<PAGE>
File Number 33-79534
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number
Post-Effective Amendment Number 5
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment Number 5
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
-----------------------------------------------
(Exact Name of Registrant)
The Minnesota Mutual Life Insurance Company
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(Name of Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
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(Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, Including Area Code: (612) 665-3500
Dennis E. Prohofsky Copy to:
Senior Vice President, J. Sumner Jones, Esq.
General Counsel and Secretary Jones & Blouch L.L.P.
The Minnesota Mutual Life 1025 Thomas Jefferson Street, N.W.
Insurance Company Suite 405 West
400 Robert Street North Washington, D.C. 20007
St. Paul, Minnesota 55101-2098
(Name and Address of Agent for Service)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on May 1, 1997, pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
on (date), pursuant to paragraph (a)(1) of Rule 485
---
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Regulation 270.24f-2 under The Investment Company Act of 1940,
Registrant has previously elected to register an indefinite number of its
variable annuity contracts under the Securities Act of 1933. The Rule 24f-2
Notice for Registrant's most recent fiscal year was filed on February 26, 1997.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO PROSPECTUS
Form N-4
Item
Number Caption in prospectus
- -------- ---------------------
1. Cover Page
2. Definitions
3. Synopsis
4. Condensed Financial Information
5. General Descriptions
6. Contract Deductions
7. Description of the Contracts
8. Annuity Period
9. Death Benefit
10. Crediting Accumulation Units
11. Withdrawals and Surrender
12. Federal Tax Status
13. Legal Proceedings
14. Table of Contents of the Statement of Additional Information
<PAGE>
GROUP VARIABLE ANNUITY PROSPECTUS
MINNESOTA MUTUAL
GROUP VARIABLE ANNUITY PROSPECTUS
The group deferred variable annuity contracts (hereinafter "Contracts"),
which are more fully described in this Prospectus, are designed to provide
benefits under certain retirement programs or plans which qualify for special
federal income tax treatment. The Contracts are specifically designed for
deferred compensation plans of state and local governments and other tax-exempt
organizations as provided in Sections 457 and 403 of the Internal Revenue Code
(hereinafter "Code").
The contract may also be used in other situations where a group annuity
contract is desired but where the benefit structure does not require a contract
which is recognized as an "annuity" for federal income tax purposes.
The owner of a Contract or a Participant under a Contract may elect to have
contract values accumulated on a completely variable basis, on a completely
fixed basis (as part of Minnesota Mutual's General Account and in which the
safety of principal and interest are guaranteed) or on a combination fixed and
variable basis. To the extent that contract values are accumulated on a variable
basis, they will be a part of the Group Variable Annuity Account. The Group
Variable Annuity Account invests its assets in shares of the Portfolios of
Advantus Series Fund, Inc. (the "Series Fund") or in shares of other registered
investment companies or portfolios of such companies (hereinafter "Underlying
Funds"). The Underlying Funds which are available under the Contract include the
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund, Inc.;
the Vanguard/Wellington Fund, Inc.; the Fidelity Contrafund; the Scudder
International Fund, a series of Scudder International Fund, Inc.; and the Janus
Twenty Fund, a series of the Janus Investment Fund. The variable accumulation
value of the Contract and the amount of each variable annuity payment will vary
in accordance with the performance of the Portfolio or Portfolios of the Series
Fund or such other Underlying Funds selected by the Contract Owner or
Participant. The Contract Owner or Participant bears the entire investment risk
for any amounts allocated to the Group Variable Annuity Account. The Contract
and all interests under it are usually subject to the general interests of
creditors of the owner of the Contract (usually the employer).
The amount of annuity payments may also be variable based upon the experience
of the Group Variable Annuity Account or the payments may be fixed. They may
also be a combination of both.
This Prospectus sets forth information that a prospective investor should know
before investing in the Group Variable Annuity Account, and it should be read
and kept for future reference. A Statement of Additional Information, bearing
the same date, which contains further Contract and Group Variable Annuity
Account information, has been filed with the Securities and Exchange Commission
and is incorporated by reference into this Prospectus. A copy of the Statement
of Additional Information may be obtained without charge by calling (612)
665-3500, or by writing the Group Variable Annuity Account at its principal
office at Minnesota Mutual Life Center, 400 Robert Street North, St. Paul,
Minnesota 55101-2098. A Table of Contents for the Statement of Additional
Information appears in this Prospectus on page 30.
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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
[LOGO]
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
PH 612/665-3500
http://www.minnesotamutual.com
The date of this document and the Statement of Additional Information is: May 1,
1997.
F.47496 Rev. 5-1997
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Definitions................................................. 3
Synopsis.................................................... 4
Expense Table............................................... 6
Condensed Financial Information............................. 9
Financial Statements........................................ 10
Performance Data............................................ 10
General Descriptions........................................ 11
Contract Charges............................................ 15
Sales Charges........................................... 15
Mortality and Expense Risk Charges...................... 15
Contract Administrative Charge.......................... 16
Premium Taxes........................................... 16
Contract Fee............................................ 16
Series Fund and Underlying Fund Expenses.................... 16
Description of the Contracts................................ 17
Voting Rights............................................... 20
Annuity Period.............................................. 21
Death Benefit............................................... 23
Crediting Accumulation Units................................ 24
Withdrawals and Surrender................................... 26
Distribution................................................ 27
Federal Tax Status.......................................... 27
Legal Proceedings........................................... 31
Registration Statement...................................... 31
Statement of Additional Information......................... 31
</TABLE>
2
<PAGE>
DEFINITIONS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting device used to determine the value of a
Contract before annuity payments begin.
ACCUMULATION VALUE: the sum of the values under a Contract in the General
Account and in the Group Variable Annuity Account. Accumulation values may also
be determined with respect to each Participant's interest in the Contract.
ANNUITY: a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain.
ANNUITY UNIT: an accounting device used to determine the amount of annuity
payments.
CERTIFICATE: a Participant's evidence of Contract rights and privileges or of
the amount and terms of annuity payments.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the Contract, which could be a state, a local
government or other tax-exempt employer eligible to contract for a
tax-advantaged plan or any other suitable group owner.
CONTRACT YEAR: a period of one year beginning with the Contract date or a
Contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which has been designated as an eligible investment for the Group Variable
Annuity Account, which shall be in addition to the Advantus Series Fund, Inc.
and its Portfolios.
GENERAL ACCOUNT: all of our assets other than those in the Group Variable
Annuity Account or in other separate accounts established by us.
GROUP VARIABLE ANNUITY ACCOUNT: a separate investment account called the
Minnesota Mutual Group Variable Annuity Account, where the investment experience
of its assets is kept separate from our other assets. This Group Variable
Annuity Account has several sub-accounts.
PARTICIPANT: a person for whom an interest is maintained under a group variable
annuity Contract, prior to the time that annuity payments begin.
PLAN: a tax-qualified plan of state and local governments and other tax-exempt
organizations, or a plan sponsored by any other suitable group owner, under
which benefits are to be provided by the group variable annuity Contracts
described herein.
PURCHASE PAYMENTS: amounts paid to us under a Contract.
SERIES FUND: the Advantus Series Fund, Inc., a mutual fund of the series type
which is an investment alternative for the Group Variable Annuity Account.
UNDERLYING FUND: one of a number of named mutual funds which are investment
alternatives for the Group Variable Annuity Account.
UNDERLYING FUND PORTFOLIO: a securities portfolio of an Underlying Fund where it
is a mutual fund of the series type.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Group Variable Annuity Account.
WE, US, OUR: The Minnesota Mutual Life Insurance Company.
YOU, YOUR: a Participant under the Contract.
3
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QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACTS
THIS SYNOPSIS CONTAINS A BRIEF SUMMARY OF SOME OF THE IMPORTANT FEATURES OF THE
VARIABLE ANNUITY CONTRACTS DESCRIBED IN THIS PROSPECTUS. YOU MAY FIND IT HELPFUL
TO RE-READ THIS SUMMARY AFTER READING THE PROSPECTUS, WHICH SHOULD BE RETAINED
FOR FUTURE REFERENCE. A GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS MAY BE
FOUND UNDER THE HEADING "DEFINITIONS" IN THIS PROSPECTUS ON PAGE 3.
WHAT IS AN ANNUITY?
An annuity is a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain. An
annuity with payments which are guaranteed as to amount during the payment
period is a fixed annuity. An annuity with payments which vary during the
payment or accumulation period in accordance with the investment experience of a
separate account is called a variable annuity.
WHAT ARE THE CONTRACTS OFFERED BY THIS PROSPECTUS?
The Contracts are combination fixed and variable annuity contracts issued by us
which provide for monthly annuity payments. These payments may begin immediately
or at a future date elected by you. Purchase payments received by us under a
Contract are allocated either to our General Account or Group Variable Annuity
Account, as specified by you. Purchase payments and other values allocated to
the General Account will be guaranteed and will accumulate at a rate of interest
guaranteed to be no less than 3%. Purchase payments and other values allocated
to the Group Variable Annuity Account are invested according to your
instructions in one or more Underlying Fund Portfolios and there is no guarantee
of investment return or even against investment loss on such allocations.
This Prospectus describes only the variable aspects of the Contracts, except
where fixed aspects are specifically mentioned. Please look to the language of
the Contracts for a description of the fixed portion of the Contracts. For more
information on the Contracts, see the heading "Description of the Contracts" in
this Prospectus.
WHAT TYPES OF VARIABLE ANNUITY CONTRACTS ARE AVAILABLE?
This Prospectus offers only one type of Contract, a group deferred variable
annuity contract (herein "Contract"), designed primarily to be used in
tax-advantaged plans of state and local governments and other tax-exempt
organizations. These governments or organizations are the owners of the
Contracts. The Contract and all interests under it are subject to the general
interests of creditors of the owner of the Contract (usually the employer).
HOW DOES A PERSON OBTAIN COVERAGE UNDER THE CONTRACT?
After purchasing a Contract, the Contract Owner will submit an application to us
for any employee who desires coverage under the Contract, is eligible to
participate in the underlying retirement program and who completes an
application. Such a person is then covered by the Contract and its terms, herein
a "Participant." A person's employer or the Contract Owner should be consulted
for additional information regarding the plan.
HOW IS THE AMOUNT OF PURCHASE PAYMENTS DETERMINED?
As a general matter, the Contract Owner, normally an employer, will report to us
the amount of purchase payments by or on behalf of each Participant. There are
no minimum amounts or number of purchase payments that are required under the
Contract. For deferred compensation programs, the employer or Contract Owner
will make purchase payments by or on behalf of a Participant pursuant to the
provisions of the underlying deferred compensation plan.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE GROUP VARIABLE ANNUITY ACCOUNT?
Currently purchase payments may be allocated to one or more of the sub-accounts
of the Group Variable Annuity Account that invest respectively in the following
Series Fund or Underlying Fund Portfolios:
Growth Portfolio of Advantus Series Fund, Inc.,
Bond Portfolio of Advantus Series Fund, Inc.,
Money Market Portfolio of Advantus Series Fund, Inc.,
Asset Allocation Portfolio of Advantus Series Fund, Inc.,
4
<PAGE>
Mortgage Securities Portfolio of Advantus Series Fund, Inc.,
Index 500 Portfolio of Advantus Series Fund, Inc.,
Capital Appreciation Portfolio of Advantus Series Fund, Inc.,
International Stock Portfolio of Advantus Series Fund, Inc.,
Value Stock Portfolio of Advantus Series Fund, Inc.,
Small Company Portfolio of Advantus Series Fund, Inc.,
Maturing Government Bond Portfolios of Advantus Series Fund, Inc. (of which
four are available),
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund,
Inc.,
Vanguard/Wellington Fund, Inc.,
Fidelity Contrafund,
Scudder International Fund, a series of Scudder International Fund, Inc.,
and
Janus Twenty Fund, a series of the Janus Investment Fund
Additional information concerning the investment objectives, policies and
related expenses of the Series Fund Portfolios can be found in the current
prospectus for the Advantus Series Fund, Inc., which is attached to this
Prospectus. Additional information concerning the investment objectives and
policies of these Underlying Funds is contained in the prospectuses for each
such option. Some of these fund alternatives may also be part of a series fund
arrangement where not all of an existing fund's investment options are available
to the Contract.
There is no assurance that any Series Fund Portfolio or Underlying Fund will
meet its objectives.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes, provided that the Contract Owner and the underlying plan permit it. A
Participant may change the allocation of future purchase payments by giving us
written notice or a telephone call notifying us of the change. Before annuity
payments begin, a Participant may transfer all or a part of the accumulation
value from one Portfolio to another or among the Portfolios. After variable
annuity payments begin, transfers of annuity reserves may be made among the
sub-accounts of the Group Variable Annuity Account and from those sub-accounts
to the General Account. However, once fixed annuity payments begin, no annuity
reserves may be transferred out of the General Account.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
The following Contract expense information is intended to illustrate the
expenses of the Contract as applied to the Participant interests thereunder. All
expenses are rounded to the nearest dollar. The information contained in the
tables must be considered with the narrative information which immediately
follows them.
5
<PAGE>
EXPENSE TABLE
The tables shown below are to assist a Contract Owner or Participant in
understanding the costs and expenses that a Participant's interest in the
Contract will bear directly or indirectly. For more information on Contract
costs and expenses, see the Prospectus heading "Contract Charges" and the
information immediately following. We reserve the right to increase the
mortality and expense risk charge to 1.25%. We also reserve the right to
increase the administrative charge to .40%. However, no such increases are
anticipated. The table does not reflect deductions for any applicable premium
taxes which may be made from each purchase payment depending upon the applicable
law. Surrender amounts in years shown reflect the Participant's ability to
withdraw an amount equal to ten percent of the accumulation value at the end of
the previous calendar year without the imposition of the deferred sales charge.
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Deferred Sales Load (as a percentage of amount
surrendered).............................................. 6.0%
decreasing uniformly
by .0833% for each of
the first 72 months
from the contract
date
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value) Mortality and
Expense Risk Charges........................................ 0.85%
Contract Administrative Charge.............................. 0.15%
------
Total Separate Account Annual Expenses.................. 1.00%
------
------
</TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(As a percentage of average net assets for the described underlying mutual
funds.)
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
MANAGEMENT & OTHER EXPENSES (AFTER EXPENSES (AFTER
INVESTMENT ADMINISTRATIVE EXPENSE EXPENSE
MANAGEMENT FEES EXPENSES REIMBURSEMENTS) REIMBURSEMENTS)
--------------- ----------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio.............. .50% -- .09% .59%
Bond Portfolio................ .50% -- .06% .56%
Money Market Portfolio........ .50% -- .10% .60%
Asset Allocation Portfolio.... .50% -- .04% .54%
Mortgage Securities
Portfolio................... .50% -- .08% .58%
Index 500 Portfolio........... .40% -- .05% .45%
Capital Appreciation
Portfolio................... .75% -- .10% .85%
International Stock
Portfolio................... .74% -- .32% 1.06%
Small Company Portfolio....... .75% -- .06% .81%
Maturing Government Bond 1998
Portfolio (1)(2)............ .05% -- .15% .20%
Maturing Government Bond 2002
Portfolio (1)(2)............ .05% -- .15% .20%
Maturing Government Bond 2006
Portfolio(2)................ .25% -- .15% .40%
Maturing Government Bond 2010
Portfolio(2)................ .25% -- .15% .40%
Value Stock Portfolio(2)...... .75% -- .08% .83%
</TABLE>
6
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<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
MANAGEMENT & OTHER EXPENSES (AFTER EXPENSES (AFTER
INVESTMENT ADMINISTRATIVE EXPENSE EXPENSE
MANAGEMENT FEES EXPENSES REIMBURSEMENTS) REIMBURSEMENTS)
--------------- ----------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Vanguard Fixed Income Securities
Fund, Inc.-- Long-Term
Corporate Portfolio............ .04% .24% .03% .31%
Vanguard/Wellington Fund,
Inc............................ .04% .23% .03% .31%
Fidelity Contrafund............. .57% -- .26% .83%
Scudder International Fund...... .82% -- .32% 1.14%
Janus Twenty Fund............... .66% -- .27% .93%
</TABLE>
(1) Investment management fees for the Maturing Government Bond 1998 and 2002
Portfolios are equal on an annual basis to .05% of average daily net assets
until April 30, 1998 at which time the fees will be .25% of average daily
net assets.
(2) Minnesota Mutual voluntarily absorbed certain expenses of the Maturing
Government Bond 1998, Maturing Government Bond 2002, Maturing Government
Bond 2006 and Maturing Government Bond 2010 Portfolios for the year ended
December 31, 1996. If these portfolios had been charged for expenses, the
ratio of expenses to average daily net assets would have been .72%, 1.14%,
1.58% and 2.18%, respectively. It is Minnesota Mutual's present intention to
waive other fund expenses during the current fiscal year which exceed, as a
percentage of average daily net assets, .15%. Minnesota Mutual also reserves
the option to reduce the level of other expenses which it will voluntarily
absorb.
CONTRACT OWNER EXPENSE EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
IF YOU SURENDERED YOUR
CONTRACT AT THE END OF THE IF YOU ANNUITIZE AT THE END OF
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD
------------------------------------- -------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio...................... $63 $80 $ 97 $189 $16 $50 $ 87 $189
Bond Portfolio........................ $63 $79 $ 96 $186 $16 $49 $ 85 $186
Money Market Portfolio................ $63 $80 $ 98 $190 $16 $50 $ 87 $190
Asset Allocation Portfolio............ $62 $79 $ 95 $183 $16 $49 $ 84 $183
Mortgage Securities Portfolio......... $63 $80 $ 97 $188 $16 $50 $ 86 $188
Index 500 Portfolio................... $61 $76 $ 90 $174 $15 $46 $ 79 $174
Capital Appreciation Portfolio........ $65 $88 $111 $217 $19 $58 $100 $217
International Stock Portfolio......... $67 $94 $121 $239 $21 $65 $111 $239
Small Company Portfolio............... $65 $87 $109 $213 $18 $57 $ 98 $213
Maturing Government Bond 1998
Portfolio........................... $59 $68 $ 77 $145 $12 $38 $ 66 $145
Maturing Government Bond 2002
Portfolio........................... $59 $68 $ 77 $145 $12 $38 $ 66 $145
Maturing Government Bond 2006
Portfolio........................... $61 $74 $ 87 $168 $14 $44 $ 77 $168
Maturing Government Bond 2010
Portfolio........................... $61 $74 $ 87 $168 $14 $44 $ 77 $168
Value Stock Portfolio................. $65 $87 $110 $215 $19 $58 $ 99 $215
Vanguard Fixed Income Securities Fund,
Inc.--Long-Term Corporate Portfolio.... $60 $72 $ 83 $158 $13 $42 $ 72 $158
Vanguard/Wellington Fund, Inc........... $60 $72 $ 83 $168 $13 $42 $ 72 $158
Fidelity Contrafund..................... $65 $87 $110 $215 $19 $58 $ 99 $215
Scudder International Fund.............. $68 $96 $125 $247 $22 $67 $115 $247
Janus Twenty Fund....................... $66 $90 $115 $225 $20 $60 $104 $225
</TABLE>
7
<PAGE>
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. The Contract has a guaranteed death benefit if a Participant dies before
annuity payments have started. The death benefit shall be equal to the greater
of: (1) the amount of the Participant's accumulation value payable at death; or
(2) the amount of the total purchase payments paid to us by or on behalf of a
Participant, less all prior Participant Contract withdrawals or transfers. A
transfer for this purpose is the application of an amount from this Contract to
another investment alternative available in the Contract Owner's underlying
plan.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The Contracts specify several annuity options. Each annuity option may be
elected on either a variable annuity or fixed annuity basis or a combination of
the two. Other annuity options may be available from us on request. The
specified annuity options are a life annuity; a life annuity with a period
certain of either 120 months, 180 months or 240 months; a joint and last
survivor annuity and a period certain annuity.
WHAT IF A CONTRACT PARTICIPANT DIES?
If a Participant dies before payments begin, we will pay the Participant's
guaranteed death benefit of the Contract as a death benefit to the named
beneficiary. If the annuitant dies after annuity payments have begun, we will
pay whatever death benefit may be called for by the terms of the annuity option
selected.
WHAT VOTING RIGHTS DO YOU HAVE?
Participants and annuitants will be able to direct us as to how to vote shares
of the Series Fund and Underlying Funds held for their Certificates.
8
<PAGE>
CONDENSED FINANCIAL INFORMATION
The financial statements of and Minnesota Mutual Group Variable Annuity and The
Minnesota Mutual Life Insurance Company Account may be found in the Statement of
Additional Information.
The table below gives per unit information about each sub-account for the
years ended December 31, 1996 and 1995 and the period from September 2, 1994,
commencement of operations, to December 31, 1994. This information should be
read in conjunction with the financial statements and related notes of Minnesota
Mutual Group Variable Annuity Account included in the Statement of Additional
Information. As of December 31, 1996, no contract owners have elected to
allocate payments to the MIMLIC Bond, MIMLIC Mortgage Securities, MIMLIC Capital
Appreciation, MIMLIC International Stock, MIMLIC Small Company, MIMLIC Maturing
Government Bond 1998, MIMLIC Maturing Government Bond 2002, MIMLIC Maturing
Government Bond 2006, MIMLIC Maturing Government Bond 2010 and MIMLIC Value
Stock Sub-Accounts. Accordingly, no condensed financial information is presented
for these Sub-Accounts.
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 2,
YEAR ENDED YEAR ENDED 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
MIMLIC Growth Sub-Account:
Unit value at beginning of period............... $1.000 -- --
Unit value at end of period..................... $1.076 -- --
Number of units outstanding at end of period.... 136,198 -- --
MIMLIC Money Market Sub-Account:
Unit value at beginning of period............... $1.055 $1.011 $1.000
Unit value at end of period..................... $1.097 $1.055 $1.011
Number of units outstanding at end of period.... 1,676,436 812,075 318,636
MIMLIC Asset Allocation Sub-Account:
Unit value at beginning of period............... $1.000 -- --
Unit value at end of period..................... $1.062 -- --
Number of unit outstanding at end of period..... 69,684 -- --
MIMLIC Index 500 Sub-Account:
Unit value at beginning of period............... $1.326 $0.979 $1.000
Unit value at end of period..................... $1.597 $1.326 $0.979
Number of units outstanding at end of period.... 3,811,296 1,252,482 261,150
Vanguard Long-Term Corporate Sub-Account:
Unit value at beginning of period............... $1.234 $0.989 $1.000
Unit value at end of period..................... $1.242 $1.234 $0.989
Number of units outstanding at end of period.... 2,199,884 1,202,743 275,796
Vanguard Wellington Sub-Account
Unit value at beginning of period............... $1.283 $0.977 $1.000
Unit value at end of period..................... $1.475 $1.283 $0.977
Number of units outstanding at end of period.... 9,571,917 4,097,086 1,363,274
Fidelity Contrafund Sub-Account:
Unit value at beginning of period............... $1.322 $0.981 $1.000
Unit value at end of period..................... $1.600 $1.322 $0.981
Number of units outstanding at end of period.... 18,638,007 11,232,337 4,870,232
Scudder International Sub-Account:
Unit value at beginning of period............... $1.039 $0.934 $1.000
Unit value at end of period..................... $1.178 $1.039 $0.934
Number of units outstanding at end of period.... 4,774,006 3,011,428 1,807,445
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 2,
YEAR ENDED YEAR ENDED 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Janus Twenty Sub-Account:
Unit value at beginning of period............... $1.289 $0.959 $1.000
Unit value at end of period..................... $1.628 $1.289 $0.959
Number of units outstanding at end of period.... 2,891,975 990,111 444,821
</TABLE>
- ------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of Minnesota Mutual Group Variable Annuity Account and
The Minnesota Mutual Life Insurance Company's financial statements are included
in the Statement of Additional Information.
- ------------------------------------------------------------------------
PERFORMANCE DATA
From time to time the Group Variable Annuity Account may publish advertisements
containing performance data relating to its sub-accounts. In the case of the
Money Market sub-account, the Group Variable Annuity Account will publish yield
or effective yield quotations for a seven-day or other specified period. In the
case of the other sub-accounts, performance data will consist of average annual
total return quotations for a one-year period and for the period since the
sub-account became available pursuant to the Group Variable Annuity Account's
registration statement, and may also include cumulative total return quotations
for the period since the sub-account became available pursuant to such
registration statement. The Money Market sub-account may also quote such average
annual and cumulative total return figures. Performance figures used by the
Group Variable Annuity Account are based on historical information of the sub-
accounts for specified periods, and the figures are not intended to suggest that
such performance will continue in the future. Performance figures of the Group
Variable Annuity Account will reflect charges made pursuant to the terms of the
Contracts offered by this Prospectus and charges of the Series Fund or
Underlying Funds. The various performance figures used in Group Variable Annuity
Account advertisements relating to the contracts described in this Prospectus
are summarized below. More detailed information on the computations is set forth
in the Statement of Additional Information.
MONEY MARKET SUB-ACCOUNT YIELD. Yield quotations for the Money Market
sub-account are based on the income generated by an investment in the
sub-account over a specified period, usually seven days. The figures are
"annualized," that is, the amount of income generated by the investment during
the period is assumed to be generated over a 52-week period and is shown as a
percentage of the investment. Effective yield quotations are calculated
similarly, but when annualized the income earned by an investment in the sub-
account is assumed to be reinvested. Effective yield quotations will be slightly
higher than yield quotations because of the compounding effect of this assumed
reinvestment. Yield and effective yield figures quoted by the sub-account will
not reflect the deduction of any applicable deferred sales charges.
TOTAL RETURN FIGURES. Cumulative total return figures may also be quoted for
all sub-accounts. Cumulative total return is based on a hypothetical $1,000
investment in the sub-account at the beginning of the advertised period, and is
equal to the percentage change between the $1,000 net asset value of that
investment at the beginning of the period and the net asset value of that
investment at the end of the period. Cumulative total return figures quoted by
the sub-account will not reflect the deduction of any applicable deferred sales
charges.
All cumulative total return figures published for sub-accounts will be
accompanied by average annual total return figures for a one-year period,
three-year period and for the period since the sub-account became available
pursuant to the Group Variable Annuity Account's registration statement. Average
annual total return figures will show for the specified period the average
annual rate of return required for an initial investment of $1,000 to equal the
surrender value of that investment at the end of the period. The surrender value
will reflect the deduction of the deferred sales charge applicable to the
contract and to the length of the period advertised. Such average annual total
return figures may also be accompanied by average annual total return figures,
for the same or other periods, which do not reflect the deduction of any
applicable deferred sales charges.
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GENERAL DESCRIPTIONS
A. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
The Minnesota Mutual Life Insurance Company is a mutual life insurance company
organized in 1880 under the laws of Minnesota. Its home office is at 400 Robert
Street North, St. Paul, Minnesota 55101-2098 (612-665-3500). It is licensed to
do a life insurance business in all states of the United States (except New
York, where it is an authorized reinsurer), the District of Columbia, Canada,
Puerto Rico, and Guam.
B. MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
On June 14, 1993, the Board of Trustees of Minnesota Mutual established the
Minnesota Mutual Group Variable Annuity Account (the "Group Variable Annuity
Account") in accordance with Minnesota Insurance Law. The Group Variable Annuity
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended (the "1940 Act") and meets the definition of a "separate
account" under the federal securities laws.
The Minnesota law under which the Group Variable Annuity Account was
established provides that the assets of the Group Variable Annuity Account shall
not be chargeable with liabilities arising out of any other business which
Minnesota Mutual may conduct, but shall be held and applied exclusively for the
benefit of the holders of those variable annuity Contracts for which the
separate account was established. The investment performance of the Group
Variable Annuity Account is entirely independent of both the investment
performance of our General Account and of any other separate accounts which we
may have established or may later establish. All obligations under the Contracts
are general corporate obligations of Minnesota Mutual.
The Group Variable Annuity Account currently has sub-accounts to which
Contract Owners and Participants may allocate purchase payments. Each
sub-account invests in shares of a corresponding Portfolio of the Fund or an
underlying Fund. Additional sub-accounts may be added at our discretion.
C. ADVANTUS SERIES FUND, INC.
The Group Variable Annuity Account may invest in Advantus Series Fund, Inc. (the
"Series Fund"), a mutual fund of the series type. Prior to May 1, 1997, the name
of the Series Fund was "MIMLIC Series Fund, Inc." On January 14, 1997, the
Series Fund's Board of Directors approved an amendment of the Series Fund's
Articles of Incorporation for the purpose of changing the name of the Series
Fund to "Advantus Series Fund, Inc." effective May 1, 1997. The purpose of the
name change is to provide the Series Fund with a more distinctive name which may
provide greater visibility and name recognition, which reflects the name of its
adviser and which may provide additional marketing opportunities for variable
contracts investing in shares of the Series Fund. The change in the Series
Fund's name will not result in any change in investment objectives, policies or
practices for the Series Fund or any of its portfolios. The Series Fund is
registered with the Securities and Exchange Commission as a diversified,
open-end management investment company, but such registration does not signify
that the Commission supervises the management, or the investment practices or
policies, of the Series Fund. The Series Fund issues its shares, continually and
without sales charge, only to our separate accounts, which currently include the
Variable Annuity Account, the Group Variable Annuity Account, Variable Fund D,
the Variable Life Account, and the Variable Universal Life Account. The Series
Fund may be made available to other separate accounts as new products are
developed, and may be used as the underlying investment medium for separate
accounts of the Northstar Life Insurance Company, a wholly-owned subsidiary of
ours domiciled in the State of New York. Shares are sold and redeemed at net
asset value. In the case of a newly issued Contract or interest under it,
purchases of shares of the Portfolios of the Series Fund in connection with the
first purchase payment will be based on the values next determined after
issuance of the Contract by us. Redemptions of shares of the Portfolios of the
Series Fund are made at the net asset value next determined from the day we
receive a request for transfer, partial withdrawal or surrender at our home
office. In the case of outstanding Contracts, purchases of shares of the
Portfolio of the Series Fund for the Group Variable Annuity Account are made at
the net asset value of such shares next determined after receipt by us of
Contract purchase payments.
The Series Fund's investment adviser is Advantus Capital Management, Inc.
("Advantus Capital"). Advantus Capital is a wholly-owned subsidiary of MIMLIC
Asset Management Company ("MIMLIC Management") which, prior to May 1, 1997,
served as investment adviser to the Series Fund. MIMLIC Management is a
wholly-owned subsidiary of
11
<PAGE>
Minnesota Mutual. The same portfolio managers and other personnel who previously
provided investment advisory services to the Series Fund through MIMLIC
Management continue to provide the same services through Advantus Capital.
Advantus Capital acts as an investment adviser to the Series Fund pursuant to an
advisory agreement.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Series Fund simultaneously. Although Minnesota Mutual does not
currently foresee any such disadvantages either to variable life insurance
policy owners or to variable annuity contract owners, the Series Fund's Board of
Directors intends to monitor events in order to identify any material conflicts
between such policy owners and contract owners and to determine what action, if
any, should be taken in response thereto. Such action could include the sale of
Series Fund shares by one or more of the separate accounts, which could have
adverse consequences. Material conflicts could result from, for example, (1)
changes in state insurance law, (2) changes in federal income tax laws, (3)
changes in the investment management of any of the Portfolios of the Series
Fund, or (4) differences in voting instructions between those given by policy
owners and those given by contract owners.
The investment objectives and certain policies of the Portfolios of the Series
Fund available in the Contract are as follows:
The Growth Portfolio seeks the long-term accumulation of capital. Current
income, while a factor in portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The Bond Portfolio seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
securities will tend to rise and fall inversely with the rise and fall of
interest rates.
The Money Market Portfolio seeks maximum current income to the extent
consistent with liquidity and the stability of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuation in short-term interest rates.
The Asset Allocation Portfolio seeks as high a level of long-term total rate
of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity
securities, bonds and money market instruments. The Asset Allocation
Portfolio involves the risks inherent in stocks and debt securities of
varying maturities and the risk that the Portfolio may invest too much or
too little of its assets in each type of security at any particular time.
The Mortgage Securities Portfolio seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily
in mortgage-related securities. Prices of mortgage-related securities will
tend to rise and fall inversely with the rise and fall of the general level
of interest rates.
The Index 500 Portfolio seeks investment results that correspond generally
to the price and yield performance of the common stocks included in the
Standard & Poor's Corporation 500 Composite Stock Price Index (the "Index").
It is designed to provide an economical and convenient means of maintaining
a broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been
included in the Index affords no assurance against declines in the price or
yield performance of that stock.
The Capital Appreciation Portfolio seeks growth of capital. Investments will
be made based upon their potential for capital appreciation. Therefore,
current income will be incidental to the objective of capital growth.
Because of the market risks inherent in any equity investment, the selection
of securities on the basis of their appreciation possibilities cannot ensure
against possible loss in value.
The International Stock Portfolio seeks long-term capital growth. In pursuit
of this objective the International Stock Portfolio
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<PAGE>
will follow a policy of investing in stocks issued by companies, large and
small, and debt obligations of companies and governments outside the United
States. Current income will be incidental to the objective of capital
growth. The Portfolio is designed for persons seeking international
diversification. Investors should consider carefully the substantial risks
involved in investing in securities issued by companies and governments of
foreign nations, which are in addition to the usual risks inherent in
domestic investments.
The Small Company Portfolio seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy
of investing primarily in common or preferred stocks issued by small
companies, defined in terms of either market capitalization or gross
revenues. Investments in small companies usually involve greater investment
risks than fixed income securities or corporate equity securities generally.
Small companies will typically have a market capitalization of less than
$1.5 billion or annual gross revenues of less than $1.5 billion.
The Value Stock Portfolio seeks the long-term accumulation of capital. In
pursuit of this objective, the Value Stock Portfolio will follow a policy of
investing primarily in the equity securities of companies which, in the
opinion of the adviser, have market values which appear low relative to
their underlying value or future earnings and growth potential. As it is
anticipated that the Portfolio will consist in large part of dividend-paying
common stocks, the production of income will be a secondary objective of the
Portfolio.
The Maturing Government Bond Portfolios seek to provide as high an
investment return as is consistent with prudent investment risk for a
specified period of time ending on a specified liquidation date. In pursuit
of this objective each of the four Maturing Government Bond Portfolios seek
to return a reasonably assured targeted dollar amount, predictable at the
time of investment, on a specific target date in the future through
investment in a portfolio composed primarily of zero coupon securities.
These are securities that pay no cash income and are sold at a discount from
their par value at maturity. The current target dates for the maturities of
these Portfolios are 1998, 2002, 2006 and 2010, respectively. On maturity
the Portfolio will be converted to cash and reinvested at the direction of
the Contract Owner. In the absence of instructions, liquidation proceeds
will be allocated to the Money Market Portfolio.
A prospectus for the Series Fund is attached to this Prospectus and
prospectuses for the other Underlying Funds are distributed with this Prospectus
or are available upon request. A person should carefully read this Prospectus
and the prospectus for any Underlying Fund Portfolio to which payments are to be
allocated before investing in the Contracts.
D. UNDERLYING FUNDS
In addition to the investment made by the Group Variable Annuity Account in
shares of the Series Fund, the Contracts also provide for sub-accounts of the
Group Variable Annuity Account which invest in shares of other registered
investment companies. These Underlying Fund options may not be available in all
Contracts issued by us and Participants should consult with their employer and
plan sponsor to determine the availability of these options under the Contract
available to them. As of the date of this Prospectus, sub-accounts have been
established which allow for investment in shares of the following:
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund,
Inc., (a corporate and government bond fund); Vanguard/Wellington Fund,
Inc., a balanced equity fund; Fidelity Contrafund, a growth equity fund;
Scudder International Fund, an international stock fund; and Janus Twenty
Fund, a growth equity fund.
The Vanguard Fixed Income Securities Fund, Inc. employs the Wellington
Management Company as the investment adviser for the Long-Term Corporate
Portfolio. The Vanguard/Wellington Fund, Inc., employs as its adviser the
Wellington Management Company. The Fidelity Contrafund has as its adviser
Fidelity Management & Research Company ("FMR"), a subsidiary of FMR
Corporation. The Scudder International Fund has as its adviser Scudder,
Stevens & Clark, Inc. The Janus Twenty Fund has as its adviser Janus Capital
Corporation.
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<PAGE>
The investment objectives and certain policies of the Underlying Funds
available under the Contract are as follows:
The Vanguard Long-Term Corporate Portfolio, part of the Vanguard Fixed
Income Securities Fund, Inc., seeks to provide investors with a high level
of income consistent with the maintenance of principal and liquidity. This
Portfolio invests in a diversified portfolio of investment grade corporate
and government bonds. This Portfolio is exposed to substantial interest rate
risk because of the length of its average maturity and it may exhibit high
to very high price fluctuations due to changing interest rates. The
possibility that corporate bonds held by the Portfolio will be repaid prior
to maturity is an additional risk associated with this Portfolio.
The Vanguard/Wellington Fund, Inc. seeks to provide conservation of
principal, a reasonable income return, and profits without undue risk. This
Fund invests in a diversified portfolio of common stocks and bonds, with
common stocks expected to represent 60% to 70% of the Fund's total assets.
Fidelity Contrafund seeks long-term growth by investing in stocks. This Fund
invests in companies that are currently "out of favor" with the public but
show potential for capital appreciation. The Fund invests in both well-known
and lesser-known companies believed to be undervalued due to overly
pessimistic appraisals by the market. The Fund invests primarily in common
stock and convertible securities, with a bias toward medium- and smaller-
capitalization companies.
The Scudder International Fund, a series of Scudder International Fund,
Inc., seeks long-term growth of capital primarily through a diversified
portfolio of marketable foreign equity securities. It generally invests in
equity securities of established companies that are listed on foreign
exchanges which the Adviser believes have favorable characteristics, but may
also invest up to 20% of its total assets in debt securities of foreign
governments, supranational organizations and private issuers. The Fund seeks
to diversify investments among several countries and to have represented in
the portfolio, in substantial proportions, business activities in not less
than three different countries. The Fund does not intend to concentrate
investments in any particular industry. Foreign investing involves exposure
to special risks, including economic or political instability and currency
fluctuation.
The Janus Twenty Fund, a series of the Janus Investment Fund, seeks
long-term growth of capital. This nondiversified Fund seeks to invest in
companies that the portfolio manager believes offer rapid growth potential.
Under normal circumstances, this Fund will concentrate its investments in a
core position of 20 to 30 common stocks. The risk of loss may be greater
than would exist with a more diversified account.
Some of these shares are available not only to insurance company separate
accounts, but may also be available to the public generally, which may have a
bearing on the question of whether the Contracts may be considered annuity
contracts for tax purposes. For more information, please see the heading
"Federal Tax Status" in this Prospectus on page 26. Persons considering
sub-account investments in these Funds should obtain a current prospectus for
those Funds from the Funds or the Contract Owners before investing in those
sub-accounts.
E. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the sub-accounts of the Group Variable Annuity
Account. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for Contracts of this class, we may substitute another
fund for a sub-account. Substitution may be with respect to existing
accumulation values, future purchase payments and future annuity payments.
Investment in all Series Fund or Underlying Fund options may not be available,
and may be restricted by the Contract Owner. For example, the Contract held by
the Chuch of the Nazarene Tax- Sheltered Annuity Plan makes available the
Underlying Fund options and the Money Market, Growth, Asset Allocation, and
Index 500 Portfolios of the Series Fund. The Contract held by the Minnesota
State Deferred Compensation Plan makes available the Underlying Fund options and
the Money Market and Index 500 Portfolios of the Series Fund. The Minnesota
State Colleges and University 403(b) Program
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makes available all of the portfolios of the Series Fund.
We may also establish additional sub-accounts in the Group Variable Annuity
Account and we reserve the right to add, combine or remove any sub-accounts of
the Group Variable Annuity Account. Each additional sub-account will purchase
shares in a new portfolio or mutual fund. Such sub-accounts may be established
when, in our sole discretion, marketing, tax, investment or other conditions
warrant such action. Similar considerations will be used by us should there be a
determination to eliminate one or more of the sub-accounts of the Group Variable
Annuity Account. The basis of offering additional investment options to existing
Contract Owners is subject to our discretion.
We also reserve the right, when permitted by law, to de-register the Group
Variable Annuity Account under the Investment Company Act of 1940, to restrict
or eliminate any voting rights of the Contract Owners, and to combine the Group
Variable Annuity Account with one or more of our other separate accounts.
- ------------------------------------------------------------------------
CONTRACT CHARGES
A. SALES CHARGES
No sales charge is deducted from the purchase payments for these Contracts.
However, when a Participant's accumulation value is reduced by a withdrawal or
surrender, a deferred sales charge may be deducted for expenses relating to the
sale of the Contracts.
The deferred sales charge is deducted from the Participant's remaining
accumulation value except in the case of a surrender, where it reduces the
amount distributed. We will deduct the deferred sales charge proportionally from
the Participant's fixed and variable accumulation value.
The amount of the deferred sales charge, expressed as a percentage of the
Participant's accumulation value withdrawn, is shown in the following table.
Percentages are shown as of the Participant's date of initial Contract
participation and the end of each of the first six years of participation. The
percentages decrease uniformly each month for 72 months from the initial date.
In no event will the sum of the deferred sales charges exceed 9% of the purchase
payments made by or on behalf of that Participant under a Contract.
<TABLE>
<CAPTION>
END OF DEFERRED
PARTICIPATION YEAR SALES CHARGE
- -------------------- -----------------
<S> <C>
Participation Date 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6 0%
</TABLE>
These sales charges may be waived in certain circumstances where sales expenses
are not paid at the time of sale to registered representatives and
broker-dealers responsible for the sales of the Contracts on the basis of
purchase payments made under the Contract and where the Contract is sold in
anticipation of reduced expenses.
B. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the Contracts by our obligation to continue
to make monthly annuity payments, determined in accordance with the annuity rate
tables and other provisions contained in the Contract, to each annuitant
regardless of how long that annuitant lives or all annuitants as a group live.
This assures an annuitant that neither the annuitant's own longevity nor an
improvement in life expectancy generally will have an adverse effect on the
monthly annuity payments received under the Contract. In addition, we assume
mortality risk in the formulation of death benefit provided by the Contract. See
the heading "Death Benefit" herein.
We assume an expense risk by assuming the risk that deductions provided for in
the Contracts for the sales and administrative expenses will be adequate to
cover the expenses incurred.
For assuming these risks, we currently make a deduction from the Group
Variable Annuity Account at the annual rate of .40% for the mortality risk and
.45% for the expense risk. We reserve the right to increase the charge for the
assumption of mortality risks to not more than .60% and the expense risks to not
more than .65%. If this charge is increased to this maximum amount, then the
total of the mortality risk charge and expense risk charge would be 1.25% on an
annual basis.
If these deductions prove to be insufficient to cover the actual cost of the
expense and mortality risks assumed by us, then we will absorb the resulting
losses and make sufficient transfers to the Group Variable Annuity Account from
our general account, where appropriate. Conversely, if these deductions prove to
be
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more than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us. Some
or all of such profit may be used to cover any distribution costs not recovered
through the deferred sales charge.
C. CONTRACT ADMINISTRATIVE CHARGE
We perform all administrative services relative to the Contract. These services
may include the review of the applications for compliance with our issue
criteria, the preparation and issue of contracts and certificates, the receipt
of purchase payments, forwarding them to the Series Fund or other fund managers
for investment, the preparation and mailing of periodic reports and the
performance of other services.
As consideration for providing these services we currently make a deduction
from the Group Variable Annuity Account at the annual rate of .15% for contract
administration. We reserve the right to increase this administrative charge to
not more than .40%. The administrative charge is designed to cover the
administrative expenses incurred by us under the Contract.
D. PREMIUM TAXES
Deduction for any applicable state premium taxes may be made from each purchase
payment or at the commencement of annuity payments. There are currently no
premium taxes which are applicable to the Contracts, but we reserve the right to
make such a deduction should they become applicable to this Contract in the
future.
E. CONTRACT FEE
For Participants who elect a fixed annuity, there is a charge of $200 which is
taken as a contract fee whenever fixed annuity payments are elected and
purchased at rates guaranteed by the Contract. This fee will also be deducted
when amounts are transferred for additional fixed annuity income once fixed
annuity payments have begun.
- ------------------------------------------------------------------------
SERIES FUND AND UNDERLYING FUND EXPENSES
Advantus Capital, one of our subsidiaries, acts as the investment adviser to the
Series Fund and deducts from the net asset value of each Portfolio of the Series
Fund a fee for its services which are provided under an investment advisory
agreement. The investment advisory agreements provide that the fee shall be
computed at the annual rate which may not exceed .4% of the Index 500 Portfolio,
.75% of the Capital Appreciation, Value Stock and Small Company Portfolios, 1%
for the International Stock Portfolio and .5% of each of the remaining
Portfolio's average daily net assets other than the Maturing Government Bond
Portfolios. The Maturing Government Bond Portfolios pay an advisory fee equal to
an annual rate of .25% of average daily net assets, however, the Portfolio which
matures in 1998 will pay a rate of .05% from its inception to April 20, 1998,
and .25% thereafter and the Portfolio which matures in 2002 will pay a rate of
.05% from its inception to April 30, 1998, and .25% thereafter of average daily
net assets.
The Underlying Funds available to the sub-accounts of the Group Variable
Annuity Account will also have advisory fees and expenses associated with the
management of the assets in those alternatives according to the agreement that
each has with its investment adviser. The adviser for each and a brief summary
of the advisory arrangement for each is as follows:
The Vanguard Fixed Income Securities Fund, Inc. employs the Wellington
Management Company as the investment adviser for the Long-Term Corporate
Portfolio. It pays the adviser a fee at the end of each fiscal quarter,
calculated by applying a rate, based on the following percentages, to the
Fund's average month-end assets for the quarter: for the first $2.5 billion,
at a rate of .125%; for the next $2.5 billion, at a rate of .100%; for the
next $2.5 billion, at a rate of .075% and over $7.5 billion, at a rate of
.050%. The advisory fee is apportioned among the three Portfolios of the
Fund according to a formula and pursuant to that allocation formula, the fee
to the Long-Term Corporate Portfolio is reduced by 50% from that applicable
to the Fund.
The Vanguard/Wellington Fund, Inc. employs as its adviser the Wellington
Management Company. It pays the adviser a fee at the end of each fiscal
quarter, calculated by applying a rate, based on the following percentages,
to the Fund's average month-end assets for the quarter: For the first $500
million, at a rate of .125%; for the next $500 million, at a rate of .100%;
for the next $1 billion, at a rate of .075%; for the next $1 billion, at a
rate of .050%; over $3 billion, at a rate of .040%.
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<PAGE>
The Fidelity Contrafund has as its adviser Fidelity Management & Research
Company ("FMR"), a subsidiary of FMR Corp. The management fee paid to FMR is
determined by taking a basic fee and then applying a performance adjustment
which, in turn, depends on how well the Fund has performed relative to the
S&P 500. The basic fee is calculated by adding an aggregated fund fee rate
to an individual fund fee rate and multiplying that amount by the Fund's
average net assets. The aggregated fund fee rate cannot rise above .52% and
it drops as total assets under management increases. As of December, 1995,
the basic fee rate was .61%. After applying the performance adjustment, the
total management fee for fiscal 1995 was .72%. The maximum annualized
performance adjustment rate is plus or minus .20%.
The Scudder International Fund has as its adviser Scudder, Stevens & Clark,
Inc. For the fiscal year ended March 31, 1995, the adviser received an
investment management fee of 0.83% of the Fund's average daily nets assets
on an annual basis. The fee is graduated so that increases in the Fund's net
assets may result in a lower fee and decreases in the Fund's net assets may
result in a higher fee.
The Janus Twenty Fund has as its adviser Janus Capital Corporation. The
advisory fee paid to the adviser for the fiscal period ended on October 31,
1995 amounted to .67%. It pays the adviser a fee at the end of each fiscal
quarter, calculated by applying a rate, based on the following percentages,
to the Fund's average month-end assets for the quarter: 1.00% of the first
$30 million, .75% of next $270 million, .70% of next $200 million and .65%
of over $500 million.
- ------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
The following material is intended to provide a general description of the terms
of the Contracts. In the event that there are questions concerning the Contracts
which are not discussed or should you desire additional information, then
inquires may be addressed to us at: Minnesota Mutual Life Center, 400 Robert
Street North, St. Paul, Minnesota 55101-2098. Our phone number is: (612)
665-3500.
1. TYPE OF CONTRACT OFFERED
GROUP DEFERRED VARIABLE ANNUITY CONTRACT
The Contract is a group deferred variable annuity contract which is offered to
employers and plan sponsors which are eligible to purchase group contracts which
are to be used in connection with tax-advantaged plans of state and local
governments and other tax-exempt organizations. The type of plans for which the
Contract is suitable are described in Sections 457 and 403 of the Internal
Revenue Code. The Contract provides rights and options to individuals who
participate under such plans; the Contracts may not be purchased directly by
individuals. The contract may also be used in other situations where a group
annuity contract is desired but where the benefit structure does not require a
contract which is recognized as an "annuity" for federal income tax purposes.
2. ISSUANCE OF CONTRACTS
The Contracts are issued by us to sponsors of eligible plans upon their
application. In a typical plan, the sponsor or eligible governmental unit is the
owner of the Contract and will designate individuals eligible to participate in
the Contract as a Participant. The Contract and all interests under it are
usually subject to the general interests of creditors of the owner of the
Contract (usually the employer).
3. MODIFICATION OF CONTRACTS
The Contract may be modified at any time by written agreement between us and the
owner of the Contract. However, no such modification will adversely affect the
rights of a Participant under the Contract unless the modification is made to
comply with a law or government regulation.
4. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of: (a) the mortality
table specified in the Contract, which reflects the age of the annuitant; (b)
the type of annuity payment option selected; and (c) the investment performance
of the Group Variable Annuity Account and its sub-accounts. The amount of the
variable annuity payments will not be affected by adverse mortality experience
or by an increase in an expense in excess of the expense deduction provided for
in the Contract. The annuitant electing to receive all or a part of
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<PAGE>
his or her payments as a variable annuity will receive the value of a fixed
number of annuity units each month. The value of such units and thus the amounts
of the monthly annuity payments will, however, reflect investment gains and
losses and investment income of the Group Variable Annuity Account, and thus the
annuity payments will vary with the investment experience of the assets of the
applicable Group Variable Annuity Account.
5. ASSIGNMENT
A Participant's accumulation value may not be assigned, sold, transferred,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, and to the maximum extent
permitted by law, that value and benefits payable under the Contract shall be
exempt from the claims of creditors. The assets of the plan are, however,
subject to the claims of the general creditors of the Contract Owner (usually
the employer).
6. LIMITATIONS ON PURCHASE PAYMENTS
The amount of purchase payments to be paid by the Contract Owner by or on behalf
of a Participant shall be determined by the Contract Owner in accordance with
the provisions of the underlying plan. All purchase payments are payable at our
Home Office which is located at: 400 Robert Street North, St. Paul, Minnesota
55101-2098.
7. SUSPENSION AND TERMINATION OF PURCHASE PAYMENTS
A Contract Owner may suspend making purchase payments by giving 60 days' written
notice to us. The suspension may be with respect to all Participants or only as
to such class or classes of Participants as may be specified by the Contract
Owner. Purchase payments may be resumed as to those suspended Participants by
written notice to us.
Under some contracts, the Contract Owner may at any time terminate the
Contract should we fail to perform under the Contract and not cure any found
deficiency or should our activities be classified as misfeasance, malfeasance or
fraud. Some Contracts may also be terminated should we have a material change in
our financial condition as measured by the standard insurance company rating
agencies.
We may terminate the Contract at any date by written notice to the Contract
Owner in the event that the Contract is no longer part of a qualified Section
457 or Section 403 plan or if we determine that a Contract amendment is
necessary and the Contract Owner does not assent to such an amendment.
After termination of the Contract, we will accept no further purchase
payments. Termination will have no effect on Participants as to whom annuity
payments have begun. As to Participants with a current accumulation value, those
values will continue to be maintained under the Contract until: (a) withdrawn to
provide plan benefits, (b) applied to provide annuity payments or (c)
transferred to the Contract Owner. So long as Participant Accumulation Values
are maintained under the Contract, the withdrawal and transfer provisions
continue to apply to those values on the same basis as prior to Contract
termination.
If amounts are to be transferred to the Contract Owner on termination of the
Contract, those accumulation values attributable to the Group Variable Annuity
Account, decreased by any applicable deferred sales charge, will be transferred
within seven days after the Contract termination. However, Minnesota Mutual
reserves the right to defer payment for any period during which the New York
Stock Exchange is closed for trading or when the Securities and Exchange
Commission has determined that a state of emergency exists which may make such
determination and payment impractical.
General Account values payable to the Contract Owner on termination are
subject to current valuation procedures and payment of the General Account
accumulation value or market value to the Contract Owner, decreased by any
applicable deferred sales charge, as may be either in a lump sum or in
installments over a five year period as the Contract Owner may elect. However,
in any event we guarantee that on the termination of the Contract, Participant
General Account market values will not be less than the sum of all allocations
made to the General Account by or on behalf of each Participant, accumulated at
3% per annum, less any Participant withdrawal, any applicable deferred sales
charge and less any transfers of General Account accumulation values to the
Group Variable Annuity Account.
8. CONTRACT SETTLEMENT
Whenever any payment of an amount under the Contract attributable to the Group
Variable Annuity Account is to be made in a single sum, payment will be made
within seven days after the date such payment is called for by the terms
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of the Contract, except as payment may be subject for postponement for:
(a) any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Securities
and Exchange Commission;
(b) any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to
dispose of securities in the Group Variable Annuity Account or to fairly
determine the value of the assets of the Group Variable Annuity Account;
or
(c) such other periods as the Commission may by order permit for the
protection of the Contract Owners.
9. PARTICIPATION IN DIVISIBLE SURPLUS
The Contract is a participating Contract. The portion, if any, of our divisible
surplus accruing on this Contract shall be determined annually by us and shall
be credited to the Contract on such a basis as we may determine. We do not
anticipate any divisible surplus and do not anticipate making dividend payments
to Contract Owners under the Contract.
10. CONTRACT LOANS
A Participant under a Contract which satisfies the requirements of Code Section
403 as a tax-sheltered annuity (a "TSA Contract") and under a plan which
provides for loans may take a loan from us with the Contract as security for the
loan, to the extent that such loans are permitted by applicable state law. The
maximum loan available is the lesser of (a) or (b), where (a) is $50,000 and (b)
is the greater of (i) one-half of the Participant's Accumulation Value less any
applicable deferred sales charge or (ii) the Participant's Accumulation Value up
to the amount of $10,000, less the amount of interest that would be charged
during the first quarter that the loan would be outstanding and less any
applicable deferred sales charge. Such a loan taken from, or secured by, a TSA
Contract may have federal income tax consequences. See "Federal Tax Status" on
Page 26 below. The maximum loan amount is determined as of the date we receive a
Participant's request for a loan. This minimum loan amount is $1,000.
Upon receiving a written request for a loan, we will send the Participant a
loan application and agreement for his or her signature. We will charge interest
in arrears. Restrictions other than the maximum loan amount which apply to loans
are:
(a) Only one loan may be outstanding at any time;
(b) A period of at least three months is required between the repayment of a
loan and the application for a new loan;
(c) If there is an outstanding loan on the Contract, then any withdrawals
will be limited to the Accumulation Value, less the outstanding loan
principal, less any interest due, and less any applicable deferred sales
charge;
(d) A loan is not available if annuity payments have begun; and
(e) The TSA loan account portion of a Participant's interest in the Contract
may not be transferred to the Group Variable Annuity Account when a loan
is outstanding, provided, however, that a single transfer from the TSA
loan account will be allowed each calendar year in an amount no more
than the TSA loan account value less the outstanding loan principal,
less the outstanding interest, and less any applicable deferred sales
charge.
The loan amount requested, plus the first quarter's interest, plus any
applicable deferred sales charge, will be transferred from the portion of the
Participant's Accumulation Value allocated to the Group Variable Annuity Account
to the General Account on the date the loan application is approved. Unless the
Participant directs us otherwise, amounts will be transferred from sub-accounts
of the Group Variable Annuity Account in the same proportion that the
Participant's allocations to each sub-account bears to his or her total
allocations to the Group Variable Annuity Account prior to the loan.
LOAN INTEREST AND TSA LOAN ACCOUNT INTEREST
The interest rate charged on a loan is variable and will be set on the first
day of each calendar quarter. It will apply to the outstanding loan principal in
that calendar quarter. The loan interest rate will not exceed the greater of the
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"published monthly average" for the calendar month ending two months before the
beginning of the calendar quarter or the "interest rate in effect on the
Contract" plus 1%. The "published monthly average" means the Moody's Composite
Average of Yields on Bonds as published by the Moody's Investors Service. The
"interest rate in effect on the Contract" is the interest rate credited on
portions of Accumulation Value allocated to the General Account, including
amounts held in the TSA loan account.
The interest rate credited to allocations of Accumulation Value to the General
Account will also be credited to the TSA loan account, which will have the
effect of reducing the effective interest rate to be paid on the loan to the
difference between the interest rate paid on the loan and that credited on the
TSA loan account. A loan will have a permanent effect on the Participant's
Accumulation Value. The effect could be either positive or negative, depending
upon whether the investment results of the sub-accounts are greater or lesser
than the interest rate credited on the TSA loan account.
LOAN REPAYMENT
Repayment must be made in substantially equal payments over a period of five
years or less. Early repayment may be made without penalty at any time. When the
loan is repaid, then the TSA loan account terminates, and the amounts remain in
the General Account. A Participant may reallocate these amounts among the
General Account and the sub-accounts of the Separate Account by exercising his
or her Contract's transfer rights.
If a Participant withdraws all of his or her Accumulation Value while a loan
is outstanding, then the loan is due at the time of the withdrawal. If the loan
is not repaid prior to the complete withdrawal, the payment on withdrawal will
be the Participant's Accumulation Value, less the outstanding loan principal,
less any interest due, and less any applicable deferred sales charges. In
addition, depending upon the Participant's circumstances, such a withdrawal may
result in income taxation, tax penalties and disqualification of the
Participant's interest in the Contract as a tax-sheltered annuity.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
contract. Treatment of a loan as a distribution will result in taxable income
under applicable tax rules. In addition, depending upon the Participant's
circumstances, it may result in income taxation, tax penalties, and
disqualification of the Participant's interest in the contract as a
tax-sheltered annuity. If there is a distribution, the Participant's
Accumulation Value will be reduced by the amount of the outstanding loan
principal, reduced by any interest due, and reduced by any applicable deferred
sales charge on that amount.
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VOTING RIGHTS
We will vote in our discretion shares of Underlying Funds other than Portfolios
of the Series Fund held in the Group Variable Annuity Account. We also will vote
the Series Fund Portfolio shares held in the Group Variable Annuity Account, but
will do so in accordance with instructions received from Participants with
values allocated to sub-accounts investing in shares of those Series Fund
Portfolios. We will vote all shares of a Series Fund Portfolio held by the Group
Variable Annuity Account for which no voting instructions are received from
Participants in the same proportion as shares held by the Group Variable Annuity
Account for which such instructions have been received. If, however, the 1940
Act or any regulation thereunder should change so that we may be allowed to vote
such shares in our own right, then we may elect to do so.
Voting instructions for votes of Series Fund Portfolio shares are to be
provided during the accumulation period by Participants with values allocated to
sub-accounts investing in those Portfolios and during the annuity period by
annuitants with annuity reserves allocated to those sub-accounts. In each case,
the value of the amounts so allocated on behalf of a Participant or annuitant
will be divided by net asset value per share of the applicable Series Fund
Portfolio shares to determine the number of shares for which voting instructions
may be provided by the Participant or annuitant. In either case, instructions
for voting fractional shares will be recognized. We shall notify each
Participant or annuitant of a Series Fund shareholders' meeting if the shares
held for the Participant may be voted at such meeting. We shall notify
Participants or annuitants who are entitled to provide such voting instructions
and will provide them with proxy materials and forms necessary for providing
voting instructions.
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During the accumulation period of each Certificate, the Participant holds the
voting interest in each Certificate. The number of votes will be determined by
dividing the accumulation value of the Contract as to the accumulation value of
each Participant attributable to each sub-account by the net asset value per
share of the underlying Series Fund shares held by that sub-account.
During the annuity period of each Certificate, the annuitant holds the voting
interest in each Certificate. The number of votes will be determined by dividing
the reserve for each annuitant allocated to each sub-account by the net asset
value per share of the underlying Series Fund shares held by that sub-account.
After an annuity begins, the votes attributable to any particular annuitant will
decrease as the reserves decrease. In determining any voting interest,
fractional shares will be recognized.
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ANNUITY PERIOD
1. ELECTING THE RETIREMENT DATE AND FORM OF ANNUITY
The Contracts provide for four annuity payment options, any one of which may be
elected if permitted by law. Each annuity payment option may be elected on
either a variable annuity or a fixed annuity basis, or a combination thereof.
Other annuity payment options may be available as agreed to between a
Participant and us and upon request to us.
If an election has not been made otherwise, and the plan does not specify to
the contrary, the Participant's retirement date shall be April 1 of the calendar
year next following the calendar year in which the Participant attains age
70 1/2. The annuity payment option shall be Option 2A, a life annuity with a
period certain of 120 months. Unless notified in writing by the Contract Owner
or Participant at least 30 days prior to the Annuity Commencement Date, a fixed
annuity will be provided by any General Account accumulation value and a
variable annuity will be provided by any Group Variable Annuity Account
accumulation value. The minimum first monthly annuity payment on either a
variable or fixed dollar basis is $20 imposed separately for the portion of the
annuity payments payable as a fixed annuity and the portion payable as a
variable annuity under each of the sub-accounts of the Group Variable Annuity
Account. If such first monthly payment would be less than $20, we may fulfill
our obligation by paying in a single sum the value of a Participant's interest
in the Contract which would otherwise have been applied to provide annuity
payments.
Once annuity payments have commenced, the annuitant cannot surrender his or
her annuity benefit and receive a single sum settlement in lieu thereof. In the
event that a beneficiary elects to receive the commuted value of the remaining
guaranteed payments in a lump sum, that value will be based on the then current
dollar amount of one payment and the same interest rate which served as a basis
for the annuity.
The mortality and expense risks charges continue to be deducted throughout the
annuity period, even under each of the available variable annuity payment
options, including Option 4, under which there is no mortality risk to Minnesota
Mutual.
2. ANNUITY PAYMENT OPTIONS
OPTION 1--LIFE ANNUITY
This is an annuity payable monthly during the lifetime of the annuitant and
terminating with the last monthly payment preceding the death of the annuitant.
This option usually offers the largest monthly payments (of those options
involving life contingencies) since there is no guarantee of a minimum number of
payments or provision for a death benefit for beneficiaries. It would be
possible under this option for the annuitant to receive only one annuity payment
if he or she died prior to the due date of the second annuity payment, two if he
or she died before the due date of the third annuity payment, etc.
OPTION 2--LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS
(OPTION 2C)
This is an annuity payable monthly during the lifetime of the annuitant, with
the guarantee that if the annuitant dies before payments have been made for the
period certain elected, payments will continue to the beneficiary during the
remainder of the period certain; or if the beneficiary so elects at any time
during the remainder of the period certain, the present value of the remaining
guaranteed number of payments, based on the then current dollar amount of one
such payment shall be paid in a single sum to the beneficiary.
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OPTION 3--JOINT AND LAST SURVIVOR ANNUITY
This is an annuity payable monthly during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. Under this option there is no guarantee of a minimum
number of payments or provision for a death benefit for beneficiaries.
OPTION 4--PERIOD CERTAIN ANNUITY
This is an annuity payable monthly for a period certain of from 5 to 20 years,
as elected. If the annuitant dies before payments have been made for the period
certain elected, payments will continue to the beneficiary during the remainder
of such period certain.
By written notice to us from the Contract Owner or a Participant at least 30
days prior to a Participant's Annuity Commencement Date, a lump sum settlement
of a Participant's accumulation value may be elected in lieu of the application
of that amount to an Annuity Payment Option. After the payment of such a lump
sum settlement to the Participant, the Participant shall have no further rights
under the Contract.
3. VALUE OF THE ANNUITY UNIT
The value of an annuity unit is determined monthly as of the first day of each
month. The value of the annuity unit on the first day of each month is
determined by multiplying the value on the first day of the preceding month by
the product of (a) .996338, and (b) the ratio of the value of the accumulation
unit for the valuation date next following the fourteenth day of the preceding
month to the value of the accumulation unit for the valuation date next
following the fourteenth day of the second preceding month. (The factor of
.996338 is used to neutralize the assumed net investment rate, discussed in
Section 4 below, of 4.5% per annum built into the first payment calculation and
which is not applicable because the actual net investment rate is credited
instead.) The value of an annuity unit as of any date other than the first day
of a month is equal to its value as of the first day of the next succeeding
month.
4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the Contract described in this Prospectus, the first monthly annuity
payment is determined by applying the value of the Participant's individual
accumulation value at retirement. State premium taxes, if applicable and not
previously deducted from purchase payments, may be deducted from the
Participant's accumulation value before the first payment is determined. These
taxes currently range from 0 to 3.5%, depending upon the state of issue and type
of plan involved.
The amount of the first monthly payment depends on the annuity payment option
elected, the form of annuity, and the adjusted age of the annuitant. A table
used to determine the adjusted age of the annuitant and joint annuitant is
contained in the Contract. For both fixed and variable annuity payments, the
adjusted age of the annuitant and joint annuitant, if any, is used to determine
the first payment.
For a fixed annuity, the Contract contains tables indicating the dollar amount
of the monthly payment under each annuity payment option for each $1,000 of
value applied. The tables are determined from the Progressive Annuity Table with
interest at the rate of 3% per annum, assuming births in the year 1900 and an
age setback of six years. A $200 fee may be deducted from the Participant's
General Account accumulation value before applying the rates found in the
tables.
The dollar amount of the first monthly variable annuity payment is determined
by applying the available value (after deduction of any applicable premium taxes
not previously deducted) to a rate which is based on the Progressive Annuity
Table with interest at the rate of 4.5% per annum, assuming births in the year
1900 and with an age setback of six years. A number of units is then determined
by dividing this dollar amount by the then current annuity unit value.
Thereafter, the number of annuity units remains unchanged during the period of
annuity payments. This determination is made separately for each sub-account of
the separate account. The number of annuity units is based upon the available
value in each sub-account as of the date annuity payments are to begin. The
dollar amount determined for each sub-account will then be aggregated for
purposes of making payment.
The 4.5% interest rate assumed in the annuity rate would produce level annuity
payments if the net investment rate remained constant at 4.5% per year.
Subsequent payments will be less than, equal to, or greater than the first
payment depending upon whether the actual net investment rate is less than,
equal to, or greater than 4.5%. A higher interest rate would mean a higher
initial payment, but a more slowly rising (or more rapidly falling) series of
subsequent payments. A lower assumption would have the opposite effect.
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If, when annuity payments are elected, we are using annuity rates for
Contracts of this class which result in larger annuity payments, we will use
those rates instead of those guaranteed in the Contract.
5. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY VARIABLE ANNUITY PAYMENTS
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each applicable sub-account of the
Group Variable Annuity Account multiplied by the annuity unit value for that
sub-account as of the due date of the payment. This amount may increase or
decrease from month to month.
The dollar amounts for variable annuity payments determined for each
applicable sub-account of the Group Variable Annuity Account will be aggregated
for purposes of making the monthly variable annuity payment to the Participant.
6. TRANSFER OF ANNUITY RESERVES
Amounts held as annuity reserves may be transferred among the variable annuity
sub-accounts during the annuity period. Annuity reserves may also be transferred
from a variable annuity to a fixed annuity during this time. The change must be
made by a written request. The annuitant and joint annuitant, if any, must make
such an election.
There are restrictions to such a transfer. The transfer of an annuity reserve
amount from any sub-account must be at least equal to $5,000 or the entire
amount of the reserve remaining in that sub-account. In addition, annuity
payments must have been in effect for a period of 12 months before a change may
be made. Such transfers can be made only once every 12 months. The written
request for an annuity transfer must be received by us more than 30 days in
advance of the due date of the annuity payment subject to the transfer. Upon
request, we will make available to you annuity reserve amount sub-account
information.
A transfer will be made on the basis of annuity unit values. The number of
annuity units from the sub-account being transferred will be converted to a
number of annuity units in the new sub-account. The annuity payment option will
remain the same and cannot be changed. After this conversion, a number of
annuity units in the new sub-account will be payable under the elected option.
The first payment after conversion will be of the same amount as it would have
been without the transfer. The number of annuity units will be set at that
number of units which are needed to pay that same amount on the transfer date.
When we receive a request for the transfer of variable annuity reserves, it
will be effective for future annuity payments. The transfer will be effective
and funds actually transferred in the middle of the month prior to the next
annuity payment affected by your request. We will use the same valuation
procedures to determine your variable annuity payment that we used initially.
Amounts held as reserves to pay a variable annuity may also be transferred to
a fixed annuity during the annuity period. However, the restrictions which apply
to annuity sub-account transfers will apply as well. The amount transferred will
then be applied to provide a fixed annuity amount. This amount will be based
upon the adjusted age of the annuitant and any joint annuitant at the time of
the transfer. The annuity payment option will remain the same. Amounts paid as a
fixed annuity may not be transferred to a variable annuity.
When we receive a request to make such a transfer to a fixed annuity, it will
be effective for future annuity payments. The transfer will be effective and
funds actually transferred in the middle of the month prior to the next annuity
payment. We will use the same fixed annuity pricing method at the time of
transfer that we used to determine an initial fixed annuity payment.
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DEATH BENEFIT
Death benefits, if any, payable under Contracts shall be in such amount as is
determined by the provisions of the applicable qualified trust or plan. The
Contracts provide that in the event of the death of the Participant prior to the
commencement of annuity payments, the death proceeds payable to the named
beneficiary will be the greater of: a) the Participant's accumulation value
determined as of the valuation date coincident with or next following the date
due proof of death is received by us, or b) the total of the purchase payments
made by or on behalf of a Participant received by us less any prior Participant
withdrawals or transfers to another investment alternative available in the
Contract Owner's underlying plan. Death proceeds will be paid in a single sum to
the beneficiary designated by the Participant, unless an annuity option is
elected by the beneficiary. Payment will be made within seven
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days after we receive due proof of death of the Participant. Except as noted
below, a Participant's entire interest in the Contract must be distributed
within five years of the Participant's death. If the annuitant dies after
annuity payments have begun, Minnesota Mutual will pay to the beneficiary any
death benefit provided by the annuity option selected. The person selected by
the Participant as the beneficiary of any remaining interest after the death of
the annuitant under the annuity option may be a person different from that
person designated as the beneficiary of the Participant's interest in the
Contract prior to the annuity commencement date.
The beneficiary will be the person or persons named in the Contract
application unless the Participant, or annuitant if annuity payments have
commenced, subsequently changes the beneficiary. In that event, we will pay the
amount payable at death to the beneficiary named in the last change of
beneficiary request. The Participant's or annuitant's written request to change
the beneficiary will not be effective until it is recorded in Minnesota Mutual's
home office records. After it has been recorded, it will take effect as of the
date the Participant or annuitant signed the request. However, if the
Participant or annuitant dies before the request has been recorded, the request
will not be effective as to those death proceeds we have paid before the request
was recorded in our home office records.
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CREDITING ACCUMULATION UNITS
During the accumulation period--the period before the commencement of annuity
payments--the purchase payment (on receipt of a completed application or
subsequently) is credited to a Participant's accumulation value on the valuation
date coincident with or next following the date such purchase payment is
received. If the initial purchase payment is accompanied by an incomplete
application, the purchase payment will not be credited until the valuation date
coincident with or next following the date a completed application is received.
We will offer to return the initial purchase payment accompanying an incomplete
application if it appears that the application cannot be completed within five
business days. Purchase payments will be credited to the Contract in the form of
accumulation units. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. The total of these separate account accumulation
values in the sub-accounts will be the separate account accumulation value.
Interests in the sub-accounts will be valued separately.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit, but the value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment experience of the Portfolios of the Series Fund and those other
Underlying Funds which may be held by the sub-accounts of the Group Variable
Annuity Account.
Minnesota Mutual will determine the value of accumulation units on each day on
which the Portfolios of the Series Fund and such other Underlying Funds are
valued. The net asset value of the Series Fund and Underlying Fund shares are
computed once daily, as of the primary closing time for business on the New York
Stock Exchange (as of the date hereof the primary close of trading is 3:00 p.m.
(Central Time), but this time may be changed) on each day, Monday through
Friday, except (i) days on which changes in the value of such Fund's securities
will not materially affect the current net asset value of such Fund's shares,
(ii) days during which no such Series Fund's shares or Underlying Fund's shares
are tendered for redemption and no order to purchase or sell such Fund's shares
is received by such Fund and (iii) customary national business holidays on which
the New York Stock Exchange is closed for trading (as of the date hereof, New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day).
Accordingly, the value of accumulation units will be determined daily, and
such determinations will be applicable to all purchase payments received by
Minnesota Mutual at its home office on that day prior to the close of business
of the Exchange. The value of accumulation units applicable to purchase payments
received subsequent to the close of business of the Exchange on that day will be
the value determined as of the close of business on the next day the Exchange is
open for trading.
In addition to providing for the allocation of purchase payments to the
sub-accounts of the separate account, the Contracts also provide
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for allocation of purchase payments to Minnesota Mutual's General Account for
accumulation at a guaranteed interest rate.
TRANSFER OF VALUES
Upon a Participant's written or telephone request, values under the Contract may
be transferred between the General Account and the Group Variable Annuity
Account or among the sub-accounts of the Group Variable Annuity Account. We will
make the transfer on the basis of accumulation unit values on the valuation date
coincident with or next following the day we receive the request at our home
office. No deferred sales charge will be imposed on such transfers. Transfers
between the sub-accounts of the Group Variable Annuity Account are unlimited as
to amount and frequency.
The Contracts permit us to limit the frequency and amount of transfers from
the General Account to the sub-accounts of the Group Variable Annuity Account.
The Contracts provide that such transfers from a Participant's Accumulation
Value in our General Account will be on a first-in, first-out (FIFO) basis and
they provide that Participants may transfer the greater of $1,000 or 10% of
their General Account accumulation value annually or in 12 monthly installments.
Currently, we limit such transfers during any calendar year to the greater of
$1,000 or an amount which is no more than 20% of the General Account
accumulation value at the time of the transfer.
Transfer arrangements may be established to begin on the 10th or 20th of any
month and if a transfer cannot be completed it will be made on the next
available transfer date.
Also, in addition to requests for transfer which are by written request, a
Participant or persons authorized by Participants may effect transfers, or a
change in the allocation of future premiums, by means of a telephone call.
Transfers and requests made pursuant to such a call are subject to the same
conditions and procedures as are outlined above for written transfer requests.
During periods of marked economic or market changes, Participants may experience
difficulty in implementing a telephone transfer due to a heavy volume of
telephone calls. In such a circumstance, Participants should consider submitting
a written transfer request while continuing to attempt a telephone transfer. We
reserve the right to restrict the frequency of--or otherwise modify, condition,
terminate or impose charges upon--telephone transfer privileges. For more
information on telephone transfers, contact Minnesota Mutual.
We will employ reasonable procedures to satisfy ourselves that instructions
received from Participants are genuine and, to the extent that we do not, we may
be liable for any losses due to unauthorized or fraudulent instructions. We
require Participants to identify themselves in those telephone conversations
through such information as we may deem to be reasonable. We record telephone
transfer and change of allocation instruction conversations and we provide
Participants with a written confirmation of the telephone transfer.
The interests of Contract Owners and Participants arising from the allocation
of purchase payments or the transfer of contract values to the General Account
of Minnesota Mutual, and thereby to its general assets, are not registered under
the Securities Act of 1933, and Minnesota Mutual is not registered as an
investment company under the Investment Company Act of 1940. Accordingly, such
interests and Minnesota Mutual are not subject to the provisions of those acts
that would apply if registration under such acts were required.
PORTABILITY
In addition to provisions which allow a transfer of Participant accumulation
values under the Contract between the General Account of Minnesota Mutual and
the Group Variable Annuity Account and transfers among the sub-accounts of the
Group Variable Annuity Account, withdrawals are also allowed from the
Participant accumulation values of the Contract to transfer amounts to other
investment alternatives offered by the Contract Owner in its underlying plan.
Withdrawals for this purpose other than those relating to the timing of
payments, are subject to the same limitations and restrictions as described in
the heading "Transfer of Values" immediately above and the same dollar
limitations on such transfers similarly apply.
VALUE OF THE CONTRACT
The value of the Contract at any time prior to the commencement of annuity
payments can be determined by multiplying the total number of accumulation units
credited to the Contract by the current value of an accumulation unit in each
sub-account of the Group Variable Annuity Account and adding to this amount the
sum of General Account values. There is no assurance that such value will equal
or exceed the purchase payments made, except with respect to amounts allocated
to the General Account.
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The Contract Owner and, where applicable, each Participant will be advised
periodically of the number of accumulation units credited to the Contract or to
the Participant's individual account, the current value of each accumulation
unit, and the total value of the Contract or the individual account.
ACCUMULATION UNIT VALUE
The value of an accumulation unit in each sub-account of the Group Variable
Annuity Account was set at $1.000000 on the first valuation date of the Group
Variable Annuity Account. The value of an accumulation unit on any subsequent
valuation date is determined by multiplying the value of an accumulation unit on
the immediately preceding valuation date by the net investment factor (described
below) for the valuation period just ended. The value of an accumulation unit as
of any date other than a valuation date is equal to its value on the next
succeeding valuation date.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment performance
of a sub-account from one valuation period to the next. For any sub-account, the
net investment factor for a valuation period is the gross investment rate for
such sub-account for the valuation period, less a deduction for the mortality
risk, expense risk and administrative charge at the current rate of 1.00% per
annum.
The gross investment rate is equal to: (1) the net asset value per share of a
Series Fund or Underlying Fund share held in a sub-account of the Group Variable
Annuity Account determined at the end of the current valuation period; plus (2)
the per share amount of any dividend or capital gain distribution by that Series
Fund or Underlying Fund if the "ex-dividend" date occurs during the current
valuation period; divided by (3) the net asset value per share of that Series
Fund or Underlying Fund share determined at the end of the preceding valuation
period. The gross investment rate may be positive or negative.
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WITHDRAWALS AND SURRENDER
Under certain circumstances a Participant may have the right to surrender his or
her interest in the Contract in whole or in part, subject to possible adverse
tax consequences. (See discussion under heading "Federal Tax Status" on pages
26-30.)
Withdrawals may be made only for the purpose of providing plan benefits,
making transfers to the Contract Owner, making transfers to plan investment
alternatives available in the Contract Owner's underlying plan other than those
provided for in this Contract, or allowing other withdrawals as allowed in the
plan and mutually agreed upon by Minnesota Mutual and the Contract Owner. The
amount available for withdrawal shall be the Participant accumulation value less
any applicable deferred sales charge. If withdrawals during the first calendar
year of participation are equal to or less than 10% of the total purchase
payments made on behalf of the Participant, the charge will not apply. In
subsequent calendar years there will be no charge for withdrawals equal to or
less than 10% of the prior calendar year Participant accumulation value. If a
Participant's withdrawals in any calendar year exceed this amount, the deferred
sales charge will apply to the excess.
Withdrawal amounts shall be deducted from the Participant's General Account
accumulation value on a first in, first out (FIFO) basis. Unless otherwise
instructed by the Participant or the Contract Owner, withdrawal amounts will be
made from a Participant's interest in the General Account and each sub-account
of the Group Variable Annuity Account in the same proportion that the value of
that Participant's interest in the General Account and any sub-account bears to
that Participant's total accumulation value.
Withdrawals are made upon written request from the Participant or Contract
Owner to Minnesota Mutual. The withdrawal date will be the valuation date
coincident with or next following the receipt of the request by Minnesota Mutual
at its home office.
We will waive the applicable dollar amount limitation on withdrawals where a
systematic withdrawal program is in place and such a smaller amount satisfies
the minimum distribution requirements of the Code.
Once annuity payments have commenced for a Participant, the Participant cannot
surrender his or her annuity benefit and receive a single sum settlement in lieu
thereof. For a discussion of commutation rights of payees and beneficiaries
subsequent to the annuity commencement date, see heading "Annuity Payment
Options" on page 21.
Contract Owners or plan administrators of the Contract Owner's underlying plan
may also submit signed written withdrawal or surrender
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<PAGE>
requests to us by facsimile (FAX) transmission. Our FAX number is (612)
665-7942. Transfer instructions or changes as to future allocations of purchase
payments may be communicated to us by the same means.
The surrender of a Certificate or a partial withdrawal thereunder may result
in a credit against Minnesota Mutual's premium tax liability. In such event,
Minnesota Mutual will pay in addition to the cash value paid in connection with
the surrender or withdrawal, the lesser of (1) the amount by which Minnesota
Mutual's premium tax liability is reduced, or (2) the amount previously deducted
from purchase payments for premium taxes. No representation can be made that
upon any such surrender or withdrawal any such payment will be made, since
applicable tax laws at the time of surrender or withdrawal would be
determinative.
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DISTRIBUTION
The Contracts will be sold by Minnesota Mutual life insurance agents who are
also registered representatives of MIMLIC Sales Corporation or other
broker-dealers who have entered into selling agreements with MIMLIC Sales
Corporation. MIMLIC Sales Corporation ("MIMLIC Sales") acts as the principal
underwriter of the Contracts. MIMLIC Sales is a wholly-owned subsidiary of
MIMLIC Asset Management Company, a wholly-owned subsidiary of Minnesota Mutual.
MIMLIC Sales is registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers, Inc.
Commissions to dealers, paid in connection with the sale of the Contracts, may
not exceed an amount which is equal to 6% of the purchase payments received for
the Contracts. Commissions on group cases may vary.
In addition, MIMLIC Sales or Minnesota Mutual will provide credits which allow
registered representatives (Agents) who are responsible for sales of the
Contracts to attend conventions and other meetings sponsored by Minnesota Mutual
or its affiliates for the purpose of promoting the sale of insurance and/or
investment products offered by Minnesota Mutual and its affiliates. Such credits
may cover the registered representatives' transportation, hotel accommodations,
meals, registration fees and the like. Minnesota Mutual may also pay registered
representatives additional amounts based upon their production and the
persistency of life insurance and annuity business placed with Minnesota Mutual.
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FEDERAL TAX STATUS
INTRODUCTION
The discussion contained herein is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any applicable state or other tax laws. In addition, this
discussion is based on our understanding of federal income tax laws as they are
currently interpreted. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service.
Minnesota Mutual is taxed as a "life insurance company" under the Internal
Revenue Code. The operations of the Group Variable Annuity Account form a part
of, and are taxed with, our other business activities. Currently, no federal
income tax is payable by us on income dividends received by the Group Variable
Annuity Account or on capital gains arising from its investment activities. The
Group Variable Annuity Account is not taxed as a "regulated investment company"
under the Internal Revenue Code (the "Code") and it does not anticipate any
change in that tax status.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of nonqualified annuities in general and
some aspects of tax qualified programs. No taxes are imposed on increases in the
value of a contract until distribution occurs, either in the form of a payment
in a single sum or as annuity payments under the annuity option elected.
As a general rule, deferred annuity contracts held by a corporation, trust or
other similar entity, as opposed to a natural person, are not treated as annuity
contracts for federal tax purposes. The investment income on such contracts is
taxed as ordinary income that is received or accrued by the owner of the
contract during the taxable year.
For payments made in the event of a full surrender of an annuity, the taxable
portion is generally the amount in excess of the cost basis (i.e., purchase
payments) of the contract. Amounts withdrawn from the variable annuity contracts
not part of a qualified program are treated first as taxable income to the
extent of the excess of the contract value over the
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<PAGE>
purchase payments made under the contract. Such taxable portion is taxed at
ordinary income tax rates.
In the case of a withdrawal under an annuity that is part of a qualified
program, a portion of the amount received is taxable based on the ratio of the
"investment in the contract" to the individual's balance in the retirement plan,
generally the value of the annuity. The "investment in the contract" generally
equals the portion of any deposits made by or on behalf of an individual under
an annuity which was not excluded from the gross income of the individual. For
annuities issued in connection with qualified plans, the "investment in the
contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes the ratio that the cost basis of the contract bears to the
expected return under the contract. Such taxable part is taxed at ordinary
income rates.
If a taxable distribution is made under the variable annuity contracts, a
penalty tax of 10% of the amount of the taxable distribution may apply. This
additional tax does not apply where the taxpayer is 59 1/2 or older, where
payment is made on account of the taxpayer's disability, or where payment is
made by reason of death of the owner, and in certain other circumstances.
The Code also provides an exception to the penalty tax for distributions, in
periodic payments, of substantially equal installments, be made for the life (or
life expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and beneficiary.
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, the designation of an annuitant or
other payee who is not also the Contract Owner, or the assignment of the
contract may result in certain income or gift tax consequences to the Contract
Owner that are beyond the scope of this discussion. A Contract Owner who is
contemplating any such transfer, designation or assignment should consult a
competent tax adviser with respect to the potential tax effects of that
transaction.
For purposes of determining a Contract Owner's gross income, the Code provides
that all nonqualified deferred annuity contracts issued by the same company (or
its affiliates) to the same Contract Owner during any calendar year shall be
treated as one annuity contract. Additional rules may be promulgated under this
provision to prevent avoidance of its effect through serial contracts or
otherwise. For further information on these rules, see your tax adviser.
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury to set standards, by
regulation or otherwise for the investments of the Group Variable Annuity
Account to be "adequately diversified" in order for the Contract to be treated
as an annuity contract for Federal tax purposes. Group Variable Annuity Account,
through the Series Fund, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Series Fund's
assets may be invested. Although the investment adviser is an affiliate of
Minnesota Mutual, Minnesota Mutual does not have control over the Series Fund or
its investments. Nonetheless, Minnesota Mutual believes that each Portfolio of
the Series Fund in which the Group Variable Annuity Account owns shares will be
operated in compliance with the requirements prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includable in the variable
annuity Contract Owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
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<PAGE>
The ownership rights of a Participant under the Contract are similar to, but
different in certain respects from, those described by the IRS in rulings in
which it was determined that contract owners were not owners of separate account
assets. For example, a Participant has the choice of one or more sub-accounts in
which to allocate net purchase payments and contract values, and may be able to
transfer among sub-accounts more frequently than in such rulings. These
differences could result in a Contract Owner and thus the Participant as being
treated as the owner of the assets of the Group Variable Annuity Account. In
addition, Minnesota Mutual does not know what standards will be set forth, if
any, in the regulations or rulings which the Treasury Department has stated it
expects to issue. Minnesota Mutual therefore reserves the right to modify the
Contract as necessary to attempt to prevent a Contract Owner or Participant from
being considered the owner of a pro rata share of the assets of the Group
Variable Annuity Account.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of the owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the Contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.
TAX QUALIFIED PROGRAMS
The annuity is designed for use with several types of retirement plans that
qualify for special tax treatment. The tax rules applicable to Participants and
beneficiaries in retirement plans vary according to the type of plan and the
terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. Owners and participants
under retirement plans as well as annuitants and beneficiaries are cautioned
that the rights of any person to any benefits under annuities purchased in
connection with these plans may be subject to the terms and conditions of the
plans themselves, regardless of the terms and conditions of the annuity issued
in connection with such a plan. Some retirement plans are subject to transfer
restrictions, distribution and other requirements that are not incorporated into
the annuity or other annuity administration procedures. Owners, participants and
beneficiaries are responsible for determining that contributions, distributions
and other transactions with respect to the annuities comply with applicable law.
Purchasers of annuities for use with any retirement plan should consult their
legal counsel and tax adviser regarding the suitability of the contract. The
contract may also be used in other situations where a group annuity contract is
desired for funding but where the benefit structure does not require a contract
which is recognized as an "annuity" for federal income tax purposes. As with
deferred compensation plans, the availability of public funds within the
contract may present additional considerations as to whether that contract is
qualified as an annuity contract for tax purposes.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the contracts to accumulate retirement savings under the
plans. Adverse tax or other legal consequences to the plan, to the participant
or to both may result if this annuity is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan complies with
all legal requirements applicable to such benefits prior to transfer of the
annuity.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax-exempt organizations. The plans may permit participants
to specify the form of investment for their deferred compensation account.
With respect to non-governmental Section 457 plans, all investments are owned
by the
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<PAGE>
sponsoring employer and are subject to the claims of the general creditors of
the employer and, depending on the terms of the particular plan, the employer
may be entitled to draw on deferred amounts for purposes unrelated to its
Section 457 plan obligations. In general, all amounts received under a Section
457 plan are taxable and are subject to federal income tax withholding as wages.
Any amount deferred under an eligible deferred compensation plan, and any
income attributable to the amounts so deferred, are currently excluded from the
Participant's income. Generally, the maximum amount of compensation that may be
deferred is the lesser of $7,500 or 33 1/3% of includable compensation (taxable
earnings). Different rules may apply for Participants covered by private
deferred compensation plans under this section and those Participants should
consult a competent tax adviser concerning the operation of such a plan. A
Participant who participates in a deferred compensation plan sponsored by an
employer and who also participates in a Section 403(b) retirement program,
Section 401(k) plan or a Simplified Employee Pension (SEP) amounts excludable
from gross income pursuant to that program, plan or pension reduce the amount of
compensation which may be deferred under a Section 457 deferred compensation
plan.
The diversification requirements of Section 817(h) of the Code, previously
described in this section, may present additional considerations for purchasers
or Participants of the Contracts. Code Section 817(h) applies to a variable
annuity contract other than a pension plan contract. Section 818 of the Code
defines pension plan contracts as contracts issued under a Section 401(a) plan,
Section 401(k) plan, Section 403(b) program, or a Section 457 retirement program
as maintained by the United States government, the government of any state or
political subdivision thereof, or by any agency or instrumentality of the
foregoing.
Notwithstanding this exemption, an existing Revenue Ruling, Revenue Ruling
81-225, may provide a legal theory that suggests that contracts which utilize a
public fund, that is to say a fund available not only to separate accounts of
insurance companies but to members of the public generally, may present
additional considerations as to whether that contract is qualified as an annuity
contract for tax purposes because of the existence of the availability of the
public funds in that contract. We believe that if the Service were to make such
a determination providing that result, that the existence of a Section 457
deferred compensation plan would, nevertheless, protect Participants in that
plan from current income taxation.
Additionally, should a contract make a public fund available to its
Participants, it is believed that additional contracts funded by the separate
account could participate in the separate account and, so long as they omitted
the use of non-public funds, that they could continue to obtain tax treatment as
an annuity under existing regulations and revenue rulings.
PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
WITHHOLDING
In general, distributions from annuities are subject to federal income tax
withholding unless the recipient elects not to have tax withheld. Different
rules may apply to payments delivered outside the United States. Some states
have enacted similar rules.
Recent changes to the Code allow the rollover of most distributions from
tax-qualified plans and Section 403(b) annuities directly to other tax-qualified
plans that will accept such distributions and to individual retirement accounts
and individual retirement annuities. Distributions which may not be rolled over
are those which are: (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 expectancies of the employee and the
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<PAGE>
employee's designated beneficiary, or (c) for a specified period of ten years or
more; (2) a required minimum distribution; or (3) the non-taxable portion of a
distribution.
Any distribution eligible for rollover, which may include payment to an
employee, an employee's surviving spouse or an ex-spouse who is an alternate
payee, will be subject to federal tax withholding at a 20% rate unless the
distribution is made as a direct rollover to a tax-qualified plan or to an
individual retirement account or annuity. It may be noted that amounts received
by individuals which are eligible for rollover may still be placed in another
tax-qualified plan or individual retirement account or individual retirement
annuity if the transaction is completed within 60 days after the distribution
has been received. Such a taxpayer must replace withheld amounts with other
funds to avoid taxation on the amount previously withheld.
LOANS
Generally, interest paid on any loan under an annuity Contract which is owned by
an individual is not deductible. A Participant should consult a competent tax
adviser before deducting any loan interest.
SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these Contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating
becoming a Participant under the Contract or exercising elections under such a
Contract. For further information a qualified tax adviser should be consulted.
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LEGAL PROCEEDINGS
There are no pending legal proceedings in which the Group Variable Annuity
Account is a party. There are no material pending legal proceedings, other than
ordinary routine litigation incidental to their business, in which Minnesota
Mutual, Advantus Capital or MIMLIC Sales is a party.
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REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Group Variable Annuity Account and the Contracts.
Statements contained in this Prospectus as to the content of Contracts and other
legal instruments are summaries. For a complete statement of the terms thereof
reference is made to such instruments as filed.
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional Contract and
Group Variable Annuity Account information, including financial statements, is
available from the offices of the Group Variable Annuity Account at your
request. The Table of Contents for that Statement of Additional Information is
as follows:
Group Variable Annuity Account
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Annuity Payments
Auditors
Financial Statements
Appendix A--Calculation of Unit Values
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PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO STATEMENT OF ADDITIONAL INFORMATION
Form N-4
Item Number Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. Minnesota Mutual Group Variable Annuity Account
18. Not Applicable
19. Not Applicable
20. Distribution of Contracts
21. Not Applicable
22. Annuity Payments
23. Financial Statements
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
Statement of Additional Information
The date of this document and the Prospectus is: May 1, 1997
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Therefore, this Statement should be read
in conjunction with the Group Variable Annuity Account's current Prospectus,
bearing the same date, which may be obtained by calling Minnesota Mutual at
(612) 665-3500, or writing the Group Variable Annuity Account at Minnesota
Mutual Life Center, 400 Robert Street North, St. Paul, Minnesota 55101-2098.
TABLE OF CONTENTS
Separate Account
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Annuity Payments
Auditors
Financial Statements
Appendix A - Calculation of Unit Values
1
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT
Minnesota Mutual Group Variable Annuity Account is a separate account of The
Minnesota Mutual Life Insurance Company ("Minnesota Mutual"). The Group
Variable Account is registered as a unit investment trust.
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
TRUSTEES PRINCIPAL OCCUPATION
Giulio Agostini Senior Vice President, Finance and
Administrative Services, Minnesota Mining and
Manufacturing Company, Maplewood, Minnesota
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller
Company, St. Paul, Minnesota (Adhesive
Products) since June 1995, prior thereto
for more than five years President and
Chief Executive Officer, H. B. Fuller
Company
John F. Grundhofer Chairman of the Board, President and Chief
Executive Officer, First Bank System, Inc.,
Minneapolis, Minnesota (Banking)
Harold V. Haverty Retired since May 1995, prior thereto, for
more than five years Chairman of the Board,
President and Chief Executive Officer,
Deluxe Corporation, Shoreview, Minnesota
(Check Printing)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota
Reatha C. King, Ph.D. President and Executive Director, General
Mills Foundation, Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Terry Tinson Saario, Ph.D. Prior to March 1996, and for more than five
years, President, Northwest Area Foundation,
St. Paul, Minnesota (Private Regional
Foundation)
Robert L. Senkler Chairman of the Board, President and Chief
Executive Officer, The Minnesota Mutual
Life Insurance Company, since August 1995;
prior thereto for more than five years Vice
President and Actuary, The Minnesota Mutual
Life Insurance Company
2
<PAGE>
Michael E. Shannon Chairman, Chief Financial and
Administrative Officer, Ecolab, Inc.,
St. Paul, Minnesota, since August 1992,
prior thereto President, Residential
Services Group, Ecolab Inc., St. Paul,
Minnesota from October 1990 to July 1992
(Develops and Markets Cleaning and
Sanitizing Products)
Frederick T. Weyerhaeuser Chairman, Clearwater Investment Trust since
May 1996, prior thereto for more than five
years, Chairman, Clearwater Management
Company, St. Paul, Minnesota (Financial
Management)
PRINCIPAL OFFICERS (OTHER THAN TRUSTEES)
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
John F. Bruder Senior Vice President
Keith M. Campbell Vice President
Paul H. Gooding Vice President and Treasurer
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Richard D. Lee Vice President
Joel W. Mahle Vice President
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary
Gregory S. Strong Vice President and Actuary
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
</TABLE>
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at
least five years.
DISTRIBUTION OF CONTRACTS
The Contracts will be continuously sold by Minnesota Mutual life insurance
agents who are also registered representatives of MIMLIC Sales Corporation or
other broker-dealers who have entered into selling agreements with MIMLIC
Sales. MIMLIC Sales acts as the principal underwriter of the contracts.
MIMLIC Sales Corporation is a wholly-owned subsidiary of MIMLIC Asset
Management Company, which in turn is a wholly-owned subsidiary of Minnesota
Mutual. MIMLIC Sales is registered as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc.
3
<PAGE>
ANNUITY PAYMENTS
Please see Appendix A to this Statement of Additional Information for an
illustration of the calculation of annuity unit values and of a variable annuity
payment, showing the method used for the calculation of both the initial and
subsequent payments.
AUDITORS
The financial statements of the Group Variable Annuity Account and The Minnesota
Mutual Life Insurance Company included in this Statement of Additional
Information have been audited by KPMG Peat Marwick LLP, 4200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402, independent auditors, as
indicated in their reports in this Statement of Additional Information, and are
included herein in reliance upon such reports and upon the authority of such
firm as experts in accounting and auditing.
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees of The Minnesota Mutual Life Insurance Company
and Contract Owners of Minnesota Mutual Group Variable Annuity Account:
We have audited the accompanying statements of assets and liabilities of the
MIMLIC Growth, MIMLIC Money Market, MIMLIC Asset Allocation, MIMLIC Index 500,
Vanguard Long-Term Corporate, Vanguard Wellington, Fidelity Contrafund, Scudder
International and Janus Twenty Segregated Sub-Accounts of Minnesota Mutual Group
Variable Annuity Account (the Account) as of December 31, 1996 and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for the periods presented in footnote (6). These financial
statements and the financial highlights are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights 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 and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statements.
Investments owned at December 31, 1996 were confirmed to us by the respective
Sub-Account mutual fund group, or, for MIMLIC Series Fund, Inc., verified by
examination of the underlying portfolios. 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 the MIMLIC Growth, MIMLIC Money
Market, MIMLIC Asset Allocation, MIMLIC Index 500, Vanguard Long-Term Corporate,
Vanguard Wellington, Fidelity Contrafund, Scudder International and Janus Twenty
Segregated Sub-Accounts of Minnesota Mutual Group Variable Annuity Account at
December 31, 1996 and the results of their operations, changes in their net
assets and the financial highlights for the periods stated in the first
paragraph above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 14, 1997
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC MIMLIC
MIMLIC MONEY ASSET
ASSETS GROWTH MARKET ALLOCATION
---------- ---------- ----------
<S> <C> <C> <C>
Investments in shares of underlying mutual funds:
MIMLIC Series Fund, Inc. - Growth Portfolio, 62,534 shares
at net asset value of $2.34 per share (cost $142,718) . . . . . . . . $ 146,534 - -
MIMLIC Series Fund, Inc. - Money Market Portfolio, 1,838,445
shares at net asset value of $1.00 per share (cost $1,838,445). . . . - 1,838,445 -
MIMLIC Series Fund, Inc. - Asset Allocation Portfolio, 39,679
shares at net asset value of $1.87 per share (cost $71,538) . . . . . - - 73,997
MIMLIC Series Fund, Inc. - Index 500 Portfolio, 2,527,457 shares
at net asset value of $2.41 per share (cost $5,323,400) . . . . . . . - - -
Vanguard Long-Term Corporate Portfolio, 310,816 shares
at net asset value of $8.79 per share (cost $2,722,470) . . . . . . . - - -
Vanguard Wellington, 540,034 shares at net asset value
of $26.15 per share (cost $13,063,067) . . . . . . . . . . . . . . . - - -
Fidelity Contrafund, 707,283 shares at net asset
value of $42.15 per share (cost $25,942,291). . . . . . . . . . . . . - - -
Scudder International Fund, 118,237 shares at net asset value of
$47.56 per share (cost $5,243,333) . . . . . . . . . . . . . . . . . - - -
Janus Twenty Fund, 171,421 shares at net asset
value of $27.47 per share (cost $4,967,813) . . . . . . . . . . . . . - - -
---------- ---------- ----------
146,534 1,838,445 73,997
Receivable for investments sold. . . . . . . . . . . . . . . . . . . . . . 2,859 3,567 3
Receivable from Minnesota Mutual for contract purchase payments . . . . . - 75,683 624
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
---------- ---------- ----------
Total assets .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,393 1,917,696 74,624
---------- ---------- ----------
LIABILITIES
Payable for investments purchased . . . . . . . . . . . . . . . . . . . . - 75,683 624
Payable to Minnesota Mutual for contract terminations and
mortality and expense charges. . . . . . . . . . . . . . . . . . . . . . 2,859 3,567 3
---------- ---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 2,859 79,250 627
---------- ---------- ----------
NET ASSETS APPLICABLE TO CONTRACT OWNERS . . . . . . . . . . . . . . . . . $ 146,534 1,838,446 73,997
---------- ---------- ----------
---------- ---------- ----------
ACCUMULATION UNITS OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . 136,198 1,676,436 69,684
---------- ---------- ----------
---------- ---------- ----------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . $ 1.076 1.097 1.062
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC VANGUARD
INDEX LONG-TERM VANGUARD
ASSETS 500 CORPORATE WELLINGTON
---------- ---------- ----------
<S> <C> <C> <C>
Investments in shares of underlying mutual funds:
MIMLIC Series Fund, Inc. - Growth Portfolio, 62,534 shares
at net asset value of $2.34 per share (cost $142,718) . . . . . . . . - - -
MIMLIC Series Fund, Inc. - Money Market Portfolio, 1,838,445
shares at net asset value of $1.00 per share (cost $1,838,445). . . . - - -
MIMLIC Series Fund, Inc. - Asset Allocation Portfolio, 39,679
shares at net asset value of $1.87 per share (cost $71,538) . . . . . - - -
MIMLIC Series Fund, Inc. - Index 500 Portfolio, 2,527,457 shares
at net asset value of $2.41 per share (cost $5,323,400) . . . . . . . 6,087,912 - -
Vanguard Long-Term Corporate Portfolio, 310,816 shares
at net asset value of $8.79 per share (cost $2,722,470) . . . . . . . - 2,732,075 -
Vanguard Wellington, 540,034 shares at net asset value
of $26.15 per share (cost $13,063,067) . . . . . . . . . . . . . . . - - 14,121,879
Fidelity Contrafund, 707,283 shares at net asset
value of $42.15 per share (cost $25,942,291). . . . . . . . . . . . . - - -
Scudder International Fund, 118,237 shares at net asset value of
$47.56 per share (cost $5,243,333) . . . . . . . . . . . . . . . . . - - -
Janus Twenty Fund, 171,421 shares at net asset
value of $27.47 per share (cost $4,967,813) . . . . . . . . . . . . . - - -
---------- ---------- ----------
6,087,912 2,732,075 14,121,879
Receivable for investments sold. . . . . . . . . . . . . . . . . . . . . . 29,862 276 610
Receivable from Minnesota Mutual for contract purchase payments . . . . . 13,428 4,506 23,571
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
---------- ---------- ----------
Total assets .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,131,202 2,736,857 14,146,060
---------- ---------- ----------
LIABILITIES
Payable for investments purchased . . . . . . . . . . . . . . . . . . . . 13,428 4,506 23,571
Payable to Minnesota Mutual for contract terminations and
mortality and expense charges. . . . . . . . . . . . . . . . . . . . . . 29,862 276 610
---------- ---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 43,290 4,782 24,181
---------- ---------- ----------
NET ASSETS APPLICABLE TO CONTRACT OWNERS . . . . . . . . . . . . . . . . . 6,087,912 2,732,075 14,121,879
---------- ---------- ----------
---------- ---------- ----------
ACCUMULATION UNITS OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . 3,811,296 2,199,884 9,571,917
---------- ---------- ----------
---------- ---------- ----------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . 1.597 1.242 1.475
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
SCUDDER
FIDELITY INTER- JANUS
ASSETS CONTRAFUND NATIONAL TWENTY
---------- ---------- ----------
<S> <C> <C> <C>
Investments in shares of underlying mutual funds:
MIMLIC Series Fund, Inc. - Growth Portfolio, 62,534 shares
at net asset value of $2.34 per share (cost $142,718) . . . . . . . . - - -
MIMLIC Series Fund, Inc. - Money Market Portfolio, 1,838,445
shares at net asset value of $1.00 per share (cost $1,838,445). . . . - - -
MIMLIC Series Fund, Inc. - Asset Allocation Portfolio, 39,679
shares at net asset value of $1.87 per share (cost $71,538) . . . . . - - -
MIMLIC Series Fund, Inc. - Index 500 Portfolio, 2,527,457 shares
at net asset value of $2.41 per share (cost $5,323,400) . . . . . . . - - -
Vanguard Long-Term Corporate Portfolio, 310,816 shares
at net asset value of $8.79 per share (cost $2,722,470) . . . . . . . - - -
Vanguard Wellington, 540,034 shares at net asset value
of $26.15 per share (cost $13,063,067) . . . . . . . . . . . . . . . - - -
Fidelity Contrafund, 707,283 shares at net asset
value of $42.15 per share (cost $25,942,291). . . . . . . . . . . . . 29,811,995 - -
Scudder International Fund, 118,237 shares at net asset value of
$47.56 per share (cost $5,243,333) . . . . . . . . . . . . . . . . . - 5,623,345 -
Janus Twenty Fund, 171,421 shares at net asset
value of $27.47 per share (cost $4,967,813) . . . . . . . . . . . . . - - 4,708,948
---------- ---------- ----------
29,811,995 5,623,345 4,708,948
Receivable for investments sold. . . . . . . . . . . . . . . . . . . . . . 30,031 692 188
Receivable from Minnesota Mutual for contract purchase payments . . . . . 33,414 1,679 16,622
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
---------- ---------- ----------
Total assets .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,875,440 5,625,716 4,725,758
---------- ---------- ----------
LIABILITIES
Payable for investments purchased . . . . . . . . . . . . . . . . . . . . 33,414 1,679 16,622
Payable to Minnesota Mutual for contract terminations and
mortality and expense charges. . . . . . . . . . . . . . . . . . . . . . 30,031 692 188
---------- ---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 63,445 2,371 16,810
---------- ---------- ----------
NET ASSETS APPLICABLE TO CONTRACT OWNERS . . . . . . . . . . . . . . . . . 29,811,995 5,623,345 4,708,948
---------- ---------- ----------
---------- ---------- ----------
ACCUMULATION UNITS OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . 18,638,007 4,774,006 2,891,975
---------- ---------- ----------
---------- ---------- ----------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . 1.600 1.178 1.628
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC MIMLIC
MIMLIC MONEY ASSET
GROWTH MARKET ALLOCATION
---------- ---------- ----------
<S> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . $ - 53,181 -
Mortality and expense risk charges (note 3) . . . . . . . . . . . . . . (268) (9,373) (151)
Administrative charges (note 3) .. . . . . . . . . . . . . . . . . . . . (47) (1,654) (27)
---------- ---------- ----------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . (315) 42,154 (178)
---------- ---------- ----------
Realized and unrealized gains on investments - net:
Realized gain distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . - - -
---------- ---------- ----------
Realized gains on sales of investments:
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 1,777 3,768,229 649
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . (1,706) (3,768,229) (633)
---------- ---------- ----------
71 - 16
---------- ---------- ----------
Net realized gains on investments . . . . . . . . . . . . . . . . . . 71 - 16
---------- ---------- ----------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,816 - 2,459
---------- ---------- ----------
Net gains (losses) on investments .. . . . . . . . . . . . . . . . . . 3,887 - 2,475
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . $ 3,572 42,154 2,297
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC VANGUARD
INDEX LONG-TERM VANGUARD
500 CORPORATE WELLINGTON
---------- ---------- ----------
<S> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 38,734 145,547 437,061
Mortality and expense risk charges (note 3) . . . . . . . . . . . . . . (31,081) (17,675) (78,491)
Administrative charges (note 3) .. . . . . . . . . . . . . . . . . . . . (5,485) (3,119) (13,852)
---------- ---------- ----------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . 2,168 124,753 344,718
---------- ---------- ----------
Realized and unrealized gains on investments - net:
Realized gain distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 20,051 38,347 545,916
---------- ---------- ----------
Realized gains on sales of investments:
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 1,097,451 509,296 458,433
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . (986,612) (498,909) (416,640)
---------- ---------- ----------
110,839 10,387 41,793
---------- ---------- ----------
Net realized gains on investments . . . . . . . . . . . . . . . . . . 130,890 48,734 587,709
---------- ---------- ----------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568,849 (116,339) 482,836
---------- ---------- ----------
Net gains (losses) on investments .. . . . . . . . . . . . . . . . . . 699,739 (67,605) 1,070,545
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 701,907 57,148 1,415,263
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
SCUDDER
FIDELITY INTER- JANUS
CONTRAFUND NATIONAL TWENTY
---------- ---------- ----------
<S> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 254,811 143,278 391,082
Mortality and expense risk charges (note 3) . . . . . . . . . . . . . . (189,322) (36,914) (23,862)
Administrative charges (note 3) .. . . . . . . . . . . . . . . . . . . . (33,410) (6,514) (4,211)
---------- ---------- ----------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . 32,079 99,850 363,009
---------- ---------- ----------
Realized and unrealized gains on investments - net:
Realized gain distributions from underlying
mutual fund (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 1,792,004 124,900 394,754
---------- ---------- ----------
Realized gains on sales of investments:
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 990,972 826,980 678,557
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . (876,061) (778,816) (625,059)
---------- ---------- ----------
114,911 48,164 53,498
---------- ---------- ----------
Net realized gains on investments . . . . . . . . . . . . . . . . . . 1,906,915 173,064 448,252
---------- ---------- ----------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,320,829 290,641 (203,397)
---------- ---------- ----------
Net gains (losses) on investments .. . . . . . . . . . . . . . . . . . 4,227,744 463,705 244,855
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 4,259,823 563,555 607,864
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC MIMLIC
MIMLIC MONEY ASSET
GROWTH MARKET ALLOCATION
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . $ (315) 42,154 (178)
Net realized gains on investments . . . . . . . . . . . . . . . . . . . 71 - 16
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,816 - 2,459
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 3,572 42,154 2,297
---------- ---------- ----------
Contract transactions (notes 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 144,424 4,696,233 72,171
Contract terminations, withdrawals and charges . . . . . . . . . . . . (1,462) (3,757,202) (471)
---------- ---------- ----------
Increase in net assets from contract transactions . . . . . . . . . . . . 142,962 939,031 71,700
---------- ---------- ----------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 146,534 981,185 73,997
Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . - 857,261 -
---------- ---------- ----------
Net assets at the end of year .. . . . . . . . . . . . . . . . . . . . . . $ 146,534 1,838,446 73,997
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
MIMLIC VANGUARD
INDEX LONG-TERM VANGUARD
500 CORPORATE WELLINGTON
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . 2,168 124,753 344,718
Net realized gains on investments . . . . . . . . . . . . . . . . . . . 130,890 48,734 587,709
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568,849 (116,339) 482,836
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 701,907 57,148 1,415,263
---------- ---------- ----------
Contract transactions (notes 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 4,785,759 1,953,546 8,416,427
Contract terminations, withdrawals and charges . . . . . . . . . . . . . (1,060,885) (762,893) (968,102)
---------- ---------- ----------
Increase in net assets from contract transactions . . . . . . . . . . . . 3,724,874 1,190,653 7,448,325
---------- ---------- ----------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4,426,781 1,247,801 8,863,588
Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . 1,661,131 1,484,274 5,258,291
---------- ---------- ----------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . 6,087,912 2,732,075 14,121,879
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
SCUDDER
FIDELITY INTER- JANUS
CONTRAFUND NATIONAL TWENTY
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . 32,079 99,850 363,009
Net realized gains on investments . . . . . . . . . . . . . . . . . . . 1,906,915 173,064 448,252
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,320,829 290,641 (203,397)
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 4,259,823 563,555 607,864
---------- ---------- ----------
Contract transactions (notes 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 13,563,785 2,946,298 4,060,942
Contract terminations, withdrawals and charges . . . . . . . . . . . . . (2,871,293) (1,015,404) (1,236,955)
---------- ---------- ----------
Increase in net assets from contract transactions . . . . . . . . . . . . 10,692,492 1,930,894 2,823,987
---------- ---------- ----------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 14,952,315 2,494,449 3,431,851
Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . 14,859,680 3,128,896 1,277,097
---------- ---------- ----------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . 29,811,995 5,623,345 4,708,948
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------
MIMLIC MIMLIC VANGUARD
MONEY INDEX LONG-TERM VANGUARD
MARKET 500 CORPORATE WELLINGTON
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . $ 26,568 274 48,052 119,940
Net realized gains on investments . . . . . . . . . . . . . . . . . - 15,267 2,616 71,719
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . - 195,854 125,712 602,762
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . 26,568 211,395 176,380 794,421
---------- ---------- ---------- ----------
Contract transactions (notes 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . 1,810,340 1,326,654 1,124,779 3,495,164
Contract terminations, withdrawals and charges . . . . . . . . . . (1,301,875) (132,580) (89,744) (363,725)
---------- ---------- ---------- ----------
Increase in net assets from contract transactions . . . . . . . . . . 508,465 1,194,074 1,035,035 3,131,439
---------- ---------- ---------- ----------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . 535,033 1,405,469 1,211,415 3,925,860
Net assets at the beginning of year. . . . . . . . . . . . . . . . . . 322,228 255,662 272,859 1,332,431
---------- ---------- ---------- ----------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . $ 857,261 1,661,131 1,484,274 5,258,291
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------
SCUDDER
FIDELITY INTER- JANUS
CONTRAFUND NATIONAL TWENTY
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . (64,705) 1,891 88,121
Net realized gains on investments . . . . . . . . . . . . . . . . . . . 1,168,103 84,404 154,167
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,598,911 199,794 (45,764)
---------- ---------- ----------
Net increase in net assets resulting from operations . . . . . . . . . . . 2,702,309 286,089 196,524
---------- ---------- ----------
Contract transactions (notes 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . 8,456,732 1,847,845 970,705
Contract terminations, withdrawals and charges . . . . . . . . . . . . (1,077,302) (694,100) (317,131)
---------- ---------- ----------
Increase in net assets from contract transactions . . . . . . . . . . . . 7,379,430 1,153,745 653,574
---------- ---------- ----------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 10,081,739 1,439,834 850,098
Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . 4,777,941 1,689,062 426,999
---------- ---------- ----------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . 14,859,680 3,128,896 1,277,097
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PRESENTATION
The Minnesota Mutual Group Variable Annuity Account (the Account) was
established on June 14, 1993 as a segregated asset account of The Minnesota
Mutual Life Insurance Company (Minnesota Mutual) under Minnesota law and is
registered as a unit investment trust under the Investment Company Act of
1940 (as amended). The Account commenced operations September 2, 1994.
The Account currently has nineteen segregated sub-accounts to which
variable annuity contract owners may allocate their purchase payments. On
December 15, 1995, twelve additional segregated sub-accounts, MIMLIC
Growth, MIMLIC Bond, MIMLIC Asset Allocation, MIMLIC Mortgage Securities,
MIMLIC Capital Appreciation, MIMLIC International Stock, MIMLIC Small
Company, MIMLIC Maturing Government Bond 1998, MIMLIC Maturing Government
Bond 2002, MIMLIC Maturing Government Bond 2006, MIMLIC Maturing Government
Bond 2010 and MIMLIC Value Stock, were added to the Account.
The assets of each segregated sub-account are held for the exclusive
benefit of the variable annuity contract owners and are not chargeable with
liabilities arising out of the business conducted by any other account or
by Minnesota Mutual. Contract owners allocate their variable annuity
purchase payments to one or more of the nineteen segregated sub-accounts.
Such payments are then invested in shares of MIMLIC Series Fund, Inc. or in
shares of other registered investment companies or portfolios (Underlying
Funds). Payments allocated to the MIMLIC Growth, MIMLIC Bond, MIMLIC Money
Market, MIMLIC Asset Allocation, MIMLIC Mortgage Securities, MIMLIC Index
500, MIMLIC Capital Appreciation, MIMLIC International Stock, MIMLIC Small
Company, MIMLIC Maturing Government Bond 1998, MIMLIC Maturing Government
Bond 2002, MIMLIC Maturing Government Bond 2006, MIMLIC Maturing Government
Bond 2010, MIMLIC Value Stock, Vanguard Long-Term Corporate, Vanguard
Wellington, Fidelity Contrafund, Scudder International and Janus Twenty
segregated sub-accounts are invested in shares of the Growth, Bond, Money
Market, Asset Allocation, Mortgage Securities, Index 500, Capital
Appreciation, International Stock, Small Company, Maturing Government Bond
1998, Maturing Government Bond 2002, Maturing Government Bond 2006,
Maturing Government Bond 2010 and Value Stock Portfolios of the MIMLIC
Series Fund, Inc., Long-Term Corporate Portfolio of the Vanguard Fixed
Income Securities Fund, Inc., Vanguard/Wellington Fund, Inc., Fidelity
Contrafund, Scudder International Fund and Janus Twenty Fund, respectively.
Each of the Underlying Funds is registered under the Investment Company Act
of 1940 (as amended) as a diversified, open-end management investment
company. As of December 31, 1996, no contract owners have elected to
allocate payments to the MIMLIC Bond, MIMLIC Mortgage Securities, MIMLIC
Capital Appreciation, MIMLIC International Stock, MIMLIC Small Company,
MIMLIC Maturing Government Bond 1998, MIMLIC Maturing Government Bond 2002,
MIMLIC Maturing Government Bond 2006, MIMLIC Maturing Government Bond 2010
and MIMLIC Value Stock segregated sub-accounts.
MIMLIC Sales Corporation acts as the underwriter for the Account. MIMLIC
Asset Management Company acts as the investment adviser for the MIMLIC
Series Fund, Inc. MIMLIC Sales Corporation is a wholly-owned subsidiary of
MIMLIC Asset Management Company. MIMLIC Asset Management Company is a
wholly-owned subsidiary of Minnesota Mutual.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets resulting from operations during the period. Actual results
could differ from those estimates.
<PAGE>
2
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENTS IN UNDERLYING FUNDS
Investments in shares of the Underlying Funds are stated at market value
which is the net asset value per share as determined daily by each of the
Underlying Funds. Investment transactions are accounted for on the date
the shares are purchased or sold. The cost of investments sold is
determined on the average cost method. All dividend distributions received
from the Underlying Funds are reinvested in additional shares of the
Underlying Funds and are recorded by the segregated sub-accounts on the ex-
dividend date.
FEDERAL INCOME TAXES
The Account is treated as part of Minnesota Mutual for federal income tax
purposes. Under current interpretations of existing federal income tax
law, no income taxes are payable on investment income or capital gain
distributions received by the Account from the Underlying Funds.
(3) MORTALITY AND EXPENSE RISK AND ADMINISTRATIVE CHARGES
The mortality and expense risk charge paid to Minnesota Mutual is computed
daily and is equal, on an annual basis, to .85 percent of the average daily
net assets of the Account. Under certain conditions, the mortality and
expense risk charge may be increased to 1.25 percent of the average daily
net assets of the Account.
The contract administrative charge paid to Minnesota Mutual is computed
daily and is equal, on an annual basis, to .15 percent of the average daily
net assets of the Account. Under certain conditions, the contract
administrative charge may be increased to not more than .40 percent of the
average daily net assets of the Account.
A contingent deferred sales charge may be imposed on a contract owner
during the first six years if a contract's accumulation value is reduced by
withdrawal or surrender. This sales charge is currently being waived by
Minnesota Mutual.
(4) INVESTMENT TRANSACTIONS
The Account's purchases of Underlying Fund shares, including reinvestment
of dividend distributions, were as follows for the year ended December 31,
1996:
Growth Portfolio of the MIMLIC Series Fund, Inc. . . . . . . $ 144,424
Money Market Portfolio of the MIMLIC Series Fund, Inc. . . . 4,749,649
Asset Allocation Portfolio of the MIMLIC Series Fund, Inc.. . 72,171
Index 500 Portfolio of the MIMLIC Series Fund, Inc. . . . . . 4,844,544
Long-Term Corporate Portfolio of the Vanguard Fixed
Income Securities Fund, Inc. . . . . . . . . . . . . . . . 1,877,089
Vanguard/Wellington Fund, Inc. . . . . . . . . . . . . . . . 8,810,294
Fidelity Contrafund . . . . . . . . . . . . . . . . . . . . . 13,562,531
Scudder International Fund . . . . . . . . . . . . . . . . . 2,995,640
Janus Twenty Fund . . . . . . . . . . . . . . . . . . . . . . 4,259,859
<PAGE>
3
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS
Transactions in units for each segregated sub-account for the year ended
December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
------------------------------------------------------
MIMLIC MIMLIC MIMLIC
MIMLIC MONEY ASSET INDEX
GROWTH MARKET ALLOCATION 500
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Units outstanding at
December 31, 1994 . . . . . . . . . . . . - 318,636 - 261,150
Contract purchase payments . . . . . . . - 1,756,508 - 1,106,436
Deductions for contract terminations
and withdrawal payments . . . . . . . . - (1,263,069) - (115,104)
---------- ---------- ----------- ---------
Units outstanding at
December 31, 1995 . . . . . . . . . . . . - 812,075 - 1,252,482
Contract purchase payments . . . . . . . 137,557 4,346,833 70,145 3,278,878
Deductions for contract terminations
and withdrawal payments . . . . . . . . (1,359) (3,482,472) (461) (720,064)
---------- ---------- ----------- ---------
Units outstanding at
December 31, 1996 . . . . . . . . . . . . 136,198 1,676,436 69,684 3,811,296
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------------------------------------
VANGUARD SCUDDER
LONG-TERM VANGUARD FIDELITY INTER- JANUS
CORPORATE WELLINGTON CONTRAFUND NATIONAL TWENTY
---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1994 . . . . . . . . . . . . 275,796 1,363,274 4,870,232 1,807,445 444,821
Contract purchase
payments . . . . . . . . . . . . . . . . 1,007,465 3,051,713 7,266,625 1,913,174 832,636
Deductions for contract
terminations and
withdrawal payments . . . . . . . . . . (80,518) (317,901) (904,520) (709,191) (287,346)
---------- ---------- ----------- --------- ----------
Units outstanding at
December 31, 1995 . . . . . . . . . . . . 1,202,743 4,097,086 11,232,337 3,011,428 990,111
Contract purchase
payments . . . . . . . . . . . . . . . . 1,631,680 6,194,350 9,383,519 2,682,525 2,722,397
Deductions for contract
terminations and
withdrawal payments . . . . . . . . . . (634,539) (719,519) (1,977,849) (919,947) (820,533)
---------- ---------- ----------- --------- ----------
Units outstanding at
December 31, 1996 . . . . . . . . . . . . 2,199,884 9,571,917 18,638,007 4,774,006 2,891,975
---------- ---------- ----------- --------- ----------
---------- ---------- ----------- --------- ----------
</TABLE>
<PAGE>
4
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS
The following tables for each segregated sub-account show certain data for
an accumulation unit outstanding during the years ended December 31, 1996
and 1995 and the period from September 2, 1994, commencement of operations,
to December 31, 1994 (year ended December 31, 1996 for MIMLIC Growth and
MIMLIC Asset Allocation):
<TABLE>
<CAPTION>
MIMLIC
MIMLIC MIMLIC ASSET
GROWTH MONEY MARKET ALLOCATION
------------ --------------------------------------- -----------
1996 1996 1995 1994 1996
------------ --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . $ 1.000 1.055 1.011 1.000 1.000
------------ --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss). . . . . . . (.004) .042 .044 .011 (.004)
Net gains or losses on securities
(both realized and unrealized) . . . . . .080 - - - .066
------------ --------- --------- --------- ---------
Total from investment operations. . . . . . .076 .042 .044 .011 .062
------------ --------- --------- --------- ---------
Unit value, end of period . . . . . . . . . $ 1.076 1.097 1.055 1.011 1.062
------------ --------- --------- --------- ---------
------------ --------- --------- --------- ---------
MIMLIC INDEX 500 VANGUARD LONG-TERM CORPORATE
------------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . $ 1.326 .979 1.000 1.234 .989 1.000
------------ --------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) . . . . . . .001 - (.003) .072 .067 .020
Net gains or losses on securities
(both realized and unrealized) . . . . . .270 .347 (.018) (.064) .178 (.031)
------------ --------- --------- --------- --------- ---------
Total from investment
operations . . . . . . . . . . . . . . . .271 .347 (.021) .008 .245 (.011)
------------ --------- --------- --------- --------- ---------
Unit value, end of period . . . . . . . . $ 1.597 1.326 .979 1.242 1.234 .989
------------ --------- --------- --------- --------- ---------
------------ --------- --------- --------- --------- ---------
</TABLE>
<PAGE>
5
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
<TABLE>
<CAPTION>
VANGUARD WELLINGTON FIDELITY CONTRAFUND
---------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . $ 1.283 .977 1.000 1.322 .981 1.000
--------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) . . . . . . .051 .047 .022 .002 (.008) (.003)
Net gains or losses on securities
(both realized and unrealized). . . . . . .141 .259 (.045) .276 .349 (.016)
--------- -------- -------- -------- -------- --------
Total from investment
operations. . . . . . . . . . . . . . . .192 .306 (.023) .278 .341 (.019)
--------- -------- -------- -------- -------- --------
Unit value, end of period . . . . . . . . . $ 1.475 1.283 .977 1.600 1.322 .981
--------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- --------
SCUDDER INTERNATIONAL JANUS TWENTY
--------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . $ 1.039 .934 1.000 1.289 .959 1.000
--------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) . . . . . . .025 .001 (.003) .199 .132 .003
Net gains or losses on securities
(both realized and unrealized) . . . . . .114 .104 (.063) .140 .198 (.044)
--------- -------- -------- -------- -------- --------
Total from investment
operations . . . . . . . . . . . . . . .139 .105 (.066) .339 .330 (.041)
--------- -------- -------- -------- -------- --------
Unit value, end of period . . . . . . . . . $ 1.178 1.039 .934 1.628 1.289 .959
--------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- --------
</TABLE>
<PAGE>
APPENDIX A
Calculation of Accumulation Unit Values
Calculation of the net investment factor and the accumulation unit value may be
illustrated by the following hypothetical example. Assume the accumulation unit
value of the Index 500 Sub-Account on the immediately preceding valuation period
was $1.000000. Assume the following about the Series Fund Index 500 Portfolio:
(a) the net asset value per share of the Index 500 Portfolio was $1.394438 at
the end of the current valuation period; (2) the Index 500 Portfolio declared a
per share dividend and capital gain distribution in the amount of $.037162
during the current valuation period; and (3) the net asset value per share of
the Index 500 Portfolio was $1.426879 at the end of the preceding valuation
period.
The gross investment rate for the valuation period would be equal to 1.003300
(1.394438 plus .037162 divided by 1.426879). The net investment rate for the
valuation period is determined by deducting the total Index 500 Sub-Account
expenses from the gross investment rate. Total Index 500 Sub-Account expenses
of .000040 is equal to .000034 for mortality and risk expense charge (the daily
equivalent of .85% assuming 252 valuation dates per year) plus .000006 for
contract administrative charge (the daily equivalent of .15% assuming 252
valuation dates per year). The net investment rate equals 1.003269 (1.003309
minus .000040).
The accumulation unit value at the end of the valuation period would be equal to
the value on the immediately preceding valuation date ($1.00000) multiplied by
the net investment factor for the current valuation period (1.003269), which
produces $1.003269.
Calculation of Annuity Unit Values and Variable Annuity Payment
The determination of the annuity unit value and the annuity payment may be
illustrated by the following hypothetical example. Assume that the contract has
been in force for more than six years so that no deferred sales charge will
apply and that there is no deduction for annuity premium taxes. Assume further
that at the date of his or her retirement, the annuitant has credited to his or
her account 30,000 accumulation units, and that the value of an accumulation
unit on the valuation date next following the fourteenth day of the preceding
month was $1.150000, producing a total value of $34,500. Assume also that the
annuitant elects an option for which the table in the contract indicates the
first monthly payment is $6.57 per $1,000 of value applied; the annuitant's
first monthly payment would thus be 34.500 multiplied by $6.57, or $226.67.
Assume that the annuity unit value on the due date of the first payment was
$1.100000. When this is divided into the first monthly payment, the number of
annuity units represented by that payment is determined to be 206.064. The
value of this same number of annuity units will be paid in each subsequent
month.
Assume further that the accumulation unit value on the valuation date next
following the fourteenth day of the succeeding month is $1.160000. This is
divided by the accumulation unit value on the preceding monthly valuation date
($1.150000) to produce a ratio of 1.008696.
<PAGE>
Multiplying this ratio by .996338 to neutralize the assumed investment rate of
4.5% per annum already taken into account in determining annuity units as
described above, produces a result of 1.005002. This is then multiplied by the
preceding annuity unit value ($1.100000) to produce a current annuity value of
$1.105502.
The second monthly payment is then determined by multiplying the fixed number of
annuity units (206.064) by the current annuity unit value ($1.105502), which
produces a second monthly annuity payment of $227.80.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company
We have audited the accompanying consolidated balance sheets of The Minnesota
Mutual Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations and policyowners'
surplus and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 audits 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Minnesota Mutual Life Insurance Company and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1996 in
conformity with generally accepted accounting principles. As discussed in Note
2 to the consolidated financial statements, the Company adopted Statement of
Financial Accounting Standards No. 120, "Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain Long-
Duration Participating Contracts," in 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in the accompanying schedules is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 10, 1997
53
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Fixed maturity securities:
Available-for-sale, at fair value (amortized cost
$4,558,975 and $4,525,352) $ 4,674,082 $ 4,761,561
Held-to-maturity, at amortized cost (fair value
$1,179,112 and $1,281,523) 1,125,638 1,180,654
Equity securities, at fair value (cost $429,509 and
$277,554) 549,797 384,882
Mortgage loans, net 608,808 608,537
Real estate, net 43,082 47,256
Policy loans 204,178 198,716
Short-term investments 122,772 72,841
Other invested assets 98,247 91,530
----------- -----------
Total investments 7,426,604 7,345,977
Cash 57,140 48,358
Finance receivables, net 259,192 226,720
Deferred policy acquisition costs 589,517 539,732
Accrued investment income 90,996 98,373
Premiums receivable 77,140 85,247
Property and equipment, net 55,050 50,809
Reinsurance recoverables 126,629 102,198
Other assets 54,798 46,530
Separate account assets 3,706,256 2,609,460
----------- -----------
Total assets $12,443,322 $11,153,404
=========== ===========
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy and contract account balances $ 4,310,015 $ 4,287,083
Future policy and contract benefits 1,638,720 1,554,898
Pending policy and contract claims 70,577 55,812
Other policyowner funds 396,848 371,537
Policyowner dividends payable 49,899 50,450
Unearned premiums and fees 207,111 210,494
Federal income tax liability:
Current 25,643 39,516
Deferred 149,665 173,905
Other liabilities 286,042 320,607
Notes payable 319,000 279,967
Separate account liabilities 3,691,374 2,596,285
----------- -----------
Total liabilities 11,144,894 9,940,554
Policyowners' surplus:
Unassigned surplus 1,190,116 1,059,598
Net unrealized investment gains 108,312 153,252
----------- -----------
Total policyowners' surplus 1,298,428 1,212,850
----------- -----------
Total liabilities and policyowners' surplus $12,443,322 $11,153,404
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
54
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Premiums $ 612,359 $ 603,770 $ 562,018
Policy and contract fees 245,966 214,203 188,115
Net investment income 530,987 515,047 486,101
Net realized investment gains 59,546 66,643 25,769
Finance charge income 46,932 39,937 34,258
Other income 51,630 40,250 30,106
---------- ---------- ---------
Total revenues 1,547,420 1,479,850 1,326,367
---------- ---------- ---------
Benefits and expenses:
Policyowner benefits 541,520 517,771 498,424
Interest credited to policies and con-
tracts 288,967 297,145 283,626
General operating expenses 302,618 273,425 253,317
Commissions 103,370 93,465 87,631
Administrative and sponsorship fees 79,360 76,223 71,143
Dividends to policyowners 24,804 27,282 26,672
Interest on notes payable 22,798 11,128 7,295
Increase in deferred policy acquisition
costs (15,312) (29,822) (43,974)
---------- ---------- ---------
Total benefits and expenses 1,348,125 1,266,617 1,184,134
---------- ---------- ---------
Income from operations before taxes 199,295 213,233 142,233
Federal income tax expense:
Current 68,033 71,379 63,641
Deferred 744 11,995 (1,511)
---------- ---------- ---------
Total federal income tax expense 68,777 83,374 62,130
Net income $ 130,518 $ 129,859 $ 80,103
========== ========== =========
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $1,212,850 $ 874,577 $ 892,510
Net income 130,518 129,859 80,103
Change in net unrealized investment
gains and losses (44,940) 208,414 (98,036)
---------- ---------- ---------
Policyowners' surplus, end of year $1,298,428 $1,212,850 $ 874,577
========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
55
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 130,518 $ 129,859 $ 80,103
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest credited to annuity and insur-
ance contracts 275,968 288,218 277,863
Fees deducted from policy and contract
balances (206,780) (201,575) (188,226)
Change in future policy benefits 84,389 100,025 63,328
Change in other policyowner liabilities 16,099 (4,762) (16,794)
Change in deferred policy acquisition
costs (15,312) (29,822) (43,974)
Change in premiums due and other receiv-
ables (26,142) (18,039) 38,166
Change in federal income tax liabilities (12,055) 18,376 17,854
Net realized investment gains (59,546) (66,643) (25,769)
Other, net 29,987 36,561 28,958
---------- ---------- ----------
Net cash provided by operating activi-
ties 217,126 252,198 231,509
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of:
Fixed maturity securities, available-
for-sale 877,682 1,349,348 653,498
Equity securities 352,901 203,493 88,645
Mortgage loans 15,567 4,315 20,912
Real estate 11,678 15,948 17,571
Other invested assets 12,280 10,775 28,305
Proceeds from maturities and repayments
of:
Fixed maturity securities, available-
for-sale 329,550 253,576 327,337
Fixed maturity securities, held-to-matu-
rity 114,222 127,617 75,648
Mortgage loans 94,703 104,730 126,134
Cost of purchases of:
Fixed maturity securities, available-
for-sale (1,228,048) (1,975,130) (1,123,125)
Fixed maturity securities, held-to-matu-
rity (60,612) (140,763) (131,820)
Equity securities (446,599) (212,142) (131,483)
Mortgage loans (108,691) (209,399) (145,964)
Real estate (3,786) (16,554) (10,985)
Other invested assets (29,271) (20,517) (12,732)
Finance receivable originations or pur-
chases (175,876) (167,298) (134,867)
Finance receivable principal payments 142,723 123,515 104,539
Other, net (43,662) (19,292) 15,309
---------- ---------- ----------
Net cash used for investing activities (145,239) (567,778) (233,078)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits credited to annuity and insurance
contracts 657,405 710,525 647,237
Withdrawals from annuity and insurance
contracts (702,681) (563,569) (645,969)
Proceeds from issuance of surplus notes -- 124,967 --
Proceeds from issuance of debt by subsidi-
ary 60,000 50,000 30,000
Payments on debt by subsidiary (21,000) (10,000) (9,100)
Other, net (6,898) (3,801) (5,940)
---------- ---------- ----------
Net cash provided by (used for) fi-
nancing activities (13,174) 308,122 16,228
---------- ---------- ----------
Net increase (decrease) in cash and short-
term investments 58,713 (7,458) 14,659
Cash and short-term investments, beginning
of year 121,199 128,657 113,998
---------- ---------- ----------
Cash and short-term investments, end of
year $ 179,912 $ 121,199 $ 128,657
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
56
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS
The Minnesota Mutual Life Insurance Company (the Company), both directly and
through its subsidiaries, provides a diversified array of insurance and
financial products and services designed principally to protect and enhance the
long-term financial well-being of individuals and families.
The Company's strategy is to be successful in carefully selected niche
markets, primarily in the United States, while focusing on the retention of
existing business and the maintenance of profitability. To achieve this
objective, the Company has divided its businesses into four strategic business
units which focus on various markets: Individual, Financial Services, Group,
and Pension. Revenues reported in 1996 by these business units were
$780,250,000, $279,554,000, $213,461,000 and $104,059,000, respectively.
Additional revenues of $170,096,000 were reported by the Company's
subsidiaries.
At December 31, 1996, the Company was one of the 11 largest mutual life
insurance company groups in the United States, as measured by total assets. The
Company serves nearly seven million people through more than 4,000 associates
located at its St. Paul headquarters and in 81 general agencies and 43 regional
offices throughout the United States.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP), which vary in
certain respects from accounting practices prescribed or permitted by state
insurance regulatory authorities. The consolidated financial statements include
the accounts of The Minnesota Mutual Life Insurance Company and its
subsidiaries (collectively, "the Company"). All material intercompany
transactions and balances have been eliminated.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported
assets and liabilities, including reporting or disclosure of contingent assets
and liabilities as of the balance sheet date and the reported amounts of
revenues and expenses during the reporting period. Actual results could vary
from management's estimates.
New Accounting Principles
In 1995 and prior years, the Company prepared its financial statements
according to statutory accounting practices prescribed or permitted by the
Commerce Department of the State of Minnesota (Department of Commerce), and
these accounting practices were considered GAAP for mutual life insurance
companies.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40 (the Interpretation), "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises."
The Interpretation was supposed to become effective for fiscal years beginning
after December 15, 1994 and stated that financial statements prepared in
accordance with statutory accounting practices would no longer be considered to
be in conformity with GAAP. The Interpretation requires all mutual life
insurance companies that report their financial statements in conformity with
GAAP to apply all applicable authoritative GAAP pronouncements, with the
exception of Statements of Financial Accounting Standards (SFAS) No. 60,
"Accounting and Reporting by Insurance Enterprises," No. 97, "Accounting and
Reporting by Insurance Enterprises for Certain Long Duration Contracts and
Realized Gains and Losses from the Sale of Investments," and No. 113,
"Accounting for Reinsurance of Short-Duration and Long-Duration Contracts."
In January 1995, the FASB issued SFAS 120, "Accounting and Reporting by
Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long
Duration Participating Contracts." This statement deferred the implementation
of the Interpretation to fiscal years beginning after December 15, 1995 and
extended the requirements of SFAS Nos. 60, 97 and 113 to mutual life insurance
enterprises.
SFAS No. 120 also requires mutual life insurance enterprises to adopt
Statement of Position 95-1, "Accounting for Certain Insurance Activities of
Mutual Life Insurance Enterprises," which was issued by the American Institute
of Certified Public Accountants.
57
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company adopted SFAS No. 120 on January 1, 1996, and the accompanying
1994 and 1995 financial statements and related notes have been restated to
conform with the presentation of the 1996 GAAP financial statements.
The Company will continue to prepare financial statements according to
statutory accounting practices prescribed or permitted by the Department of
Commerce for purposes of filing with the Department of Commerce, the National
Association of Insurance Commissioners and states in which the Company is
licensed to do business. The significant differences between statutory and GAAP
financial results are presented in Note 12.
Insurance Revenues and Expenses
Premiums on traditional life products, which include individual whole life and
term insurance and immediate annuities, are credited to revenue when due. For
accident and health and group life products, premiums are credited to revenue
over the contract period as earned. Benefits and expenses are recognized in
relation to premiums over the contract period via a provision for future policy
benefits and the amortization of deferred policy acquisition costs.
Nontraditional life products include individual adjustable and variable life
insurance and group universal and variable life insurance. Revenue from
nontraditional life products and deferred annuities is comprised of policy and
contract fees charged for the cost of insurance, policy administration and
surrenders. Expenses include the portion of claims not covered by and interest
credited to the related policy and contract account balances. Policy
acquisition costs are amortized relative to gross margins.
Deferred Policy Acquisition Costs
The costs of acquiring new and renewal business, which vary with and are
primarily related to the production of new and renewal business, are generally
deferred to the extent recoverable from future premiums or expected gross
profits. Deferrable costs include commissions, underwriting expenses and
certain other selling and issue costs.
For traditional life, accident and health and group life products, deferred
acquisition costs are amortized over the premium paying period in proportion to
the ratio of annual premium revenues to ultimate anticipated premium revenues.
The ultimate premium revenues are estimated based upon the same assumptions
used to calculate the future policy benefits.
For nontraditional life products and deferred annuities, deferred acquisition
costs are amortized over the estimated lives of the contracts in relation to
the present value of estimated gross profits from surrender charges and
investment, mortality and expense margins.
Deferred acquisition costs amortized were $125,978,000, $104,940,000 and
$86,477,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Finance Charge Income and Receivables
Finance charge income represents fees and interest charged on consumer loans.
The Company uses the interest (actuarial) method of accounting for finance
charges and interest on finance receivables. Accrual of finance charges and
interest is suspended when a loan is contractually delinquent for more than 60
days and is subsequently recognized when received. Accrual is resumed when the
loan is contractually less than 60 days past due. An allowance for
uncollectible amounts is maintained by direct charges to operations at an
amount which management believes, based upon historical losses and economic
conditions, is adequate to absorb probable losses on existing receivables that
may become uncollectible. The reported receivables are net of this allowance.
Valuation of Investments
Fixed maturity securities (bonds) which the Company has the positive intent and
ability to hold to maturity are classified as held-to-maturity and are carried
at amortized cost, net of write-downs for other than temporary declines in
value. Premiums and discounts are amortized or accreted over the estimated
lives of the securities based on the interest yield method. Fixed maturity
securities which may be sold prior to maturity are classified as available-for-
sale and carried at fair value.
58
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equity securities (common stocks and preferred stocks) are carried at fair
value. Equity securities also include initial contributions to affiliated
registered investment funds that are managed by a subsidiary of the Company.
These contributions are carried at the market value of the underlying net
assets of the funds.
Mortgage loans are carried at amortized cost less an allowance for
uncollectible amounts. Premiums and discounts are amortized or accreted over
the terms of the mortgage loans based on the interest yield method. A mortgage
loan is considered impaired if it is probable that contractual amounts due will
not be collected. Impaired mortgage loans are valued at the fair value of the
underlying collateral. Interest income on impaired mortgage loans is recorded
on an accrual basis. However, when the likelihood of collection is doubtful,
interest income is recognized when received.
Fair values of fixed maturity securities and equity securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are estimated using values obtained from independent
pricing services which specialize in matrix pricing and modeling techniques for
estimating fair values. Fair values of mortgage loans are based upon discounted
cash flows, quoted market prices and matrix pricing.
Real estate is carried at cost less accumulated depreciation and an allowance
for estimated losses. Accumulated depreciation on real estate at December 31,
1996 and 1995, was $5,968,000 and $8,342,000, respectively.
Policy loans are carried at the unpaid principal balance.
Derivative Financial Instruments
The Company entered into equity swaps in 1996 as part of an overall risk
management strategy. The swaps are used to hedge exposure to market risk on
$400,000,000 of the Company's common stock portfolio. The swaps are based upon
certain stock indices, and settlement with the counterparties will take place
in January 1998. If, at the time of settlement for a particular swap, the
designated stock index has fallen below a specified level, the counterparty
will pay the Company an amount based upon the decline in the index and the
stock portfolio value protected by the swap. If, at the time of settlement, the
designated stock index has risen, the Company will pay the counterparty an
amount based upon the increase in the index and 25% of the stock portfolio
value protected by the swap.
The basic types of risks associated with derivatives are market risk (that
the value of the derivative will be adversely affected by changes in the
market) and credit risk (that the counterparty will not perform according to
the contract terms). To reduce credit risk, the swap contracts require that the
counterparties maintain sufficient credit ratings and provide collateral under
certain circumstances.
The swaps are carried at fair value, which is based upon dealer quotes.
Changes in fair value are recorded directly in policyowners' surplus. Upon
settlement of the swaps, gains or losses are recognized in income.
Capital Gains and Losses
Realized and unrealized capital gains and losses are determined on the specific
identification method. Write-downs of held-to-maturity securities and the
provision for credit losses on mortgage loans and real estate are recorded as
realized losses.
Changes in the fair value of fixed maturity securities available-for-sale and
equity securities are recorded as a separate component of policyowners'
surplus, net of taxes and related adjustments to deferred policy acquisition
costs and unearned policy and contract fees.
Property and Equipment
Property and equipment are carried at cost, net of accumulated depreciation of
$81,962,000 and $75,507,000 at December 31, 1996 and 1995, respectively.
Buildings are depreciated over 40 years and equipment is generally depreciated
over 5 to 10 years. Depreciation expense for the years ended December 31, 1996,
1995 and 1994, was $6,454,000, $5,941,000 and $8,136,000, respectively.
59
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the exclusive benefit of certain policyowners
and contractholders. The Company receives administrative and investment
advisory fees for services rendered on behalf of these funds. Separate account
assets and liabilities are carried at fair value, based upon the market value
of the investments held in the segregated funds.
The Company periodically invests money in its separate accounts. The market
value of such investments is included with separate account assets and amounted
to $14,882,000 and $13,175,000 as of December 31, 1996 and 1995, respectively.
Policyowner Liabilities
Policy and contract account balances represent the net accumulation of funds
associated with nontraditional life products and deferred annuities. Additions
to the account balances include premiums, deposits and interest credited by the
Company. Decreases in the account balances include surrenders, withdrawals,
benefit payments, and charges assessed for the cost of insurance, policy
administration and surrenders.
Future policy and contract benefits are comprised of reserves for traditional
life, group life, and accident and health products. The reserves were
calculated using the net level premium method based upon assumptions regarding
investment yield, mortality, morbidity, and withdrawal rates determined at the
date of issue, commensurate with the Company's experience. Provision has been
made in certain cases for adverse deviations from these assumptions.
Other policyowner funds are comprised of dividend accumulations, premium
deposit funds and supplementary contracts without life contingencies.
Participating Business
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are declared
by the Board of Trustees based upon actuarial determinations which take into
consideration current mortality, interest earnings, expense factors and federal
income taxes. Dividends are recognized as expenses consistent with the
recognition of premiums.
Income Taxes
Current income taxes are charged to operations based upon amounts estimated to
be payable as a result of taxable operations for the current year. Deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between financial statement
carrying amounts and income tax bases of assets and liabilities.
Reinsurance Recoverables
Insurance liabilities are reported before the effects of ceded reinsurance.
Reinsurance recoverables represent amounts due from reinsurers for paid and
unpaid benefits, expense reimbursements, prepaid premiums and future policy
benefits.
60
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS
Net investment income for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $433,985 $426,114 $417,698
Equity securities 14,275 8,883 4,485
Mortgage loans 63,865 58,943 49,676
Real estate (475) 497 648
Policy loans 13,828 12,821 11,800
Short-term investments 6,535 6,716 4,262
Other invested assets 4,901 5,168 3,212
-------- -------- --------
Gross investment income 536,914 519,142 491,781
Investment expenses (5,927) (4,095) (5,680)
-------- -------- --------
Total $530,987 $515,047 $486,101
======== ======== ========
</TABLE>
Net realized capital gains (losses) for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $(6,536) $24,025 $(2,528)
Equity securities 57,770 36,374 11,268
Mortgage loans (721) (207) (82)
Real estate 7,088 2,436 3,915
Other invested assets 1,945 4,015 13,196
------- ------- -------
Total $59,546 $66,643 $25,769
======= ======= =======
</TABLE>
Gross realized gains (losses) on the sales of fixed maturity securities and
equity securities for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities, available-for-sale:
Gross realized gains $ 19,750 $ 34,898 $ 13,375
Gross realized losses (26,286) (10,873) (15,903)
Equity securities:
Gross realized gains 79,982 52,670 21,538
Gross realized losses (22,212) (16,296) (10,270)
</TABLE>
Net unrealized gains (losses) included in policyowners' surplus at December
31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Gross unrealized gains $314,576 $358,877
Gross unrealized losses (77,337) (13,713)
Adjustment to deferred policy acquisition costs (65,260) (99,732)
Adjustment to unearned policy and contract fees (8,192) (11,665)
Deferred federal income taxes (55,475) (80,515)
-------- --------
Net unrealized gains $108,312 $153,252
======== ========
</TABLE>
61
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and fair value of investments in marketable securities by
type of investment were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------- FAIR
COST GAINS LOSSES VALUE
---------- -------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 302,820 $ 2,397 $ 6,756 $ 298,461
States, municipalities, and polit-
ical subdivisions 11,296 759 -- 12,055
Foreign governments 1,926 -- 54 1,872
Corporate securities 2,450,126 115,846 19,554 2,546,418
Mortgage-backed securities 1,792,807 64,834 42,365 1,815,276
---------- -------- ------- ----------
Total fixed maturities 4,558,975 183,836 68,729 4,674,082
Equity securities--unaffiliated 353,983 107,172 5,168 455,987
Equity securities--affiliated 75,526 18,284 -- 93,810
---------- -------- ------- ----------
Total equity securities 429,509 125,456 5,168 549,797
---------- -------- ------- ----------
Total available-for-sale 4,988,484 309,292 73,897 5,223,879
Held-to-maturity:
Corporate securities 904,994 50,187 3,130 952,051
Mortgage-backed securities 220,644 7,833 1,416 227,061
---------- -------- ------- ----------
Total held-to-maturity 1,125,638 58,020 4,546 1,179,112
---------- -------- ------- ----------
Total $6,114,122 $367,312 $78,443 $6,402,991
========== ======== ======= ==========
DECEMBER 31, 1995
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 261,669 $ 10,911 $ 440 $ 272,140
States, municipalities, and polit-
ical subdivisions 26,317 3,262 -- 29,579
Foreign governments 1,704 223 -- 1,927
Corporate securities 2,523,889 169,329 6,098 2,687,120
Mortgage-backed securities 1,711,773 62,510 3,488 1,770,795
---------- -------- ------- ----------
Total fixed maturities 4,525,352 246,235 10,026 4,761,561
Equity securities--unaffiliated 196,355 91,269 1,590 286,034
Equity securities--affiliated 81,199 17,649 -- 98,848
---------- -------- ------- ----------
Total equity securities 277,554 108,918 1,590 384,882
---------- -------- ------- ----------
Total available-for-sale 4,802,906 355,153 11,616 5,146,443
Held-to-maturity:
United States government and gov-
ernment agencies and authorities 250 3 -- 253
States, municipalities, and polit-
ical subdivisions 525 6 -- 531
Corporate securities 953,511 89,962 525 1,042,948
Mortgage-backed securities 226,368 11,540 117 237,791
---------- -------- ------- ----------
Total held-to-maturity 1,180,654 101,511 642 1,281,523
---------- -------- ------- ----------
Total $5,983,560 $456,664 $12,258 $6,427,966
========== ======== ======= ==========
</TABLE>
62
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 1996, 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>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
--------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 33,390 $ 33,429 $ 4,889 $ 4,948
Due after one year through five
years 435,040 459,870 163,206 168,527
Due after five years through ten
years 1,383,954 1,429,460 223,848 235,754
Due after ten years 913,784 936,047 513,051 542,822
---------- ---------- ---------- ----------
2,766,168 2,858,806 904,994 952,051
Mortgage-backed securities 1,792,807 1,815,276 220,644 227,061
---------- ---------- ---------- ----------
Total $4,558,975 $4,674,082 $1,125,638 $1,179,112
========== ========== ========== ==========
</TABLE>
At December 31, 1996 and 1995, bonds and certificates of deposit with a
carrying value of $12,934,000 and $15,296,000, respectively, were on deposit
with various regulatory authorities as required by law.
Allowances for credit losses on investments are reflected on the consolidated
balance sheets as a reduction of the related assets and were as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans $ 1,895 $ 1,711
Foreclosed real estate 535 400
Investment real estate 2,529 2,565
------- -------
Total $ 4,959 $ 4,676
======= =======
</TABLE>
At December 31, 1996, the recorded investment in mortgage loans that were
considered to be impaired was $6,518,000 before allowance for credit losses.
Included in this amount is $2,225,000 of impaired loans, for which the related
allowance for credit losses is $395,000, and $4,293,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
At December 31, 1995, the recorded investment in mortgage loans that were
considered to be impaired was $12,232,000 before allowance for credit losses.
Included in this amount is $3,256,000 of impaired loans, for which the related
allowance for credit losses is $211,000, and $8,976,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
In addition to the allowance for credit losses on impaired mortgage loans, a
general allowance for credit losses was established for potential impairments
in the remainder of the mortgage loan portfolio. The general allowance was
$1,500,000 at December 31, 1996, 1995 and 1994.
Changes in the allowance for credit losses on mortgage loans were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $1,711 $2,449 $2,412
Provision for credit losses 381 127 622
Charge-offs (197) (865) (585)
------ ------ ------
Balance at end of year $1,895 $1,711 $2,449
====== ====== ======
</TABLE>
63
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
Below is a summary of interest income on impaired mortgage loans.
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Average impaired mortgage loans $9,375 $15,845 $20,236
Interest income on impaired mortgage loans--contractual 1,796 1,590 2,103
Interest income on impaired mortgage loans--collected 1,742 1,515 1,963
</TABLE>
(4) NET FINANCE RECEIVABLES
Finance receivables as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Direct installment loans $204,038 $178,262
Retail installment notes 30,843 32,345
Retail revolving credit 24,863 14,864
Credit card receivables 3,541 4,479
Accrued interest 3,404 3,147
-------- --------
Gross receivables 266,689 233,097
Allowance for uncollectible amounts (7,497) (6,377)
-------- --------
Finance receivables, net $259,192 $226,720
======== ========
</TABLE>
Direct installment loans at December 31, 1996 consisted of $93,127,000 of
discount basis loans (net of unearned finance charges) and $110,911,000 of
interest-bearing loans. As of December 31, 1995, discount basis loans amounted
to $92,351,000 and interest-bearing loans amounted to $85,911,000. Direct
installment loans generally have a maximum term of 84 months. Retail
installment notes are principally discount basis, arise from the sale of
household appliances, furniture, and sundry services, and generally have a
maximum term of 48 months. Experience has shown that a substantial portion of
finance receivables will be renewed, converted or paid in full prior to
maturity.
Principal cash collections of direct installment loans amounted to
$92,438,000, $75,865,000 and $70,941,000, and the percentage of these cash
collections to average net balances was 48%, 47% and 55% for the years ended
December 31, 1996, 1995 and 1994, respectively.
Changes in the allowance for uncollectible amounts for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $ 6,377 $5,360 $4,801
Provision for credit losses 10,086 6,140 4,652
Charge-offs (11,036) (6,585) (5,305)
Recoveries 2,070 1,462 1,212
------- ------ ------
Balance at end of year $ 7,497 $6,377 $5,360
======= ====== ======
</TABLE>
64
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES
Income tax expense varies from the amount computed by applying the federal
income tax rate of 35% to income from operations before taxes. The significant
components of this difference were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax expense $69,753 $74,631 $49,781
Differences between
computed and actual tax
expense:
Dividends received
deduction (2,534) (1,710) (1,293)
Special tax on mutual
life insurance
companies 2,760 10,134 9,880
Tax credits (3,475) (1,840) (1,150)
Expense adjustments and
other 2,273 2,159 4,912
------- ------- -------
Total tax expense $68,777 $83,374 $62,130
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to the Company's net
deferred federal tax liability were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Policyowner liabilities $ 15,854 $ 22,151
Unearned fee income 43,232 43,576
Pension and post-retirement benefits 21,815 20,187
Tax deferred policy acquisition costs 58,732 47,228
Net realized capital losses 8,275 7,881
Other 19,229 17,997
-------- --------
Gross deferred tax assets 167,137 159,020
Deferred tax liabilities:
Deferred policy acquisition costs 206,331 188,906
Real estate and property and equipment depreciation 10,089 9,049
Basis difference on investments 8,605 7,402
Net unrealized capital gains 81,339 119,604
Other 10,438 7,964
-------- --------
Gross deferred tax liabilities 316,802 332,925
-------- --------
Net deferred tax liability $149,665 $173,905
======== ========
</TABLE>
A valuation allowance for deferred tax assets was not considered necessary as
of December 31, 1996 and 1995, because the Company believes that it is more
likely than not that the deferred tax assets will be realized through future
reversals of existing taxable temporary differences and future taxable income.
Income taxes paid for the years ended December 31, 1996, 1995 and 1994, were
$79,026,000, $64,390,000 and $45,268,000, respectively.
65
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) LIABILITY FOR UNPAID ACCIDENT AND HEALTH CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Activity in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1 $377,302 $349,311 $323,304
Less: reinsurance recoverable 80,333 61,624 51,549
-------- -------- --------
Net balance at January 1 296,969 287,687 271,755
-------- -------- --------
Incurred related to:
Current year 134,727 129,896 129,028
Prior years 4,821 (4,014) 860
-------- -------- --------
Total incurred 139,548 125,882 129,888
-------- -------- --------
Paid related to:
Current year 51,695 47,620 46,270
Prior years 70,073 68,980 67,686
-------- -------- --------
Total paid 121,768 116,600 113,956
-------- -------- --------
Net balance at December 31 314,749 296,969 287,687
Plus: reinsurance recoverable 102,161 80,333 61,624
-------- -------- --------
Balance at December 31 $416,910 $377,302 $349,311
======== ======== ========
</TABLE>
The liability for unpaid accident and health claims and claim adjustment
expenses is included in future policy and contract benefits and pending policy
and contract claims on the consolidated balance sheets.
Incurred claims related to prior years are due to the differences between
actual and estimated claims incurred as of the end of the prior year and
interest credited to future policy and contract benefits.
(7) EMPLOYEE BENEFIT PLANS
Pension Plans
The Company has noncontributory defined benefit retirement plans covering
substantially all employees and certain agents. Benefits are based upon years
of participation and the employee's average monthly compensation or the agent's
adjusted annual compensation. Plan assets are comprised of mostly stocks and
bonds which are held in the general and separate accounts of the Company and
administered under group annuity contracts issued by the Company. The Company's
funding policy is to contribute annually the minimum amount required by
applicable regulations. The Company also has an unfunded noncontributory
defined benefit retirement plan which provides certain employees with benefits
in excess of limits for qualified retirement plans.
Net periodic pension cost for the years ended December 31 included the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 6,019 $ 5,294 $ 4,880
Interest accrued on projected benefit obligation 8,541 7,935 7,382
Actual return on plan assets (12,619) (18,061) (1,331)
Net amortization and deferral 4,698 11,811 (5,094)
-------- -------- -------
Net periodic pension cost $ 6,639 $ 6,979 $ 5,837
======== ======== =======
</TABLE>
66
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status for the Company's plans as of December 31 was calculated as
follows:
<TABLE>
<CAPTION>
FUNDED PLANS UNFUNDED PLAN
------------------ ----------------
1996 1995 1996 1995
-------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit ob-
ligations:
Vested benefit obligation $ 61,328 $ 56,428 $ -- $ --
Non-vested benefit obligation 19,119 16,599 5,912 4,539
-------- -------- ------- -------
Accumulated benefit obligation $ 80,447 $ 73,027 $ 5,912 $ 4,539
======== ======== ======= =======
Pension liability included in other li-
abilities:
Projected benefit obligation $117,836 $105,180 $12,576 $10,430
Plan assets at fair value 115,107 102,594 -- --
-------- -------- ------- -------
Plan assets less than projected bene-
fit obligation 2,729 2,586 12,576 10,430
Unrecognized net gain (loss) 3,633 2,095 (2,332) (1,187)
Unrecognized prior service cost (364) (213) -- --
Unamortized transition asset (obliga-
tion) 2,422 2,643 (8,451) (9,219)
Additional minimum liability -- -- 4,119 4,515
-------- -------- ------- -------
Net pension liability $ 8,420 $ 7,111 $ 5,912 $ 4,539
======== ======== ======= =======
</TABLE>
A weighted average discount rate of 7.5% and a weighted average rate of
increase in future compensation levels of 5.8% were used in determining the
actuarial present value of the projected benefit obligation at December 31,
1996 and 1995. The assumed long-term rate of return on plan assets was either
7.5% or 8.5%, depending on the plan.
Profit Sharing Plans
The Company also has profit sharing plans covering substantially all employees
and agents. The Company's contribution rate to the employee plan is determined
annually by the trustees of the Company and is applied to each participant's
prior year earnings. The Company's contribution to the agent plan is made as a
certain percentage, based upon years of service, applied to each agent's total
annual compensation. The Company recognized contributions to the plans during
1996, 1995 and 1994 of $6,092,000, $6,595,000 and $6,866,000, respectively.
Participants may elect to receive a portion of their contributions in cash.
Postretirement Benefits Other than Pensions
The Company also has unfunded postretirement plans that provide certain health
care and life insurance benefits to substantially all retired employees and
agents. Eligibility is determined by age at retirement and years of service
after age 30. Health care premiums are shared with retirees, and other cost-
sharing features include deductibles and co-payments.
Components of net periodic postretirement benefit cost for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $1,011 $1,276 $1,760
Interest accrued on projected benefit obligation 2,041 2,452 2,298
Amortization of prior service cost (513) (513) (223)
Amortization of net gain (177) -- --
------ ------ ------
Net periodic postretirement benefit cost $2,362 $3,215 $3,835
====== ====== ======
</TABLE>
67
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The accumulated postretirement benefit obligation and the accrued
postretirement benefit liability for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $10,238 $11,875
Other fully eligible plan participants 4,594 5,535
Other active plan participants 9,514 9,809
------- -------
Total accumulated postretirement benefit obligation 24,346 27,219
Unrecognized prior service cost 4,107 4,620
Unrecognized net gain 9,880 4,743
------- -------
Accrued postretirement benefit liability $38,333 $36,582
======= =======
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation for 1996 and 1995 was 7.5%. The 1996 net health care cost trend rate
was 9.0%, graded to 5.5% over 7 years, and the 1995 rate was 11.0%, graded to
5.5% over 11 years.
The assumptions presented herein are based on pertinent information available
to management as of December 31, 1996 and 1995. Actual results could differ
from those estimates and assumptions. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1996 by
$4,262,000 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit costs for 1996 by $583,000.
(8) REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance companies. To the extent that a reinsurer is
unable to meet its obligations under the reinsurance agreement, the Company
remains liable. The Company evaluates the financial condition of its reinsurers
and monitors concentrations of credit risk to minimize its exposure to
significant losses from reinsurer insolvencies.
Reinsurance is accounted for over the life of the underlying reinsured
policies using assumptions consistent with those used to account for the
underlying policies.
The effect of reinsurance on premiums for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $615,098 $600,841 $558,066
Reinsurance assumed 64,489 64,792 60,939
Reinsurance ceded (67,228) (61,863) (56,987)
-------- -------- --------
Net premiums $612,359 $603,770 $562,018
======== ======== ========
</TABLE>
Reinsurance recoveries on ceded reinsurance contracts were $72,330,000,
$58,338,000 and $60,970,000 during 1996, 1995 and 1994, respectively.
68
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1996 and 1995.
Although management is not aware of any factors that would significantly affect
the estimated fair values, such amounts have not been comprehensively revalued
since those dates. Therefore, estimates of fair value subsequent to the
valuation dates may differ significantly from the amounts presented herein.
Considerable judgment is required to interpret market data to develop the
estimates of fair value. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Please refer to Note 2 for additional fair value disclosures concerning fixed
maturity securities, equity securities, mortgages and derivatives. The carrying
amounts for policy loans, cash, short term investments and finance receivables
approximate the assets' fair values.
The interest rates on the finance receivables outstanding as of December 31,
1996 and 1995, are consistent with the rates at which loans would currently be
made to borrowers of similar credit quality and for the same maturity; as such,
the carrying value of the finance receivables outstanding as of December 31,
1996 and 1995, approximate the fair value for those respective dates.
The fair values of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges, are
estimated to be the amount payable on demand as of December 31, 1996 and 1995.
The amount payable on demand equates to the account balance less applicable
surrender charges. Contracts without guaranteed interest rates and surrender
charges have fair values equal to their accumulation values plus applicable
market value adjustments. The fair values of guaranteed investment contracts
and supplementary contracts without life contingencies are calculated using
discounted cash flows, based on interest rates currently offered for similar
products with maturities consistent with those remaining for the contracts
being valued.
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the fair value of notes payable.
The carrying amounts and fair values of the Company's financial instruments
which were classified as assets as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturity securities:
Available-for-sale $4,674,082 $4,674,082 $4,761,561 $4,761,561
Held-to-maturity 1,125,638 1,179,112 1,180,654 1,281,523
Equity securities 549,797 549,797 384,882 384,882
Mortgage loans:
Commercial 432,198 445,976 373,897 391,089
Residential 176,610 180,736 234,640 239,723
Policy loans 204,178 204,178 198,716 198,716
Short-term investments 122,772 122,772 72,841 72,841
Cash 57,140 57,140 48,358 48,358
Finance receivables, net 259,192 259,192 226,720 226,720
Derivatives 1,197 1,197 -- --
---------- ---------- ---------- ----------
Total financial assets $7,602,804 $7,674,182 $7,482,269 $7,605,413
========== ========== ========== ==========
</TABLE>
69
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and fair values of the Company's financial instruments
which were classified as liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred annuities $2,178,355 $2,152,636 $2,178,223 $2,156,886
Annuity certain contracts 52,636 53,962 48,492 50,732
Other fund deposits 808,592 805,709 856,535 847,975
Guaranteed investment contracts 18,770 18,866 47,426 47,987
Supplementary contracts without
life contingencies 47,966 47,536 41,431 39,962
Notes payable 319,000 325,974 279,967 294,103
---------- ---------- ---------- ----------
Total financial liabilities $3,425,319 $3,404,683 $3,452,074 $3,437,645
========== ========== ========== ==========
</TABLE>
(10) NOTES PAYABLE
In September 1995, the Company issued surplus notes with a face value of
$125,000,000, at 8.25%, due in 2025. The surplus notes are subordinate to all
current and future policyowners' interests, including claims, and indebtedness
of the Company. All payments of interest and principal on the notes are subject
to the approval of the Department of Commerce. The approved accrued interest
was $3,008,000 as of December 31, 1996 and 1995. The issuance costs of
$1,403,000 are deferred and amortized over 30 years on a straight-line basis.
Notes payable as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Corporate--surplus notes, 8.25%, 2025 $125,000 $124,967
Consumer finance subsidiary--senior, 6.53%--8.77%, through
2003 194,000 155,000
-------- --------
Total notes payable $319,000 $279,967
======== ========
</TABLE>
At December 31, 1996, the aggregate minimum annual notes payable maturities
for the next five years were as follows: 1997, $21,000,000; 1998, $31,000,000;
1999, $49,000,000; 2000, $33,000,000; 2001, $26,000,000.
Long-term borrowing agreements involving the consumer finance subsidiary
include provisions with respect to borrowing limitations, payment of cash
dividends on or purchases of common stock, and maintenance of liquid net worth.
As of December 31, 1996, the consumer finance subsidiary was required to have a
minimum liquid net worth of $41,354,000. Liquid net worth at that date was
$51,803,000.
Interest paid on debt for the years ended December 31, 1996, 1995 and 1994,
was $21,849,000, $6,504,000 and $5,378,000, respectively.
(11) COMMITMENTS AND CONTINGENCIES
The Company is involved in various pending or threatened legal proceedings
arising out of the normal course of business. In the opinion of management, the
ultimate resolution of such litigation will not have a material adverse effect
on operations or the financial position of the Company.
The Company has issued certain participating group annuity and life insurance
contracts jointly with another life insurance company. The joint contract
issuer has liabilities related to these contracts of
70
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) COMMITMENTS AND CONTINGENCIES (CONTINUED)
$328,346,000 as of December 31, 1996. To the extent the joint contract issuer
is unable to meet its obligation under the agreement, the Company remains
liable.
The Company has long-term commitments to fund venture capital and real estate
investments totaling $142,469,000 as of December 31, 1996. The Company
estimates that $35,000,000 of these commitments will be invested in 1997, with
the remaining $107,469,000 invested over the next four years.
As of December 31, 1996, the Company had committed to purchase bonds and
mortgage loans totaling $74,123,000 but had not completed the purchase
transactions.
At December 31, 1996, the Company had guaranteed the payment of $68,700,000
in policyowner dividends and discretionary amounts payable in 1997. The Company
has pledged bonds, valued at $70,336,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessments pertaining to future insolvencies and impairments of
unaffiliated insurance companies. The Company records a liability for future
guaranty fund assessments based upon known insolvencies, according to data
received from the National Organization of Life and Health Insurance Guaranty
Associations. An asset is held for the amount of guaranty fund assessments paid
which can be recovered through future premium tax credits.
(12) STATUTORY FINANCIAL DATA
Statutory accounting is primarily focused on solvency and surplus adequacy.
Therefore, fundamental differences exist between statutory and GAAP accounting,
and their effects on income and policyowners' surplus are illustrated below:
<TABLE>
<CAPTION>
POLICYOWNERS' SURPLUS NET INCOME
---------------------- ----------------------------
1996 1995 1996 1995 1994
---------- ---------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statutory basis $ 682,886 $ 601,565 $115,797 $ 88,706 $ 65,123
Adjustments:
Deferred policy acquisi-
tion costs 589,517 539,732 15,312 29,822 43,974
Net unrealized invest-
ment gains 111,575 235,143 -- -- --
Statutory asset valua-
tion reserve 240,474 201,721 -- -- --
Statutory interest main-
tenance reserve 24,707 32,899 (8,192) 12,976 (4,426)
Premiums and fees de-
ferred or receivable (75,716) (77,444) 1,587 497 (2,310)
Change in reserve basis 98,406 77,464 20,114 12,382 (1,444)
Separate accounts (40,755) (36,010) (6,304) (854) (5,837)
Unearned policy and con-
tract fees (121,843) (122,786) (2,530) (4,410) (10,406)
Surplus notes (125,000) (124,967) -- -- --
Net deferred taxes (149,665) (173,905) 744 (11,995) 1,511
Nonadmitted assets 31,531 28,211 -- -- --
Policyowner dividends 57,765 57,263 502 4,660 2,446
Other (25,454) (26,036) (6,512) (1,925) (8,528)
---------- ---------- -------- -------- --------
As reported in the
accompanying
consolidated
financial statements $1,298,428 $1,212,850 $130,518 $129,859 $ 80,103
========== ========== ======== ======== ========
</TABLE>
71
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AS SHOWN
MARKET ON THE BALANCE
TYPE OF INVESTMENT COST(3) VALUE SHEET(1)
- ------------------ ---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds:
United States government and government
agencies and authorities $ 302,820 $ 298,461 $ 298,461
States, municipalities and political
subdivisions 11,296 12,055 12,055
Foreign governments 1,926 1,872 1,872
Public utilities 547,228 590,445 573,030
Mortgage-backed securities 2,013,451 2,042,337 2,035,920
All other corporate bonds 2,807,892 2,908,024 2,878,382
---------- ---------- ----------
Total bonds 5,684,613 5,853,194 5,799,720
---------- ---------- ----------
Equity securities:
Common stocks:
Public utilities 510 611 611
Banks, trusts and insurance companies 12,824 21,484 21,484
Industrial, miscellaneous and all
other 329,792 422,401 422,401
Nonredeemable preferred stocks 10,857 11,491 11,491
---------- ---------- ----------
Total equity securities 353,983 455,987 455,987
---------- ---------- ----------
Mortgage loans on real estate 608,808 xxxxxx 608,808
Real estate (2) 43,082 xxxxxx 43,082
Policy loans 204,178 xxxxxx 204,178
Other long-term investments 98,247 xxxxxx 98,247
Short-term investments 122,772 xxxxxx 122,772
---------- ----------
Total $1,077,087 xxxxxx $1,077,087
---------- ----------
Total investments $7,115,683 xxxxxx $7,332,794
========== ==========
</TABLE>
- -------
(1) Amortized cost for bonds classified as held-to-maturity and fair value for
common stocks and bonds classified as available-for-sale.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $1,810,000.
(3) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for bonds
and other investments.
72
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------- ------------------------------------------------------------
FUTURE POLICY AMORTIZATION
DEFERRED BENEFITS OTHER POLICY BENEFITS, OF DEFERRED
POLICY LOSSES, CLAIMS CLAIMS AND NET CLAIMS, LOSSES POLICY OTHER
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS PREMIUM INVESTMENT AND SETTLEMENT ACQUISITION OPERATING
SEGMENT COSTS EXPENSES(1) PREMIUMS(2) PAYABLE REVENUE(3) INCOME EXPENSES COSTS EXPENSES
- ------- ----------- -------------- ----------- ------------ ---------- ---------- -------------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
Life insurance $456,461 $2,123,148 $149,152 $51,772 $568,874 $223,762 $478,228 $ 97,386 $290,525
Accident and
health insurance 62,407 437,118 33,770 18,774 160,097 34,202 96,743 14,017 87,222
Annuity 70,649 3,360,614 -- 31 79,245 267,473 243,387 14,575 111,366
Property and
liability
insurance -- 27,855 24,189 -- 50,109 5,550 36,933 -- 19,033
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$589,517 $5,948,735 $207,111 $70,577 $858,325 $530,987 $855,291 $125,978 $508,146
======== ========== ======== ======= ======== ======== ======== ======== ========
1995:
Life insurance $430,829 $2,009,154 $151,864 $41,212 $540,353 $203,487 $454,299 $ 80,896 $266,090
Accident and
health insurance 55,888 400,950 34,847 14,567 153,505 33,358 93,482 11,448 83,345
Annuity 53,015 3,401,760 -- 33 74,899 272,499 260,854 12,596 86,716
Property and
liability
insurance -- 30,117 23,783 -- 49,216 5,703 33,563 -- 18,090
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$539,732 $5,841,981 $210,494 $55,812 $817,973 $515,047 $842,198 $104,940 $454,241
======== ========== ======== ======= ======== ======== ======== ======== ========
1994:
Life insurance $510,117 $1,867,170 $133,221 $47,099 $505,300 $192,141 $443,233 $ 59,351 $245,791
Accident and
health insurance 46,506 352,955 36,529 17,142 136,619 30,119 93,359 12,401 75,380
Annuity 92,664 3,263,042 -- 12 60,479 258,196 238,301 14,725 79,498
Property and
liability
insurance -- 32,807 21,865 -- 47,735 5,645 33,829 -- 18,717
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$649,287 $5,515,974 $191,615 $64,253 $750,133 $486,101 $808,722 $ 86,477 $419,386
======== ========== ======== ======= ======== ======== ======== ======== ========
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
PREMIUMS
SEGMENT WRITTEN(4)
- ------- ----------
(IN THOUSANDS)
<S> <C>
1996:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 50,515
-------
$50,515
=======
1995:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 51,133
-------
$51,133
=======
1994:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 47,073
-------
$47,073
=======
</TABLE>
- -----
(1) Includes policy and contract account balances
(2) Includes unearned policy and contract fees
(3) Includes policy and contract fees
(4) Applies only to property and liability insurance
73
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
OTHER FROM OTHER NET ASSUMED TO
GROSS AMOUNT COMPANIES COMPANIES AMOUNT NET
------------ ----------- ----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996:
Life insurance in force $116,445,975 $15,164,764 $22,957,287 $124,238,498 18.5%
============ =========== =========== ============
Premiums:
Life insurance $ 347,056 $ 45,988 $ 63,044 $ 364,112 17.3%
Accident and health
insurance 174,219 15,511 1,389 160,097 0.9%
Annuity 38,041 -- -- 38,041 --
Property and liability
insurance 55,782 5,729 56 50,109 0.1%
------------ ----------- ----------- ------------
Total premiums $ 615,098 $ 67,228 $ 64,489 $ 612,359 10.5%
============ =========== =========== ============
1995:
Life insurance in force $106,228,277 $15,620,303 $24,289,241 $114,897,215 21.1%
============ =========== =========== ============
Premiums:
Life insurance $ 342,433 $ 44,778 $ 62,169 $ 359,824 17.3%
Accident and health
insurance 163,412 12,296 2,389 153,505 1.6%
Annuity 41,225 -- -- 41,225 --
Property and liability
insurance 53,771 4,789 234 49,216 0.5%
------------ ----------- ----------- ------------
Total premiums $ 600,841 $ 61,863 $ 64,792 $ 603,770 10.7%
============ =========== =========== ============
1994:
Life insurance in force $ 99,220,067 $13,570,369 $23,520,616 $109,170,314 21.5%
============ =========== =========== ============
Premiums:
Life insurance $ 322,799 $ 38,088 $ 59,064 $ 343,775 17.2%
Accident and health
insurance 145,333 10,007 1,293 136,619 0.9%
Annuity 33,889 -- -- 33,889 --
Property and liability
insurance 56,045 8,892 582 47,735 1.2%
------------ ----------- ----------- ------------
Total premiums $ 558,066 $ 56,987 $ 60,939 $ 562,018 10.8%
============ =========== =========== ============
</TABLE>
74
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Minnesota Mutual Group Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item
Number
- ------
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with
the Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Minnesota Mutual Group
Variable Annuity Account for the period ended December 31,
1996, are included in Part B of this filing and consist of
the following:
1. Independent Auditors' Report - Minnesota Mutual Group
Variable Annuity Account
2. Statement of Assets and Liabilities - Minnesota Mutual
Group Variable Annuity Account
3. Statements of Operations - Minnesota Mutual Group
Variable Annuity Account
4. Statements of Changes in Net Assets - Minnesota
Mutual Group Variable Annuity Account
5. Notes to Financial Statements - Minnesota Mutual
Group Variable Annuity Account
(b) Audited Financial Statements of The Minnesota Mutual Life
Insurance Company for the period ended December 31, 1996,
are included in Part B of this filing and consist of the
following:
1. Independent Auditors' Report - The Minnesota Mutual
Life Insurance Company
2. Balance Sheets - The Minnesota Mutual Life Insurance Company
3. Statements of Operations and Policyowners' Surplus -
The Minnesota Mutual Life Insurance Company
4. Statements of Cash Flows - The Minnesota Mutual Life
Insurance Company
5. Notes to Financial Statements - The Minnesota Mutual
Life Insurance Company
6. Summary of Investments - Other than Investments in
Related Parties - The Minnesota Mutual Life Insurance
Company
7. Supplementary Insurance Information - The Minnesota
Mutual Life Insurance Company
8. Reinsurance - The Minnesota Mutual Life Insurance Company
9. Short-term Borrowings - The Minnesota Mutual Life
Insurance Company
<PAGE>
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance
Company's Board of Trustees establishing Minnesota
Mutual Group Variable Annuity Account.
2. Not applicable.
3. (a) Form of Distribution Agreement.
(b) Form of Broker-Dealer Sales Agreement.
4. (a) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 94-9310 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(b) The specimen copy of the Participant's Certificate of Insurance,
form number 94-9311 Rev. 2-96 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-79534, Post-Effective
Amendment Number 4, is hereby incorporated by reference.
(c) The specimen copy of the Annuitization Endorsement, form number
94-9312
(d) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 95-9330 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(e) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9331 Rev. 2-96 previously filed as
this exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 4, is hereby incorporated by
reference.
(f) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 95-9332 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(g) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9333 Rev. 2-96 previously filed as
this exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 4, is hereby incorporated by
reference.
(h) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9338.
5. (a) Application, form number F. 18210 Rev. 12-81,
Contract Owner Application.
(b) Application, form number MSRS 240 Rev. 9-94,
Participant Application.
(c) Annuity Application, form number 95-9325.
(d) Group TSA Variable Annuity Application, form number
95-9329.
6. (a) The Articles of Re-Incorporation of The
Minnesota Mutual Life Insurance Company.
(b) The By-Laws of The Minnesota Mutual Life Insurance Company.
7. Not applicable.
<PAGE>
8. Deferred Compensation Business Plan Agreement.
9. Opinion and Consent of Donald F. Gruber, Esq.
10. (a) Consent of KPMG Peat Marwick LLP.
(b) The Minnesota Mutual Life Insurance Company Board of Trustees'
Power of Attorney to Sign Registration Statement, previously
filed as this exhibit to Registrant's Form N-4, File Number
33-79534, Post-Effective Amendment Number 4, is hereby
incorporated by reference.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotations.
(a) Money Market Segregated Sub-Account
Performance Calculations.
(b) Index 500 Segregated Sub-Account Performance
Calculations.
(c) Long-Term Corporate Segregated Sub-Account
Performance Calculations.
(d) Vanguard/Wellington Segregated Sub-Account
Performance Calculations.
(e) Fidelity Contrafund Segregated Sub-Account
Performance Calculations.
(f) Scudder International Segregated Sub-Account
Performance Calculations.
(g) Janus Twenty Segregated Sub-Account Performance
Calculations.
<PAGE>
14. (a) Financial Data Schedule - MIMLIC Money Market Sub-Account
(b) Financial Data Schedule - Vanguard Long-Term Corporate Sub-Account
(c) Financial Data Schedule - Vanguard/Wellington Sub-Account
(d) Financial Data Schedule - MIMLIC Index 500 Sub-Account
(e) Financial Data Schedule - Fidelity Contrafund Sub-Account
(f) Financial Data Schedule - Scudder International Fund Sub-Account
(g) Financial Data Schedule - Janus Twenty Fund Sub-Account
(h) Financial Data Schedule - MIMLIC Asset Allocation Sub-Account
(i) Financial Data Schedule - MIMLIC Growth Sub-Account
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
- ------------------ ---------------------- ---------------------
Giulio Agostoni Trustee None
3M
3M Center - Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen Trustee None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
John F. Bruder Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Paul H. Gooding Vice President and None
The Minnesota Mutual Life Treasurer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Trustee None
First Bank System, Inc.
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty Trustee None
Deluxe Corporation
401 Woodduck Lane
North Oaks, MN 55127
Robert E. Hunstad Executive Vice None
The Minnesota Mutual Life President
Insurance Company
400 Robert Street North
St. Paul, MN 55101
<PAGE>
James E. Johnson Senior Vice President None
The Minnesota Mutual Life and Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
271 19th Avenue South
Minneapolis, MN 55455
Richard D. Lee Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Reatha C. King, Ph.D. Trustee None
General Mills Foundation
P. O. Box 1113
Minneapolis, MN 55440
Joel W. Mahle Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Dennis E. Prohofsky Senior Vice President, None
The Minnesota Mutual Life General Counsel and
Insurance Company Secretary
400 Robert Street North
St. Paul, MN 55101
Thomas E. Rohricht Trustee None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
<PAGE>
Terry Tinson Saario, Ph.D. Trustee None
3141 Dean Court #1202
Minneapolis, MN 55416
Robert L. Senkler Chairman, President None
The Minnesota Mutual Life Chief Executive
Insurance Company Officer
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Trustee None
Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Vice President None
The Minnesota Mutual Life and Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Frederick T. Weyerhaeuser Trustee None
Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Minnesota Fire and Casualty Company
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
Open-end registered investment company offering shares solely to
separate accounts of The Minnesota Mutual Life Insurance Company
and Northstar Life Insurance Company:
Advantus Series Fund, Inc.
Wholly-owned subsidiary of MIMLIC Asset Management Company:
MIMILIC Sales Corporation
Advantus Capital Management, Inc.
<PAGE>
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
HomePlus Insurance Agency, Inc.
MCM Funding 1997-1, Inc.
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Wholly-owned subsidiaries of Minnesota Fire and Casualty Company:
HomePlus Insurance Company
Majority-owned subsidiary of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation (Tennessee)
Consolidated Capital Advisors, Inc. (Tennessee)
Majority-owned subsidiary of MIMLIC Sales Corporation:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Majority-owned subsidiaries of The Minnesota Mutual Life
Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
<PAGE>
Less than majority owned, but greater than 25% owned,
subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life
Insurance Company:
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Unless indicated otherwise, parenthetically, each of the
above corporations is a Minnesota corporation.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 14, 1997, the number of Contract Participants for
this Registration Statement were as follows:
Number of Record
Title of Class Holders
Group Variable Annuity Contracts 27,084
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute, found at
Minnesota Statutes 300.083, as amended, effective January 1,
1984, which requires indemnification of individuals only under
the circumstances described by the statute. Expenses incurred in
the defense of any action, including attorneys' fees, may be
advanced to the individual after written request by the board of
directors upon receiving an undertaking from the individual to
repay any amount advanced unless it is ultimately determined that
he or she is entitled to be indemnified by the corporation as
authorized by the statute and after a determination that the
facts then known to those making the determination would not
preclude indemnification.
Indemnification is required for persons made a part to a
proceeding by reason of their official capacity so long as they
acted in good faith, received no improper personal benefit and
have not been indemnified by another organization. In the case
of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other
acts arising out of official capacity: (1) where the person is
acting directly for the corporation there must be a reasonable
belief by the person that his or her conduct was in the best
interests of the corporation or; (2) where the person is serving
another organization or plan at the request of the corporation,
the person must have reasonably believed that his or her conduct
was not opposed to the best interests of the corporation. In the
case of persons not directors, officers or policy-making
employees, determination of eligibility for indemnification may
be made by a board-
<PAGE>
appointed committee of which a director is a
member. For other employees, directors and officers, the
determination of eligibility is made by the Board or a committee
of the Board, special legal counsel, the shareholder of the
corporation or pursuant to a judicial proceeding.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Group Variable Annuity Account
pursuant to the foregoing provisions, or otherwise, The Minnesota
Mutual Life Insurance Company and Minnesota Mutual Group Variable
Annuity Account have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by The Minnesota
Mutual Life Insurance Company and Minnesota Mutual Group Variable
Annuity Account of expenses incurred or paid by a director,
officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Group Variable Annuity
Account in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling
person in connection with the securities being registered, The
Minnesota Mutual Life Insurance Company and Minnesota Mutual
Group Variable Annuity Account 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 UNDERWRITERS
(a) The principal underwriter is MIMLIC Sales Corporation. MIMLIC
Sales Corporation also is the principal underwriter for eleven
other organized mutual funds (Advantus Spectrum Fund, Inc.,
MIMLIC Cash Fund, Inc., Advantus Bond Fund, Inc., Advantus Horizon
Fund, Inc., Advantus Money Market Fund, Inc., Advantus Mortgage
Securities Fund, Inc., Advantus Cornerstone Fund, Inc., Advantus
Enterprise Fund, Inc., Advantus International Balanced Fund, Inc.,
Advantus Venture Fund, Inc., Advantus Index 500 Fund, Inc.) and for
four additional separate accounts of The Minnesota Mutual Life
Insurance Company, all which offer contracts on a variable basis.
(b) Directors and officers of the Underwriter.
DIRECTORS AND OFFICERS
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Robert E. Hunstad Chairman of the Board Executive Vice
400 Robert Street North and Director President
St. Paul, Minnesota 55101
<PAGE>
George I. Connolly President, Chief Director, Broker-
400 Robert Street North Executive Officer and Dealer
St. Paul, Minnesota 55101 Director
Margaret Milosevich Vice President, Chief Manager
400 Robert Street North Operations Officer and
St. Paul, Minnesota 55101 Treasurer
Dennis E. Prohofsky Secretary and Director Senior Vice
400 Robert Street North President, General
St. Paul, Minnesota 55101 Counsel and
Secretary
Thomas L. Clark Assistant Treasurer Compliance Analyst
400 Robert Street North
St. Paul, Minnesota 55101
Margaret A. Berg Assistant Secretary Manager
400 Robert Street North
St. Paul, Minnesota 55101
(c) All commission and other compensation received by each
principal underwriter, directly or indirectly, from the
Registrant during the Registrant's last fiscal year:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
- ----------- ---------------- --------------- ----------- ------------
MIMLIC Sales
Corporation $1,365,712.11
*Note: This figure does not include compensation paid to
registered representatives of MIMLIC Sales Corporation who are
also licensed sales representatives of Minnesota Mutual. These
registered representatives are paid directly by Minnesota Mutual
on behalf of MIMLIC Sales Corporation.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act and the Rules promulgated
thereunder are in the physical possession of The Minnesota Mutual
Life Insurance Company, St. Paul, Minnesota 55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
<PAGE>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to 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 Contracts may be accepted.
(b) The Registrant hereby undertakes to include as part of any
application to purchase a contract offered by the prospectus
a space that an applicant can check to request a Statement
of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this form promptly upon written
or oral request.
(d) The Company hereby represents that it is relying upon and complies
with the provisions of Paragraph (1) through (4) of the SEC Staff's
No-Action Letter dated November 22, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See
American Counsel of Life Insurance; SEC No-Action Letter,
[1959 Transfer Binder] Fed. Sec. L. Rep. (CCH) para. 78,904 at 78,533
(November 22, 1988).
(e) The Minnesota Mutual Life Insurance Company hereby represents that, as to
the variable annuity policies which are the subject of this Registration
Statement, File No. 33-79534, the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by
The Minnesota Mutual Life Insurance Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant, Minnesota Mutual Group Variable Annuity
Account, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Amendment to the Registration Statement and
has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the Undersigned, thereunto duly authorized,
in the City of Saint Paul, and State of Minnesota, on the 23rd day of
April, 1997.
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By
------------------------------------------------
Robert L. Senkler
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor, The
Minnesota Mutual Life Insurance Company, has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
Undersigned, thereunto duly authorized, in the City of Saint Paul, and State of
Minnesota, on the 23rd day of April, 1997.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By
------------------------------------------------
Robert L. Senkler
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in their capacities with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman, President and
- ------------------------- Chief Executive Officer
Robert L. Senkler
* Trustee
- -------------------------
Giulio Agostini
* Trustee
- -------------------------
Anthony L. Andersen
* Trustee
- -------------------------
John F. Grundhofer
* Trustee
- -------------------------
Harold V. Haverty
* Trustee
- -------------------------
David S. Kidwell, Ph.D.
<PAGE>
* Trustee
- -------------------------
Reatha C. King, Ph.D.
* Trustee
- -------------------------
Thomas E. Rohricht
* Trustee
- -------------------------
Terry N. Saario, Ph.D.
* Trustee
- -------------------------
Michael E. Shannon
* Trustee
- -------------------------
Frederick T. Weyerhaeuser
Vice President April 23, 1997
- ------------------------- and Treasurer
Paul H. Gooding (chief financial officer)
Vice President April 23, 1997
- ------------------------- (chief accounting officer)
Gregory S. Strong
*By Attorney-in-Fact April 23, 1997
----------------------
Dennis E. Prohofsky
* Pursuant to power of attorney dated February 12, 1996, previously filed as
Exhibit 10(b) to this Registration Statement.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
1. The Resolution of The Minnesota Mutual Life Insurance
Company's Board of Trustees establishing Minnesota Mutual
Group Variable Annuity Account
3.(a) Form of Distribution Agreement
(b) Form of Broker-Dealer Sales Agreement
4.(c) The specimen copy of the Annuitization Endorsement, form
number 94-9312
(h) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9338
5.(a) Application, form number F. 18210 Rev. 12-81, Contract Owner
Application
(b) Application, form number MSRS 240 Rev. 9-94, Participant
Application
(c) Annuity Application, form number 95-9325
(d) Group TSA Variable Annuity Application, form number 95-9329
6.(a) The Articles of Re-Incorporation of The Minnesota Mutual
Life Insurance Company
(b) The By-Laws of The Minnesota Mutual Life Insurance Company
8. Deferred Compensation Business Plan Agreement
9. Opinion and Consent of Donald F. Gruber, Esq.
10.(a) Consent of KPMG Peat Marwick LLP.
13.(a) Money Market Segregated Sub-Account Performance Calculations
(b) Index 500 Segregated Sub-Account Performance Calculations
(c) Long-Term Corporate Segregated Sub-Account Performance
Calculations
(d) Vanguard/Wellington Segregated Sub-Account Performance
Calculations
(e) Fidelity Contrafund Segregated Sub-Account Performance
Calculations
(f) Scudder International Segregated Sub-Account Performance
Calculations
(g) Janus Twenty Segregated Sub-Account Performance Calculations
14.(a) Financial Data Schedule - MIMLIC Money Market Sub-Account
(b) Financial Data Schedule - Vanguard Long-Term Corporate Sub-
Account
(c) Financial Data Schedule - Vanguard/Wellington Sub-Account
(d) Financial Data Schedule - MIMLIC Index 500 Sub-Account
(e) Financial Data Schedule - Fidelity Contrafund Sub-Account
(f) Financial Data Schedule - Scudder International Fund Sub-
Account
(g) Financial Data Schedule - Janus Twenty Fund Sub-Account
(h) Financial Data Schedule - MIMLIC Asset Allocation Sub-
Account
(i) Financial Data Schedule - MIMLIC Growth Sub-Account
<PAGE>
CERTIFICATE OF SECRETARY
I, Robert J. Hasling, hereby certify that I am the Secretary of The Minnesota
Mutual Life Insurance Company, Saint Paul, Minnesota; that I have charge,
custody and control of the record books and corporate seal of said Company; and
that the attached is a true and correct copy of a resolution adopted by the
Board of Trustees of said Company at a meeting held June 14, 1993, at which
meeting a quorum was present and acting throughout.
I hereby certify that the attached resolution has not been modified, amended or
rescinded, and continues in full force and effect.
"RESOLVED, that the Company hereby establishes a separate account in
accordance with subdivision 1 of Section 61A.14 of Minnesota Statutes 1992,
as amended, for the purpose of issues contracts on a variable basis, which
account shall be known as Group Annuity Separate Account, or by such other
name as the Chief Executive Officer may determine;
FURTHER RESOLVED, that such separate account be registered as an investment
company pursuant to the provision of the Investment Company Act of 1940, as
amended, and that application be made for such exemptions from that Act as
may be necessary or desirable;
FURTHER RESOLVED, that there be prepared and filed with the Securities and
Exchange Commission in accordance with the provisions of the Securities Act
of 1933, as amended a registration statement, and any amendments thereto,
relating to such contracts on a variable basis as may be offered to the
public;
FURTHER RESOLVED, that the Chief Executive Officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized
and directed to take such further actions as may in their judgment be
necessary and desirable to implement the foregoing resolutions."
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal
of The Minnesota Mutual Life Insurance Company this 5th day of April, 1994.
(SEAL)
-----------------------------------
Secretary
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this ______ day of __________________, 1994, between and
among Minnesota Mutual Group Variable Annuity Account (the "Separate Account"),
a registered separate account of The Minnesota Mutual Life Insurance Company, a
Minnesota corporation ("Minnesota Mutual"), and MIMLIC Sales Corporation, a
Minnesota corporation ("Distributor").
WITNESSETH:
WHEREAS, Minnesota Mutual established the Separate Account, a separate
account of Minnesota Mutual; and
WHEREAS, the Separate Account offers for sale certain group variable
annuity contracts (the "contracts") which are deemed to be securities under the
Securities Act of 1933 ("1933 Act") and the laws of some states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of Minnesota Mutual, is
registered as a broker-dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 ("1934 Act") and is a member
of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the parties desire to have the Distributor act as principal
underwriter of the contracts and assume full responsibility for the securities
activities of each "person associated" (as that term is defined in Section 3(a)
(18) of the 1934 Act) with the Distributor and engaged directly or indirectly in
the sale of the contracts (the "associated persons"); and
WHEREAS, the parties desire to have Minnesota Mutual perform certain
services in connection with the sale of the contracts;
NOW THEREFORE, in consideration of the covenants and mutual promises of the
parties made to each other, it is hereby covenanted and agreed as follows:
1. The Distributor will act as the exclusive principal underwriter of the
contracts and as such will assume full responsibility for the securities
activities of all the associated persons. The Distributor will train the
associated persons, use its best efforts to prepare them to complete
satisfactorily the applicable NASD and state examinations so that they may be
qualified, register the associated persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. Unless otherwise permitted by applicable
state law, all persons engaged in the sale of the contracts must also be agents
of Minnesota Mutual.
2. The Distributor will assume full responsibility for the continued
compliance by itself and the associated persons with the NASD Rules of Fair
Practice and Federal and state laws, to the extent applicable, in connection
with the sale of the contracts. The Distributor will make timely filings with
the SEC, NASD, and any other regulatory authorities of all reports and any
<PAGE>
sales literature relating to the contracts required by law to be filed by the
Distributor. Minnesota Mutual will make available to the Distributor copies of
any agreements or plans intended for use in connection with the sale of
contracts in sufficient number and in adequate time for clearance by the
appropriate regulatory authorities before they are used, and it is agreed that
the parties will use their best efforts to obtain such clearance as
expeditiously as is reasonably possible.
3. With the consent of Minnesota Mutual, the Distributor may enter into
agreements with other broker-dealers duly licensed under applicable Federal and
state laws for the sale and distribution of the contracts and may perform such
duties as may be provided for in such agreements.
4. Minnesota Mutual, with respect of the contracts, will prepare and file
all registration statements and prospectuses (including amendments) and all
reports required by law to be filed with Federal and state regulatory
authorities. Minnesota Mutual will bear the cost of printing and mailing all
notices, proxies, proxy statements, and periodic reports that are to be
transmitted to persons having voting rights under the contracts. Minnesota
Mutual will make prompt and reasonable efforts to effect and keep in effect, at
its expense, the registration or qualification of its contracts in such
jurisdictions as may be required by Federal and state regulatory authorities.
5. Minnesota Mutual will (a) maintain and preserve in accordance with
Rules 17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained by it in connection with the offer and sale of the contracts, which
books and records shall be and remain the property of the Distributor and shall
at all times be subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act and by all other regulatory bodies having jurisdiction,
and (b) upon or prior to completion of each "transaction" as that term is used
in Rule 10b-10 of the 1934 Act, send a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by Minnesota Mutual acting in the capacity of agent for the Distributor.
6. All purchase payments and any other monies payable upon the sale,
distribution, renewal or other transaction involving the contracts shall be paid
or remitted directly to, and all checks shall be drawn to the order of,
Minnesota Mutual, and the Distributor shall not have or be deemed to have any
interest in such payments or monies. All such payments and monies received by
the Distributor shall be remitted daily by the Distributor to Minnesota Mutual
for allocation to the Account in accordance with the contracts and any
prospectus with respect to the contracts.
7. Minnesota Mutual will, in connection with the sale of the contracts,
pay on behalf of the Distributor all amounts (including sales commissions due to
the sale representatives of the Distributor or to broker-dealers who have
entered into sales agreements with the Distributor. The records in respect of
such payments shall be properly reflected on the books and records maintained by
Minnesota Mutual.
8. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from Minnesota Mutual the following
amounts:
2
<PAGE>
(a) Upon receipt of proper evidence of expenditures, an amount sufficient
to reimburse the Distributor for its expenses incurred in carrying out
the terms of this Agreement, and
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual .
9. As compensation for its services performed and expenses incurred under
this Agreement, Minnesota Mutual will receive all amounts deducted as
administrative, sales, mortality and expense risk charges under the contracts,
as specified in the contracts and in the prospectus or prospectuses forming a
part of any registration statement with respect to the contracts filed with the
SEC under the 1933 Act. It is understood that Minnesota Mutual assumes the risk
that the above compensation for its services under the contracts may not prove
sufficient to cover its actual expenses in connection therewith and that its
compensation for assuming such risk shall be included in and limited to the
foregoing charges described in said prospectus(es).
10. Minnesota Mutual will, except as otherwise provided in this Agreement,
bear the cost of all administrative services and expenses of the Separate
Account, including but not limited to such expenses as salaries, rent, postage,
telephone, travel, legal, actuarial and auditing fees, office equipment and
stationary, legal services and expenses, registration, filing and other fees, in
connection with (a) registering and qualifying the contracts and (to the extent
requested by the Distributor) the associated persons with Federal and state
regulatory authorities and the NASD and (b) printing and distributing all
contracts and all registration statements and prospectuses (including
amendments), notices, periodic reports, sales literature and advertising
prepared, filed or distributed with respect to the contracts.
11. Each party hereto shall advise the others promptly of (a) any action
of the SEC or any authorities of any state of territory, of which it has
knowledge, affecting registration or qualification of the contracts, or the
right to offer the contracts for sale, and (b) the happening of any event which
makes untrue any statement, or which requires the making of any change, in the
registration statement or prospectus in order to make the statements therein not
misleading.
12. The services of the Distributor and Minnesota Mutual under this
Agreement are not deemed to be exclusive and the Distributor and Minnesota
Mutual shall be free to render similar services to others, including, without
implied limitation, such other separate accounts as are not or hereafter
established by Minnesota Mutual, so long as the services of the Distributor and
Minnesota Mutual hereunder are not impaired or interfered with thereby.
13. This Agreement shall upon execution become effective as of the date
first above written, and shall continue in effect indefinitely unless terminated
by either party on 60 days' written notice to the other.
3
<PAGE>
14. This Agreement shall automatically terminate in the event of its
assignment, as that term is defined in the Investment Company Act of 1940, as
amended, unless an appropriate exemptive order is issued by the SEC with respect
to such assignment.
15. This Agreement shall be and is subject to the provisions of the
Investment Company Act of 1940, as amended, and the Rules and Regulations
thereunder.
16. This Agreement may be amended at any time by mutual consent of the
parties.
17. This Agreement shall be governed by and construed in accordance with
the law of Minnesota.
Witness: By:
--------------------------- -------------------------------------
Secretary Chairman of the Board and Chief
Executive Officer
MINNESOTA MUTUAL GROUP VARIABLE
ANNUITY ACCOUNT
The Minnesota Mutual Life
Insurance Company
Witness: By:
--------------------------- -------------------------------------
Secretary
MIMLIC SALES CORPORATION
Witness: By:
--------------------------- -------------------------------------
Vice President President
4
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
MIMLIC SALES CORPORATION
St. Paul, Minnesota
BROKER DEALER SALES AGREEMENT
FOR
GROUP INSURANCE AND SECURITIES PRODUCTS
WHEREAS, The Minnesota Mutual Life Insurance Company (hereinafter referred to as
"Minnesota Mutual") is under agreement with its wholly-owned subsidiary, MIMLIC
Sales Corporation (hereinafter referred to as "MIMLIC Sales"), to market and
service certain group insurance and securities products listed in the attached
Exhibit A, which is hereby made a part of this agreement, (hereinafter referred
to as "Securities Products"), as may be amended.
AND WHEREAS, Minnesota Mutual and MIMLIC Sales wish to authorize the entity
indicated below (hereinafter referred to as "Producer") to offer, solicit for
sale, and service the Securities Products under certain terms and conditions and
with certain liabilities and duties as hereinafter set forth;
AND WHEREAS, Producer wishes to offer, solicit for sale, and service the
Securities Products under terms and conditions and certain liabilities and
duties as hereinafter set forth to those individuals eligible to participate in
the Securities Products issued to the State of Minnesota for the Minnesota State
Deferred Compensation Plan (hereinafter referred to as the "Plan");
AND WHEREAS, MIMLIC Sales and Producer are registered as broker/dealers pursuant
to applicable state securities laws and Section 15 of the Securities Exchange
Act of 1934, as amended, and each is a member of the National Association of
Securities Dealers, Inc. (hereinafter referred to as "NASD") and are in
compliance with appropriate state insurance licensing requirements.
NOW, THEREFORE, Minnesota Mutual, MIMLIC Sales, and Producer agree as follows:
1. Minnesota Mutual and MIMLIC Sales hereby authorize Producer to offer,
solicit for sale, and service, and Producer does hereby agree to offer,
solicit for sale, and service, Securities Products only through persons who
are registered with the NASD as registered representatives of Producer, and
who are properly licensed with the appropriate state insurance and
securities department, a list of which registered representatives as of the
date hereof is attached as Exhibit B. Producer, through such registered
representatives, has the authority to make sales presentations to group
policyholders and to prospective purchasers and participants (hereinafter
collectively referred to as "Participants") of the Securities Products,
solicit master and Participant applications for the Securities Products,
enroll Participants, and perform services in respect of the Securities
Products as required by Minnesota Mutual or MIMLIC Sales, provided that in
making such presentations, solicitations, enrollments or in servicing the
Securities Products, Producer shall act as an independent contractor, and
not as an agent or employee of Minnesota Mutual or MIMLIC Sales.
2. Minnesota Mutual shall pay to Producer commissions on accumulation values
held under the Securities Products in respect of Participants to Minnesota
Mutual or its designated agent for the purchase of the Securities Products,
all in accordance with the terms and provisions of the attached Exhibit A
entered into between Minnesota Mutual and MIMLIC Sales and Producer for
each Securities Product. No person associated
<PAGE>
with Producer shall have any interest in any such commission payable by
Minnesota Mutual and MIMLIC Sales to Producer. Minnesota Mutual and MIMLIC
Sales reserve the right to decline any application for coverage of a
Participant under Securities Product without liability to anyone and to
refund in full all contributions received in connection with an application
which is declined.
3. Applications solicited by the Producer will be accepted only in the amounts
and on the terms which are set forth in the then current Prospectus (and/or
Statement of Additional Information, if any) for the Group Deferred
Variable Annuity Contract. Applications will be accepted only from those
individuals authorized to participate in the group contract issued to the
Plan.
4. The right is reserved to Minnesota Mutual and MIMLIC Sales to contract
separately with any employee, representative or agent of Producer for
whatever purpose, provided that the terms of any such contract do not
conflict with the provisions of this agreement. Nothing contained herein
shall prevent or restrict (i) Minnesota Mutual or MIMLIC Sales from
marketing said Securities Products through other stock brokerage firms,
insurance agents and brokers, and through its own organization, or (ii)
Producer from acting as agent and/or broker for other insurance companies,
whether or not affiliated with Producer, in any jurisdiction with respect
to any insurance or Securities Product, including Securities Products
similar or identical to those of Minnesota Mutual or MIMLIC Sales.
5. Producer shall not be entitled to and agrees to return to Minnesota Mutual
any commissions paid to Producer in connection with accumulation values of
any Participant who has elected to terminate his/her participation under
the Securities Product in accordance with its free-look provision, if any,
or under any other applicable state or federal law or regulations or NASD
rule or policy. Minnesota Mutual may apply any such earned fees to the
debit balance of Producer's commission account.
6. Any commission which has been advanced to Producer but is not earned, as
determined by Minnesota Mutual, may be deducted from the Producer's
commission account, or demand may be made for payment of same, and if
demand is made, Producer hereby agrees to promptly refund overpaid
commissions or fees to Minnesota Mutual.
Minnesota Mutual shall have first claim on all of Producer's earnings under
this agreement. Minnesota Mutual may keep all or any part of such earnings
and reduce any debt Producer owes MIMLIC Sales or Minnesota Mutual. While
MIMLIC Sales may release Producer's earnings while it owes a debt to MIMLIC
Sales, this does not mean MIMLIC Sales has waived this right of first claim
to Producer's earnings. MIMLIC Sales' claim also takes precedence over
claim of Producer's creditors. All Producer's earnings kept by MIMLIC
Sales will be used to reduce debt owed to MIMLIC Sales and Minnesota
Mutual.
7. Producer has and assumes full responsibility for the sales activities of
all persons engaged directly or indirectly in the securities and insurance
operations of Producer. Each such person is a person associated
(hereinafter sometimes referred to as "Associated Persons") of and with
Producer as defined in Section 3(a)(18) of the Securities Exchange Act of
1934, as amended, and, therefore, is a person for whom Producer has full
responsibility in connection with his/her training, supervision and control
as contemplated by Section 15(b)(4)(E) of such Act.
-2-
<PAGE>
8. MIMLIC Sales shall assume all statutory and regulatory responsibility as a
registered broker/dealer and member of the NASD with respect to the
offering for sale of the Securities Products, with the exception of the
following duties which shall be the sole obligation and responsibility of
Producer:
(a) Further to paragraph 1 hereof, Producer will make and be responsible
for sales presentations to group policyholders, prospective
purchasers, and Participants; solicitations of master and Participant
applications for the Securities Products; enrollments of prospective
purchasers and Participants under the Securities Products; and the
servicing of the Securities Products as required by Minnesota Mutual
and MIMLIC Sales; and
(b) Further to paragraph 5 hereof, Producer will be responsible for the
sales activities of its Associated Persons, including their training,
supervision and control. This responsibility shall specifically
include liability of the Producer for any private business
transactions, authorized or not by Producer, of or related to the
Associated Person, regardless of Producer's knowledge, actual or
implied, of such transactions. Producer shall indemnify and hold
harmless Minnesota Mutual and MIMLIC Sales from any claims, damages,
expenses, liabilities or causes of action, asserted or brought by
anyone, resulting from any private business transactions of any
Associated Person which are the subject of this paragraph.
9. Producer shall indemnify and hold harmless Minnesota Mutual and MIMLIC
Sales from any claims, damages, expenses, liabilities or causes of action,
asserted or brought by anyone, resulting from any negligent, fraudulent, or
intentional acts, omissions, or errors of Producer, its employees,
registered representatives, other representatives, or agents in the
offering for sale, solicitation, or servicing of the Securities Products;
and from any negligent, fraudulent, or intentional acts, omissions, or
errors of Producer, its employees, registered representatives, other
representatives, or agents in violation of federal or state laws or
regulations and NASD rules, of any nature, applicable to the offering for
sale, solicitation, or servicing of the Securities Products.
10. Producer shall confine the use of any advertising matter, prospectuses,
circulars, letters, pamphlets, schedules, stationery, broadcasting, or
sales material of any kind concerning Minnesota Mutual, MIMLIC Sales or the
Securities Products to such material as has been first approved in writing
by MIMLIC Sales and then by the NASD and/or the Securities and Exchange
Commission.
11. Upon receipt of a written request in proper form and in respect of a
Participant for the Partial Surrender or Surrender of the Participant
Account as defined in the provisions of the Securities Product, Minnesota
Mutual undertakes to make prompt payment of the amount requested and
payable under the Securities Product in accordance with the terms thereof,
and to make payment in accordance with any representations made in the
appropriate prospectus associated with the Securities Product or otherwise
in accordance with the Investment Company Act of 1940 or applicable rules
thereunder.
12. Producer agrees to remit in full to Minnesota Mutual, immediately upon
receipt, all contributions received and such applications, forms, and any
other required documentation obtained in respect of Participants in
Securities Products.
-3-
<PAGE>
13. MIMLIC Sales may terminate this agreement immediately and without notice if
the Producer fails to maintain it registration as a broker/dealer and
member of the NASD or fails to maintain its state insurance license, or if
Producer violates this agreement or fails to perform to MIMLIC Sales'
satisfaction under the terms and conditions of this agreement. MIMLIC
Sales and Producer shall have the right, upon thirty days' written notice
to the other, to terminate this agreement for whatever reason deemed
appropriate by such party. Notwithstanding the termination of this
agreement, MIMLIC Sales and Producer acknowledge that each of them shall be
individually and respectively liable, responsible and accountable for any
and all actions undertaken prior to the effective date of the termination
of this agreement.
14. Minnesota Mutual and MIMLIC Sales reserve the right, without notice to
Producer, to suspend, withdraw, or modify the offering of the Securities
Products or to change the conditions of their offering with respect to
anyone.
15. Minnesota Mutual and MIMLIC Sales retain the right during normal business
hours to have access to and audit the books and records of Producer
regarding any matters pertaining to the solicitation, sale or servicing of
the Securities Products sufficient to permit Minnesota Mutual to fulfill
all of its contractual obligations to group policyholders and Participants.
Minnesota Mutual and MIMLIC Sales shall have the right to conduct such an
audit during the currency of and up to five years immediately following the
termination of this agreement.
16. Producer shall secure and maintain a fidelity bond in at least the amounts
prescribed under Article III, Section 32 of the NASD Rules of Fair
Practice. Producer shall provide MIMLIC Sales with a copy of said bond
within 30 days after executing this agreement.
17. This agreement shall have no application in states whose laws, regulations
or administrative policies prohibit the payment of commissions on the sale
of Securities Products to any type of corporate or other entity, or whose
laws otherwise prohibit the performance of any of the essential terms of
this agreement.
18. Producer agrees to execute all Services and Commissions Agreements, or
similar documents, which Minnesota Mutual or MIMLIC Sales require during
the duration of this agreement. Producer acknowledges that the terms and
provisions of those agreements and documents also govern the relationship
among the parties to this agreement and that each agreement or document may
impose duties, responsibilities and liabilities in addition to those listed
herein.
19. Producer, Minnesota Mutual and MIMLIC Sales agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or judicial
proceeding with respect to any registered representative or other agent of
Producer or the Producer itself to the extent that such investigation or
proceeding is in connection with the Securities Products marketed under
this agreement. Without limiting the foregoing:
(a) Minnesota Mutual and MIMLIC Sales will promptly notify Producer of any
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by it with respect to the
Producer or any registered representative or other agent of the
Producer or with respect to Minnesota Mutual or MIMLIC Sales which may
affect the issuance of the Securities Products marketed under this
agreement.
-4-
<PAGE>
(b) The Producer will promptly notify Minnesota Mutual and MIMLIC Sales of
any customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Producer with respect to
it or to any registered representative or other agent of Producer in
connection with the Securities Products marketed under this agreement
or any activity in connection therewith.
20. In the case of a substantive customer complaint in connection with the
Securities Products marketed under this agreement, Minnesota Mutual, MIMLIC
Sales and Producer will cooperate in investigating such complaint, but any
response to such complaint will be the sole responsibility of MIMLIC Sales.
Producer has no right to start any legal proceedings on behalf of Minnesota
Mutual's and MIMLIC Sales or in their name. If Producer is sued because of
any unauthorized action or statement by Minnesota Mutual or MIMLIC Sales,
they agree to indemnify and save Producer harmless from any judgments,
settlements, attorneys fees and expenses.
Minnesota Mutual and MIMLIC Sales have no right to start any legal
proceedings on Producer's behalf or in its name. If Minnesota Mutual
and/or MIMLIC Sales are sued because of any unauthorized action or
statement by Producer, Producer agrees to indemnify and save it or them
harmless from any judgments, settlements, attorneys fees and expenses.
21. Any manuals, guides, books, tapes, programs and other materials, if any,
developed by Minnesota Mutual or MIMLIC Sales which may be delivered to the
Producer from time to time will be owned solely by Minnesota Mutual or
MIMLIC Sales, as the case may be; however, during such time as this
agreement is in effect between the parties hereto, if the Producer elects
to do so, its registered representatives may use any such manuals, guides,
books, programs and other materials which may have been delivered to the
Producer but may use them solely in the Producer's business hereunder, and
upon such terms and conditions as Minnesota Mutual or MIMLIC Sales may
establish at the time of such delivery. Upon termination of this
agreement, such items will be returned promptly to Minnesota Mutual.
22. Any notice to be given to a party to this agreement shall be in writing,
addressed to that party at the address shown in this agreement or at such
other address as the parties may designate in writing and provide to each
other. Any notice delivered by the mails, postage fully prepaid, shall be
deemed to have been given five (5) days after mailing or, if earlier, upon
receipt.
23. This agreement may not be assigned by any party without the written consent
of all the parties to this agreement.
24. This agreement including any attachments constitutes the entire agreement
and covenant between the parties on this contractual matter. This
agreement merges, supersedes and repeals all previous negotiations or
understandings between the parties relating to this subject matter.
25. This agreement may not be amended except by written agreement executed by
the parties.
26. This agreement shall be effective as of the date it is fully executed by
all parties.
27. This agreement shall be construed pursuant to the laws of the State of
Minnesota.
-5-
<PAGE>
IN WITNESS WHEREOF, Minnesota Mutual, MIMLIC Sales and Producer, by their duly
authorized officers, have caused this agreement to be executed.
Signed at St. Paul, Minnesota on the _____ day of __________________, 1994.
MIMLIC SALES CORPORATION
By
--------------------------------------
Registered Principal
- ----------------------------------------
(Title)
Signed at St. Paul, Minnesota on the _____ day of __________________, 1994.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By
--------------------------------------
- ----------------------------------------
(Title)
Signed at _____________________ this _____ day of __________________, 1994.
GREAT-WEST ASSURANCE COMPANY
Registered Broker/Dealer
98-0000673
________________________________________
Taxpayer Identification Number
By
--------------------------------------
(Title)
---------------------------------
By
--------------------------------------
(Title)
---------------------------------
-6-
<PAGE>
BROKER/DEALER SALES AGREEMENT
FOR
GROUP INSURANCE AND SECURITIES PRODUCTS
EXHIBIT A
I. THE SECURITIES PRODUCTS SHALL INCLUDE THE FOLLOWING:
(i) The Group Deferred Variable Annuity Contract issued by The Minnesota
Mutual Life Insurance Company and registered with the Securities and
Exchange Commission pursuant to the Minnesota Mutual Group Variable
Annuity Account Registration Statement under the Investment Company
Act of 1940; and
(ii) The Group Accumulation Annuity Contract issued by The Minnesota Mutual
Life Insurance Company and registered with the Securities and Exchange
Commission pursuant to the Minnesota Mutual Variable Fund D
Registration Statement under the Investment Company Act of 1940.
II. COMMISSIONS TO PRODUCER.
(i) Minnesota Mutual shall pay monthly to Producer a fee which is equal,
on an annual basis, to 0.33% of accumulation values held in the
Securities Products and attributable to the marketing efforts of
Producer under this Agreement, which accumulation values shall include
amounts held for systematic withdrawal but shall not include amounts
which have been applied to purchase any annuity option under the
Securities Products.
(ii) Whenever accumulation values held under the Securities Products and
attributable to the marketing efforts of Producer under this Agreement
are applied to purchase any annuity option thereunder, which for this
purpose shall not include amounts held for systematic withdrawal,
Minnesota Mutual shall pay to Producer a one-time payment in an amount
equal to 1.5% of the amount of such accumulation values applied to
purchase such annuity option.
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<PAGE>
BROKER/DEALER SALES AGREEMENT
FOR
GROUP INSURANCE AND SECURITIES PRODUCTS
EXHIBIT B
Registered Representatives of the Producer
Who Are Also Appointed Agents of Minnesota Mutual
James Bye
Julianne Bye
Mary Bye
James Gooley
Scott Hallett
Paul Johnson
Shirley Johnson
Herbert Lewis
Matthew Madson
Linda Malosky
John McEnaney
Richard O'Connor
Steve Olsonoski
Lexann Pryd-Kakuk
Carl Scheuman
John Timberg
Joyce Williams
William Williams, Jr.
-8-
<PAGE>
Minnesota Mutual ANNUITIZATION ENDORSEMENT
The Minnesota Mutual Life Insurance Company certifies that the Annuitant named
in the schedule below is entitled to the Annuity Payments described in this
schedule. Payments are to commence on the Annuity Commencement Date.
ANNUITY PAYMENT SCHEDULE
Contractholder ____________________________________
Group Contract Number ____________________________________
Annuitant ____________________________________
Annuitant's Social Security Number ____________________________________
Annuitant's Date of Birth ____________________________________
Annuity Commencement Date ____________________________________
Joint Annuitant ____________________________________
Joint Annuitant's Date of Birth ____________________________________
Annuitant's Beneficiary ____________________________________
Amount Applied to Purchase Fixed Annuity ____________________________________
Fixed Annuity Payment ____________________________________
Frequency ____________________________________
Amount Applied to Purchase Variable Annuity ____________________________________
Number of Variable Annuity Units ____________________________________
____________________________________
____________________________________
____________________________________
Initial Variable Annuity Payment ____________________________________
____________________________________
____________________________________
____________________________________
Form of Retirement Income ____________________________________
Secretary Registrar President
94-9312 The Minnesota Mutual Life Insurance Company
<PAGE>
GENERAL
Misstatement of Age. In the event the age or any other fact affecting an
annuitant's coverage has been misstated, the amount of any Retirement Income
payable under the Group Contract with respect to such annuitant shall be
adjusted to such amount as would have been paid had the true facts been stated.
Assignment. No assignment of any benefits under the Group Contract shall be
valid and such benefits shall be exempt from the claims to the maximum extent
permitted by law.
Evidence of Survival. When a payment under the Group Contract is contingent
upon the survival of any person, evidence of such person's survival must be
furnished either by personal endorsement of check drawn for said payment or
otherwise to the satisfaction of Minnesota Mutual.
This endorsement summarizes the provisions of the Group Contract pertaining to
the Retirement Income shown in the schedule. It does not constitute a contract,
and in the event of any conflict between the Group Contract and this
endorsement, the terms of the Group Contract shall prevail. The Group Contract
may be examined by annuitants at an accessible place designated by the
Contractholder.
<PAGE>
CONTRACT OWNER:
CONTRACT NUMBER:
PARTICIPANT:
CERTIFICATE NUMBER:
ANNUITY COMMENCEMENT DATE:
ISSUE DATE:
We have issued a group annuity contract to the Contract Owner. This certificate
is evidence of your coverage under the group annuity contract. You became a
participant under that contract when we first received purchase payments on your
behalf.
In this certificate, we will summarize the principal provisions of the group
annuity contract. This certificate is not an insurance contract. It does not
amend, extend or change the coverage under the group annuity contract.
All rights and benefits are determined solely by that contract and its terms.
You may examine the group annuity contract at a place designated by the Contract
Owner.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9338 Minnesota Mutual 1
<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
When we use the following words, this is what we mean:
THE PARTICIPANT, YOU, YOUR
The person named as the proposed participant in the application for
participation.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
ANNUITANT
The person who may receive lifetime benefits under this certificate. Joint
annuitants will be considered a single entity.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
this certificate.
PARTICIPATION YEAR
A period of one year starting on the first day of the month in which we first
receive purchase payments on your behalf, or on an anniversary of that date.
PURCHASE PAYMENTS
Amounts paid to us for credit to your participant account, as consideration for
the benefits provided by the group annuity contract.
DEFERRED COMPENSATION
A program of retirement savings.
PLAN
A deferred compensation plan established by the Contract Owner and funded by the
contract under which this certificate is issued. No obligation under the plan
is assumed by us, nor shall the plan or any amendment thereto be construed to
amend or modify the contract in any way except with our express written consent.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
The sum of your values in the separate account. It is composed of your interest
in one or more sub-accounts of the separate account. Your interest in the sub-
accounts shall be valued separately. The total of those values will be the
separate account accumulation value.
WITHDRAWAL VALUE
The value of your participant account which is available for withdrawal. This
value equals the
95-9338 Minnesota Mutual 2
<PAGE>
accumulation value, subject to the deferred sales charge during the first six
participation years. However, if withdrawals during the first calendar year are
equal to or less than 10% of the purchase payments made during the first year of
participation and, if in subsequent calendar years they are equal to or less
than 10% of the accumulation value at the end of the previous calendar year, the
charge will not apply. If withdrawals in any calendar year exceed that amount,
the deferred sales charge will apply to the excess.
SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable Annuity
Account. This separate account was established by us for this class of contract
under Minnesota law. The separate account is composed of several sub-accounts.
The assets of the separate account are ours. Those assets are not subject to
claims arising out of any other business of ours.
WRITTEN REQUEST
A request in writing signed by you. We may also require that this certificate
be sent in with your written request.
ANNUITY PAYMENTS
Payments made at regular intervals to you or to any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
An annuity with equal payments which remain fixed during the payment period.
VARIABLE ANNUITY
An annuity payable from the separate account with payments which increase or
decrease in amount to reflect the investment experience of the separate account
and its sub-accounts.
AGE
Age of a person at nearest birthday.
PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made to us, by the Contract Owner, at our home
office.
HOW OFTEN DO YOU MAKE PURCHASE PAYMENTS?
You may make purchase payments as agreed upon between you and the Contract
Owner.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at anytime. You may begin again at
anytime before annuity payments start unless you have taken a lump sum benefit
payment of your entire account.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
95-9338 Minnesota Mutual 3
<PAGE>
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated to the separate account and its sub-accounts. Initially, you
indicate your allocation in the application. Later, you may change your
allocation for future purchase payments by giving us written or telephone
notice. Applications received without allocation instructions will be treated
as incomplete.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into several sub-accounts. Purchase payments
may be applied to one or more of the sub-accounts. We reserve the right to add,
combine or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. Purchase payments are invested in the funds at their net asset value.
The net asset value per share for each fund is determined by adding the current
value of securities and all other assets held by such fund, subtracting
liabilities, and dividing the remainder by the number of shares outstanding.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing accumulation values, future
purchase payments and future annuity payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts, as determined by us. If this type of transfer is made, the term
"separate account," as used in this contract, shall then mean the separate
account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) de-register the separate account under the Investment Company Act of 1940;
(b) restrict or eliminate voting rights of Contract Owners or other persons who
have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
- --------------------------------------------------------------------------------
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account.
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on withdrawals during your first
six participation years. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be canceled of a value equal to the charge and the withdrawal.
95-9338 Minnesota Mutual 4
<PAGE>
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The charge is indicated in the table shown below. These percentages decrease
uniformly by .083% for each of the first 72 months of participation.
End of
Participation Year Charge
------------------ ------
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
In no event will the amount of deferred sales charge exceed 9% of the total
purchase payments made on your behalf.
WHAT CHARGES ARE ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. They are the
mortality risk charge, the expense risk charge and the administrative charge.
These charges are deducted on each valuation date from the assets of the
separate account. On an annual basis, they may be as much as 1.65% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, it shall not
exceed .60% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This charge compensates us for the guarantee that the deductions provided in
this contract will be sufficient to cover our actual expenses. Actual expense
results incurred by us shall not adversely affect any payments or values under
this contract. On an annual basis, it shall not exceed .65% of the net asset
value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
The administrative charge is to compensate us for the administrative expenses
incurred by us. On an annual basis, it shall not exceed .40% of the net asset
value of the separate account.
VALUATION
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HOW IS YOUR ACCUMULATION VALUE DETERMINED?
The separate account value will include all sub-accounts of the separate
account. For each sub-account of the separate account, it is equal to the
number of accumulation units held on your behalf multiplied by the accumulation
unit value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation
95-9338 Minnesota Mutual 5
<PAGE>
units will not be affected by changes in the accumulation unit value. However,
the total number of accumulation units will be affected by future contract
transactions. In addition, the units of each sub-account will be increased by
subsequent purchase payments and transfers to that sub-account. The units of
each sub-account will be decreased by transfers or withdrawals from that sub-
account and any applicable deferred sales charge.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account. The value of an
accumulation unit for each sub-account was originally set at $1.00 on the first
valuation date. For any subsequent valuation date, its value is equal to its
value on the preceding valuation date multiplied by the net investment factor
for that sub-account for the valuation period ending on the subsequent valuation
date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of no more than 1.65% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(b) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period;
divided by
(c) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
HOW IS THE ANNUITY UNIT VALUE DETERMINED?
The value of an annuity unit for a sub-account is determined monthly as of the
first day of the month. The value is equal to the annuity unit value for that
sub-account as of the first day of the preceding month multiplied by the product
of (a) .996338; and (b) the sub-account investment factor. This investment
factor is the accumulation unit value for that sub-account on the valuation date
next following the fourteenth day of the preceding month divided by the
accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that value on the first day
of the next month.
WITHDRAWAL BENEFITS
- --------------------------------------------------------------------------------
MAY I WITHDRAW FUNDS FROM MY ACCOUNT?
Yes. However, withdrawals may be made only for the purpose of providing benefit
payments in accordance with the provisions of the plan and contract; or such
other circumstances as may be agreed to by us and the Contract Owner. All
withdrawals will be on a first in, first out (FIFO) basis.
MAY I WITHDRAW FUNDS FROM MY ACCOUNT FOR TRANSFER TO OTHER OPTIONS AVAILABLE IN
THE PLAN?
Yes. Amounts withdrawn from the sub-accounts of the separate account are not
limited. Such withdrawals may be taken once per year or in 12 monthly
installments.
95-9338 Minnesota Mutual 6
<PAGE>
WHAT AMOUNT IS AVAILABLE FOR WITHDRAWAL?
The amount available for withdrawal shall be the accumulation value less any
applicable deferred sales charge. If withdrawals during the first calendar year
of participation year are equal to or less than 10% of the total purchase
payments made on your behalf, the charge shall not apply. In subsequent
calendar years, there will be no charge for withdrawals equal to or less than
10% of your prior calendar year end accumulation value. If withdrawals in any
calendar year exceed 10% of that accumulation value, the deferred sales charge
will apply to the excess.
TRANSFER PROVISIONS
- --------------------------------------------------------------------------------
WHAT IS A TRANSFER?
A transfer is a reallocation of funds within this contract. It may be between
the sub-accounts of the separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. Transfers may be made by your written request. For transfers from the
sub-accounts of the separate account we will make the transfer on the basis of
the sub-account accumulation unit value on the valuation date coincident with or
next following the day we receive the request at our home office.
DO ANY RESTRICTIONS APPLY?
No. Transfers from the sub-accounts of the separate account are not limited as
to amount or frequency.
All transfers shall be on a first in, first out (FIFO) basis.
AMOUNT PAYABLE AT DEATH
- --------------------------------------------------------------------------------
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, the death benefit shall be
equal to the greater of: (1) the accumulation value, determined as of the
valuation date coincident with or next following the day due proof of death is
received by us; or (2) the total of purchase payments received by us on your
behalf, less any prior withdrawals.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death, satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN WILL WE PAY DEATH BENEFITS?
We will pay death benefits in a single sum to the designated beneficiary, unless
the
95-9338 Minnesota Mutual 7
<PAGE>
beneficiary has elected an annuity payment option. Payment will be made within
seven days after we receive due proof of death of the participant.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE YOU?
If a beneficiary dies before you, that beneficiary's interest in the participant
account ends with that beneficiary's death. Only those beneficiaries who
survive you will be eligible to share in the accumulation value. If no
beneficiary survives you, we will pay the accumulation value to the executors or
administrators of your estate.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You, or the annuitant if annuity payments have begun, can file a written
request with us to change the beneficiary.
A written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date the
request was signed. However, if you or the annuitant die before the request has
been recorded, the request will not be effective as to those death proceeds we
have paid before the request was recorded in our home office records.
ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us or the Contract Owner in writing that annuity payments are to
be made, when these payments are to begin, and what annuity form and option has
been selected. This notice must be accompanied by a verification signed by the
plan administrator which states that the elected form of benefit distribution
satisfies the terms of the plan. We must receive this notice at least 30 days
in advance of the date annuity payments are to begin. Annuity payments are made
on the first day of the month. Once annuity payments commence, you may not
change the annuity payment option or cancel future annuity payments to receive a
lump sum.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
When an annuity is to begin, we use your accumulation value to provide an
annuity under the options selected. We require that each monthly annuity
payment be at least $20. If the first monthly annuity payment would be less
than $20, we reserve the right to pay you the accumulation value in a lump sum
in lieu of all other rights under this contract. The requirement that the first
monthly payment be at least $20 shall be imposed separately for the portion
payable as a fixed annuity and for the portion payable as a variable annuity
under each of the sub-accounts of the separate account.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant before payments begin.
IF YOU MAKE NO ELECTION, WHEN DOES THE ANNUITY BEGIN?
If you do not elect another date, annuity payments will begin on the later of
the April 1st of the calendar year following the calendar year in which you
attain age 70 1/2 , or the April 1st of the calendar year following the calendar
year in which you retire.
95-9338 Minnesota Mutual 8
<PAGE>
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of a life annuity with period certain of 120 months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. Separate account accumulation units will be applied to provide a variable
annuity.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
Both fixed and variable annuity payments are available under the following
options:
Option 1 - Life Annuity - annuity payments payable monthly for the lifetime of
the annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 - Life Annuity with a Period Certain - annuity payments payable monthly
for the lifetime of the annuitant; provided, if the annuitant dies before
payments have been made for the entire period certain, those remaining certain
payments will be made to the beneficiary.
The period certain may be for 120 months; 180 months; or for 240 months.
Option 3 - Joint and Last Survivor Annuity - annuity payments payable monthly
for the joint lifetimes of the annuitant and a designated joint annuitant. The
payments end with the last payment due before the survivor's death.
Option 4 - Fixed Period Annuity - annuity payments payable monthly for a fixed
period of from five to twenty years. If the annuitant dies before all payments
for the fixed period are received, payments will continue for the remainder of
the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING ANNUITY
PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
payments paid in a lump sum. This right exists under Options 2 and 4.
The lump sum payment will be the commuted value of the remaining payments. It
will be based on the then current dollar amount of one payment, using the same
interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
We have included tables of guaranteed annuity rates in the group annuity
contract. Those rates are guaranteed for your use as long as you are a
participant.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The method for determining the first and subsequent variable annuity payments is
described in the group annuity contract. We guarantee that the mortality
assumptions and method of determining payments will be guaranteed for as long as
you are a participant.
95-9338 Minnesota Mutual 9
<PAGE>
WILL THESE RATES ALWAYS BE USED?
No. If, when you elect your annuity option, we are using annuity rates for this
class of contract which are more favorable than the guaranteed rates, we will
use the more favorable rates.
ARE TRANSFERS PERMITTED DURING THE ANNUITY PERIOD?
Yes. Amounts held as annuity reserves for a variable annuity may be transferred
among the sub-accounts during the annuity period. Amounts held as annuity
reserves for a variable annuity may also be transferred to provide a fixed
annuity. Transfers must be made by written request and received by us at least
30 days in advance of the due date of the annuity payment subject to the
request. The annuitant and joint annuitant, if any, must make such an election.
Transfers of annuity reserves from any sub-account must be at least equal to: 1)
$5,000; or 2) the entire amount of reserve remaining in that sub-account. In
addition, annuity payments must have been in effect for at least 12 months
before a change may be made. Such transfers are allowed only once every 12
months. Once fixed annuity payments begin, reserves may not be transferred back
to provide a variable annuity.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment of accumulation value in lieu of the
application of accumulation value to provide annuity payments. We must receive
your written request at least 30 days prior to the annuity commencement date.
After such lump sum settlement has been made, you shall have no further rights
under this contract.
TERMINATION PROVISIONS
- --------------------------------------------------------------------------------
WHO CAN TERMINATE THE CONTRACT?
The group annuity contract may be terminated by us or by the Contract Owner. We
may terminate the contract only if we need to amend the contract and the
Contract Owner does not consent to such amendment.
WHAT HAPPENS IF THE CONTRACT TERMINATES?
Suspension of purchase payments or termination of the contract will have no
effect on you if annuity payments have begun. Otherwise, your accumulation
values will continue to be maintained under the contract until: (a) withdrawn to
provide benefits; (b) applied to provide annuity payments; or (c) transferred to
the Contract Owner in accordance with the provisions of the group annuity
contract.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
CAN THE CONTRACT BE MODIFIED?
Yes. It may be modified by written agreement between us and the Contract Owner.
No such modification shall adversely affect your rights unless the modification
is made to comply with a law or government regulation. No change or waiver of
any of the provisions of the contract will be valid unless made in writing by us
and signed by our president, a vice president, our secretary or an assistant
secretary. No agent or other person has the authority to change or waive any
provision of the contract.
WILL YOU RECEIVE DIVIDENDS?
95-9338 Minnesota Mutual 10
<PAGE>
Each year we will determine if this contract will share in our divisible
surplus. We call your share a dividend. Dividends, if received, will be
credited as determined by us.
HOW WILL YOU KNOW THE VALUE OF YOUR PARTICIPANT ACCOUNT?
Before annuity payments commence, at least annually, you will receive a report.
This report will summarize transactions for the period covered by the report.
It will show the current accumulation value and the current separate account
accumulation unit values. The report will be as of a date within two months of
its mailing.
WHAT IF A PERSON'S AGE IS MISSTATED?
If a person's age has been misstated, the amount payable under the contract as
an annuity will be that amount which would have been paid based upon the
person's correct age. In the case of an overpayment, we may either deduct the
required amount from that person's future annuity payments; or, require the
person to pay us in cash; or both may be done until we are repaid. In the case
of an underpayment, we will pay the required amount with the next payment.
CAN YOU ASSIGN YOUR PARTICIPANT ACCOUNT?
No. Your accumulation value may not be assigned, sold, transferred, discounted
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose. To the maximum extent permitted by law,
your accumulation value and any benefits payable under the contract shall be
exempt from the claims of your creditors.
MAY YOU BE ASKED TO PROVIDE US WITH ADDITIONAL INFORMATION?
Yes. You must provide any other information we need to administer the contract
and your participant account. If you cannot do so, we may ask the person
concerned for that information. We shall not be liable for any payment based
upon information given to us in error or not given to us.
95-9338 Minnesota Mutual 11
<PAGE>
Application is Hereby Made to
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
OF SAINT PAUL, MINNESOTA
by
________________________________________________________________________________
whose main office address is____________________________________________________
________________________________________________________________________________
for Group Contract Number_______________________________________________________
Said Group Contract is hereby approved and the terms thereof are hereby
accepted.
This application is executed in duplicate, one counterpart being attached to
said Contract and the other being returned to The Minnesota Mutual Life
Insurance Company.
It is agreed that this application supersedes any previous application for the
said Contract.
Executed at_____________________________Date______________________________,19___
________________________________________
Full Name of Applicant
Witness_________________________________By______________________________________
Minnesota Mutual
Representative _________________________
F.18210 Rev. 12-81
<PAGE>
<TABLE>
<S><C><C>
/ / NEW
/ / CHANGE
/ / STOP [LOGO] MINNESOTA STATE DEFERRED COMPENSATION PLAN
/ / ONE-TIME APPLICATION FOR SALARY DEFERRAL
- ---------------------------------------------------------------------------------------------------------------------------------
1. NAME (PRINT LAST, FIRST, INITIAL) 2. SOCIAL SECURITY NO. 3. DATE OF BIRTH 4. SEX
/ / Male / / Female
- ---------------------------------------------------------------------------------------------------------------------------------
5. STREET ADDRESS / / ADDRESS CHANGE 6. CITY 7. STATE 8. ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------------
9. EMPLOYER DEPT./DIV. TELEPHONE 10. PAYROLL CYCLE (Check one)
/ / Monthly / / Bi-Weekly
/ / Semi-monthly / / Weekly / / Other______________
- ---------------------------------------------------------------------------------------------------------------------------------
11. INVESTMENT AMOUNT
Specify the whole dollar amount to be deferred from your salary each pay period to each of the following product providers.
The amount cannot be less than $10.00 per product provider selected. Amounts listed below totally replace previous selections.
- -------------------- -------------------- -------------------- --------------------
$ .00 + $ .00 + $ .00 = $ .00
- -------------------- -------------------- -------------------- --------------------
SUPPLEMENTAL INVESTMENT MINNESOTA MUTUAL GREAT-WEST GRAND TOTAL
FUND MANAGED BY THE FUTURE FUNDS II PER PAY PERIOD
STATE INVESTMENT BOARD
12. INVESTMENT SELECTION
The amounts deferred are to be invested in the following percentages. Use only whole numbers. The percentages must total 100%
per product provider. Changes affect only future investments.
SUPPLEMENTAL INVESTMENT MINNESOTA MUTUAL GREAT-WEST
FUND MANAGED BY THE FUTURE FUNDS II
STATE INVESTMENT BOARD Use whole numbers Use whole numbers
% Minnesota Mutual % 36 Month
Use whole numbers -------------- General Account -------------- Guaranteed Certificate Fund
% Fixed
- -------------- Interest Acct. % MIMLIC % 84 Month
-------------- Money Market -------------- Guaranteed Certificate Fund
% Money Market Acct. % Vanguard % Great-West
- -------------- -------------- Long Term Corporate -------------- Money Market Portfolio
% Bond Market Acct. % Vanguard % Voyageur U.S.
- -------------- -------------- Wellington -------------- Government Securities
% Income Share Acct. % MIMLIC % Fidelity Adviser
- -------------- -------------- Index 500 -------------- Income and Growth
% Common Stock % Fidelity % Vista Growth
- -------------- Index Account -------------- Contrafund -------------- and Income
% Growth Share Acct. % Scudder % Great-West Growth
- -------------- -------------- International -------------- Fund I (Janus)
% International Acct. % Janus Twenty % Twentieth Century
- -------------- -------------- -------------- Ultra Investors
- -------------- --------------
100% TOTAL* 100% TOTAL* % Great-West & International
- -------------- -------------- -------------- Equity (Templeton)
--------------
100% TOTAL*
*See Memo of Understanding - Items 6 & 7. --------------
13. CURRENT ANNUAL SALARY
Needed to confirm Deferred Compensation does not exceed annual maximum as stated on reverse side (see item #3) $
-------------
ANNUAL SALARY
14. CATCH UP PROVISION - (SEE ITEM #3 ON REVERSE SIDE)
This deferred amount utilizes the catch up provision for three consecutive years beginning January __ and ending December __.
15. BENEFICIARY
Unless you designate otherwise, your Deferred Compensation beneficiary will be your surviving spouse, or if none, your
estate. Your last beneficiary designation on file will be in effect unless you elect to designate a new beneficiary or a
beneficiary other than your surviving spouse. To designate a new beneficiary, complete a Minnesota State Deferred
Compensation Plan Beneficiary form.
16. REQUIRED SIGNATURES (SEE REVERSE SIDE)
I HAVE READ AND ACKNOWLEDGE THE ABOVE PROVISIONS AND THOSE CONTAINED ON THE REVERSE SIDE OF THIS FORM.
- ------------------------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
X X
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
FOR INTERNAL USE ONLY TAX I.D. NUMBER GROUP POLICY #
- -----------------------------------
COMPANY DATE REC'D DATE PROCESSED
- ------------------------------------------------------------------------------------------------
DEPARTMENT/DIVISION P.P. END DATE
EFFECTIVE PAY
- ------------------------------------------------------------------------------------------------ DATE
PLAN REPRESENTATIVE'S SIGNATURE EMPLOYER SIGNATURE ----------------------------
- ------------------------------------------------------------------------------------------------ ----------------------------
MSRS 240 Rev. 12-95
RETURN TO YOUR SERVICE REPRESENTATIVE:
National Benefits, Inc. OR Ochs Services, Inc. The Prospectuses for the Minnesota Mutual
300 Prairie Center Drive, Suite 310 85 E. 7th Place, Suite 285 Separate Account and the Fund have a Statement
Eden Prairie, MN 55344 St. Paul, MN 55101 of Additional Information. The Supplemental Fund
(612) 941-0800 (612) 223-4300 and Great-West Fund also have additional information.
1-800-732-1200 1-800-825-6247 Would you like a copy of the additional information
for the funds you have selected: / / Yes / / No
</TABLE>
<PAGE>
MINNESOTA STATE DEFERRED
COMPENSATION PLAN
MEMO OF UNDERSTANDING
1. I understand that payment from my Deferred Compensation Plan account
cannot begin until termination of employment except for an approved
unforeseeable emergency which the IRS regulations define as major
unreimbursed expenses from illness or accident, impending personal
bankruptcy, disability or major property loss. Participants are expected
to utilize liquid savings to cover other emergencies. Deferred
Compensation Plan payments are subject to taxation as ordinary income
in the year received.
2. I understand that IRS regulations require a distribution date to be
established by January 31st following the calendar year employment is
terminated.
3. My total annual Deferred Compensation is subject to contribution
limitations in accordance with Section 457 of the Internal Revenue Service
code. The maximum deferral is 25 percent of gross taxable compensation,
not to exceed $7,500 per year. The maximum is reduced by any contribution
to a Tax Sheltered Annuity Plan, IRS Code 403(b). A special catch-up
provision may allow deferral of up to $15,000 per year for three (3)
calendar years prior to normal retirement age. Contact your service
representative for additional details. Note that any employer
contributions and annual leave deferrals are included in determining the
annual maximum.
4. I have received a brochure detailing the general features, investment
options and transferability of the three product providers as well as a
prospectus or detailed investment option description of the company
selected. I am aware of all adminstrative costs of each investment option
as outlined in the Plan materials.
5. I understand that this agreement shall be effective not earlier than the
first pay date the month following receipt of this completed application
and shall continue in effect until modified or terminated in accordance
with the Deferred Compensation Rules.
6. I understand that payments and values provided by a variable annuity
contract or mutual funds may be variable and are not guaranteed as to
dollar amount. The employer, product provider and administrator are not
responsible for a decline in value due to investment results.
7. I understand that payments and values provided by a fixed annuity
contract are not guaranteed and are backed only by the financial strength
of the product provider.
The Minnesota State Deferred Compensation Plan is administered by the
Minnesota State Retirement System, 3rd Floor Minnesota State Bank Bldg.,
175 West Lafayette Frontage Road South at Plato, St. Paul, MN 55107-1425.
Telephone: (612) 296-2761; Toll Free: 1-800-657-5757, FAX: (612) 297-5238.
Your social security number and other requested information on this
authorization is private data. The data will be used to determine your
eligibility and to process your payroll deductions for the Minnesota Public
Employees' Deferred Compensation Plan. You are not legally required to
supply this data. However, because the payroll system is based on social
security numbers, we will not be able to process your payroll deduction
without it. The data may be supplied to the Minnesota State Retirement
System, The Minnesota Mutual Life Insurance Company, Great-West Life
Assurance Company, your employing agency, the Department of Finance and
Employee Relations, and federal and state tax officials, for payroll and
tax purposes.
<PAGE>
MINNESOTA MUTUAL ANNUITY APPLICATION
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Annuity Services - 400 Robert
Street North - St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
For Group, Flexible Contributions, Deferred Annuity Under Group 403(b)
Contracts issued to the Church of the Nazarene, Board of Pensions and
Benefits USA and for a Group Variable Annuity Contract issued to the
Church of the Nazarene Tax Sheltered Annuity Plan Trust
A. Full Name of Participant (Employee)
---------------------------------------------------------------------------
Sex Age Date of Birth Place of Birth
/ /M / /F (Mo., Day, Year) (City, State)
---------------------------------------------------------------------------
Residence No. Street
---------------------------------------------------------------------------
City State Zip
---------------------------------------------------------------------------
Occupation
---------------------------------------------------------------------------
Participant's Social Security Number
---------------------------------------------------------------------------
B. Name of Employer
---------------------------------------------------------------------------
Address of Employer
No. Street
---------------------------------------------------------------------------
City State Zip
---------------------------------------------------------------------------
C. District Affiliation (if any)
---------------------------------------------------------------------------
D. Spouse's Name
---------------------------------------------------------------------------
E. Date of Birth Spouse's Social Security Number
---------------------------------------------------------------------------
F. Name of Beneficiary Date of Birth S.S. Number
---------------------------------------------------------------------------
Relationship
---------------------------------------------------------------------------
If living, otherwise to:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Unless otherwise stated, the designation is revocable and beneficiaries of
like class shall share equally with right of survivorship.
G. Special Instructions or Remarks
------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
H. Check annuity contract options for which you are applying:
/ / Option A - Flexible Benefit Options Account
/ / Option B - Limited Benefit Options Account
/ / Option D - Group Variable Annuity Account with a purchase payment
account allocation of:
% MIMLIC Money Market
-----
% MIMLIC Growth
-----
% MIMLIC Asset Allocation
-----
% MIMLIC Index 500
-----
% Vanguard Long Term Corporate
-----
% Vanguard Wellington
-----
% Fidelity Contrafund
-----
% Scudder International
-----
% Janus Twenty
-----
100 % TOTAL MUST EQUAL 100%
FOR OPTION D, COMPLETE THE DISCLOSURE FORM ON THE REVERSE SIDE.
The Prospectuses for the Group Variable Annuity Account and the MIMLIC
Series Fund, Inc. each refer to a Statement of Additional Information.
Would you like us to send you a copy? / / Yes / / No
I. I represent that the statements and answers in this application are full,
complete, and true to the best of my knowledge. I agree that they are to
be considered the basis of any annuity issued.
- --------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
- --------------------------------------------------------------------------------
X
- ------------------------------------------------------------ ---------------
EMPLOYER
----------------------------------------------------------------------
per X
----------------------------------------------------------------------------
(Treasurer of Secretary of Board)
signed at Date
------------------------------------------------- ----------------
- --------------------------------------------------------------------------------
TO BE COMPLETED FOR OPTION D BY AUTHORIZED REPRESENTATIVE
- --------------------------------------------------------------------------------
To the best of my knowledge, this contract / / will / / will not replace or
change an existing insurance or annuity contract. I certify that a current
Prospectus was delivered. No written sales materials were used other than those
approved by the Home Office. I have determined this to be a suitable investment
based on my knowledge of the participant's investment objectives and financial
circumstances.
- --------------------------------------------------------------------------------
SIGNATURE OF AUTHORIZED REPRESENTATIVE AGENCY CODE AGENT CODE
X 2064 421
- --------------------------------------------------------------------------------
APPLICATION FOR OPTION D BECOMES EFFECTIVE ONLY UPON ACCEPTANCE BY MIMLIC SALES
CORPORATION
- --------------------------------------------------------------------------------
ACCEPTED BY DATE CASE NUMBER
X 2856424-
- --------------------------------------------------------------------------------
95-9325 FOR OPTION D, ALSO COMPLETE REVERSE SIDE CERTIFICATE #
-------------------------
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT DISCLOSURE
(Must be completed for Option D - Group Variable Annuity Applications)
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
OCCUPATION NUMBER OF DEPENDENTS AGES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
FINANCIAL PROFILE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
APPROXIMATE ANNUAL INCOME $ RANK YOUR INVESTMENT OBJECTIVES FROM 1 to 5
---------- (1 is of greatest importance, 5 is of least importance)
APPROXIMATE NET WORTH $
---------- Conservative Income/Capital Preservation
TAX BRACKET % -----
---------- Current Income
ASSET BREAKDOWN APPROXIMATE -----
Conservative Growth/Total Return
SAVINGS (MONEY MARKET FUNDS) $ -----
---------- Growth
INSURANCE ($ FACE AMOUNT) $ -----
--------- ---------- Aggressive Growth
(Cash Value) -----
-------------------------------------------------------
STOCKS/BONDS/MUTUAL FUNDS $
---------- RISK TOLERANCE (check one box)
REAL ESTATE $
---------- / / Low Risk
BUSINESS INTERESTS $
---------- / / Moderate Risk
RETIREMENT FUNDS $
---------- / / High Risk
- -----------------------------------------------------------------------------------------------------------
SIGNATURE
- -----------------------------------------------------------------------------------------------------------
</TABLE>
In connection with your investment, please read the following:
- I understand that provisions of Section 403(b)(11) of the Internal Revenue
Code restrict the timing of distributions from the tax sheltered annuity
contracts such as that described in this application. Distributions are
restricted to certain stated events such as: attainment of age 59-1/2,
separation from service, disability, death, or hardship. I understand
that the restrictions do not alter my contractual ability to transfer the
accumulation values among the sub-accounts available under the contract or
to exchange my TSA contract for another, provided that the transaction
meets the requirements of the Code and that any required agreements,
including those requiring the consent of the employer, are executed prior
to the transfer.
- I have received and had an opportunity to read a current copy of the
prospectus for this investment prior to investing.
- I have been informed of all charges and expenses associated with this
investment.
- I realize that this may be a long-term investment which should be held for
a number of years. Surrendering in the short term may result in a loss.
- I am aware there is no assurance that the initial objective(s) of this
investment will be achieved. Thus, when I ultimately surrender the
investment, I may receive more or less than the amount I invested.
- I realize that the element of risk is inherent in any investment - what
varies is the degree of risk. Generally, the greater the expected return,
the greater the risk I must be willing to assume.
- Given my personal circumstances, this is a suitable investment.
I believe the information provided on this form is true and accurate to the best
of my knowledge. I have read and agree with the above statements.
- --------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
X
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
GROUP TSA
MINNESOTA MUTUAL VARIABLE ANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Annuity Services - 400 Robert Street North - St. Paul, Minnesota 55101-2098 -
Toll Free 1-800-362-3141
- ------------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT (PLEASE PRINT)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ / M / / F
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
/ / M / / F
- ------------------------------------------------------------------------------------------------------------------------------------
/ / M / / F
- ------------------------------------------------------------------------------------------------------------------------------------
/ / M / / F
- ------------------------------------------------------------------------------------------------------------------------------------
/ / M / / F
- ------------------------------------------------------------------------------------------------------------------------------------
EMPLOYER
- ------------------------------------------------------------------------------------------------------------------------------------
NAME ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF PERIODIC PURCHASE PAYMENT REPLACEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Will this contract applied for replace or change an existing insurance or
$_______________per pay period annuity contract?
- -------------------------------------------------- / / Yes* / / No
PURCHASE PAYMENT ACCOUNT ALLOCATION
- -------------------------------------------------- * If yes, please provide your contract number and the name of the insurance
company under Special Instructions.
% General % Bond
- ---- ---- -----------------------------------------------------------------------------
% Growth % Money Market STATEMENT OF ADDITIONAL INFORMATION
- ---- ---- -----------------------------------------------------------------------------
% Asset Allocation % Mortgage Securities
- ---- ---- The Prospectuses for the Group Variable Annuity Account and the Fund each
% Maturing % Index 500 refer to a Statement of Additional Information.
- ---- Government ----
Bond - 1998 % Capital Appreciation Would you like us to send you a copy?
----
% International Stock / / Yes / / No
% Maturing ----
- ---- Government % Small Company
Bond - 2002 ----
% Maturing % Value Stock
- ---- Government ----
Bond - 2006
% Maturing
- ---- Government TOTAL MUST EQUAL 100%
Bond - 2010
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT SIGNATURE
- ------------------------------------------------------------------------------------------------------------------------------------
I represent that the statements and answers in this application are full, complete and true to the best of my knowledge. I
ACKNOWLEDGE RECEIPT OF A CURRENT GROUP VARIABLE ANNUITY ACCOUNT PROSPECTUS AND A CURRENT PROSPECTUS FOR THE MIMLIC SERIES FUND, INC.
I UNDERSTAND THAT ALL PAYMENTS AND VALUE OF ANY CONTRACT ISSUED, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
- ------------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT SIGNATURE DATE
X
- ------------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY REPRESENTATIVE
- ------------------------------------------------------------------------------------------------------------------------------------
To the best of my knowledge, this contract / / will / / will not replace or change an existing insurance or annuity contract. I
certify that a current Prospectus was delivered. No written sales materials were used other than those approved by the Home Office.
I have determined this to be a suitable investment based on my knowledge of the participant's investment objectives and financial
circumstances.
- ------------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME REPRESENTATIVE SIGNATURE AGENT CODE AGENCY CODE DATE
X
- ------------------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY MIMLIC SALES CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE COMPLETE REVERSE SIDE
95-9329
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
GROUP VARIABLE ANNUITY ACCOUNT DISCLOSURE
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
OCCUPATION NUMBER OF DEPENDENTS AGES
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL PROFILE
- ------------------------------------------------------------------------------------------------------------------------------------
APPROXIMATE ANNUAL INCOME $ RANK YOUR INVESTMENT OBJECTIVES FROM 1 TO 5
------------ (1 is of greatest importance, 5 is of least importance)
APPROXIMATE NET WORTH $
------------ Conservative Income/Capital Preservation
TAX BRACKET % -----
------------ Current Income
ASSET BREAKDOWN APPROXIMATE -----
Conservative Growth/Total Return
SAVINGS (MONEY MARKETS FUNDS) $ -----
------------ Growth
INSURANCE ($___________FACE AMOUNT) $ -----
------------ Aggressive Growth
(Cash Value) -----
STOCKS/BONDS/MUTUAL FUNDS $
------------ ------------------------------------------------------------------------
REAL ESTATE $
------------ RISK TOLERANCE (check one box)
BUSINESS INTERESTS $
------------ / / Low Risk
RETIREMENT FUNDS $
------------ / / Moderate Risk
/ / High Risk
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE
- ------------------------------------------------------------------------------------------------------------------------------------
In connection with your investment, please read the following:
- I understand that provisions of Section 403(b)(11) of the Internal Revenue Code restrict the timing of distributions from
the tax sheltered annuity contracts such as that described in this application. Distributions are restricted to certain
stated events such as: attainment of age 59-1/2, separation from service, disability, death, or hardship. I understand
that the restrictions do not alter my contractual ability to transfer the accumulation values among the sub-accounts
available under the contract or to exchange my TSA contract for another, provided that the transaction meets the
requirements of the Code and that any required agreements, including those requiring the consent of the employer, are
executed prior to the transfer.
- I have received and had an opportunity to read a current copy of the prospectus for this investment prior to investing.
- I have been informed of all charges and expenses associated with this investment.
- I realize that this may be a long-term investment which should be held for a number of years. Surrendering in the short
term may result in a loss.
- I am aware there is no assurance that the initial objective(s) of this investment will be achieved. Thus, when I
ultimately surrender the investment, I may receive more or less than the amount I invested.
- I realize that the element of risk is inherent in any investment - what varies is the degree of risk. Generally, the
greater the expected return, the greater the risk I must be willing to assume.
- Given my personal circumstances, this is a suitable investment.
I believe the information provided on this form is true and accurate to the best of my knowledge. I have read and agree with the
above statements.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
X
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RE-INCORPORATION
OF
"THE BANKERS LIFE ASSOCIATION OF MINNESOTA"
and
Change of Name to
"THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY"
(as adopted on August 5, 1901)
"Resolved, that THE BANKERS LIFE ASSOCIATION OF MINNESOTA, hereby
authorizes and declares its Re-incorporation, and does hereby Re-incorporate
under and by virtue of Chapter One Hundred and Seventy-five (175), as amended,
of the General Laws of the State of Minnesota for the year Eighteen Hundred and
Ninety-five entitled 'An Act to Revise and Codify the Insurance Laws of the
State'; and to that end does hereby adopt the following Articles of
Incorporation, in lieu of, and as a substitute for, any and all Articles of
Incorporation, heretofore existing, viz:
ARTICLE I.
The future corporate name of this corporation is THE MINNESOTA MUTUAL
LIFE INSURANCE COMPANY.
ARTICLE II.
The location and Home Office of the Company is and shall be in the
City of Saint Paul, State of Minnesota.
ARTICLE III.
This Company is re-incorporated for the purpose of transacting and it
proposes, upon the Mutual Plan, to transact, the business of, and to make,
insurance upon the lives of individuals, and every insurance appertaining
thereto or connected therewith; to grant, purchase or dispose of annuities and
endowments of any kind whatsoever; and to take risks, and insure, against
accident to or sickness of persons.
It is proposed and intended that the duration and continuance of this
corporation and its corporate powers shall be perpetual, and that it shall have
perpetual succession.
<PAGE>
ARTICLE IV.
By-laws not in conflict herewith or with the law, may be adopted, and
from time to time amended, repealed or abrogated in whole or in part, by the
Board of Trustees.
ARTICLE V.
Except as herein otherwise expressly provided, all of the corporate
powers of the company shall be exercised and the amount of compensation of
Officers and Trustees shall be regulated by a Board of Trustees, and authority
is vested in the Board of Trustees to appoint, and delegate power and authority
to, such Officers, Servants and Agents as said Board shall by resolution or by-
law determine.
ARTICLE VI.
The Board of Trustees shall consist of at least five persons, and may
consist of a greater number, if the by-laws shall at any time so provide.
All of the members of the Board of Trustees shall be residents and
citizens of the State of Minnesota, until such time as the By-laws otherwise
provide.
The names of the members of the present Board of Trustees are CHARLES
H. BIGELOW, MAURICE AUERBACH, JOHN B. SANBORN, CRAWFORD LIVINGSTON AND J.F.R.
FOSS.
ARTICLE VII.
The first meeting of members hereafter shall be held at three o'clock
in the afternoon on the first Tuesday in March, A.D. Nineteen Hundred and Two at
the Home Office of the Company; provided, that a special meeting, or special
meetings of members may be held prior to said date upon due notice.
ARTICLE VIII.
The regular annual meeting of members shall be held at three o'clock
in the afternoon of the first Tuesday in March of each year, at the Home Office,
for the election of Trustees, whenever any are to be elected, and for the
transaction of such other business as may properly come before it.
<PAGE>
ARTICLE IX.
Article ten of these Articles relates solely to a Guaranty Trust Fund
heretofore created by the deposits of members who became such under the
assessment plan.
ARTICLE X.
All amounts pledged to this Company to secure payment of assessments
occasioned by death of its members shall be used only for that purpose, and
meanwhile the same shall be and remain invested in United States Registered
Bonds, and shall constitute and be know as "The Guaranty Trust Fund". Such
bonds shall be made payable to this company, and shall be transferable or
convertible only upon resolution of its Board of Trustees, and such board shall
have the exclusive charge and control thereof.
All interest realized from such bonds shall meanwhile be used to
defray the Company's operating expenses.
This article shall never be amended or in any way at all changed
without the consent of every member of this Company, to be given in writing,
signed by him and filed with the Company's Secretary, and reciting in full the
proposed amendment or change.
ARTICLE XI.
These Articles may be amended at any time to any extent, not in
violation of law, by resolution adopted by a two-thirds vote of all the votes
cast by the members at any special meeting lawfully called for that purpose, or
by such two-thirds vote at any regular meeting of the members."
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
As Amended by Resolution of
the Board of Trustees
July 22, 1994
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE I. MEMBERS
Section 1. Regular Annual Meetings. . . . . . . . . . . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . . . . . . . . . . 1
Section 3. Number of Votes. . . . . . . . . . . . . . . . . . . . . 2
Section 4. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Presiding Officer and Recording
of Minutes . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II. BOARD OF TRUSTEES
Section 1. Composition of the Board of Trustees . . . . . . . . . . 3
(a) Number of Trustees . . . . . . . . . . . . . . . . . . . . 3
(b) Qualifications . . . . . . . . . . . . . . . . . . . . . . 4
(c) Election . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Term of Office of Elected Trustee. . . . . . . . . . . . . 4
(e) Appointment by the Board . . . . . . . . . . . . . . . . . 5
Section 2. Meetings of the Board. . . . . . . . . . . . . . . . . . 5
(a) Place of Meetings. . . . . . . . . . . . . . . . . . . . . 5
(b) Regular Meetings . . . . . . . . . . . . . . . . . . . . . 5
(c) Special Meetings . . . . . . . . . . . . . . . . . . . . . 6
(d) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Action without Meeting . . . . . . . . . . . . . . . . . . 7
Section 3. Removal. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4. Chair of the Board . . . . . . . . . . . . . . . . . . . 8
Section 5. Compensation . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III. COMMITTEES OF THE BOARD
Section 1. Standing and Other Committees
of the Board. . . . . . . . . . . . . . . . . . . . . 9
(a) Creation of Committees . . . . . . . . . . . . . . . . . . 9
(b) Appointments . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Qualifications . . . . . . . . . . . . . . . . . . . . . . 9
(d) Committee Chairs . . . . . . . . . . . . . . . . . . . . . 10
(e) Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(g) Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Minutes and Reports. . . . . . . . . . . . . . . . . . . . 11
Section 2. Audit Committee. . . . . . . . . . . . . . . . . . . . . 11
Section 3. Corporate Governance and Public
Affairs Committee. . . . . . . . . . . . . . . . . . . 12
Section 4. Executive Committee. . . . . . . . . . . . . . . . . . . 14
Section 5. Investment Committee . . . . . . . . . . . . . . . . . . 14
Section 6. Personnel and Compensation Committee . . . . . . . . . . 15
<PAGE>
Page
----
ARTICLE IV. OFFICERS
Section 1. Number . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2. Election . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3. Term of Office . . . . . . . . . . . . . . . . . . . . . 17
Section 4. Removal. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6. Duties of Officers . . . . . . . . . . . . . . . . . . . 18
(a) Chief Executive Officer. . . . . . . . . . . . . . . . . . 18
(b) President. . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Vice Presidents. . . . . . . . . . . . . . . . . . . . . . 19
(d) Secretary. . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Controller . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) Actuary. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Other Officers . . . . . . . . . . . . . . . . . . . . . . 20
Section 7. Absence or Disability. . . . . . . . . . . . . . . . . . 21
ARTICLE V. DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. Fund and Investments . . . . . . . . . . . . . . . . . . 21
Section 2. Deposits . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI. INDEMNIFICATION
Section 1. Trustees and Officers. . . . . . . . . . . . . . . . . . 22
Section 2. Employees and Agents . . . . . . . . . . . . . . . . . . 23
Section 3. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4. Other Indemnification Permitted. . . . . . . . . . . . . 24
ARTICLE VII. CORPORATE SEAL. . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
BY-LAWS
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
AS AMENDED BY RESOLUTION
OF THE BOARD OF TRUSTEES
JULY 22, 1994
ARTICLE I
MEMBERS
Section 1. REGULAR ANNUAL MEETINGS. The regular annual meeting of members
shall be held at three o'clock in the afternoon of the first Tuesday in March of
each year, at the Home Office of the Company, as required by Article VIII of the
Articles of Re-incorporation. Notice of the meeting shall be as prescribed in
Section 61A.32 of Minnesota Statutes, as amended from time to time.
Section 2. SPECIAL MEETINGS. A special meeting of the members may be
called at any time by the Board of Trustees or by the joint action of either the
Chair of the Board or the Chief Executive Officer and not less than three other
Trustees. The Secretary shall give notice of the special meeting by causing to
be mailed to each member, at the member's address then appearing on the books of
the Company, a notice of the time, place and purpose of the meeting at least
thirty days before the date set for the meeting.
-1-
<PAGE>
Section 3. NUMBER OF VOTES. At each meeting of the members, every person
insured by this Company will be a member entitled to one vote, and one
additional vote for each one thousand dollars of insurance in excess of the
first one thousand dollars, subject to a maximum of one hundred votes; provided,
however, that, in the case of group insurance, voting rights shall be determined
by Section 61A.32 of Minnesota Statutes, as amended from time to time. The
Company has no cumulative voting.
Section 4. PROXIES. Any member may vote by proxy at any meeting of
members. To be valid, the proxy appointment must be in writing and must be
filed with, and received by, the Secretary at the Home Office of the Company at
least five days before the meeting at which it is to be used, exclusive of the
day of the meeting, but inclusive of the day of receipt and filing of the proxy.
A proxy appointment may be for a specified period of time or may provide that it
will be in effect until revoked. A proxy may be revoked by a member at any time
by written notice to the Secretary, or by executing a new proxy appointment and
filing it as required herein, or by personally appearing and exercising his or
her rights as a member at any meeting of the members.
Section 5. QUORUM. Insurance of an amount not less than One Hundred
Million Dollars, represented in person or by proxy, or partly in person and
partly by proxy, shall constitute a quorum at any regular or special meeting of
members. In the
-2-
<PAGE>
absence of a quorum, those members present may adjourn the meeting from time to
time until a quorum shall be present. If a quorum is present when a duly called
or held meeting is convened, the members present may continue to transact
business until adjournment, even though member(s) may have left the meeting so
that less than a quorum is present at the meeting.
Section 6. PRESIDING OFFICER AND RECORDING OF MINUTES. Meetings of the
members shall be presided over by the Chair of the Board, if present, otherwise
by the Chief Executive Officer, if present, otherwise by the President, if
present, otherwise by a Vice President; provided that if none of those
designated are present, then by a chair to be chosen by a majority of the
members who are present in person or by proxy. The Secretary, if present,
otherwise an Assistant Secretary, shall record the minutes of every meeting;
provided that if none of those designated are present, then a person to record
the minutes of that meeting shall be chosen by a majority of the members who are
present in person or by proxy.
ARTICLE II
BOARD OF TRUSTEES
Section 1. COMPOSITION OF THE BOARD OF TRUSTEES. The composition of the
Board of Trustees shall be as follows:
(a) NUMBER OF TRUSTEES. The property, affairs and business of the Company
shall be managed by a Board of Trustees which shall consist of not fewer than
five (as required by
-3-
<PAGE>
Article VI of the Articles of Re-incorporation) or more than sixteen persons,
the number of which for each year shall be determined by the members at their
regular annual meeting. The person or persons who hold the offices of Chief
Executive Officer and President shall, without the necessity of election, be
Trustees by virtue of the office.
(b) QUALIFICATIONS. Trustees need not be members of the Company, nor
residents or citizens of Minnesota. Additional qualifications for initial or
continued Board membership may be prescribed from time to time by the Board.
(c) ELECTION. Except as otherwise provided in these By-Laws, Trustees
shall be elected at regular annual meetings of the members. Nominations for the
office of Trustee shall be made before voting for that office commences. Votes
for persons not so nominated shall be disregarded. The election of each Trustee
shall be by a plurality of the votes cast for the office. In the event the
members fail to elect nominees to fill all of the offices to be elected, then
the Board of Trustees shall have the authority to choose qualified persons to
fill such office or offices by appointment as provided in Section 1(e) of this
Article II.
(d) TERM OF OFFICE OF ELECTED TRUSTEE. The term of office of each elected
Trustee shall be to such of the next three regular annual meetings of the
members as is stated in his or her nomination, or, if none is stated, to the
third such meeting following the date of his or her election, or until his
-4-
<PAGE>
or her earlier death, resignation or removal. No Trustee shall be elected to
the Board for a term of office which extends beyond the annual meeting of
members which coincides with or next follows his or her seventieth birthday.
(e) APPOINTMENT BY THE BOARD. If the office of any Trustee is not filled
by the members at a regular annual meeting of members, a majority of the
Trustees may choose a person to fill that office. If the office of any Trustee
becomes vacant for any reason, a majority of the remaining Trustees may choose a
successor. Each Trustee so chosen shall hold office until the next regular
annual meeting of the members. Not more than one-third of the maximum number of
Trustees may be so chosen by the Board between regular annual meetings of the
members.
Section 2. MEETINGS OF THE BOARD. Meetings of the Board of Trustees shall
be as follows:
(a) PLACE OF MEETINGS. Meetings of the Board may be held either within or
without the State of Minnesota.
(b) REGULAR MEETINGS. Regular meetings of the Board shall be held at such
times and places as are fixed from time to time by resolution of the Board.
Notice need not be given of those regular meetings of the Board held at the
times and places fixed by resolution, nor need notice be given of adjourned
meetings. If either or both the time or place of a regular meeting are other
than that fixed by resolution, a telephonic or written notice shall be given to
each Trustee not
-5-
<PAGE>
less than twenty-four hours prior to the time of that regular meeting.
(c) SPECIAL MEETINGS. Special meetings of the Board may be held at any
time upon call either of the Chair of the Board, or of the Chief Executive
Officer, or upon written request of any three or more Trustees. Except as
otherwise provided, notice of a special meeting shall be given to each Trustee
either in writing or by telephone. Notice of at least seventy-two hours prior
to the meeting time is required if written notice is deposited in the United
States mail in the City of Saint Paul. Notice of at least twenty-four hours
prior to the meeting time is required if written notice is left at either the
place of business or residence of each Trustee. Notice of at least six hours
prior to the meeting time is required if all Trustees are personally either
served with a written notice or contacted by telephone. Notice need not be
given to the Trustees of adjourned special meetings. Also, special meetings may
be held at any time without notice if all of the Trustees are present, or if,
before the meeting, those not present waive such notice in writing. Notice of a
special meeting shall state the purpose of the meeting.
(d) NOTICE. All notices of meetings of the Board required to be given
under these By-Laws shall be given either by the person or persons who called
the meeting, or by the Secretary, or, in his or her absence, by an Assistant
Secretary.
-6-
<PAGE>
(e) QUORUM. A majority of the Trustees shall constitute a quorum for the
transaction of business at any meeting of the Board. In the absence of a
quorum, those Trustees present may adjourn the meeting from time to time until a
quorum shall be present. Except as otherwise provided in these By-Laws, the
acts of a majority of the Trustees present at any meeting at which a quorum is
present shall be the acts of the Board. The Trustees present at a duly called
or held meeting at which a quorum is present, may continue to transact business
until adjournment, even though Trustee(s) may have left the meeting so that less
than a quorum is present at the meeting.
(f) ACTION WITHOUT MEETING. Any action which may be taken at a meeting of
the Board may be taken without a meeting if a consent in writing, setting forth
the actions to be taken, shall be signed by all of the Trustees. The action so
taken shall be effective on the date on which the last signature is placed on
the writing or writings, or on such earlier effective date as is stated in the
writing.
Section 3. REMOVAL. A member of the Board of Trustees who fails to meet
the standards set by the Board for Board members, or who is deemed by the
remaining members of the Board to be untrustworthy, or incapable by reason of
total and permanent disability of fulfilling the duties of his or her office,
may be removed from office by the unanimous vote of the remaining Trustees then
in office.
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Section 4. CHAIR OF THE BOARD. The Board of Trustees shall elect annually
from among its members a Chair of the Board. The Chair of the Board shall
continue to serve at the will and pleasure of the Board, for the term of his or
her election or until his or her prior death, resignation, or removal from the
Board. The Chair of the Board shall preside at meetings of the members, of the
Board and of the Executive Committee. In addition, the Chair shall have such
other powers, duties and responsibilities as may be determined and assigned by
the Board or these By-Laws.
Section 5. COMPENSATION. Except as provided in this Section, Trustees
shall be entitled to reasonable compensation for their services, and to
reimbursement for reasonable expenses incurred, as Trustees and as members of
committees of the Board. The amount of compensation shall be set from time to
time by resolution of the Board of Trustees. Except as otherwise expressly
provided by the Board, no such compensation or reimbursement shall be paid to an
officer of the Company who also serves as a Trustee. Any Trustee receiving
compensation under this Section shall not be barred from serving the Company in
a non-officer capacity and receiving reasonable compensation for such other
services.
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ARTICLE III
COMMITTEES OF THE BOARD
Section 1. STANDING AND OTHER COMMITTEES OF THE BOARD. The Board of
Trustees shall have the following committees:
(a) CREATION OF COMMITTEES. The following designated standing committees
of the Board are hereby authorized and created: Audit, Corporate Governance and
Public Affairs, Executive, Investment, and Personnel and Compensation. In
addition, the Board is authorized to create any other committee or committees of
the Board as the Board from time to time deems necessary. The name, duration
and duties of each other committee and the number of members thereof shall be as
prescribed in the action creating the committee.
(b) APPOINTMENTS. Except as provided in Section 4 of this Article III,
the members of each standing Board committee shall consist of those Trustees
appointed by the Board of Trustees. Each Trustee appointed to a Board committee
shall continue to serve on that committee at the will and pleasure of the Board
for the period specified in his or her appointment or until his or her earlier
death, resignation or removal.
(c) QUALIFICATIONS. Each Trustee is qualified to be appointed and
successively reappointed to one or more committees, except that a Trustee who
also acts as an officer or employee of the Company shall not serve as a member
of the Audit Committee.
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(d) COMMITTEE CHAIRS. The Board shall appoint one of the members of each
of the Board committees, except the Executive Committee, to chair that committee
and, in its discretion, may also appoint one of the members of each of the
committees to serve as a vice chair of that committee. If neither the committee
chair nor the committee vice chair is present at a meeting of a committee, the
committee members present at that committee meeting shall elect another
committee member to chair that meeting.
(e) MEETINGS. Each committee shall meet at such times as the chair of
that committee may designate or as a majority of that committee may determine,
subject to a minimum of not less than two meetings per calendar year, except
that the Executive Committee is not subject to a minimum number of meetings
requirement.
(f) QUORUM. A majority of each Board committee shall constitute a quorum
at each meeting of that committee. At any meeting of a committee at which a
quorum is present, the committee may continue to transact business until
adjournment, even though committee member(s) may have left the meeting so that
less than a quorum is present at the meeting. If a quorum is not present for a
committee meeting, the chair of that committee may request the Board to appoint
a sufficient number of other Trustees to serve as members of the committee only
for that meeting, so as to obtain a quorum. If the Board makes the
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requested appointments, any action so taken at the committee meeting shall be
valid and binding.
(g) VACANCIES. In the case of the death, resignation or removal of a
member of a committee, the Board may appoint another Trustee to fill the vacancy
so created on that committee for the balance of the unexpired appointment. The
appointment shall be subject to the qualifications set forth for that committee.
(h) MINUTES AND REPORTS. Each committee shall keep a written record of
its acts and proceedings and shall submit that record to the Board of Trustees
at a regular meeting of the Board and at such other times as requested by the
Board or when a majority of the committee deems it desirable to do so. Failure
to submit a record will not, however, invalidate any action taken by the
committee prior to the time the record of the action was, or should have been
submitted to the Board. The minutes of the Corporate Governance and Public
Affairs, Executive, and Personnel and Compensation Committees shall be recorded
by the Secretary. The minutes of each of the other committees shall be recorded
by the person designated by the chair of that committee.
Section 2. AUDIT COMMITTEE. The Audit Committee shall consist of not
fewer than four non-management Trustees and shall have the following powers and
duties:
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(a) Annually recommend to the Board a firm of independent certified public
accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's internal
auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the Company
conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and disaster
recovery.
(h) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 3. CORPORATE GOVERNANCE AND PUBLIC AFFAIRS COMMITTEE. The
Corporate Governance and Public Affairs Committee shall consist of not fewer
than four Trustees and shall have the following powers and duties:
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(a) Annually review the size and composition of the Board.
(b) Periodically develop and recommend to the Board the standards to be
met by persons selected for nomination to the Board.
(c) Prior to the annual meeting of members each year, recommend to the
Board a slate of persons to be nominated to serve on the Board for whom the
Company should solicit proxies.
(d) On the recommendation of the Chair of the Board or the Chief Executive
Officer, review the ongoing affiliation with the Board of any member who fails
to meet the standards set by the Board for Board members, or who is deemed by
the remaining members of the Board to be untrustworthy, or incapable by reason
of total and permanent disability of fulfilling the duties of his or her office.
(e) Periodically, review the powers and duties of Board committees.
(f) Annually review and approve the methods and levels of compensation for
members of the Board, including but not limited to benefit plans and
compensation deferral plans; and review and make changes in the method and
timing of benefits for individuals covered under any such plans in accordance
with the terms of such plans.
(g) Annually review and approve the contributions policy.
(h) Annually review Company contributions to be made to the foundation.
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(i) Review Company's code of ethics and conflict of interest disclosures.
(j) Review Company policy on major issues in areas of social
responsibility and public affairs, including such matters as voting and
solicitation of proxies, "social purpose" investments, and other like matters as
may properly come before it.
(k) Periodically review Company by-laws.
(l) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 4. EXECUTIVE COMMITTEE. The Executive Committee shall consist of
the Chairs of the other standing Board committees and the Chair of the Board
and, in the interim between meetings of the Board, shall have and exercise all
of the powers and authority of the Board (including the determination of whether
a person is entitled to indemnification under Article VI of these By-Laws as
required by Section 300.083, Subdivision 6(b) of Minnesota Statutes, as amended
from time to time), except the Committee shall not:
(a) alter or amend the By-Laws;
(b) make appointments to the Board of Trustees;
(c) elect, appoint or terminate the Chairman of the Board, Chief Executive
Officer, President, any Vice President, Secretary, or Treasurer.
Section 5. INVESTMENT COMMITTEE. The Investment Committee shall consist
of not fewer than four Trustees and
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shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for Company investments, the
procedures for the valuation of real estate owned by the Company and commercial
loans held by the Company, recommend changes thereto, and submit to the Board
for its approval and adoption the policy and procedures for the ensuing twelve
months.
(b) Review all investments, except policy loans, of Company funds,
including their acquisition and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
Section 6. PERSONNEL AND COMPENSATION COMMITTEE. The Personnel and
Compensation Committee shall consist of not fewer than four Trustees and shall
have the following powers and duties:
(a) For senior management, annually review performance and total
compensation, including salary, bonus plans, employee benefits and perquisites.
Senior management is defined as Chief Executive Officer, Chief Operating
Officer, President and all vice presidents. Approve and report to the Board for
ratification total compensation for the Chief Executive
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Officer, President and Chief Operating Officer. Approve total compensation for
the vice presidents.
(b) Review qualifications of candidates for election as officers of the
Company. Recommend to the Board for approval officer candidates for the
positions of Chief Executive Officer, Chief Operating Officer, President, all
vice presidents, controller, secretary, treasurer, assistant secretary and
assistant treasurer.
(c) Periodically review succession plans for Chief Executive Officer,
Chief Operating Officer and senior vice presidents.
(d) Review and report to the Board organization changes that have
significant Company and business impact.
(e) Review and approve special employment or compensation contracts for
active, retired or terminated employees.
(f) Annually review and approve salary policies for Company employees.
(g) Annually review and recommend to the Board a PSP distribution to
covered employees.
(h) Periodically review and approve changes to compensation deferral plans
for officers and employees, including the designation of plan trustees and plan
administrators. Review and make changes in the method of timing of benefits for
individuals covered under any of said plans in accordance with the terms of said
plans. Annually determine and approve the interest crediting rates for amounts
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held under deferred compensation plans for officers, employees and Trustees and
make any other determination necessary or advisable in the administration of
those plans.
(i) Periodically review and approve major changes to benefit plans.
(j) Annually review programs and progress made for developing diversity at
all levels of the Company and submit findings to the Board.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Company shall be a Chief Executive
Officer, a President, one or more Vice Presidents, a Treasurer, an Actuary, a
Controller, a Secretary, and one or more Assistant Secretaries. In addition,
there may be such other officers as the Board of Trustees from time to time may
deem necessary. One individual may hold two or more offices, except that of
President and Secretary.
Section 2. ELECTION. Officers shall be elected or appointed by the Board
of Trustees.
Section 3. TERM OF OFFICE. Each officer shall serve for the term stated
in his or her election or appointment or until his or her earlier death,
resignation or removal.
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Section 4. REMOVAL. Any officer may be removed from office, with or
without cause, at any time by the affirmative vote of the majority of the Board
of Trustees then in office.
Section 5. VACANCIES. Any vacancy in any office from any cause may be
filled by the Board of Trustees at its next meeting.
Section 6. DUTIES OF OFFICERS. The duties of the officers shall be as
follows:
(a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general active management of the business of the Company and, in the absence of
the Chair of the Board, shall preside at all meetings of the members and the
Board of Trustees, and shall see that all orders and resolutions of the Board
are carried into effect. Except where, by law, the signature of the President
is required, the Chief Executive Officer shall possess the same power as the
President to sign and execute all authorized certificates, contracts, bonds, and
other obligations of the Company.
(b) PRESIDENT. The President, in the absence of the Chair of the Board
and the Chief Executive Officer, shall preside at all meetings of the members
and the Board of Trustees. The President shall be the chief administrative
officer of the Company and shall have the power to sign and execute all
authorized certificates, contracts, bonds, and other obligations of the Company.
The President also shall perform such other duties as are incident to the office
or are
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properly required of him or her by the Board or the Chief Executive Officer.
(c) VICE PRESIDENTS. Each Vice President will perform those duties as
from time to time may be assigned by the Chief Executive Officer. In the
absence of the President, a Vice President designated by the Board of Trustees
shall perform the duties of the President. A Vice President shall have the
power to sign and execute all authorized certificates, contracts, bonds and
other obligations of the Company. One or more of the Vice Presidents may be
entitled Executive Vice President, Senior Vice President, Vice President, Second
Vice President, Group Vice President, Assistant Vice President, or such other
variation thereof as may be designated by the Board.
(d) SECRETARY. The Secretary shall give notice and keep the minutes of
all meetings of the members, the Board of Trustees, the Corporate Governance and
Public Affairs Committee, the Executive Committee and the Personnel and
Compensation Committees and shall give and serve all notices of the Company.
The Secretary or an Assistant Secretary shall have the power to sign with the
Chief Executive Officer, President, or any Vice President in the name of the
Company all authorized certificates, contracts, bonds, or other obligations of
the company and may affix the Company Seal thereto. The Secretary shall have
charge and custody of the books and papers of the Company and in general shall
perform all duties incident to the office of Secretary, except as otherwise
specifically
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provided in these By-Laws, and such other duties as from time to time may be
assigned by the Chief Executive Officer. If Assistant Secretaries are elected
or appointed, they shall have those powers and perform those duties as from time
to time may be assigned to them by the Chief Executive Officer and, in the
absence of the Secretary, one of them shall perform the duties of the Secretary.
(e) TREASURER. The Treasurer shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Treasurer, one of
them shall perform the duties of the Treasurer.
(f) CONTROLLER. The Controller shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) ACTUARY. The Actuary shall have those powers and shall perform those
duties as from time to time may be assigned by the Chief Executive Officer.
(h) OTHER OFFICERS. Other officers elected or appointed by the Board of
Trustees shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
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Section 7. ABSENCE OR DISABILITY. In the case of the absence or
disability of any officer of the Company or of any person authorized to act in
his or her place during such period of absence or disability, the Board of
Trustees from time to time may delegate the powers and duties of such officer to
any other officer, or any Trustee, or any other person whom they may select.
ARTICLE V
DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. FUNDS AND INVESTMENTS. All funds and investments of the
Company shall be held in the name of "The Minnesota Mutual Life Insurance
Company" or its nominee or as otherwise provided in accordance with applicable
Minnesota Statutes, as amended from time to time. In no event shall any funds
or investments be held in the name of any individual who is an officer or
employee of the Company.
Section 2. DEPOSITS. The Board of Trustees shall designate those banks
and financial institutions in which Company funds shall be deposited. The Board
by separate resolution also shall designate the persons authorized to withdraw
or transfer funds held in those accounts. No funds shall be withdrawn or
transferred from those accounts except upon the authorization of the person or
persons so authorized.
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ARTICLE VI
INDEMNIFICATION
Section 1. TRUSTEES AND OFFICERS. To the fullest extent permitted by
applicable Minnesota Statutes, as amended from time to time, the Company shall
indemnify each person (and the legal representatives of the person) who has
been, or is, a Trustee or officer of the Company. This indemnification shall
extend to all judgments, penalties, and fines, including, without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been a Trustee or officer of the Company or who,
while a Trustee or officer of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee, or agent of another organization
or of an employee benefit plan. However, indemnification for appeals from any
determination in a proceeding shall be subject to prior approval of the Board by
Trustees.
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Section 2. EMPLOYEES AND AGENTS. Subject to the provisions of applicable
Minnesota Statutes, as amended from time to time, the Board of Trustees may, but
need not, decide to indemnify a person (and the legal representatives of the
person), other than a Trustee or officer, who has been or is an employee or
agent of the Company. The indemnification, if any, shall extend to all
judgments, penalties, and fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been an employee or agent of the Company or who,
while an employee or agent of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee or agent of another organization
or of an employee benefit plan. Also, indemnification for appeals from any
determination in a proceeding, where indemnification was previously granted by
the Board, shall be subject to prior approval by the Board.
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Section 3. INSURANCE. The Board of Trustees may authorize the purchase
and maintenance of such form or forms of insurance as the Board may deem
necessary or prudent to indemnify the Company and/or those persons who have
been, are or may be Trustees, officers, employees, or agents of the Company, or
who, while a Trustee, officer, employee or agent of the Company, is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee, or agent of another organization or of an employee benefit plan
against any liability asserted against and incurred by the person in or arising
from that capacity, whether or not the Company would have been required to
indemnify the person against the liability under the provisions of this Article
VI or under applicable Minnesota Statutes, as amended from time to time.
Section 4. OTHER INDEMNIFICATION PERMITTED. Nothing contained in this
Article shall affect the rights to indemnification to which Company personnel
other than Trustees and officers may be entitled by contract or otherwise under
law.
ARTICLE VII
CORPORATE SEAL
The corporate seal of this Company shall be the words "Corporate Seal"
encircled with the words "The Minnesota Mutual Life Insurance Company".
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ARTICLE VIII
AMENDMENTS
By the affirmative vote of a majority of the Board of Trustees, these By-
Laws, or any part thereof, may be amended, repealed, or abrogated.
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DEFERRED COMPENSATION PLAN BUSINESS AGREEMENT
This Agreement is entered into by and between the Minnesota State Board of
Investment (hereinafter the "SBI"), the Minnesota State Retirement System
(hereinafter the "MSRS") and The Minnesota Mutual Life Insurance Company
(hereinafter "Minnesota Mutual"), this first day of July, 1994 (hereinafter the
"Effective Date"), to amend and supplement Group Deferred Variable Annuity
Contract Number 0844049.
The SBI, the MSRS and Minnesota Mutual, in consideration of the mutual
agreements contained herein, do hereby agree as follows:
I. DEFINITIONS
A. The PLAN - The "Plan" as defined in Section 1.01 of Group Deferred Variable
Annuity Contract Number 0844049.
B. The PRIOR CONTRACTS - Collectively, Group Deferred Annuity Contract Number
0844047, issued by Minnesota Mutual and Northwestern National Life
Insurance Company (individually, the "Prior Fixed Contract") and Group
Accumulation Annuity Contract Number 0844048, issued by Minnesota Mutual
(individually, the "Prior Variable Contract"), which Prior
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Contracts where issued for the purpose of underwriting certain of the fixed
and variable annuity options under the Plan.
C. The NEW CONTRACT - A new Group Deferred Variable Annuity Contract (Number
0844049) developed and issued by Minnesota Mutual and offering both fixed
and variable options for use in connection with the Plan.
D. MSRS - The Minnesota State Retirement System, which, acting through its
executive director with the advice and consent of its board of directors,
administers the Plan.
E. PRODUCT PROVIDER(S) - A life insurance company appointed by the SBI which
offers annuity contracts to be used in conjunction with underwriting
certain of the fixed and variable annuity options under the Plan.
F. PLAN MARKETING ORGANIZATIONS - Marketing Organizations which have entered
into agreements with MSRS, which have been approved by the SBI, and
pursuant to which such marketing organizations offer to participants in the
Plan both the investment options managed by the SBI and the annuity
contracts issued by the Product Providers.
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G. SUPPLEMENTAL INVESTMENT FUND - The investment options available under the
Plan which are managed by the SBI.
II. APPOINTMENT OF MINNESOTA MUTUAL AS PRODUCT PROVIDER
The SBI hereby appoints Minnesota Mutual as a Product Provider to the Plan
for the purpose of making available to the participants in the Plan the New
Contract and the options available thereunder, and Minnesota Mutual hereby
accepts such appointment subject to the terms and conditions set forth
herein. In the performance of its responsibilities under this Agreement,
the relationship of Minnesota Mutual to the SBI and/or MSRS is solely that
of an independent contractor. Nothing contained herein shall be construed
as establishing an employment, joint venture or partnership relationship
between Minnesota Mutual and the SBI and/or MSRS. Minnesota Mutual's
obligations and the relationship between Minnesota Mutual and the SBI shall
be governed solely by the terms of this Agreement, the Prior Contracts and
the New Contract. SBI also acknowledges that Minnesota Mutual shall have
no responsibility for the establishment or operation of the Plan, except as
provided by the terms of this Agreement.
III. CLOSING OF THE PRIOR CONTRACTS
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A. Closing Date
Except as otherwise provided in this Section III, the Prior Contracts shall
be closed with respect to the Plan beginning on the later of the Effective
Date or the date on which the registration statement covering the New
Contract is declared effective by the United States Securities and Exchange
Commission, but in no event later than September 30, 1994, or such later
date as may be agreed to by the SBI (the "Closing Date"). On and after the
Closing Date all salary deferrals and/or purchase payments allocated to the
general account of Minnesota Mutual shall be credited to the general
account under the New Contract rather than the Prior Fixed Contract. With
regard to salary deferrals and/or purchase payments which are being
allocated to a separate account of Minnesota Mutual under the Prior
Variable Contract, such salary deferrals and/or purchase payments shall
continue to be allocated to the Prior Variable Contract for up to 90 days
after the Closing Date or until such earlier date as Plan participants have
provided new purchase payment allocation instructions to Minnesota Mutual
for use in connection with the New Contract. Beginning 90 days after the
Closing Date, or such later date as Minnesota Mutual may determine, all
salary deferrals and/or purchase payments allocated to a separate account
shall be credited to the New Contract.
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B. Accumulation Values In Prior Contracts
Accumulation values in the Prior Contracts on and after the Closing Date
shall continue to be subject to and controlled by the terms and provisions
set forth in the Prior Contracts, and by the provisions of the Plan and the
rules thereunder.
Accumulation values in the Prior Variable Contract may be left therein and
may be transferred between the various sub-accounts available thereunder.
Such accumulation values may also be transferred, without restriction, to
any other investment option available under the Plan, including the New
Contract, or withdrawn or annuitized subject to rules and restrictions
under the Plan and the Prior Variable Contract. Accumulation values in the
Prior Fixed Contract may also remain in such contract until withdrawn or
transferred to another investment option under the Plan, including options
under the New Contract. Any provision in the Prior Fixed Contract not
withstanding, accumulation values remaining in the Prior Fixed Contract
after the Closing Date shall be subject to the same portability rights and
restrictions as general account accumulation values held under the New
Contract (see Paragraph C of Section IV of this Agreement); provided,
however, during the six-month period beginning on
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the Closing Date, a Plan participant may transfer all or any portion of
such accumulation values, without restriction, to any other variable
investment option available under the New Contract.
IV. THE NEW CONTRACT
A. Generally; Availability
The form of the New Contract has been provided to and approved by the SBI.
The terms and conditions of the New Contract are incorporated herein by
reference and made a part of this Agreement except as otherwise provided.
The New Contract shall be available for use in connection with the Plan on
the Effective Date of this Agreement or as soon thereafter as the
registration statement covering the New Contract shall have been declared
effective by the United States Securities and Exchange Commission, but in
no event later than September 30, 1994, or such later date as may be
approved by the SBI. Salary deferrals and/or purchase payments received
prior to such date shall continue to be allocated to the Prior Contracts.
B. Allocations Options
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The New Contract will offer one general account or fixed annuity option.
The New Contract will also provide, with respect to purchase payments
allocated to a separate account of Minnesota Mutual and its various sub-
accounts, variable investment funds in which such purchase payments may be
invested. The investment funds available to the New Contract's sub-
accounts shall be as follows:
1. Money Market Portfolio of MIMLIC Series Fund, Inc.
2. Index 500 Portfolio of MIMLIC Series Fund, Inc.
3. Vanguard/Wellington Fund, Inc.
4. Long-Term Corporate Portfolio of Vanguard Fixed Income Securities
Fund, Inc.
5. Scudder International Fund, a series of Scudder International
Fund, Inc.
6. Fidelity Contrafund
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7. Janus Twenty Fund, a series of the Janus Investment Fund
The continued use of these investment funds is contingent upon their
availability for purchase by Minnesota Mutual and the sub-accounts of its
separate account. Substitute or additional investment funds may be made
available under the New Contract only with the consent of the SBI.
C. Provisions Of New Contract Amended By This Agreement
(1) Portability
Transfers of accumulation values held in the general account and the
separate account shall be permitted in accordance with the provisions of
the New Contract; provided, Section 5 and any other provision in the New
Contract notwithstanding, Plan participants may annually, in each calendar
year, transfer up to 20% of accumulation values held in the general account
and may also transfer 100% of such accumulation values at termination of
employment or at retirement.
(2) Deferred Sales Charge
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The deferred sales charge described in Sections 3.01 and 5 of the New
Contract shall not apply to the Plan or its participants, nor shall it
apply to any withdrawals or transfers described in such sections of the New
Contract.
(3) Termination
Section 7.02 of the New Contract is amended to provide that the New
Contract shall also terminate:
(i) in the event that Minnesota Mutual fails to comply with or perform any
provision of this Agreement, subject to Minnesota Mutual's right to
cure such failure within 90 days after receipt of written notice
thereof; and
(ii) on June 30, 1999 or upon the earlier termination of this Agreement.
D. Interest Rates And Expenses
The minimum rate of interest credited to accumulation values in the general
account, as well as all expenses applicable to the general and separate
accounts, shall be as set forth in the New Contract. Minnesota Mutual
agrees that it will not report rates of return on general or separate
account
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accumulation values to Plan participants except on a basis which takes into
account all applicable expense factors. Minnesota Mutual agrees to provide
30 days notice of any change in separate account expense factors.
V. DUTIES OF MINNESOTA MUTUAL
A. Minnesota Mutual shall accept purchase payments allocated to the New
Contract in connection with the Plan in whatever frequency they are
transmitted. Minnesota Mutual shall apply such purchase payments to the
appropriate New Contract participant's accumulation value in accordance
with the instructions received from the appropriate employer directing the
amount of purchase payment to be applied to each participant account.
Purchase payments shall be credited to a New Contract participant's
accumulation value in accordance with the terms of the New Contract upon
receipt of such purchase payments by Minnesota Mutual at its home office
with appropriate allocation instructions.
B. When making any benefit payments in accordance with the Plan, Minnesota
Mutual shall report to the Internal Revenue Service the amounts of such
payments in accordance with Internal Revenue Service requirements.
Page 10
<PAGE>
C. Minnesota Mutual agrees to withhold federal and state income taxes from
benefit payments in accordance with instructions from the Plan
participant's employer as to the amounts to be withheld, or as is otherwise
required by the Internal Revenue Service or by appropriate state tax
authorities.
D. Minnesota Mutual agrees that, with respect to matters relating to the Plan,
Minnesota Mutual will make information from its participant account records
available to the SBI, MSRS and the Plan Marketing Organizations upon
request. Minnesota Mutual shall provide, at its expense, software to allow
the Plan Marketing Organizations and MSRS access to Minnesota Mutual's
system of Plan participant information relating to the Prior Contracts and
the New Contract. Minnesota Mutual also agrees that Plan participant
records are private and that only Minnesota Mutual, the SBI, MSRS, and the
Plan Marketing Organizations where necessary, shall have access to such
records.
E. Minnesota Mutual agrees to comply in all areas with:
1. Rules of the Plan which have been approved by the SBI, to the extent
required by Minnesota Statutes, Section 352.96, subd.
Page 11
<PAGE>
3 (1993 Supp.), and filed with the Minnesota Secretary of State and
Revisor of Statutes;
2. Minnesota Statutes 1992, Section 352.96 (1992 and 1993 Supp.), and any
amendments thereto, provided such amendments do not impair a material
provision of the New Contract and this Agreement; and
3. Section 457 of the Internal Revenue Code of 1986, as amended, or any
rules and regulations thereunder.
VI. MARKETING AND ADMINISTRATIVE SERVICES
A. Plan Marketing Organizations
Minnesota Mutual understands and agrees that MSRS may enter into separate
agreements with Plan Marketing Organizations which will enroll and provide
service to participants in the Plan. Subject to the approval of the SBI,
MSRS, not Minnesota Mutual, is responsible for hiring, directing and
supervising, terminating, and determining the compensation or other
emoluments payable to these Plan Marketing Organizations. Minnesota Mutual
agrees that, except as provided in this Agreement, it will not provide any
compensation or other emoluments to any Plan Marketing Organization, or to
any
Page 12
<PAGE>
individual agent employed by a Plan Marketing Organization, in connection
with services provided to the Plan unless such compensation or emolument
has been approved by MSRS and the SBI.
B. Cooperation With Plan Marketing Organizations
Minnesota Mutual (and its broker-dealer affiliate) agrees to make the New
Contract available to the Plan Marketing Organizations for offer to Plan
participants. In that regard, Minnesota Mutual (and its broker-dealer
affiliate) will enter into such selling agreements as are necessary to make
the New Contract available to the Plan Marketing Organizations and will
also appoint as its agents such employees of the Plan Marketing
Organizations as are necessary. Nothing in this Agreement or in any
agreement between MSRS and a Plan Marketing Organization shall preclude or
limit Minnesota Mutual, or its broker-dealer affiliate, from exercising its
rights, duties or obligations under any law or regulation to supervise the
offer and sale of the New Contract and the persons or individuals it has
authorized or appointed to offer and sell the New Contract. Failure to
cooperate with Plan Marketing Organizations, subject to Minnesota Mutual's
right to cure such failure within 90 days after receipt of written notice
thereof, is grounds for termination under both
Page 13
<PAGE>
Section IX of this Agreement and Section 7.02 of the New Contract.
C. Equality Of Presentation
MSRS shall have sole responsibility for ensuring that the Plan Marketing
Organizations provide fair and equal presentations of all investment
options available under the Plan and that the compensation and emoluments
paid to the Plan Marketing Organizations represents the entire compensation
and emoluments received by any Plan Marketing Organization with regard to
the Plan. Upon request by Minnesota Mutual, SBI shall request MSRS to
provide reasonable assurances to Minnesota Mutual that such fair and equal
presentations are being made. The Agreements with the different Plan
Marketing Organizations shall be substantially identical in form and
content and the requirements of the MSRS shall be consistently applied to
all Plan Marketing Organizations.
Disputes, if any, between the Product Providers, SBI and/or MSRS over the
presentation of products or rates of return and materials prepared by the
Plan Marketing Organizations shall be resolved by a Plan consultant
retained by the SBI. Costs of any such consultant shall be borne by the
Product Provider or Providers initiating such dispute resolution process.
Such
Page 14
<PAGE>
costs shall not be counted as part of the $50,000 maximum applicable to
monitoring costs which are to be reimbursed by Minnesota Mutual in
accordance with Section VII of this Agreement.
D. Reimbursement To MSRS
Minnesota Mutual agrees to make payments to MSRS to reimburse it for
administrative services provided in connection with the Plan. At the end
of each calendar month, Minnesota Mutual will remit to MSRS in the first
year a payment which is equal, on an annual basis, to .07% of the then
current accumulation values (estimated monthly and reconciled to actual
accumulation values quarterly) held under both the Prior Contracts and the
New Contract. Accumulation values for this purpose shall not include
amounts which have been applied to purchase any annuity option, but shall
include amounts held for systematic withdrawal. In subsequent years the
amount of this monthly payment, with respect to accumulation values under
the Prior Contracts and the New Contract, may be adjusted from time to time
by the SBI.
The SBI agrees that the percentage rate of reimbursement to MSRS for
administration services shall be identical for the Product Providers.
Page 15
<PAGE>
E. Payments to Plan Marketing Organizations
Minnesota Mutual agrees to make payments monthly to each Plan Marketing
Organization, or, where necessary, to the broker-dealer with which the
employees of the Plan Marketing Organization are registered, for marketing
services provided in connection with the Plan, which are equal, on an
annual basis, to a percentage, which shall be the percentage rate set forth
in Section 5 of the applicable agreements between MSRS and the Plan
Marketing Organization, of the then current accumulation values held under
both the Prior Contracts and the New Contract and attributable to the
marketing efforts of such Plan Marketing Organization. Accumulation values
for this purpose shall not include amounts which have been applied to
purchase any annuity option, but shall include amounts held for systematic
withdrawal.
Whenever accumulation values held under either the Prior Contracts or the
New Contract are applied to provide any annuity option, which for this
purpose shall not include amounts held for systematic withdrawal, Minnesota
Mutual shall make a one-time payment to the Plan Marketing Organization to
which such accumulation values are attributable, or, where necessary, to
the broker-dealer with which the employees of
Page 16
<PAGE>
the Plan Marketing Organization are registered, in an amount equal to 1.5%
of the amount applied to provide such annuity option.
Any agreement between Minnesota Mutual and a Plan Marketing Organization,
or a broker-dealer with which the employees of such Plan Marketing
Organization are registered, with respect to such compensation or other
emoluments shall be subject to prior approval by MSRS and the SBI.
Minnesota Mutual shall not pay compensation or other emoluments to any Plan
Marketing Organization or broker-dealer without first providing
documentation of the amount and method of computation of such compensation
or other emoluments to, and receiving approval from, MSRS. The SBI agrees
that the percentage rate of compensation or other emoluments to Plan
Marketing Organizations shall be identical for all Product Providers.
F. Costs Of Forms And Marketing Materials
The costs of developing and printing enrollment and/or application forms,
beneficiary designation forms, transfer forms, brochures describing the
Plan, products and investment options, brochures containing performance and
risk comparison, or any other materials required in connection with the
Plan shall be borne by the Product Providers and MSRS for the
Page 17
<PAGE>
Supplemental Investment Fund. The percentage of such costs which the
Product Providers shall bear shall be equal to the percentage of total
assets then held under the Plan by such Product Provider.
Minnesota Mutual agrees to provide developmental and printing services to
MSRS to the extent permitted by law, subject to control by MSRS, in
connection with such forms, brochures and materials. If such services are
provided by Minnesota Mutual, the cost of such services shall be subject to
verification by MSRS and billed directly to MSRS by Minnesota Mutual and
then re-billed by MSRS to the Product Providers and MSRS.
VII. REIMBURSEMENT FOR MONITORING COSTS
Minnesota Mutual agrees to make payments to the SBI to reimburse the SBI
for Minnesota Mutual's share of the SBI's costs in monitoring the
performance of the investment options under the Plan. The SBI agrees to
provide to Minnesota Mutual a statement of its monitoring costs, in
reasonable detail, prior to the making of such payment by Minnesota Mutual.
The portion of such costs due hereunder in any year from Minnesota Mutual
shall be determined by dividing the total of such costs by the number of
Product Providers. In no event, however, shall the total amount of all
reimbursement payments by
Page 18
<PAGE>
Minnesota Mutual under this Section VII exceed $50,000 during the term of
this Agreement, without the prior consent of Minnesota Mutual. Payments
shall be made on an invoice from the SBI. The invoice schedule will be
determined by the SBI but Minnesota Mutual shall not receive an invoice
more frequently than quarterly. Payments are due 30 days from the date of
receipt by Minnesota Mutual of the invoice.
VIII. AUDIT OF MINNESOTA MUTUAL
Minnesota Mutual agrees to provide annually to the SBI a copy of its
financial statements which shall have been examined and certified by
independent auditors. In addition, Minnesota Mutual agrees to allow such
of its books and records and accounting procedures and practices as are
directly relevant to the Plan and this Agreement to be examined in such
manner as may reasonably be required by the SBI or the Legislative Auditor
of the State of Minnesota.
IX. TERMINATION OF AGREEMENT
This Agreement will terminate on June 30, 1999, unless terminated earlier
hereunder. This Agreement will also terminate in the event the New
Contract is terminated pursuant
Page 19
<PAGE>
to Section 7.02 thereof, as amended by Section IV, paragraph C(3), of this
Agreement.
X. AMENDMENTS TO THIS AGREEMENT
No amendment to this Agreement shall be effective unless such amendment
shall be in writing and signed by all of the parties hereto.
XI. NOTICE
Any notice under this Agreement must be in writing and may be given by or
on behalf of Minnesota Mutual by delivering the same to the SBI or by
mailing it to the SBI at its address of record with Minnesota Mutual, and
any notice to Minnesota Mutual given by the SBI shall be in writing and
mailed to Minnesota Mutual at its Home Office. Any such notice shall be
effective on the date of receipt unless the terms of this Agreement dictate
otherwise.
XII. GOVERNING LAW
This Agreement shall be construed according to the laws of Minnesota.
Page 20
<PAGE>
XIII. INDEMNIFICATION AND DEFENSE
Minnesota Mutual hereby agrees to indemnify and hold harmless the State of
Minnesota, the Minnesota State Board of Investment (in this section, the
"Board"), each member of the Board individually, the officers, agents and
employees of each and every of the above, their successors, and any combination
thereof, from all claims, demands, or causes of action arising out of an act or
omission of Minnesota Mutual related to this Agreement or an act or omission of
Minnesota Mutual related to Minnesota Mutual's sales activities in connection
with the Plan; provided, however, that such acts or omissions of Minnesota
Mutual shall not include acts or omissions of Plan Marketing Organizations
related to sales activities in connection with the Plan where the MSRS has
directed or assumed responsibility for the supervision of such sales activities
as described in Section VII of this Agreement.
Minnesota Mutual shall reimburse the Board for all reasonable expenses incurred
to defend and legal proceedings that may be brought against the State of
Minnesota, the Minnesota State Board of Investment, each member of the Board
individually, the officers, agents and employees of each and every of the above,
their successors, and any combination thereof, on any claim or demand effected
by this section, and shall satisfy any judgment
Page 21
<PAGE>
that may be rendered against such party or parties in respect to any such claim
or demand. The Board shall notify Minnesota Mutual upon receipt of any such
claim or demand which it receives. Pursuant to Minnesota Statutes section 8.06,
the Minnesota Attorney General (or its designee) shall be the legal counsel for
the State of Minnesota, the Board, the members of the Board individually, and
the officers, agents and employees of the Board or the State of Minnesota.
XIV. EMPLOYMENT PRACTICES
Minnesota Mutual certifies that it has received a certificate of compliance from
the Commissioner of Human Rights pursuant to Minnesota Statutes section 363.073.
XV. DATA CONFIDENTIALITY
To the extent that Minnesota Mutual has access to data of the Plan which is
classified as private, nonpublic or confidential pursuant to the Minnesota
Government Data Practices Act, Minnesota Statutes chapter 13, Minnesota Mutual
agrees to comply with the requirements of Minnesota Statutes chapter 13 in
providing services under this Agreement. Minnesota Mutual agrees to indemnify,
save and hold harmless the State of Minnesota, the Minnesota State Board of
Investment, each member of the Board
Page 22
<PAGE>
individually, the officers, agents and employees of each and every of the above,
from all claims arising out of, resulting from any act or omission of Minnesota
Mutual or in any violation by Minnesota Mutual of any provision of the Minnesota
Government Data Practices Act, Minnesota Statutes chapter 13, including legal
fees and disbursements paid or incurred to enforce this provision of the
Agreement. In the event Minnesota Mutual subcontracts any or all of the work to
be performed under this Agreement, Minnesota Mutual shall retain responsibility
under this paragraph for compliance with the Minnesota Government Data Practices
Act.
XVI. WAIVER
Any waiver at any time by either party hereto of any right with respect to any
matter arising in connection with this Agreement shall not be deemed to be a
waiver with respect to any subsequent matter.
XVII. ANTITRUST
Minnesota Mutual shall assign to the State of Minnesota any and all claims for
overcharges as to goods and/or services provided in connection with the
Agreement resulting from antitrust violations
Page 23
<PAGE>
which arise under the antitrust laws of the United States and the antitrust laws
of the State of Minnesota.
XVIII. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable, such
invalidity or enforceability will not affect the validity or enforceability of
any provision hereof, all of which provisions are hereby declared severable.
XIX. ONGOING OBLIGATION
The provisions of (1) Paragraphs B, C and D of Section IV, (2) Paragraphs B, C,
D and E of Section V, (3) Paragraphs D and E of Section VI, (4) Section VIII,
(5) Section XIII and (6) Section XV herein shall survive any termination of this
Agreement; provided, however, that the provisions of Paragraphs D and E of
Section VI shall not survive a termination of this Agreement prior to June 30,
1999.
IN WITNESS WHEREOF, the parties have, by their duly authorized officers or
representatives, executed ______ counterparts of the Agreement, intending to be
bound thereby.
MINNESOTA STATE BOARD OF INVESTMENT
Page 24
<PAGE>
By:
-----------------------------------------
Title:
--------------------------------------
MINNESOTA STATE RETIREMENT SYSTEM
By:
-----------------------------------------
Executive Director
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
STATE OF MINNESOTA
THE OFFICE OF THE ATTORNEY GENERAL
By:
-----------------------------------------
Assistant Attorney General
STATE OF MINNESOTA
DEPARTMENT OF ADMINISTRATION
By:
-----------------------------------------
Title:
--------------------------------------
STATE OF MINNESOTA
DEPARTMENT OF FINANCE
Page 25
<PAGE>
By:
-----------------------------------------
Title:
--------------------------------------
Page 26
<PAGE>
[Minnesota Mutual Letterhead]
April 23, 1997
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Group Variable Annuity Account (the
"Account") in connection with Post-Effective Amendment No. 5 to its Registration
Statement on Form N-4. This Post-Effective Amendment is to be filed by the
Company and the Account with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, with respect to certain variable annuity
contracts (Securities and Exchange Commission File No. 33-79534.
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant to the laws of the State of Minnesota; and
2. The issuance and sale of the variable annuity contracts funded by the
Account have been duly authorized by the Company and such contracts, when
issued in accordance with and as described in the current Prospectus
contained in the Registration Statement, and upon compliance with
applicable local and federal laws, will be legal and binding obligations of
the Company in accordance with their terms.
I hereby consent to the filing of this option as an exhibit to the Registration
Statement.
Sincerely,
Donald F. Gruber
Donald F. Gruber
Senior Counsel
<PAGE>
(KPMG Peat Marwick LLP Letterhead)
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
The Minnesota Mutual Life Insurance Company and
Contract Owners of Minnesota Mutual Group Variable Annuity Account:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "AUDITORS" in Part B of the Registration Statement.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 23, 1997
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
MIMLIC SERIES FUND, INC. - MONEY MARKET SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
SIMPLE YIELD CALCULATION
Simple yields are computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the MIMLIC Series Fund, Inc. - Money Market segregated
sub-account (MSF - Money Market sub-account) at the beginning of the most recent
seven calendar day period, subtracting a hypothetical charge reflecting
deductions from contractowner accounts, and dividing the difference by the value
of the account at the beginning of the seven day period to determine the base
period return, and multiplying the base period return by 365/7.
EFFECTIVE YIELD CALCULATION
Effective yields are computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one accumulation unit of the MSF - Money Market sub-account at the
beginning of the most recent seven calendar day period, subtracting a
hypothetical charge reflecting deductions from contractowner accounts, and
dividing the difference by the value of the account at the beginning of the
seven day period return by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result.
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
MIMLIC SERIES FUND, INC. - INDEX 500 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
VANGUARD FIXED INCOME SECURITIES FUND, INC. - LONG-TERM
CORPORATE SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
VANGUARD/WELLINGTON FUND SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
FIDELITY CONTRAFUND SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
SCUDDER INTERNATIONAL FUND SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
JANUS TWENTY FUND SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on the
effective date of the contract. The cumulative total return at the end of any
given period is calculated as follows:
ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED
-------------------------------------------------
CUMULATIVE = INITIAL AMOUNT INVESTED * 100
TOTAL RETURN
Cumulative total return will be calculated both with and without consideration
of the contingent deferred sales charge.
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value amount each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return will be calculated both with and without
consideration of the contingent deferred sales charge.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000924279
<NAME> MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 1
<NAME> MIMLIC MONEY MARKET SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1838445
<INVESTMENTS-AT-VALUE> 1838445
<RECEIVABLES> 79251
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1917696
<PAYABLE-FOR-SECURITIES> 75683
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3567
<TOTAL-LIABILITIES> 79250
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1676436
<SHARES-COMMON-PRIOR> 812075
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1838446
<DIVIDEND-INCOME> 53181
<INTEREST-INCOME> 0
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