value)
Mortality and Expense Risk Charge ............... 1.15% 1.15%
Account Fees and Expenses ....................... 0% 0%
Enhanced Death Benefit Charge ................... 0% .30%
---- ----
Total Separate Account Annual Expenses .......... 1.15% 1.45%
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Annual Expenses of the Funds:(3)
(as a percentage of average net assets)
Total Fund
Management Other Operating
Fees Expenses Expenses
---------- -------- ---------
The Guardian Cash Fund ....................... .50% .03% .53%
The Guardian Bond Fund ....................... .50% .05% .55%
The Guardian Stock Fund ...................... .50% .02% .52%
The Guardian Small Cap Stock Fund ............ .75% .14% .89%
Baillie Gifford International Fund ........... .80% .18% .98%
Baillie Gifford Emerging Markets Fund ........ 1.00% .49% 1.49%
Value Line Centurion Fund .................... .50% .09% .59%
Value Line Strategic Asset Management Trust .. .50% .08% .58%
Gabelli Capital Asset Fund ................... 1.00% .12% 1.12%
MFS Growth With Income Series(4).............. .75% .20% .95%
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(1) After the first contract year, you may withdraw in each contract year,
without a deferred sales charge, the greater of: (i) 10% of the
accumulation value on the date of the first withdrawal in the current
contract year, or (ii) 10% of the amount of the single premium payment.
For contracts issued in Section 1035 exchanges or in certain IRA transfers
or rollovers, this privilege may also be exercised in the first contract
year. The amount used to calculate this charge will not exceed the single
premium payment, and the charge will not exceed 6% of the amount being
withdrawn, as outlined in the table above.
(2) After the first contract year, you may withdraw in each contract year,
without a deferred sales charge, the greater of: (i) 10% of the
accumulation value on the date of the first withdrawal in the current
contract year, or (ii) 10% of the total premiums paid under the contract
in the 84 months immediately preceding the date of your withdrawal. For
contracts issued in Section 1035 exchanges or in certain IRA transfers or
rollovers, this privilege may also be exercised in the first contract
year. This charge will not exceed 6% of the total premiums paid in the 84
months preceding the date of your withdrawal.
(3) These percentages reflect the actual fees and expenses incurred by each
Fund during the year ended December 31, 1998. The percentages for Value
Line Centurion Fund and Value Line Strategic Asset Management Trust
reflect (as part of "Other Expenses" and "Total Fund Operating Expenses")
the effects of expense reimbursement arrangements pursuant to which each
of these Funds reimburses GIAC for certain administrative and shareholder
servicing expenses incurred by GIAC on their behalf.
(4) Prior to October 2, 1998, the Adviser of MFS Growth With Income Series
agreed to bear expenses for the Series, subject to reimbursement by the
Series, such that the Series "Other Expenses" shall not exceed 0.25% of
the average daily net assets of the Series during the current fiscal year.
In 1998, actual "Other Expenses" and "Total Fund Operating Expenses" for
the Series were .13% and .88%, respectively.
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PROSPECTUS 3
<PAGE>
The table on the preceding page will assist you in understanding the various
costs and expenses of the Separate Account and its underlying Funds. The
accompanying Fund prospectuses provide a more complete description of the
various costs and expenses.
Comparison of Contract Expenses Among Underlying Funds
For Single Premium (SP) and Flexible Premium (FP) Payment Contracts
Basic Contract
<TABLE>
<CAPTION>
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If you surrender your If you do not surrender
contract at the end of the or you annuitize at the end of
applicable time period: the applicable time period:
You would pay the You would pay the
following expenses on a $1,000 following expenses on a $1,000
investment, assuming a 5% investment, assuming a 5%
annual return on assets: annual return on assets:
Single Premium and Flexible Single Premium and Flexible
Premium Contracts Premium Contracts
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1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE GUARDIAN CASH FUND $79 SP $107 SP $129 SP $214 SP $19 SP $57 SP $99 SP $214 SP
$79 FP $117 FP $159 FP $214 FP $19 FP $57 FP $99 FP $214 FP
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THE GUARDIAN BOND FUND $79 SP $108 SP $130 SP $216 SP $19 SP $58 SP $100 SP $216 SP
$79 FP $118 FP $160 FP $216 FP $19 FP $58 FP $100 FP $216 FP
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THE GUARDIAN STOCK FUND $78 SP $107 SP $128 SP $213 SP $18 SP $57 SP $98 SP $213 SP
$78 FP $117 FP $158 FP $213 FP $18 FP $57 FP $98 FP $213 FP
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THE GUARDIAN SMALL CAP STOCK $82 SP $119 SP $148 SP $253 SP $22 SP $69 SP $118 SP $253 SP
FUND $82 FP $129 FP $178 FP $253 FP $22 FP $69 FP $118 FP $253 FP
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BAILLIE GIFFORD INTERNATIONAL $83 SP $122 SP $153 SP $262 SP $23 SP $72 SP $123 SP $262 SP
FUND $83 FP $132 FP $183 FP $262 FP $23 FP $72 FP $123 FP $262 FP
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BAILLIE GIFFORD EMERGING $89 SP $138 SP $179 SP $315 SP $29 SP $88 SP $149 SP $315 SP
MARKETS FUND $89 FP $148 FP $209 FP $315 FP $29 FP $88 FP $149 FP $315 FP
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VALUE LINE CENTURION FUND $79 SP $109 SP $132 SP $220 SP $19 SP $59 SP $102 SP $220 SP
$79 FP $119 FP $162 FP $220 FP $19 FP $59 FP $102 FP $220 FP
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VALUE LINE STRATEGIC ASSET $79 SP $109 SP $131 SP $219 SP $19 SP $59 SP $101 SP $219 SP
MANAGEMENT TRUST $79 FP $119 FP $161 FP $219 FP $19 FP $59 FP $101 FP $219 FP
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GABELLI CAPITAL ASSET FUND $85 SP $126 SP $160 SP $277 SP $25 SP $76 SP $130 SP $277 SP
$85 FP $136 FP $190 FP $277 FP $25 FP $76 FP $130 FP $277 FP
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MFS GROWTH WITH INCOME SERIES $83 SP $121 SP $151 SP $259 SP $23 SP $71 SP $121 SP $259 SP
$83 FP $131 FP $181 FP $259 FP $23 FP $71 FP $121 FP $259 FP
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</TABLE>
4 PROSPECTUS
<PAGE>
Comparison of Contract Expenses Among Underlying Funds
For Single Premium (SP) and Flexible Premium (FP) Payment Contracts
Contract with Enhanced Death Benefit
<TABLE>
<CAPTION>
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If you surrender your If you do not surrender
contract at the end of the or you annuitize at the end of
applicable time period: the applicable time period:
You would pay the You would pay the
following expenses on a $1,000 following expenses on a $1,000
investment, assuming a 5% investment, assuming a 5%
annual return on assets: annual return on assets:
Single Premium and Flexible Single Premium and Flexible
Premium Contracts Premium Contracts
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1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE GUARDIAN CASH FUND $82 SP $117 SP $145 SP $246 SP $22 SP $67 SP $115 SP $246 SP
$82 FP $127 FP $175 FP $246 FP $22 FP $67 FP $115 FP $246 FP
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THE GUARDIAN BOND FUND $82 SP $117 SP $146 SP $249 SP $22 SP $67 SP $116 SP $249 SP
$82 FP $127 FP $176 FP $249 FP $22 FP $67 FP $116 FP $249 FP
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THE GUARDIAN STOCK FUND $82 SP $117 SP $144 SP $245 SP $22 SP $67 SP $114 SP $245 SP
$82 FP $127 FP $174 FP $245 FP $22 FP $67 FP $114 FP $245 FP
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THE GUARDIAN SMALL CAP STOCK $85 SP $128 SP $164 SP $284 SP $25 SP $78 SP $134 SP $284 SP
FUND $85 FP $138 FP $194 FP $284 FP $25 FP $78 FP $134 FP $284 FP
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BAILLIE GIFFORD INTERNATIONAL $86 SP $131 SP $168 SP $294 SP $26 SP $81 SP $138 SP $294 SP
FUND $86 FP $141 FP $198 FP $294 FP $26 FP $81 FP $138 FP $294 FP
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BAILLIE GIFFORD EMERGING $92 SP $147 SP $195 SP $345 SP $32 SP $97 SP $165 SP $345 SP
MARKETS FUND $92 FP $157 FP $225 FP $345 FP $32 FP $97 FP $165 FP $345 FP
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VALUE LINE CENTURION FUND $82 SP $119 SP $148 SP $253 SP $22 SP $69 SP $118 SP $253 SP
$82 FP $129 FP $178 FP $253 FP $22 FP $69 FP $118 FP $253 FP
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VALUE LINE STRATEGIC ASSET $82 SP $118 SP $147 SP $252 SP $22 SP $68 SP $117 SP $252 SP
MANAGEMENT TRUST $82 FP $128 FP $177 FP $252 FP $22 FP $68 FP $117 FP $252 FP
- ---------------------------------------------------------------------------------------------------------------
GABELLI CAPITAL ASSET FUND $88 SP $135 SP $176 SP $308 SP $28 SP $85 SP $146 SP $308 SP
$88 FP $145 FP $206 FP $308 FP $28 FP $85 FP $146 FP $308 FP
- ---------------------------------------------------------------------------------------------------------------
MFS GROWTH WITH INCOME SERIES $86 SP $130 SP $167 SP $291 SP $26 SP $80 SP $137 SP $291 SP
$86 FP $140 FP $197 FP $291 FP $26 FP $80 FP $137 FP $291 FP
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</TABLE>
These expense comparisons assume that the expenses incurred during the periods
shown will be the same as those reported in the Expense Table above. The
comparison does not represent past or future expenses. Actual expenses may be
higher or lower than those shown. The effect of the annual contract fee was
calculated by: (1) dividing the total contract fees for the year ended December
31, 1998 by total average net assets for the year; (2) adding this percentage to
annual expenses; and (3) calculating the dollar amounts. In addition, premium
taxes ranging from .5% to 3.5% are currently imposed by certain states and
municipalities, and will reduce the amount of each premium payment available for
allocation under the contract. See Deductions and charges.
PROSPECTUS 5
<PAGE>
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THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
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The Guardian Insurance & Annuity Company, Inc. (GIAC) is a stock life insurance
company incorporated in the state of Delaware in 1970. GIAC, which issues the
contracts offered with this prospectus, is licensed to conduct an insurance
business in all 50 states of the United States and the District of Columbia. The
company had total assets of over $9.5 billion as of December 31, 1998. Its
financial statements appear in the Statement of Additional Information.
GIAC's executive office is located at 7 Hanover Square, New York, New York
10004. The mailing address of the GIAC Customer Service Office, which
administers these contracts, is P.O. Box 26210, Lehigh Valley, Pennsylvania
18002.
GIAC is wholly owned by The Guardian Life Insurance Company of America (Guardian
Life), a mutual life insurance company organized in the State of New York in
1860. As of December 31, 1998, Guardian Life had total assets in excess of $15.5
billion. Guardian Life does not issue the contracts offered under this
prospectus and does not guarantee the benefits they provide.
BUYING A CONTRACT
There are two types of contracts. With a Flexible Premium Payment Contract, you
make regular payments throughout the accumulation period. With a Single Premium
Payment Contract, you make a single payment when you buy the contract. Both
types of contracts allow you to direct where your net premium payments are
invested.
The application form
If you would like to buy a contract, you must complete and sign the application
form. You or your agent then must send it, along with your initial premium
payment, by regular U.S. mail to the following address:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210
Lehigh Valley, Pennsylvania 18002
If you wish to send your application and payment by certified, registered or
express mail, please address it to:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
3900 Burgess Place
Bethlehem, Pennsylvania 18017
Our decision to accept or reject your application is based on administrative
rules such as whether you have completed the form completely and accurately. We
have the right to reject any application or initial premium payment for any
reason.
6 PROSPECTUS
<PAGE>
If we accept your application as received, we will credit your net premium
payment to your new contract within two business days. If your application is
not complete within five business days of our receiving it, we will return it to
you along with your payment.
Payments
We require a minimum initial premium payment of $5,000 for Single Premium
Payment Contracts, and $500 for Flexible Premium Payment Contracts ($1,000 in
New York State). Thereafter, the minimum additional flexible payment is $100.
However, if you purchase a Flexible Premium Payment Contract through an employer
payroll deduction plan, we will accept purchase payments below $100. The total
amount paid in flexible premium payments in any contract year after the first
may not exceed, without our written consent, the lesser of 10 times the total
amount you paid in premium payments in the first contract year, or $100,000.
THE ACCUMULATION PERIOD
How we allocate your premium payments
After we receive your initial premium payment and issue a contract to you, we
will normally credit subsequent net premium payments to your contract on the
same day we receive them, provided we receive them prior to the close of our
regular business day.
If we receive your payment on a non-business day, or after our close, we will
normally credit it on the next business day. If required in your state or
municipality, premium taxes are deducted from your payment before we credit it
to your contract. We call the amount remaining after this deduction the net
premium payment.
We use your net premium payments to purchase accumulation units in the variable
investment options you have chosen or in the fixed-rate option, according to
your instructions in the application or as later changed. The prices of
accumulation units are set daily because they change along with the share values
of the Funds you invest in. The amount you pay for each unit will be the next
price calculated after we receive and accept your payment.
The value of accumulation units will vary as you earn interest in the fixed-rate
option or as the value of investments rises and falls in the variable investment
options.
You can change your investment option selections by notifying us in writing. We
will apply your new instructions to subsequent net premium payments after we
receive and accept them. Please remember that you cannot invest in more than six
variable investment options, or five variable investment options and the
fixed-rate option at any given time.
PROSPECTUS 7
<PAGE>
The Separate Account
GIAC has established a Separate Account, known as Separate Account D, to receive
and invest your premium payments in the variable investment options. The
Separate Account has 10 investment divisions, corresponding to the 10 Funds
available to you. The performance of each division is based on the Fund in which
it invests. Each investment division is divided into two subdivisions, one for
tax qualified retirement plans and the other for non-tax qualified retirement
plans.
The Separate Account was established by GIAC in August 1989. It is registered as
a unit investment trust under the Investment Company Act of 1940 (the 1940 Act)
and meets the definition of a separate account under federal securities laws.
State insurance law provides that the assets of the Separate Account equal to
its reserves and other liabilities are not chargeable with GIAC's obligations
except those under annuity contracts issued through the Separate Account.
Income, gains and losses of the Separate Account are kept separate from other
income, gains or losses of the contract owner.
Each investment division is administered and accounted for as part of the
general business of GIAC. Under Delaware law, the income and capital gains or
capital losses of each investment division are credited to or charged against
the assets held in that division according to the terms of each contract,
without regard to other income, capital gains or capital losses of the other
investment divisions or of GIAC. Contract obligations are GIAC's responsibility.
According to Delaware insurance law, the assets of the Separate Account are not
chargeable with liabilities arising out of any other business GIAC may conduct.
Please see Financial Information: Federal tax matters.
We have the right to make changes to the Separate Account, to the investment
divisions within it, and to the fund shares they hold. These changes must be
made in a manner that is consistent with laws and regulations. When necessary,
we'll use this right to serve your best interests and to carry out the purposes
of the contract. Possible changes to the Separate Account and the investment
divisions include:
o deregistering the Separate Account under the 1940 Act
o operating the Separate Account as a management investment company, or in
another permissible form
o combining two or more Separate Accounts or investment divisions
o transferring assets to another Separate Account
o modifying the contracts where necessary to preserve the favorable tax
treatment that owners of variable annuities currently receive under the
Internal Revenue Code.
8 PROSPECTUS
<PAGE>
Variable investment options
You may choose to invest in a maximum of six of the 10 variable investment
options at any time. Each Fund is an open-end diversified management investment
company, registered with the Securities and Exchange Commission under the 1940
Act.
The Funds have different investment objectives which influence their risk and
return. The table below summarizes their main characteristics.
Some Funds have similar investment objectives and policies to other Funds
managed by the same adviser. However, the investment returns of the Funds may be
higher or lower than those of similar funds managed by the same adviser. There
is no assurance, and we make no representation, that the performance of any Fund
will be comparable to the performance of any other fund.
All of the funds are available for investment through other variable annuity
contracts funded by the Separate Account. Some of these Funds are also available
under other separate accounts supporting variable annuity contracts and variable
life insurance policies of GIAC and other companies. We do not anticipate any
inherent conflicts with these arrangements. However, it is possible that
conflicts of interest may arise in connection with the use of the same Funds
under both variable life insurance policies and variable annuity contracts, or
issued by different companies. While the Board of Directors of each Fund
monitors activities in an effort to avoid or correct any material irreconcilable
conflicts of interest arising out of this arrangement, we may also take actions
to protect the interests of our contract owners. See the accompanying Fund
prospectuses for more information about possible conflicts of interest.
Some investment advisers (or their affiliates) may pay us compensation for
administration, distribution or other expenses. Currently, these advisers
include Value Line, Inc. and Massachusetts Financial Services Company. The
amount of compensation is usually based on assets of the relevant variable
investment options from contracts that we issue, and some advisers may pay us
more than others.
PROSPECTUS 9
<PAGE>
<TABLE>
<CAPTION>
Fund Investment objective(s) Typical investments
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Guardian Stock Fund Long-term growth of capital U.S. common stocks
- -------------------------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund Long-term growth of capital U.S. common stocks of companies
with small market capitalization
- -------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund Maximum income without undue risk Investment grade debt
of principal; capital appreciation obligations
as a secondary objective
- -------------------------------------------------------------------------------------------------------------
The Guardian Cash Fund High level of current income Money market instruments
consistent with liquidity and
preservation of capital
- -------------------------------------------------------------------------------------------------------------
Baillie Gifford International Fund Long-term capital appreciation Common stocks and convertible
securities issued by foreign
companies
- -------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Long-term capital appreciation Common stocks and convertible
Fund securities of emerging market
companies
- -------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund Long-term growth of capital U.S. common stocks with selections
based on rankings of the Value
Line Ranking System
- -------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset High total investment return U.S. common stocks with selections
Management Trust (current income and capital based on rankings of the Value
appreciation) consistent with Line Ranking System, bonds and
reasonable risk money market instruments
- -------------------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Growth of capital; current income U.S. common stocks and convertible
as a secondary objective securities
- -------------------------------------------------------------------------------------------------------------
MFS Growth With Income Series Reasonable current income and Equity securities issued by U.S.
long-term growth of capital and and foreign companies
income
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Some of these Funds may not be available in your state.
10 PROSPECTUS
<PAGE>
The Funds' investment advisers and their principal business addresses are shown
in the table below.
<TABLE>
<CAPTION>
Fund Investment Adviser
and Principal Business Address
- ---------------------------------------------------------------------------------------
<S> <C>
The Guardian Stock Fund Guardian Investor Services Corporation
The Guardian Small Cap Stock Fund 7 Hanover Square
The Guardian Bond Fund New York, New York 10004
The Guardian Cash Fund
- ---------------------------------------------------------------------------------------
Baillie Gifford International Fund Guardian Baillie Gifford Limited (Adviser)
Baillie Gifford Emerging Markets Fund Baillie Gifford Overseas Limited (Sub-adviser)
1 Rutland Court
Edinburgh, Scotland
EH3 8EY
- ---------------------------------------------------------------------------------------
Value Line Centurion Fund Value Line, Inc.
Value Line Strategic Asset Management 220 East 42nd Street
Trust New York, New York 10017
- ---------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580
- ---------------------------------------------------------------------------------------
MFS Growth With Income Series Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
- ---------------------------------------------------------------------------------------
</TABLE>
Before investing, please read the accompanying Fund prospectuses carefully. They
contain important information on the investment objectives, policies, charges
and expenses of the Funds.
PROSPECTUS 11
<PAGE>
Fixed-rate option
The fixed-rate option is not registered under the Securities Act of 1933 or as
an investment company under the 1940 Act, and is therefore not subject to the
provisions or restrictions of these Acts. However, the following disclosure
about the fixed-rate option may be subject to certain generally applicable
provisions of the federal securities laws regarding the accuracy and
completeness of statements not in prospectuses. The fixed-rate option may not be
available for allocation in all states in which the contracts are available.
In the fixed-rate option, we guarantee that the net premium payments you invest
will earn daily interest at a minimum annual rate of 3.5%. You can allocate all
of your net premium payments to this option, or you may choose it as one of your
six investment selections. The value of your net premiums invested in the
fixed-rate option does not vary with the investment experience of any Fund. The
money that you put into your fixed-rate option becomes part of GIAC's general
assets.
At certain times we may choose to pay interest at a rate higher than 3.5%, but
we aren't obliged to do so. Higher interest rates are determined at our
discretion, and we can change them prospectively without notice. We don't use a
specific formula to determine interest rates; rather we consider such factors as
general economic trends, current rates of return on our general account
investments, regulatory and tax requirements, and competitive factors. The rate
of interest we pay hasn't been limited by our Board of Directors.
Here are some of the important conditions that apply when we pay interest on
your investments in the fixed-rate option:
o The initial interest rate that we credit to your premiums or transfers
will be whatever rate is in effect on the date the amounts are allocated
to the fixed-rate option.
o This interest rate will continue until the next contract anniversary date.
o At that time, all payments and transfers allocated to the fixed-rate
option during the previous year, together with interest earned, will be
credited with the rate of interest in effect on the renewal date, known as
the renewal rate.
o The renewal rate will be guaranteed until the next contract anniversary
date.
If your state's insurance department permits, your contract may have what's
known as a bailout rate. If the renewal rate set on any contract anniversary
date is more than 3% below the interest rate for the previous year, or falls
below the minimum bailout rate outlined in your contract, you can withdraw all
or part of the money you have invested in the fixed-rate option for one year or
more from the contract without incurring a deferred sales charge.
When you buy a contract, please note:
- --------------------------------------------------------------------------------
o You can choose up to six investment options at any one time.
o If you select the fixed-rate option, you are limited to an
additional five variable options.
o There are no initial sales charges on the premium payments that you
allocate to the variable investment options. However, there may be
premium tax charges.
o All of the dividends and capital gains distributions that are
payable to variable investment options are reinvested in shares of
the applicable Fund at the current net asset value.
o When the annuity period of the contract begins, we will apply your
accumulation value to a payment option in order to make annuity
payments to you.
o You can arrange to transfer your investments among the divisions by
notifying us in writing or by telephone. Currently, there is no fee
for this, but we reserve the right to charge a fee and to limit the
number of transactions.
o You can change beneficiaries as long as the annuitant is living.
12 PROSPECTUS
<PAGE>
Transfers
You can transfer money among variable investment options both before and after
the date annuity payments begin. You can also transfer to and from the
fixed-rate option, but only before the date annuity payments begin. Transfers
are subject to certain conditions, which are described below.
If you are considering a transfer, be sure to look into each option carefully
and make sure your decisions will help you to achieve your long-term investment
goals.
During the accumulation period and up to 30 days before the date annuity
payments are scheduled to begin, you can transfer all or part of your
accumulation value among the contract options. These transfers are subject to
the following rules:
o We permit transfers from the fixed-rate option to any variable investment
option only once each contract year, during the 30 days beginning on the
contract anniversary date. There is an exception for the dollar cost
averaging feature: amounts that have been on deposit in the fixed-rate
option longest will be transferred out first. The maximum yearly transfer
from the fixed-rate option is the greater of the following:
- -- 33 1/3% of the amount in the fixed-rate option on the applicable contract
anniversary date or
- -- $2,500.
Each transfer involving the variable investment options will be based on the
accumulation unit value that is next calculated after we have received proper
transfer instructions from you.
We will implement a transfer upon receiving your written or telephone
instructions in good order. If your request reaches our customer service office
before 3:30 p.m. Eastern time on a business day, we will normally implement it
that same day.
At this time, we do not limit the number of transfers you may make. However, we
have the right to limit the frequency of transfers to not more than once every
30 days.
At this time, we do not charge for transfers; however, we do have the right to
impose a fee of up to $25 per transfer. We will deduct any transfer charges on a
pro-rata basis from the options you transfer from.
We require proper authorization to honor telephone transfer instructions. If you
would like this privilege, please complete a transfer authorization form, or
give us authorization on your application. Once we have your authorization on
file, you can carry out a telephone transfer by calling 1-800-533-0099 between
9:00 a.m. and 3:30 p.m. Eastern time on any business day when we are open.
PROSPECTUS 13
<PAGE>
During periods of drastic economic or market changes it may be difficult to
contact us to request a telephone transfer. At such times, please send your
transfer request by regular or express mail and we will process it using the
accumulation unit value first calculated after we receive the request. We have
the right to modify, suspend or discontinue telephone transfer privileges at any
time without prior notice.
After the date annuity payments begin, if you have a variable annuity option you
can transfer all or part of the value of your annuity among the variable
investment options only once each calendar year. No fixed-rate option transfers
are permitted.
Surrenders and partial withdrawals
During the accumulation period and while the annuitant and all contract owners
are living, you can redeem your contract in whole. This is known as surrendering
the contract. If you redeem part of the contract, it's called a partial
withdrawal. We will not accept requests for surrenders or partial withdrawals
after the date annuity payments begin.
Your request for surrenders and partial withdrawals must be received in good
order. If you wish to surrender your contract, you must send us the contract or
we will not process the request. If you have lost the contract, we will require
an acceptable affidavit of loss.
To process a partial withdrawal, we will redeem enough accumulation units to
equal the dollar value of your request. When you surrender your contract, we
redeem all the units. For both transactions we use the unit value next
calculated after we receive a proper request from you. We will deduct any
applicable contract charges and deferred sales charges from the proceeds of a
surrender. In the case of a partial withdrawal, we will cash additional units to
cover these charges. If you have less than $1,000 left in your contract after a
partial withdrawal, we will cancel the contract and pay you the balance of the
proceeds. This is called an involuntary surrender and it may be subject to any
applicable contract charges and a deferred sales charge. Please see Financial
information: Federal tax matters.
Surrenders and partial withdrawals are subject to tax, and may be subject to
penalty taxes and mandatory federal income tax withholding. After the first
contract year, you are allowed to make an annual withdrawal of the following
amounts from the contract without paying a deferred sales charge:
- --------------------------------------------------------------------------------
When you call us, we will require identification of your contract as well
as your personal security code. We may accept transfer instructions from
anyone who can provide us with this information. Neither GIAC, Guardian
Investor Services Corporation, nor the Funds will be liable for any loss,
damage, cost or expense resulting from a telephone transfer we reasonably
believe to be genuine. As a result, you assume the risk of unauthorized or
fraudulent telephone transfers. We may record telephone conversations
regarding transfers without disclosure to the caller.
14 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
There are special restrictions on withdrawals from contracts issued in
connection with Section 403(b) qualified plans. Please see Financial
information: Federal tax matters for details about how withdrawals can be
made from these contracts.
For Single Premium Payment Contracts
o 10% of your contract's accumulation value, or if greater,
o 10% of the amount of your single premium payment.
For Flexible Premium Payment Contracts
o 10% of your contract's accumulation value, or if greater,
o 10% of the total premiums paid during the 84 months immediately preceding
the date of your withdrawal.
These withdrawal privileges can be exercised in the first contract year of the
following contracts:
o Section 1035 exchanges
o IRA transfers
o rollovers from annuity contracts.
Unless you are making a withdrawal directly from the fixed-rate option in
accordance with the bailout provisions, we will cash accumulation units in the
following order:
o all variable accumulation units attributable to the investment divisions;
this will be done on a pro-rata basis unless you instruct us differently,
then
o all fixed accumulation units attributable to the fixed-rate option.
We will send you your payment within seven days of receiving a request from you
in good order. Please see Payments later in this section.
If you have a question about surrenders or withdrawals, please call us toll free
at 1-800-221-3253.
Managing your annuity
You may wish to take advantage of one of the programs we offer to help you build
a stronger annuity, such as dollar cost averaging.
There is no fee for dollar cost averaging, but we have the right to introduce
one. We also have the right to modify or discontinue this program. We'll give
you written notice if we do so.
Dollar Cost Averaging
You can transfer specific amounts of money from one investment option to another
on a monthly basis, as opposed to investing the total amount at one time. This
approach may help lower your average dollar cost of investing over time.
However, there is no guarantee that dollar cost averaging will result in profits
or prevent losses.
If you wish to take advantage of this program, you must designate a dollar
amount to be transferred automatically out of the Cash Fund investment division.
The money can go into one or more of the other variable investment options or
the fixed-rate option. The rule
PROSPECTUS 15
<PAGE>
still applies that you can invest in a maximum of only six options at one time
(this includes the required Cash Fund option).
You can begin dollar cost averaging when you buy your contract or at any time
afterwards, until annuity payments begin, by completing the dollar cost
averaging election form and returning it to us. We must receive it in good order
at least three business days before the monthly anniversary date of when you
wish the transfers to begin.
You may select dollar cost averaging from the Cash Fund investment division for
periods of 12, 24 or 36 months. Your total accumulation value at the time must
be at least $10,000 for transfers over a 12-month period, and $20,000 for
transfers over a 24 to 36 month period. Transfers will be made in the amounts
you designate and must be at least $100 per receiving contract investment
option.
Payments:
- --------------------------------------------------------------------------------
For all transactions, we can delay payment if the contract is being
contested. We may postpone any calculation or payment from the variable
investment options if:
o the New York Stock Exchange is closed for trading or trading has
been suspended, or
o the Securities and Exchange Commission restricts trading or
determines that a state of emergency exists which may make payment
or transfer impracticable
Assigning contract interests
If the contract is part of a corporate retirement plan or an individual
plan under sections 401(a), 403(b) or 408 of the Internal Revenue Code,
the contract owner's interest in the contract cannot be assigned, unless
the contract owner is not the annuitant or the annuitant's employer.
Assigned contract interests may be treated as a taxable distribution to
the contract owner. See Federal tax matters for more information.
Reports
At least twice each year, we send a report to each contract owner that
contains financial information about the Separate Account, according to
applicable laws, rules and regulations. Additionally, at least once each
year, we send a statement to each contract owner that reports the number
of accumulation units and their value under the contract.
16 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
THE ANNUITY PERIOD
When annuity payments begin
You choose the month and year in which we will begin paying annuity benefits.
The first payment is made on the first day of the month. The date you choose
can't be later than the annuitant's 85th birthday, unless we have agreed. Please
note that this date may be determined by the retirement plan under which your
annuity contract was issued.
How your annuity payments are calculated
Your annuity payments will be fixed, variable or a combination of both,
depending on whether you have chosen a fixed-rate or a variable rate payment
option. Your payments are determined by the following:
o the table in your contract reflecting the nearest age of the annuitant
o the annuity payout option you choose
o the investment returns of the variable investment options you choose, if
you choose a variable payment option.
The number and amount of your annuity payments won't be affected by the
longevity of annuitants as a group. Nor will they be affected by an increase in
our expenses over the amount we have charged in your contract.
We will make annuity payments once a month, except as follows:
o Proceeds of less than $2,000 will be delivered in a single payment.
o We may change the schedule of installment payments to avoid payments of
less than $20.
If you choose a variable annuity payment, or a combination of variable and fixed
payments, variable annuity payments assume a 4% annual investment return. We
compare the assumed rate of 4% to the actual returns of the variable investment
options you have chosen:
o if the actual net annual return on investment equals 4% -- the amount of
your variable annuity payments will not change
o if the actual net annual return on investment is greater than 4% -- the
amount of your variable annuity payments will increase
o if the actual net annual return on investment is less than 4% -- the
amount of your variable annuity payments will decrease.
Variable annuity payout options
The payout options currently offered are discussed below. You can choose to have
annuity payments made under any one of the variable or fixed-rate annuity payout
options that are available. You can make your choice at any time before your
annuity payments begin. At any time, we may discontinue any of these options or
make additional options available.
PROSPECTUS 17
<PAGE>
All variable annuity payout options are designated with the letter "V." After
the first payment, the amount of variable annuity payments will increase or
decrease to reflect the value of your variable annuity units. The value of the
units will reflect the performance of the variable investment options chosen.
This is why the amount of each payment will vary.
There are a variety of payout options for you to choose from that we've
described below. If you do not make a choice, we will automatically select
Option V-2. You may change options if you wish, provided you do so before
payments begin.
Option V-1 -- Life Annuity without Guaranteed Period
We make a payment once a month during the annuitant's lifetime, ending with the
payment preceding the annuitant's death. This option allows for the maximum
variable monthly payment because there is neither a guaranteed minimum number of
payments nor a provision for a death benefit for beneficiaries. It is possible
that an annuitant could receive only one payment, if he or she dies before the
date of the second payment.
Option V-2 -- Life Annuity with 10-Year Guaranteed Period
We make a payment once a month during the annuitant's lifetime, but if the
annuitant dies before receiving 10 years worth of payments (120), the remaining
payments will be made to the beneficiary. The beneficiary can then choose to
take all or part of the remaining payments in a lump sum at their current dollar
value. If the beneficiary dies while receiving the payments, the balance will be
paid in one sum at its current dollar value to the beneficiary's estate.
Option V-3 -- Joint and Survivor Annuity
We make a payment once a month during the joint lifetimes of the annuitant and a
designated second person, the joint annuitant. If one dies, payments will
continue during the survivor's lifetime, but the amount of the payment will then
be reduced to two-thirds of the number of units paid out each month when both
parties were alive. It is possible that the joint annuitants could receive only
one payment if they both die before the date of the second payment.
Fixed-rate annuity payout options
All Fixed Annuity Payout Options are designated by the letter "F."
Option F-1 -- Life Annuity without Guaranteed Period
We make a fixed payment once a month during the annuitant's lifetime, ending
with the payment preceding the annuitant's death. This option offers the maximum
fixed payment because there is neither a guaranteed minimum number of fixed
monthly payments nor a provision for a death benefit for beneficiaries. It is
possible that the annuitant could receive only one payment if he or she dies
before the date of the second payment.
18 PROSPECTUS
<PAGE>
Option F-2 -- Life Annuity with 10-Year Guaranteed Period
We make a fixed payment once a month during the annuitant's lifetime, but if the
annuitant dies before receiving 10 years worth of payments (120), the remaining
payments will be made to the beneficiary. The beneficiary can then choose to
take all or part of the remaining payments in a lump sum at their current dollar
value. If the beneficiary dies while receiving the payments, the balance will be
paid in one sum at its current dollar value to the beneficiary's estate.
Option F-3 -- Joint and Survivor Annuity
We make a fixed payment once a month during the joint lifetimes of the annuitant
and a designated second person, the joint annuitant. If one dies, payments will
continue during the survivor's lifetime, but the amount of the payment will then
be reduced to two-thirds of the number of units paid out each month when both
parties were alive. It is possible that the joint annuitants could receive only
one payment if they both die before the date of the second payment.
OTHER CONTRACT FEATURES
Death benefits
If the annuitant you have named or you (if the contract is a non-qualified
contract), dies before the date annuity payments begin, we pay a death benefit.
In addition, you have the option of buying an enhanced death benefit rider which
may provide a higher death benefit.
The regular death benefit is the greater of:
o the accumulation value of the contract at the end of the valuation period
during which we receive proof of death; or
o the total of all premiums paid, minus any partial withdrawals and any
deferred sales charges paid on any withdrawals.
For annuitants aged 75 or older on the contract's issue date, the death benefit
will be the accumulation value at the end of the valuation period during which
we receive proof of death.
Generally, your beneficiaries will be taxed on the gain in your annuity
contract. Consult your tax adviser about the estate tax and income tax
consequences of your particular situation.
We normally pay the death benefit within seven days of receiving in good order
proof of death. However, we have the right to defer the payment of other
contract benefits under certain circumstances. These are described under
Surrenders and partial withdrawals.
Enhanced death benefits
In certain states, you can choose to buy an enhanced death benefit rider when
you buy your contract. The enhanced death benefit rider is also available under
current contracts that have annuitants who
PROSPECTUS 19
<PAGE>
are under age 75 at the time the rider is issued. You will pay a daily charge
for this rider based on an annual rate of 0.30% of the net assets of your
variable net investment options. We reserve the right to discontinue the offer
of the enhanced death benefit rider at any time, without prior notice.
If a death benefit is payable under this option, the beneficiary will either
receive the death benefit described above or the enhanced death benefit,
whichever is greater.
The enhanced death benefit is calculated as follows:
o The accumulation value of the contract at the end of the reset date*
immediately preceding the annuitant's death:
-- Plus any premiums paid after the reset date
-- Minus any partial withdrawals after the reset date
-- Minus any deferred sales charges and premium taxes.
*The first reset date is on the issue date of the enhanced death benefit rider.
After this, each reset date will be each seventh rider anniversary date after
that (i.e., the 7th, 14th and 21st rider anniversaries, and so on.)
We will terminate the enhanced death benefit rider on the earliest of the
following dates:
o the date the enhanced death benefit is paid out
o the date the contract terminates
o the date of the annuitant's 85th birthday
o the retirement date or
o the date we receive a written termination request from you.
Once the rider is terminated, it cannot be reinstated. The enhanced death
benefit rider may not be available in all states.
FINANCIAL INFORMATION
How we calculate unit values
When you choose a variable investment option, you accumulate variable
accumulation units. With the fixed-rate option, you accumulate fixed
accumulation units. To calculate the number of accumulation units you buy with
each payment, we divide the amount you invest in each option by the value of
units in the option. We use the unit value next calculated after we have
received and accepted your payment. We calculate unit values at the close of
business of the New York Stock Exchange, usually at 4:00 p.m. Eastern time, each
day the Exchange is open for trading and GIAC is open for business.
20 PROSPECTUS
<PAGE>
To determine the value of your account, we multiply the number of accumulation
units in each option by the current unit value for the option.
We determine the value of a fixed accumulation unit by adding together its value
at the end of the preceding valuation period and any interest credited to the
unit since the end of that period.
We determine the value of a variable accumulation unit by multiplying its value
at the end of the preceding valuation period by the net investment factor for
the current valuation period.
The net investment factor is a measure of the investment experience of each
variable investment option. We determine the net investment factor for a given
valuation period as follows:
o At the end of the valuation period we add together the net asset value of
a Fund share and its portion of dividends and distributions made by the
Fund during the period.
o We divide this total by the net asset value of the particular Fund share
calculated at the end of the preceding valuation period.
o Finally we add up the daily charges (mortality and expense risks,
administrative expenses, any premium taxes, and the enhanced death benefit
rider where applicable) and subtract them from the above total.
Summary financial information about the Separate Account
The following condensed financial information is derived from the financial
statements of Separate Account D, which were audited by PricewaterhouseCoopers
LLP, independent accountants, for the year ended December 31, 1998. The data
should be read in conjunction with the financial statements, related notes and
other financial information from the Separate Account's 1998 Annual Report to
contract owners, which are incorporated by reference into the Statement of
Additional Information. A copy of the 1998 Annual Report to contract owners and
the Statement of Additional Information may be obtained by calling or writing
GIAC's Customer Service Office. The address and phone number appear on the cover
of this Prospectus.
PROSPECTUS 21
<PAGE>
Summary financial information about the Separate Account
Selected data for accumulation units of the Separate Account
outstanding at the end of each period.
Tax qualified and non-tax qualified: Basic contract
Year Ended December 31,
<TABLE>
<CAPTION>
Variable accumulation
unit value
at beginning of period ($): 1998 1997 1996 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 13.289 12.785 12.319 11.809 11.507 11.341 11.115 10.649
The Guardian Stock Fund 36.607 27.313 21.775 16.359 16.763 14.136 11.910 8.862
The Guardian Bond Fund 17.195 15.960 15.695 13.503 14.149 13.029 12.238 10.655
The Guardian Small
Cap Stock Fund 11.314 10.000(4) N/A N/A N/A N/A N/A N/A
Gabelli Capital Asset Fund 16.629 11.798 10.751 10.000(3) N/A N/A N/A N/A
Baillie Gifford
International Fund 17.717 16.012 14.036 12.766 12.803 9.662 10.739 10.00(1)
Baillie Gifford Emerging
Markets Fund 10.711 10.626 8.629 8.782 10.000(2) N/A N/A N/A
Value Line Centurion Fund 33.714 28.097 24.224 17.495 18.099 16.766 16.012 10.644
Value Line Strategic Asset
Management Trust 28.415 24.854 21.700 17.079 18.164 16.427 14.445 10.194
MFS Growth With
Income Series 10.395 10.000(4) N/A N/A N/A N/A N/A N/A
<CAPTION>
Year Ended December 31,
Variable accumulation
unit value
at end of period ($): 1998 1997 1996 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 13.808 13.289 12.785 12.319 11.809 11.507 11.341 11.115
The Guardian Stock Fund 43.374 36.607 27.313 21.775 16.359 16.763 14.136 11.910
The Guardian Bond Fund 18.373 17.195 15.960 15.695 13.503 14.149 13.029 12.238
The Guardian Small Cap
Stock Fund 10.540 11.314 N/A N/A N/A N/A N/A N/A
Gabelli Capital Asset Fund 18.362 16.629 11.798 10.751 N/A N/A N/A N/A
Baillie Gifford
International Fund 21.222 17.717 16.012 14.036 12.766 12.803 9.662 10.739
Baillie Gifford Emerging
Markets Fund 7.754 10.711 10.626 8.629 8.782 N/A N/A N/A
Value Line Centurion
Fund 42.480 33.714 28.097 24.224 17.495 18.099 16.766 16.012
Value Line Strategic Asset
Management Trust 35.780 28.415 24.854 21.700 17.079 18.164 16.427 14.445
MFS Growth With
Income Series 12.569 10.395 N/A N/A N/A N/A N/A N/A
</TABLE>
(1) Commencing February 8, 1991
(2) Commencing October 17, 1994
(3) Commencing May 1, 1995
(4) Commencing July 16, 1997
22 PROSPECTUS
<PAGE>
Tax-qualified
<TABLE>
<CAPTION>
Number of variable
accumulation units Year Ended December 31,
outstanding at end -------------------------------------------------
of period (tax qualified): 1998 1997 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Guardian Cash Fund 7,266,911 6,727,794 7,321,876 6,926,901
The Guardian Stock Fund 27,976,272 30,904,192 27,746,820 23,534,061
The Guardian Bond Fund 6,026,989 6,393,335 6,810,309 7,014,567
The Guardian Small Cap
Stock Fund 2,145,507 2,107,128 N/A N/A
Gabelli Capital Asset Fund 2,899,296 2,663,507 1,933,134 991,190
Baillie Gifford
International Fund 7,576,214 8,104,837 8,047,579 7,289,479
Baillie Gifford Emerging
Markets Fund 1,459,365 2,175,481 1,522,784 749,143
Value Line Centurion Fund 5,006,874 5,678,747 5,667,373 4,771,855
Value Line Strategic Asset
Management Trust 15,879,736 17,793,318 18,177,711 16,584,130
MFS Growth With
Income Series 1,169,892 199,543 N/A N/A
</TABLE>
Tax-qualified
<TABLE>
<CAPTION>
Number of variable
accumulation units Year Ended December 31,
outstanding at end -------------------------------------------------
of period (tax qualified): 1994 1993 1992 1991
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Guardian Cash Fund 6,899,486 4,605,152 4,598,975 3,653,165
The Guardian Stock Fund 18,824,239 12,501,820 6,559,579 3,290,347
The Guardian Bond Fund 6,312,515 6,016,214 4,175,926 2,017,037
The Guardian Small Cap
Stock Fund N/A N/A N/A N/A
Gabelli Capital Asset Fund N/A N/A N/A N/A
Baillie Gifford
International Fund 7,632,246 3,944,746 1,571,181 732,319
Baillie Gifford Emerging
Markets Fund 248,098 N/A N/A N/A
Value Line Centurion Fund 4,045,695 3,406,565 2,515,056 1,302,089
Value Line Strategic
Asset Management Trust 15,618,595 12,594,766 7,568,013 3,081,311
MFS Growth With
Income Series N/A N/A N/A N/A
</TABLE>
PROSPECTUS 23
<PAGE>
<TABLE>
<CAPTION>
Non-Tax qualified
Number of variable
accumulation units Year Ended December 31,
outstanding at end -------------------------------------------------
of period (non-tax qualified): 1998 1997 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Guardian Cash Fund 6,996,434 7,181,851 7,380,883 7,241,159
The Guardian Stock Fund 22,179,981 24,675,427 22,529,110 19,937,985
The Guardian Bond Fund 5,299,086 5,641,462 5,852,776 6,096,789
The Guardian Small
Cap Stock Fund 1,588,307 1,574,232 N/A N/A
Gabelli Capital Asset Fund 2,402,479 2,309,346 1,814,916 1,157,178
Baillie Gifford
International Fund 5,668,921 6,351,899 7,047,241 6,575,473
Baillie Gifford Emerging
Markets Fund 1,465,050 2,246,907 1,848,596 691,090
Value Line Centurion Fund 4,169,964 4,796,414 5,376,867 4,892,644
Value Line Strategic
Asset Management Trust 11,329,929 12,587,806 13,034,700 12,026,703
MFS Growth With
Income Series 1,269,788 246,298 N/A N/A
</TABLE>
Non-Tax qualified
<TABLE>
<CAPTION>
Number of variable
accumulation units Year Ended December 31,
outstanding at end -------------------------------------------------
of period (non-tax qualified): 1994 1993 1992 1991
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Guardian Cash Fund 8,107,403 5,394,541 3,895,295 3,061,803
The Guardian Stock Fund 16,594,903 12,589,044 6,112,466 3,294,032
The Guardian Bond Fund 5,358,555 5,776,313 4,257,072 2,194,420
The Guardian
Small Cap Stock Fund N/A N/A N/A N/A
Gabelli Capital Asset Fund N/A N/A N/A N/A
Baillie Gifford
International Fund 7,442,570 4,620,707 1,499,668 582,292
Baillie Gifford Emerging
Markets Fund 358,340 N/A N/A N/A
Value Line Centurion Fund 4,263,710 4,010,263 3,147,495 1,948,573
Value Line Strategic
Asset Management Trust 11,773,225 10,438,598 5,611,106 2,135,711
MFS Growth With
Income Series N/A N/A N/A N/A
</TABLE>
24 PROSPECTUS
<PAGE>
Tax qualified and non-tax qualified:
Contract with enhanced death benefit(1)
Variable accumulation unit value Year ended December 31,
at beginning of period ($): 1998 1997
- --------------------------------------------------------------------------------
The Guardian Cash Fund 10.050 $ 10.00
- --------------------------------------------------------------------------------
The Guardian Stock Fund 10.561 10.00
- --------------------------------------------------------------------------------
The Guardian Bond Fund 10.110 10.00
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 10.143 10.00
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 10.639 10.00
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 10.556 10.00
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 10.893 10.00
- --------------------------------------------------------------------------------
Value Line Centurion Fund 10.208 10.00
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 10.259 10.00
- --------------------------------------------------------------------------------
MFS Growth With Income Series 10.655 10.00
- --------------------------------------------------------------------------------
Variable accumulation unit value Year ended December 31,
at end of period ($): 1998 1997
- --------------------------------------------------------------------------------
The Guardian Cash Fund 10.411 $ 10.050
- --------------------------------------------------------------------------------
The Guardian Stock Fund 12.476 10.561
- --------------------------------------------------------------------------------
The Guardian Bond Fund 10.771 10.110
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 9.421 10.143
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 11.712 10.639
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 12.606 10.556
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 7.861 10.893
- --------------------------------------------------------------------------------
Value Line Centurion Fund 12.824 10.208
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 12.886 10.259
- --------------------------------------------------------------------------------
MFS Growth With Income Series 12.845 10.655
- --------------------------------------------------------------------------------
(1) The Enhanced Death Benefit Rider became available under this contract
commencing November 12, 1997.
PROSPECTUS 25
<PAGE>
Tax qualified
Number of variable accumulation units Year ended December 31,
Outstanding at end of period: 1998 1997
- --------------------------------------------------------------------------------
The Guardian Cash Fund 320,026 125,490
- --------------------------------------------------------------------------------
The Guardian Stock Fund 3,865,416 1,796,714
- --------------------------------------------------------------------------------
The Guardian Bond Fund 426,447 125,001
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 263,450 118,658
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 362,166 139,475
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 522,011 246,228
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 118,902 94,206
- --------------------------------------------------------------------------------
Value Line Centurion Fund 426,561 236,287
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 1,501,105 621,102
- --------------------------------------------------------------------------------
MFS Growth With Income Series 182,150 28,771
- --------------------------------------------------------------------------------
Non-Tax qualified
Number of variable accumulation units Year ended December 31,
Outstanding at end of period: 1998 1997
- --------------------------------------------------------------------------------
The Guardian Cash Fund 306,752 133,988
- --------------------------------------------------------------------------------
The Guardian Stock Fund 3,818,258 2,193,618
- --------------------------------------------------------------------------------
The Guardian Bond Fund 489,352 192,239
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 557,020 424,156
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 612,153 431,108
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 518,678 267,282
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 237,328 232,942
- --------------------------------------------------------------------------------
Value Line Centurion Fund 618,351 391,939
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 1,503,469 767,916
- --------------------------------------------------------------------------------
MFS Growth With Income Series 481,917 12,260
- --------------------------------------------------------------------------------
26 PROSPECTUS
<PAGE>
Contract costs and expenses
The amount of a charge may not strictly correspond to the costs of providing the
services or benefits indicated by the name of the charge or related to a
particular contract. For example, the contingent deferred sales charge may not
fully cover all of the sales and distribution expenses actually incurred by
GIAC, and proceeds from other charges, including the mortality and expense risk
charge, may be used in part to cover these expenses.
No sales charges are deducted from your premium payments when you make them.
However, the following charges do apply:
Expenses of the Funds
The Funds you choose through your variable investment options have their own
management fees and general operating expenses. The deduction of these fees and
expenses is reflected in the per-share value of the Funds. They are fully
described in the Funds' prospectuses.
Mortality and expense risk charge
You will pay a daily charge based on an annual rate of 1.15% of the net assets
of your variable investment options to cover our mortality and expense risks.
(Approximately 0.70% covers mortality risks, while the remaining 0.45% covers
expense risks.) Mortality risks arise from our promise to pay death benefits and
make annuity payments to each annuitant for life. Expense risks arise from the
possibility that the amounts we deduct to cover sales and administrative
expenses may not be sufficient.
Administrative expenses
We deduct a yearly fee of $35 on each anniversary date of your contract during
the accumulation period. To pay this charge, we will cancel the number of
accumulation units that is equal in value to the fee. We cancel accumulation
units in the same proportion as the percentage of the contract's accumulation
value attributable to each variable investment option and the fixed-rate option.
If you surrender your contract before the contract anniversary date, we will
still deduct the contract fee for that year. This charge covers the cost of
administering the contracts, and is not expected to generate a profit.
In addition, the following charges may apply:
Contingent deferred sales charge
If you make a partial withdrawal from your account or surrender your contract,
you will pay a deferred sales charge on any amount that has been in your
contract for less than eight contract years. This charge compensates us for
expenses related to the sale of contracts. These include commissions to
registered representatives, as well as promotional expenses.
PROSPECTUS 27
<PAGE>
When we calculate the deferred sales charge, all amounts taken out are assumed
to come from the oldest premium. We do this to minimize the amount you owe. The
amount of the charge and the time period used to calculate it depend on the type
of contract you have. The deferred sales charge associated with single premium
payment contracts are listed in the table below.
Contract Deferred
Year Sales charge
- --------------------------------------------
1 6%
- --------------------------------------------
2 6%
- --------------------------------------------
3 5%
- --------------------------------------------
4 4%
- --------------------------------------------
5 3%
- --------------------------------------------
6 2%
- --------------------------------------------
7 1%
- --------------------------------------------
8+ 0%
- --------------------------------------------
The deferred sales charge associated with flexible premium payment contracts is
calculated as the lesser of:
o 6% of the premium payments you have made within seven contract years (84
months) before the date of your request for the withdrawal or surrender;
or
o 6% of the amount withdrawn or surrendered.
Enhanced death benefit expenses
If you choose the enhanced death benefit and it is in effect, you will pay a
daily charge based on an annual rate of 0.30% of the net assets of your variable
investment options.
Premium taxes
Some states and municipalities may charge premium taxes when premium payments
are made or when you begin to receive annuity payments. These taxes range from
about 0.5% to 3.5% of your premium payments. We may deduct the premium tax
either from your premium payment when made, or from the annuity payments on the
date annuity payments begin, depending on state laws.
In jurisdictions where the premium tax is incurred when a premium payment is
made, we deduct the amount from your premium payment at the time it is made. We
reserve the right to pay the premium tax on your behalf and then deduct the same
amount from the value of your contract when you surrender it, or on your death,
or on the date annuity payments begin, whichever is first. We will do this only
if permitted by applicable law.
28 PROSPECTUS
<PAGE>
Transfer charge
Currently, we do not charge for transfers. However, we reserve the right to
charge up to $25 for each transfer. We will deduct this charge on a proportional
basis from the options from which amounts are transferred.
Federal tax matters
The following summary provides a general description of the Federal income tax
considerations associated with the contracts. It is not intended to be complete
or to cover all tax situations. This summary is not intended as tax advice. You
should consult a tax adviser for more complete information. This summary is
based on our understanding of the present Federal income tax laws. We make no
representation as to the likelihood of continuation of the present Federal
income tax laws or as to how they may be interpreted by the Internal Revenue
Service (IRS).
We believe that our contracts will qualify as annuity contracts for Federal
income tax purposes, and the following summary assumes so. Further details are
available in the Statement of Additional Information, under the heading Tax
Status of the Contracts.
When you invest in an annuity contract, you usually don't pay taxes on your
investment gains until you withdraw the money -- generally for retirement
purposes. In this way, annuity contracts have been recognized by the tax
authorities as a legitimate means of deferring tax on investment income.
We believe that if you are a natural person you won't be taxed on increases in
the accumulation value of a contract until a distribution occurs or until
annuity payments begin. For these purposes, the agreement to assign or pledge
any portion of a contact's accumulation value and, in the case of a qualified
contract (described below) any portion of an interest in the qualified plan
generally will be treated as a distribution.
When annuity payments begin, you will be taxed only on the investment gains you
have earned and not on the payments you made to purchase the contract.
Generally, withdrawals from your annuity should only be made once the annuitant
reaches age 59 1/2, dies or is disabled; otherwise a 10% tax penalty is applied
against any amounts included in income.
If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a qualified
contract. If your annuity is independent of any formal retirement or pension
plan, it is termed a non-qualified contract.
PROSPECTUS 29
<PAGE>
Taxation of non-qualified contracts
Non-natural person
If a non-natural person owns a non-qualified annuity contract, the owner
generally must include in income any increase in the excess of the accumulation
value over the investment in the contract (generally, the premiums or other
consideration paid for the contract) during the taxable year. There are some
exceptions to this rule, and a prospective owner that is not a natural person
should discuss these with a tax adviser.
This following summary generally applies to contracts owned by natural persons.
Withdrawals
When a withdrawal from a non-qualified contract occurs, the amount received will
be treated as ordinary income subject to tax up to an amount equal to any excess
of the accumulation value immediately before the distribution that exceeds the
owner's investment in the contract. Generally, the owner's investment in the
contract is the amount equal to the premiums or other consideration paid for the
contract, reduced by any amounts previously distributed from the contract that
were not subject to tax at that time. In the case of a surrender under a
non-qualified contract, the amount received generally will be taxable only to
the extent it exceeds the owner's investment in the contract.
Penalty tax on certain withdrawals
In the case of a distribution from a non-qualified contract, a federal tax
penalty may be imposed equal to 10% of the amount treated as income. However,
there is generally no penalty on distributions that are:
o made on or after the taxpayer reaches age 59 1/2
o made on or after the death of an owner
o attributable to the taxpayer's becoming disabled, or
o made as part of a series of substantially equal periodic payments for the
life -- or life expectancy -- of the taxpayer.
Other exceptions may apply under certain circumstances. Special rules may also
apply to the exceptions noted above. You should consult a tax adviser with
regard to exceptions from the penalty tax.
Annuity payments
Although tax consequences may vary depending on the payout option elected under
an annuity contract, a portion of each annuity payment is generally not taxed
and the remainder is taxed as ordinary income. The non-taxable portion of an
annuity payment is generally determined so that you recover your investment in
the contract ratably on a tax-free basis over the expected stream of annuity
payments, as determined when annuity payments begin. However, once your
investment in the contract has been fully recovered, the full amount of each
annuity payment is subject to tax as ordinary income.
30 PROSPECTUS
<PAGE>
Taxation of death benefits
Amounts may be distributed from a contract because of your death or the death of
the annuitant. Generally, such amounts are included in the income of the
recipient as follows:
o if distributed in a lump sum, they are taxed in the same manner as a
surrender of the contract
o if distributed under a payout option, they are taxed in the same way as
annuity payments.
Transfers, assignments and contract exchanges
Transferring or assigning ownership of a contract, designating an annuitant,
selecting certain maturity dates or exchanging a contract may result in certain
tax consequences to you that are not outlined here. If you are considering any
such transaction, you should consult a professional tax adviser.
Withholding tax
Annuity distributions are generally subject to withholding for the recipient's
federal income tax liability. However, recipients can generally choose not to
have tax withheld from distributions.
Multiple contracts
All annuity contracts issued by GIAC or its affiliates to the same owner during
any calendar year are treated as one annuity contract for purposes of
determining the amount included in the contract owner's income when a taxable
distribution occurs.
Taxation of qualified contracts
Your rights under a qualified contract may be subject to the terms of the
retirement plan itself, regardless of the terms of the qualified contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions with respect to the contract comply with
the law.
Individual Retirement Accounts (IRAs)
As defined in Sections 219 and 408 of the Internal Revenue Code, individuals are
allowed to make annual contributions to an IRA of up to the lesser of $2,000 or
100% of their adjusted gross income. All or a portion of these contributions may
be deductible, depending on the person's income.
Distributions from certain pension plans may be rolled over into an IRA on a
tax-deferred basis without regard to these limits. So-called SIMPLE IRAs under
Section 408 (p) of the Internal Revenue Code and Roth IRAs under Section 408A,
may also be used in connection with variable annuity contracts.
SIMPLE IRAs allow employees to defer a percentage of annual compensation up to
$6,000 to a retirement plan, if the sponsoring employer makes matching or
non-elective contributions. The penalty for a distribution from a SIMPLE IRA
that occurs within the first
PROSPECTUS 31
<PAGE>
two years after the employee begins to participate in the plan is 25%, instead
of the usual 10%.
Contributions to Roth IRAs are not tax-deductible, and contributions must be
made in cash or as a rollover or transfer from another Roth IRA or IRA. A
rollover or conversion of an IRA to a Roth IRA may be subject to tax.
Distributions from Roth IRAs are generally not taxed. In addition to the 10%
penalty which generally applies to distributions made before age 59 1/2, a 10%
penalty will be imposed for any distribution made from a Roth IRA during the
five taxable years starting after you first contribute to any Roth IRA.
Corporate pension and profit-sharing plans
Under Section 401(a) of the Internal Revenue Code, corporate employers are
allowed to establish various types of retirement plans for employees, and
self-employed individuals are allowed to establish qualified plans for
themselves and their employees.
Adverse tax consequences to the retirement plan, the participant or both may
result if the contract is transferred to any individual as a means of providing
benefit payments, unless the plan complies with all applicable requirements
before transferring the contract.
Tax-sheltered annuities
Under Section 403(b) of the Internal Revenue Code, public schools and other
eligible employers are allowed to purchase annuity contracts and mutual fund
shares through custodial accounts on behalf of employees. Generally, these
purchase payments are excluded for tax purposes from employee gross incomes.
However, these payments may be subject to Social Security taxes.
Distributions of salary reduction contributions and earnings (other than your
salary reduction accumulation as of December 31, 1988) are not allowed before
age 59 1/2, separation from service, death or disability. Salary reduction
contributions may also be distributed upon hardship, but would generally be
subject to penalties.
Other tax issues
You should note that the annuity contract includes a death benefit that in some
cases may exceed the greater of the purchase payments or the contract value. The
death benefit could be viewed as an incidental benefit, the amount of which is
limited in any 401(a) or 403(b) plan. Because the death benefit may exceed this
limitation, employers using the contract in connection with corporate pension
and profit-sharing plans, or tax-sheltered annuities, should consult their tax
adviser.
Qualified contracts other than Roth IRAs have minimum distribution rules that
govern the timing and amount of distributions. You should refer to your
retirement plan, adoption agreement or consult a tax
32 PROSPECTUS
<PAGE>
adviser for more information about these distribution rules.
Our income taxes
At the present time, we make no charge for any Federal, state or local taxes --
other than the charge for state and local premium taxes that we incur -- that
may be attributable to the investment divisions of the Separate Account or to
the contracts. We do have the right in the future to make additional charges for
any such tax or other economic burden resulting from the application of the tax
laws that we determine is attributable to the investment divisions of the
Separate Account or the contracts.
Under current laws in several states, we may incur state and local taxes in
addition to premium taxes. These taxes are not now significant and we are not
currently charging for them. If they increase, we may deduct charges for such
taxes.
- --------------------------------------------------------------------------------
As a result of a 1983 U.S. Supreme Court ruling, employer-related plans
must use rate tables that are gender-neutral to calculate annuity purchase
rates. We have revised our tables for employer-related plans and filed
them in the states where we do business. We will continue to use our
gender-distinct tables in all other contracts, unless it is prohibited by
state law. In those cases our gender-neutral tables will be used.
Possible tax law changes
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the contracts could change by legislation
or otherwise. You should consult a tax adviser with respect to legislative
developments and their effect on the contracts.
We have the right to modify the contracts in response to legislative changes
that could otherwise diminish the favorable tax treatment annuity contract
owners currently receive. We make no guarantee regarding the tax status of any
contract and do not intend this summary as tax advice.
Performance results
From time to time, we may show performance information for the Separate
Account's investment divisions in advertisements, sales literature or other
materials provided to existing or prospective contract owners. These materials
are based upon historical information and are not necessarily representative of
future performance. More detail about historical performance appears in the
Statement of Additional Information. When we show performance, we'll always
include SEC standard performance, which reflects all fees and charges for
specified periods. We may also show non-standard performance, for example,
without showing the effect of certain charges such as deferred sales charges.
Among the key performance measures we use are total returns and yields.
Total returns include: average annual total return, total return, and change in
accumulation unit value -- all of which reflect the change in the value of an
investment in an investment division of the Separate Account over a specified
period, assuming the reinvestment of all income dividends and capital gains
distributions.
Yield figures may be quoted for investments in shares of the Cash Fund and the
Bond Fund. Current yield is a measure of the income
PROSPECTUS 33
<PAGE>
earned on a hypothetical investment over a specified base period of seven days
for the Cash Fund investment division, and 30 days (or one month) for the Bond
Fund investment division. Effective yield is another measure which may be quoted
by the Cash Fund investment division, which assumes that the net investment
income earned during a base period will be earned and reinvested for a year.
Yields are expressed as a percentage of the value of an accumulation unit at the
beginning of the base period. Yields are annualized, which assumes that an
investment division will generate the same level of net investment income over a
one-year period. However, yields fluctuate daily.
Advertisements and sales literature for the Separate Account's investment
divisions may compare a Fund's performance to that of investments offered
through the separate accounts of other insurance companies that have similar
investment objectives or programs. Promotional material may also compare a
Fund's performance to one or more indices of the types of securities which the
Fund buys and sells for its portfolio. Performance comparisons may be
illustrated by tables, graphs or charts. Additionally, promotional material may
refer to:
o the types and characteristics of certain securities
o features of a Fund's portfolio
o financial markets
o historical, current or perceived economic trends, and
o topics of general investor interest, such as personal financial planning.
In addition, advertisements and sales literature may refer to or reprint all or
portions of articles, reports or independent rankings or ratings which relate
specifically to the investment divisions or to other comparable investments.
However, such material will not be used to indicate future performance.
Advertisements and sales literature about the variable annuity contracts and the
Separate Account may also refer to ratings given to GIAC by insurance company
rating organizations such as:
o Moody's Investors Service, Inc.
o Standard & Poor's Ratings Group
o A.M. Best & Co.
o Duff & Phelps.
These ratings relate only to GIAC's ability to meet its obligations under the
contracts' fixed-rate option and to pay death benefits provided under the
contracts, not to the performance of the variable investment options.
Further information about the performance of each investment division is
contained in their respective annual reports, which may be obtained from GISC
free of charge.
34 PROSPECTUS
<PAGE>
YOUR RIGHTS AND RESPONSIBILITIES
Voting rights
We own the Fund's shares, but you may have voting rights in the various Funds.
To the extent that we are required by law, we will cast our votes according to
the instructions of those contract owners who have an interest in variable
investment options investing in Funds holding a shareholder vote, as of the
shareholder meeting record date. Those votes for which we receive no
instructions will be voted in the same proportion as those we have received
instructions for. We'll solicit instructions when the Funds hold shareholder
votes. We have the right to restrict contract owner voting instructions if the
laws change to allow us to do so.
The owner of the contract has voting rights until the date annuity payments
begin. After that date, rights switch to the annuitant. Voting rights diminish
with the reduction of your contract value. The fixed-rate option has no voting
rights.
Your right to cancel the contract
During the 10-day period after receiving your contract, the free look period,
you have the right to examine your contract and return it for cancellation if
you change your mind about buying it. Longer periods may apply in some states.
Upon cancellation and as required by state law or regulation, we'll refund to
you either:
o the total amount you paid for the contract; or
o the sum of the surrender value of the contract, plus the difference
between the premiums you paid (including any contract fees or other
charges) and the amounts allocated to the variable and fixed-rate
investment options under the contract.
Distribution of the contracts
The variable annuity contracts are sold by insurance agents who are licensed by
GIAC and who are either registered representatives of GISC or of broker-dealer
firms which have entered into sales agreements with GISC and GIAC. GISC and such
other broker-dealers are members of the National Association of Securities
Dealers, Inc. GIAC will generally pay commissions to these individuals or
entities for the sale of contracts. These commissions may vary, but in total are
not expected to exceed 5.25% of each contract premium payment. We also reserve
the right to pay additional annual sales compensation of up to .45% of the value
of contracts, based on the value of the contracts and any riders that are in
force. Where permitted by state law, we reserve the right to pay additional
sales or service compensation while a contract is in force, based on the value
of a contract. Additional amounts may also be paid in connection with special
promotional incentives. The principal underwriter of the contracts is GISC,
located at 7 Hanover Square, New York, New York 10004.
PROSPECTUS 35
<PAGE>
SPECIAL TERMS USED IN THIS PROSPECTUS
Accumulation Period: The period between the issue date of the contract and the
retirement date.
Accumulation Unit: A measure used to determine the value of a contractowner's
interest under the contract before annuity payments begin. The contract has
variable accumulation units and fixed accumulation units.
Accumulation Value: The value of all the accumulation units in the variable
investment options and/or the fixed-rate option credited to a contract.
Annuitant: The person on whose life the annuity payments are based and on whose
death, prior to the retirement date, benefits under the contract are paid.
Retirement Date: The date on which annuity payments under the contact begin.
Annuity Payments: Periodic payments, either variable or fixed in nature, made by
GIAC to the contract owner at monthly intervals after the retirement date.
Annuity Unit: A measure used to determine the amount of any variable annuity
payment.
Business day: Each day the New York Stock Exchange is open for trading and GIAC
is open for business.
Contract Anniversary Date: The annual anniversary measured from the issue date
of the contract.
Contract owner: You (or your); the person(s) or entity designated as the owner
in the contract.
Funds: The diversified open-end management investment companies, each
corresponding to a variable investment option. The Funds are listed on the front
cover of this prospectus.
Good Order: Notice from any party authorized to initiate a transaction under
this contract, received in a format satisfactory to GIAC at its customer service
office, that contains all information required by GIAC to process that
transaction.
Valuation Period: The time period from the determination of one accumulation
unit and annuity unit value to the next.
Variable Investment Options: The Funds underlying the contract are the variable
investment options -- as distinguished from the fixed-rate option -- available
for allocations of net premium payments and accumulation values.
36 PROSPECTUS
<PAGE>
OTHER INFORMATION
Year 2000 compliance
Many computer systems are unable to distinguish between the years 1900 and 2000
when they are making date-related calculations, because of the way that date
information is stored in these machines. Like businesses around the world that
rely on computerized systems for their day-to-day functioning, we may be
adversely affected if our computer systems, or the computer systems of companies
that we do business with, cannot address this problem by January 1, 2000. We are
working to address this issue and expect that our computer systems will be able
to correctly interpret the year 2000 when that date arrives but we cannot
guarantee that our preparations will be successful.
In conjunction with our parent company, Guardian Life, we are directing
significant portions of our internal information technology efforts and
contracting, as needed, with outside consultants to help update our systems to
accommodate the year 2000. We have also initiated discussions with other
critical parties whose systems impact our own to determine the progress they are
making toward addressing year 2000 issues.
Everyone involved is making substantial efforts to address their systems and the
systems with which they interface, but it is not possible to provide assurance
that operational problems will not occur. We believe that, with the modification
of existing computer systems, updates by vendors and conversion to new software
and hardware, we are well positioned to mitigate the year 2000 issue and that
contract owners will not experience negative effects with respect to their
contracts as a result of the year 2000 issue. However, the year 2000 issue, by
its very nature contains inherent uncertainties, including the uncertainty of
year 2000 readiness of third parties. As a result, we are unable to determine at
this time whether the consequences of year 2000 failures will have a material
adverse effect on our results of operations, liquidity or financial position.
We are also incorporating potential issues surrounding year 2000 into our
contingency planning process, in the event that, despite our substantial best
efforts and those of other critical parties, there may still remain unresolved
year 2000 problems.
PROSPECTUS 37
<PAGE>
Legal Proceedings
Neither the Separate Account nor GIAC is a party to any pending material legal
proceeding.
Where to get more information
Our Statement of Additional Information (SAI) has more details about the
contracts described in this prospectus. If you would like a free copy, please
call us toll-free at 1-800-221-3253, or write to us at the following address:
Guardian Insurance & Annuity Corporation
Customer Service Office
Box 26210
Lehigh Valley, Pennsylvania 18002
The SAI contains the following information:
o Services to the Separate Account
o Annuity payments
o Tax status of the contracts
o Performance data
o Valuation of assets of the Separate Account
o Transferability restrictions
o Experts
o Financial statements
38 PROSPECTUS
<PAGE>
THE GUARDIAN INVESTOR(R)
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
Issued Through
THE GUARDIAN SEPARATE ACCOUNT D
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
--------------
Statement of Additional Information dated May 1, 1999
--------------
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for The Guardian Separate
Account D (marketed under the name "The Guardian Investor") dated May 1, 1999.
A free Prospectus is available upon request by writing or calling:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210 Lehigh Valley, Pennsylvania 18002
1-800-221-3253
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the Prospectus.
TABLE OF CONTENTS
Page
----
Services to the Separate Account.................................... B-2
Annuity Payments.................................................... B-2
Tax Status of the Contracts ........................................ B-3
Performance Data.................................................... B-3
Valuation of Assets of the Separate Account......................... B-8
Transferability Restrictions........................................ B-9
Experts............................................................. B-9
Financial Statements................................................ B-9
B-1
<PAGE>
SERVICES TO THE SEPARATE ACCOUNT
The Guardian Insurance & Annuity Company, Inc. ("GIAC") maintains the books
and records of The Guardian Separate Account D (the "Separate Account"). GIAC, a
wholly owned subsidiary of The Guardian Life Insurance Company of America, acts
as custodian of the assets of the Separate Account. GIAC bears all expenses
incurred in the operations of the Separate Account, except the mortality and
expense risk charge and the administrative charge (as described in the
Prospectus), which are borne by the Contractowner.
The firm of PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New
York, New York 10036 currently serves as independent accountants for GIAC and
the Separate Account.
Guardian Investor Services Corporation ("GISC"), a wholly owned subsidiary
of GIAC, serves as principal underwriter for the Separate Account pursuant to a
distribution and service agreement between GIAC and GISC. The Contracts are
offered continuously and are sold by GIAC insurance agents who are registered
representatives of either GISC or of other broker-dealers which have selling
agreements with GISC and GIAC. In the years 1998, 1997 and 1996, GISC received
underwriting commissions from GIAC with respect to the sales of variable annuity
contracts in the amount of $1,946,477, $1,979,926 and $1,851,468, respectively.
ANNUITY PAYMENTS
The objective of the Contracts is to provide benefit payments which will
increase at a rate sufficient to maintain purchasing power at a constant level.
For this to occur, the actual net investment rate must exceed the assumed
investment rate of 4% by an amount equal to the rate of inflation. Of course, no
assurance can be made that this objective will be met. If the assumed interest
rate were to be increased, benefit payments would start at a higher level but
would increase more slowly or decrease more rapidly. Likewise, a lower assumed
interest rate would provide a lower initial payment with greater increases or
lesser decreases in subsequent Annuity Payments.
Value of an Annuity Unit: The value of an Annuity Unit is determined
independently for each of the Variable Investment Options. For any Valuation
Period, the value of an Annuity Unit is equal to the value for the immediately
preceding Valuation Period multiplied by the annuity change factor for the
current Valuation Period. The Annuity Unit value for a Valuation Period is the
value determined as of the end of such period. The annuity change factor is
equal to the net investment factor for the same Valuation Period adjusted to
neutralize the assumed investment return used in determining the Annuity
Payments. The net investment factor is reduced by the amount of the mortality
and expense risk charge on an annual basis during the life of the Contract. The
dollar amount of any monthly payment due after the first monthly payment under a
Variable Investment Option will be determined by multiplying the number of
Annuity Units by the value of an Annuity Unit for the Valuation Period ending
ten (10) days prior to the Valuation Period in which the monthly payment is due.
Determination of the First Monthly Annuity Payment: At the time Annuity
Payments begin, the value of the Contractowner's account is determined by
multiplying the appropriate Variable or Fixed Accumulation Unit Value on the
Valuation Period ten (10) days before the date the first variable or fixed
Annuity Payment is due by the corresponding number of Variable or Fixed
Accumulation Units credited to the Contractowner's account as of the date the
first Annuity Payment is due, less any applicable premium taxes not previously
deducted.
The Contracts contain tables reflecting the dollar amount of the first
monthly payment which can be purchased with each $1,000 of value accumulated
under the Contract. The amounts depend on the variable or fixed Annuity Payout
Option selected, the mortality table used under the Contract (the 1983
Individual Mortality Table a projected using Scale G) and the nearest age of the
Annuitant. The first Annuity Payment is determined by multiplying the benefit
per $1,000 of value shown in the Contract tables by the number of thousands of
dollars of value accumulated under the Contract.
B-2
<PAGE>
Determination of the Second and Subsequent Monthly Variable Annuity
Payments: The amount of the second and subsequent variable Annuity Payments is
determined by multiplying the number of Annuity Units by the appropriate Annuity
Unit Value as of the valuation period ten (10) days prior to the day such
payment is due. The number of Annuity Units under a Contract is determined by
dividing the first monthly variable Annuity Payment by the value of the
appropriate Annuity Unit on the date of such payment. This number of Annuity
Units remains fixed during the variable Annuity Payment period, provided no
transfers among the Variable Investment Options are made. If a transfer among
the Variable Investment Options is made, the number of Annuity Units will be
adjusted accordingly.
The assumed investment return of 4% under the Contract is the measuring
point for subsequent variable Annuity Payments. If the actual net investment
rate (on an annual basis) remains constant at 4%, the variable Annuity Payments
will remain constant. If the actual net investment rate exceeds 4%, the variable
Annuity Payment will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than 4%, variable Annuity Payments will
decrease.
The second and subsequent monthly payments made under a Fixed Annuity
Payout Option will be equal to the amount of the first monthly fixed Annuity
Payment (described above).
TAX STATUS OF THE CONTRACTS
Tax law imposes several requirements that variable annuities must satisfy
in order to receive the tax treatment normally accorded to annuity contracts.
Diversification Requirements. The Code requires that the investments of
each investment division of the separate account underlying the contracts be
"adequately diversified" in order for the contracts to be treated as annuity
contracts for Federal income tax purposes. It is intended that each investment
division, through the fund in which it invests, will satisfy these
diversification requirements.
Owner Control. In certain circumstances, owners of variable annuity
contracts have been considered for Federal income tax purposes to be the owners
of the assets of the separate account supporting their contracts due to their
ability to exercise investment control over those assets. When this is the case,
the contract owners have been currently taxed on income and gains attributable
to the variable account assets. There is little guidance in this area, and some
features of our contracts, such as the flexibility of an owner to allocate
premium payments and transfer amounts among the investment divisions of the
separate account, have not been explicitly addressed in published rulings. While
we believe that the contracts do not give owners investment control over
separate account assets, we reserve the right to modify the contracts as
necessary to prevent an owner from being treated as the owner of the separate
account assets supporting the contract.
Required Distributions. In order to be treated as annuity contract for
Federal income tax purposes, section 72(s) of the Internal Revenue Code requires
any non-qualified contract to contain certain provisions specifying how your
interest in the contract will be distributed in the event of the death of a
holder of the contract. Specifically, section 72(s) requires that (a) if any
holder dies on or after the annuity starting date, but prior to the time the
entire interest in the contract has been distributed, the entire interest in the
contract will be distributed at least as rapidly as under the method of
distribution being used as of the date of such holder's death; and (b) if any
holder dies prior to the annuity starting date, the entire interest in the
contract will be distributed within five years after the date of such holder's
death. These requirements will be considered satisfied as to any portion of a
holder's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
holder's death. The designated beneficiary refers to a natural person designated
by the holder as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased holder, the contract may be continued with the surviving spouse
as the new holder.
The non-qualified contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
PERFORMANCE DATA
The tables below provide performance results for each of the Separate
Account's Investment Divisions through December 31, 1998. The results shown in
this section are not an estimate or guarantee of future investment performance,
and do not represent the actual experience of amounts invested by a particular
Contractowner. Moreover, the performance information for each Investment
Division reflects the investment experience of its underlying Funds for periods
prior to the commencement of operations of the Separate Account (January 16,
1990) if the Funds existed prior to such date. Such results were calculated by
applying all Contract and Separate Account level charges to the historical Fund
performance results for such prior periods. During such prior periods, the Funds
were utilized as the underlying Funds for other separate accounts of GIAC which
were established in connection with the issuance of other variable contracts.
Average Annual Total Return Calculations
The first section of the following table was calculated using the
standardized method prescribed by the Securities and Exchange Commission. It
illustrates each Investment Division's average annual total return over the
periods shown. The average annual total return for an Investment Division for a
specified period is determined by reference to a hypothetical $1,000 investment
that includes capital appreciation and depreciation for the stated period,
according to the following formula:
P(1 + T)^n = ERV
Where: P = A hypothetical purchase of $1,000 from which no sales load is
deducted.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of the hypothetical $1,000 purchase
at the end of the period.
Each calculation assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period, that
no transfers or additional purchase payments were made and the surrender of the
Contract at the end of each period. The Investment Division's average annual
total return is the annual rate that would be necessary to achieve the ending
value of an investment kept in the Investment Division for the period specified.
The rate of return reflects all charges assessed against a
B-3
<PAGE>
Contract and at the Separate Account level except for any premium taxes that may
be payable. The charges reflected include any applicable contingent deferred
sales charge; the mortality and expense risk charge; and a pro-rated portion of
the contract administration fee. See the Prospectus for a detailed description
of such charges.
The second section of the table was calculated in the same manner as the
first except that no contingent deferred sales charge was deducted since it is
assumed that the Contract continues through the end of each period.
BASIC CONTRACT
<TABLE>
<CAPTION>
Average Annual Total Return for a
Contract Surrendered on 12/31/98
(FP = Flexible Premium Payment Contract; Average Annual Total Return on 12/31/98
SP = Single Premium Payment Contract) Assuming Contract Continues
---------------------------------------- ---------------------------------------
Length of Investment Period Length of Investment Period
---------------------------------------- ---------------------------------------
Ten Years (or Ten Years (or
Since Fund Since Fund
Investment Division Date of Fund Inception, Inception,
Corresponding To Inception One Year Five Years If Less) One Year Five Years If Less)
- ---------------------- ------------ -------- ---------- ------------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash -2.32%FP 2.55%FP 4.00%FP
Fund................ 1/7/82 -2.32%SP 3.10%SP 4.00%SP 3.83% 3.63% 4.00%
The Guardian Bond 0.77%FP 4.30%FP 7.73%FP
Fund................ 5/1/83 0.77%SP 4.79%SP 7.73%SP 6.77% 5.28% 7.43%
The Guardian Stock 12.41%FP 13.88%FP 17.86%FP
Fund................ 4/13/83 12.41%SP 14.17%SP 17.86%SP 18.41% 14.45% 17.86%
The Guardian Small -12.92%FP N/A -2.40%FP -6.92% N/A 3.60%
Cap Stock Fund...... 5/1/97 -12.92%SP -2.40%SP
Gabelli Capital 4.34%FP N/A 16.30%FP
Asset Fund.......... 5/1/95 4.34%SP N/A 16.30%SP 10.34% N/A 17.96%
Baillie Gifford 13.70%FP 9.81%FP 9.39%FP
International Fund.. 2/8/91 13.70%SP 10.18%SP 9.39%SP 19.70% 10.56% 9.93%
Baillie Gifford
Emerging Markets.... -33.69%SP N/A -7.77%FP
Fund................ 10/17/94 -33.69%SP N/A -7.77%SP -27.69% N/A -5.95%
Value Line Centurion 19.92%FP 17.83%FP 18.32%FP
Fund ("VLCF")....... 11/15/83 19.92%SP 18.18%SP 18.32%SP 25.92% 18.53% 18.32%
Value Line Strategic
Asset Management 19.91%FP 20.07%FP 15.63%FP
Trust ("VLSAM")..... 10/1/87 19.91%SP 20.47%SP 15.63%SP 25.91% 20.86% 15.63%
MFS Growth With 14.84%FP N/A 24.42%FP
Income Series ...... 10/9/95 14.84%SP N/A 22.22%SP 20.84% N/A 24.46%
</TABLE>
B-4
<PAGE>
CONTRACT WITH ENHANCED DEATH BENEFIT
<TABLE>
<CAPTION>
Average Annual Total Return for a
Contract Surrendered on 12/31/98
(FP = Flexible Premium Payment Contract; Average Annual Total Return on 12/31/98
SP = Single Premium Payment Contract) Assuming Contract Continues
---------------------------------------- ---------------------------------------
Length of Investment Period Length of Investment Period
---------------------------------------- ---------------------------------------
Ten Years (or Ten Years (or
Since Fund Since Fund
Investment Division Date of Fund Inception, Inception,
Corresponding To Inception One Year Five Years If Less) One Year Five Years If Less)
- ---------------------- ------------ -------- ---------- ------------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash -2.43%FP 2.44%FP 3.89%FP
Fund................ 1/7/82 -2.43%SP 2.99%SP 3.89%SP 3.72% 3.52% 3.89%
The Guardian Bond 0.66%FP 4.19%FP 7.32%FP
Fund................ 5/1/83 0.66%SP 4.68%SP 7.32%SP 6.66% 5.17% 7.32%
The Guardian Stock 12.30%FP 13.77%FP 17.75%FP
Fund................ 4/13/83 12.30%SP 14.06%SP 17.75%SP 18.30% 14.34% 17.75%
The Guardian Small -13.03%FP -2.51%FP
Cap Stock Fund...... 5/1/97 -13.03%SP N/A -2.51%SP -7.03% N/A 3.49%
Gabelli Capital 4.23%FP N/A 16.19%FP
Asset Fund.......... 5/1/95 4.23%SP N/A 16.19%SP 10.23% N/A 17.85%
Baillie Gifford 13.59%FP 9.70%FP 9.28%FP
International Fund.. 2/8/91 13.59%SP 10.08%SP 9.28%SP 19.59% 10.45% 9.82%
Baillie Gifford
Emerging Markets.... -33.80%SP N/A -7.88%FP
Fund................ 10/17/94 -33.80%SP N/A -7.88%SP -27.80% N/A -6.06%
Value Line Centurion 19.81%FP 17.72%FP 18.21%FP
Fund ("VLCF")....... 11/15/83 19.81%SP 18.07%SP 18.21%SP 25.81% 18.42% 18.21%
Value Line Strategic
Asset Management 19.80%FP 19.96%FP 15.52%FP
Trust ("VLSAM")..... 10/1/87 19.80%SP 19.96%SP 15.52%SP 25.80% 20.75% 15.52%
MFS Growth With 14.73%FP N/A 24.31%FP
Income Series ...... 10/9/95 14.73%FP N/A 24.31%SP 20.73% N/A 24.35%
</TABLE>
Change in Accumulation Unit Value
The following performance information illustrates the cumulative change and
the actual annual change in Accumulation Unit values for the periods specified
for each Investment Division and is computed differently than the standardized
average annual total return information.
An Investment Division's cumulative change in Accumulation Unit values is
the rate at which the value of an Accumulation Unit changed over the time period
illustrated. The actual annual change in Accumulation Unit values is the rate at
which the value of an Accumulation Unit changed over each 12-month period
illustrated. The rates of change in Accumulation Unit values quoted in the
tables reflect a deduction for the mortality and expense risk charge and when
applicable, the Enhanced Death Benefit charge. They do not reflect deductions
for any contingent deferred sales charge, contract administration fee or premium
taxes. The rates of change would be lower if these charges were included.
B-5
<PAGE>
BASIC CONTRACT
<TABLE>
<CAPTION>
Cumulative Change in Accumulation Unit Value
for Period Ended December 31, 1998
--------------------------------------------------------------
Ten Years (or
Since Fund
Investment Division Inception, Date of Fund
Corresponding To One Year Five Years If Less) Inception
- ---------------------------------------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
The Guardian Cash Fund.................. 3.91% 19.98% 49.16% 1/7/82
The Guardian Bond Fund.................. 6.85% 29.83% 106.29% 5/1/83
The Guardian Stock Fund................. 18.49% 158.73% 420.79% 4/13/83
The Guardian Small Cap Stock Fund....... -6.84% N/A 5.40% 5/1/97
Gabelli Capital Asset Fund.............. 10.42% N/A 83.64% 5/1/95
Baillie Gifford International Fund...... 19.78% 65.79% 112.44% 2/8/91
Baillie Gifford Emerging Markets Fund... -27.61% N/A -22.45% 10/17/94
Value Line Centurion Fund............... 26.00% 134.75% 441.40% 11/15/83
Value Line Strategic Asset Management
Trust................................. 25.99% 97.06% 320.24% 10/1/87
MFS Growth With Income Series........... 20.92% N/A 90.82% 10/9/95
</TABLE>
CONTRACT WITH ENHANCED DEATH BENEFIT
<TABLE>
<CAPTION>
Cumulative Change in Accumulation Unit Value
for Period Ended December 31, 1998
--------------------------------------------------------------
Ten Years (or
Since Fund
Investment Division Inception, Date of Fund
Corresponding To One Year Five Years If Less) Inception
- ---------------------------------------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
The Guardian Cash Fund.................. 3.80% 18.21% 45.15% 1/7/82
The Guardian Bond Fund.................. 6.74% 27.92% 101.74% 5/1/83
The Guardian Stock Fund................. 18.37% 152.54% 413.02% 4/13/83
The Guardian Small Cap Stock Fund....... -6.93% N/A -6.51% 5/1/97
Gabelli Capital Asset Fund.............. 10.31% N/A 67.71% 5/1/95
Baillie Gifford International Fund...... 19.66% 63.29% 92.69% 2/8/91
Baillie Gifford Emerging Markets Fund... -27.69% N/A -14.63% 10/17/94
Value Line Centurion Fund............... 25.88% 131.18% 433.30% 11/15/83
Value Line Strategic Asset Management
Trust................................. 25.86% 94.14% 323.27% 10/1/87
MFS Growth With Income Series........... 20.80% N/A 89.11% 10/9/95
</TABLE>
B-6
<PAGE>
BASIC CONTRACT
<TABLE>
<CAPTION>
Change in Accumulation Unit Value for 12-Month Period ended December 31,
---------------------------------------------------------------------------------------------------
Investment Division
Corresponding To 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
- ---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund ...... 5.17% 5.13% 6.09% 7.79% 6.75% 4.38% 2.03% 1.46% 2.63% 4.32% 3.78% 3.94%
The Guardian Bond Fund ...... 13.52% -0.83% 8.44% 12.57% 6.31% 14.86% 6.46% 8.59% -4.56% 16.24% 1.68% 7.74%
The Guardian Stock Fund ..... 15.76% 0.69% 18.98% 22.02% -12.80% 34.40% 18.69% 18.58% -2.41% 33.11% 25.43% 34.02%
The Guardian Small Cap Stock
Fund ........................ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 13.14%
Gabelli Capital Asset Fund .. N/A N/A N/A N/A N/A N/A N/A N/A N/A 7.53%* 9.73% 40.95%
Baillie Gifford
International Fund .......... N/A N/A N/A N/A N/A 7.40%* -9.95% 32.50% -0.28% 9.95% 14.08% 10.65%
Baillie Gifford Emerging
Markets Fund ................ N/A N/A N/A N/A N/A N/A N/A N/A -12.17%* -1.74% 23.14% 0.80%
Value Line Centurion Fund
("VLCF") .................... 15.52% -3.97% 6.35% 29.99% 4.33% 50.44% 4.71% 7.95% -3.34% 38.47% 15.98% 19.99%
Value Line Strategic Asset
Management Trust
("VLSAM") ................... N/A -5.41% 8.92%* 24.11% -1.32% 41.69% 13.73% 10.57% -5.97% 27.06% 14.53% 14.33%
MFS Growth With Income
Series ...................... N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 23.01%* 28.29%
<CAPTION>
--------
Investment Division
Corresponding To 1998
- ---------------- ----
<S> <C>
The Guardian Cash Fund ...... 3.91
The Guardian Bond Fund ...... 6.85
The Guardian Stock Fund ..... 18.49
The Guardian Small Cap Stock
Fund ........................ -6.84
Gabelli Capital Asset Fund .. 10.42
Baillie Gifford
International Fund .......... 19.78
Baillie Gifford Emerging
Markets Fund ................ -27.61
Value Line Centurion Fund
("VLCF") .................... 26.00
Value Line Strategic Asset
Management Trust
("VLSAM") ................... 25.99
MFS Growth With Income
Series ...................... 20.92
</TABLE>
* From date of commencement of public offering of Fund's shares through
December 31.
<TABLE>
<CAPTION>
CONTRACT WITH ENHANCED DEATH BENEFIT
Change in Accumulation Unit Value for 12-Month Period ended December 31,
---------------------------------------------------------------------------------------------------
Investment Division
Corresponding To 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
- ---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund ...... 4.85 4.82 5.77 7.46 6.45 4.07 1.72 1.16 2.32 4.01 3.47 3.63
The Guardian Bond Fund ...... 13.18 -1.13 8.11 12.23 6.00 14.51 6.14 8.26 -4.85 15.89 1.38 7.41
The Guardian Stock Fund ..... 15.41 0.39 18.63 21.65 -13.05 33.99 18.33 18.22 -2.70 32.71 25.05 33.62
The Guardian Small Cap Stock
Fund ........................ 3.11*
Gabelli Capital Asset Fund .. 9.40* 40.53
Baillie Gifford
International Fund .......... -10.22* 32.10 -0.58 9.62 13.74 10.31
Baillie Gifford Emerging
Markets Fund ................ -2.04* 22.77 0.49
Value Line Centurion Fund
("VLCF") .................... 15.18 -4.26 6.03 29.59 4.03 49.98 4.39 7.63 -3.63 38.05 15.63 19.63
Value Line Strategic Asset
Management Trust
("VLSAM") ................... 8.59* 23.74 -1.60 41.26 13.39 10.24 -6.25 26.68 14.18 13.98
MFS Growth With Income
Series ...................... 22.64* 27.91
<CAPTION>
CONTRACT WITH ENHANCED DEATH BENEFIT
------
Investment Division
Corresponding To 1998
- ---------------- ----
<S> <C>
The Guardian Cash Fund ...... 3.80
The Guardian Bond Fund ...... 6.74
The Guardian Stock Fund ..... 18.37
The Guardian Small Cap Stock
Fund ........................ -6.93
Gabelli Capital Asset Fund .. 10.31
Baillie Gifford
International Fund .......... 19.66
Baillie Gifford Emerging
Markets Fund ................ -27.69
Value Line Centurion Fund
("VLCF") .................... 25.88
Value Line Strategic Asset
Management Trust
("VLSAM") ................... 25.86
MFS Growth With Income
Series ...................... 20.80
</TABLE>
* From date of commencement of public offering of Fund's shares through
December 31.
B-7
<PAGE>
Calculation of Yield Quotations for the Cash Fund Investment Division
The yield of the Investment Division of the Separate Account investing in
the Cash Fund represents the net change, exclusive of gains and losses realized
by the Investment Division or the Cash Fund and unrealized appreciation and
depreciation with respect to the Cash Fund's portfolio of securities, in the
value of a hypothetical pre-existing Contract that is credited with one
Accumulation Unit at the beginning of the period for which yield is determined
(the "base period"). The base period generally will be a seven-day period. The
current yield for a base period is calculated by dividing (1) the net change in
the value of the Contract for the base period (see "Accumulation Period" in the
Prospectus) by (2) the value of the Contract at the beginning of the base period
and multiplying the result by 365/7. Deductions from purchase payments (for
example, any applicable premium taxes) and any applicable contingent deferred
sales charge assessed at the time of withdrawal or annuitization are not
reflected in the computation of current yield of the Investment Division. The
determination of net change in Contract value reflects all deductions that are
charged to a Contractowner, in proportion to the length of the base period and
the Investment Division's average Contract size. The current annualized yield of
the Cash Fund Investment Division for the 7-day period ended December 31, 1998
was 4.76%.
Yield also may be calculated on an effective or compound basis, which
assumes continual reinvestment by the Investment Division throughout an entire
year of net income earned by the Investment Division at the same rate as net
income is earned in the base period. The effective or compound yield for a base
period is calculated by (1) dividing (i) the net change in the value of the
Contract for the base period by (ii) the value of the Contract as of the
beginning of the base period, (2) adding 1 to the result, (3) raising the sum to
a power equal to 365 divided by the number of days in the base period, and (4)
subtracting 1 from the result. The effective annualized yield of the Cash Fund
Investment Division for the 7-day period ended December 31, 1998 was 4.87%.
The current and effective yields of the Cash Fund Investment Division will
vary depending on prevailing interest rates, the operating expenses and the
quality, maturity and type of instruments held in the Cash Fund's portfolio.
Consequently, no yield quotation should be considered as representative of what
the yield of the Investment Division may be for any specified period in the
future. The yield is subject to fluctuation and is not guaranteed.
Performance Comparisons
Advertisements and sales literature for the Separate Account's Investment
Divisions and their underlying Funds may compare their performance to other
investment vehicles and the separate accounts of other insurance companies as
reflected in independent performance data furnished by sources such as Lipper
Analytical Services, Inc., Morningstar, and Variable Annuity Research & Data
Service, all of which are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. The performance analyses
prepared by such services rank issuers on the basis of total return, assuming
reinvestment of distributions, but may not take sales charges, redemption fees,
or certain expense deductions into consideration.
VALUATION OF ASSETS OF THE SEPARATE ACCOUNT
The value of Fund shares held in each Investment Division at the time of
each valuation is the redemption value of such shares at such time. If the right
to redeem shares of a Fund has been suspended, or payment of redemption value
has been postponed for the sole purpose of computing Annuity Payments, the
shares held in the Separate Account (and corresponding Annuity Units) may be
valued at fair value as determined in good faith by GIAC's Board of Directors.
B-8
<PAGE>
TRANSFERABILITY RESTRICTIONS
Where a Contract is owned in conjunction with a retirement plan qualified
under the Internal Revenue Code of 1986, as amended ("Code"), a tax-sheltered
annuity program or individual retirement account, and notwithstanding any other
provisions of the Contract, the Contractowner may not change the ownership of
the Contract nor may the Contract be sold, assigned or pledged as collateral for
a loan or as security for the performance of an obligation or for any other
purpose to any person other than GIAC unless the Contractowner is the trustee of
an employee trust qualified under the Code, the custodian of a custodial account
treated as such, or the employer under a qualified non-trusteed pension plan.
EXPERTS
The financial statements of the Separate Account incorporated in this
Statement of Additional Information and in the Registration Statement by
reference to the Annual Report to Contractowners for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants. The statutory basis balance
sheets of GIAC as of December 31, 1998 and 1997 and the related statutory basis
statements of operations, of changes in common stock and surplus and of cash
flow for the three years in the period ended December 31, 1998 appearing in this
Statement of Additional Information have been so included in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants. Such financial
statements have been included herein or incorporated herein by reference in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
FINANCIAL STATEMENTS
The statutory basis financial statements of GIAC which are set forth herein
beginning on page B-10 should be considered only as bearing upon the ability of
GIAC to meet its obligations under the Contracts.
The financial statements of the Separate Account are incorporated herein by
reference to the Separate Account's 1998 Annual Report to Contractowners. Such
financial statements, the notes thereto and the reports of the independent
accountants and auditors thereon are incorporated by reference into this
Statement of Additional Information or are included elsewhere in this
Registration Statement. A free copy of the 1998 Annual Report to Contractowners
accompanies this Statement of Additional Information.
B-9
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
The Guardian Insurance & Annuity Company, Inc.
We have audited the accompanying statutory basis balance sheets of The Guardian
Insurance & Annuity Company, Inc. as of December 31, 1998 and 1997, and the
related statutory basis statements of operations, of changes in common stock and
surplus and of cash flows for the three years in the 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 presentation. We believe
that our audits provide a reasonable basis for our opinion.
As described in Note 2, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by insurance regulatory
authorities (statutory basis of accounting), which is a comprehensive basis of
accounting other than generally accepted accounting principles. Accordingly, the
financial statements are not intended to represent a presentation in accordance
with generally accepted accounting principles. The effects on the financial
statements of the variances between such practices and generally accepted
accounting principles are material and are described in Note 2.
In our opinion, the financial statements referred to above (1) do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of The Guardian Insurance & Annuity Company, Inc. at December
31, 1998 and 1997, or the results of its operations or its cash flows for the
three years ended in the period ended December 31, 1998, because of the effects
of the variances between the statutory basis of accounting and generally
accepted accounting principles, and (2) present fairly, in all material
respects, its financial position and the results of its operations and its cash
flows, in conformity with accounting practices prescribed or permitted by
insurance regulatory authorities.
PricewaterhouseCoopers LLP
February 25, 1999
B-10
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN INSURANCE
& ANNUITY COMPANY, INC.
- --------------------------------------------------------------------------------
The Guardian Insurance & Annuity Company, Inc.
STATUTORY BASIS BALANCE SHEETS
<TABLE>
<CAPTION>
As of December 31,
-------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Admitted Assets
Investments:
Fixed maturities, principally at amortized cost
(market: 1998 - $547,051,594; 1997 - $492,052,307) ...... $ 536,554,920 $ 484,747,832
Affiliated mutual funds, at market .......................... 29,096,730 30,551,186
Investment in subsidiary .................................... 16,915,998 12,073,143
Policy loans - variable life insurance ...................... 72,861,940 72,737,781
Cash and short-term investments ............................. 9,006,075 23,602,410
Investment in joint venture ................................. 347,338 345,492
Other Invested Assets ....................................... 96,910 95,710
Accrued investment income receivable ........................... 17,378,196 13,303,271
Due from parent and affiliates ................................. 15,296,679 7,573,304
Other assets ................................................... 10,565,481 12,461,722
Receivable from separate accounts .............................. 34,565,822 30,203,923
Variable annuity and EISP/CIP separate account assets .......... 8,338,242,774 6,810,882,719
Variable life separate account assets .......................... 502,222,315 414,699,239
-------------- --------------
Total admitted assets ................................... $9,583,151,178 $7,913,277,732
============== ==============
Liabilities
Policy liabilities and accruals:
Fixed deferred reserves ..................................... $ 344,614,116 $ 339,797,646
Fixed immediate reserves .................................... 10,576,555 7,397,461
Life reserves ............................................... 74,101,150 67,799,492
Minimum death benefit guarantees ............................ 1,447,553 1,117,645
Policy loan collateral fund reserve ......................... 71,009,047 70,734,812
Accrued expenses, taxes, & commissions ...................... 1,507,045 1,592,997
Due to parent and affiliates ................................ 25,040,196 20,408,087
Federal income taxes payable ................................ 16,932,639 10,939,640
Other liabilities ........................................... 16,127,345 20,540,325
Asset valuation reserve ..................................... 29,566,970 26,305,528
Variable annuity and EISP/CIP separate account liabilities .. 8,263,551,697 6,750,575,077
Variable life separate account liabilities .................. 501,289,827 413,364,790
-------------- --------------
Total liabilities ....................................... 9,355,764,140 7,730,573,500
Common stock and surplus
Common Stock, $100 par value, 20,000 shares authorized,
issued and outstanding .................................. 2,000,000 2,000,000
Additional paid-in surplus .................................. 137,398,292 137,398,292
Assigned and unassigned surplus ............................. 87,988,746 43,305,940
-------------- --------------
Total Common Stock and Surplus .......................... 227,387,038 182,704,232
-------------- --------------
Total liabilities, common stock and surplus ............. $9,583,151,178 $7,913,277,732
============== ==============
</TABLE>
See notes to statutory basis financial statements.
B-11
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
STATUTORY BASIS STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations:
Variable annuity considerations ................... $ 1,266,800,186 $ 995,209,301 $ 731,792,764
Life insurance premiums and fixed
annuity considerations .......................... 69,728,716 68,222,360 44,874,269
Net investment income ............................. 54,235,472 47,993,754 42,366,902
Amortization of IMR ............................... 266,599 111,783 333,219
Net gain from operations of separate accounts ..... 2,619,113 5,780,327 8,860,462
Service fees ...................................... 94,170,552 76,350,291 58,774,486
Variable life -- cost of insurance ................ 16,844,679 11,205,120 4,844,028
Reserve adjustments on reinsurance ceded .......... 34,449,189 7,885,341 30,636,445
Commission and expense allowances ................. 29,942,869 16,268,128 14,508,840
Other income ...................................... 9,570,705 5,178,266 2,535,356
--------------- --------------- ---------------
1,578,628,080 1,234,204,671 939,526,771
--------------- --------------- ---------------
Benefits and expenses:
Benefits:
Death benefits ........................................ 6,461,543 5,340,675 6,785,456
Annuity benefits .................................. 1,041,372,277 687,719,014 426,072,773
Surrender benefits ................................ 25,260,734 17,620,583 17,459,706
Increase in reserves .............................. 14,594,471 18,291,585 82,891,516
Net transfers to (from) separate accounts:
Variable annuity and EISP/CIP ..................... 291,988,248 359,468,681 323,093,897
Variable Life ..................................... 7,484,413 (630,102) (10,417,095)
Commissions ........................................... 50,875,519 43,352,989 39,233,431
General insurance expenses ............................ 79,386,352 59,476,685 42,523,892
Taxes, licenses and fees .............................. 6,289,814 3,743,414 3,723,858
Reinsurance terminations .............................. 40,482 182,535 (15,470,015)
--------------- --------------- ---------------
1,523,753,853 1,194,566,059 915,897,419
--------------- --------------- ---------------
Income before income taxes and realized
gains from investments ............................ 54,874,227 39,638,612 23,629,352
Federal income taxes .................................. 14,505,552 12,073,500 3,941,460
--------------- --------------- ---------------
Income from operations, net of federal income taxes,
and before net realized gains ..................... 40,368,675 27,565,112 19,687,892
Realized gains from investments, net of federal
income taxes, net of transfer to IMR .............. 92,355 472,127 7,540
--------------- --------------- ---------------
Net income ............................................ $ 40,461,030 $ 28,037,239 $ 19,695,432
=============== =============== ===============
</TABLE>
See notes to statutory basis financial statements.
B-12
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
STATUTORY BASIS STATEMENTS OF CHANGES IN COMMON STOCK AND SURPLUS
<TABLE>
<CAPTION>
Assigned and Total
Additional unassigned common
Common paid-in surplus stock and
stock surplus (Deficit) surplus
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balances at December 31, 1995 ...................... $ 2,000,000 $ 137,398,292 $ 2,479,635 $ 141,877,927
------------- ------------- ------------- -------------
Net income from operations ......................... 19,695,433 19,695,433
Tax on prior years separate account seed
investment unrealized gains .................... (104,732) (104,732)
Increase in unrealized appreciation of Company's
investment in joint venture .................... 241,456 241,456
Increase in unrealized appreciation of Company's
investment in subsidiary ....................... 142,201 142,201
Decrease in unrealized appreciation of Company's
investment in other assets ..................... (9,384) (9,384)
Increase in non-admitted assets .................... (80,815) (80,815)
Disallowed interest maintenance reserve ............ (128,107) (128,107)
Surplus changes resulting from reinsurance ......... (2,073,155) (2,073,155)
Net increase in asset valuation reserve ............ (5,779,916) (5,779,916)
------------- ------------- ------------- -------------
Balances at December 31, 1996 ...................... $ 2,000,000 $ 137,398,292 $ 14,382,616 $ 153,780,908
============= ============= ============= =============
Net income from operations ......................... 28,037,239 28,037,239
Increase in unrealized appreciation of Company's
investment in joint venture .................... 42,908 42,908
Increase in unrealized appreciation of Company's
investment in subsidiary ....................... 4,326,500 4,326,500
Increase in unrealized appreciation of Company's
investment in other assets ..................... 9,384 9,384
Increase in unrealized appreciation of Company's
investment in an affiliated mutual fund ........ 7,271,233 7,271,233
Decrease in non-admitted assets .................... 83,011 83,011
Disallowed interest maintenance reserve ............ (197,600) (197,600)
Surplus changes resulting from reinsurance ......... 534,908 534,908
Net increase in asset valuation reserve ............ (11,184,259) (11,184,259)
------------- ------------- ------------- -------------
Balances at December 31, 1997 ...................... $ 2,000,000 $ 137,398,292 $ 43,305,940 $ 182,704,232
============= ============= ============= =============
Net income from operations ......................... 40,461,030 40,461,030
Increase in unrealized appreciation of Company's
investment in joint venture .................... 1,846 1,846
Increase in unrealized appreciation of Company's
investment in subsidiary ....................... 4,542,855 4,542,855
Decrease in unrealized appreciation of Company's
investment in an affiliated mutual fund ........ (1,831,189) (1,831,189)
Increase in unrealized appreciation of Company's
seed investment in separate accounts ........... 3,690,295 3,690,295
Decrease in non-admitted assets .................... 57,886 57,886
Disallowed interest maintenance reserve ............ 1,090,623 1,090,623
Surplus changes resulting from reinsurance ......... (69,098) (69,098)
Net increase in asset valuation reserve ............ (3,261,442) (3,261,442)
------------- ------------- ------------- -------------
Balances at December 31, 1998 ...................... $ 2,000,000 $ 137,398,292 $ 87,988,746 $ 227,387,038
============= ============= ============= =============
</TABLE>
See notes to statutory basis financial statements.
B-13
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
STATUTORY BASIS STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from insurance activities:
Premiums, annuity considerations and
deposit funds ........................ $ 1,341,389,534 $ 1,065,244,583 $ 780,710,735
Investment income ....................... 51,241,553 46,412,248 42,413,736
Commissions and expense allowances on
reinsurance ceded .................... 57,916,363 22,679,622 37,315,301
Other income ............................ 102,437,913 67,084,996 47,357,962
Death benefits .......................... (7,112,859) (5,492,854) (6,900,438)
Surrender benefits ...................... (25,806,851) (17,780,564) (2,774,865)
Annuity benefits ........................ (1,040,119,415) (689,207,046) (424,511,908)
Commissions, other expenses
and taxes (excluding FIT) ............ (133,189,119) (101,213,566) (78,968,214)
Net transfers to separate accounts ...... (298,118,417) (356,017,200) (307,856,562)
Federal income taxes (excluding tax on
capital gains) ....................... (8,930,569) (5,094,779) 682,025
Increase in policy loans ................ (124,158) (4,594,714) (4,300,868)
Other operating expenses and sources .... (2,618,322) (140,580) 2,077,342
--------------- --------------- ---------------
Net cash provided by insurance activities ... 36,965,653 21,880,146 85,244,246
--------------- --------------- ---------------
Cash flows from investing activities:
Proceeds from dispositions of
investment securities ................ 280,921,058 315,404,430 224,692,954
Purchases of investment securities ...... (332,368,788) (331,151,548) (309,590,319)
Federal income tax on capital gains ..... (114,258) (355,657) (505,496)
--------------- --------------- ---------------
Net cash used in investing activities ....... (51,561,988) (16,102,775) (85,402,861)
--------------- --------------- ---------------
Net increase (decrease) in cash ......... (14,596,335) 5,777,371 (158,615)
Cash and short-term investments,
beginning of year .................... 23,602,410 17,825,039 17,983,654
--------------- --------------- ---------------
Cash and short-term investments,
end of year .......................... $ 9,006,075 $ 23,602,410 $ 17,825,039
=============== =============== ===============
</TABLE>
See notes to statutory basis financial statements.
B-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO STATUTORY BASIS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
The Guardian Insurance & Annuity Company, Inc. (GIAC or the Company) is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (The
Guardian). The Company, domiciled in the state of Delaware, is licensed to
conduct life and health insurance business in all fifty states and the District
of Columbia. The Company's primary business is the sale of variable deferred
annuity contracts and variable and term life insurance policies. For variable
products other than 401(k) products, contracts are sold by insurance agents who
are licensed by GIAC and are either Registered Representatives of Guardian
Investor Services Corporation (GISC) or of other broker dealer firms that have
entered into sales agreements with GIAC and GISC. The Company's general agency
distribution system is used for the sale of other products and policies.
GISC, a wholly owned subsidiary of the Company, is a registered broker
dealer under the Securities Exchange Act of 1934 and is a registered investment
advisor under the Investment Adviser's Act of 1940. GISC is the distributor and
underwriter for GIAC's variable products, and the investment advisor to certain
mutual funds sponsored by GIAC, which are investment options for the variable
products.
Insurance Separate Accounts: The Company has established fourteen
insurance separate accounts primarily to support the variable annuity and life
insurance products it offers. The majority of the separate accounts are unit
investment trusts registered under the Investment Company Act of 1940. Proceeds
from the sale of variable products are invested through these separate accounts
in certain mutual funds specified by the contractholders. Of these separate
accounts the Company maintains two separate accounts whose sole purpose is to
fund certain employee benefit plans of The Guardian.
The assets and liabilities of the separate accounts are clearly identified
and distinct from the other assets and liabilities of the Company. The assets of
the separate accounts will not be charged with any liabilities arising out of
any other business of the Company. However, the obligations of the separate
accounts, including the promise to make annuity and death benefit payments,
remain obligations of the Company. Assets and liabilities of the separate
accounts are stated primarily at the market value of the underlying investments
and corresponding contractholders obligations. The amounts provided by the
Company to establish separate account investment portfolios (seed money) are not
included in separate account liabilities.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation of financial statements: The financial statements
have been prepared on a statutory basis of accounting that is prescribed or
permitted by the Insurance Department of the State of Delaware which is a
comprehensive basis of accounting other than generally accepted accounting
principles (GAAP).
Financial statements prepared on a statutory basis vary from financial
statements prepared on a GAAP basis because: (1) the costs relating to acquiring
business, principally commissions and certain policy issue expenses, are charged
to income in the year incurred, whereas on a GAAP basis they would be recorded
as assets and amortized over the future periods to be benefited; (2) life
insurance and annuity reserves are based on statutory mortality and interest
requirements, without consideration of withdrawals, whereas on GAAP basis they
are based on anticipated Company experience for lapses, mortality and investment
yield; (3) life insurance enterprises are required to establish a formula-based
asset valuation reserve (AVR) by a direct charge to surplus to offset potential
investment losses; under GAAP, provisions for investments are established as
needed through a charge to income; (4) realized gains and losses resulting from
changes in interest rates on fixed income investments are deferred in the
interest maintenance reserve (IMR) and amortized into investment income over the
remaining life of the investment sold; for GAAP, such gains and losses are
recognized in income at the time of sale; (5) bonds are carried principally at
amortized cost for statutory reporting and at market value for GAAP; (6) annuity
and certain insurance premiums are recognized as premium income, whereas for
GAAP they are recognized as deposits; (7) deferred federal income taxes are not
provided for temporary differences between tax and book assets and liabilities
as they are under GAAP; (8) certain reinsurance transactions are accounted for
as reinsurance for statutory purposes and as financing transactions under GAAP,
and assets and liabilities are reported net of reinsurance for statutory
purposes and gross of reinsurance for GAAP.
B-15
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
Use of Estimates: The preparation of financial statements of insurance
enterprises requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements. As a provider of life insurance and annuity products, GIAC's
operating results in any given period depend on estimates of policy reserves
required to provide for future policyholder benefits. The development of policy
reserves for insurance and investment contracts requires management to make
estimates and assumptions regarding mortality, lapse, expense and investment
experience. Such estimates are primarily based on historical experience and, in
many cases, state insurance laws that require specific mortality, morbidity, and
investment assumptions to be used by the Company. Actual results could differ
from those estimates. Management monitors actual experience, and where
circumstances warrant, revises its assumptions and the related reserve
estimates.
Valuation of investments: Investments in securities are recorded in
accordance with valuation procedures established by the National Association of
Insurance Commissioners (NAIC). Unrealized gains and losses on investments
carried at market are recorded directly to unassigned surplus. Realized gains
and losses on disposition of investments are determined by the specific
identification method. The Company has recorded in accordance with NAIC
requirements, the net gain from the operations of the separate accounts in the
operations of the general account instead of in surplus.
Bonds: Bonds are valued principally at amortized cost. Mortgage backed
bonds are carried at amortized cost using the interest method considering
anticipated prepayments at the date of purchase. Significant changes in future
anticipated cash flows from the original purchase assumptions are accounted for
using the retrospective adjustment method with PSA standard prepayment rates.
Investment in subsidiary: GIAC's investment in GISC is carried at equity
in GIAC's underlying net assets. Undistributed earnings or losses are reflected
as unrealized capital gains and losses directly in unassigned surplus. Dividends
received from GISC are recorded as investment income and amounted to $14,000,000
in 1998, $10,000,000 in 1997 and $9,500,000 in 1996.
Short-Term Investments: Short-term investments are stated at amortized
cost and consist primarily of investments having maturities at the date of
purchase of six months or less. Market values for such investments approximate
carrying value.
Loans on Policies: Loans on policies are stated at unpaid principal
balance. The carrying amount approximates fair value since loans on policies
have no defined maturity date and reduce the amount payable at death or at
surrender of the contract.
Investment Reserves: In compliance with regulatory requirements, the
Company maintains the Asset Valuation Reserve (AVR) and the Interest Maintenance
Reserve (IMR). The AVR is intended to stabilize surplus against market
fluctuations in the value of equities and credit related declines in the value
of bonds. Changes in the AVR are recorded directly to unassigned surplus. The
IMR captures net after-tax realized capital gains which result from changes in
the overall level of interest rates for fixed income investments and amortizes
these net capital gains into income over the remaining stated life of the
investments sold. The Company uses the group method of calculating the IMR,
consistent with prior years. Any net negative IMR amounts are treated as a
non-admitted asset.
Contract and Policy Reserves: Fixed deferred reserves represent the fund
balance left to accumulate at interest under fixed annuity contracts that were
offered directly by the Company, a fixed rate option that is offered to variable
annuity contractowners and a single premium deferred annuity that is offered by
the Company. The Company no longer offers the fixed annuity contracts.
The estimated fair value of contractholder account balances within the
fixed deferred reserves has been determined to be equivalent to carrying value
as the current offering and renewal rates are set in response to current market
conditions and are only guaranteed for one year.
The interest rate credited on fixed annuity contracts included in fixed
deferred reserves for 1998 was 5.75%. The interest rate credited on the fixed
rate option that is offered to certain variable annuity contractowners ranged
from 5.25% to 5.50% during 1998. For the fixed rate option currently issued, the
issue and renewal interest rates credited vary from month to month and ranged
from 5.00% to 5.40% in 1998. For single premium deferred annuities the rates
ranged from 5.00% to 6.00% in 1998. Fixed immediate reserves are a liability
within the general account for those annuitants that have elected a fixed
annuity payout option. The immediate contract reserve is computed using the 1971
IAM Table and the 1983 IAM Table and a 4% discount rate.
B-16
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
The loan collateral fund reserve is the cash value of loaned variable life
policyowner account values. The reserve is credited with interest at 4% per
annum for single premium variable life policyowners, 6.5% for annual pay
variable life and group universal life policyowners and 7% for other variable
life policyowners.
Non-admitted Assets: Certain assets designated as "non-admitted assets" in
accordance with rules and regulations of the Department of Insurance of the
State of Delaware are charged directly to unassigned surplus. At December 31,
1998 and 1997 non-admitted assets consisted of agents' balances and
miscellaneous receivables in the amounts of $24,493 and $82,380, respectively.
Acquisition Costs: Commissions and other costs incurred in acquiring new
business are charged to operations as incurred.
Premiums and Other Revenues: Premiums and annuity considerations are
recognized for funds received on variable life insurance and annuity products.
Corresponding transfers to/from separate accounts are included in the expenses.
Revenue also includes service fees from the separate accounts consisting
of mortality and expense charges, annual administration fees, charges for the
cost of term insurance related to variable life policies and penalties for early
withdrawals. Services fees were not charged on separate account assets of
$239,935,035 and $162,522,811 at December 31, 1998 and 1997, respectively, which
represent investments in The Guardian's employee benefit plans.
Federal Income Taxes: The provision for federal income taxes is based on
income from operations currently taxable, as well as accrued market discount on
bonds. Realized gains and losses are reported after adjustment for the
applicable federal income taxes. The taxable portion of unrealized appreciation
of the Company's separate account investments is included in operations for 1997
and 1996.
Other: Certain reclassifications have been made in the amounts presented
for prior periods to conform those periods to the 1998 presentation.
NOTE 3 -- FEDERAL INCOME TAXES
The Company's federal income tax return is consolidated with its parent,
The Guardian. The consolidated income tax liability is allocated among the
members of the group according to a tax sharing agreement. In accordance with
the tax sharing agreement between and among the parent and participating
subsidiaries, each member of the group computes its tax provision and liability
on a separate return basis, but may, where applicable, recognize benefits of net
operating losses and capital losses utilized in the consolidated group.
Estimated payments are made between the members of the group during the year.
A reconciliation of federal income tax expense, based on the prevailing
corporate income tax rate of 35% for 1998, 1997 and 1996 to the federal income
tax expense reflected in the accompanying financial statements is as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income tax at prevailing corporate income tax rates
applied to pretax statutory income ............. $ 19,205,980 $ 13,873,514 $ 8,270,274
Add (deduct) tax effect of:
Adjustment for annuity and other reserves ...... (669,996) (291,470) (1,478,476)
DAC Tax ........................................ 1,179,820 1,712,811 867,731
Dividend from subsidiary ....................... (4,900,000) (3,500,000) (3,325,000)
Other -- net ................................... (310,282) 278,645 (393,069)
------------ ------------ ------------
Federal income taxes .............................. $ 14,505,522 $ 12,073,500 $ 3,941,460
============ ============ ============
</TABLE>
The provision for federal income taxes includes deferred taxes in 1998,
1997 and 1996 of $140,153, $181,145 and $353,051, respectively, applicable to
the difference between the tax basis and the financial statement basis of
recording investment income relating to accrued market discount.
B-17
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
NOTE 4 -- INVESTMENTS
The major categories of net investment income are summarized as follows:
For the years ended December 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
Fixed maturities ................ $33,923,167 $31,806,228 $28,234,145
Affiliated money market funds ... 376,734 524,277 121,733
Subsidiary ...................... 14,000,000 10,000,000 9,500,000
Policy loans .................... 3,489,135 3,386,194 3,089,114
Short-term investments .......... 2,320,305 2,280,599 1,204,805
Joint venture dividend .......... 1,254,010 1,047,525 623,160
Other ........................... 58,069 59,779 55,301
----------- ----------- -----------
55,421,420 49,104,602 42,828,258
Less: Investment expenses ....... 1,185,948 1,110,848 461,356
----------- ----------- -----------
Net investment income ........... $54,235,472 $47,993,754 $42,366,902
=========== =========== ===========
Gross realized gains and losses, less applicable federal income taxes and
transfer to IMR, are summarized as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Realized gains from dispositions:
U.S. Government bonds ........................ $ 1,195,870 $ 722,440 $ 1,014,811
Corporate debt securities .................... 997,008 413,022 1,014,562
Common stocks ................................ -- 174 --
Seed investment redeemed ..................... -- -- --
Foreign exchange ............................. 13,301 2,791 11,599
Realized losses from dispositions:
U.S. Government bonds ........................ 65,414 744,168 181,025
Corporate debt securities .................... 39,431 399,618 617,325
Foreign exchange ............................. 10,413 5,773 --
Short term investments ....................... -- 1,218 191
----------- ----------- -----------
Net realized capital gains (losses) .......... 2,090,921 (12,350) 1,242,431
----------- ----------- -----------
Federal income tax expense (benefit):
Current ...................................... 889,995 (269,216) 829,609
Deferred ..................................... (248,651) (209,059) (394,759)
----------- ----------- -----------
Total federal income tax expense (benefit) ... 641,344 (478,275) 434,850
----------- ----------- -----------
Transfer to IMR ................................. 1,357,222 (6,202) 800,041
----------- ----------- -----------
Net realized gains (losses) ..................... $ 92,355 $ 472,127 $ 7,540
=========== =========== ===========
</TABLE>
The market values of bonds are based on quoted prices as available. For
certain private placement debt securities where quoted market prices are not
available, fair value is estimated by management using adjusted market prices
for like securities.
B-18
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
The cost and estimated market values of investments by major investment
category at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Treasury securities & obligations
of U.S. government corporations
and agencies ............................. $ 28,358,300 $ 1,523,421 $ 16,958 $ 29,864,763
Obligations of states and political
subdivisions ............................. 60,246,691 1,424,844 3,176 61,668,359
Debt securities issued by foreign
governments .............................. 7,997,622 91,952 27,557 8,062,017
Corporate debt securities ................... 439,952,307 10,035,537 2,531,389 447,456,455
Common stock of subsidiary .................. 9,698,292 7,217,706 -- 16,915,998
Affiliated mutual funds ..................... 23,656,682 5,440,048 -- 29,096,730
------------ ------------ ------------ ------------
$569,909,894 $ 25,733,508 $ 2,579,080 $593,064,322
============ ============ ============ ============
<CAPTION>
December 31, 1997
---------------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Treasury securities & obligations
of U.S. government corporations
and agencies ............................. $ 65,358,213 $ 1,550,649 $ 16,198 $ 66,892,664
Obligations of states and political
subdivisions ............................. 71,909,687 795,387 41,850 72,663,224
Debt securities issued by foreign
governments .............................. 7,062,711 -- 115,745 6,946,966
Corporate debt securities ................... 340,417,221 6,143,061 1,010,829 345,549,453
Common stock of subsidiary .................. 9,398,292 2,674,851 -- 12,073,143
Affiliated mutual funds ..................... 23,279,949 7,271,237 -- 30,551,186
------------ ------------ ------------ ------------
$517,426,073 $ 18,435,185 $ 1,184,622 $534,676,636
============ ============ ============ ============
</TABLE>
B-19
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
The amortized cost and estimated market value of debt securities at
December 31, 1998 and 1997, by contractual maturity, is shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations.
<TABLE>
<CAPTION>
As of December 31, 1998
---------------------------
Estimated
Amortized Market
Cost Value
------------ ------------
<S> <C> <C>
Due in one year or less ................................ $ 45,493,721 $ 45,752,348
Due after one year through five years .................. 249,871,238 253,196,904
Due after five years through ten years ................. 102,513,130 107,752,117
Due after ten years .................................... 67,626,976 68,332,574
------------ ------------
465,505,065 475,033,943
Sinking fund bonds
(including collateralized mortgage obligations) .. 71,049,855 72,017,651
------------ ------------
$536,554,920 $547,051,594
============ ============
<CAPTION>
As of December 31, 1998
---------------------------
Estimated
Amortized Market
Cost Value
------------ ------------
<S> <C> <C>
Due in one year or less ................................ $ 59,694,316 $ 59,737,770
Due after one year through five years .................. 234,805,896 236,867,373
Due after five years through ten years ................. 103,002,869 106,604,446
Due after ten years .................................... 21,552,124 22,383,887
------------ ------------
419,055,205 425,593,476
Sinking fund bonds
(including collateralized mortgage obligations) .. 65,692,627 66,458,831
------------ ------------
$484,747,832 $492,052,307
============ ============
</TABLE>
B-20
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
NOTE 5 -- REINSURANCE CEDED
The Company enters into coinsurance, modified coinsurance and yearly
renewable term agreements with affiliated companies and outside parties to
provide for reinsurance of selected variable annuity contracts and group life
and individual life policies. Under the terms of the modified coinsurance
agreements, reserves related to the reinsurance business and corresponding
assets are held by the Company. Accordingly, policy reserves include
$125,849,752 and $76,669,184 at December 31, 1998 and 1997, respectively,
applicable to policies reinsured under modified coinsurance agreements. The
reinsurance contracts do not relieve the Company of its primary obligation for
policyowner benefits. Failure of reinsurers to honor their obligations could
result in losses to the Company.
The effect of these agreements on the components of the Company's gain
from operations in the accompanying statements of operations are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Premiums and deposits ...................... $(65,505,954) $(43,873,731) $(83,250,212)
Net investment income ...................... -- -- (61,779)
Commission and expense allowances .......... 34,449,189 7,885,341 14,508,839
Reserve adjustments ........................ 29,942,869 16,268,128 30,636,445
Other income ............................... 2,447,454 1,875,163 (25,000)
------------ ------------ ------------
Revenues ................................. 1,333,558 (17,845,099) (38,191,707)
Policyholder benefits ...................... (7,606,157) (10,975,075) (26,873,945)
Increase in aggregate reserves ............. (35,020) 22,859,719 (5,658,260)
Reinsurance terminations ................... -- (27,421,066) (15,470,015)
General expenses and other taxes ........... (337,215) (40,452) (81,667)
------------ ------------ ------------
Deductions ............................... (7,978,392) (15,576,874) (48,083,887)
------------ ------------ ------------
Net income (loss) from reinsurance ceded ... $ 9,311,950 $ (2,268,225) $ 9,892,180
============ ============ ============
</TABLE>
B-21
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
NOTE 6 -- REINSURANCE ASSUMED
The Company has entered into various coinsurance agreements with
non-affiliated and affiliated companies. The Company assumes certain life and
disability income policies.
The effect of these agreements on the components of the Company's gain
from operations in the accompanying statements of operations are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Premiums and deposits ....................... $ 1,336,343 $ (389,221) $ 41,133,358
Net investment income ....................... 45,349 45,288 94,657
Other income ................................ -- (62,752) 375,404
------------ ------------ ------------
Revenues .................................. 1,381,692 (406,685) 41,603,419
Policyholder benefits ....................... 3,022,842 3,967,619 8,076,053
Increase in aggregate reserves .............. (1,387,716) (31,677,857) 31,556,908
Reinsurance expenses ........................ -- 27,603,602 (452,476)
Other expenses .............................. 382,249 1,885,300 551,319
------------ ------------ ------------
Deductions ................................ 2,017,375 1,778,664 39,731,804
------------ ------------ ------------
Net (loss) income from reinsurance assumed .. $ (635,683) $ (2,185,349) $ 1,871,615
============ ============ ============
</TABLE>
NOTE 7 -- RELATED PARTY TRANSACTIONS
Registered representatives of the Guardian Investor Services Corporation
produce a major portion of the Company's business. During 1998, 1997 and 1996,
premium and annuity considerations produced by GISC amounted to $554,895,420,
$564,519,265 and $528,353,595, respectively. The related commissions paid to
GISC amounted to $1,946,477, $1,979,926 and $1,851,468 for 1998, 1997 and 1996,
respectively.
The Company is billed by The Guardian for all compensation and related
employee benefits for those employees of The Guardian who are engaged in the
Company's business and for the Company's use of The Guardian's centralized
services and agency force. The amounts charged for these services amounted to
$83,611,701 in 1998, $60,009,449 in 1997 and $41,129,644 in 1996, and, in the
opinion of management, were considered appropriate for the services rendered.
The company had an investment in the Guardian Real Estate Account (GREA),
which was established in 1987 under Delaware insurance law as an insurance
company separate account. GIAC had contributed capital to GREA since it was
established to provide for funds and to preserve liquidity. Effective December
19, 1997, GREA was liquidated and, as a result, $6,746,290 was returned to GIAC
in the form of capital and there was a realized gain recorded of $969,045
included in the net gain from operations of separate accounts.
A significant portion of the Company's separate account assets is invested
in affiliated mutual funds. Each of these funds has an investment advisory
agreement with GISC, except for The Baillie Gifford International Fund, The
Baillie Gifford Emerging Markets Fund, The Guardian Baillie Gifford
International Fund and The Guardian Baillie Gifford Emerging Markets Fund. The
investments as of December 31, 1998 and 1997 are as follows:
B-22
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
The Guardian Park Avenue Fund ....................... $ 511,588,454 $ 371,662,107
The Guardian Stock Fund ............................. 3,664,861,157 3,222,051,866
The Guardian Small Cap Stock Fund ................... 109,166,077 60,104,422
The Guardian Park Avenue Small Cap Fund ............. 13,183,737 --
The Guardian Bond Fund .............................. 381,492,004 355,417,535
The Baillie Gifford International Fund .............. 526,434,528 442,651,457
The Baillie Gifford Emerging Markets Fund ........... 34,599,571 65,038,546
The Guardian Baillie Gifford International Fund ..... 9,066,433 3,378,730
The Guardian Baillie Gifford Emerging Markets Fund .. 817,757 --
The Guardian Asset Allocation Fund .................. 39,803,636 14,910,420
The Guardian Investment Quality Bond Fund ........... 9,350,331 1,546,854
The Guardian Cash Management Fund ................... 57,953,144 22,250,501
The Guardian Cash Fund .............................. 419,482,654 368,122,449
-------------- --------------
$5,777,799,483 $4,927,134,887
============== ==============
</TABLE>
The Company, in agreement with Baillie Gifford Overseas Ltd., has a joint
venture company -- Guardian Baillie Gifford Ltd. (GBG) -- that is organized as a
corporation in Scotland. GBG is registered in both the United Kingdom and the
United States to act as an investment advisor for the Baillie Gifford
International Fund (BGIF), the Baillie Gifford Emerging Markets Fund (BGEMF),
The Guardian Baillie Gifford International Fund (GBGIF) and The Guardian Baillie
Gifford Emerging Markets Fund (GBGEMF). The Funds are offered in the U.S. as
investment options under certain variable annuity contracts and variable life
policies.
The Company maintains an investment in an affiliated money market mutual
fund, The Guardian Cash Management Fund. At December 31, 1998 and 1997 this
amounted to $3,025,669 and $2,888,149, respectively. The Company also maintains
an investment in an affiliated small cap stock mutual fund, The Guardian Small
Cap Stock Fund. At December 31, 1998 and 1997 this amounted to $26,071,061 and
$27,663,037, respectively.
NOTE 8 -- SEPARATE ACCOUNTS
The following represents a reconciliation of net transfers from GIAC to
the separate accounts. Transfers are reported in the Summary of Operations of
the Separate Account Annual Statement:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Transfers to separate accounts ........................ $ 1,358,239,902 $ 1,054,380,697 $ 767,741,428
Transfers from separate accounts ...................... (1,168,640,854) (782,891,638) (518,683,141)
--------------- --------------- ---------------
Net transfers to separate accounts .................. 189,599,048 271,489,059 249,058,287
--------------- --------------- ---------------
Reconciling Adjustments:
Mortality & expense guarantees -- variable annuity .... 85,937,882 70,027,514 53,219,656
Mortality & expense guarantees -- variable life ....... 2,387,487 2,021,656 1,687,711
Administrative fees -- variable annuity ............... 4,703,565 4,095,230 3,867,120
Cost of insurance -- variable life .................... 16,844,679 11,205,120 4,844,028
--------------- --------------- ---------------
Total adjustments ................................... 109,873,613 87,349,520 63,618,515
--------------- --------------- ---------------
Transfers as reported in the Statement of
Operations of GIAC .................................. $ 299,472,661 $ 358,838,579 $ 312,676,802
=============== =============== ===============
</TABLE>
B-23
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
NOTE 9 -- ANNUITY ACTUARIAL RESERVES AND DEPOSIT LIABILITIES
The following describes withdrawal characteristics of annuity actuarial
reserves and deposit liabilities:
<TABLE>
<CAPTION>
For the Year Ending 1998 For the Year Ending 1997
------------------------ ------------------------
Amount % Amount %
------------ ------ ------------ ------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal
with market value adjustment ....... $ 52,174,391 10.91% $ 46,276,766 10.19%
------------ ------ ------------ ------
total with adjustment or at
market value ..................... 52,174,391 10.91 46,276,766 10.19
at book value without adjustment
(minimal or no charge or
adjustment) ...................... 312,963,860 65.44 313,725,462 69.05
Not subject to discretionary
withdrawal ......................... 113,088,817 23.65 94,338,339 20.76
------------ ------ ------------ ------
Total (gross) ........................ 478,227,068 100.00 454,340,567 100.00
Reinsurance ceded .................... -- -- -- --
------------ ------ ------------ ------
Total ................................ $478,227,068 100.00% $454,340,567 100.00%
============ ====== ============ ======
</TABLE>
This does not include $8,132,854,608 and $6,647,606,347 of non-guaranteed
annuity reserves held in separate accounts, and $2,618,241 and $3,572,284 at
December 31, 1998 and 1997, respectively, in annuity reserves being held as a
loan collateral fund for loans on certain annuity contracts.
NOTE 10 -- STATUTORY FINANCIAL INFORMATION
The following reconciles the statutory net income of the Company as
reported to the regulatory authorities to consolidated GAAP net income:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Statutory net income ........................... $ 40,461,030 $ 28,037,239 $ 19,695,432
Adjustments to restate to the basis of GAAP:
Net income of subsidiaries ................... 4,542,855 4,326,500 142,201
Change in deferred policy acquisition costs .. 43,181,782 41,883,919 42,525,493
Deferred premiums ............................ (1,497,411) (5,542,795) 3,238,115
Re-estimation of future policy benefits ...... (9,649,126) (3,353,249) 26,953,558
Reinsurance .................................. 4,088,420 12,372,471 (36,353,822)
Deferred federal income tax expense .......... (11,950,565) (16,212,244) (13,074,280)
Elimination of interest maintenance reserve .. (266,599) (111,783) (333,219)
Other, net ................................... 427,287 201,840 (2,444,872)
------------ ------------ ------------
Consolidated GAAP net income ................... $ 69,337,673 $ 61,601,898 $ 40,348,606
============ ============ ============
</TABLE>
B-24
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
December 31, 1998
The following reconciles the statutory capital and surplus of the Company
as reported to the regulatory authorities to consolidated GAAP stockholder's
equity:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Statutory capital and surplus .................... $ 227,387,038 $ 182,704,232 $ 153,780,908
Add (deduct) cumulative effect of adjustments:
Deferred policy acquisition costs ............. 313,617,745 267,369,685 221,475,216
Elimination of asset valuation reserve ........ 29,566,970 26,305,528 15,121,269
Re-estimation of future policy benefits ....... 46,905,628 41,283,947 31,167,840
Establishment of deferred federal income tax .. (98,820,880) (84,703,745) (65,164,526)
Unrealized gains on investments ............... 11,711,227 7,852,564 2,313,203
Other liabilities ............................. (48,126,550) (33,486,652) (32,389,767)
Deferred premiums ............................. (7,848,934) (7,024,891) (1,482,096)
Other, net .................................... (5,026,655) (3,468,519) (2,215,098)
------------- ------------- -------------
Consolidated GAAP stockholder's equity ...... $ 469,365,589 $ 396,832,149 $ 322,606,949
============= ============= =============
</TABLE>
B-25
<PAGE>
The Guardian Separate Account D
(Individual)
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements have been incorporated by reference
or are included in Part B:
(1) The Guardian Separate Account D (incorporated by reference into
Part B):
Statement of Assets and Liabilities as of December 31, 1998
Statement of Operations for the Year Ended December 31, 1998
Statements of Changes in Net Assets for the Two Years Ended
December 31, 1998 and 1997
Notes to Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(2) The Guardian Insurance & Annuity Company, Inc. (included in Part
B):
Statutory Basis Balance Sheets as of December 31, 1998 and 1997
Statutory Basis Statements of Operations for the Three Years
Ended December 31, 1998, 1997 and 1996
Statutory Basis Statements of Changes in Common Stock and Surplus
for the Three Years Ended December 31, 1998, 1997 and 1996
Statutory Basis Statements of Cash Flow for the Three Years Ended
December 31, 1998, 1997 and 1996
Notes to Statutory Basis Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(b) Exhibits
Number Description
------ -----------
1 Resolutions of the Board of Directors of The Guardian
Insurance & Annuity Company, Inc. establishing Separate
Account D (1)
2 Not Applicable
3 Underwriting and Distribution Contracts:
(a) Distribution and Service Agreement between The
Guardian Insurance & Annuity Company, Inc. and
Guardian Investor Services Corporation, as
amended (1)
(b) Form of Broker-Dealer Supervisory and Service
Agreement (1)
4 Specimen of Variable Annuity Contract (1)
5 Form of Application for Variable Annuity Contract
6 (a) Certificate of Incorporation of The Guardian
Insurance & Annuity Company, Inc. (1)
(b) By-laws of The Guardian Insurance & Annuity Company,
Inc. (1)
7 Automatic Indemnity Reinsurance Agreement between The
Guardian Insurance & Annuity Company, Inc. and The
Guardian Life Insurance Company of America, as
amended (1)
<PAGE>
8 Amended and Restated Agreement for Services and
Reimbursement Therefore, between The Guardian Life
Insurance Company of America and The Guardian Insurance
& Annuity Company, Inc. (1)
9 Opinion and Consent of Counsel (1)
10 Consent of PricewaterhouseCoopers LLP
11 Not Applicable
12 Not Applicable
13 Powers of Attorney executed by a majority of the Board
of Directors and principal officers of The Guardian
Insurance & Annuity Company, Inc. (1)
1. Incorporated by reference to the Registration Statement on Form N-4 (Reg.
33-31755), as previously filed on April 24, 1998.
C-2
<PAGE>
Item 25. Directors and Officers of the Depositor
The following is a list of directors and officers of The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), the depositor of the
Registrant. The principal business address of each director and officer is
201 Park Avenue South, New York, New York 10003.
Name
Positions with GIAC
- -------------------
Joseph D. Sargent President, Chief Executive Officer & Director
John M. Smith Executive Vice President & Director
Edward K. Kane Executive Vice President & Director
Frank J. Jones Executive Vice President, Chief Investment Officer
& Director
Philip H. Dutter Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
William C. Warren Director
Thomas G. Sorrell Vice President
Howard G. Most Vice President
Robert J. Crimmins Vice President
Charles G. Fisher Vice President & Actuary
Ryan W. Johnson Vice President, Equity Sales
Eileen McDonnell Vice President, Group Pensions
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Donald P. Sullivan, Jr. Vice President
Joseph A. Caruso Vice President & Secretary
Earl Harry Treasurer
Ann T. Kearney Second Vice President
Alexander M. Grant, Jr. Second Vice President
Paul Iannelli Second Vice President
Peggy L. Coppola Second Vice President
C-3
<PAGE>
Item 26. Persons Controlled by or under Common Control with Registrant
The following list sets forth the persons directly controlled by The Guardian
Life Insurance Company of America ("Guardian Life") as of Febraury 28, 1999:
<TABLE>
<CAPTION>
100% Percentage of
State of Incorporation Voting Securities
Name of Entity or Organization Owned
------------ ------------------ -------------
<S> <C> <C>
The Guardian Insurance & Delaware 100%
Annuity Company, Inc.
Guardian Asset Management Delaware 100%
Corporation
Park Avenue Life Insurance Delaware 100%
Company
Guardian Reinsurance Services Connecticut 100%
Inc.
Private Healthcare Systems, Inc. Delaware 48%
Managed Dental Care, Inc. California 100%
The Guardian Baillie Gifford
International Fund Massachusetts 22%
The Guardian Investment Quality Bond Fund Massachusetts 34%
Baillie Gifford International Fund Maryland 24%
Baillie Gifford Emerging Markets Fund Maryland 33%
The Guardian Tax-Exempt Bond Fund Massachusetts 89%
The Guardian Asset Allocation Fund Massachusetts 11%
The Guardian Park Avenue Small Cap Fund Massachusetts 19%
The Guardian Baillie Gifford Emerging
Markets Fund Massachusetts 76%
The Guardian High Yield Bond Fund Massachusetts 91%
The Guardian Small Cap Stock Fund Maryland 33%
</TABLE>
The following list sets forth the persons directly controlled by affiliates
of Guardian Life, and thereby indirectly controlled by Guardian Life, as of
February 28, 1999:
Approximate
Percentage of Voting
Securities Owned
Place of Incorporation by Guardian Life
Name of Entity or Organization Affiliates
------------ ------------------- --------------
Guardian Investor Services New York 100%
Corporation
Guardian Baillie Gifford Limited Scotland 51%
The Guardian Cash Fund, Inc. Maryland 100%
The Guardian Bond Fund, Inc. Maryland 100%
The Guardian Stock Fund, Inc. Maryland 100%
GIAC Funds, Inc. Maryland 100%
Park Avenue Securities LLC Delaware 100%
The Guardian Park Avenue Fund Massachusetts 16%
Item 27. Number of Contractowners
Type of Contract Number as of April 1, 1999
---------------- --------------------------
Individual (Non-Qualified) 29,337
Individual (Qualified) 50,958
Group (Qualified) 726
81,021
Total
C-4
<PAGE>
Item 28. Indemnification
Reference is made to Article VIII of GIAC's By-Laws, as supplemented by
Section 3.2 of the Certificate of Incorporation of GIAC, filed as Exhibits 6(b)
and 6(a), respectively, to this Registration Statement and incorporated herein
by reference.
Item 29. Principal Underwriters
(a) Guardian Investor Services Corporation ("GISC") is the principal
underwriter of the Registrant's variable annuity contracts and it is also the
principal underwriter of shares of The Guardian Bond Fund, Inc.; The Guardian
Stock Fund, Inc.; The Guardian Cash Fund, Inc.; The Park Avenue Portfolio, a
series trust consisting of the following ten series: The Guardian Cash
Management Fund, The Guardian Park Avenue Fund, The Guardian Park Avenue Small
Cap Fund, The Guardian Park Avenue Tax-Efficient Fund, The Guardian Investment
Quality Bond Fund, The Guardian High Yield Bond Fund, The Guardian Tax-Exempt
Fund, The Guardian Asset Allocation Fund, The Guardian Baillie Gifford
International Fund and The Guardian Baillie Gifford Emerging Markets Fund., and
GIAC Funds, Inc. (formerly, GBG Funds, Inc.) a series fund consisting of Baillie
Gifford International Fund, Baillie Gifford Emerging Markets Fund and The
Guardian Small Cap Stock Fund. All of the aforementioned funds and the series
trust are registered with the SEC as open-end management investment companies
under the Investment Company Act of 1940, as amended ("1940 Act"). In addition,
GISC is the distributor of variable annuity and variable life insurance
contracts currently offered by GIAC through its separate accounts, The
Guardian/Value Line Separate Account, The Guardian Separate Account A, The
Guardian Separate Account B, The Guardian Separate Account C, The Guardian
Separate Account D, The Guardian Separate Account E, The Guardian Separate
Account K and The Guardian Separate Account M, which are all registered as unit
investment trusts under the 1940 Act.
(b) The following is a list of directors and officers of GISC. The
principal business address of each person is 201 Park Avenue South, New York,
New York 10003.
Name Position(s) with GISC
---- ---------------------
John M. Smith President & Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
Philip H. Dutter Director
Joseph D. Sargent Director
William C. Warren Director
Frank J. Jones Director
Ryan W. Johnson Senior Vice President & National Sales
Director
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Donald P. Sullivan, Jr. Vice President
C-5
<PAGE>
Name Position(s) with GISC
---- ---------------------
Alexander M. Grant, Jr. Second Vice President
Ann T. Kearney Second Vice President
Peggy L. Coppola Second Vice President
Earl C. Harry Treasurer
Joseph A. Caruso Vice President & Secretary
Item 30. Location of Accounts and Records
Most of the Registrant's accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained by GIAC, the depositor, at its Customer Service Office, 3900
Burgess Place, Bethlehem, Pennsylvania 18017. Documents constituting the
Registrant's corporate records are also maintained by GIAC but are located at
its Executive Office, 7 Hanover Square, New York, New York 10004.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant hereby undertakes to include, 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.
(b) The Depositor, GIAC, hereby undertakes and represents that the fees and
charges deducted under the contract, in the aggregate are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the risks
assumed by GIAC.
C-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, The Guardian Separate Account D certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on the 30th day of
April, 1999.
The Guardian Separate Account D
(Registrant)
By: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
(Depositor)
By: /s/ John M. Smith
--------------------------------
John M. Smith
Executive Vice President
C-7
<PAGE>
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following directors and principal officers of The Guardian
Insurance & Annuity Company, Inc. in the capacities and on the date indicated.
s/JOSEPH D. SARGENT * President, Chief Executive
- ------------------------------ Officer and Director
Joseph D. Sargent
(Principal Executive Officer)
s/FRANK J. JONES* Executive Vice President, Chief
- ------------------------------ Investment Officer and Director
Frank J. Jones
(Principal Financial Officer)
s/FRANK L. PEPE* Vice President and Controller
- ------------------------------
Frank L. Pepe
(Principal Accounting Officer)
s/JOHN M. SMITH Executive Vice President
- ------------------------------ and Director
John M. Smith
s/ARTHUR D. FERRARA * Director
- ------------------------------
Arthur D. Ferrara
s/WILLIAM C. WARREN* Director
- ------------------------------
William C. Warren
s/EDWARD K. KANE* Executive Vice President
- ------------------------------ and Director
Edward K. Kane
s/LEO R. FUTIA* Director
- ------------------------------
Leo R. Futia
s/PHILIP H. DUTTER* Director
- ------------------------------
Philip H. Dutter
s/PETER L. HUTCHINGS*
- ------------------------------ Director
Peter L. Hutchings
By /s/ JOHN M. SMITH Date: April 30, 1999
--------------------------------
John M. Smith
Executive Vice President
* Pursuant to a Power of Attorney
C-8
<PAGE>
Exhibit Index
Number Description
- ------ -----------
10(a) Consent of PricewaterhouseCoopers LLP
C-9
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
amendment No. 11 to the registration statement on Form N-4 (the "Registration
Statement") of our report dated February 25, 1999, relating to the financial
statements appearing in the December 31, 1998 Annual Report to Contractowners of
The Guardian Separate Account D, which are also incorporated by reference into
the Registration Statement. We also consent to the use in the Statement of
Additional Information of our report dated February 25, 1999, relating to the
statutory basis financial statements of The Guardian Insurance & Annuity
Company, Inc., which appears in such Statement of Additional Information, and to
the incorporation by reference of our report into the Prospectus. We also
consent to the references to us under the heading "Summary Financial Information
about the Separate Account" in the Prospectus and under the heading "Experts" in
the Statement of Additional Information. However, it should be noted that
PricewaterhouseCoopers LLP has not prepared or certified such "Summary Financial
Information about the Separate Account."
PricewaterhouseCoopers LLP
New York, NY
April 26, 1999
