<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 33-93482
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 1
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
NATIONWIDE VA SEPARATE ACCOUNT-B
(Exact Name of Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
================================================================================
The Registrant elects to register an indefinite number of securities in
accordance with Rule 24f-2 under the Investment Company Act of 1940. Pursuant to
Paragraph (a)(3) thereof, a non-refundable fee in the amount of $500 accompanies
this registration.
Approximate date of proposed public offering: (Upon the effective date of
this Registration Statement).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance to Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
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NATIONWIDE LIFE AND ANNUITY VA SEPARATE ACCOUNT-B
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover page................................................................................ 3
Item 2. Definitions............................................................................... 4
Item 3. Synopsis or Highlights.................................................................... 9
Item 4. Condensed Financial Information........................................................... N/A
Item 5. General Description of Registrant, Depositor, and Portfolio Companies..................... 10
Item 6. Deductions and Expenses................................................................... 11
Item 7. General Description of Variable Annuity Contracts......................................... 11
Item 8. Annuity Period............................................................................ 13
Item 9. Death Benefit and Distributions........................................................... 14
Item 10. Purchases and Contract Value.............................................................. 16
Item 11. Redemptions............................................................................... 18
Item 12. Taxes..................................................................................... 18
Item 13. Legal Proceedings......................................................................... 20
Item 14. Table of Contents of the Statement of Additional Information.............................. 20
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page................................................................................ 25
Item 16. Table of Contents......................................................................... 25
Item 17. General Information and History........................................................... 25
Item 18. Services.................................................................................. 25
Item 19. Purchase of Securities Being Offered...................................................... 25
Item 20. Underwriters.............................................................................. 25
Item 21. Calculation of Performance Information.................................................... 25
Item 22. Annuity Payments.......................................................................... 26
Item 23. Financial Statements...................................................................... 27
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits......................................................... 28
Item 25. Directors and Officers of the Depositor................................................... 47
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant............ 49
Item 27. Number of Contract Owners................................................................. 62
Item 28. Indemnification........................................................................... 62
Item 29. Principal Underwriter..................................................................... 62
Item 30. Location of Accounts and Records.......................................................... 65
Item 31. Management Services....................................................................... 65
Item 32. Undertakings.............................................................................. 65
</TABLE>
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Home Office
P.O. Box 16609
Columbus, Ohio 43216-6609, 1-800-848-6331
TDD 1-800-238-3035
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE VA SEPARATE ACCOUNT-B
OF NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
The Individual Deferred Variable Annuity Contracts described in this
Prospectus are flexible purchase payment contracts (collectively referred to as
the "Contracts"). Reference throughout the prospectus to the Contracts shall
also mean certificates issued under Group Flexible Fund Retirement Contracts.
The Contracts, by themselves, do not qualify for tax-deferral under federal tax
rules governing Non-Qualified Annuities and Individual Retirement Annuities. The
Contracts are, however, issued to custodians of Individual Retirement Accounts
("IRAs") for the benefit of individual IRA account holders. Annuity payments
under the Contracts are deferred until a selected later date.
Purchase payments are allocated to the Nationwide VA Separate Account-B
("Variable Account"), a separate account of Nationwide Life and Annuity
Insurance Company (the "Company"). The Variable Account uses its assets to
purchase shares at net asset value in one or more of the following series of the
underlying Mutual Fund options:
<TABLE>
<S> <C>
- -Delchester Fund-Institutional Class -Nationwide(R) Money Market Fund
- -Dreyfus A Bonds Plus, Inc. -Neuberger & Berman Guardian Fund, Inc.
- -The Dreyfus Third Century Fund, Inc. -Neuberger & Berman Limited Maturity Bond
- -The Evergreen Total Return Fund Fund
- -Fidelity Asset Manager(TM) -Neuberger & Berman Partners Fund, Inc.
- -Fidelity Equity-Income Fund -Oppenheimer Global Fund
- -Fidelity Magellan(R) Fund -Peoples Index Fund, Inc.
- -Fidelity Puritan Fund -Phoenix Balanced Fund Series
- -Janus Twenty Fund -Strong Total Return Fund, Inc.
- -MFS(R) World Governments Fund -Templeton Foreign Fund
- -Nationwide(R) Bond Fund -Twentieth Century Growth Investors
- -Nationwide(R) Fund -Twentieth Century International Equity Fund
- -Nationwide(R) Growth Fund -Twentieth Century Ultra Investors
-Twentieth Century U.S. Governments Short-
Term
</TABLE>
This Prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by the
Nationwide VA Separate Account-B before investing. You should read it and keep
it for future reference. A Statement of Additional Information dated December
1, 1995 containing further information about the Contracts and the Nationwide
VA Separate Account-B has been filed with the Securities and Exchange
Commission. You can obtain a copy without charge from Nationwide Life and
Annuity Insurance Company by calling the number listed above, or writing P.O.
Box 16609, Columbus, Ohio 43216-6609.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 1, 1995, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION APPEARS ON PAGE 18 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS DECEMBER 1, 1995.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNUITANT- The person designated to receive annuity payments during
Annuitization and upon whose life any annuity payments involving life
contingencies depends. This person must be age 85 or younger at the time of the
Contract issuance, unless the Company has approved a request for an Annuitant of
greater age. The Annuitant is the person who may exercise the right to change
the allocation of investment options or designations of the Beneficiary,
Contingent Beneficiary, the Annuity Payment Option, or the Annuitization Date.
ANNUITIZATION DATE- The date on which annuity payments actually commence.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence, as originally shown on the Contract Data Page of the Contract unless
changed by the Owner.
ANNUITY PAYMENT OPTION- The method for making annuity payments. Several options
are available under the Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person who may receive certain benefits
under the Contract upon the death of the Annuitant. The Beneficiary can be
changed by the Annuitant as set forth in the Contract.
CODE-The Internal Revenue Code of 1986, as amended.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner shall be an IRA custodian. All
contractual rights, however, are exercisable by the Annuitant.
CONTRACT VALUE- The Variable Account Contract Value.
CONTRACT YEAR- Each year commencing with the Date of Issue, and each Contract
Anniversary thereafter shall be a Contract Year.
DATE OF ISSUE- The date shown as the Date of Issue on the Contract Data Page of
the Contract.
DEATH BENEFIT- The benefit payable upon the death of the Annuitant prior to the
Annuitization Date. If the Annuitant dies after the Annuitization Date, any
benefit that may be payable shall be as specified in the Annuity Payment Option
elected.
DISTRIBUTION- A Distribution is any payment of part or all of the Contract
Value.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during the annuity payment period.
INDIVIDUAL RETIREMENT ACCOUNT- A custodial account which qualifies for federal
tax treatment under Section 408 of the Internal Revenue Code.
MUTUAL FUNDS (FUNDS) - The registered management investment companies, in which
the assets of the Sub-Accounts of the Variable Account will be invested.
QUALIFIED PLANS- Retirement Plans which receive favorable tax treatment under
the provisions of the Internal Revenue Code, including those described in
Section 401 and 403(a) of the Internal Revenue Code.
TAX SHELTERED ANNUITY- An annuity which qualifies for treatment under Section
403(b) of the Internal Revenue Code of 1986, as amended.
VALUATION DATE- Each day the New York Stock Exchange and the Company's home
office is open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- A separate investment account of the Company into which
Variable Account purchase payments are allocated.
VARIABLE ANNUITY- An annuity providing for payments which vary in amount with
the investment experience of the Variable Account.
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<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS....................................................... 2
SUMMARY OF CONTRACT EXPENSES.................................................... 4
SYNOPSIS........................................................................ 7
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY................................... 8
THE VARIABLE ACCOUNT............................................................ 8
Underlying Mutual Fund Options......................................... 8
Voting Rights.......................................................... 8
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS............... 9
Mortality Risk Charge.................................................. 9
Expense Risk Charge.................................................... 9
Administration Charge.................................................. 9
Premium Taxes.......................................................... 9
Expenses of Variable Account........................................... 9
Investments of the Variable Account.................................... 9
Right to Revoke........................................................ 10
Transfers.............................................................. 10
Beneficiary Provisions................................................. 10
Ownership Provisions................................................... 10
Substitution of Securities............................................. 10
Inquiries.............................................................. 11
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT......................................... 11
Value of an Annuity Unit............................................... 11
Assumed Investment Rate................................................ 11
Frequency and Amount of Annuity Payments............................... 11
Annuity Commencement Date.............................................. 11
Change in Annuity Commencement Date.................................... 11
Change in Form of Annuity.............................................. 12
Annuity Payment Options................................................ 12
Death Benefit at Death of Annuitant Prior to the Annuitization Date.... 12
Death Benefit After the Annuitization Date............................. 13
Required Distributions for IRAs........................................ 13
Generation-Skipping Transfers.......................................... 13
GENERAL INFORMATION............................................................. 13
Services............................................................... 13
Statements and Reports................................................. 14
Allocation of Purchase Payments and Contract Value..................... 14
Value of a Variable Account Accumulation Unit.......................... 15
Net Investment Factor.................................................. 15
Valuation of Assets.................................................... 15
Determining the Contract Value......................................... 15
Surrender (Redemption)................................................. 16
Taxes.................................................................. 16
IRAs................................................................... 16
Diversification........................................................ 17
Advertising............................................................ 17
LEGAL PROCEEDINGS............................................................... 18
TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION................... 18
APPENDIX A...................................................................... 19
APPENDIX B...................................................................... 20
</TABLE>
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<PAGE> 6
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge................................. 0 %
----
VARIABLE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charges....................................... 1.25 %
----
Administration Charge.................................................... 0.20 %
----
Total Variable Account Annual Expenses................................... 1.45 %
----
</TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(1)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Total Portfolio
Management Other Company
Fees Expenses Expenses
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DELCHESTER FUND-INSTITUTIONAL CLASS 0.58% 0.25% 0.83%
- -------------------------------------------------------------------------------------------------------------
DREYFUS A BONDS PLUS, INC. 0.65% 0.25% 0.90%
- -------------------------------------------------------------------------------------------------------------
THE DREYFUS THIRD CENTURY FUND, INC. 0.75% 0.42% 1.17%
- -------------------------------------------------------------------------------------------------------------
THE EVERGREEN TOTAL RETURN FUND 1.00% 0.18% 1.18%
- -------------------------------------------------------------------------------------------------------------
FIDELITY ASSET MANAGER 0.72% 0.32% 1.04%
- -------------------------------------------------------------------------------------------------------------
FIDELITY EQUITY-INCOME FUND 0.44% 0.25% 0.69%
- -------------------------------------------------------------------------------------------------------------
FIDELITY MAGELLAN(R) FUND 0.76% 0.23% 0.99%
- -------------------------------------------------------------------------------------------------------------
FIDELITY PURITAN FUND 0.53% 0.26% 0.79%
- -------------------------------------------------------------------------------------------------------------
JANUS TWENTY FUND 0.67% 0.35% 1.02%
- -------------------------------------------------------------------------------------------------------------
MFS(R) WORLD GOVERNMENTS FUND 0.90% 0.64% 1.54%
- -------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) BOND FUND 0.50% 0.21% 0.71%
- -------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) FUND 0.50% 0.13% 0.63%
- -------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) GROWTH FUND 0.50% 0.18% 0.68%
- -------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) MONEY MARKET 0.45% 0.20% 0.65%
- -------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN GUARDIAN FUND, INC. 0.62% 0.19% 0.81%
- -------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN LIMITED MATURITY BOND FUND 0.49% 0.21% 0.70%
- -------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN PARTNERS FUND, INC. 0.65% 0.16% 0.81%
- -------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL FUND 0.73% 0.49% 1.22%
- -------------------------------------------------------------------------------------------------------------
PEOPLES INDEX FUND(R), INC. 0.10% 0.54% 0.64%
- -------------------------------------------------------------------------------------------------------------
PHOENIX BALANCED FUND SERIES 0.53% 0.43% 0.96%
- -------------------------------------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND, INC. 0.81% 0.39% 1.20%
- -------------------------------------------------------------------------------------------------------------
TEMPLETON FOREIGN FUND 0.63% 0.51% 1.14%
- -------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY GROWTH INVESTORS 1.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY INTERNATIONAL EQUITY FUND 1.90% 0.00% 1.90%
- -------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY ULTRA INVESTORS 1.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY U.S. GOVERNMENTS SHORT TERM 1.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
1 The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against Variable Account assets or
reductions from Contract Values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net
asset value, which is the share price used to calculate the unit values of
the Variable Account.
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<PAGE> 7
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- --------------------------------------------------------------------------------------------------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delchester Fund-Inst'l 24 74 126 270 24 74 126 270 * 74 126 270
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 25 76 130 277 25 76 130 277 * 76 130 277
- --------------------------------------------------------------------------------------------------------------------------
The Dreyfus Third 28 84 144 305 28 84 144 305 * 84 144 305
Century Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
The Evergreen Total 28 85 144 306 28 85 144 306 * 85 144 306
Return Fund
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Asset 26 80 137 291 26 80 137 291 * 80 137 291
Manager(TM)
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income 22 69 119 255 22 69 119 255 * 69 119 255
Fund
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan Fund 26 79 135 286 26 79 135 286 * 79 135 286
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 24 72 124 265 24 72 124 265 * 70 120 257
- --------------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 26 80 136 289 26 80 136 289 * 80 136 289
- --------------------------------------------------------------------------------------------------------------------------
MFS(R) World 31 96 163 342 31 96 163 342 * 96 163 342
Governments Fund
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond 23 70 120 257 23 70 120 257 * 70 120 257
Fund
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 22 67 116 248 22 67 116 248 * 67 116 248
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 22 69 118 254 22 69 118 254 * 69 118 254
Fund
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 22 68 117 250 22 68 117 250 * 68 117 250
Market Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman 24 73 125 267 24 73 125 267 * 73 125 267
Guardian Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman 23 70 119 256 23 70 119 256 * 70 119 256
Limited Maturity Bond
Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman 24 73 125 267 24 73 125 267 * 73 125 267
Partners Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Global 28 86 146 310 28 86 146 310 * 86 146 310
Fund
- ---------------------------------------------------------------------------------------------------------------
Peoples Index Fund, 22 68 116 249 22 68 116 249 * 68 116 249
Inc.
- ---------------------------------------------------------------------------------------------------------------
Phoenix Balanced 25 78 133 283 25 78 133 283 * 78 133 283
Fund Series
- ---------------------------------------------------------------------------------------------------------------
Strong Total Return 28 85 145 308 28 85 145 308 * 85 145 308
Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------
Templeton Foreign 27 83 142 302 27 83 142 302 * 83 142 302
Fund
- ---------------------------------------------------------------------------------------------------------------
Twentieth C. Growth 26 79 135 287 26 79 135 287 * 79 135 287
Investors
- ---------------------------------------------------------------------------------------------------------------
Twentieth C. 35 107 181 376 35 107 181 376 * 107 181 376
International Equity
Fund
- ---------------------------------------------------------------------------------------------------------------
Twentieth C. U.S. 26 79 135 287 26 79 135 287 * 79 135 287
Governments Short-
Term
- ---------------------------------------------------------------------------------------------------------------
Twentieth C. Ultra 26 79 135 287 26 79 135 287 * 79 135 287
Investors
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* The Contracts sold under this Prospectus do not permit annuitizations during
the first two Contract years.
The purpose of the Summary of Contract Expenses and Example is to assist the
Annuitant in understanding the various costs and expenses that an Annuitant
will bear directly or indirectly. The expenses of the Nationwide Variable
Account as well as those of the underlying Mutual Funds are reflected in the
table. For more and complete descriptions of the expenses of the Nationwide
Variable Account, (see "Variable Account Charges, Purchase Payments, and Other
Deductions"). For more and complete information regarding expenses paid out of
the assets of a particular underlying Mutual Fund, see the underlying Mutual
Fund's prospectus. Deductions for premium taxes may also apply but are not
reflected in the Example shown above (see "Premium Taxes").
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<PAGE> 9
SYNOPSIS
The Company does not deduct a sales charge from purchase payments made
for these Contracts. Nor is any sales charge deducted upon the surrender of the
Contract.
The Company assesses an Administration Charge equal to an annual rate of
0.20% of the daily net asset value of the Variable Account. These charges are to
reimburse the Company for administrative expenses related to the issue and
maintenance of the Contracts. The Company does not expect to recover from these
charges an amount in excess of accumulated administrative expenses (see
"Administration Charge").
The Company deducts a Mortality Risk Charge equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of
0.45% of the daily net asset value of the Variable Account as compensation for
the Company's risk by undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").
The initial Purchase Payment must be at least $15,000 and subsequent
purchase payments at least $1000. The cumulative total of all purchase payments
under a Contract may not exceed $1,000,000 without the prior consent of the
Company (see "Allocation of Purchase Payments and Contract Value").
If the Contract Value at the Annuitization Date is less than $5,000, the
Contract Value may be distributed in one lump sum in lieu of annuity payments.
If any annuity payment would be less than $50, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $50 (see "Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged against
the Contracts. If any such premium taxes are payable at the time purchase
payments are made, the premium tax deduction will be made from the Contract
prior to allocation to any underlying Mutual Fund option (see "Premium Taxes").
To be sure that the Annuitant is satisfied with the Contract, the
Annuitant has a ten day free look. Within ten days of the date the Contract is
received, it may be returned to the Home Office of the Company, at the address
shown on page 1 of this Prospectus. When the Contract is received by the
Company, the Company will void the Contract and refund the Contract Value in
full unless otherwise required by state and/or federal law (see "Right to
Revoke").
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<PAGE> 10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
The Nationwide Life and Annuity Insurance Company, formerly the Financial
Horizons Life Insurance Company, a stock life insurance company organized under
the laws of the State of Ohio, was established in February, 1981. The Company is
a member of the "Nationwide Insurance Enterprise", with its home office at One
Nationwide Plaza, Columbus, Ohio 43216-6609. The Company offers certain life
insurance products and annuities.
THE VARIABLE ACCOUNT
The Variable Account was established as Financial Horizons VA Separate
Account-2 by the Company on March 6, 1991, pursuant to the provisions of Ohio
law. The name of the Variable Account was changed to Nationwide VA Separate
Account-B pursuant to a resolution by the Board of Directors. The Company has
caused the Variable Account to be registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940. Such registration does not involve supervision
of the management of the Variable Account or the Company by the Securities and
Exchange Commission.
The Variable Account is a separate investment account of the Company and
as such, is not chargeable with liabilities arising out of any other business
the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. Obligations under the Contracts, however,
are obligations of the Company. Income, gains and losses, whether or not
realized, from the assets of the Variable Account are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains, or losses of the Company.
Purchase payments are allocated within the Variable Account among one or
more sub-accounts made up of shares in the underlying Mutual Funds designated by
the Annuitant.
UNDERLYING MUTUAL FUND OPTIONS
Annuitants may choose from among a number of different underlying Mutual
Fund options. (See Appendix B which contains a summary of investment objectives
for each underlying Mutual Fund). More detailed information may be found in the
current prospectus for each underlying Mutual Fund offered. Such a prospectus
for the underlying Mutual Fund option(s) being considered must accompany this
Prospectus and should be read in conjunction herewith. A copy of each prospectus
may be obtained without charge from Nationwide Life and Annuity Insurance
Company by calling 1-800-848-6331, TDD 1-800-238-3035, or writing P.O. Box
16609, Columbus, Ohio 43216-6609.
The underlying Mutual Funds are available to the general public. Based on
the Company's marketing plan for the Contracts (the Contracts will be
exclusively marketed through IRA custodial accounts), the Company does not
anticipate any disadvantages to this. There is, however, a possibility that a
material conflict may arise between the interest of the Variable Account and the
various individuals and entities holding shares of the Mutual Funds. A conflict
may occur due to a change in law affecting the operations of variable annuity
separate accounts, differences in the voting instructions of the Annuitants and
others maintaining a voting interest in the funds, or some other reason. In the
event of conflict, the Company will take any steps necessary to protect the
Annuitants and variable annuity payees, including withdrawal of the Variable
Account from participation in the underlying Mutual Fund or Mutual Funds which
are involved in the conflict.
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to purchase
payments or accumulated amounts allocated to the Variable Account.
In accordance with its view of present applicable law, the Company will
vote the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual Funds
in accordance with instructions received from persons whose Contract Value is
measured by units in the Variable Account. However, if the Investment Company
Act of 1940 or any Regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote the shares of the underlying Mutual Funds in its
own right, it may elect to do so.
The person having the voting interest under a Contract shall be the
Annuitant. The number of shares held in the Variable Account which is
attributable to each Contract Owner is determined by dividing the Annuitant's
interest in the Variable Account by the net asset value of the applicable share
of the underlying Mutual Funds.
The number of shares held in the Variable Account which is attributable
to each Contract is determined by dividing the reserve for such Contract by the
net asset value of one share.
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<PAGE> 11
The number of shares which a person has the right to vote will be
determined as of the date to be chosen by the Company not more than 90 days
prior to the meeting of the underlying Mutual Fund and voting instructions will
be solicited by written communication at least 21 days prior to such meeting.
Underlying Mutual Fund shares held in the Variable Account as to which no
timely instructions are received will be voted by the Company in the same
proportion as the voting instructions which are received with respect to all
Contracts participating in the Variable Account.
Each person having the voting interest in the Variable Account will
receive periodic reports relating to the underlying Mutual Fund, proxy material
and a form with which to give such voting instructions with respect to the
proportion of the underlying Mutual Fund shares held in the Variable Account
corresponding to his or her interest in the Variable Account.
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" that variable annuity payments
will not be affected by the death rates of persons receiving such payments or of
the general population by virtue of annuity rates incorporated in the Contract
which cannot be changed.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis and
is equal to an annual rate of 0.80% of the daily net asset value of the Variable
Account. The Company expects to generate a profit through assessing this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
deducts an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis and is equal to an annual rate of 0.45% of the daily
net asset value of the Variable Account. The Company expects to generate a
profit through assessing this charge.
ADMINISTRATION CHARGE
The Company assesses an Administration Charge equal to an annual rate of
0.20% of the daily net asset value of the Variable Account. The deduction of the
Administration Charge is made from each sub-account in the same proportion that
the Contract Value in each sub-account bears to the total Contract Value in the
Variable Account. These charges are designed only to reimburse the Company for
administrative expenses and the Company will monitor these charges to ensure
that they do not exceed annual administration expenses.
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon purchase
payments received by the Company. To the best of the Company's present
knowledge, premium taxes currently imposed by certain jurisdictions range from
0% to 3.5%. This range is subject to change. The method used to recoup premium
tax expense will be determined by the Company at its sole discretion and in
compliance with applicable state law. The Company currently deducts such charges
from a Contract Owner's Contract Value either: (1) at the time the Contract is
surrendered, (2) at annuitization, or (3) in those states which require, at the
time purchase payments are made to the Contract.
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of expenses:
(1) administration expenses relating to the issuance and maintenance of the
Contracts; (2) mortality risk expense of guaranteeing the annuity purchase rates
at issue for the life of the Contracts; and (3) expense risk associated with
guaranteeing expenses through the deduction by the Company of the Mortality
Risk, Expense Risk and Administration Charges described above. If these charges
are insufficient to cover these expenses, the loss will be borne by the Company.
Deductions from and expenses paid out of the assets of the underlying
Mutual Funds are described in each of the underlying Mutual Funds' prospectuses.
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of purchase each Annuitant elects to have purchase payments
attributable to his participation in the Variable Account allocated among one or
more of the sub-accounts which consist of shares in the
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underlying Mutual Funds. Shares of the respective underlying Mutual Funds
specified by the Annuitant are purchased at net asset value for the respective
sub-account(s) and converted into Accumulation Units. At the time of
Application, the Annuitant designates the underlying Mutual Funds to which he
desires to have purchase payments allocated. Such election is subject to any
minimum purchase payment limitations which may be imposed by the underlying
Mutual Funds designated. The Annuitant may change the election as to allocation
of purchase payments or may elect to exchange amounts among the sub-account
options pursuant to such terms and conditions applicable to such transactions as
may be imposed by each of the underlying Mutual Funds, in addition to those set
forth in the Contracts.
RIGHT TO REVOKE
The Annuitant may revoke the Contract at any time between the Date of
Issue and the date 10 days after receipt of the Contract and receive a refund of
the Contract Value unless otherwise required by state and/or federal law.
Mailing or delivery must occur on or before 10 days after receipt of the
Contract for revocation to be effective. In order to revoke the Contract, if it
has not been received, written notice must be mailed or delivered to the home
office of the Company at the mailing address shown on page 1 of this Prospectus.
The liability of the Variable Account under this provision is limited to
the Contract Value in each sub-account on the date of revocation. Any additional
amounts refunded to the Annuitant will be paid by the Company.
TRANSFERS
Transfers among sub-account underlying Mutual Fund options are permitted
12 times per year. The Owner's value in each sub-account will be determined as
of the date the transfer request is received in good order in the home office.
Transfers among the sub-accounts may be made either in writing or, in
states allowing such transfers, by telephone. This telephone exchange privilege
is made available to Annuitants automatically without their having to elect this
privilege. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include
any or all of the following, or such other procedures as the Company may, from
time to time, deem reasonable: requesting identifying information, such as name,
contract number, Social Security number, and/or personal identification number;
tape recording all telephone transactions; and providing written confirmation
thereof to both the Annuitant and any agent of record, at the last address of
record. The Company will not be liable for following instructions communicated
by telephone which it reasonably believes to be genuine. Any losses incurred
pursuant to actions taken by the Company in reliance on telephone instructions
reasonably believed to be genuine shall be borne by the Annuitant. The Company
may withdraw the telephone exchange privilege upon 30 days' written notice to
the Annuitants.
BENEFICIARY PROVISIONS
The Beneficiary is the person or persons who may receive certain benefits
under the Contract in the event the Annuitant dies prior to the Annuitization
Date. If more than one Beneficiary survives the Annuitant, each will share
equally unless otherwise specified in the Beneficiary designation. If no
Beneficiary survives the Annuitant, all rights and interests of the Beneficiary
shall vest in the Contingent Beneficiary, and if more than one Contingent
Beneficiary survives, each will share equally unless otherwise specified in the
Contingent Beneficiary designation. If a Contingent Beneficiary is not named or
predeceases the Annuitant, all rights and interest of the Contingent Beneficiary
will vest with the Annuitant's estate. The Annuitant may change the Beneficiary
or Contingent Beneficiary from time to time, by written notice to the Company.
The change, upon receipt by the Company at its home office, will take effect as
of the time the written notice was signed, whether or not the Annuitant is
living at the time of recording, but without further liability as to any payment
or settlement made by the Company before receipt of such change.
OWNERSHIP PROVISIONS
Unless otherwise provided, the Annuitant has all rights under the
Contract. The exercise of any ownership right in the Contract (including the
right to surrender or partially surrender the Contract, to change the
Beneficiary, Contingent Beneficiary, the Annuity Payment Option or Annuitization
Date) shall require a written indication of an intent to exercise that right,
which must be signed by the Annuitant.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Funds described in this Prospectus
should no longer be available for investment by the Variable Account or if, in
the judgment of the Company's management, further investment in such underlying
Mutual Fund shares should become inappropriate in view of the purposes of the
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Contract, the Company may substitute shares of another underlying Mutual Fund
for underlying Mutual Fund shares already purchased or to be purchased in the
future by purchase payments under the Contract. No substitution of securities in
the Variable Account may take place without prior approval of the Securities and
Exchange Commission, and under such requirements as it may impose.
INQUIRIES
Inquiries may be directed to Nationwide Life and Annuity Insurance
Company by writing P.O. Box 16609, Columbus, Ohio 43216-6609, or calling
1-800-848-6331, TDD 1-800-238-3035.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date the Variable Account Contract Value is applied
to the Annuity Payment Option elected in accordance with the Annuity Table in
the Contract.
Subsequent Variable Annuity payments vary in amount in accordance with
the investment performance of the Variable Account. The dollar amount of the
first annuity payment determined as above is divided by the value of an Annuity
Unit as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units remains
fixed during the annuity payment period. The dollar amount of the second and
subsequent payments is not predetermined and may change from month to month. The
dollar amount of each subsequent payment is determined by multiplying the fixed
number of Annuity Units by the Annuity Unit Value for the Valuation Period in
which the payment is due. The Company guarantees that the dollar amount of each
payment after the first will not be affected by variations in mortality
experience from mortality assumptions used to determine the first payment.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit is arbitrarily set initially at $10 when the
first underlying Mutual Fund shares are purchased. The value of an Annuity Unit
for a sub-account for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated, and multiplying the result by an
interest factor to neutralize the assumed investment rate of 3.5% per annum
built into the Annuity Tables contained in the Contracts (see "Net Investment
Factor").
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables contained
in the Contracts. A higher assumption would mean a higher initial payment but
more slowly rising or more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual investment rate is at
the annual rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the
net amount available to apply under any Annuity Payment Option is less than
$5,000, the Company shall have the right to pay such amount in one lump sum in
lieu of annuity payments. In addition, if the payments provided for would be or
become less than $50, the Company shall have the right to change the frequency
of payments to such intervals as will result in payments of at least $50.
ANNUITY COMMENCEMENT DATE
The Annuitant selects an Annuity Commencement Date at the time of
Application. Such date must be the first day of a calendar month and must be at
least 2 years after the Date of Issue.
CHANGE IN ANNUITY COMMENCEMENT DATE
The Annuitant may, upon prior written notice to the Company, change the
Annuity Commencement Date. The date to which such a change may be made shall be
the first day of a calendar month.
If the Annuitant requests in writing (see "Ownership Provisions"), and
the Company approves the request, the Annuity Commencement Date may be deferred.
No further changes in the Designated Annuitant will be permitted under the
Contract. The amount of the Death Benefit will be limited to the Contract Value
if the Annuity Commencement Date is postponed beyond the first day of the
calendar month after the Designated Annuitant's 86th birthday.
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CHANGE IN FORM OF ANNUITY
The Annuitant may, upon prior written notice to the Company, at any time
prior to the Annuitization Date, elect one of the Annuity Payment Options.
ANNUITY PAYMENT OPTIONS
Any of the following Annuity Payment Options may be elected:
Option 1-Life Annuity-An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of
the Annuitant. IT WOULD BE POSSIBLE UNDER THIS OPTION FOR THE ANNUITANT
TO RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE
THIRD ANNUITY PAYMENT DATE, AND SO ON.
Option 2-Joint and Last Survivor Annuity-An annuity payable monthly
during the joint lifetimes of the Annuitant and designated second person
and continuing thereafter during the lifetime of the survivor. AS IS THE
CASE UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM NUMBER OF PAYMENTS
GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST
SURVIVING ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if at the death of the Annuitant payments have been made
for fewer than 120 or 240 months, as selected, payments will be made as
follows:
(1) If the Annuitant is the payee, any guaranteed annuity payments
will be continued during the remainder of the selected period to
the Beneficiary or the Beneficiary may, at any time, elect to have
the present value of the guaranteed number of annuity payments
remaining paid in a lump sum as specified in section (2) below.
(2) If a Beneficiary is the payee, the present value, computed as of
the date on which notice of death is received by the Company at
its home office, of the guaranteed number of annuity payments
remaining after receipt of such notice and to which the deceased
would have been entitled had he or she not died, commuted at the
Assumed Investment Rate effective in determining the Annuity
Tables, shall be paid in a lump sum.
Some of the stated Annuity Options may not be available in all states.
The Annuitant may request an alternative non-guaranteed option by giving notice
in writing prior to annuitization. If such a request is approved by the Company,
it will be permitted under the Contract.
Individual Retirement Accounts are subject to the minimum distribution
requirements set forth in the Internal Revenue Code.
DEATH BENEFIT AT DEATH OF ANNUITANT PRIOR TO THE ANNUITIZATION DATE
If the Annuitant dies prior to the Annuitization Date, a Death Benefit is
payable to the Beneficiary. If no Beneficiary is named (or if the Beneficiary
predeceases the Annuitant), then the Death Benefit is payable to the Contingent
Beneficiary. If no Contingent Beneficiary is named (or if the Contingent
Beneficiary predeceases the Annuitant), then the Death Benefit will be paid to
Annuitant or the Annuitant's estate.
The value of the Death Benefit will be determined as of the Valuation
Date coincident with or next following the date the Company receives in writing
the following: (1) due proof of the Annuitant's death; and (2) an election for
either a single sum payment or an Annuity Payment Option; and (3) any form
required by state insurance laws. If single sum payment is requested, payment
will be made in accordance with any applicable laws and regulations governing
the payment of Death Benefit. If an Annuity Payment Option is requested,
election must be made by the Annuitant during the 90-day period commencing with
the date written notice is received by the Company. If no election has been made
by the end of such 90-day period commencing with the date written notice is
received by the Company. If no election has been made by the end of such 90-day
period, the Death Benefit will be paid in a single sum payment. If the
Designated Annuitant dies prior to his or her 86th birthday, the value of the
Death Benefit will be the greater of (1) the sum of all Purchase Payments, made
to the Contract less any amounts surrendered, (2) the Contract Value, or (3) the
Contract Value as of the most recent five-year Contract Anniversary, less any
amounts surrendered since the most recent five-year Contract Anniversary. If the
Designated Annuitant dies on or after his or her 86th birthday, then the Death
Benefit will be equal to the Contract Value.
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DEATH BENEFIT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may
be payable shall be as specified in the Annuity Payment Option elected.
REQUIRED DISTRIBUTIONS FOR IRAS
Distribution from an IRA must begin not later than April 1 of the
calendar year following the calendar year in which the Annuitant attains age
70-1/2. Distribution may be accepted in a lump sum or in nearly equal payments
over: (a) the Annuitant's life or the lives of the Annuitant and his or her
spouse or Designated Beneficiary, or (b) a period not extending beyond the
Annuitant's life expectancy or the life expectancy of the Annuitant and the
Annuitant's spouse or designated Beneficiary.
If the Annuitant dies prior to the commencement of his or her
distribution, the interest in the Annuity held by the custodial account must be
distributed by December 31 of the year during which the fifth anniversary of his
or her death occurs unless:
(a) The Annuitant names his or her surviving spouse as the Beneficiary and
such spouse elects to:
(i) treat the annuity as an asset of an IRA established for his or her
benefit; or
(ii) receive distribution of the account in nearly equal payments over
his or her life (or a period not exceeding his or her life
expectancy) and commencing not later than December 31 of the year
in which the Owner would have attained age 70-1/2; or
(b) The Annuitant names a Beneficiary other than his or her surviving spouse
and such beneficiary elects to receive a distribution of the account in
nearly equal payments over his or her life (or a period not exceeding his
or her life expectancy) commencing not later than December 31 of the year
following the year in which the Annuitant dies.
If the Annuitant dies after distribution has commenced, distribution must
continue at least as rapidly as under the schedule being used prior to his or
her death, except to the extent that a surviving spouse beneficiary may elect to
treat the contract as his or her own, in the same manner as is described in
Section (a)(i) above.
If the amounts distributed do not satisfy the distribution rules
mentioned above, a penalty tax of 50% is levied on the amount that should have
been distributed for that year.
All or a portion of each distribution will be included in the gross
income of the person receiving the distribution and taxed at ordinary income tax
rates. The portion of the distribution which is taxable is based on the ratio
between the amount by which non-deductible purchase payments exceed prior
non-taxable distributions and total account balances at the time of the
distribution. The Annuitant must annually report the amount of non-deductible
purchase payments, the amount of any distribution, the amount by which
non-deductible purchase payments for all years exceed non-taxable distributions
for all years, and the total balance of all IRAs.
IRA distributions will not receive the benefit of the tax treatment of a
lump sum distribution from a Qualified Plan. If the Annuitant dies prior to the
time distribution of his or her interest in the annuity is completed, the
balance will also be included in his or her gross estate.
GENERATION-SKIPPING TRANSFERS
The Company may be required to determine whether the Death Benefit or any
other payment constitutes a direct skip as defined in Section 2612 of the
Internal Revenue Code, and the amount of the tax on the generation-skipping
transfer resulting from such direct skip. If applicable, such payment will be
reduced by any tax the Company is required to pay by Section 2603 of the
Internal Revenue Code.
A direct skip may occur when property is transferred to or a Death
Benefit is paid to an individual two or more generations younger than the
Annuitant.
GENERAL INFORMATION
SERVICES
ASSET REBALANCING-The Annuitant may direct the automatic reallocation of
contract values to the underlying Mutual Fund options or a predetermined
percentage basis every three months. If the last day of the three month period
falls on a Saturday, Sunday, recognized holiday or any other day when the New
York Stock Exchange is closed, the Asset Rebalancing exchange will occur on the
last business day before that day. Asset
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Rebalancing will not affect future allocations of purchase payments. An Asset
Rebalancing request must be made in writing on a form provided by the Company.
The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days' written notice to the Annuitants, however, any such
discontinuation would not affect Asset Rebalancing programs which have already
commenced. The Company also reserves the right to assess a processing fee for
this service.
DOLLAR COST AVERAGING- The Annuitant may direct the Company to
automatically transfer from the Money Market sub-account or the Limited Maturity
Bond Portfolio sub-account to any other sub-account within the Variable Account
on a monthly basis. This service is intended to allow the Annuitant to utilize
Dollar Cost Averaging, a long-term investment program which provides for
regular, level investments over time. The Company makes no guarantees that
Dollar Cost Averaging, will result in a profit or protect against loss in a
declining market. Transfers for purposes of Dollar Cost Averaging can only be
made from the Money Market sub-account or the Limited Maturity Bond Portfolio
sub-account. The minimum monthly Dollar Cost Averaging transfer is $100. A
written election of this service, on a form provided by the Company, must be
completed by the Annuitant in order to begin transfers. Once elected, transfers
from the Money Market sub-account or the Limited Maturity Bond Portfolio
sub-account will be processed monthly until either the value in the Money Market
sub-account or the Limited Maturity Bond Portfolio sub-account is completely
depleted or the Annuitant instructs the Company in writing to cancel the monthly
transfers.
The Company reserves the right to discontinue offering Dollar Cost
Averaging upon 30 days' written notice to Annuitants; however, any such
discontinuation would not affect Dollar Cost Averaging programs already
commenced. The Company also reserves the right to assess a processing fee for
this service.
SYSTEMATIC WITHDRAWALS- An Annuitant may elect in writing on a form
provided by the Company to take Systematic Withdrawals by surrendering a
specified dollar amount (of at least $100) on a monthly, quarterly, semi-annual,
or annual basis. The Company will process the withdrawals as directed by
surrendering on a pro-rata basis Accumulation Units from all sub-accounts in
which the Annuitant has an interest. Each Systematic Withdrawal is subject to
federal income taxes on the taxable portion. In addition, a 10% federal penalty
tax may be assessed on Systematic Withdrawals if the Annuitant is under age
59-1/2. If directed by the Annuitant, the Company will withhold federal income
taxes from each Systematic Withdrawal. The Annuitant may discontinue Systematic
Withdrawals at any time by notifying the Company in writing.
The Company reserves the right to discontinue offering Systematic
Withdrawals upon 30 days' written notice to Annuitants however; any such
discontinuation would not affect any Systematic Withdrawal programs already
commenced. The Company also reserves the right to assess a processing fee for
this service.
STATEMENTS AND REPORTS
The Company will mail to Annuitants, at their last known address of
record, any statements and reports required by applicable law or regulation.
Annuitants should therefore give the Company prompt notice of any address
change. The Company will send a confirmation statement to Annuitants each time a
transaction is made affecting the Owners' Variable Account Contract Value, such
as making additional purchase payments, transfers, exchanges or withdrawals.
Quarterly statements are also mailed detailing the Contract activity during the
calendar quarter. Instead of receiving an immediate confirmation of transactions
made pursuant to some types of periodic payment plan (such as a dollar cost
averaging program) or salary reduction arrangement, Annuitants may receive
confirmation of such transactions in their quarterly statements. Annuitants
should review the information in these statements carefully. All errors or
corrections must be reported to the Company immediately to assure proper
crediting to the Annuitants' Contract. The Company will assume all transactions
are accurate unless otherwise notified within 30 days after receipt of the
statement. The Company will also send to Annuitants each year an annual report
and a semi-annual report containing financial statements for the Variable
Account, as of December 31 and June 30, respectively.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase payments are allocated to one or more sub-accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Funds by the Annuitant, and converted into Accumulation Units.
The initial first year purchase payment must be at least $15,000 and
additional payments, if any, must be at least $1,000. The Company, however,
reserves the right to lower this $1,000 purchase payment minimum for certain
employer sponsored programs. The Annuitant may increase or decrease purchase
payments or change the frequency of payment. The Annuitant is not obligated to
continue purchase payments in the amount or at the frequency elected. There are
no penalties for failure to continue purchase payments.
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The cumulative total of all purchase payments under Contracts issued on
the life of any one Designated Annuitant may not exceed $1,000,000 without prior
consent of the Company.
THE PURCHASER IS CAUTIONED THAT INVESTMENT RETURN ON SMALL INITIAL AND
SUBSEQUENT PURCHASE PAYMENTS MAY BE LESS THAN CHARGES ASSESSED BY THE COMPANY.
The initial purchase payment allocated to designated sub-accounts of the
Variable Account will be priced not later than 2 business days after receipt of
an order to purchase if the Application and all information necessary for
processing the purchase order are complete upon receipt by the Company. The
Company, however, may retain the purchase payment for up to 5 business days
while attempting to complete an incomplete Application. If the Application
cannot be made complete within 5 days, the prospective purchaser will be
informed of the reasons for the delay and the purchase payment will be returned
immediately unless the prospective purchaser specifically consents to the
Company retaining the purchase payment until the Application is made complete.
Purchase payments will not be priced on the following nationally
recognized holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account Accumulation Unit for each sub-account
was arbitrarily set initially at $10 when underlying Mutual Fund shares in that
sub-account were available for purchase. The value for any subsequent Valuation
Period is determined by multiplying the Accumulation Unit value for each
sub-account for the immediately preceding Valuation Period by the Net Investment
Factor for the sub-account during the subsequent Valuation Period. The value of
an Accumulation Unit may increase or decrease from Valuation Period to Valuation
Period. The number of Accumulation Units will not change as a result of
investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is:
(1) the net asset value per share of the underlying Mutual Fund held
in the sub-account determined at the end of the current Valuation
Period, plus
(2) the per share amount of any dividend or capital gain distributions
made by the underlying Mutual Fund held in the sub-account if the
"ex-dividend" date occurs during the current Valuation Period.
(b) is the net asset value per share of the underlying Mutual Fund held in
the sub-account determined at the end of the immediately preceding
Valuation Period.
(c) is a factor representing the daily Mortality Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account. Such
factor is equal to an annual rate of 1.45 % of the daily net asset value
of the Variable Account.
For underlying Mutual Funds that credit dividends on a daily basis and
pay such dividends once a month (the Nationwide Money Market Fund), the Net
Investment Factor allows for the monthly reinvestment of these daily dividends.
The Net Investment Factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease. It should be noted that
changes in the Net Investment Factor may not be directly proportional to changes
in the net asset value of underlying Mutual Fund shares, because of the
deduction for Mortality Risk Charge, Expense Risk Charge and Administration
Charge, and any charge or credit for tax reserves.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units
attributable to the Contract is the Contract Value. The number of Accumulation
Units credited per each sub-account are determined by dividing the net amount
allocated to the sub-account by the Accumulation Unit Value for the sub-account
for the Valuation Period during which the purchase payment is received by the
Company. In the event part or all of
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the Contract Value is surrendered or charges or deductions are made against the
Contract Value, an appropriate number of Accumulation Units from the Variable
Account will be deducted.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant, the Company will,
upon proper written application by the Annuitant deemed by the Company to be in
good order, allow the Annuitant to surrender a portion or all of the Contract
Value. "Proper Written Application" means that the surrender must be requested
in writing by the Annuitant, satisfy all good order requirements, and the
Company may require that the signature(s) be guaranteed by a member firm of the
New York, American, Boston, Midwest, Philadelphia, or Pacific Stock Exchange, or
by a Commercial Bank or a Savings and Loan, which is a member of the Federal
Deposit Insurance Corporation.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account to equal the gross dollar
amount requested. In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all sub-accounts
in which the Annuitant has an interest.
The Company will pay any funds applied for from the Variable Account
within 7 days of receipt of such application in the Company's home office.
However, the Company reserves the right to suspend or postpone the date of any
payment of any benefit or values for any Valuation Period (1) when the New York
Stock Exchange ("Exchange") is closed, (2) when trading on the Exchange is
restricted, (3) when an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders;
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (2) and (3)
exist. The Contract Value on surrender may be more or less than the total of
purchase payments made by an Annuitant, depending on the market value of the
underlying Mutual Fund shares.
TAXES
INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF
A PERSONAL TAX ADVISER.
The Company does not make any guarantee regarding the tax status for any
Contract or any transaction involving the Contracts. The Contracts, by
themselves, do not qualify for tax-deferral under the federal tax rules
governing Non-Qualified Annuities and Individual Retirement Annuities. Instead,
the Contracts have been designed to be purchased as assets of IRA custodial
accounts pursuant to certain regulations under section 408 of the Code.
Annuitants should consult their financial or tax consultants to discuss in
detail their particular tax situation and the use of the Contracts.
Generally, the amount of any payment of items of interest to a
nonresident alien of the United State shall be subject to withholding of a tax
equal to thirty percent (30%) of such amount or, if applicable, a lower treaty
rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such payment
is includable in the recipient's gross income.
IRAS
The Contract is intended to be purchased as an asset of IRA custodial
accounts established pursuant to regulations 1.408-2(b)(2)(ii) and 1.408-2(d)
under Section 408 of the Code. Because the Contract's minimum initial and
subsequent Purchase Payments are greater than the maximum yearly contribution
permitted an IRA, the Contract may be purchased only in connection with a
"rollover" (including a direct trustee-to-trustee transfer, where permitted).
Specifically, Contracts may be purchased only in connection with a rollover or
transfer (if applicable) of amounts from a Qualified Plan, Tax-Sheltered
Annuity, IRA or Individual Retirement Annuity. The Annuitant should seek
competent advice as to the tax consequences associated with the use of this
Contract.
Recent changes to the Code permit the rollover of most distributions from
Qualified Plans to other Qualified Plans or Individual Retirement Accounts. Most
distributions from Tax-Sheltered Annuities may be rolled into another
Tax-Sheltered Annuity or an IRA. Distributions which may not be rolled over are
those which are:
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1. one of a series of substantially equal annual (or more frequent) payments
made: a) over the life (or life expectancy) of the employee, b) the joint
lives (or joint life expectancies) of the employee and the employee's
designated beneficiary, or c) for a specified period of ten years or
more, or
2. a required minimum distribution.
Any distribution from a Qualified Plan or Tax Sheltered Annuity that is
eligible for rollover will be subject to federal tax withholding at a rate of
twenty percent (20%) unless the distribution is transferred directly to an
appropriate plan as described above.
Individual Retirement Accounts may not provide life insurance benefits.
If the Death Benefit associated with the Contracts offered hereunder exceeds the
greater of the cash value of the Contract or the sum of all purchase payments
(less any surrenders), it is possible the Internal Revenue Service could
determine that the Individual Retirement Account does not qualify for the
desired tax treatment.
DIVERSIFICATION
The Internal Revenue Service has promulgated regulations under Section
817(h) of the Internal Revenue Code ("Code") relating to diversification
standards for the investments underlying a variable annuity contract. The
regulations provide that a variable annuity contract which does not satisfy the
diversification standards will not be treated as an annuity contract, unless the
failure to satisfy the regulations was inadvertent, the failure is corrected,
and the owner or the Company pays an amount to the Internal Revenue Service. The
amount will be based on the tax that would have been paid by the Annuitant if
the income, for the period the contract was not diversified, had been received
by the Annuitant. If the failure to diversify is not corrected in this manner,
the owner of an annuity contract will be deemed the owner of the underlying
securities and will be taxed on the earnings of his or her account. The Company
believes, under its interpretation of the Code and regulations thereunder, that
the investments underlying this Contract meet these diversification standards.
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide
Separate Account Trust Money Market Fund sub-account. "Yield" is a measure of
the net dividend and interest income earned over a specific seven-day period
(which period will be stated in the advertisement) expressed as a percentage of
the offering price of the sub-account's units. Yield is an annualized figure,
which means that it is assumed that the sub-account generates the same level of
net income over a 52-week period. The "effective yield" is calculated similarly
but includes the effect of assumed compounding, calculated under rules
prescribed by the Securities and Exchange Commission. The effective yield will
be slightly higher than yield due to this compounding effect.
The Company may also from time to time advertise the performance of the
sub-account of the Variable Account relative to the performance of other
variable annuity sub-accounts or mutual funds with similar or different
objectives, or the investment industry as a whole. Other investments to which
the sub-accounts may be compared include, but are not limited to: precious
metals, real estate, stocks and bonds, closed-end funds, CDs, bank money market
deposit accounts and passbook savings, and the Consumer Price Index.
The sub-accounts of the Variable Account may also be compared to certain
market indexes, which may include, but are not limited to: the S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2-1/2 Year CD Rates;
and the Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's;
magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine,
Financial World, Consumer Reports, Business Week, Time, Newsweek, National
Underwriter, U.S. News and World Report; rating services such as LIMRA, Value,
Best's Agent Guide, Western Annuity Guide, Comparative Annuity Reports; and
other publications such as the Wall Street Journal, Barron's, Investor's Daily,
and Standard & Poor's Outlook. In addition, Variable Annuity Research & Data
Service (The VARDS Report) is an independent rating service that ranks over 500
variable annuity funds based upon total return performance. These rating
services and publications rank the performance of the underlying Mutual Funds
against all underlying Mutual Funds over specified periods and against
underlying mutual funds in specified categories. The rankings may or may not
include the effects of sales or other charges.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard & Poor's and A.M. Best Company. The
purpose of these ratings is to reflect the financial
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strength or claims-paying ability of the Company. The ratings are not intended
to reflect the investment experience or financial strength of the Variable
Account. The Company may advertise these ratings from time to time. In addition,
the Company may include in certain advertisements, endorsements in the form of a
list of organizations, individuals or other parties which recommend the Company
or the Contracts. Furthermore, the Company may occasionally include in
advertisements comparisons of currently taxable and tax deferred investment
programs, based on selected tax brackets, or discussions of alternative
investment vehicles and general economic conditions.
The Company may from time to time advertise several types of historical
performance for the sub-accounts of the Variable Account. The Company may
advertise for the sub-accounts standardized "average annual total return,"
calculated in a manner prescribed by the Securities and Exchange Commission, and
nonstandardized "total return". "Average annual total return" will show the
percentage rate of return of a hypothetical initial investment of $1,000 for at
least the most recent one, five and ten year period, or for a period covering
the time the underlying Mutual Fund held in the sub-account has been in
existence, if the underlying Mutual Fund has not been in existence for one of
the prescribed periods. This calculation reflects the deduction of all
applicable charges made to the Contracts except for premium taxes, which may be
imposed by certain states.
Nonstandardized "total return" will be calculated in a similar manner and
for the same time periods as the average annual total return except total return
will assume an initial investment of $10,000. An assumed initial investment of
$10,000 will be used because that figure more closely approximates the size of a
typical Contract than does the $1,000 figure used in calculating the
standardized average annual total return quotations.
For those underlying Mutual Funds which have not been held as
sub-accounts within the Variable Account for a quoted period, the standardized
average annual total return and nonstandardized total return quotations will
show the investment performance such underlying Mutual Funds would have achieved
(reduced by the applicable charges) had they been held as sub-accounts within
the Variable Account for the period quoted.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY
IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. AN ANNUITANT'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS THAN
ORIGINAL COST.
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which the Company and the Variable
Account are parties or to which any of their property is the subject.
The General Distributor, Nationwide Financial Services, Inc., is not
engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
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General Information and History................................................ 1
Services....................................................................... 1
Purchase of Securities Being Offered........................................... 1
Underwriters................................................................... 1
Calculations of Performance.................................................... 1
Fund Performance Summary....................................................... N/A
Annuity Payments............................................................... 2
Financial Statements........................................................... 3
</TABLE>
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APPENDIX A
ANNUITY PAYMENT PERIOD-FIXED ANNUITY
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Contract Value to the
applicable Annuity Table in accordance with the Annuity Payment Option elected.
This will be done at the Annuitization Date on an age last birthday basis. Fixed
Annuity payments after the first will not be less than the first Fixed Annuity
payment.
The Company does not credit discretionary interest to Fixed Annuity
payments during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
ANNUITY TABLES
The Annuity Tables contained in the Contracts are based on the 1971
Individual Annuity Mortality Table (set back one year).
ASSUMED INTEREST RATE
The Annuity Tables contained in the Contracts are based on the 1971
Individual Annuity Mortality Table (set back one year) and an assumed interest
rate of 3.5%.
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APPENDIX B
PARTICIPATING FUNDS
Delchester Fund-Institutional Class
Investment Objective: Seeks to provide high current income by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper. This fund invests primarily in high-yield securities (junk
bonds) and greater risks may be involved with an investment in the fund than an
investment in a mutual fund comprised primarily of investment grade bonds.
Dreyfus A Bonds Plus, Inc.
Investment Objective: The Fund's goal is to provide the maximum amount of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Fund invests principally in debt obligations of
corporations, the U.S. Government and its agencies and instrumentalities, and
major U.S. banking institutions. The Fund's investment objective cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares. There
can be no assurance that the Fund's investment objective will be achieved.
The Dreyfus Third Century Fund, Inc.
Investment Objective: Primarily seeks to provide capital growth through equity
investment in companies that, in the opinion of the Fund's management, not only
meet traditional investment standards but which also show evidence that they
conduct their business, in a manner that contributes to the enhancement of the
quality of life in America. Current income is secondary to the primary goal.
The Evergreen Total Return Fund
Investment Objective: Seeks to achieve a return consisting of current income and
capital appreciation in the value of its shares. The emphasis on current income
and capital appreciation will be relatively equal although, over time, changes
in the outlook for market conditions and the level of interest rates will cause
the fund to vary its emphasis between these two elements in its search for the
optimum return for its shareholders. The fund seeks to achieve its investment
objective through investments in common stocks, preferred stocks, securities
convertible into or exchangeable for common stocks and fixed income securities.
The fund may also write covered call options.
Fidelity Asset Manager(TM)
Investment Objective: Seeks high total return with reduced risk over the long
term by allocating its assets among stocks, bonds and short-term instruments.
Fidelity Equity-Income Fund
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The fund seeks a
yield which exceeds the composite yield on the securities comprising the
Standard & Poor's 500 Composite Stock Price index. In addition, consistent with
the above objective, in managing its portfolio, the fund will consider the
potential for achieving capital appreciation.
Fidelity Magellan(R) Fund
Investment Objective: Seeks capital appreciation by investing primarily in
common stock and securities convertible into common stock. Up to 20% of the
fund's assets may also be invested in debt securities of all types and qualities
issued by foreign and domestic issuers if the fund's management believes that
doing so will result in capital appreciation. No emphasis is placed on dividend
income except when the fund's management believes that this income will have a
favorable influence on the market value of the security. Because the fund has no
limitation on the quality of debt securities in which it may invest, the debt
securities in its portfolio may be of poor quality and may present the risk of
default or may be in default.
Fidelity Puritan Fund
Investment Objective: Seeks to obtain as much income as possible, consistent
with the preservation and conservation of capital, by investing in a broadly
diversified portfolio of high-yielding securities, including common stocks,
preferred stocks, and bonds. While emphasis on income is an important objective,
this does not preclude growth in capital since some securities offering a better
than average yield may also possess some growth possibilities.
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Janus Twenty Fund
Investment Objective: Seeks growth of capital in a manner consistent with the
preservation of capital. Under normal conditions, the Fund will concentrate its
investments in a core position of 20-30 common stocks. However, the percentage
of the Fund's assets invested in common stocks will vary, depending upon its
investment adviser's opinion of prevailing market, financial and economic
conditions. Consequently, the Fund may at times hold substantial positions in
cash, or interest bearing securities.
MFS(R) World Governments Fund
Investment Objective: To seek not only preservation, but also growth of capital,
together with moderate current income through a professionally managed
internationally diversified portfolio consisting primarily of debt securities
and, to a lesser extent, equity securities. The fund is designed for investors
who wish to diversify their investments beyond the United States and who are
prepared to accept the risks entailed in such investments which may be higher
than those associated with certain U.S. Investments.
Nationwide(R) Bond Fund
Investment Objective: Seeks to generate a high level of income consistent with
capital preservation through investments in high quality bonds and other fixed
income securities. Through investment in long-term income obligations, including
corporate debt securities, United States and Canadian government obligations and
commercial paper, this fund seeks to serve those who are less willing to accept
the greater risk and higher volatility of a common stock portfolio.
Nationwide(R) Fund
Investment Objective: Seeks to obtain a reasonable current income on invested
capital and possible growth of such income through timely investments in common
stocks, convertible issues or bonds. Major emphasis in the selection of
investments for this fund is placed on securities which will provide a
reasonable current return. Though growth of capital considerations is secondary,
an effort is made to select those securities which, while paying a reasonable
current return, also hold some promise of long-term growth as well as
possibilities of growth of income.
Nationwide(R) Growth Fund
Investment Objective: Seeks to achieve reasonable growth of capital through
selective participation in the long-term progress of business without emphasis
on current return on invested capital. Major emphasis in the selection of
securities for this fund is placed on strong companies which have capable
management, and are in fields where social and economic trends, technical
developments and new processes or products indicate greater than average growth.
Nationwide(R) Money Market Fund
Investment Objective: Seeks to provide as high a level of current income as is
consistent with the preservation of capital and maintenance of liquidity,
through a diversified portfolio of high quality money market instruments
maturing in one year or less.
Neuberger & Berman Guardian Fund, Inc.
Investment Objective: Seeks capital appreciation through investments generally
in dividend-paying issues of established companies that its investment officers
believe are well managed. The emphasis of the Fund's investments is on common
stock. The Fund diversifies its holdings among different industries and
different companies in light of conditions prevailing at any given time. Current
income is a secondary objective.
Neuberger & Berman Limited Maturity Bond Fund
Investment Objective: Seeks highest current income consistent with low risk to
principal and liquidity. The Fund invests in a diversified portfolio of short-to
intermediate-term debt securities and other debt securities with special
features producing similar price characteristics. Total return is a secondary
objective.
Neuberger & Berman Partners Fund, Inc.
Investment Objective: Seeks capital growth. The fund invests in securities
solely on the basis of management's evaluation of their investment merit and
potential for growth using a value-oriented approach to the selection of
individual securities. The fund's management believes that the fund is an
attractive investment vehicle for conservative investors who are interested in
long-term appreciation from stock investments, but who have a low tolerance for
risk.
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Oppenheimer Global Fund
Investment Objective: Seeks capital appreciation. The fund emphasizes investment
in foreign and domestic securities considered by the fund's investment manager
to have appreciation possibilities, primarily common stocks or securities having
investment characteristics of common stocks (such as convertible securities) of
"growth-type" companies. As a matter of fundamental policy, under normal market
conditions, the fund will invest its total assets in securities of issuers
traded in markets in at least three different countries (which may include the
United States). The portfolio may also emphasize securities of cyclical
industries and "special situations" when the fund's manager believes that they
present opportunities for capital growth. The remainder of the fund's invested
assets will be invested in securities for liquidity purposes.
Peoples Index Fund, Inc.
Investment Objective: Seeks to provide investment results that correspond to the
price and yield performance of publicly-traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index. The
fund's investment objective cannot be changed without approval by the holders of
a majority of the fund's outstanding voting shares.
Phoenix Balanced Fund Series
Investment Objective: The Fund seeks reasonable income, long-term capital growth
and conservation of capital. It is intended that the Fund will invest in common
stocks and fixed income securities, with emphasis on income-producing securities
which appear to have some potential for capital enhancement.
Strong Total Return Fund, Inc.
Investment Objective: Seeks a combination of income and capital appreciation
which will produce the highest total return while assuming reasonable risks.
"Reasonable risks" refers to the advisor's judgment that the risks of investing
in the securities in the Total Return Fund's portfolio are no greater than
normal. The Total Return Fund invests in common stocks and other equity-type
securities; corporate bonds, debentures, and notes; and short-term money market
instruments. Common stocks may be either growth or income oriented. Other
equity-type securities are limited to convertible bonds, preferred stocks,
warrants, and convertible preferred shares. Short-term money market instruments
include U.S. Treasury obligations, bank certificates of deposit, commercial
paper, and variable-rate master demand notes (floating-rate debt instruments
without a fixed maturity). The Total Return Fund may also invest in debt
securities issued or guaranteed by the U.S. government and its agencies or
instrumentalities.
Templeton Foreign Fund
Investment Objective: Seeks long-term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments outside
the United States. Any income realized will be incidental.
Twentieth Century Growth Investors
Investment Objective: Seeks capital growth through investment in securities
which the management considers to have better than average prospects for
appreciation of value. The fund's investment approach identifies companies with
accelerating earnings and revenues. As part of its strategy, the fund remains
essentially fully invested in stocks at all times.
Twentieth Century International Equity Fund
Investment Objective: Seeks capital growth by investing in an international
portfolio of common stocks, primarily in developed markets; stocks considered by
the investment manager to have prospects for appreciation. The fund will invest
primarily in common stocks (defined to include depository receipts for common
stocks) and other equity equivalents of such companies.
Twentieth Century Ultra Investors
Investment Objective: The investment objective of the fund is to seek capital
growth by investing primarily in common stocks that are considered by management
to have better-than-average prospects for appreciation.
Twentieth Century U.S. Governments Short-Term
Investment Objective: To seek current income and limited price volatility by
maintaining an average weighted portfolio maturity of four years or less. U.S.
Governments invests in securities of the United States government and its
agencies.
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STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1995
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY THE NATIONWIDE VA SEPARATE ACCOUNT-B
OF NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the Prospectus
and should be read in conjunction with the Prospectus dated December 1, 1995.
The Prospectus may be obtained from Nationwide Life and Annuity Insurance
Company by writing P.O. Box 16609, Columbus, Ohio 43216-6609, or calling
1-800-243-6295, TDD 1-800-238-3035.
TABLE OF CONTENTS
<TABLE>
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PAGE
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General Information and History................................................. 1
Services........................................................................ 1
Purchase of Securities Being Offered............................................ 1
Underwriters.................................................................... 1
Calculations of Performance..................................................... 1
Fund Performance Summary........................................................ N/A
Annuity Payments................................................................ 2
Financial Statements............................................................ 3
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide VA Separate Account-B is a separate investment account of
Nationwide Life and Annuity Insurance Company ("Company"). On April 7, 1988,
ownership of the Company changed from Nationwide Mutual Insurance Company to
Nationwide Life Insurance Company. The Company is a member of the Nationwide
Insurance Enterprise and all of the Company's common stock is owned entirely by
Nationwide Life Insurance Company. The common stock of Nationwide Life Insurance
Company is owned by Nationwide Corporation. Nationwide Corporation is a holding
company. All of the common stock of Nationwide Corporation is held by Nationwide
Mutual Insurance Company (95.3%) and Nationwide Mutual Fire Insurance Company
(4.7%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Annuitant and
the number and type of Contracts issued to each such Annuitant and records with
respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of the
underlying Mutual Funds.
The financial statements have been included herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants, Two
Nationwide Plaza, Columbus, Ohio 43215, and upon the authority of said firm as
experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by
Nationwide Financial Services, Inc. ("NFS"), One Nationwide Plaza, Columbus,
Ohio 43216, an affiliate of the Company. No underwriting commissions have been
paid by the Company to NFS.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund
sub-account, subject to Rule 482 of the Securities Act of 1933, shall consist of
a seven calendar day historical yield, carried at least to the nearest hundredth
of a percent. The yield shall be calculated by determining the net change,
exclusive of capital changes, in the value of hypothetical pre-existing account
having a balance of one accumulation unit at the
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beginning of the base period, subtracting a hypothetical charge reflecting
deductions from Annuitants' accounts, and dividing the net change in account
value by the value of the account at the beginning of the period to obtain a
base period return, and multiplying the base period return by (365/7) or (366/7)
in a leap year. The Nationwide Money Market Fund sub-account's effective yield
is computed similarly but includes the effect of assumed compounding on an
annualized basis of the current unit value yield quotations of the Fund.
The Nationwide Money Market Fund sub-account's yield and effective yield
will fluctuate daily. Actual yields will depend on factors such as the type of
instruments in the Fund's portfolio, portfolio quality and average maturity,
changes in interest rates, and the Fund's expenses. Although the sub-account
determines its yield on the basis of a seven calendar day period, it may use a
different time period on occasion. The yield quotes may reflect the expense
limitation described "Investment Manager and Other Services" in the Fund's
Statement of Additional Information. There is no assurance that the yields
quoted on any given occasion will remain in effect for any period of time and
there is no guarantee that the net asset values will remain constant. It should
be noted that an Annuitant's investment in the Nationwide Money Market Fund
sub-account is not guaranteed or insured. Yield of other money market funds may
not be comparable if a different base period or another method of calculation is
used.
All performance advertising shall also include quotations of standardized
average annual total return, calculated in accordance with a standard method
prescribed by rules of the Securities and Exchange Commission, to facilitate
comparison with standardized average annual total return advertised for a
specific period is found by first taking a hypothetical $1,000 investment in
each of the sub-accounts' units on the first day of the period at the offering
price, which is the Accumulation Unit Value per unit ("initial investment") and
computing the ending redeemable value ("redeemable value") of that investment at
the end of the period. The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return reflects the deduction of
1.45% Mortality, Expense Risk and Administration Charge. No deduction is made
for premium taxes which may be assessed by certain states. Nonstandardized total
return may also be advertised, and is calculated in a manner similar to
standardized average annual total return except the nonstandardized total return
is based on a hypothetical initial investment of $10,000. An assumed initial
investment of $10,000 will be used because that figure more closely approximates
the size of a typical Contract than does the $1,000 figure used in calculating
the standardized average annual total return quotations.
The standardized average annual total return and nonstandardized average
annual total return quotations will be current to the last day of the calendar
quarter preceding the date on which an advertisement is submitted for
publication. Both the standardized average annual return and the nonstandardized
average annual total return will be based on rolling calendar quarters and will
cover periods of one, five, and ten years, or a period covering the time the
underlying Mutual Fund held in the sub-account has been in existence, if the
underlying Mutual Fund has not been in existence for one of the prescribed
periods. For those underlying Mutual Funds which have not been held as
sub-accounts within the Variable Account for one of the quoted periods, the
average annual total return and nonstandardized total return quotations will
show the investment performance such underlying Mutual Funds would have achieved
(reduced by the applicable charges) had they been held as sub-accounts within
the Variable Account for the period quoted.
Quotations of average annual total return and total return are based upon
historical earnings and will fluctuate. Any quotation of performance, therefore,
would not be considered a guarantee of future performance. Factors affecting a
sub-account's performance include general market conditions, operating expenses
and investment management. An Annuitant's account when redeemed may be more or
less than original cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the
prospectus.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Financial Horizons Life Insurance Company:
We have audited the accompanying balance sheets of Financial Horizons Life
Insurance Company (a wholly owned subsidiary of Nationwide life Insurance
Company) as of December 31,1994 and 1993, and the related statements of income,
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31,1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Financial Horizons Life
Insurance Company as of December 31,1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31,1994, in conformity with generally accepted accounting
principles.
As discussed in note 2 to the financial statements, in 1994 the Company adopted
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 27, 1995
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FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Balance Sheets
December 31, 1994 and 1993
(000's omitted)
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Assets 1994 1993
------ --------------- -------------
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $427,874 in 1994) $413,764 -
Equity securities (cost $9,543 in 1994; $527 in 1993) 9,411 585
Fixed maturities held-to-maturity, at amortized cost (fair value $78,690
in 1994; $479,587 in 1993) 82,631 456,539
Mortgage loans on real estate 95,281 91,463
Real estate 1,802 1,211
Policy loans 79 -
Short-term investments (note 13) 365 1,772
--------------- -------------
603,333 551,570
--------------- -------------
Accrued investment income 8,041 7,291
Deferred policy acquisition costs 41,540 32,651
Deferred Federal income tax 1,923 -
Other assets 270 144
Assets held in Separate Accounts (note 8) 177,933 134,383
--------------- -------------
$833,040 726,039
=============== =============
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims (notes 6 and 8) 583,188 527,231
Accrued Federal income tax (note 7):
Current 10 264
Deferred - 334
--------------- -------------
10 598
--------------- -------------
Other liabilities 4,663 5,168
Liabilities related to Separate Accounts (note 8) 177,933 134,383
--------------- -------------
765,794 667,380
--------------- -------------
Shareholder's equity (notes 3, 4 and 12):
Capital shares, $40 par value. Authorized 66 shares (100 shares in 1993),
issued and outstanding 66 shares 2,640 2,640
Paid-in additional capital 52,960 43,960
Unrealized gains (losses) on securities available-for-sale, net of adjustment
to deferred policy acquisition costs of $8,546 ($0 in 1993) and deferred
Federal income tax benefit of $1,994 ($20 expense in 1993) (3,703) 38
Retained earnings 15,349 12,021
--------------- -------------
67,246 58,659
Commitments (note 9) --------------- -------------
$833,040 726,039
=============== =============
</TABLE>
See accompanying notes to financial statements.
28 of 68
<PAGE> 29
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Income
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1994 1993 1992
--------------- ------------- ----------
Revenues (note 14):
Traditional life insurance premiums $ 311 85 93
Universal life and investment product policy charges 3,601 2,345 1,055
Net investment income (note 5) 45,030 40,477 32,726
Realized gains (losses) on investments (note 5) (625) 420 374
--------------- ------------- -----------
48,317 43,327 34,248
--------------- ------------- -----------
Benefits and expenses:
Benefits and claims 29,870 29,439 25,242
Amortization of deferred policy acquisition costs 6,940 4,128 1,737
Other operating costs and expenses 6,320 5,424 4,264
--------------- ------------- -----------
43,130 38,991 31,243
--------------- ------------- -----------
Income before Federal income tax and cumulative
effect of changes in accounting principles 5,187 4,336 3,005
--------------- ------------- -----------
Federal income tax (note 7):
Current expense 2,103 1,982 504
Deferred (benefit) expense (244) (630) 501
--------------- ------------- -----------
1,859 1,352 1,005
--------------- ------------- -----------
Income before cumulative effect of changes in
accounting principles 3,328 2,984 2,000
Cumulative effect of changes in accounting principles,
net of tax (note 3) - (514) -
--------------- ------------- -----------
Net income $ 3,328 2,470 2,000
=============== ============= ===========
</TABLE>
See accompanying notes to financial statements.
29 of 68
<PAGE> 30
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Shareholder's Equity
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Paid-in on securities Total
Capital additional available-for- Retained shareholder's
shares capital sale, net earnings equity
------------- ------------ ---------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
1992:
Balance, beginning of year $ 2,640 43,960 - 7,551 54,151
Net income - - - 2,000 2,000
Unrealized gains on equity
securities, net of deferred
Federal income tax - - 21 - 21
------------- ------------ ---------------- ------------ -----------------
Balance, end of year $ 2,640 43,960 21 9,551 56,172
============= ============ ================ ============ =================
1993:
Balance, beginning of year 2,640 43,960 21 9,551 56,172
Net income - - - 2,470 2,470
Unrealized gains on equity
securities, net of deferred
Federal income tax - - 17 - 17
------------- ------------ ---------------- ------------ -----------------
Balance, end of year $ 2,640 43,960 38 12,021 58,659
============= ============ ================ ============ =================
1994:
Balance, beginning of year 2,640 43,960 38 12,021 58,659
Capital contributions - 9,000 - - 9,000
Net income - - - 3,328 3,328
Adjustment for change in
accounting for certain investments
in debt and equity securities, net of
adjustment to deferred policy
acquisition costs and deferred
Federal income tax (note 3) - - 4,698 - 4,698
Unrealized losses on securities
available-for-sale, net of
adjustment to deferred policy
acquisition costs and deferred
Federal income tax - - (8,439) - (8,439)
------------- ------------ ----------------- ------------ -----------------
Balance, end of year $ 2,640 52,960 (3,703) 15,349 67,246
============= ============ ================= ============ =================
</TABLE>
See accompanying notes to financial statements.
30 of 68
<PAGE> 31
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Cash Flows
Years ended December 31, 1994, 1993 and 1992
(000's omitted)
<TABLE>
<CAPTION>
1994 1993 1992
--------------- ---------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,328 2,470 2,000
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Capitalization of deferred policy acquisition costs (7,283) (10,351) (11,512)
Amortization of deferred policy acquisition costs 6,940 4,128 1,737
Amortization and depreciation 473 660 (32)
Realized losses (gains) on invested assets, net 625 (420) (374)
Deferred Federal income tax (benefit) expense (244) (784) 501
Increase in accrued investment income (750) (1,078) (1,799)
(Increase) decrease in other assets (126) 326 269
Increase (decrease) in policyholder account balances 926 (202) 288
Decrease (increase) in accrued Federal income tax payable (254) 666 (452)
Decrease (increase) in other liabilities (505) 2,843 1,104
----------------- ------------- -------------
Net cash provided by (used in) operating activities 3,130 (1,742) (8,270)
----------------- ------------- -------------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 24,850 - -
Proceeds from sale of securities available-for-sale 13,170 134 -
Proceeds from maturity of fixed maturities held-to-maturity 8,483 28,829 6,734
Proceeds from sale of fixed maturities - 2,136 23,515
Proceeds from repayments of mortgage loans on real estate 5,733 3,804 1,100
Proceeds from repayments of policy loans 2 2 -
Cost of securities available-for-sale acquired (94,130) (661) -
Cost of fixed maturities held-to maturity acquired (15,544) (100,671) (155,804)
Cost of mortgage loans on real estate acquired (11,000) (31,200) (21,000)
Cost of real estate acquired (52) (2) (901)
Policy loans issued (80) (2) -
---------------- ------------ -------------
Net cash used in investing activities (68,568) (97,631) (146,356)
---------------- ------------ -------------
Cash flows form financing activities:
Proceeds from capital contribution 9,000 - -
Increase in universal life and investment product account balances 95,254 127,050 170,818
Decrease in universal life and investment product account balances (40,223) (33,159) (16,778)
---------------- ------------ -------------
Net cash provided by financing activities 64,031 93,891 154,040
---------------- ------------ -------------
Net decrease in cash and cash equivalents (1,407) (5,482) (586)
Cash and cash equivalents, beginning of year 1,772 7,254 7,840
---------------- ------------ -------------
Cash and cash equivalents, end of year $ 365 1,772 7,254
================ ============ =============
</TABLE>
See accompanying notes to financial statements.
31 of 68
<PAGE> 32
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements
December 31, 1994, 1993 and 1992
(000's omitted)
(1) Organization and Description of Business
----------------------------------------
Financial Horizons Life Insurance Company (the Company) is a wholly
owned subsidiary of Nationwide Life Insurance Company (NLIC).
The Company is a life insurer licensed in 41 states and the
District of Columbia. The Company sells primarily fixed and
variable rate annuities through banks and other financial
institutions. In addition, the Company sells universal life and other
interest-sensitive life products and is subject to competition from
other insurers throughout the United States. The Company is subject
to regulation by the Insurance Departments of states in which it is
licensed, and undergoes periodic examinations by those departments.
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce
insurer profits, new legal theories or insurance company
insolvencies through guaranty fund assessments may create costs for
the insurer beyond those recorded in the financial statements. The
Company mitigates this risk by operating throughout the United
States, thus reducing its exposure to any single jurisdiction, and
also by employing underwriting practices which identify and
minimize the adverse impact of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by
the Company will default. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining
sound credit and collection policies and by providing for any
amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This
change in rates may cause certain interest-sensitive products to
become uncompetitive or may cause disintermediation. The
Company mitigates this risk by charging fees for non-conformance
with certain policy provisions, by offering products that transfer
this risk to the purchaser, and/or by attempting to match the
maturity schedule of its assets with the expected payouts of its
liabilities. To the extent that liabilities come due more quickly
than assets mature, an insurer would have to borrow funds or sell
assets prior to maturity and potentially recognize a gain or loss.
(2) Summary of Significant Accounting Policies
------------------------------------------
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP) which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities. See note 4.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
revenues and expenses for the period. Actual results could differ
significantly from those estimates.
The estimates susceptible to significant change are those used in
determining the liability for future policy benefits and claims and
those used in determining valuation allowances for mortgage loans on
real estate and real estate. Although some variability is inherent in
these estimates, management believes the amounts provided are
adequate.
32 of 68
<PAGE> 33
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(a) Valuation of Investments and Related Gains and Losses
-----------------------------------------------------
Prior to January 1, 1994, the Company classified fixed maturities in
accordance with the then existing accounting standards, and accordingly,
fixed maturity securities were carried at amortized cost, adjusted for
amortization of premium or discount, since the Company had both the ability
and intent to hold these securities until maturity. Equity securities were
carried at fair value with the unrealized gains and losses, net of deferred
Federal income tax, reported as a separate component of shareholder's
equity.
In May 1993, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO.115- ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES (SFAS 115). SFAS 115 requires
fixed maturities and equity securities to be classified as either
held-to-maturity, available-for-sale, or trading. The Company has no
trading securities. The Company adopted SFAS 115 as of January 1, 1994,
with no effect on net income. See note 3 regarding the effect on
shareholder's equity.
Fixed maturity securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. Loans in foreclosure and loans considered in-substance
foreclosed as of the balance sheet date are placed on non-accrual status
and written down to the fair value of the existing property to derive a new
cost basis. Real estate is carried at cost less accumulated depreciation
and valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In May, 1993, the FASB issued STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 114 - ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN (SFAS 114).
SFAS 114, which was amended by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 118 - ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN - INCOME
RECOGNITION AND DISCLOSURE in October, 1994, requires the measurement of
impaired loans be based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. The impact on the
financial statements of adopting SFAS 114 as amended is not expected to be
material. Previously issued financial statements shall not be restated.
The Company will adopt SFAS 114 as amended in 1995.
(b) Revenues and Benefits
---------------------
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance products
include those products with fixed and guaranteed premiums and benefits and
consist primarily of certain annuities with life contingencies. Premiums
for traditional life insurance products are recognized as revenue when due
and collected. Benefits and expenses are associated with earned premiums
so as to result in recognition of profits over the life of the contract.
This association is accomplished by the provision for future policy
benefits.
33 of 68
<PAGE> 34
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual
deferred annuities and immediate annuities without life contingencies.
Revenues for universal life and investment products consist of cost of
insurance, policy administration and surrender charges that have been
earned and assessed against policy account balances during the period.
Policy benefits and claims that are charged to expense include benefits and
claims incurred in the period in excess of related policy account balances
and interest credited to policy account balances.
(c) Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable selling expenses have been deferred for universal life and
investment products. Deferred policy acquisition costs are being amortized
with interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest margins,
cost of insurance, policy administration and surrender charges. For years
in which gross profits are negative, deferred policy acquisition costs are
amortized based on the present value of gross revenues. Beginning January
1, 1994, deferred policy acquisition costs are adjusted to reflect the
impact of unrealized gains and losses on fixed maturity securities
available-for-sale. See note 2(a).
(d) Separate Accounts
-----------------
Separate Account assets and liabilities represent contractholders' funds
which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the statements of income and cash flows except
for the fees the Company receives for administrative services and risks
assumed.
(e) Future Policy Benefits
----------------------
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
(f) Federal Income Tax
------------------
The Company files a consolidated Federal income tax return with Nationwide
Mutual Insurance Company.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change from the
deferred method of accounting for income tax of APB Opinion 11 to the asset
and liability method of accounting for income tax. Under the asset and
liability method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under this method,
the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the deferred
tax assets to the amounts expected to be realized.
Prior to 1993, the Company applied the deferred method of accounting for
income tax which recognized deferred income tax for income and expense
items that are reported in different years for financial reporting purposes
and income tax purposes using the tax rate applicable for the year of
calculation. Under the deferred method, deferred tax is not adjusted for
subsequent changes in tax rates. See note 7.
The Company has reported the cumulative effect of the change in method of
accounting for income tax in the 1993 statement of income. See note 3.
34 of 68
<PAGE> 35
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(g) Reinsurance Ceded
-----------------
Reinsurance premiums ceded and reinsurance recoveries on
benefits and claims incurred are deducted from the respective income
and expense accounts.
(h) Cash Equivalents
----------------
For purposes of the statements of cash flows, the Company considers
all short-term investments with original maturities of three months
or less to be cash equivalents.
(i) Reclassification
----------------
Certain items in the 1993 and 1992 financial statements have
been reclassified to conform to the 1994 presentation.
(3) Changes in Accounting Principles
--------------------------------
Effective January 1, 1994, the Company changed its method of accounting
for certain investments in debt and equity securities in connection
with the issuance of a new accounting standard by the FASB as described
in Note 2(a). As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $380,974 and
$399,556, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994, has been recorded
as a direct credit to shareholder's equity as follows:
Excess of fair value over amortized cost of fixed
maturity securities available-for-sale $ 18,582
Adjustment to deferred policy acquisition costs (11,355)
Deferred Federal income tax (2,529)
--------------
$ 4,698
==============
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The
effect as of January 1, 1993, the date of adoption, has been recognized
in the 1993 statement of income as the cumulative effect of changes in
accounting principles, as follows:
Asset/liability method of recognizing income tax (note 7) $ (79)
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $234), (note 11) (435)
Net cumulative effect of changes in accounting
principles $ (514)
=======
(4) Basis of Presentation
---------------------
The financial statements have been prepared in accordance with GAAP.
An Annual Statement, filed with the Department of Insurance of the
State of Ohio (the Department), is prepared on the basis of accounting
practices prescribed or permitted by such regulatory authority.
Prescribed statutory accounting practices include a variety of
publicationsof the National Association of Insurance Commissioners
(NAIC), as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass all
accounting practices not so prescribed. The Company has no material
permitted statutory accounting practices.
35 of 68
<PAGE> 36
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<TABLE>
The following reconciles the statutory net income (loss) as reported to regulatory authorities to net income as shown in the
accompanying financial statements:
<CAPTION>
1994 1993 1992
----------- --------- ----------
<S> <C> <C> <C>
Statutory net income (loss) $ 6,173 3,539 (2,092)
Adjustments to restate to the basis of GAAP:
Increase in deferred policy acquisition costs, net 343 6,223 9,775
Future policy benefits (3,587) (7,401) (5,217)
Deferred Federal income tax benefit (expense) 244 630 (501)
Valuation allowances and other than temporary
declines accounted for directly in surplus (553) (440) (266)
Interest maintenance reserve 84 476 301
Cumulative effect of changes in accounting principles, net of tax - (514) -
Other, net 624 (43) -
----------- ---------- ---------
Net income per accompanying statements of income $ 3,328 2,470 2,000
=========== ========== =========
</TABLE>
<TABLE>
The following reconciles the statutory capital shares and surplus as reported to regulatory authorities to shareholder's equity as
shown in the accompanying financial statements:
<CAPTION>
1994 1993 1992
----------- ---------- ---------
<S> <C> <C> <C>
Statutory capital shares and surplus $ 48,947 35,875 33,723
Add (deduct) cumulative effect of adjustments:
Deferred policy acquisition costs 41,540 32,651 26,428
Nonadmitted assets - 2 13
Asset valuation reserve 3,516 2,152 1,166
Interest maintenance reserve 629 545 69
Future policy benefits (15,106) (11,518) (4,117)
Deferred Federal income tax, including effect of changes in
accounting principles in 1993 1,923 (334) (1,110)
Cumulative effect of change in accounting principles for
postretirement benefits other than pensions, gross - (669) -
Difference between amortized cost and fair value of fixed
maturity securities available-for-sale, gross (14,110) - -
Other, net (93) (45) -
----------- ---------- ---------
Shareholder's equity per accompanying balance sheets $67,246 58,659 56,172
=========== ========== =========
</TABLE>
<TABLE>
(5) Investments
-----------
An analysis of investment income by investment type follows for the years ended December 31:
<CAPTION>
1994 1993 1992
----------- ---------- ---------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 36,720 - -
Equity securities 16 13 -
Fixed maturities held-to-maturity 540 34,023 28,107
Mortgage loans on real estate 8,437 7,082 4,831
Real estate 175 167 101
Short-term 207 295 398
Other 19 - 20
----------- ---------- ---------
Total investment income 46,114 41,580 33,457
Less: investment expenses 1,084 1,103 731
----------- ----------- ---------
Net investment income $ 45,030 40,477 32,726
=========== =========== =========
</TABLE>
36 of 68
<PAGE> 37
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<TABLE>
An analysis of the change in gross unrealized gains (losses) on securities
available-for-sale and fixed maturities held-to-maturity follows for the years
ended December 31:
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $(32,692) - -
Equity securities (190) 26 32
Fixed maturities held-to-maturity (8,407) 5,710 (1,906)
--------- --------- ---------
$(41,289) 5,736 (1,874)
========= ========= =========
</TABLE>
<TABLE>
An analysis of realized gains (losses) on investments by investment type follows for the years ended December 31:
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Realized on disposition of investments:
Securities available-for-sale:
Fixed maturities $ 260 - -
Fixed maturities - 856 736
Mortgage loans on real estate (332) 4 (96)
--------- ---------- ----------
(72) 860 640
--------- ---------- ----------
Valuation allowances:
Mortgage loans on real estate (500) (250) (110)
Real estate and other (53) (190) (156)
--------- ---------- ----------
(553) (440) (266)
--------- ---------- ----------
$ (625) 420 374
========= ========== ==========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
were as follow as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Securities available-for-sale
-----------------------------
Fixed maturities:
US Treasury securities and obligations of US
government corporations and agencies $ 4,442 92 - 4,534
Obligations of states and political
subdivisions 273 - (21) 252
Debt securities issued by foreign governments 8,517 15 (452) 8,080
Corporate securities 214,332 518 (7,903) 206,947
Mortgage-backed securities 200,310 1,291 (7,650) 193,951
------------- ---------- ---------- --------------
Total fixed maturities 427,874 1,916 (16,026) 413,764
Equity securities 9,543 45 (177) 9,411
------------- ---------- ---------- --------------
$437,417 1,961 (16,203) 423,175
============= ========== =========== ==============
The amortized cost and estimated fair value of fixed maturity corporate securities held-to-maturity as of December 31, 1994
are $82,631 and $78,690, respectively. Gross gains of $130 and gross losses of $4,071 are unrealized on these securities.
</TABLE>
37 of 68
<PAGE> 38
<TABLE>
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The amortized cost and estimated fair value of investments in fixed maturity securities were as follows as of December 31, 1993:
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
US Treasury securities and obligations of US
government corporations and agencies $ 12,630 1,315 - 13,945
Obligations of states and political subdivisions 275 5 - 280
Debt securities issued by foreign governments 8,606 393 (19) 8,980
Corporate securities 252,000 13,725 (411) 265,314
Mortgage-backed securities 183,028 8,757 (717) 191,068
----------- ----------- ----------- -----------
$456,539 24,195 (1,147) 479,587
=========== =========== =========== ===========
As of December 31, 1993 unrealized gain on equity securities was $58 before providing for deferred Federal income tax.
The amortized cost and estimated fair value of fixed maturity securities available-for-sale and fixed maturity securities held-to-
maturity as of December 31, 1994, by contractual maturity, are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
</TABLE>
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
---------- ----------
Fixed maturity securities available-for-sale
--------------------------------------------
<S> <C> <C>
Due in one year or less $ 25,898 25,970
Due after one year through five years 171,126 164,870
Due after five years through ten years 30,540 28,973
---------- ----------
227,564 219,813
Mortgage-backed securities 200,310 193,951
---------- ----------
$427,874 413,764
========== ==========
Fixed maturity securities held-to-maturity
------------------------------------------
Due in one year or less $ 7,000 6,923
Due after one year through five years 41,563 40,381
Due after five years through ten years 32,524 30,003
Due after ten years 1,544 1,383
---------- ----------
$ 82,631 78,690
========== ==========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1994 were
$13,170, while proceeds from sales of investments in fixed maturity securities
during 1993 were $2,136 ($23,515 in 1992). Gross gains of $373 ($205 in 1993
and $706 in 1992) and gross losses of $73 (none in 1993 and 1992) were realized
on those sales.
Real estate is presented at cost less accumulated depreciation of $97 in 1994
($58 in 1993) and valuation allowancesof $472 in 1994 ($420 in 1993). Other
valuation allowances are $860 in 1994 ($360 in 1993) on mortgage loans on real
estate.
The Company generally initiates foreclosure proceedings on all mortgage loans
on real estate delinquent sixty days. Foreclosures of mortgage loans on real
estate were $631 in 1994 ($0 in 1993). No mortgage loans on real estate were
in process of foreclosure or in-substance foreclosed as of December 31, 1994
and 1993.
Investments with an amortized cost of $2,786 and $2,785 as of December 31, 1994
and 1993, respectively, were on deposit with various regulatory agencies as
required by law.
38 of 68
<PAGE> 39
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(6) Future Policy Benefits
----------------------
The liability for future policy benefits for investment products has been
established based on policy terms, interest rates and various contract
provisions. The average interest rate credited on investment product
policies was 5.3%, 6.0% and 6.9% for the years ended December 31, 1994,
1993 and 1992, respectively.
(7) Federal Income Tax
------------------
The Company adopted Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes (SFAS 109), as of January 1, 1993. See note
3. The 1992 financial statements have not been restated to apply the
provisions of SFAS 109.
The significant components of deferred income tax benefit for the years
ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Deferred income tax expense (exclusive of the
effects of other components listed below) $(244) (666)
Adjustments to deferred income tax assets and
liabilities for enacted changes in tax laws and rates - 36
---------- ----------
$(244) (630)
========== ==========
</TABLE>
For the year ended December 31, 1992, deferred income tax expense results from
timing differences in the recognition of income and expense for income tax and
financial reporting purposes. The primary sources of those timing differences
were deferred policy acquisition costs (deferred expense of $2,688) and
reserves for future policy benefits (deferred benefit of $2,746).
Total Federal income tax expense for the years ended December 31, 1994, 1993
and 1992 differs from the amount computed by applying the U.S. Federal income
tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
Amount % Amount % Amount %
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $1,815 35.0 $1,518 35.0 $1,022 34.0
Tax exempt interest and dividends
received deduction (50) (1.0) (206) (4.7) (20) (0.7)
Current year increase in U.S. Federal
income tax rate - - 36 0.8 - -
Other, net 94 1.8 4 0.1 3 (0.1)
---------- ----- ---------- ----- ---------- -----
Total (effective rate of each year) $1,859 35.8 $1,352 31.2 $1,005 33.4
========== ===== ========== ===== ========== =====
</TABLE>
Total Federal income tax paid was $2,357, $1,316 and $956 during the years
ended December 31, 1994, 1993 and 1992, respectively.
39 of 68
<PAGE> 40
<TABLE>
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<CAPTION>
The tax effects of temporary differences that give rise to significant components of the net deferred tax asset (liability) as
of December 31 are as follows:
<S> <C> <C>
1994 1993
--------------- ---------------
Deferred tax assets:
Future policy benefits $ 5,879 6,096
Securities available-for-sale 4,985 -
Liabilities in Separate Accounts 3,111 2,688
Mortgage loans on real estate and real estate 458 268
Other assets and other liabilities 101 668
--------------- ---------------
Total gross deferred tax assets 14,534 9,720
--------------- ---------------
Deferred tax liabilities:
Deferred policy acquisition costs 12,611 9,603
Fixed maturities and equity securities - 451
--------------- ---------------
Total gross deferred tax liabilities 12,611 10,054
--------------- ---------------
Net deferred tax asset (liability) $ 1,923 (334)
=============== ===============
</TABLE>
The Company has determined that valuation allowances are not
necessary as of December 31, 1994 and 1993 and January 1, 1993 (date
of adoption of SFAS 109) based on its analysis of future deductible
amounts. All future deductible amounts can be offset by future
taxable amounts or recovery of Federal income tax paid within the
statutory carryback period. In addition, for future deductible
amounts for securities available-for-sale, affiliates of the Company
which are included in the same consolidated Federal income tax return
hold investments that could be sold for capital gains that could
offset capital losses realized by the Company should securities
available-for-sale be sold at a loss.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS No. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires
disclosure of fair value information about existing on and off-balance
sheet financial instruments. In cases where quoted market prices are
not available, fair value is based on estimates using present value or
other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flow.
Although fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could
cause these estimates to vary materially. In that regard, the derived
fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in the
immediate settlement of the instruments. SFAS 107 excludes certain
assets and liabilities from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the
underlying value of the Company.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically
exempted from SFAS 107 disclosures, estimated fair value of policy
reserves on insurance contracts are provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company
in estimatingits fair value disclosures:
SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying amount
reported in the balance sheets for these instruments approximate
their fair value.
40 of 68
<PAGE> 41
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
INVESTMENT SECURITIES: Fair value for fixed maturity securities is
based on quoted market prices, where available. For fixed maturity
securities not actively traded, fair value is estimated using values
obtained from independent pricing services or, in the case of private
placements, is estimated by discounting expected future cash flows
using a current market rate applicable to the yield, credit quality
and maturity of the investments. The fair value for equity securities
is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of assets
held in Separate Accounts is based on quoted market prices. The fair
value of liabilities related to Separate Accounts is the amount
payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage loans on
real estate is estimated using discounted cash flow analyses, using
interest currently being offered for similar loans to borrowers with
similar credit ratings. Loans with similar characteristics are
aggregated for purposes of the calculations. Fair value for mortgages
in default is valued at the estimated fair value of the underlying
collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON INSURANCE CONTRACTS: The estimated fair value is
the amount payable on demand. Also included are disclosures for the
Company's limited payment policies, which the Company has used
discounted cash flow analyses similar to those used for investment
contracts with known maturities to estimate fair value.
<TABLE>
<CAPTION>
Carrying amount and estimated fair value of financial instruments subject to SFAS 107 and policy reserves on insurance contracts
were as follows as of December 31:
<S> <C> <C> <C> <C>
1994 1993
---- ----
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ------------- ------------- -------------
Assets
------
Investments:
Securities available-for-sale:
Fixed maturities $413,764 413,764 - -
Equity securities 9,411 9,411 585 585
Fixed maturities held-to-maturity 82,631 78,690 456,539 479,587
Mortgage loans on real estate 95,281 92,340 91,463 96,168
Policy loans 79 79 - -
Short-term investments 365 365 1,772 1,772
Assets held in Separate Accounts 177,933 177,933 134,383 134,383
Liabilities
-----------
Investment contracts 579,903 563,331 524,362 505,926
Policy reserves on insurance contracts 3,285 3,141 2,869 2,811
Liabilities related to Separate Accounts 177,933 168,749 134,383 126,407
</TABLE>
41 of 68
<PAGE> 42
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(9) Additional Financial Instruments Disclosures
----------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans. These instruments involve, to varying
degrees, elements of credit risk in excess of amounts recognized on
the balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property
represents the collateral if the commitment is funded. The Company's
policy for new mortgage loans on real estate is to lend no more than
80% of collateral value. Should the commitment be funded, the
Company's exposure to credit loss in the event of nonperformance by
the borrower is represented by the contractual amounts of these
commitments less the net realizable value of the collateral. The
contractual amounts also represent the cash requirements for all
unfunded commitments. Commitments on mortgage loans on real estate of
$6,000 extending into 1995 were outstanding as of December 31, 1994.
SIGNIFICANT CONCENTRATIONS OF CREKIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no
more than 27% (34% in 1993) in any geographic area and no more than
8.2% (9.8% in 1993) with any one borrower. The summary below depicts
loans by remaining principal balance as of each December 31:
<TABLE>
<Caption
Apartment
Office Warehouse Retail & other Total
----------- ------------ ---------- ----------- -----------
1994:
<S> <C> <C> <C> <C> <C>
East North Central $1,921 2,254 10,290 4,959 19,424
East South Central - - 1,921 9,876 11,797
Mountain - - - 1,986 1,986
Middle Atlantic 882 1,872 1,909 - 4,663
New England - 921 1,983 - 2,904
Pacific 1,952 6,873 6,310 4,910 20,045
South Atlantic 1,965 - 10,049 13,970 25,984
West North Central - 1,500 - - 1,500
West South Central 1,921 978 - 4,973 7,872
---------- ------------ ------------ ------------ -------------
$8,641 14,398 32,462 40,675 96,175
=========== ============ ============ ============
Less valuation allowances and unamortized discount 894
-------------
Total mortgage loans on real estate, net $95,281
=============
1993:
East North Central $1,929 2,381 10,340 4,973 19,263
East South Central - - 1,925 7,968 9,893
Middle Atlantic 882 1,916 1,929 - 4,727
New England - 943 2,000 - 2,943
Pacific 1,978 2,988 6,385 4,964 16,315
South Atlantic 1,977 - 11,338 17,600 30,915
West North Central - 1,500 - - 1,500
West South Central 1,949 986 - 3,000 5,935
---------- ------------ ------------ ------------ ------------
$8,175 10,714 33,917 38,505 91,851
========== ============ ============ ============
Less valuation allowances and unamortized discount 388
------------
Total mortgage loans on real estate, net $91,463
============
</TABLE>
42 of 68
<PAGE> 43
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(10) Pension Plan
------------
The Company is a participant, together with other affiliated
companies, in a pension plan covering all employees who have completed
at least one thousand hours of service within a twelve-month period
and who have met certain age requirements. Plan contributions
are invested in a group annuity contract with NLIC. Benefits are
based upon the highest average annual salary of any three consecutive
years of the last ten years of service. The Company funds an
allocation of pension costs accrued for employees of affiliates whose
work efforts benefit the Company.
Pension costs charged to operations by the Company during the
years ended December 31, 1994, 1993 and 1992 were $265, $131, and $91,
respectively.
The net periodic pension cost for the plan as a whole for the
years ended December 31, 1994, 1993 and 1992 follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,740 47,694 44,343
Interest cost on projected benefit obligation 73,951 70,543 68,215
Actual return on plan assets (21,495) (105,002) (62,307)
Net amortization and deferral (62,150) 20,832 (24,281)
---------- ---------- ----------
Net periodic pension cost $ 55,046 34,067 25,970
========== ========== ==========
Basis for measurements, net periodic pension cost:
Weighted average discount rate 5.75% 6.75% 7.25%
Rate of increase in future compensation levels 4.50% 4.75% 5.25%
Expected long-term rate of return on plan assets 7.00% 7.50% 8.00%
</TABLE>
<TABLE>
Information regarding the funded status of the plan as a whole as of December 31, 1994 and 1993 follows:
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Accumulated benefit obligation:
Vested $ 914,850 972,475
Nonvested 7,570 10,227
---------- ----------
$ 922,420 982,702
========== ==========
Projected benefit obligation for
services rendered to date 1,305,547 1,292,477
Plan assets at fair value 1,241,771 1,208,007
---------- ----------
Plan assets less than projected benefit obligation (63,776) (84,470)
Unrecognized prior service cost 46,201 49,551
Unrecognized net losses 39,408 55,936
Unrecognized net assets at January 1, 1987 (21,994) (24,146)
---------- ----------
Net accrued pension expense $ (161) (3,129)
========== ==========
Basis for measurements, funded status of plan:
Weighted average discount rate 7.50% 5.75%
Rate of increase in future compensation levels 6.75% 4.50%
</TABLE>
43 of 68
<PAGE> 44
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(11) Postretirement Benefits Other Than Pensions
-------------------------------------------
In addition to the defined benefit pension plan, the Company
participates with other affiliated companies in life and health care
defined benefit plans for qualifying retirees. Postretirement life
and health care benefits are contributory and available to full time
employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement life
insurance contributions are based on age and coverage amount of each
retiree. Postretirement health care benefit contributions are
adjusted annually and contain cost-sharing features such as
deductibles and coinsurance. The accounting for the health care plan
anticipates future cost-sharing changes to the written plan that are
consistent with the Company's expressed intent to increase the retiree
contribution amount annually for expected health care inflation. The
Company's policy is to fund the cost of health care benefits in
amounts determined at the discretion of management. The Company began
funding in 1994. Plan assets are invested in group annuity contracts
of NLIC.
Effective January 1, 1993, the Company adopted the provisions
of STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS'
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106),
which requires the accrual method of accounting for postretirement
life and health care insurance benefits based on actuarially
determined costs to be recognized over the period from the date of
hire to the full eligibility date of employees who are expected to
qualify for such benefits. Postretirement benefit cost for 1992,
which was recorded on a cash basis, has not been restated.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly,
a noncash charge of $669 ($435 net of related income tax benefit) was
recorded on the statement of income as a cumulative effect of a change
in accounting principle. See note 3. The adoption of SFAS 106,
including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $739
to $761 in 1993. Net periodic postretirement benefit cost for 1994
was $119. The Company's accrued postretirement benefit obligation as
of December 31, 1994 and 1993 was $771 and $739, respectively.
Actuarial assumptions for the measurement of the December 31, 1994
accumulated postretirement benefit obligation include a discount rate
of 8% and an assumed health care cost trend rate of 11%, uniformly
declining to an ultimate rate of 6% over 12 years.
Actuarial assumptions for the measurement of the December 31, 1993
accumulated postretirement benefit obligation and the 1994 net
periodic postretirement benefit cost include a discount rate of 7% and
an assumed health care cost trend rate of 12%, uniformly declining to
an ultimate rate of 6% over 12 years.
Actuarial assumptions used to determine the accumulated postretirement
benefit obligation as of January 1, 1993 and the 1993 net periodic
postretirement benefit cost include a discount rate of 8% and an
assumed health care cost trend rate of 14%, uniformly declining to an
ultimate rate of 6% over 12 years.
Information regarding the funded status of the plan as a whole as of
December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1994 1993
---------- ----------
Accumulated postretirement benefit obligation:
Retirees $ 76,677 90,312
Fully eligible, active plan participants 22,013 24,833
Other active plan participants 59,089 84,103
---------- ----------
Accumulated postretirement benefit obligation 157,779 199,248
Plan assets at fair value 49,012 -
---------- ----------
Plan assets less than accumulated postretirement benefit obligation (108,767) (199,248)
Unrecognized net (gains) losses (41,497) 15,128
---------- ----------
Accrued postretirement benefit obligation $(150,264) (184,120)
========== ==========
</TABLE>
44 of 68
<PAGE> 45
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The amount of net periodic postretirement benefit cost for the plan as
a whole for the years ended December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Net periodic postretirement benefit cost:
Service cost - benefits attributed to employee service during the year $ 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,011 13,928
Actual return on plan assets (1,622) -
Net amortization and deferral 1,622 -
---------- ----------
Net periodic postretirement benefit cost $22,597 21,018
========== ==========
</TABLE>
The health care cost trend rate assumption has a significant effect on
the amounts reported. A one percentage point increase in the assumed
health care cost trend rate would increase the accumulated
postretirement benefit obligation as of December 31, 1994 and 1993 by
$8,109 and $15,621, respectively, and the net periodic postretirement
benefit cost for the years ended December 31, 1994 and 1993 by $866
and $2,377, respectively.
(12) Regulatory Risk-Based Capital and Dividend Restriction
------------------------------------------------------
Ohio, the Company's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas
for determining the amount of risk-based capital specify various
weighting factors that are applied to financial balances or various
levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio of the company's regulatory total
adjusted capital, as defined by the NAIC, to its authorized control
level risk-based capital, as defined by the NAIC. Companies below
specific trigger points or ratios are classified within certain
levels, each of which requires specified corrective action. The
Company exceeds the minimum risk-based capital requirements.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $58,823
of shareholder's equity, as presented in the accompanying financial
statements, is restricted as to dividend payments in 1995.
(13) Transactions With Affiliates
----------------------------
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash
Management Company (CCMC), both affiliates, under which NCMC and CCMC
act as common agents in handling the purchase and sale of short-term
securities for the respective accounts of the participants. Amounts
on deposit with NCMC and CCMC were $365 and $1,772 at December 31,
1994 and 1993, respectively, and are included in short-term
investments on the accompanying balance sheets.
45 of 68
<PAGE> 46
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(14) Major Lines of Business
-----------------------
The Company operates in the life insurance line of business in the
life insurance industry. Life insurance operations include
universal life, variable universal life and annuity contracts issued
to individuals.
The following table summarizes the revenues and income (losses) before
Federal income tax and cumulative effect of changes in accounting
principles for the years ended December 31, 1994, 1993 and 1992 and
assets as of December 31, 1994, 1993 and 1992, by line of business.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1994 1993 1992
------------ ------------ ------------
Revenues:
Life insurance $ 45,407 39,871 30,878
Investment income allocated to capital and surplus 2,910 3,456 3,370
------------ ------------ ------------
Total $ 48,317 43,327 34,248
============ ============ ============
Income (losses) before Federal income tax and cumulative
effect of changes in accounting principles:
Life insurance 2,743 880 (365)
Investment income allocated to capital and surplus 2,444 3,456 3,370
------------ ------------ ------------
Total $ 5,187 4,336 3,005
============ ============ ============
Assets:
Life insurance 765,794 667,380 494,221
Capital and surplus 67,246 58,659 56,172
------------ ------------ ------------
Total $833,040 726,039 550,393
============ ============ ============
</TABLE>
Allocations of investment income and certain general expenses were
based on a number of assumptions and estimates, and reported operating
results would change by line if different methods were applied.
Investment income and realized losses allocable to policyholders in
1994 were $41,495 and $42, respectively.
(15) Subsequent Event
----------------
On January 30, 1995, the Company received approval from the Ohio
Secretary of State to change its name to Nationwide Life and Annuity
Insurance Company.
46 of 68
<PAGE> 47
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
(a) Financial Statements: PAGE
<S> <C>
(1) Financial statements and schedule included
in Prospectus
(Part A): N/A
(2) Financial statements and schedule included To be provided by pre-
in Part B as required: effective amendment to
the Registration Statement
Nationwide VA Separate Account-B: N/A
Financial Horizons Life Insurance Company:
Independent Auditors' Report. 27
Balance Sheets as of December 31, 1994 and 1993. 28
Statements of Income for the years ended December 31, 29
1994, 1993 and 1992.
Statements of Shareholder's Equity for 30
the years ended December 31, 1994, 1993 and 1992.
Statements of Cash Flows for the years ended 31
December 31, 1994, 1993 and 1992.
Notes to Financial Statements. 32
</TABLE>
47 of 68
<PAGE> 48
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing establishment of the separate account
(Nationwide Variable Account)
(2) Not Applicable
(3) Underwriting or Distribution Agreement between
Depositor and Principal Underwriter*
(4) Form of Variable Annuity Contract - attached hereto
(5) Form of Application - attached hereto
(6) Articles of Incorporation
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - attached hereto
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Computation of Performance Quotations
*Filed previously in connection with a previous
registration statement (SEC File No. 33-86408) on
November 14, 1994 and hereby incorporated by
reference
48 of 68
<PAGE> 49
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olivet, NC 28365
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Peter F. Frenzer President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson President and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Roy Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
Robert H. Rickel Director
P.O. Box 319
Bayview, ID 83803
</TABLE>
49 of 68
<PAGE> 50
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
2724 West Lebanon Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
James E. Brock Senior Vice President-
One Nationwide Plaza Investment Product Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health, and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President-Sales
One Nationwide Plaza Financial Services
Columbus, OH 43215
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
Carl J. Santillo Senior Vice President
One Nationwide Plaza Life and Health Operations
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
</TABLE>
50 of 68
<PAGE> 51
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Matthew S. Easley Vice President-
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-Strategic
One Nationwide Plaza Planning/Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President-
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT.
* Subsidiaries for which separate financial statements are
filed
** Subsidiaries included in the respective consolidated
financial statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
51 of 68
<PAGE> 52
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Nationwide Mutual Insurance Company Ohio Insurance Company
(Casualty)
Nationwide Mutual Fire Insurance Company Ohio Insurance Company
Nationwide Investing Foundation Michigan Investment Company
Nationwide Insurance Enterprise Foundation Ohio Membership Non-Profit
Corporation
Nationwide Insurance Golf Charities, Inc. Ohio Membership Non-Profit
Corporation
Farmland Mutual Insurance Company Iowa Insurance Company
F & B, Inc. Iowa Insurance Agency
Farmland Life Insurance Company Iowa Life Insurance Company
Nationwide Agribusiness Insurance Company Iowa Insurance Company
Colonial Insurance Company of California California Insurance Company
Nationwide General Insurance Company Ohio Insurance Company
Nationwide Property & Casualty Insurance Ohio Insurance Company
Company
** Nationwide Life and Annuity Insurance Ohio Life Insurance Company
Company
Scottsdale Insurance Company Ohio Insurance Company
Scottsdale Indemnity Company Ohio Insurance Company
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
Neckura General Insurance Company Germany Insurance Company
Columbus Service, GMBH Germany Insurance Broker
Auto-Direkt Insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative service for
Neckura Insurance Group
SVM Sales GMBH, Neckura Insurance Group Germany Sales support for Neckura
Insurance Group
</TABLE>
52 to 68
<PAGE> 53
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Lone Star General Agency, Inc. Texas Insurance Agency
Colonial County Mutual Insurance Company Texas Insurance Company
Nationwide Communications Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Redevelopment Ohio Redevelopment of blighted
Corporation areas within the City of
Columbus, Ohio
Insurance Intermediaries, Inc. Ohio Insurance Broker and
Insurance Agency
Nationwide Cash Management Company Ohio Investment Securities Agent
California Cash Management Company California Investment Securities Agent
Nationwide Development Company Ohio Owns, leases and manages
commercial real estate
Allnations, Inc. Ohio Promotes cooperative
insurance corporations
worldwide
Gates, McDonald & Company of New York New York Workers Compensation Claims
Administration
Nationwide Indemnity Company Ohio Reinsurance Company
NWE, Inc. Ohio Special Investments
</TABLE>
53 of 68
<PAGE> 54
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Nationwide Corporation Ohio Organized for the purpose of
acquiring, holding,
encumbering, transferring,
or otherwise disposing of
shares, bonds, and other
evidences of indebtedness,
securities, and contracts of
other persons, associations,
corporations, domestic or
foreign and to form or
acquire the control of other
corporations
Nationwide Health Care Corporation Ohio Develops and operates
Managed Care Delivery System
InHealth, Inc. Ohio Health Maintenance
Organization (HMO)
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Inc. Ohio Develops and operates
Managed Care Delivery System
** West Coast Life Insurance Company California Life Insurance Company
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance
Administration, Claims
Examining, and Data
Processing Services
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
Leber Direkt Insurance Company Germany Life Insurance Company
** Nationwide Life Insurance Company Ohio Life Insurance Company
</TABLE>
54 of 68
<PAGE> 55
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
** Nationwide Property Management, Inc. Ohio Owns, leases, manages and
deals in Real Property.
** MRM Investments, Inc. Ohio Owns and operates a
Recreational Ski Facility
** National Casualty Company Michigan Insurance Company
** Nationwide Financial Services, Inc. Ohio Registered Broker-Dealer,
Investment Manager and
Administrator
* Nationwide Separate Account Trust Massachusetts Investment Company
* Nationwide Investing Foundation II Massachusetts Investment Company
* Financial Horizons Investment Trust Massachusetts Investment Company
PEBSCO Securities Corp. Oklahoma Registered Broker-Dealer in
Deferred Compensation Market
** National Premium and Benefit Delaware Insurance Administrative
Administration Company Services
Public Employees Benefit Services Delaware Marketing and Administration
Corporation of Deferred Employee
Compensation Plans for
Public Employees
PEBSCO of Massachusetts Insurance Agency, Massachusetts Markets and Administers
Inc. Deferred Compensation Plans
for Public Employees
</TABLE>
55 of 68
<PAGE> 56
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Public Employees Benefit Services Alabama Markets and Administers
Corporation of Alabama Deferred Compensation Plans
for Public Employees
Public Employees Benefit Services Montana Markets and Administers
Corporation of Montana Deferred Compensation Plans
for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers
Deferred Compensation Plans
for Public Employees
Public Employees Benefit Services Arkansas Markets and Administers
Corporation of Arkansas Deferred Compensation Plans
for Public Employees
Public Employees Benefit Services New Mexico Markets and Administers
Corporation of New Mexico Deferred Compensation Plans
for Public Employees
Wausau Lloyds Texas Texas Lloyds Company
Wausau Service Corporation Wisconsin Holding Company
American Marine Underwriters, Inc. Florida Underwriting Manager
Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and
Medicare Supplement Insurance
Wausau Business Insurance Company Illinois Insurance Company
Wausau Preferred Health Insurance Company Wisconsin Insurance and Reinsurance
Company
Wausau Insurance Co. Limited (U.K.) United Kingdom Insurance and Reinsurance
Company
Wausau Underwriters Insurance Company Wisconsin Insurance Company
Employers Life Insurance Company of Wausau Wisconsin Life Insurance Company
</TABLE>
56 of 68
<PAGE> 57
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Employers Insurance of Wausau Wisconsin Insurance Company
A Mutual Company
Wausau General Insurance Company Illinois Insurance Company
Countrywide Services Corporation Delaware Products Liability,
Investigative and Claims
Management Services
Wausau International Underwriters California Special Risks, Excess and
Surplus Lines Insurance
Underwriting Manager
Companies Agency, Inc. (Wisconsin) Wisconsin Insurance Broker
Companies Agency Insurance Services of California Insurance Broker
California, Inc.
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Key Health Plan, Inc. California Pre-paid health plans
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration,
record keeping and
consulting and compensation
consulting
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for
Policies placed through
Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Pennsylvania, Inc. Pennsylvania Insurance Broker
Companies Agency of Massachusetts, Inc. Massachusetts Insurance Broker
</TABLE>
57 of 68
<PAGE> 58
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C>
Companies Agency of New York, Inc. New York Insurance Broker
Financial Horizons Distributors Agency of Oklahoma Life Insurance Agency
Oklahoma, Inc.
Financial Horizons Distributors Agency, Inc. Delaware Insurance Agency
Financial Horizons Distributors Agency of Ohio Insurance Agency
Ohio, Inc.
Landmark Financial Services of New York, New York Life Insurance Agency
Inc.
Financial Horizons Distributors Agency of Alabama Life Insurance Agency
Alabama, Inc.
Financial Horizons Securities Corporation Oklahoma Broker Dealer
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
NEA Valuebuilder Investor Services, Inc. Delaware Life Insurance Agency
NEA Valuebuilder Investor Services of Alabama Life Insurance Agency
Alabama, Inc.
NEA Valuebuilder Investor Services of Massachusetts Life Insurance Agency
Massachusetts, Inc.
NEA Valuebuilder Investor Services of Ohio, Ohio Life Insurance Agency
Inc.
NEA Valuebuilder Investor Services of Texas Life Insurance Agency
Texas, Inc.
NEA Valuebuilder Investor Services of Oklahoma Life Insurance Agency
Oklahoma, Inc.
Financial Horizons Distributors Agency of Texas Life Insurance Agency
Texas, Inc.
Colonial General Insurance Agency, Inc. Arizona Insurance Agency
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
Video Eagle, Inc. Ohio Operates Several Video Cable
Systems
</TABLE>
58 of 68
<PAGE> 59
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED CHART)
STATE OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VA Separate Account-A Ohio Nationwide Life and Issuer of Annuity Contracts
Annuity Separate Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VL Separate Account-A Ohio Nationwide Life and Issuer of Life Insurance
Annuity Separate Account Contracts
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide VA Separate Account-C Ohio Nationwide Life and Issuer of Annuity Contracts
Annuity Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Issuer of Annuity Contracts
Annuity Separate Account
* Nationwide VA Separate Account-Q Ohio Nationwide Life and Issuer of Annuity Contracts
Annuity Separate Account
</TABLE>
59 of 68
<PAGE> 60
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| |=================================
| Contribution Note Cost |
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | |
| | | | | WAUSAU LLOYDS |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | |
| ------------- Shares | | ------------- Shares |=============| |
| | | | | |
| Cost | | Cost | | |
| ---- | | ---- | | A TEXAS LLOYDS |
| Employers-- | | Employers-- | | |
| 100% $15,683,300 | | 100% $106,763,000 | | |
|_______________________________| |________________________________| |_____________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 5,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $11,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $24,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. (AMU) |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | (WISCONSIN) | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| NATIONWIDE ENTERPRISE INSURANCE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
===| NATIONWIDE MUTUAL |=============================================| NATIONWIDE MUTUAL |
| (CASUALTY) | | FIRE |
|_________________________________________| |___________________________|
| | | |__________________________________________________________________ :
| | | | | :
______________|__________ | | | _____________________________ _____________|_:____________________
| ALLNATIONS | | | | | NATIONWIDE | | NATIONWIDE |
| | | | | | GENERAL | | CORPORATION |
| Common Stock: 2,939 | | | | | | | |
| ------------- Shares | | | | | Common Stock: 20,000 Shares | | Common Stock: Control |
| | | | |___| ------------- | | ------------- ------- |
| Cost | | | | | | | $13,092,790 100% |
| ---- | | | | | Cost | | |
| Casualty-26% $88,320 | | | | | ---- | | Shares Cost |
| Fire-26% $88,463 | | | | | Casualty-100% $5,944,422 | | ----- ---- |
|_________________________| | | | |_____________________________| | Casualty $12,443,280 $710,293,557 |
| | | | Fire 649,510 24,007,936 |
_________________________ | | | _____________________________ | |
| FARMLAND MUTUAL | | | | | NATIONWIDE PROPERTY | | (See Page 2) |
| INSURANCE COMPANY | | | | | AND CASUALTY | |____________________________________|
| | | | | | |
| Guaranty Fund |____| | | | Common Stock: 60,000 Shares |
| ------------- |______| |___| ------------- |
| Certificate | | | |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | COLONIAL INS. CO. |
_______________|___________ | | OF CALIFORNIA |
| F & B, INC. | | | |
| | | | Common Stock: 1,750 Shares |
| Common Stock: 1 Share | |___| ------------- |
| ------------- | | | |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | SCOTTSDALE | | COLONIAL GENERAL |
| FARMLAND LIFE | | | INSURANCE COMPANY | | INSURANCE AGENCY, INC. |
| INSURANCE COMPANY | | | | | |
| | | | Common Stock: 30,136 Shares | | Common Stock: 1 Share |
| Common Stock: 1,000,000 |___|___| ------------- |______| ------------ |
| ------------- Shares | | | | | |
| | | | Cost | | Cost |
| Cost | | | ---- | | ---- |
| ---- | | | Casualty-100% $150,000,000 | | Scottsdale- $1,082,336 |
| Casualty-100% $23,826,196 | | |_____________________________| | 100% |
|____________________________| | |__________________________|
| _____________________________
| | NATIONWIDE AGRIBUSINESS |
| | INS. CO. |
| | |
| | Common Stock: 1,000,000 |
| | ------------- Shares |
| | |
|___| Casualty- Cost |
| | 99.9% ---- |
| | $26,300,981 |
| | Other Capital: |
| | Casualty- |
| | Ptd. $713,567 |
| |_____________________________|
|
| _____________________________ ______________________________
| | NECKURA HOLDING CO. | | NECKURA |
| | (NECKURA) | | INSURANCE CO. |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | AUTO INSURANCE CO. |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIRECT |
| | | INSURANCE CO. |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE INDEMNITY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares | | Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | |______| |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty $5,000,000 | | Colonial $500,000 |
| | 100% | | Lone Star 150,000 |
| |_____________________________| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | CASH MANAGEMENT |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________ __________________________
| | CALIFORNIA | | VIDEO EAGLE INC. |
| | CASH MANAGEMENT | | |
| | | | Common Stock: 750 Shares |
| | Common Stock: 90 Shares | | ------------- |
|___| ------------- | ____| |
| | | | | Cost |
| | Cost | | | ---- |
| | ---- | | | NW Comm.- $0 |
| | Casualty-100% $9,000 | | | 100% |
| |_____________________________| | |__________________________|
| |
| |
| |
| _____________________________ | __________________________
| | NATIONWIDE | | | THE BEAK AND |
| | COMMUNICATIONS INC. | | | WIRE CORPORATION |
| | | | | |
| | Common Stock: 14,750 Shares | | | Common Stock: 750 Shares |
|___| ------------- |__|___| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Associated Companies - Dotted Line
Contractural Association - Double Line
December 31, 1994
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|__________________
| NATIONWIDE LIFE |
| Common Stock: 3,814,779 |
| ------------- Shares |
| |
| NW Corp.- Cost |
| 100% ---- |
| $909,179,664 |
|______________________________|
|
_________________________________________________________________________________|
| | |
____________|____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | FINANCIAL HORIZONS |
| FINANCIAL SERVICES | | Common Stock: 100 Shares | | | LIFE |
| Common Stock: 7,676 | | ------------- | | | Common Stock: 66,000 |
______| ------------- Shares | _____| | |_______| ------------- Shares |
| ____| Cost | | | Cost | | | NW Life- Cost |
| | | ---- | | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |_________________________| | |___________________________| | |______________________________|
| | | | | |
| | _________________________ | ___________|_|_____________ |
| | | NATIONWIDE | | | | |
| | | INVESTOR SERVICES | | | | |
| | | Common Stock: 5 Shares | | | NCC OF AMERICA, | |
| |____| ------------- | | | INC. (INACTIVE) | | ______________________________
| | | | | | | | | WEST COAST LIFE |
| | | NW Fin. Serv.- Cost | | | | | | Common Stock: 1,000,000 |
| | | 100% ---- | | | | | | ------------- Shares |
| | | $5,000 | | | | |_______| Cost |
| | |_________________________| | |___________________________| | | ---- |
| | | | | NW Life-100% $92,762,014 |
| | _________________________ | ___________________________ | |______________________________|
| | | NATIONWIDE | | | HICKEY-MITCHELL | |
| | | INVESTING | | | INSURANCE AGENCY | |
| | | FOUNDATION | | | Common Stock: 101 Shares | |
| |____| | |_____| ----------- | |
| ____| | | | | ______________________________
| | | | | Cost | | | EMPLOYERS LIFE INSURANCE CO. |
| | | | | ---- | | | OF WAUSAU (EL) |
| | | COMMON LAW TRUST | | Nat. Cas.-100% $4,701,200 | | | |
| | |_________________________| |___________________________| | | Common Stock: 250,000 Shares |
| | | |_______| ------------- |
| | _________________________ ____________|______________ | | ---- |
| | | NATIONWIDE | | NATIONAL PREMIUM & | | | NW Life-100% $165,627,416 |
| | | INVESTING | | BENEFIT ADMINISTRATION | | |______________________________|
| |____| FOUNDATION II | | Common Stock: 10,000 | | |
| ____| | | ------------ Shares | | |
| | | | | Cost | | |
| | | | | Hickey- ---- | | ___________|_________________
| | | COMMON LAW TRUST | | Mitchell-100% $1,319,469 | | | WAUSAU PREFERRED |
| | |_________________________| |___________________________| | | HEALTH INS. CO. |
| | | | |
| | | | Common Stock: 200 Shares |
| | _________________________ | | ------------- |
| | | NATIONWIDE | | | EL -- 100% Cost |
| |____| SEPARATE ACCOUNT | | | ---- |
| ____| TRUST | | | $51,413,193 |
| | | COMMON LAW TRUST | | |_____________________________|
| | |_________________________| |
| | |
| | |
| | _________________________ |
| | | FINANCIAL HORIZONS | | ______________________________
| |____| INVESTMENT TRUST | | | NATIONWIDE |
|______| TRUST | | | PROPERTY MANAGEMENT |
| COMMON LAW TRUST | | | Common Stock: 59 Shares |
|_________________________| |_______| ------------- |
| | |
| | Cost |
| | ---- |
| | NW Life-100% $1,907,896 |
| |______________________________|
| |
| |
| |
| |
| ____________|_________________
| | MRM INVESTMENTS, INC. |
| | Common Stock: 1 Share |
| | ------------ |
| | |
| | Cost |
| | Nat. Prop. ---- |
| | Mgmt.-100% $550,000 |
| |______________________________|
|
|
| ___________________________
| | NWE, INC. |
| | |
| | Common Stock: 100 Shares |
|_______| |
| NW Life-100% Cost |
| ---- |
| $35,971,375 |
|___________________________|
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| (CASUALTY) |___________________________________________________________
| |
|_______________________________________|
| _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
__________________|______________|___
| NATIONWIDE CORPORATION |
| Common Stock: Control: |
| ------------- ------- |
| 13,092,790 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty $12,443,280 $710,293,557 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_______________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES | | GATES, McDONALD | | FINANCIAL HORIZONS |
| BENEFIT SERV. CORP. | | & COMPANY (GATES) | | DISTRIBUTORS AGY., INC. |
______| Common Stock: 236,494 | | Common Stock: 254 Shares | | Common Stock: 1,000 Shares|
| ____| ------------- Shares | | ------------- |___ _____| ------------- |
| | | Cost | | | | | ___| |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $12,830,936 | | ---- | | | | | NW Corp. ---- |
| | |___________________________| | MW Corp.- $22,126,323 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ___________________________ | GATES, McDONALD & Co. | | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- Shares | | | | | |___| Common Stock: 10,000 |
| | | Cost | | Cost | | | | | ----------- Shares |
| | | Pub. Emp. Ben. ---- | | ---- | | | | | Cost |
| | | Serv.Corp.-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |___________________________| | | | | | | FHDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ___________________________ | GATES, McDONALD & Co. | | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | NEW MEXICO | | | | | | | LANDMARK FINANCIAL |
| | | Common Stock: 1,000 | | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____| ------------- Shares | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___| Common Stock: 10,000 |
| | | Pub. Emp. Ben. ---- | | ---- | | | | ------------- Shares |
| | | Serv.Corp.-100% $1,000 | | $93,750 | | | | Cost |
| | |___________________________| |___________________________| | | | ---- |
| | | | | FHDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 | | | | FINANCIAL HORIZONS |
| |____| ------------- Shares | | | | SECURITIES CORP. |
| | | Cost | | |___| Common Stock: 10,000 |
| | | Pub. Emp. Ben. ---- | | | | ------------- Shares |
| | | Serv.Corp. 100% $500 | | | | Cost |
| | |___________________________| | | | ---- |
| | | | | FHDAI-100% $153,000 |
| | | | |___________________________|
| | | |
| | ___________________________ | |
| | | PEBSCO OF | ___________________________ | |
| | | MONTANA | | AFFILIATE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 500 | | | | | | |
| | | ------------- Shares | | Common Stock: 100 Shares |__ | | | FINANCIAL HORIZONS |
| | | Cost | | | | |___| DISTRIBUTORS |
| | | Pub. Emp. Ben. ---- | | FHDAI-100% Cost | | ___| AGENCY OF TEXAS, |
| | | Serv.Corp.-100% $500 | | ---- | | | | INC. |
| | |___________________________| | $100 | | | |___________________________|
| | |___________________________| | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | ALABAMA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 100,000 | | ___| DISTRIBUTORS AGY. |
| | | ------------- Shares | | | | OF OHIO, INC. |
| | | Cost | | | |___________________________|
| | | Pub. Emp. Ben. ---- | | |
| | | Serv.Corp.-100% $1,000 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | MASSACHUSETTS | | | | |
| | | INSURANCE AGENCY, INC. | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 1,000 | | ___| DISTRIBUTORS AGY. |
| | | ------------- Shares | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | Pub. Emp. Ben. ----- | | |
| | | Serv.Corp.-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____ AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE (FIRE) |
| |
|_______________________________________|
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | INHEALTH, INC. |
| INVESTOR SERVICES, INC. | | | Common Stock: 100 |
_______| Common Stock: 500 | | | ------------ Shares |
| _____| ------------- Shares | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $12,046,413 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | NATIONWIDE |
| | | INVESTOR SERVICES | | | HEALTH CARE |
| |_____| OF ALABAMA, INC. | |_____| Common Stock: 15 Shares |
| | | Common Stock: 500 | _____| ------------ |
| | | ------------- Shares | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW Corp.- ---- |
| | | NEA-100% $5,000 | | | 100% $16,850,000 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MGT. |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| | | OF OHIO, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 100 | |_____| ------------- |
| | | ------------- Shares | | | |
| | | Cost | | | Cost |
| | | ----- | | | NW Health ---- |
| | | NEA-91% $5,000 | | | Care-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | | | | INHEALTH |
| | | | | | AGENCY, INC. |
| | | NEA VALUEBUILDER | | | Common Stock: 99 Shares |
| |_____| INVESTOR SERVICES | |_____| ------------- |
| | | OF TEXAS, INC. | | Cost |
| | | | | NW Health ---- |
| | | | | Corp.-99% $116,077 |
| | |___________________________| |___________________________|
| |
| | ___________________________
| | | |
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
</TABLE>
Subsidiary Companies -- Solid Line
Associated Companies -- Dotted Line
Contractual Association -- Double Line
December 31, 1994
Page 2
<PAGE> 65
Item 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by the Company of any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or
employee of the Company, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Financial Services, Inc. ("NFS") acts as general
distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-5, Nationwide
Variable Account-6, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VLI
Separate Account-2, Nationwide VLI Separate Account-3, NACo
Variable Account and the Nationwide Variable Account, all
of which are separate investment accounts of the Company or
its affiliates.
NFS also acts as principal underwriter for the Nationwide
Investing Foundation, Nationwide Separate Account Trust,
Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
62 of 68
<PAGE> 66
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olivet, NC 28365
Willard J. Engel Director
1100 E. Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Peter F. Frenzer Vice Chairman, President
One Nationwide Plaza and Director
Columbus, OH 43215
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Henry S. Holloway Director
1247 Stafford Road
Darlington, MD 21034
Gordon E. McCutchan Executive Vice President-Law and
One Nationwide Plaza Corporate Services and Director
Columbus, OH 43215
D. Richard McFerson President and
One Nationwide Plaza Chief Executive Officer--Nationwide
Columbus, OH 43215 Insurance Enterprise and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Roy Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
Robert H. Rickel Director
P.O. Box 319
Bayview, ID 83803
Arden L. Shisler Director
2724 West Lebanon Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
</TABLE>
63 of 68
<PAGE> 67
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
Harold W. Weihl Chairman of the Board of Directors
14282 King Road
Bowling Green, OH 43402
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager and Treasurer
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Financial
Services,
Inc.
</TABLE>
64 of 68
<PAGE> 68
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Gary E. Berndt
Nationwide Life and Annuity Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant hereby represents that any contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the
Internal Revenue Code of 1986, as amended, is issued by the
Registrant in reliance upon, and in compliance with, the
Securities and Exchange Commission's no-action letter to the
American Council of Life Insurance (publicly available November
28, 1988) which permits withdrawal restrictions to the extent
necessary to comply with IRC Section 403(b)(11).
65 of 68
<PAGE> 69
Offered by
Nationwide Life and Annuity Insurance Company
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide VA Separate Account-B
Individual Deferred Variable Annuity Contract
PROSPECTUS
December 1, 1995
66 of 68
<PAGE> 70
ACCOUNTANTS' CONSENT
The Board of Directors
Nationwide Life and Annuity Insurance Company (formerly Financial Horizons
Life Insurance Company):
We consent to the use of our report included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Columbus, Ohio
November 21, 1995
67 of 68
<PAGE> 71
SIGNATURES
As required by the Securities Act of 1933, the Registrant, NATIONWIDE
VARIABLE ACCOUNT-B, has caused this Registration Statement to be signed on its
behalf in the City of Columbus, and State of Ohio, on this 21st day of
November, 1995.
NATIONWIDE VA SEPARATE ACCOUNT-B
--------------------------------------------------------------
(Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE
COMPANY
---------------------------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 21st day of
November, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
/s/LEWIS J. ALPHIN Director
- ----------------------------------------
Lewis J. Alphin
/s/WILLARD J. ENGEL Director
- ----------------------------------------
Willard J. Engel
/s/FRED C. FINNEY Director
- ----------------------------------------
Fred C. Finney
President/Chief Operating
/s/PETER F. FRENZER Officer and Director
- ----------------------------------------
Peter F. Frenzer
/s/CHARLES L. FUELLGRAF, JR. Director
- ----------------------------------------
Charles L. Fuellgraf, Jr.
Chairman of the Board
/s/HENRY S. HOLLOWAY and Director
- ----------------------------------------
Henry S. Holloway
/s/D. RICHARD MCFERSON Chief Executive Officer and Director
- ----------------------------------------
D. Richard McFerson
/s/DAVID O. MILLER Director
- ----------------------------------------
David O. Miller
/s/C. RAY NOECKER Director
- ----------------------------------------
C. Ray Noecker
Executive Vice President-
/s/ROBERT A. OAKLEY Chief Financial Officer
- ----------------------------------------
Robert A. Oakley
/s/JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ---------------------------------------- ------------------------
James F. Patterson Joseph P. Rath
/s/ROBERT H. RICKEL Director Attorney-in-Fact
- ----------------------------------------
Robert H. Rickel
/s/ARDEN L. SHISLER Director
- ----------------------------------------
Arden L. Shisler
/s/ROBERT L. STEWART Director
- ----------------------------------------
Robert L. Stewart
/s/NANCY C. THOMAS Director
- ----------------------------------------
Nancy C. Thomas
/s/HAROLD W. WEIHL Director
- ----------------------------------------
Harold W. Weihl
</TABLE>
<PAGE> 72
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
NATIONWIDE VA SEPARATE ACCOUNT-B
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
EXHIBITS TO FORM N-4
SEC FILE NO. 33-93482
<PAGE> 1
EXHIBIT NO. 1
BOARD OF DIRECTORS RESOLUTION OF THE DEPOSITOR
<PAGE> 2
EXCERPT FROM:
MINUTES OF A REGULAR MEETING OF THE BOARD OF DIRECTORS OF NATIONWIDE LIFE AND
ANNUITY INSURANCE COMPANY, held at the office of the Company in Columbus, Ohio,
on March 1, 1995.
The following resolution related to name changes for the Company's separate
accounts to coincide with the name change of the Company was presented for
consideration:
RESOLVED, that effective May 1, 1995 and thereafter the names of the separate
accounts of the Company be changed in the following manner:
Financial Horizons VA Separate Account-1 shall be
known as Nationwide VA Separate Account-A;
Financial Horizons VA Separate Account-2 shall be
known as Nationwide VA Separate Account-B;
Financial Horizons VA Separate Account-3 shall be
known as Nationwide VA Separate Account-C;
Financial Horizons VL Separate Account-1 shall be
known as Nationwide VL Separate Account-A; and
Financial Horizons Qualified Plans Variable Account
shall be known as Nationwide VA Separate Account-Q.
A motion was made, seconded and carried, that the resolution be adopted.
<PAGE> 3
EXCERPT FROM:
MINUTES OF A REGULAR MEETING OF THE BOARD OF DIRECTORS OF FINANCIAL HORIZONS
LIFE INSURANCE COMPANY, held at the office of the Company in Columbus, Ohio, on
March 6, 1991.
The following resolution concerning the establishment of Financial Horizons VA
Separate Account-2 was presented for consideration:
RESOLVED, that the Company, pursuant to the provisions of Ohio Revised Code
Section 3907.15, hereby establishes a separate account, designated Financial
Horizons VA Separate Account-2 (hereinafter the Variable Account) for the
following use and purposes, and subject to such conditions as hereafter set
forth:
RESOLVED, FURTHER, that the Variable Account shall be established for the
purpose of providing for the issuance of variable annuity contracts
(hereinafter the Contracts), which Contracts provide that part or all of the
annuity benefits and cash value will reflect the investment experience of one
or more designated underlying securities; and
RESOLVED FURTHER, that the fundamental investment policy of the Variable
Account shall be to invest or reinvest the assets of the Variable Account in
securities issued by investment companies registered under the Investment
Company Act of 1940, as may be specified in the respective Contracts; and
RESOLVED FURTHER, that the proper officers of the Company be, and they hereby
are, authorized to take all action they deem necessary or appropriate to: (a)
register the Variable Account as a unit investment trust under the Investment
Company Act of 1940, as amended; (b) register the Contracts in such amounts as
the officers of the Company shall from time to time deem appropriate under the
Securities Act of 1933 and to prepare and file amendments to such registration
as they may deem necessary or desirable; and (c) take all other action
necessary to comply with: the Investment Company Act of 1940, including the
filing of applications for such exemptions from the Investment Company Act of
1940 as the officers of the Company shall deem necessary or desirable; the
Securities Exchange Act of 1934; the Securities Act of 1933; and all other
applicable state and federal laws in connection with offering said Contracts
for sale and the operation of the Variable Account; and
<PAGE> 4
RESOLVED FURTHER, that John E. Fisher, John L. Marakas, Peter F. Frenzer,
Harvey S. Galloway, James E. Brock, Thomas E. Kryshak, Gordon E. McCutchan, W.
Sidney Druen and Joseph P. Rath and each of them, with full power to act
without the others, hereby are severally authorized and empowered to execute
and cause to be filed with the Securities and Exchange Commission on behalf of
the Variable Account and by the Company as sponsor and depositor any required
Registration Statement and Notice thereof registering the Variable Account as
an investment company under the Investment Company Act of 1940; and a
Registration Statement under the Securities Act of 1933, registering the
Contracts and any and all amendments to the foregoing on behalf of and as
attorneys for the Variable Account and the Company and on behalf of and as
attorneys for the principal executive officer and/or the principal financial
officer and/or the principal accounting officer and/or any other officer of the
Variable Account and the Company; and
RESOLVED FURTHER, that the proper officers of the Company be, and they hereby
are, authorized on behalf of the Variable Account and on behalf of the Company
to take any and all action which they may deem necessary or advisable in order
to sell the Contracts and, if necessary, to register or qualify Contracts for
offer and sale under the insurance and securities laws of any of the states of
the United States of America and in connection therewith to execute, deliver
and file all such applications, reports, covenants, resolutions and other
papers and instruments as may be required under such laws, and to take any and
all further action which said officers or counsel of the Company may deem
necessary or desirable in order to maintain such registration or qualification
for as long as said officers or counsel deem it to be in the best interests of
the Variable Account and the Company; and
RESOLVED FURTHER, that the proper officers of the Company be, and they hereby
are, authorized in the names and on behalf of the Variable Account and the
Company to execute and file irrevocable written consents on the part of the
Variable Account and of the Company to be used in such states wherein such
consents to service of process may be requisite under the insurance or
securities laws thereof in connection with said registration or qualification
of Contracts and appoint the appropriate state official, or such other persons
as may be allowed by said insurance or securities laws, agent of the Variable
Account and of the Company for the purpose of receiving and accepting process;
and
RESOLVED FURTHER, that the appropriate officers of the Company be, and they
hereby are, authorized to establish procedures under which the Company will
provide sales and administrative functions with respect to the Contracts issued
in connection therewith, including, but not limited to procedures for providing
any voting rights required by the federal securities
<PAGE> 5
laws for owners of such Contracts with respect to securities owned by the
Variable Account, adding additional underlying investment series to the
Variable Account, and permitting conversion or exchange of Contract values or
benefits among the various series.
A motion was made, seconded and carried, that the resolution be adopted.
<PAGE> 1
EXHIBIT NO. 4
THE VARIABLE ANNUITY CONTRACT FORM
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(Hereinafter called the Company)
P.O. Box 182008
Columbus, Ohio 43218-2008
1-800-533-5622 (For any inquiries)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY will make annuity payments to the
Annuitant starting on the Annuitization Date, as set forth in the Contract.
This Contract is provided in return for the Purchase Payments made as required
in the Contract.
TEN DAY LOOK
TO BE SURE THAT THE OWNER IS SATISFIED WITH THIS CONTRACT, THE OWNER HAS TEN
DAYS TO EXAMINE THE CONTRACT AND RETURN IT TO THE HOME OFFICE FOR ANY REASON.
WHEN THE CONTRACT IS RECEIVED IN THE HOME OFFICE, THE COMPANY WILL RETURN THE
CONTRACT VALUE TO THE OWNER, WITHOUT DEDUCTION FOR ANY SALES CHARGES OR
ADMINISTRATION FEES AS OF THE DATE OF CANCELLATION, WHERE PERMITTED BY STATE
LAW.
Executed for the Company on the Date of Issue.
/s/ Gordon E. McCutchan /s/ Peter F. Frenzer
- ------------------------ --------------------
Gordon E. McCutchan Peter F. Frenzer
Secretary President
READ YOUR CONTRACT CAREFULLY
Individual Flexible Premium Deferred Variable Annuity, Non-Participating
ANNUITY PAYMENTS, DEATH BENEFITS, AND OTHER CONTRACT VALUES PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE, MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE FLUCTUATIONS IN THE
NET INVESTMENT FACTOR, AND ARE NOT GUARANTEED AS TO FIXED-DOLLAR AMOUNT.
NOTICE - The details of the variable provisions in the
Contract may be found on Pages 9, 13, 14 and 18.
FHL - 463 (Trail)
<PAGE> 3
CONTENTS
DATA PAGE.................................................................INSERT
CONTENTS.....................................................................2
DEFINITIONS..................................................................3
GENERAL PROVISIONS...........................................................6
ACCUMULATION PROVISIONS......................................................12
ANNUITIZATION PROVISIONS.....................................................16
ANNUITY PAYMENT OPTIONS......................................................19
ANNUITY TABLES...............................................................21
<PAGE> 4
DEFINITIONS
ACCUMULATION UNIT - An Accumulation Unit is an accounting unit of measure. It is
used to calculate the Variable Account Contract Value prior to the Annuitization
Date.
ANNUITANT - The Annuitant is the person designated to receive annuity payments
during Annuitization and upon whose life any annuity payment involving life
contingencies depends. This person must be age 85 or younger at the time of
Contract issuance, unless the Company has approved a request for an Annuitant of
greater age. The Annuitant may be changed prior to the Annuitization Date with
the consent of the Company.
ANNUITIZATION DATE - The Annuitization Date is the date annuity payments are
scheduled to begin.
ANNUITIZATION - Annuitization is the process of selecting an Annuity Payment
Option to begin the pay out phase of the Contract.
ANNUITY PAYMENT OPTION - The Annuity Payment Option is the chosen form of
annuity payments. Several options are available under this Contract.
ANNUITY UNIT - An Annuity Unit is an accounting unit of measure used to
calculate the value of Variable Annuity payments.
BENEFICIARY - The Beneficiary is the person who may receive certain benefits
under the Contract upon the death of the Annuitant prior to the Annuitization
Date. The Beneficiary can be changed by the Contract Owner as set forth in the
Contract.
COMPANY - The Company is the Nationwide Life and Annuity Insurance Company.
CONTINGENT ANNUITANT - The Contingent Annuitant is the person designated to be
the Annuitant if the Annuitant is not living at the Annuitization Date. If a
Contingent Annuitant is named, all provisions of the Contract which are based on
the death of the Annuitant prior to the Annuitization Date will be based on the
death of the last survivor of the Annuitant and Contingent Annuitant.
CONTINGENT BENEFICIARY - The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTINGENT OWNER - The Contingent Owner, if named, may succeed to the rights of
the Contract Owner upon the Contract Owner's death before the Annuitization
Date.
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<PAGE> 5
CONTRACT - The Individual Flexible Premium Deferred Variable Annuity described
herein.
CONTRACT ANNIVERSARY - An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER(S) (OWNER) - The Contract Owner is the person who possesses all
rights under the Contract, including the right to designate and change any
designations of the Owner, Contingent Owner, Annuitant, Contingent Annuitant,
Beneficiary, Contingent Beneficiary, Annuity Payment Option, and the
Annuitization Date.
CONTRACT VALUE - The Contract Value is the sum of the value of all Variable
Account Accumulation Units attributable to the Contract.
CONTRACT YEAR - A Contract Year is each year starting with the Date of Issue of
the Contract and each Contract Anniversary thereafter.
DATE OF ISSUE - The Date of Issue is the date the first Purchase Payment is
applied to the Contract .
DEATH BENEFIT - The benefit payable upon the death of the Annuitant prior to the
Annuitization Date. This benefit does not apply upon the death of the Contract
Owner when the Owner and Annuitant are not the same person. If the Annuitant
dies after the Annuitization Date, any benefit that may be payable shall be as
specified in the Annuity Payment Option elected.
DISTRIBUTION - A Distribution is any payment of part or all of the Contract
Value.
FIXED ANNUITY - A Fixed Annuity is a series of payments which are guaranteed by
the Company as to a dollar amount during the Annuitization period.
HOME OFFICE - The Home Office is the main office of the Company located in
Columbus, Ohio.
JOINT OWNER - The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Contract Owner. IF A JOINT OWNER IS
NAMED, REFERENCES TO "CONTRACT OWNER" OR "OWNER" IN THIS CONTRACT WILL APPLY TO
BOTH THE OWNER AND JOINT OWNER. JOINT OWNERS MUST BE SPOUSES AT THE TIME JOINT
OWNERSHIP IS REQUESTED.
MUTUAL FUNDS (FUNDS)- The registered management investment companies in which
the assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACT - A Non-Qualified Contract is a Contract which does not
qualify for favorable tax treatment under the provisions of sections 401
4
<PAGE> 6
(qualified plans), 408 (individual retirement annuities) or 403(b) (tax
sheltered annuities) of the Internal Revenue Code of 1986.
PURCHASE PAYMENT - A Purchase Payment is a deposit of new value into the
contract. The term "Purchase Payment" does not include transfers among the
Sub-Accounts.
QUALIFIED CONTRACT - A Qualified Contract is a contract issued to fund a
qualified plan.
QUALIFIED PLANS - A retirement plan which receives favorable tax treatment under
the provisions of the Internal Revenue Code, including those described in
Section 401 and 403(a) of the Internal Revenue Code.
SUB-ACCOUNTS - Sub-Accounts are separate and distinct divisions of the Variable
Account, to which specific Mutual Fund shares are allocated and for which
Accumulation Units and Annuity Units are separately maintained.
VALUATION DATE - A Valuation Date is each day the New York Stock Exchange and
the Company's Home Office are open for business. It may also be any other day
during which there is a sufficient degree of trading of the Variable Account's
Mutual Fund shares such that the current net asset value of its Accumulation
Units might be materially affected.
VALUATION PERIOD - A Valuation Period is the interval of time between one
Valuation Date and the next Valuation Date. It is measured from the closing of
business of the New York Stock Exchange and ending at the close of business for
the next succeeding Valuation Date.
VARIABLE ACCOUNT - The Variable Account is a separate investment account of the
Company into which Variable Account Purchase Payments are allocated. The
Variable Account is divided into Sub-Accounts, each of which invests in the
shares of a separate Mutual Fund.
VARIABLE ANNUITY - A Variable Annuity is a series of payments which are not
predetermined or guaranteed as to dollar amount and which vary in amount with
the investment experience of the Variable Account.
5
<PAGE> 7
GENERAL PROVISIONS
DEDUCTION FOR PREMIUM TAXES
The Company will charge against the Contract Value the amount of any premium
taxes levied by a state or any other government entity upon Purchase Payments
received by the Company. The method used to recoup premium taxes will be
determined by the Company at its sole discretion and in compliance with
applicable state law. The Company currently deducts such charges from a Contract
Owner's Contract Value either (1) at the time the Contract is surrendered, (2)
at Annuitization, or (3) at such earlier date as the Company may be subject to
such taxes.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct a Mortality and Expense Risk Charge equal, on an annual
basis, to 1.25 % of the daily net asset value of the Variable Account. This
deduction is made to compensate the Company for assuming the mortality risks and
expense risks under this Contract. The Company assumes a "mortality risk" that
fixed and variable annuity payments will not be affected by the death rates of
persons receiving such payments or of the general population by virtue of
annuity rates incorporated in the Contract which cannot be changed. The Company
also assumes a mortality risk by its promise to pay in certain circumstances a
Death Benefit that is greater than the Contract Value. The "expense risk"
involves the guaranty by the Company that it will not increase charges for
administration of the Contract regardless of the Company's actual administrative
expenses.
ADMINISTRATION CHARGE
The Company will deduct an Administration Charge equal, on an annual basis, to
0.20% of the daily net asset value of the Variable Account. This deduction is
made to reimburse the Company for expenses incurred in the administration of the
Contract and of the Variable Account.
BENEFICIARY PROVISIONS
The Beneficiary is the person or persons who may receive certain benefits under
the Contract in the event the Annuitant dies prior to the Annuitization Date. If
more than one Beneficiary survives the Annuitant, each will share equally unless
otherwise specified in the Beneficiary designation. If no Beneficiary survives
the Annuitant, all rights and interests of the Beneficiary shall vest in the
Contingent Beneficiary, and if more than one Contingent Beneficiary survives,
each will share equally unless otherwise specified in the Contingent Beneficiary
designation. If a Contingent Beneficiary predeceases the Annuitant or if a
Contingent Beneficiary is not named, all rights and interests of the
6
<PAGE> 8
Contingent Beneficiary will vest with the Contract Owner or the Contract Owner's
estate. Subject to the terms of any existing assignment, the Contract Owner may
change the Beneficiary or Contingent Beneficiary from time to time during the
lifetime of the Annuitant, by written notice to the Company. The change, upon
receipt and recording by the Company at the Home Office, will take effect as of
the time the written notice was signed, whether or not the Annuitant is living
at the time of recording, but without further liability as to any payment or
settlement made by the Company before receipt of such change.
CONTRACT OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the Contract.
IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF AS OWNER, THE PURCHASER WOULD
HAVE NO RIGHTS UNDER THE CONTRACT. If a Joint Owner is named, the Joint Owner
will possess an undivided interest in the Contract. The Contract Owner has sole
rights in the Contract prior to the Annuitization Date. Unless otherwise
provided, when Joint Owners are named, the exercise of any ownership right in
the Contract (including the right to surrender or partially surrender the
Contract, to change the Owner, Contingent Owner, the Annuitant, the Contingent
Annuitant, the Beneficiary, the Contingent Beneficiary, the Annuity Payment
Option or the Annuitization Date) shall require a written indication of an
intent to exercise that right, which must be signed by both the Owner and Joint
Owner. Joint Owners must be spouses at the time joint ownership is requested. If
a Contract Owner dies prior to the Annuitization Date and the Contract Owner and
the Annuitant are not the same person, Contract ownership will be determined in
accordance with the "Death of Contract Owner" provision. If the Annuitant
(regardless of whether the Annuitant is also the Contract Owner) dies prior to
the Annuitization Date, ownership will be determined in accordance with the
"Death of Annuitant Prior to Annuitization Date" provision. On and after the
Annuitization Date, the Contract Owner is the Annuitant.
Prior to the Annuitization Date, the Contract Owner may name a new Contract
Owner. Such change may be subject to state and federal gift taxes and may also
result in current federal income taxation. Any change of Contract Owner
designation will automatically revoke any prior Contract Owner designation. Any
request for change of Contract Owner must be (1) made by proper written
application, and, (2) received and recorded by the Company at its Home Office,
and (3) may include a signature guarantee as specified in the "Surrender"
provision. Subject to the terms of any existing assignment, the Contract Owner
may change the Beneficiary or Contingent Beneficiary from time to time during
the lifetime of the Annuitant, by written notice to the Company. The change,
upon receipt and recording by the Company at the Home Office, will take effect
as of the time the written notice was signed, whether or not the Annuitant is
living at the time of recording, but without further liability as to any payment
or settlement made by the Company before receipt of such change.
7
<PAGE> 9
The Contract Owner may request a change in the Annuitant or Contingent Annuitant
before the Annuitization Date. Such a request must be made in writing on a form
acceptable to the Company and must be signed by the Contract Owner and the
person to be named as Annuitant or Contingent Annuitant. Such request must be
received by the Company at its Home Office prior to the Annuitization Date. Any
such change is subject to underwriting and approval by the Company.
CONTINGENT OWNER
The Contingent Owner is the person or persons who may receive certain benefits
under the Contract in the event the Contract Owner dies before the Annuitization
Date. If more than one Contingent Owner survives the Contract Owner, each will
share equally unless otherwise specified in the Contingent Owner designation. If
a Contingent Owner is not named or predeceases the Contract Owner, all rights
and interest of the Contingent Owner will vest in the Contract Owner's estate.
Subject to the terms of any existing assignment, the Contract Owner may change
the Contingent Owner from time to time prior to the Annuitization Date, by
written notice to the Company. The change, upon receipt and recording by the
Company at its Home Office, will take effect as of the time the written notice
was signed, whether or not the Contract Owner is living at the time of
recording, but without further liability as to any payment or settlement made by
the Company before receipt of such change.
DEATH OF CONTRACT OWNER
If the Contract Owner and the Annuitant are not the same person and the Contract
Owner dies prior to the Annuitization Date, then the Joint Owner, if any,
becomes the new Contract Owner. If no Joint Owner is named (or if the Joint
Owner predeceases the Contract Owner), then the Contingent Owner becomes the new
Contract Owner. If no Contingent Owner is named (or if the Contingent Owner
predeceases the Contract Owner), then the Contract Owner's estate becomes the
Contract Owner. Unless the new Contract Owner is the prior Contract Owner's
surviving spouse, the entire interest in the Contract must be distributed within
five years of the prior Contract Owner's death or be distributed in the form of
a life annuity or an annuity for a period not exceeding his or her life
expectancy. Such annuity must begin within one year following the date of the
prior Contract Owner's death. If the new Contract Owner is the surviving spouse
of the prior Contract Owner, the Contract may be continued without any required
Distribution.
If the Annuitant (regardless of whether the Annuitant is also the Contract
Owner) dies prior to the Annuitization Date, a Death Benefit will be payable in
accordance with the "Death of Annuitant Prior to the Annuitization Date"
section.
8
<PAGE> 10
DEATH OF ANNUITANT PRIOR TO ANNUITIZATION DATE
If the Annuitant dies prior to the Annuitization Date, a Death Benefit is
payable unless the Contract Owner has also named a Contingent Annuitant, in
which case the Death Benefit is payable upon the death of the last survivor of
the Annuitant and Contingent Annuitant. The Death Benefit is payable to the
Beneficiary. If no Beneficiary is named (or if the Beneficiary predeceases the
Annuitant), then the Death Benefit is payable to the Contingent Beneficiary. If
no Contingent Beneficiary is named (or if the Contingent Beneficiary predeceases
the Annuitant), then the Death Benefit will be paid to the Contract Owner or the
Contract Owner's estate.
The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the date the Company receives in writing at
the Home Office the following three items (1) due proof of the Annuitant's
death; and (2) an election for either (a) a single sum payment or (b) an Annuity
Payment Option; and (3) any applicable state required form(s).
Proof of death is either:
(1) a copy of a certified death certificate;
(2) a copy of a certified decree of a court of competent jurisdiction as to
the finding of death;
(3) a written statement by a medical doctor who attended the deceased; or
(4) any other proof satisfactory to the Company.
If a single sum payment is requested, payment will be made in accordance with
any applicable laws and regulations governing the payment of Death Benefits. If
an Annuity Payment Option is requested, election must be made by the Contract
Owner during the 90-day period commencing with the date written notice is
received by the Company. If no election has been made by the end of such 90-day
period, the Death Benefit will be paid in a single sum payment. If the Annuitant
dies prior to his 86th birthday, the value of the Death Benefit will be the
greatest of (1) the sum of all Purchase Payments, less any amounts surrendered,
(2) the Contract Value or (3) the Contract Value as of the most recent five-year
Contract Anniversary, less any amounts surrendered since the most recent
five-year Contract Anniversary. If the Annuitant dies on or after his 86th
birthday, then the Death Benefit will be equal to the Contract Value.
If the Contract Owner is not a natural person, the death of the Annuitant (or a
change of the Annuitant) will be treated like a death of the Contract Owner and
will result in a Distribution pursuant to the first paragraph in the "Death of
Contract Owner" provision, regardless of whether a Contingent Annuitant has also
been named. If the Contract Owner is not an individual, the death of the
Annuitant (or a change of the Annuitant) will be treated like a death of the
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<PAGE> 11
Contract Owner for purposes for the "Death of Contract Owner" provision, and
result in a distribution of either:
(a) the Death Benefit described above (if there is no Contingent Annuitant),
or
(b) the benefit described in the "Death of Contract Owner" provision (in all
other cases),
provided that any such distribution must be made within the time period
specified in the "Death of Contract Owner" provision.
DEATH OF ANNUITANT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the Annuity Payment Option selected.
ALTERATION OR MODIFICATION
All changes in or to the terms of the Contract must be: (1) made in writing; and
(2) signed by the President or Secretary of the Company. No other person can
alter or change any of the terms or conditions of this Contract.
ASSIGNMENT
Where permitted, the Owner may assign all rights under this Contract at any time
during the lifetime of the Annuitant, prior to the Annuitization Date. The
Company will not be bound by any assignment until written notice is received and
recorded at the Home Office. The Company is not responsible for the validity or
tax consequences of any assignment. An assignment will not apply to any payment
made or action taken by the Company prior to the time it was recorded.
If this Contract is issued to fund a retirement plan pursuant to Internal
Revenue Code Sections 401, 403, 404 or 408, it may not be assigned, pledged or
otherwise transferred except as permitted by applicable law.
The value of any portion of the Contract which is assigned, pledged or
transferred by gift may be treated like a cash withdrawal for federal tax
purposes and may be subject to a tax penalty. All rights in this Contract are
personal to the Contract Owner and may not be assigned without written consent
of the Company.
ENTIRE CONTRACT
This document is the whole Contract between the Owner and the Company. This
Contract, Data Page and Endorsement(s) (if any), make up the entire Contract.
10
<PAGE> 12
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, all payments and benefits
under this Contract will be adjusted. Payments and benefits will be made, based
on the correct age or sex. Proof of age of an Annuitant may be required at any
time, in a form satisfactory to the Company. When the age or sex of an Annuitant
has been misstated, the dollar amount of any overpayment will be deducted from
the next payment or payments due under this Contract. The dollar amount of any
underpayment made by the Company as a result of any such misstatement will be
paid in full with the next payment due under this Contract.
EVIDENCE OF SURVIVAL
Where any payments under this Contract depend on the recipient being alive on a
given date, proof that such person is living may be required by the Company.
Such proof may be required prior to making the payments.
PROTECTION OF PROCEEDS
Proceeds under this Contract are not assignable by any Beneficiary prior to the
time they are due. Proceeds are not subject to the claims of creditors or to
legal process, except as mandated by applicable laws.
REPORTS
At least once each year, prior to the Annuitization Date, a report showing the
Contract Value will be provided to the Owner.
INCONTESTABILITY
This Contract will not be contested.
CONTRACT SETTLEMENT
The Company may require this Contract to be returned to the Home Office prior to
making any payments. All sums payable to or by the Company under this Contract
are payable at the Home Office.
NUMBER AND GENDER
Unless otherwise provided, all references in this Contract which are in the
singular form will include the plural; all references in the plural form will
include the singular; and all references in the male gender will include the
female and neuter genders.
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<PAGE> 13
NON-PARTICIPATING
This Contract is non-participating. It will not share in the surplus of the
Company.
ACCUMULATION PROVISIONS
SURRENDER
The Owner may surrender part or all of the Contract Value at any time this
Contract is in force and prior to the earlier of the Annuitization Date or the
death of the Annuitant or Contingent Annuitant if any. All surrenders will have
the following conditions:
1. The request for surrender must be in writing.
2. The contract value will be paid to the Owner after proper written
application and the Contract are received at the Home Office.
3. The Company reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guaranty. Payment of the Contract
Value will be made within seven days of receipt of both proper written
application and the Contract.
4. When written application and the Contract are received, the Company will
surrender the number of Variable Account Accumulation Units needed to
equal the dollar amount requested.
5. If a partial surrender is requested, the amounts surrendered will be
withdrawn on a pro-rata basis from the sub-accounts of the Variable
Account.
For tax purposes, a surrender is treated as a withdrawal of earnings first.
SURRENDER VALUE
The Surrender Value at any time will be the Contract Value.
SUSPENSION OR DELAY IN PAYMENT OF SURRENDER
The Company has the right to suspend or delay the date of any Surrender payment
from the Variable Account for any period:
1. When the New York Stock Exchange is closed;
2. When trading on the New York Stock Exchange is restricted;
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<PAGE> 14
3. When an emergency exists as a result of which: disposal of securities
held in the Variable Account is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the net assets
of the Variable Account;
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders; or
5. When the request for Surrender is not made in writing.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in numbers 2, 3, and 4 above exist.
FLEXIBLE PURCHASE PAYMENTS
The Contract is bought for the initial Purchase Payment and any subsequent
Purchase Payments. The cumulative total of all Purchase Payments under this and
any other annuity Contract(s) issued by the Company having the same Annuitant
may not exceed $1,000,000 without the prior consent of the Company.
The initial Purchase Payment is due on the Date of Issue and may not be less
than $15,000. Purchase payments, if any, after the initial Purchase Payment must
be a least $1,000 and may be made at any time.
If no considerations have been received under this Contract for a period of two
full years and the paid-up annuity benefit at maturity would be less than $20
monthly, the Company may at its option terminate the Contract by payment of the
accumulated value and by such payment be relieved of any further obligation
under the Contract.
ALLOCATION OF PURCHASE PAYMENTS
The Owner elects to have the Purchase Payments allocated among the Sub-Accounts
of the Variable Account at the time of application. The allocation of future
Purchase Payments may be changed by the owner by a written request that is
received and recorded by the Company.
CONTRACT VALUE
The Contract Value at any time will be the Variable Account Contract Value.
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<PAGE> 15
VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the sum of the value of all Variable
Account Accumulation Units under this Contract.
If: (1) part or all of the Variable Account Contract Value is surrendered; or
(2) charges or deductions are made against the Variable Account Contract Value;
then, an appropriate number of Accumulation Units will be canceled or
surrendered to equal such amount.
THE VARIABLE ACCOUNT
The Variable Account is a separate investment account of the Company. The
Company has allocated a part of its assets for this Contract and certain other
contracts to the Variable Account. Such assets of the Variable Account remain
the property of the Company. However, they may not be charged with the
liabilities from any other business in which the Company may take part.
The Variable Account is divided into Sub-Accounts which invest in shares of the
Mutual Funds. Purchase payments are allocated among one or more of these
Sub-Accounts, as designated by the Owner.
INVESTMENTS OF THE VARIABLE ACCOUNT
The Purchase Payments applied to the Variable Account will be invested at net
asset value in one or more of the Sub-Accounts.
VALUATION OF ASSETS
Mutual Fund shares in the Variable Account will be valued at their net asset
value.
VARIABLE ACCOUNT ACCUMULATION UNITS
The number of Accumulation Units for each Sub-Account of the Variable Account is
found by dividing: (1) the net amount allocated to the Sub-Account; by (2) the
Accumulation Unit value for the Sub-Account for the Valuation Period during
which the Company received the Purchase Payment.
VARIABLE ACCOUNT ACCUMULATION UNIT VALUE
The value of an Accumulation Unit for each Sub-Account of the Variable Account
was arbitrarily set at $10 when the first Mutual Fund shares were available for
purchase. The value for any later Valuation Period is found as follows:
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<PAGE> 16
The Accumulation Unit Value for each Sub-Account for the last prior Valuation
Period is multiplied by the Net Investment Factor for the Sub-Account for the
next following Valuation Period. The result is the Accumulation Unit Value. The
value of an Accumulation Unit may increase or decrease from one Valuation Period
to the next. The number of Accumulation Units will not change as a result of
investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than one; therefore, the value of an
Accumulation Unit may increase or decrease.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by: dividing (1) by (2) and subtracting (3) from the result, where:
1. is the net result of:
a. the net asset value per share of the Mutual Fund held in the
Sub-Account, determined at the end of the current Valuation
Period; plus
b. the per share amount of any dividend or capital gain
distributions made by the Mutual Fund held in the Sub-Account,
if the "ex-dividend" date occurs during the current Valuation
Period.
2. the net asset value per share of the Mutual Fund held in the
Sub-Account, determined at the end of the last prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge deducted
from the Variable Account. Such factor is equal, on an annual basis, to
1.45% of the daily net asset value of the Variable Account.
For funds that credit dividends on a daily basis and pay such dividends once a
month, the Net Investment Factor allows for the monthly reinvestment of these
daily dividends.
TRANSFER PROVISIONS
Transfers among the Sub-Accounts are limited to twelve (12) transfers per year.
SYSTEMATIC WITHDRAWALS
The Contract Owner may elect in writing on a form provided by the Company to
take Systematic Withdrawals of a specified dollar amount (of at least $100) on a
monthly, quarterly, semi-annual or annual basis. The Company will process the
15
<PAGE> 17
withdrawals as directed by surrendering on a pro-rata basis Accumulation Units
from all of the Sub-Accounts in which the Contract Owner has an interest. Each
Systematic Withdrawal is subject to federal income taxes on the taxable portion.
[In addition, a 10% federal penalty tax may be assessed on Systematic
Withdrawals if the Contract Owner is under age 59-1/2.] If directed by the
Contract Owner, the Company will withhold federal income taxes from each
Systematic Withdrawal. A Systematic Withdrawal program will terminate
automatically at the end of each Contract Year and may be reinstated only on or
after the next Contract Anniversary pursuant to a new request. The Contract
Owner may discontinue Systematic Withdrawals at any time by notifying the
Company in writing.
Systematic Withdrawals are not available prior to the expiration of the ten day
free look provision of the Contract. The Company also reserves the right to
assess a processing fee for this service.
DISTRIBUTION PROVISIONS
The following events will give rise to a Distribution:
1. Reaching the Annuitization Date - Distribution will be made pursuant to
the Annuity Payment Option selected.
2. Death of the Annuitant prior to the Annuitization Date - Distribution
to be made in accordance with the options available under the Death of
Annuitant provisions of this Contract.
3. Death of the Owner - Distribution to be made in a manner consistent
with the Death of Owner provisions of this Contract.
4. Other Surrender - Distribution to be made in accordance with the
Surrender provisions of this Contract.
ANNUITIZATION PROVISIONS
GENERAL
All of the provisions within this section are subject to the restrictions set
forth in the Section entitled "Death Of Owner".
16
<PAGE> 18
ANNUITIZATION
This is the process of selecting an Annuity Payment Option to begin the pay out
phase of the Contract. As of the Annuitization Date, the Contract Value is
surrendered and applied to the purchase rate then in effect for the option
selected. The purchase rates for any options guaranteed to be available will be
determined on a basis not less favorable than the 1983 "Table a" with ages set
back 6 years, with minimum interest at 3.0%. The rates shown in the Annuity
Tables are calculated on this guaranteed basis. Annuitization is irrevocable
once payments have begun.
ANNUITIZATION DATE
Such date may be the first day of a calendar month or any other agreed upon
date. It must be at least one year after the Date of Issue. The Annuitization
Date may not be later than the first day of the first calendar month after the
Annuitant's 86th birthday, unless a later date has been requested by the
Contract Owner; and approved by the Company. This date is selected by the
Contract Owner at the time of application. Any applicable premium taxes not
already deducted may be deducted from the Contract Value at the Annuitization
Date. The remaining Contract Value will then be applied to the Annuity Payment
Option selected by the Owner.
CHANGE OF ANNUITIZATION DATE
The Owner may change the Annuitization Date. A change of Annuitization Date must
be made by written request. The request must be received at the Home Office
prior to both new and old Annuitization Dates. The date to which such a change
may be made must be the first day of a calendar month.
CHANGE OF ANNUITY PAYMENT OPTION
The Owner may change the Annuity Payment Option prior to the Annuitization Date.
A change of the Annuity Payment Option must be made by written request and must
be received at the Home Office prior to the Annuitization Date. After a change
of Annuity Payment Option is received at the Home Office, it will become
effective as of the date it was requested. A change of Annuity Payment Option
will not apply to any payment made or action taken by the Company before it is
received.
ANNUITY PAYMENT OPTIONS
An Annuity Payment Option may be selected prior to Annuitization. Any Annuity
Payment Option not set forth in the Contract or a combination of available
options which is satisfactory to both the Company and the Annuitant may be
selected.
17
<PAGE> 19
SUPPLEMENTARY AGREEMENT
A Supplementary Agreement will be issued within 30 days following the
Annuitization Date. The Supplementary Agreement will set forth the terms of the
Annuity Payment Option selected.
FREQUENCY AND AMOUNT OF PAYMENTS
Payments will be made based on the Annuity Payment Option selected and frequency
selected. However, if the net amount to be applied to any annuity payment option
at the Annuitization Date is less than $5000, the Company has the right to pay
such amount in one lump sum.
If any payment provided for would be or becomes less than $50, the Company has
the right to change the frequency of payment to an interval that will result in
payments of at least $50.
FIXED ANNUITY PROVISIONS
A Fixed Annuity is an annuity with level payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. At the
Annuitization Date, the designated portion of the Contract Value will be applied
to the applicable Annuity Table. This will be done in accordance with the
Annuity Payment Option selected.
VARIABLE ANNUITY PROVISIONS
A Variable Annuity is a series of payments which are not predetermined or
guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.
DETERMINATION OF FIRST VARIABLE ANNUITY PAYMENT
At the Annuitization Date, a designated portion of the Contract Value will be
applied to purchase rates based on the 1971 Individual Annuity Mortality Table
with ages set back one year and 3.5% interest.
ANNUITY UNIT VALUE
An Annuity Unit is used to calculate the value of annuity payments. The value of
an Annuity Unit for each Sub-Account was arbitrarily set at $10 when the first
Mutual Fund shares were bought. The value for any later Valuation Period is
found as follows:
1. The Annuity Unit Value for each Sub-Account for the last prior
Valuation Period is multiplied by the Net Investment Factor for the
Sub-Account for the Valuation Period for which the Annuity Unit Value
is being calculated.
18
<PAGE> 20
2. The result is multiplied by an interest factor. This is done because
the Assumed Investment Rate of 3.5% per year is built into the Annuity
Tables.
VARIABLE ANNUITY PAYMENTS AFTER THE FIRST PAYMENT
Variable Annuity payments after the first vary in amount. The payment amount
changes with the investment performance of the Sub-Accounts within the Variable
Account. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the unit
value as of the Annuitization Date. This result establishes the fixed
number of Annuity Units for each monthly annuity payment after the
first. This number of Annuity Units remains fixed during the annuity
payment period.
2. The fixed number of Annuity Units is multiplied by the Annuity Unit
Value for the Valuation Date for which the payment is due. This result
establishes the dollar amount of the payment.
The Company guarantees that the dollar amount of each payment after the first
will not be affected by variations in expenses or mortality experience.
ANNUITY PAYMENT OPTIONS
GENERAL
All annuity payments will be mailed within 10 working days of the first of the
month in which they are scheduled to be made. The following is a list of options
guaranteed to be made available by the Company.
LIFE ANNUITY
The amount to be paid under this option will be paid during the lifetime of the
Annuitant. Payments will cease with the last payment due prior to the death of
the Annuitant.
JOINT AND LAST SURVIVOR ANNUITY
The amount to be paid under this option will be paid during the lifetimes of the
Annuitant and designated second person. Payments will continue as long as either
is living.
19
<PAGE> 21
LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED
The amount to be paid under this option will be paid during the lifetime of the
Annuitant. A guaranteed period of 120 or 240 months may be selected. If the
Annuitant dies prior to the end of this guaranteed period, the recipient chosen
by the Annuitant to receive the remaining payments may choose to continue
receiving payments until the end of the guaranteed period, or receive the
commuted value of the remaining guaranteed payments in a lump sum. Such lump sum
payment will be equal to the present value of the remaining guaranteed payments.
The payment will be computed as of the date on which proof of the death of the
Annuitant is received at the Home Office and computed at an assumed investment
rate which is the greater of that used in the Annuity Tables in effect on the
date of the calculation of the lump sum and that used in the Annuity Tables in
effect on the Annuitization Date.
ANY OTHER OPTION
The amount and period under any other option will be determined by the Company.
Payment options not set forth in the Contract are available only if they are
approved by both the Company and the Annuitant.
20
<PAGE> 22
MONTHLY BENEFITS PER $1000 APPLIED
ANNUITY TABLES
JOINT AND SURVIVOR MONTHLY ANNUITY PAYMENTS
<TABLE>
<CAPTION>
ANNUITANT'S AGE LAST BIRTHDAY
FEMALE AGE
----------
50 55 60 65 70
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
MALE AGE 50 3.36 3.46 3.56 3.64 3.71
-------- 55 3.42 3.56 3.69 3.82 3.93
60 3.47 3.64 3.82 3.99 4.16
65 3.70 3.92 4.15 4.39
70 4.00 4.30 4.61
</TABLE>
<TABLE>
<CAPTION>
LIFE ANNUITY: MONTHLY ANNUITY PAYMENTS
MALE GUARANTEED PERIOD FEMALE GUARANTEED PERIOD
ANNUITANT'S ANNUITANT'S
ATTAINED AGE 120 240 ATTAINED AGE 120 240
LAST BIRTHDAY NONE MONTHS MONTHS LAST BIRTHDAY NONE MONTHS MONTHS
- ------------- ---- ------ ------ ------------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
40 3.41 3.40 3.38 40 3.23 3.23 3.22
41 3.44 3.44 3.41 41 3.26 3.26 3.24
42 3.48 3.48 3.45 42 3.29 3.29 3.27
43 3.52 3.52 3.48 43 3.32 3.32 3.30
44 3.57 3.56 3.52 44 3.35 3.35 3.33
45 3.61 3.60 3.56 45 3.39 3.38 3.37
46 3.66 3.65 3.60 46 3.42 3.42 3.40
47 3.71 3.69 3.64 47 3.46 3.46 3.43
48 3.76 3.74 3.68 48 3.50 3.50 3.47
49 3.81 3.79 3.73 49 3.55 3.54 3.51
50 3.87 3.85 3.77 50 3.59 3.58 3.55
51 3.93 3.90 3.82 51 3.64 3.63 3.59
52 3.99 3.96 3.87 52 3.68 3.67 3.63
53 4.05 4.02 3.92 53 3.74 3.72 3.68
54 4.12 4.09 3.97 54 3.79 3.78 3.72
55 4.19 4.15 4.03 55 3.85 3.83 3.77
56 4.27 4.22 4.08 56 3.90 3.89 3.82
57 4.34 4.30 4.14 57 3.97 3.95 3.88
58 4.43 4.37 4.20 58 4.03 4.01 3.93
59 4.51 4.45 4.26 59 4.10 4.08 3.99
60 4.60 4.54 4.32 60 4.18 4.15 4.04
61 4.70 4.62 4.39 61 4.25 4.22 4.11
62 4.80 4.72 4.45 62 4.34 4.30 4.17
63 4.91 4.82 4.51 63 4.42 4.38 4.23
64 5.03 4.92 4.58 64 4.52 4.47 4.30
65 5.15 5.03 4.65 65 4.61 4.56 4.37
66 5.28 5.14 4.71 66 4.72 4.66 4.44
67 5.43 5.27 4.78 67 4.83 4.76 4.51
68 5.58 5.39 4.84 68 4.95 4.87 4.58
69 5.74 5.53 4.90 69 5.08 4.98 4.65
70 5.91 5.66 4.96 70 5.21 5.10 4.72
71 6.10 5.81 5.02 71 5.36 5.22 4.79
72 6.30 5.96 5.08 72 5.51 5.36 4.86
73 6.51 6.12 5.13 73 5.67 5.50 4.93
74 6.73 6.28 5.18 74 5.85 5.65 5.00
75 6.97 6.44 5.23 75 6.04 5.80 5.06
</TABLE>
21
<PAGE> 1
EXHIBIT NO. 5
THE VARIABLE ANNUITY APPLICATION FORM
<PAGE> 2
<TABLE>
<CAPTION>
NATIONWIDE LIFE AND ANNUITY INS. CO. / / NON-QUALIFIED / / 403(b) TRANSFERS
ONE NATIONWIDE PLAZA / / IRA SEP/IRA / / 401(a) (MONEY
P.O. BOX 182008 (OWNER AND ANNUITANT PURCHASE, PROFIT
COLUMBUS, OHIO 43218-2008 MUST BE THE SAME) SHARING ONLY)
ANNUITY APPLICATION
$15,000 MINIMUM INITIAL PAYMENT
_________________________________________________________________________________________________________________________________
<S> <C>
CONTRACT OWNER (If Applicable) / / JOINT OWNER / / CONTINGENT
1 (Spouse Only) OWNER
_______________________________________________________
(Print) Last First MI ________________________________________________
CONTRACT Last First MI
OWNER (S) _______________________________________________________
Address ________________________________________________
Address
_______________________________________________________
City State Zip ________________________________________________
If no annuitant is City State Zip
specified in Soc. Sec. No./Tax I.D. Sex / / M
section 2, the ______ - ____ - ______ / / F Soc. Sec. No./Tax I.D. Sex / / M
contract owner _________ _________ ____________ ______ - ____ - ______ / / F
will be the Date of MO. DAY YEAR _________ _________ ____________
annuitant Birth --------- --------- ------------ Date of MO. DAY YEAR
______________________________ Birth --------- --------- ------------
______________________________
_________________________________________________________________________________________________________________________________
2 ANNUITANT / / CONTINGENT ANNUITANT (If Applicable)
_______________________________________________________ ________________________________________________
ANNUITANT (Print) Last First MI Last First MI
Complete only if _______________________________________________________ ________________________________________________
different from Address Address
the contract owner.
_______________________________________________________ ________________________________________________
City State Zip City State Zip
Soc. Sec. No./Tax I.D. Sex / / M Soc. Sec. No./Tax I.D. Sex / / M
______ - ____ - ______ / / F ______ - ____ - ______ / / F
_________ _________ ____________ _________ _________ ____________
Date of MO. DAY YEAR Date of MO. DAY YEAR
Birth --------- --------- ------------ Birth --------- --------- ------------
______________________________ ______________________________
Annuitization Date ____________________________________
_________________________________________________________________________________________________________________________________
3 PRIMARY BENEFICIARY / / CONTINGENT BENEFICIARY
BENEFICIARY _______________________________________________________ ________________________________________________
(Print) Last First MI (Print) Last First MI
_______________________________________________________ ________________________________________________
Relationship To Owner(s) Relationship To Owner(s)
_________________________________________________________________________________________________________________________________
4 FIRST PURCHASE PAYMENT $__________________
ANNUITY Submitted herewith. A copy of this application duly signed by the agent will constitute receipt
PURCHASE for such amount. If this application is declined, there will be no liability on the part of the
PAYMENTS company, and any sums submitted with this application will be refunded.
(MINIMUM INITIAL PURCHASE PAYMENT OF $15,000)
_________________________________________________________________________________________________________________________________
5 Will the proposed contract replace any existing annuity or insurance contracts?
/ / No / / Yes Existing Company _______________________________________________
REPLACEMENT In accordance with TEFRA (1982), please provide the cost basis of the contract.
Pre-TEFRA $__________________________ Post-TEFRA $________________________
(Before August 14, 1982)
_________________________________________________________________________________________________________________________________
6
REMARKS
_________________________________________________________________________________________________________________________________
</TABLE>
FHL-520 Public Fund IRA-AO 10/95
<PAGE> 3
<TABLE>
====================================================================================================================================
<S> <C> <C> <C>
% DELCHESTER FUND % NEUBERGER & BERMAN DOLLAR COST AVERAGING (OPTIONAL)
------- -------
7 INSTITUTIONAL CLASS GUARDIAN FUND, INC. Transfers must be at least $100
ALLOCATIONS % DREYFUS A BONDS PLUS, % NEUBERGER & BERMAN Change of these instructions
------- -------
INC. LIMITED MATURITY BOND requires completion of form
FUND
% THE DREYFUS THIRD provided by the Company.
------- % NEUBERGER & BERMAN
CENTURY FUND, INC. -------
PARTNERS FUND, INC.
% THE EVERGREEN TOTAL
------- % OPPENHEIMER GLOBAL
RETURN FUND -------
FUND
INITIAL MINIMUM: % FIDELITY ASSET MANAGER % PEOPLES INDEX FUND, Please transfer $
------- ------- --------
$15,000 FUND INC. per month from the (check one)
% FIDELITY EQUITY-INCOME % PHOENIX BALANCED FUND / / Nationwide Money Market
------- -------
FUND SERIES Fund
IF NO ALLOCATIONS % FIDELITY MAGELLAN FUND
ARE SPECIFIED, ------- % STRONG TOTAL RETURN / / Neuberger and Berman Limited
THE ENTIRE -------
AMOUNT WILL BE % FIDELITY PURITAN FUND FUND, INC. Maturity Bond Fund
ALLOCATED TO THE ------- (Fund Name, whole % only, totaling 100%)
NATIONWIDE % TEMPLETON FOREIGN
MONEY MARKET % JANUS TWENTY FUND -------
FUND PENDING ------- FUND %
INSTRUCTION FROM -------------------------------
THE CONTRACT % MFS WORLD % TWENTIETH CENTURY
OWNER. ------- ------- 100 % TOTAL
WHOLE GOVERNMENTS FUND GROWTH INVESTORS Begin processing these transfer
PERCENTAGES instructions on 19
ONLY, MUST % NATIONWIDE BOND FUND % TWENTIETH CENTURY --------- ----
TOTAL 100% ------- ------- Mo. Day Yr.
INTERNATIONAL EQUITY (ALL DCA TRANSACTIONS WILL BE CONFIRMED
% NATIONWIDE FUND FUND ON QUARTERLY STATEMENTS. PLEASE REVIEW
------- THE INFORMATION IN THESE STATEMENTS
% TWENTIETH CENTURY ULTRA CAREFULLY. ALL ERRORS OR CORRECTIONS
% NATIONWIDE GROWTH ------- MUST BE REPORTED TO NATIONWIDE WITHIN
------- INVESTORS 30 DAYS TO ASSURE PROPER CREDITING TO
FUND YOUR CONTRACT.)
% TWENTIETH CENTURY U.S.
% NATIONWIDE MONEY -------
------- GOVERNMENTS SHORT-
MARKET FUND TERM
====================================================================================================================================
8 OPTIONAL: I (Contract Owner) appoint ________________________________________________________________as my Limited
Attorney in fact. Once this appointment is received and recorded by Nationwide Life and Annuity, my Limited
LIMITED Attorney in fact may exchange contract values in my name between and among the sub-accounts of my contract
POWER OF and change allocations among the sub-accounts for my future contributions. I and my Limited Attorney in
ATTORNEY Fact, agree, for ourselves, our heirs, the legal representative of our estates, their successors and assigns,
to release Nationwide Life and Annuity from any liability for acting in reliance on instructions given
pursuant to the Limited Power. We jointly and severally agree to indemnify Nationwide Life and Annuity from
/ / NO / / YES and against any claim, liability or expense arising out of any action by Nationwide Life and Annuity in
reliance on such instructions.
- -------------- THIS POWER IS PERSONAL TO THE HOLDER AND MAY NOT BE DELEGATED TO ANY OTHER PERSON OR ORGANIZATION. THE HOLDER
Initialed by MUST BE A CURRENTLY LICENSED AND APPOINTED REPRESENTATIVE OF NATIONWIDE LIFE AND ANNUITY AND MUST BE THE AGENT
Contract Owner OF RECORD FOR THIS CONTRACT, OR THE POWER WILL AUTOMATICALLY TERMINATE.
====================================================================================================================================
9 / / Please send me a copy of the Statement of Additional Information to the Prospectus.
Signed at: on
------------------------------------------ -------------------------------------
City State (Mo / Day / Year)
Contract Owner Joint Owner
-------------------------------------- --------------------------------------
(If Applicable)
SIGNATURES Witness #020-
------------------------------- ---------------------------------------
(Signature of Producer) (Print Producer Name and Number)
Producer Phone # ( ) Address
--------------------------- ----------------------------------------------
Producer: Do you have reason to believe the contract applied for is to replace existing annuities or
insurance owned by the annuitant? / / Yes / / No
Broker Dealer Telephone
---------------------------------- --------------------------------
====================================================================================================================================
SEND COMPLETED APPLICATION - WITH A CHECK MADE OUT TO NATIONWIDE LIFE AND ANNUITY INSURANCE CO. TO:
FOR REGULAR MAIL: Nationwide Life and Annuity Insurance Co.
P.O. Box 182008
Columbus, Ohio 43218-2008
1-(800)-533-5622
</TABLE>
<PAGE> 1
EXHIBIT NO. 6
ARTICLES OF INCORPORATION OF THE DEPOSITOR
<PAGE> 2
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
I, Dennis W. Click, Assistant Secretary of FINANCIAL HORIZONS LIFE
INSURANCE COMPANY, hereby certify that the attached is a true and correct copy
of the AMENDED ARTICLES OF INCORPORATION of FINANCIAL HORIZONS LIFE INSURANCE
COMPANY.
I further certify that the AMENDED ARTICLES OF INCORPORATION have not
been amended, altered, or repealed and are now in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and caused the
corporate seal of FINANCIAL HORIZONS LIFE INSURANCE COMPANY to be hereunto
affixed this 10th day of November, 1994.
/s/ Dennis W. Click
-------------------------------
Dennis W. Click
Assistant Secretary
<PAGE> 3
AMENDED ARTICLES OF INCORPORATION
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
FIRST: The name of said Corporation shall be "FINANCIAL HORIZONS LIFE
INSURANCE COMPANY."
SECOND: Said Corporation is to be located, and its principal offices
maintained, in the City of Columbus, County of Franklin, State
of Ohio.
THIRD: This Corporation is formed for the purpose of making insurance
upon the lives of individuals, and every type of insurance
appertaining thereto or connected therewith, and granting,
purchasing or disposing of annuities, as authorized by Section
3907.01, Ohio Revised Code, as it now exists or may hereafter be
amended.
*FOURTH: The maximum number of shares which the Corporation is authorized
to have outstanding is Sixty-Six Thousand (66,000) shares, all
of which shall be with par value of Forty Dollars ($40.00) each.
FIFTH: The amount of capital with which the Corporation will begin
business is One Million Forty Thousand Dollars ($1,040,000.00).
SIXTH: The corporate powers and business of the Corporation shall be
exercised, conducted and controlled, and the corporate property
managed by a board of directors consisting of not less than five
(5), nor more than twenty-one (21), as may from time to time be
fixed by the Code of Regulations of the Corporation. At the
first election of directors one-third of the directors shall be
elected to serve until the next annual meeting, one-third shall
be elected to serve until the second annual meeting, one-third
shall be elected to serve until the third annual meeting;
therefore all directors shall be elected to serve for terms of
three (3) years each, and until their successors are elected and
qualified. Vacancies in the board of directors, arising from any
cause, shall be filled by the remaining directors.
The directors shall be elected at the annual meetings of the
stockholders by a majority of the stockholders present in person
or by proxy, provided that vacancies may be filled as herein
provided for.
The stockholders of the Corporation shall have the right,
subject to the statutes of the State of Ohio and these Articles
of Incorporation, to adopt a Code of Regulations governing the
transaction of the business and affairs of the Corporation which
may be altered, amended or repealed in a manner provided by law.
* Amended effective December 9, 1993
<PAGE> 4
The board of directors shall elect from their own number a Chairman
of the Board of Directors, a General Chairman, and a President. The
board of directors shall also elect a Vice President and a Secretary
and a Treasurer, or a Secretary-Treasurer. The board of directors may
also elect or appoint such additional vice presidents, assistant
secretaries and assistant treasurers as may be deemed advisable or
necessary, and may fix their duties. The board of directors may
appoint such other officers as may be provided in the Code of
Regulations. All officers, unless sooner removed by the board of
directors, shall hold office for one (1) year, or until their
successors are elected and qualified. Other than the Chairman of the
Board of Directors, the General Chairman and the President, the
officers need not be members of the board of directors. Officers shall
be elected at each annual organization meeting of the board of
directors, but elections or appointments to fill vacancies may be had
at any meeting of the directors.
SEVENTH: The annual meeting of the stockholders of the Corporation shall be
held at such time as may be fixed in the Code of Regulations of the
Corporation. Any meeting of the stockholders, annual or special, may
be held in or outside the State of Ohio. Reasonable notice of all
meeting of stockholders should be given, by mail or publication, or as
prescribed by the Code of Regulations or by law.
Amended effective December 9, 1993
<PAGE> 1
EXHIBIT NO. 9
OPINION OF COUNSEL
<PAGE> 2
[DRUEN, RATH & DIETRICH LETTERHEAD]
November 21, 1995
Nationwide Life and Annuity
Insurance Company
One Nationwide Plaza
Columbus, Ohio 43216
To the Company:
We have prepared the Registration Statement filed with the Securities and
Exchange Commission for the purpose of registering under the Securities Act of
1933, as amended, Individual Deferred Variable Annuity Contracts to be sold by
Nationwide Life and Annuity Insurance Company ("Nationwide") and to be issued
and administered through the Nationwide VA Separate Account-B. In connection
therewith, we have examined the Articles of Incorporation, Code of Regulations
and Bylaws of Nationwide, minutes of meetings of the Board of Directors,
pertinent provisions of federal and Ohio laws, together with such other
documents as we have deemed relevant for the purposes of this opinion. Based on
the foregoing, it is our opinion that:
1. Nationwide is a stock life insurance corporation duly
organized and validly existing under the laws of the State of
Ohio and duly authorized to issue and sell life insurance and
annuity contracts.
2. The Nationwide VA Separate Account-B has been properly created
and is a validly existing separate account pursuant to the
laws of the State of Ohio.
3. The issuance and sale of the Individual Deferred Variable
Annuity Contracts have been duly authorized by Nationwide.
When issued and sold in the manner stated in the prospectus
constituting a part of the Registration Statement, the
contracts will
<PAGE> 3
Nationwide Life and Annuity Insurance Company
November 21, 1995
Page 2
be legal and binding obligations of Nationwide in accordance
with their terms, except that clearance must be obtained, or
the contract form must be approved, prior to the issuance
thereof in certain jurisdictions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Opinions" in the prospectus contained in the Registration Statement.
Very truly yours,
/s/ DRUEN, RATH & DIETRICH
- -----------------------------
DRUEN, RATH & DIETRICH
<PAGE> 1
EXHIBIT NO. 13
COMPUTATION OF PERFORMANCE CALCULATIONS
<PAGE> 2
PERFORMANCE ADVERTISING CALCULATION SCHEDULE
The Variable Account may from time to time quote historical performance in
advertisements.
A yield and effective yield may be advertised for money market sub-accounts,
computed according to the following formulas:
365
YIELD = [BPR X --- - 1] X 100
7
365/7
EFFECTIVE YIELD = [BPR - 1] X 100
Where:
UVend
BPR = Base Period Return = (-----)
UVbeg
UVget = Unit Value at beginning of period
UVend = Unit Value at end of period
Standardized average annual total return may be advertised for non-money market
funds, computed according to the following general formula:
ERV 1/n
T = [(---) - 1] X 100; if n is greater than or equal to 1
P
ERV
T = [(---) - 1] X 100; if n is less than 1
P
ERV = AV - CDSC
1 1/n
AVn <1 = P (----- X UVend) - AC
UVbeg
P AC
AVn is greater than or equal to 1 = [----- - epsilon -----] X UVend
UVbeg UVann
<PAGE> 3
Where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the quoted periods at the end of the quoted
periods (or fractional portion thereor)
AV = accrued value
AC = administrative charge, equal to $30 per year
CDSC = contingent deferred sales charge, equal to (7-a)% of the lesser
of $1,000 or AV (CDSC expires after 7 completed contract years)
UVbeg = Unit Value at beginning of period
UVend = Unit Value at end of period
UVann = Unit Value at contract anniversary
Nonstandardized total return is calculated similarly to the above, except that
CDSC will be equal to $0 and P will be $10,000.
