As filed with the Securities and Exchange Commission on April 29, 1999
Registration No. 33-83928
--------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
PRE-EFFECTIVE AMENDMENT NO. _____ ( )
POST-EFFECTIVE AMENDMENT NO. 7 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 7 (X)
(Check appropriate box or boxes)
--------------------------------------------------
RETIREMENT PLAN SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Officers) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
Great-West Life & Annuity Insurance Company
President and Chief Executive Officer
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check
appropriate space):
Immediately upon filing pursuant to paragraph (b) of Rule 485.
__X__ On April 30, 1999, pursuant to paragraph (b) of Rule 485.
60 days after filing pursuant to paragraph (a)(1) of
Rule 485. _____ On ____________, pursuant to paragraph (a)(1) of Rule
485. _____ 75 days after filing pursuant to paragraph (a)(2) of Rule
485.
<PAGE>
_____ On ____________, pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following:
_____ This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
<TABLE>
<S> <C>
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page.............................................................Cover Page
2 Definitions............................................................Definitions
3. Synopsis...............................................................Overview; Fee Table; Key Features
4. Condensed Financial Information........................................Appendix A
5. General Description of
Registrant, Depositor and
Portfolio Companies..................................................Great-West Life & Annuity
Insurance Company; The Series
Account; Investments of the Series
Account; Voting Rights
6. Deductions ............................................................Fee Table; Key Features-Charges
and Deductions Under the
Contracts; Distribution of the
Contracts
7. General Description of
Variable Annuity Contracts ..........................................The Contracts; Investments of the
Series Account; Statement of
Additional Information
8. Annuity Period.........................................................Annuity Options
<PAGE>
9. Death Benefit..........................................................Death Benefit; Annuity Options
10. Purchases and Contract Value...........................................Overview; The Contracts; The
Contracts-Purchase of Contracts;
Distribution of the Contracts
11. Redemptions............................................................The Contracts; The
Contracts-Surrender and Partial
Withdrawal; Key
Features-Surrendering Your
Contract or Making Partial
Withdrawals
12. Taxes..................................................................Federal Tax Consequences
13. .......................................................................Legal ProceedingsLegal Proceedings
14. .......................................................................Table of Contents of Statement of
Additional Information.....................................................Statement of Additional
Information
<PAGE>
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page.............................................................Cover Page
16. Table of Contents......................................................Table of Contents
17. General Information and
History..............................................................Not Applicable
18. Services...............................................................Custodian and Accountants
19. Purchase of Securities
Being Offered........................................................Not Applicable
20. Underwriters...........................................................Underwriter
21. Calculation of
Performance Data.....................................................Calculation of Performance Data
22. Annuity Payments.......................................................Not Applicable
23. Financial Statements...................................................Financial Statements
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
of
Great-West Life & Annuity Insurance Company
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACTS
Distributed by
One Orchard Equities, Inc.
Issued by
Great-West Life & Annuity Insurance Company
8515 East Orchard Road, Englewood, Colorado 80111
(800) 338-4015
================================================================================
Overview
This prospectus describes individual flexible premium variable annuity contracts
(the "Contracts") designed for Individual Retirement Annuity programs ("IRA
Programs"). The Contracts provide an annuity insurance contract whose value is
based on the investment performance of Investment Divisions that you select. The
Contracts can be purchased only in connection with IRA Programs; depending on
your state of residence, there are generally three ways you can purchase a
Contract:
o with rollover proceeds from qualified plans, such as 401(k) plans, o with
rollover proceeds from other eligible rollover sources, or o with earned income.
If you purchase a Contract, your spouse may also purchase a Contract for his or
her IRA Program.
Who Should Invest
You should consider purchasing the Contract if you are seeking an investment for
your IRA Program that offers a wide range of investment and payment options
enabling you to design a retirement plan that meets your objectives and needs.
Allocating Your Investment
You can allocate your Contributions among 14 Investment Divisions of Retirement
Plan Series Account (the "Series Account"). Each Investment Division invests in
one of 14 corresponding portfolios of the Maxim Series Fund, Inc. (the "Fund").
You can also allocate your money to certain options where you can earn a fixed
rate of return. Your interest in a fixed option is not considered a security and
is not subject to registration with or review by the Securities and Exchange
Commission.
Annuity Payment Options
The Contract offers you a variety of annuity payment options. You can select
from options that provide for fixed or variable payments or a combination of
both. Under a variable annuity payment option, your annuity payments will
continue to reflect the investment experience of the Investment Divisions you
select. Annuity payments can be guaranteed for your lifetime and/or your
spouse's lifetime or for a specified period of time, depending on your needs and
circumstances.
This prospectus is accompanied by a current prospectus for the Fund. This
prospectus presents important information you should read before purchasing a
Contract. Please read it carefully and retain it for future reference. You can
find more detailed information pertaining to the Contract in the Statement of
Additional Information dated May 1, 1999, which has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
incorporated by reference into this prospectus, which means that it is legally a
part of this prospectus. It may be obtained without charge by contacting
Great-West Life & Annuity Insurance Company ("we," "GWL&A" or "Great-West") at
the address or telephone number set forth above. Or, you can obtain it by
visiting the Securities and Exchange Commission's web site at www.sec.gov.
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.
The date of this prospectus is May 1, 1999.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Table of Contents
Definitions 4
Key Features 6
Fee Table 8
Eligible Fund Annual Expenses 9
Examples. 10
Condensed Financial Information 13
Great-West Life & Annuity Insurance Company 14
The Series Account 14
Eligible Funds 14
Advisers. 16
Reinvestment and Redemption 16
Investments of the Series Account 16
The Contracts 17
Charges and Deductions 19
Death Benefit 21
Annuity Options 22
Periodic Payment Options 24
Federal Tax Consequences 25
Performance Related Information 28
Voting Rights 30
Distribution of the Contracts 31
Amendment of Contracts 31
Ownership 31
State Regulation 31
Reports 31
Year 2000 31
Rights Reserved by Great-West 31
Adding and Discontinuing Investment Options 31
Substitution of Investments 32
Legal Matters 32
Registration Statement 32
Statement of Additional Information 32
</TABLE>
<PAGE>
Definitions
Accumulation Period
The period between the effective date of your Contract and the Annuity
Commencement Date. During this period, you are making Contributions to the
Contract.
Accumulation Unit
An accounting measure we use to determine your Variable Account Value during the
Accumulation Period.
Administrative Offices
The Administrative Offices of GWL&A are located at 8505 East Orchard Road,
Englewood, Colorado 80111.
Annuitant
The person upon whose life the payment of an annuity is based and who will
receive annuity payments. The Annuitant must be the Contract Owner.
Annuity Account
An account established by us in your name that reflects all of your activity
under a Contract.
Annuity Commencement Date
The date annuity payments begin under an Annuity Option.
Annuity Period
The period following the Accumulation Period that begins on the Annuity
Commencement Date.
Annuity Unit
An accounting measure we use to determine the dollar value of each variable
annuity payment after the first payment.
Contribution(s)
Amounts you pay to purchase a Contract.
Contract
An agreement between GWL&A and the Contract Owner (which includes the purchase
application) providing the terms of the variable annuity offered by this
prospectus.
Contract Owner
The person to whom a Contract is issued; sometimes referred to as "you" or
"your" in this Prospectus.
Contract Value
The sum of your Variable Account Value and your Guaranteed Account Value, less
any withdrawals, deductions for charges, and any applicable Premium Tax.
Eligible Fund
A mutual fund in which an Investment Division invests all of its assets. Each
Eligible Fund is a portfolio of the Maxim Series Fund, Inc.
Fixed Annuity
An annuity with payments which remain fixed throughout the Annuity Period and
which do not reflect the investment experience of the Series Account.
Fixed Option
An option that pays a fixed rate of return to which you can allocate
Contributions or Transfers. Your interest in a fixed option is not a security
and is not subject to supervision by the Securities and Exchange Commission.
Guaranteed Account Value
The sum of the values of your Guaranteed Sub-Accounts.
Guaranteed Interest Rate
A minimum interest rate applicable to a Fixed Option. It is presently equal to
an annual effective rate of 3.00%.
Guaranteed Sub-Account
An account we maintain that reflects the values credited to you from a specific
Fixed Option.
Investment Division
The Series Account is divided into Investment Divisions, one for each Eligible
Fund. Each Investment Division invests all of its assets in one Eligible Fund.
You select one or more Investment Divisions to which you allocate Contract
Value. Contract Value you allocate to an Investment Division will reflect the
investment performance of the corresponding Eligible Fund.
Premium Tax
The amount of tax, if any, charged by a state or other governmental authority.
Request
Any request, either written, by telephone or computerized, which is in a form
satisfactory to GWL&A and received by GWL&A at its Administrative Offices.
Series Account
The segregated investment account established by GWL&A to provide funding
options for the Contract. It is registered as a unit investment trust under the
Investment Company Act of 1940.
Transfer
When you move your Contract Value between and among the Investment Divisions
and/or the Fixed Options.
Valuation Date
A date on which we calculate the value of the Investment Divisions. This
calculation is made as the close of business of the New York Stock Exchange
(generally 4:00 p.m. ET) on each day that the New York Stock Exchange is open
for trading. Contributions and Requests received after 4:00 p.m. EST/EDT will be
considered to have been received on the next business day. On the day after
Thanksgiving, however, you can only submit transactions by automated voice
response unit or fully automated computer link. The day after Thanksgiving is a
Valuation Date.
Valuation Period
The period between the end of two successive Valuation Dates.
Variable Annuity
An annuity providing for payments, the amount of which will vary with the
performance of the Investment Divisions that you select.
Variable Account Value
The total value of your Variable Sub-Account(s).
Variable Sub-Account
An account we maintain that reflects the value credited to you from a specific
Investment Division.
<PAGE>
Key Features
Following are some of the key features of the Contract. These topics are
discussed in more detail throughout this prospectus so please be sure to read
through it carefully.
Purpose of the Contracts
The Contracts are designed to be an investment for IRA Programs. Depending on
your state of residence, there are generally three ways you can purchase a
Contract:
o........with rollover proceeds from qualified plans, such as 401(k) plans, o
with rollover proceeds from other eligible rollover sources, or o with earned
income.
The Contracts may also be purchased for IRA Programs for spouses of Contract
Owners.
What is the Minimum Contribution The minimum initial investment is:
o........Nothing if it is made with eligible rollover proceeds
o $250 if it is made from earned income derived from non-retirement plan sources
The minimum ongoing contribution is:
o Nothing if it is made with eligible rollover proceeds
o $250 if it is made from earned income derived from non-retirement plan sources
Allocation of Contributions
You may allocate your Contributions to the Investment Divisions of the Series
Account or to a Fixed Option, or a combination of both. The value of your
Contract that is allocated to the Investment Divisions will depend upon the
investment performance of those divisions. Each Investment Division invests in a
corresponding Eligible Fund. You can change your allocation instructions at any
time by Request.
Surrendering Your Contract or Making Partial Withdrawals
You can surrender your entire Contract or make a partial withdrawal at any time
before the Annuity Commencement Date. If you request a partial withdrawal less
than 30 days before the Annuity Commencement Date, we may delay the Annuity
Commencement Date for up to 30 days. Upon a surrender or partial withdrawal, a
penalty tax may be assessed. Please see "Federal Tax Consequences."
Transfers
You may Transfer your Contract Value among the Investment Divisions and/or the
Fixed Options at any time before the Annuity Commencement Date.
Annuity Options
The Contracts provide several annuity payment options. You can select from
options that provide for fixed or variable payments or a combination of both.
Under a variable payment option your annuity payments will reflect the
performance of the Investment Divisions that you select. You must elect an
annuity option(s) at least 30 days before your Annuity Commencement Date. If you
do not make an election within this time frame, annuity payments will begin
automatically on the Annuity Commencement Date under an option providing for a
life annuity with 120 monthly payments certain.
Free Look Period
During the free look period, you may cancel your Contract within 20 days (or
longer where required by law) of receiving it. You may cancel it for any reason
by delivering or mailing it along with a Request to cancel to our Administrative
Offices and we will refund to you the sum of the Contributions you have made
less withdrawals.
A Wide Range of Investment Choices
You may allocate some or all of your Contributions to 14 Investment Divisions of
the Series Account. Each Investment Division invests in shares of one Eligible
Fund. Each Eligible Fund is a separate mutual fund that has distinct investment
objectives and policies. You can obtain a more complete description of the
Eligible Funds in the accompanying prospectus for the Fund, which you should
read carefully before allocating to an Investment Division. We reserve the right
to add or delete Investment Divisions at our discretion.
Charges and Deductions under the Contract
You will pay certain charges under the Contract. These charges may include:
o........An annual Contract Maintenance Charge
o An administrative fee if you surrender your Contract or make a partial
withdrawal within the first twelve months
o A mortality and expense risk charge
o A Premium Tax
In addition, you indirectly pay the management fees and other expenses of an
Eligible Fund when you allocate your money to the corresponding Investment
Division.
<PAGE>
Fee Table
The purpose of this table and the examples that follow is to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly when investing in the Contract. The table and examples reflect
expenses related to the Contracts and the Eligible Funds.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Transaction Expenses
Sales load imposed on purchases None
Deferred sales load None
Distribution fees None
Exchange fee None
Administrative fee if your Contract is surrendered during first 12 months $50
Administrative fee if your make a partial withdrawal during first 12 months $25
Contract Maintenance Charge $30*
</TABLE>
* You will be charged a Contract Maintenance Charge of $30 if your Contract
Value is less than $5,000 on December 31. We will assess this fee only if your
Contract was issued on or after July 8, 1998, and the assessment of the fee has
been approved by the insurance regulatory authorities of your state.
Annual Expenses of the Investment Divisions (as a percentage of average Variable
Account Value) The only expense of the Investment Divisions of the Series
Account is our deduction of a Mortality and Expense Risk Charge. The amount of
this charge that applies to your Contract will be based on the following
schedule:
-------------------------------- -----------------------------
Mortality & Expense Risk Charge Contract Value
-------------------------------- -----------------------------
0.75% $0 - $9,999.99
-------------------------------- -----------------------------
-------------------------------- -----------------------------
0.50% $10,000 - $24,999.99
-------------------------------- -----------------------------
-------------------------------- -----------------------------
0.25% $25,000 - $49,999.99
-------------------------------- -----------------------------
-------------------------------- -----------------------------
0.00% $50,000 and greater
-------------------------------- -----------------------------
The mortality and expense charge for the first calendar year of your Contract
will be based on your initial Contribution. Thereafter, the amount of the charge
will be based on your Contract Value on December 31 of each year. You may wish
to monitor your Contract Value closely to ensure that you take advantage of the
lowest possible charge.
<PAGE>
Eligible Fund Annual Expenses
(as a percentage of average daily net assets, before any applicable fee waivers
or expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Portfolio Management Fees Other Expenses Total Maxim Series Fund
Annual Expenses
Maxim Money Market Portfolio 0.46% None 0.46%
Maxim Investment Grade
Corporate Bond Portfolio 0.60% None 0.60%
Maxim Stock Index Portfolio 0.60% None 0.60%
Maxim U.S. Government
Mortgage Securities Portfolio
0.60% None 0.60%
Maxim Small-Cap Index 0.60% None 0.60%
Portfolio
Maxim Growth Index Portfolio 0.60% None 0.60%
Maxim Short-Term Maturity
Bond Portfolio 0.60% None 0.60%
Maxim Founders Blue Chip 1.00% 0.15% 1.15%
Portfolio
Maxim Value Index Portfolio 0.60% None 0.60%
Maxim Ariel Small-Cap Value 1.00% 0.27% 1.27%*
Portfolio
Maxim Foreign Equity Portfolio 1.00% 0.31% 1.31%*
Maxim Loomis Sayles Small-Cap
Value Portfolio 1.00% 0.10% 1.10%
Maxim Loomis Sayles Corporate 0.90% None 0.90%
Bond Portfolio
Maxim T. Rowe Price MidCap 1.00% 0.05% 1.05%
Growth Portfolio
</TABLE>
* When taking voluntary reimbursements and waivers into account the fees of the
Maxim Ariel Small-Cap Value Portfolio were 1.26% and the Maxim Foreign Equity
Portfolio were 1.30%.
<PAGE>
Examples
If you surrender your Contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return:
<TABLE>
<S> <C> <C> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
Maxim Money Market $54.81 $15.83 $28.95 $73.06
Investment Division
Maxim Investment Grade $56.26 $20.59 $37.60 $94.57
Corporate Bond
Investment Division
Maxim Stock Index $56.26 $20.59 $37.60 $94.57
Investment Division
Maxim U.S. Government $56.26 $20.59 $37.60 $94.57
Mortgage Securities
Investment Division
Maxim Small-Cap Index $56.26 $20.59 $37.60 $94.57
Investment Division
Maxim Growth Index $56.26 $20.59 $37.60 $94.57
Investment Division
Maxim Short-Term $56.26 $20.59 $37.60 $94.57
Maturity Bond
Investment Division
Maxim Founders Blue $61.94 $39.03 $70.91 $175.98
Chip Investment Division
Small-CapMaxim Value $56.26 $20.59 $37.60 $94.57
Index Investment
Division
Maxim Ariel Small-Cap $63.06 $42.67 $77.45 $191.69
Value Investment
Division
Maxim Foreign Equity $63.47 $43.99 $79.81 $197.35
Investment Division
Maxim Loomis Sayles $61.53 $37.70 $68.53 $170.23
Small-Cap Value
Investment Division
Maxim Loomis Sayles $59.36 $30.70 $55.91 $139.58
Corporate Bond
Investment Division
Maxim T. Rowe Price $60.91 $35.71 $64.94 $161.54
MidCap Growth
Investment Division
</TABLE>
<PAGE>
Examples (Cont.) If you do not surrender your Contract, or if you annuitize at
the end of the applicable time period, you would pay the following expenses on a
$1,000 investment, assuming a 5% annual return:
<TABLE>
<S> <C> <C> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
Maxim Money Market $4.81 $15.83 $28.95 $73.06
Investment Division
Maxim Investment Grade $6.26 $20.59 $37.60 $94.57
Corporate Bond
Investment Division
Maxim Stock Index $6.26 $20.59 $37.60 $94.57
Investment Division
Maxim U.S. Government $6.26 $20.59 $37.60 $94.57
Mortgage Securities
Investment Division
Maxim Small-Cap Index $6.26 $20.59 $37.60 $94.57
Investment Division
Maxim Growth Index $6.26 $20.59 $37.60 $94.57
Investment Division
Maxim Short-Term $6.26 $20.59 $37.60 $94.57
Maturity Bond
Investment Division
Maxim Founders Blue $11.94 $39.03 $70.91 $175.98
Chip Investment Division
Short-Term Maturity
Bond Investment Division
Maxim Value Index $6.26 $20.59 $37.60 $94.57
Investment Division
Maxim Ariel Small-Cap $13.06 $42.67 $77.45 $191.69
Value Investment
Division
Maxim Foreign Equity $13.47 $43.99 $79.81 $197.35
Investment Division
Maxim Loomis Sayles $11.53 $37.70 $68.53 $170.23
Small-Cap Value
Investment Division
Maxim Loomis Sayles $9.36 $30.70 $55.91 $139.58
Corporate Bond
Investment Division
Maxim T. Rowe Price $10.91 $35.71 $64.94 $161.54
MidCap Growth
Investment Division
</TABLE>
These examples, including the assumed rate of return, should not be considered a
representation of past or future expenses or performance. They show the highest
level of mortality and expense risk charges that you might pay. The tables do
not reflect the imposition of the Contract Maintenance Charge. Actual expenses
and performance achieved may be more or less than those shown.
<PAGE>
39
32
Condensed Financial Information Attached as Appendix A is a table showing
selected information concerning Accumulation Units for each Investment Division.
An Accumulation Unit is the unit of measure that we use to calculate the value
of your interest in an Investment Division. The Accumulation Unit values do not
reflect the deduction of certain charges that are subtracted from your Annuity
Account Value, such as the Contract Maintenance Charge. The information in the
table is included in the Series Account's financial statements, which have been
audited by Deloitte & Touche LLP, independent auditors. To obtain a fuller
picture of each Investment Division's finances and performance, you should also
review the Series Account's financial statements, which are contained in the
Statement of Additional Information.
<PAGE>
Great-West Life & Annuity Insurance Company GWL&A is a stock life insurance
company originally organized under the laws of the state of Kansas as the
National Interment Association. Its name was changed to Ranger
National Life Insurance Company in 1963 and to Insuramerica Corporation prior to
changing to its current name in 1982. In September of 1990, GWL&A redomesticated
and is now organized under the laws of the state of Colorado.
GWL&A is authorized to engage in the sale of life insurance, accident and health
insurance and annuities. It is qualified to do business in the District of
Columbia, Puerto Rico, the U.S. Virgin Islands, Guam and 49 states in the United
States.
GWL&A is an indirect, wholly-owned subsidiary of The Great-West Life Assurance
Company ("Great-West Life"). Great-West Life is a subsidiary of Great-West
Lifeco Inc., a holding company. Great-West Lifeco Inc. is in turn a subsidiary
of Power Financial Corporation, a financial services company. Power Corporation
of Canada, a holding and management company, has voting control of Power
Financial Corporation. Mr. Paul Desmarais, through a group of private holding
companies, which he controls, has voting control of Power Corporation of Canada.
GWL&A is the issuer of the Contracts and it has primary responsibility for their
administration.
The Series Account We organized the Series Account under Colorado law on January
25, 1994. The Series Account is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940.
However, this registration does not involve supervision of the management or
investment practices or polices of the Series Account or GWL&A by the Securities
and Exchange Commission.
We own the assets of the Series Account. The income, gains or losses, realized
or unrealized, from assets allocated to an Investment Division are credited to
or charged against that Investment Division without regard to the other income
gains or losses of any other Investment Division and without regard to any other
business GWL&A may conduct.
We will at all time maintain assets in the Series Account with a total market
value at least equal to the reserves and other liabilities relating to the
variable benefits under all Contracts participating in the Series Account. Those
assets may not be charged with our liabilities from our other business. Our
obligations under those Contracts are, however, our general corporate
obligations.
The Series Account is divided into 14 Investment Divisions. Each Investment
Division invests exclusively in shares of a corresponding Eligible Fund. We may
in the future add new Investment Divisions or delete existing ones. The income,
gains or losses, realized or unrealized, from assets allocated to each
Sub-Account are credited to or charged against that Sub-Account without regard
to the other income, gains or losses of the other Sub-Accounts. All amounts
allocated to an Investment Division will be invested in the corresponding
Eligible Fund.
We hold the assets of the Series Account. We keep those assets physically
segregated and held separate and apart from our general account assets. We
maintain records of all purchases and redemptions of shares of the portfolios.
We do not guarantee the investment performance of the Investment Divisions. Your
Variable Account Value and the amount of variable annuity payments depend on the
investment performance of the Eligible Funds. Therefore, Contract Owners bear
the full investment risk for all Contributions allocated to the Investment
Divisions.
The Series Account currently has 14 Investment Divisions available for
allocation of Contributions. Each Investment Division invests exclusively in
shares of one Eligible Fund. If we decide to make additional Investment
Divisions available in the future, we may or may not make them available to
existing Contract Owners, based on our assessment of marketing needs and
conditions.
Eligible Funds The Contract offers a number of investment options, corresponding
to the Investment Divisions. Each Investment Division invests in a single
Eligible Fund. Each Eligible Fund is a separate mutual fund having its own
objectives and investment policies. Each Eligible Fund is a separate mutual fund
that is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940. This registration does not involve supervision
of the Eligible Funds by the Securities and Exchange Commission. More
comprehensive information, including a discussion of potential risks, is found
in the current prospectuses for the Eligible Funds. The prospectuses should be
read in connection with this prospectus. You may obtain a copy of the Eligible
Fund prospectuses without charge by Request.
Some of the Eligible Funds have been established by investment advisers which
manage publicly traded mutual funds having similar names and investment
objectives. While some of the Eligible Funds may be similar to, and may in fact
be modeled after publicly traded mutual funds, you should understand that the
Eligible Funds are not otherwise directly related to any publicly traded mutual
fund. Consequently, the investment performance of publicly traded mutual funds
and any corresponding Eligible Funds may differ substantially.
The income, gains and losses of one Eligible Fund generally have no effect on
the investment performance of any other portfolio.
The Eligible Funds include the following:
o........The Maxim Money Market Portfolio seeks as high a level of current
income as is consistent with the preservation of capital and liquidity.
Investment in the Money Market Portfolio is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the portfolio seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in this
portfolio.
o........The Maxim Investment Grade Corporate Bond Portfolio seeks the highest
possible current income within the confines of the primary goal of insuring
the protection of capital by investing primarily in investment grade
corporate debt securities and in debt securities issued by the U.S.
Government and its agencies.
o........The Maxim Stock Index Portfolio seeks investment results that track the
total return of the common stocks that comprise Standard & Poor's (S&P) 500
Composite Stock Price Index and the S&P Mid-Cap Index, weighted according
to their respective pro-rata shares of the market.
o........The Maxim U.S. Government Mortgage Securities Portfolio seeks the
highest level of return consistent with preservation of capital and
substantial credit protection by investing in mortgage-related securities
issued or guaranteed by an agency or instrumentality of the U.S.
Government, other U.S. agency and instrumentality obligations, and in U.S.
Treasury obligations.
o........The Maxim Small-Cap Index Portfolio seeks investment results that track
the total return of the common stocks that comprise the S&P Small-Cap 600
Stock Index.1
o........The Maxim Value Index Portfolio seeks investment results that track the
total return of the common stocks that comprise the Russell 1000 Value
Index.2
o........The Maxim Growth Index Portfolio seeks investment results that track
the total return of the common stocks that comprise the Russell 1000 Growth
Index.
o........The Maxim Ariel Small-Cap Value Portfolio seeks long term capital
appreciation, by investing primarily in small-cap common stocks. This
portfolio will emphasize small companies that are believed to be
undervalued.
o........The Maxim Foreign Equity Portfolio seeks total return from long-term
growth of capital and dividend income by investing its assets primarily in
international equity securities which are predominantly common stocks and
may also include any types of equity securities.
o The Maxim Loomis Sayles Small-Cap Value Portfolio seeks long-term capital
growth. This portfolio seeks to build a core small-cap portfolio of solid
growth companies' stock with a small emphasis on companies that have
experienced significant business problems but which are believed to have
favorable prospects for recovery.
o........The Maxim Loomis Sayles Corporate Bond Portfolio seeks high total
investment return through a combination of current income and capital
preservation. This portfolio will invest at least 65% of its total assets
in corporate debt securities of any maturity. It may also invest up to 20%
of its total assets in preferred stocks or foreign securities and up to 35%
in below investment grade
quality securities.
o........The Maxim Short-Term Maturity Bond Portfolio seeks preservation of
capital, liquidity and maximum total return through investment in an
actively managed portfolio of debt securities.
o........The Maxim Founders Blue Chip Portfolio seeks long-term growth of
capital and income. This portfolio invests primarily in common stocks of
large, well established, stable and mature companies, commonly known as
"Blue Chip" companies.
o........The Maxim T. Rowe Price MidCap Growth Portfolio seeks long-term
appreciation. This portfolio will invest primarily in a diversified
portfolio of mid-cap companies emphasizing companies whose earnings are
expected to grow at a faster rate than the average mid-cap company.
- --------
1 Standard & Poor's Small-Cap 600 Stock Index is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by the Fund and GWL&A. The
portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of using
this index. 2 The Frank Russell Company is not a sponsor of, or in any other way
affiliated with, the Eligible Funds.
Where to Find More Information about the Portfolios Additional information about
the Eligible Funds can be found in the current prospectus for the Maxim Series
Fund, Inc., which can be obtained from us.
Advisers Investment Adviser The investment adviser (the "Investment Adviser")
for the Fund is GW Capital Management LLC, 8515 East Orchard Road, Englewood,
Colorado 80111. The Investment Adviser is an affiliate of GWL&A.
Sub-Advisers
Ariel Capital
Management Inc.
("Ariel"), located at 307 N. Michigan Avenue, Chicago, Illinois 60601, is
responsible for the day-to-day management of the Maxim Ariel Small-Cap Value
Portfolio and for making decisions to buy, sell or hold any particular security.
Loomis, Sayles & Company, Inc. ("Loomis Sayles"), located at One Financial
Center, Boston, Massachusetts 02111, is responsible for the day-to-day
management of the Maxim Loomis Sayles Small-Cap Value, Maxim Foreign Equity and
Maxim Loomis Sayles Corporate Bond Portfolios.
Founders Asset
Management, LLC
("Founders"), located at 2930 East Third Avenue, Denver, Colorado, 80206, is
responsible for the day-to-day management of the Maxim Founders Blue Chip
Portfolio.
T. Rowe Price Associates, Inc. ("T. Rowe Price"), located at 100 East Pratt
Street, Baltimore, Maryland, 21202, is responsible for the day-to-day management
of the Maxim T. Rowe Price MidCap Growth Portfolio.
Reinvestment and Redemption All dividend and capital gains distributions made by
an Eligible Fund will be automatically reinvested in shares of that portfolio.
We will redeem portfolio shares at their net asset values to the extent
necessary to make annuity or other payments under the variable portion of your
Contract.
Investments of the Series Account Shares of the Fund are also sold to the
following:
o........the FutureFunds Series Account and Maxim Series Account, which are
separate accounts established by GWL&A to receive and invest premiums paid
under variable annuity contracts issued by GWL&A,
o the TNE Series (k) Account of Metropolitan Life Insurance Company to fund
benefits under variable annuity contracts,
o the Pinnacle Series Account of GWL&A to fund variable life insurance
policies, and
o other separate accounts of GWL&A, its affiliates and other insurance
companies.
It is possible that, in the future, it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the Fund at the same time. Although disadvantages are not currently foreseen,
the Board of Directors of the Fund intends to monitor events in order to
identify any material conflicts between variable life insurance policyowners and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. Such action could include the sale of the Fund's
shares by one or more of GWL&A's separate accounts which could have adverse
consequences. For example, material conflicts could result from changes in state
insurance laws, changes in Federal income tax laws, changes in the investment
management of any portfolio of the Fund, or differences in voting instructions
between those given by policyowners and those given by contract owners.
Meeting investment objectives depends on various factors, including, but not
limited to, how well the portfolio managers anticipate changing economic and
market conditions. There is no guarantee that any of the Eligible Funds will
achieve their stated objectives.
The Contracts Application and Initial Contribution The first step to purchasing
a Contract is to fill out your application and forward it to our Administrative
Offices along with your initial Contribution. Depending on your state of
residence, there are generally three ways you can purchase a Contract:
o........with rollover proceeds from qualified plans, such as 401(k) plans,
o with rollover proceeds from other eligible rollover sources, or o with earned
income.
The Contract may also be purchased for an IRA Program for your spouse.
There is no minimum initial Contribution if you purchase the Contract with
eligible rollover proceeds. Otherwise, the minimum initial amount needed to
purchase the Contract is $250.
If your application is complete, your Contract will be issued and your initial
Contribution will be credited within two business days of receipt at our
Administrative Offices. Acceptance is subject to sufficient information in a
form acceptable to us. We reserve the right to reject any application or
Contribution.
If your application is incomplete, we will contact you by telephone to obtain
the required information. If we are able to complete your application within
five business days of our receipt of your incomplete application, we will credit
your initial Contribution within two business days of the application's
completion. If we cannot complete your application within five business days
after we receive it, we will immediately return your application and initial
Contribution. If you provide consent, we will retain your initial Contribution
and credit it as soon as we have completed your application.
Free Look Period During the free look period, you may cancel your Contract
within twenty days (or longer where required by law) after you receive it.
During the free look period, all Contributions you have instructed us to
allocate to the Investment Divisions will be allocated pursuant to your
instructions.
During the free look period, you may change the Investment Divisions in which
you would like to invest as well as your allocation percentages. Any changes you
make during the free look period will take effect after the free look period has
expired.
Any returned Contracts will be void from the date we issued the Contract to you.
The sum of any Contributions you have made, less withdrawals, will be refunded
to you. Any investment gains or losses arising during this period shall accrue
to or be borne by us.
If you exercise the free look privilege, you must return the Contract to us at
our Administrative Offices. To cancel a Contract we must receive it personally
or postmarked by the expiration of the free look period.
Subsequent Contributions Once your application is complete and we have received
your initial Contribution, you can make subsequent Contributions at any time
prior to the Annuity Commencement Date or the date you begin receiving payments
under a periodic payment option. There is no minimum Contribution amount if
Contributions are being made with eligible rollover proceeds. Otherwise, the
minimum ongoing Contribution amount is $250.
Contract Value Before the Annuity Commencement Date, your Contract Value is the
sum of your Variable and Guaranteed Sub-Accounts.
Before your Annuity Commencement Date, your Variable Account Value is the total
dollar amount of all Accumulation Units credited to you from each Investment
Division in which you have invested money. When you allocate Contributions or
make Transfers to an Investment Division, we credit you with Accumulation Units
of that Division. We determine the number of Accumulation Units credited to you
by dividing the amount of your Contribution or Transfer by the Investment
Division's Accumulation Unit value on the Valuation Date your Contribution is
received or Transfer is processed.
We determine each Investment Division's Accumulation Unit value on each
Valuation Date as of the close of the New York Stock Exchange (generally 4:00
p.m. ET). We multiply the Division's Accumulation Unit value on the immediately
preceding Valuation Date by the Division's Net Investment Factor to arrive at
the current Valuation Date's Accumulation Unit value. Each Investment Division's
Accumulation Unit value is expected to change on a daily basis due to, among
other things, the investment experience of the Eligible Fund in which the
Division invests and the deduction of the Mortality and Expense Risk Charge. We
use the Net Investment Factor to determine the amount of this change, if any.
The formula we use to calculate the Net Investment Factor is described in
Appendix B. On any given Valuation Date, an Investment Division's Net Investment
Factor may be greater than one, less than one or zero. This means that an
Investment Division's Accumulation Unit value on that Valuation Date may
increase, decrease or remain unchanged.
Transfers At any time before the Annuity Commencement Date, you can transfer all
or a portion of your Contract Value among and between the Investment Divisions
and/or the Fixed Option by Request. Transfer Requests can only be made by the
Contract Owner. A Transfer generally will be effective on the date the Request
is received if received before 4:00 p.m. ET, unless your Request designates some
later date. A Transfer Request we receive after 4:00 p.m. ET will be considered
received on the next following Valuation Date. If we receive a Transfer Request
within 30 days of the Annuity Commencement Date, we may delay the Annuity
Commencement Date by not more than 30 days. Additional Transfer conditions apply
to Transfers involving the Fixed Options, as more fully described in your
Contract.
You can make Transfer Requests by telephone if you have completed and sent to us
a Telephone Request Form. The Form may be obtained by contacting our
Administrative Offices. Telephone Transfers completed before 4:00 p.m. EST/EDT
will be made on that day at that day's unit values. Calls completed after 4:00
p.m. EST/EDT will be made on the next Valuation Date, at that day's unit values.
We will use reasonable procedures to confirm that instructions communicated by
telephone are genuine such as:
o requiring some form of personal identification prior to acting on
instructions,
o providing written confirmation of the transaction, and/or
o tape recording the instructions given by telephone.
If we follow these procedures, we will not be liable for my loses due to
unauthorized or fraudulent telephone instructions. We reserve the right to
suspend telephone privileges at anytime, for some or all Contracts, and for any
reason.
Cash Withdrawals You may withdraw all or part of your Contract Value at any time
before the date annuity payments begin by submitting a written withdrawal
Request to our Administrative Offices. The amount payable to you if you
surrender your Contract is your Contract Value as determined on the Valuation
Date we receive your Request. If you surrender your Contract, that is, make a
withdrawal of your entire Contract Value, all rights under the Contract will
terminate. You should know that you can apply amounts payable upon surrender to
an annuity payment option instead of taking a lump sum.
If you request a partial withdrawal, your Contract Value will be reduced by the
dollar amount withdrawn. Partial withdrawals are unlimited. You must specify the
Investment Divisions or Fixed Options from which the withdrawal is to be made.
If we receive your request for a partial withdrawal less then 30 days before
your Annuity Commencement Date, we may, at our option, delay the Annuity
Commencement Date for up to 30 days. You should know that you may have to pay
Premium Tax upon making a surrender or partial withdrawal.
Amounts payable to you upon a surrender or partial withdrawal attributable to
your Variable Account will be paid within seven days of our receipt of your
Request. However, we may postpone payment of these amounts for any longer period
as permitted by the Securities and Exchange Commission.
If you surrender your Contract during the first twelve months after you
purchased it, we will assess a $50.00 administrative fee. Similarly, if you make
a partial withdrawal during that first twelve months, we will assess a $25.00
administrative fee. In addition, you may be required to pay taxes on amounts you
receive from a surrender or partial withdrawal, including a 10% penalty tax.
Please refer to your Contract for additional restrictions that may apply to
withdrawals involving your Guaranteed Account.
Charges and Deductions Contract Maintenance Charge We deduct $30 from your
Contract Value if your Contract Value is less than $5,000 on December 31 of any
year. We will assess this fee only if your Contract was issued on or after July
8, 1998, and the assessment of the fee has been approved by the insurance
regulatory authorities of your state of residence. We assess this charge during
the second quarter after December 31 on which your Contract Value was less than
$5,000.
Sales Charge We do not impose any sales charges.
Administrative Fee We impose a $50 charge if you surrender your Contract during
the first 12 months after it was issued to you. We do not assess this charge,
however, if you cancel your Contract during the free look period. We impose a
$25 charge if you make a partial withdrawal during the first 12 months after the
Contract was issued to you.
Premium Taxes The applicable Premium Tax rates that states and other
governmental entities impose currently range from 0% to 3.5% and are subject to
change. These Premium Taxes will depend, among other things, on the state of
residence of the Contract Owner and the insurance tax laws and status of GWL&A
in these states when the Premium Taxes are incurred.
We presently make no deduction from Contributions for Premium Taxes; however, we
reserve the right to make such deductions from Contributions, the Contract Value
upon the annuity date, and surrender or partial withdrawal amounts or periodic
payment amounts.
Mortality and Expense Risk Charge We deduct from each Investment Division's
Accumulation Unit value an amount, computed daily, a mortality and expense risk
charge which is equal to an annual rate as described below. This charge is
intended to compensate us for the mortality and expense risks we assume under
the Contracts.
The level of the mortality and expense risk charge applicable to your Contract
during the first calendar year will be based upon your initial Contribution, in
accordance with the schedule set forth below. The amount of this charge in
subsequent calendar years will be based upon your Contract Value as of December
31 of the previous calendar year, in accordance with the schedule.
------------------------------ --------------------------------
M & E Risk Charge Contract Value
------------------------------ --------------------------------
------------------------------ --------------------------------
0.75% From $0 - 9,999.99
------------------------------ --------------------------------
------------------------------ --------------------------------
0.50% From $10,000 - 24,999.99
------------------------------ --------------------------------
------------------------------ --------------------------------
0.25% From $25,000 - 49,999.99
------------------------------ --------------------------------
------------------------------ --------------------------------
0.00% From $50,000 and greater
------------------------------ --------------------------------
Since we determine the level of the mortality and expense risk charge based on
your December 31 Contract Value, you should monitor your Contract Value closely
to ensure that, to the extent possible, you are taking advantage of the lowest
possible level of the charge. Each level of this charge is guaranteed and will
not be increased.
Portfolio Expenses
Your Variable Account Value reflects the value of portfolio shares and,
therefore, the fees and expenses paid by the portfolio. A complete description
of the fees, expenses and deductions from the portfolios is found in the
accompanying prospectus for the Fund.
Death Benefit
We will pay a death benefit to your beneficiary upon our receipt of proof of
your death if your death occurs before the Annuity Commencement Date. The death
benefit, if any, will be your Contract Value as of the date of your death.
If you die after the Annuity Commencement Date, the remaining portion of your
interest will continue to be distributed at least as quickly as under the method
of distribution being used before your death.
If you die before the Annuity Commencement Date, we will complete distribution
of your entire interest within five years of your date of death, except to the
extent that you make an election to receive distributions in accordance with one
of the following:
o If your interest is payable to a designated beneficiary, then your whole
interest may be distributed over the life or life expectancy of that
beneficiary or over a period not extending beyond the life expectancy of
the beneficiary beginning not later than one year after your date of death.
o If the only designated beneficiary is your surviving spouse, the date
distributions are required to begin under the above cannot be earlier than
the later of (1) December 31 of the year right after the year in which you
died or (2) December 31 of the year in which you would have reached age 70
1/2.
If the designated beneficiary is your surviving spouse, your spouse may treat
the Contract as his or her own IRA. This election will be considered to have
been made if your surviving spouse makes a regular IRA contribution to the
Contract, makes a rollover to or from such Contract, or fails to choose any of
the above provisions.
We compute life expectancy by using the expected return multiples in Tables V
and VI of section 1.72-9 of the Income Tax Regulations. For purposes of
distributions that begin after your death, life expectancies will be
recalculated annually, unless your surviving spouse elects otherwise by the time
distributions are required to begin. Such an election will be irrevocable by
your surviving spouse and will apply to all subsequent years. In the case of any
other designated beneficiary, life expectancies will be calculated using the
attained age of that beneficiary in the year in which distributions are required
to begin under this section. In that case, payments for any subsequent calendar
year will be calculated based on such life expectancy decreased by one for each
year which has passed since the year life expectancy was first calculated.
Distributions under this section are considered to have begun if they are made
on account of you reaching your required beginning date or if, before your
required beginning date, distributions irrevocably begin to you over a period
allowed and in an annuity form acceptable under section 1.401(a)(9) of the
Income Tax Regulations.
You may designate or change a beneficiary by filing a Request with GWL&A at its
Administrative Offices. Each change of beneficiary that you make revokes any
previous designation. Unless otherwise provided in the beneficiary designation,
one of the following procedures will take place on the death of a beneficiary:
o if there is more than one primary surviving beneficiary, your Contract
Value will be shared equally among them,
o if any primary beneficiary dies before you, that beneficiary's interest
will pass to any other named surviving primary beneficiary or
beneficiaries, to be shared equally,
o if there is no surviving primary beneficiary, your Contract Value will pass
to any surviving contingent beneficiary, and if more than one contingent
beneficiary, will be shared equally among them,
o if no beneficiary survives you, your Contract Value will pass to your estate,
or
o if the designation of the beneficiary was not adequately made, your
Contract Value will pass to your estate.
Annuity Options
You can choose an Annuity Commencement Date and the form of annuity payments
("Annuity Options") at any time during the Accumulation Period. The Annuity
Commencement Date you elect generally must, to avoid the imposition of an excise
tax, not be later than April 1 of the year right after the year in which you
attain age 70 1/2 without regard to your actual retirement date or termination
of employment date. It is your responsibility to file the necessary Request with
GWL&A.
You may postpone or accelerate your Annuity Commencement Date, or change any of
your Annuity Option elections, by sending a Request to our Administrative
Offices up to 30 days before the existing Annuity Commencement Date. If any
Annuity Commencement Date you have elected would be less than 30 days from the
date your Request is received, we may delay the date you have elected, but not
by more than 30 days.
The Contract provides for the Annuity Options described below, as well as other
Annuity Options that we may choose to make available in the future. Except as
otherwise noted, the Annuity Options provide for payments on a variable, fixed
or combination basis. You may elect more than one Annuity Option. If you do not
elect an Annuity Option, your Contract automatically provides for a variable
life annuity (with respect to the variable portion of your Contract) and/or a
fixed life annuity (with respect to the fixed portion of your Contract) with 120
monthly payments guaranteed.
The level of annuity payments under the following options is based on the option
selected and, depending on the option chosen, such factors as the age at which
payments begin and the frequency and duration of payments.
o Option No. 1: Fixed Life Annuity
This option provides an annuity payable monthly during the lifetime of the
Annuitant. It would be possible under this option for the Annuitant to receive
no annuity payment if he/she died before the date of the first annuity payment,
one annuity payment if the Annuitant died before the second annuity payment,
etc.
o Option No. 2: Fixed Life Annuity with Payments Guaranteed for Designated
Periods
This option provides monthly payments during a guaranteed period or for the
lifetime of the Annuitant, whichever is longer. Under this option, there is a
guarantee that if, at the death of the Annuitant, payments have been made for
less than the designated period, the beneficiary will receive payments for the
rest of the period. The designated period may be 5, 10, 15, or 20 years.
o Option No. 3: Joint and One-Half Survivor (available only as fixed dollar
payments)
This option provides an annuity payable during the joint lifetime of the
Annuitant and a designated second person, and thereafter during the remaining
lifetime of the survivor. After the death of the annuitant, and while only the
designated second person is alive, the amount payable will be one-half of the
amount paid while both were living. It would be possible under this option for
the annuitant and the beneficiary to receive no annuity payment if both persons
died prior to the date of the first annuity payment, one annuity payment if both
persons died before the second annuity payment, etc.
o Option No. 4: Income of Specified Amount (available only as fixed dollar
payments)
Under this option, the amount of the periodic benefit may be paid in equal
annual, semiannual, quarterly, or monthly installments in the dollar amount
elected, provided that the annuity payment period is not less than 36 months nor
more than 240 months.
o Option No. 5: Income for Specified Period (available only as fixed dollar
payments)
Under this option, payments are paid annually, semi-annually, quarterly or
monthly, as elected, for a selected period of not less than 36 months nor more
than 240 months.
o Option No. 6: Fixed Life Annuity with Installment Refund Period
Under this payment option, monthly payments will be paid for the life of the
Annuitant or until the sum of the payments made equals the amount applied,
whichever is greater. This option may not be available in all states or under
your Contract.
Variable Annuity Payments
Variable annuity payments will be determined on the basis of:
o the Variable Account Value prior to the Annuity Commencement Date;
o the annuity tables contained in the Contract which reflect your age;
o the type of annuity option(s) selected; and
o the investment performance of the Eligible Funds after the Annuity
Commencement Date.
You receive the value of a fixed number of Annuity Units each month.
On the Annuity Commencement Date, we determine the number of Annuity Units for
each Variable Sub-Account on which variable annuity payments are based. We
calculate the number of Annuity Units for each Variable Sub-Account by dividing
the amount of the first monthly payment by the value of an Annuity Unit on the
fifth Valuation Period before the Annuity Commencement Date in each Variable
Sub-Account selected. Although the number of Annuity Units is fixed by this
process, the value of the units will vary with the performance of the Eligible
Fund.
The dollar amount of the first monthly variable annuity payment is determined by
applying the total value of the Accumulation Units credited to the Contract
Value on the fifth Valuation Period before the Annuity Commencement Date to the
annuity tables contained in the Contract. Amounts shown in the tables are based
on the 1983 Table (a) for Individual Annuity Valuation with an assumed
investment return at the rate of 3.0% per annum. The first annuity payment is
determined by multiplying the benefit per $1,000 of value shown in the Contract
tables by the number of thousands of dollars of value accumulated under the
Variable Account Value. These annuity tables vary according to the form of
annuity selected and according to your age at the Annuity Commencement Date.
The 3.0% interest rate stated above is the measuring point for subsequent
annuity payments. If the actual Net Investment Factor (annualized) exceeds 3.0%,
the payment will increase at a rate equal to the amount of this excess. However,
if the actual rate is less than 3.0%, annuity payments will decrease. If the
assumed rate of interest were to be increased, annuity payments would start at a
higher level but would increase more slowly or decrease more rapidly.
The amount of subsequent payments is determined by multiplying the number of
Annuity Units to be paid by the appropriate Annuity Unit value on the fifth
Valuation Period before the date the payment is due. The Annuity Unit value at
the end of any Valuation Period is determined by multiplying the Annuity Unit
value for the immediately preceding Valuation Period by the product of:
o the Net Investment Factor of the Variable Sub-Account for the Valuation
Period for which the Annuity Unit is being determined, and
o a factor of .999932 to neutralize the assumed investment return of 3.0% per
year used in the annuity table.
The value of the Annuity Units is determined as of a Valuation Period five days
before the payment in order to allow the calculation of the amount of annuity
payments and the mailing of checks before their due date.
Fixed Annuity Payments
The guaranteed level of fixed annuity payments will be determined on the basis
of:
o the Guaranteed Account Value before the Annuity Commencement Date,
o the annuity tables contained in the Contract which reflect your age, and
o the type of annuity option(s) elected.
The payment amount may be greater, however, if we are using a more favorable
table on your Annuity Commencement Date.
Combination Variable and Fixed Annuity Payments
If an election is made to receive annuity payments on a combination variable and
fixed basis, the Variable Account Value will be applied to the variable annuity
option elected and the Guaranteed Account Value will be applied to the fixed
annuity option.
Proof of Age and Survival
We may require proof of age and survival from any payee if payments depend on
that payee's age or survival.
Frequency and Amount of Annuity Payments
Variable annuity payments will be paid as monthly installments. Fixed annuity
payments will be paid annually, semiannually, quarterly or monthly, as
requested. However, if any payment to be made under any annuity option will be
less than $100 we may make the payments in the most frequent interval which
produces a payment of at least $100. If the net amount available to apply under
any Annuity Option is less than $2,000, we may pay it in one lump sum. The
maximum amount that may be applied under an Annuity Option without the prior
written consent of GWL&A is $1,000,000.00.
Periodic Payment Options
We offer two distribution options that are not considered Annuity options: The
Estate Maximizer Option ("EMO") and the Flexible Payment Option ("FPO"). These
options are available to any Contract Owner, but with respect to the EMO, you
must be at least age 70 1/2.
Since EMO and FPO are not Annuity options, your Contract remains in the
Accumulation Period and retains all rights and flexibility described in this
prospectus. When we make payments to you under these options, the value of
Accumulation Units canceled will be withdrawn in the same order that the
Contributions were applied to your Contract and on a pro rata basis; that is,
proportioned across the Investment Divisions to which you have allocated your
Contributions.
Distributions from a periodic payment option before age 59 1/2 may be subject to
an early withdrawal penalty under the Internal Revenue Code. Distributions after
age 59 1/2 will not be subject to penalties as long as payments are
substantially level and are paid over a period of not less than five years.
All payments made to you when you reach age 70 1/2 from any periodic payment
option must comply with the Internal Revenue Code's minimum distribution
regulations.
We reserve the right to discontinue the availability of these distribution
options and to change the terms for future elections.
Once you elect an option, you may revoke it at any time by submitting a Request
to our Administrative Offices. Any revocation you make will apply only to the
amounts that have not yet been paid. Once you revoke an EMO or FPO, you may not
elect it again.
If any periodic payment will be less than $100, we may make the payments in the
most frequent interval which produces a payment of at least $100.
FPO is different from EMO in the following ways:
o FPO payments are made for a fixed dollar amount or a fixed time period
whereas EMO payments vary in dollar amount and can continue indefinitely
during your lifetime, and
o generally, FPO payments will be higher than expected EMO payments.
You should carefully assess your future income needs when considering the
election of these distribution options.
Estate Maximizer Option ("EMO")
We will calculate and distribute an annual amount using the method contained in
the Internal Revenue Code's minimum distribution regulations. You specify the
initial distribution date. Subsequent distributions will be made on the 15th of
any month (or the next Valuation Date if the 15th is not a Valuation Date) or
another date we may designate or allow. The annual distribution is determined by
dividing your Contract Value by a life expectancy factor from tables designated
by the Internal Revenue Service. The factor will be based on either your life
expectancy or the joint life expectancy of you and your spouse and will be
redetermined for each year's distribution. The Contract Value to be used in this
calculation is your Contract Value on the December 31 before the year in which
the EMO payment is being made. This calculation will be changed, if necessary,
to conform to changes in the Internal Revenue Code or applicable regulations.
Flexible Payment Option ("FPO")
FPO payments are available on a monthly, quarterly, semiannual or annual basis.
You specify the initial distribution date. Subsequent distributions will be made
on the 15th of any month (or the next Valuation Date if the 15th is not a
Valuation Date) or another date we may designate or allow.
You may elect one of two methods of distribution for payments from Variable
Sub-Accounts:
o Specified Payment - payments of a designated dollar amount. The
dollar amount chosen must be greater than or equal to the minimum
distribution amount allowed by the Internal Revenue Code and
applicable regulations. Your Contract Value on December 31 before
the year for which the payment is being made will be used in this
calculation. Payments will stop on the earlier of:
o the date the amount you elected to be paid has been reduced to zero, or
o your Contract Value is zero.
o Specified Period - payments for a designated time period. The annual
distribution amount must be greater than or equal to the minimum
distribution amount required by the Internal Revenue Code and applicable
regulations. Each annual distribution is determined by dividing your
Contract Value by the number of years remaining in the elected period. Your
Contract Value on December 31 before the year for which the payment is
being made will be used in this calculation. For payments made more often
than annually, the annual payment result (calculated above) is divided by
the number of payments due each year. The specified period must be at least
three years, but not greater than the Annuitant's life expectancy factor.
Payments will stop on the earlier of:
o the date the amount you elected to be paid has been reduced to zero, or
o your Contract Value is zero.
For purposes of determining the amount to be distributed under each of these
distribution methods, life expectancy will be recalculated annually based on
Section 401(a)(9) of the Internal Revenue Code or applicable regulations.
Federal Tax Consequences
The ultimate effect of federal income taxes on your Contract Value, on annuity
payments and on the economic benefit to you, the beneficiary or other payee
depends on GWL&A's tax status, and upon the tax and employment status of the
individual concerned. The discussion which follows is general in nature and is
not intended as tax advice. No representation is made regarding the likelihood
of the continuation of present federal income tax law or of the current
interpretations of the Internal Revenue Service. No discussion of state or other
tax laws is provided. FOR FURTHER INFORMATION, CONSULT A QUALIFIED TAX ADVISER.
Taxation of GWL&A
GWL&A is taxed on its insurance business in the United States as a life
insurance company in accordance with Part I of Subchapter L of the Internal
Revenue Code. The Series Account is taxed as a part of GWL&A; not as a
"regulated investment company" under Part I of Subchapter M of the Code.
Investment income and realized capital gains on the assets of the Series Account
are reinvested and are taken into account in determining the Contract Value.
Under existing federal income tax law, such amounts do not generally result in
any tax to GWL&A which will be chargeable to the Contract Owner or the Series
Account. GWL&A reserves the right to make a deduction from your account balance
for taxes, if any, imposed with respect to such items in the future.
Individual Retirement Annuities (IRAs)
In general, set forth below are some comments concerning the federal income
taxation of IRAs under Sections 72 and 408 of the Internal Revenue Code. It
should be understood that the following discussion is not exhaustive, and that
special rules may apply to certain situations not discussed here. You and your
beneficiaries are responsible for determining that Contributions, distributions
and other transactions with respect to the Contract comply with applicable laws.
To qualify as an IRA under Section 408 of the Internal Revenue Code, the
Annuitant must at all times be the owner of the Contract. Your entire interest
is nonforfeitable and nontransferable. Contributions may not exceed the
limitations allowable under the Internal Revenue Code. You may not borrow from
the Contract or pledge the annuity or any portion of it as security for a loan.
If you borrow money under the Contract, including a policy loan, the Contract
ceases to qualify as an IRA as of the first day of the year, and the fair market
value of the Contract is includable in your gross income for the year. If you
pledge any portion of the Contract as security for a loan, that portion is
deemed distributed on the first day of the year in which the pledge was made and
is includible in your gross income.
Generally, a Contract Owner who is a natural person is not taxed on increases
(if any) in the value of the Contract until a distribution. Internal Revenue
Code Section 408(d)(1) provides that distributions from IRAs, including total or
partial withdrawals and annuity payments, are generally taxed for federal income
tax purposes under Code Section 72. Under these rules, a portion of the
distribution may be excludable from income if any nondeductible contributions
were made. However, if the initial Contribution to this IRA was entirely from
pre-tax contributions to a qualified plan, the entire amount distributed
generally will be taxable to the Contract Owner as ordinary income in the year
distributed. There is no special averaging treatment for lump sum distributions.
Rollovers
Generally, you may receive a distribution of any amount from an IRA and within
60 days roll that amount, or any part of it, over into any other IRA. Amounts
properly rolled over will not be included in gross income until a distribution
is taken from the new IRA. Only one rollover from a particular IRA to any other
IRA may be made in any one-year period. Certain other restrictions apply.
You may receive a distribution from an IRA and within 60 days roll it over into
a qualified plan, only if all the funds in the IRA are attributable to a
previous rollover distribution from a qualified plan. Similarly, you may receive
a distribution from an IRA and within 60 days roll it over into a plan described
under Section 403(b) of the Internal Revenue Code, only if all the funds in the
IRA are attributable to a previous rollover distribution from such a plan. If
you mix a rollover contribution from a qualified plan with other contributions
or funds from other sources, the right to roll it back into a qualified plan is
forfeited.
Required Beginning Date/Minimum Distribution Requirements
Your entire interest in the Contract typically must be distributed, or begin to
be distributed, by April 1 following the year in which you reach age 70 1/2.
Required distributions must be made over a period not exceeding your life
expectancy or the joint lives of you and your designated beneficiary. If the
amount distributed does not meet the minimum distribution and incidental death
benefit requirements of Internal Revenue Code Section 401(a)(9) and the
regulations thereunder, a 50% penalty tax on the amount which was required to
be, but was not, distributed may be imposed on you.
Premature Withdrawals
Distributions made before you reach age 59 1/2 are premature distributions and
ordinarily are subject to an additional tax equal to 10% of the amount of the
distributions which is includable in gross income in the tax year. However, the
penalty tax will not apply to distributions that are:
o made to a beneficiary or your estate on or after your death,
o attributable to you being disabled within the meaning of code Section
72(m)(7), or
o made as a part of a series of substantially equal periodic payments (at
least annually) for your life or life expectancy or the joint lives or life
expectancies of you and your designated beneficiary.
If the last exemption above applies at the time of the distribution but the
series of payments is later modified or discontinued (other than because of
death or disability), before you reach age 59 1/2 or, within five years of the
date of the first payment, whichever is later, you are liable for the 10%
penalty plus interest on all payments received before age 59 1/2. This penalty
is imposed in the year the modification or discontinuance occurs.
Other exemptions may apply. For more details, consult a qualified tax adviser.
Distributions on Death of Contract Owner
If you die on or after the date annuity payments start, and before the entire
interest in the Contract has been distributed, the remainder of your interest
will be distributed on the same or on a more rapid schedule than that provided
for in the method in effect on the date of death.
If you die before the date annuity payments start, your entire interest must
generally be distributed within five years after the date of your death. If
payable to a designated beneficiary, the distributions may be paid over the life
of that designated beneficiary or over a period not extending beyond the life
expectancy of that beneficiary, so long as payments start within one year of
your death. If the sole designated beneficiary is your spouse, the Contract may
be continued in the name of the spouse as Contract Owner.
A surviving spouse, who is your beneficiary, may elect to treat the entire
annuity as his or her own IRA regardless of whether distributions had begun to
you or have begun to the surviving spouse. As the new Contract Owner, the
surviving spouse may make contributions to the IRA and make rollovers from it.
Such an election is deemed made if any amounts required to be distributed on
your death under these rules have not been distributed or any additional amounts
are contributed to the annuity.
Federal Income Tax Withholding on Distributions
Taxable distributions from an IRA are generally subject to income tax
withholding in the following manner:
o If the distribution is in the form of an annuity or similar periodic
payments, amounts are withheld as though each distribution were a payment
of wages.
o In the case of any other kind of distribution, a flat 10% will be withheld,
unless the recipient elects not to have the tax withheld.
<PAGE>
Performance Related Information
From time to time, the Series Account may advertise certain performance related
information concerning its Investment Divisions. Performance information about
an Investment Division is based on the Investment Division's historical
performance only and is not intended to indicate future performance. Below are
tables of performance related information for each of the four levels of the
Mortality and Expense Risk Charge that may be assessed under the Contracts. For
the "Inception Date" of a particular Investment Division see the "Total Return"
tables below.
<TABLE>
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Division Yield Effective Yield
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
Maxim Money Market a* 3.79% 3.89%
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
Maxim Money Market o* 4.04% 4.14%
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
Maxim Money Market u* 4.29% 4.39%
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
Maxim Money Market z* 4.54% 4.64%
- ---------------------------------------- -------------------------------------- --------------------------------------
Yield and effective Yield for the Money Market Investment Division is for the
7-day period ended December 31, 1998. Yield calculations take into account
recurring charges against the Series Account and the Money Market Portfolio. All
yield and effective yield information is annualized.
The following table illustrates standardized 1Year and average annual total
return as of the period ended December 31, 1998. The cumulative total return
shown is non-standardized.
Total Return
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Divisions a* Date of Inception 1 Year Cumulative Total Average Annual Total
Return Since Inception Return Since Inception
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Foreign Equity June 23, 1995 6.84% 9.00% 2.46%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Small-Cap Index June 20, 1995 -2.36% 49.43% 12.02%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Growth Index August 9, 1995 36.24% 132.06% 28.10%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Small-Cap -3.04% 68.36% 16.56%
Value August 9, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Stock Index June 20, 1995 25.82% 126.20% 25.96%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Ariel Small-Cap Value August 9, 1995 7.45% 70.13% 16.92%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Founders Blue Chip June 30, 1997 16.96% 28.53% 18.15%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Value Index August 9, 1995 13.60% 101.77% 22.94%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim U.S. Government Mortgage 6.30% 24.95% 6.76%
Securities August 9, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Investment Grade Corporate 6.26% 21.84% 5.97%
Bond August 9, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Corporate August 9, 1995 2.64% 37.49% 9.81%
Bond
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Grade Corporate Bond
August 9, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Short-Term Maturity Bond April 1, 1996 5.54% 15.42% 5.34%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Money Market July 5, 1995 4.35% 16.32% 4.41%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim T. Rowe Price MidCap Growth June 30, 1997 21.29% 40.05% 25.09%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Money Market July 5, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Divisions o* Date of Inception 1 Year Cumulative Total Average Annual Total
Return Since Inception Return Since Inception
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Foreign Equity July 24, 1995 7.10% 7.05% 1.98%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Small-Cap Index July 24, 1995 -2.11% 45.77% 11.56%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Growth Index July 24, 1995 36.04% 136.64% 28.38%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Small-Cap -2.79% 72.09% 17.22%
Value August 3, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Stock Index July 24, 1995 26.14% 123.33% 26.28%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Ariel Small-Cap Value July 24, 1995 7.72% 74.49% 17.54%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Founders Blue Chip June 30, 1997 17.25% 29.01% 18.44%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Value Index July 24, 1995 13.88% 105.19% 23.21%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim U.S. Government Mortgage 6.57% 26.23% 6.99%
Securities July 24, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Investment Grade Corporate 6.53% 23.06% 6.20%
Bond July 24, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Corporate July 24, 1995 2.90% 39.21% 10.07%
Bond
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Grade Corporate Bond
July 24, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Short-Term Maturity Bond March 13, 1996 5.81% 16.39% 5.55%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Money Market November 30, 1995 4.85% 14.85% 4.57%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim T. Rowe Price MidCap Growth June 30, 1997 21.60% 35.05% 22.10%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Money Market November 30, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
<PAGE>
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Divisions u* Date of Inception 1 Year Cumulative Total Average Annual Total
Return Since Inception Return Since Inception
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Foreign Equity October 3, 1995 7.37% 11.28% 3.33%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Small-Cap Index September 8, 1995 -1.85% 37.14% 9.98%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Growth Index September 8, 1995 36.92% 129.71% 28.50%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Small-Cap -2.54% 66.47% 17.71%
Value November 17, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Stock Index July 12, 1995 26.45% 123.48% 26.03%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Ariel Small-Cap Value July 12, 1995 7.99% 73.29% 17.13%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Founders Blue Chip June 30, 1997 17.54% 29.49% 18.74%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Value Index July 12, 1995 14.17% 105.62% 23.04%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim U.S. Government Mortgage 6.83% 25.57% 6.77%
Securities July 12, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Investment Grade Corporate 6.80% 21.20% 6.01%
Bond September 19, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Corporate September 19, 1995 3.16% 35.01% 9.55%
Bond
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Short Term Maturity Bond March 11, 1995 6.07% 17.18% 5.79%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Money Market November 16, 1995 4.88% 16.17% 4.90%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim T. Rowe Price MidCap Growth June 30, 1997 21.90% 34.98% 22.06%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Money Market November 16, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Investment Divisions z* Date of Inception 1 Year Cumulative Total Annual Total Return
Return Since Inception Since Inception
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Foreign Equity October 4, 1995 7.65% 11.68% 3.45%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Small-Cap Index August 9, 1995 -1.60% 45.11% 11.57%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Growth Index July 26, 1995 37.26% 137.36% 28.59%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Small-Cap -2.30% 75.04% 17.81%
Value August 3, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Stock Index August 9, 1995 26.77% 131.45% 28.00%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Ariel Small-Cap Value August 3, 1995 8.26% 76.61% 18.11%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Founders Blue Chip June 30, 1997 17.83% 29.98% 19.04%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Value Index August 13, 1995 14.46% 109.00% 24.30%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim U.S. Government Mortgage 7.10% 28.68% 18.24%
Securities July 26, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Investment Grade Corporate 7.06% 25.43% 6.80%
Bond July 26, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Loomis Sayles Corporate July 26, 1995 3.42% 41.54% 10.63%
Bond
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Short Term Maturity Bond August 16, 1996 6.34% 15.61% 6.31%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim Money Market July 5, 1995 5.14% 19.42% 4.98%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Maxim T. Rowe Price MidCap Growth June 30, 1997 22.21% 36.19% 22.79%
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
Money Market July 5, 1995
- ---------------------------------- ---------------------- ------------------------ ----------------------- -----------------------
- -----------
</TABLE>
Mortality & Expense Risk Charge Contract Value
a* = 0.75% $0 - $9,999.99
o* = 0.50% $10,000 - $24,999.99
u* = 0.25% $25,000 - $49,999.99
z* = 0.00% $50,000 and greater
The Series Account may include performance information about the Investment
Divisions in advertisements or other sales
material.
When we advertise the total return of one of these Investment Divisions, it will
be shown as average annual total return for one year, five years, and ten years
or since its inception if the Investment Division has not been in existence for
at least ten years. Average annual total return is measured by comparing the
value of an investment in the Investment Division at the beginning of the
relevant period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions). In calculating average annual total return, it is assumed that
the entire value of the Investment Division will be distributed on the last day
of the period. In addition to average annual total return, we may also advertise
cumulative total return, year-by-year total return or total return of the
Eligible Funds prior to their availability in the Series Account.
For the Money Market Investment Division, "yield" means the income generated by
an investment in the Money Market Investment Division over a certain seven-day
period. This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" of the Money Market Investment Division is calculated
similarly but, when annualized, the income earned by an investment in the Money
Market Investment Division is assumed to be reinvested. The "effective yield"
will be slightly higher than the "yield" because of the compounding effect of
this assumed reinvestment.
The yield and effective yield calculations for the Money Market Investment
Division include all recurring charges under the Contract, and is lower than
yield and effective yield of the corresponding Money Market Portfolio, which
does not have comparable Contract charges. Total return for the Investment
Divisions include all charges under your Contract, and likewise, is lower than
total return of the corresponding Eligible Funds which have no comparable
Contract charges.
For more complete information on the method used to calculate yield, effective
yields, and total return of the respective Investment Divisions, see the
"Statement of Additional Information."
Voting Rights To the extent required by applicable law, GWL&A will vote the
shares of the Eligible Funds held by the Investment Divisions of the Series
Account at regular and special meetings of shareholders of the Fund in
accordance with instructions received from Contract Owners. If, however, the
Investment Company Act of 1940 or any regulation should be amended, or if the
present interpretation of that Act should change, or if we determine that we are
allowed to vote all Eligible Fund shares in our own right, we may elect to do
so.
Before the Annuity Commencement Date, you have the voting interest relating to
the Eligible Fund shares attributable to your Variable Sub-Account. After
annuity payments begin under a variable annuity option, the payee will have the
voting interest.
The number of votes which you have the right to cast will be determined by
applying your percentage interest in an Investment Division to the total number
of votes attributable to that Investment Division. In determining the number of
votes, fractional shares will be recognized. During the annuity payment period,
the number of votes attributable to your Contract will decrease as the assets
held to fund the annuity payments decrease.
Shares for which we do not receive timely instructions and shares held by us as
to which Contract Owners have no beneficial interest will be voted in the same
proportion as the voting instructions which have been received. Voting
instructions to abstain on any item to be voted upon will be applied on a pro
rata basis to reduce the votes eligible to be cast.
Each person having a voting interest will receive proxy materials, reports and
other materials relating to the applicable underlying portfolio of the Fund.
Distribution of the Contracts One Orchard Equities, Inc. ("One Orchard"), 8515
East Orchard Road, Englewood, Colorado 80111, is the principal underwriter and
the distributor of the Contracts. One Orchard is registered with the Securities
and Exchange Commission under the Securities and Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. Applications for the Contracts will be solicited by duly-licensed insurance
agents of GWL&A who are registered with One Orchard. One Orchard is an affiliate
of Great-West.
No commissions will be paid to
any person for the sale of
Contracts.
Amendment of Contracts We reserve the right to amend the Contract without the
consent of any person in order to meet the requirements of the Investment
Company Act of 1940 or other applicable federal or state laws or regulations, or
to modify the annuity rates for future Contributions. We will notify you of any
such changes.
Ownership
The Contract Owner has all rights under the Contract. By law, the assets of the
Series Account are held for the exclusive benefit of the Contract Owners and
their designated beneficiaries. These assets cannot be charged with liabilities
that arise out of any other business we may conduct.
State Regulation As a life insurance company organized and operated under
Colorado law, we are subject to provisions governing such companies and to
regulation by the Colorado Commissioner of Insurance.
Our books and accounts are subject to review and examination by the Colorado
Division of Insurance at all times and a full examination of our operations is
conducted by the National Association of Insurance Commissioners at least once
every three years.
Reports
We will furnish to you
semi-annual and annual reports concerning the operations of the Investment
Divisions. In addition, you will be furnished not less frequently than annually
a statement of your Contract Value.
Year 2000 We have a number of existing computer programs that use only two
digits to identify a year in the date field, which creates a problem with the
upcoming change in the century. We have developed detailed plans that we expect
to rectify the year 2000 problem. These plans include modifying programs where
necessary, replacing certain programs with year 2000 compliant software, and
working with vendors and business partners, including banks, custodians and
investment managers, who need to become year 2000 compliant. The resources that
are being devoted to this effort are substantial. Management estimates that the
total cost to implement these plans will not be material, and has budgeted the
expense as part of its computer systems operating costs through the year 2000.
We completed this process during the first quarter of 1999 and will conduct
system testing with third parties throughout 1999. However, there can be no
assurance that we will be successful, or that interaction with other service
providers will not impair our services at that time.
Rights Reserved by Great-West We reserve the right to make certain changes we
feel would best serve the interests of Contract Owners and Annuitants or would
be appropriate in carrying out the purposes of the Contracts. Any changes will
be made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, we will obtain your approval of the changes and approval
from any appropriate regulatory authority. Approval may not be required in all
cases, however. Examples of the changes we may make include:
o To operate the Series Account in any form permitted under the Investment
Company Act of 1940 or in any other form permitted by law.
o To transfer any assets in any Investment Division to another Investment
Division, or to one or more separate accounts; or to add, combine or remove
Investment Divisions of the Series Account.
o To substitute, for the Eligible Fund shares in any Investment Division, the
shares of another Eligible Fund or shares of another investment company or
any other investment permitted by law.
o To make any changes required by the Internal Revenue Code or by any other
applicable law in order to continue treatment of the Contract as an
annuity.
o To change the time or time of day at which a Valuation Date is deemed to
have ended.
o To make any other necessary technical changes in the Contract in order to
conform with any action the above provisions permit us to take, including
changing the way we assess charges, without increasing them for any
outstanding Contract beyond the aggregate amount guaranteed.
Adding and Discontinuing Investment Options We may, upon 30 days written notice
to you, direct that you may not make any future Contributions or Transfers to a
particular Investment Division.
When we inform you that we are discontinuing an Investment Division to which you
are allocating money, we will ask that you promptly submit alternative
allocation instructions. If we do not receive your changed allocation
instructions, we may return all affected Contributions or allocate those
Contributions as indicated in the written notice provided to you. Contributions
and Transfers you make to a discontinued Investment Division before the
effective date of the notice may be kept in those Investment Divisions, unless
we receive an order from the Securities and Exchange Commission permitting us to
substitute shares of a mutual fund for shares of the corresponding Eligible
Fund.
If we decide to make new investment options available under the Contracts, in
our sole discretion, we may or may not make those options available to you.
Substitution of Investments Where we determine to discontinue an Investment
Division, in our sole discretion, we may substitute shares of another mutual
fund for the shares of the discontinued Eligible Fund. No substitution may take
place without prior approval of the Securities and Exchange Commission, and
prior notice to you.
Legal Matters Certain legal matters relating to the federal securities laws have
been passed upon for GWL&A by Jorden Burt Boros Cicchetti Berenson & Johnson
LLP.
Registration Statement We have filed a registration statement ("Registration
Statement") with the Securities and Exchange Commission under the Securities Act
of 1933 relating to the Contracts offered by this prospectus. This prospectus
has been filed as part of the Registration Statement and does not contain all of
the information set forth in the Registration Statement and exhibits thereto.
Reference is made to the Registration Statement and exhibits for further
information relating to us and the Contracts. Statements contained in this
prospectus, as to the content of the Contracts and other legal instruments, are
summaries. For a complete statement of the terms thereof, reference is made to
the instruments as filed as exhibits to the Registration Statement. The
Registration Statement and its exhibits may be inspected and copied at the
offices of the Securities and Exchange Commission located at 450 Fifth Street,
N.W., Washington, D.C.
Statement of Additional
Information The Statement of Additional Information contains more specific
information and financial statements relating to the Series Account and GWL&A.
The Table of Contents of the Statement of Additional Information is set forth
below:
1. Custodian and Independent Auditors
2. Underwriter
3. Calculation of Performance Data
4. Financial Statements
Inquiries and requests for a Statement of Additional Information should be
directed to GWL&A in writing at 8515 E. Orchard Road, Englewood, Colorado 80111,
or by telephoning GWL&A at (800) 338-4015.
<PAGE>
Appendix A
APPENDIX A
Condensed Financial Information
Selected Data for Accumulation
Units
Outstanding Throughout Each
Period
For the Years Ended December 31
MAXIM MONEY MARKET INVESTMENT
DIVISION+
<TABLE>
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value at beginning of $11.14 $10.93 $11.06 $11.36 $10.66 $10.47 $10.54 $10.79
period
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Value at end of period $11.63 $11.46 $11.61 $11.95 $11.14 $10.93 $11.06 $11.36
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Increase (decrease) in .49 .53 .55 .59 .48 .46 .52 .57
value of Accumulation Units
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Number of Accumulation 20,837.46 41,474.94 75,566.21 226,071.77 12,004.78 26,660.24 32,201.63 80,773.05
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
A O U Z A*(3) O*(15) U*(15) Z*(3)
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Value at beginning of $10.23 $10.02 $10.05 $10.27 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Value at end of period $10.66 $10.47 $10.54 $10.79 $10.23 $10.02 $10.05 $10.27
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Increase (decrease) in .43 .45 .49 .52 .23 .02 .05 .27
value of Accumulation Units
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
Number of Accumulation 9,449.98 12,173.70 15,907.37 59,518.32 2,395.98 926.69 1,445.29 44,935.09
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ---------- ------------ ------------ ----------- ----------- -------------
MAXIM INVESTMENT GRADE
CORPORATE BOND INVESTMENT
DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $11.37 $11.51 $11.46 $11.66 $10.72 $10.82 $10.75 $10.91
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $12.09 $12.26 $12.24 $12.48 $11.37 $11.51 $11.46 $11.66
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .72 .75 .78 .82 .65 .69 .71 .75
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 8,742.38 10,556.44 19,279.56 60,223.73 6,517.10 8,451.89 8,892.12 18,942.32
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(8) O*(5) U*(11) Z*(6)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.48 $10.55 $10.45 $10.58 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $10.72 $10.82 $10.75 $10.91 $10.48 $10.55 $10.45 $10.58
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .24 .27 .30 .32 .48 .55 .45 .58
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 4,019.39 5,887.41 2,497.98 14,123.28 756.56 1,298.14 2,523.64 7,411.72
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM STOCK INDEX
INVESTMENT DIVISION+
- ---------------------------- ---------------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ---------------------------------------------------- --------------------------------------------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
A O U Z A O U Z
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Value at beginning of $18.42 $18.45 $18.56 $16.69 $14.01 $14.00 $14.06 $14.11
period
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Value at end of period $23.18 $23.27 $23.48 $23.69 $18.42 $18.45 $18.56 $18.68
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Increase (decrease) in 4.76 4.82 4.92 5.01 4.41 4.45 4.50 4.57
value of Accumulation Units
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Number of Accumulation 57,660.73 123,326.43 138,697.83 360,224.24 53,406.89 93,690.46 101,305.87 216,413.98
Units outstanding at end
of period
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ---------------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ---------------------------------------------------- --------------------------------------------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
A O U Z A*(1) O*(5) U*(4) Z *(8)
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Value at beginning of $11.59 $11.55 $11.57 $11.58 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Value at end of period $14.01 $14.00 $14.06 $14.11 $11.59 $11.55 $11.57 $11.58
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Increase (decrease) in 2.42 2.45 2.49 2.53 1.59 1.55 1.57 1.58
value of Accumulation Units
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
Number of Accumulation 30,565.13 48,278.77 50.780.90 119,929.73 4,042.63 11,673.47 18,708.73 55,122.00
Units outstanding at end
of period
- ---------------------------- ------------ ------------ ------------ ------------- ---------- ------------- ------------ ------------
MAXIM U.S. GOVERNMENT
MORTGAGE SECURITIES
INVESTMENT DIVISION+
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Value at beginning of $11.67 $11.80 $11.88 $11.95 $10.82 $10.92 $10.96 $11.00
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Value at end of period $12.40 $12.58 $12.69 $12.81 $11.67 $11.80 $11.88 $11.95
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Increase (decrease) in .73 .78 .81 .86 .85 .88 .92 .95
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Number of Accumulation 14,629.83 20,647.77 33,304.47 108,890.83 8,773.99 15,501.18 17,934.40 37,775.13
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
A O U Z A*(8) O*(5) U*(4) Z*(6)
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Value at beginning of $10.45 $10.52 $10.54 $10.55 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Value at end of period $10.82 $10.92 $10.96 $11.00 $10.45 $10.52 $10.54 $10.55
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Increase (decrease) in .37 .40 .42 .45 .45 .52 .54 .55
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
Number of Accumulation 5,272.40 8,847.40 7,526.42 18,157.75 731.02 5,864.01 1,624.61 7,344.94
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ----------- ------------ ------------
MAXIM SMALL-CAP INDEX
INVESTMENT DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $15.95 $16.04 $16.15 $16.25 $13.28 $13.33 $13.38 $13.43
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $15.58 $15.71 $15.85 $15.99 $15.95 $16.04 $16.15 $16.25
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in (.37) (.33) (.30) (.26) 2.67 2.71 2.77 2.82
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 23,227.78 28,845.27 31,905.16 61,018.77 21,596.15 22,264.86 29,959.15 49,337.14
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(1) O*(5) U*(9) Z*(8)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $11.60 $11.62 $11.63 $11.65 10.00 10.00 10.00 10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $13.28 $13.33 $13.38 $13.43 $11.60 $11.62 $11.63 $11.65
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in 1.68 1.71 1.75 1.78 1.60 1.62 1.63 1.65
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 13,245.31 17,113.51 20,809.07 28,991.22 2,240.54 5,959.11 3,318.14 14,397.06
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM GROWTH INDEX
INVESTMENT DIVISION+
- ---------------------------- -------------------------------------------------- -------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- -------------------------------------------------- -------------------------------------------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
A O U Z A O U Z
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Value at beginning of $18.18 $18.29 $18.41 $18.53 $14.17 $14.22 $14.28 $14.34
period
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Value at end of period $24.77 $24.99 $25.21 $25.44 $18.18 $18.29 $18.41 $18.53
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Increase (decrease) in 6.59 6.70 6.80 6.91 4.01 4.07 8.20 4.19
value of Accumulation Units
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Number of Accumulation 64,431.56 109,295.25 114,929.12 246,772.24 43,323.40 65,415.29 68,910.66 113,708.46
Units outstanding at end
of period
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- -------------------------------------------------- -------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- -------------------------------------------------- -------------------------------------------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
A O U Z A*(8) O*(5) U*(9) Z*(6)
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Value at beginning of $11.69 $11.71 $11.72 $11.74 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Value at end of period $14.17 $14.22 $14.28 $14.34 $11.69 $11.71 $11.72 $11.74
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Increase (decrease) in 2.48 2.51 2.56 2.60 1.69 1.71 1.72 1.74
value of Accumulation Units
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
Number of Accumulation 23,490.03 35,100.60 38,890.98 64,886.39 3,339.10 10,056.69 9,367.33 19,673.41
Units outstanding at end
of period
- ---------------------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
MAXIM VALUE INDEX
INVESTMENT DIVISION+
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $18.40 $18.52 $18.64 $18.76 $13.82 $13.88 $13.93 $13.99
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $20.90 $21.09 $21.28 $21.47 $18.40 $18.52 $18.64 $18.76
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in 2.50 2.57 2.64 2.71 4.58 4.64 4.71 4.77
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 41,606.69 81,338.97 94,959.15 183,410.06 34,549.99 61,417.45 65,117.93 113,775.97
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A*(8) O*(5) U*(4) Z*(10)
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $11.55 $11.56 $11.58 $11.60 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $13.82 $13.88 $13.93 $13.99 $11.55 $11.56 $11.58 $11.60
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in 2.27 2.32 2.35 2.39 1.55 1.56 1.58 1.60
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 16,778.01 32,274.09 32,323.22 46,735.19 1,666.79 7,395.18 12,134.89 18,036.45
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
MAXIM ARIEL SMALL-CAP
VALUE INVESTMENT DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $16.37 $16.48 $16.59 $16.69 $12.90 $12.95 $13.00 $13.06
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $17.60 $17.76 $17.92 $18.08 $16.37 $16.48 $16.59 $16.69
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in 1.23 1.28 1.33 1.39 3.47 3.53 3.59 3.63
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 15,277.80 25,248.80 36.738.60 56.570.22 12,300.05 17,280.05 29,579.62 30,895.89
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(8) O*(5) U*(4) Z*(7)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $11.02 $11.04 $11.05 $11.07 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $12.90 $12.95 $13.00 $13.06 $11.02 $11.04 $11.05 $11.07
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in 1.88 1.91 1.95 1.99 1.02 1.04 1.05 1.07
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 5,037.63 7,695.51 12,528.51 8,094.84 773.21 1,371.51 5,416.35 2,801.92
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM FOREIGN EQUITY
INVESTMENT DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.30 $10.31 $10.36 $10.43 $11.00 $10.99 $11.01 $11.06
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $11.01 $11.05 $11.13 $11.23 $10.30 $10.31 $10.36 $10.43
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .71 .74 .77 .80 (.70) (.68) (.65) (.63)
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 14,150.08 17,599.47 22,714.22 29,845.49 13,468.10 18,078.02 19,626.37 25,784.14
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(2) O*(5) U*(12) Z*(13)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.30 $10.27 $10.26 $10.28 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $11.00 $10.99 $11.01 $11.06 $10.30 $10.27 $10.26 $10.28
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .70 .72 .75 .78 .30 .27 .26 .28
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 9,442.18 12,679.40 10,789.35 9,174.83 2,788.66 1,670.77 2,190.94 1,192.47
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM LOOMIS SAYLES
SMALL-CAP VALUE INVESTMENT
DIVISION+
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $19.03 $19.16 $19.27 $19.40 $15.40 $15.46 $15.52 $15.59
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $18.46 $18.63 $18.79 $18.96 $19.03 $19.16 $19.27 $19.40
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in (.57) (.53) (.48) (.44) 3.63 3.70 3.75 3.81
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 42,420.28 65,931.45 77,252.32 124,677.56 37,737.28 64,185.86 59,544.98 69,924.71
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A*(8) O*(7) U*(14) Z*(7)
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $11.93 $11.95 $11.96 $11.98 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $15.40 $15.46 $15.52 $15.59 $11.93 $11.95 $11.96 $11.98
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in 3.47 3.51 3.56 3.61 1.93 1.95 1.96 1.98
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 19,250.73 30,001.51 23,175.18 24,716.11 1,064.47 5,718.10 1,398.81 4,726.93
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
MAXIM LOOMIS SAYLES
CORPORATE BOND INVESTMENT
DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $13,42 $13.58 $13.50 $13.76 $11.99 $12.11 $12.01 $12.21
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $13.77 $13.98 $13.93 $14.23 $13.42 $13.58 $13.50 $13.76
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .35 .40 .43 .47 1.43 1.47 1.49 1.55
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 12,931.10 33,672.28 38,152.86 60,299.36 11,596.69 24,206.54 22,675.77 33,423.75
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(8) O*(5) U*(11) Z*(6)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.95 $11.03 $10.91 $11.06 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $11.99 $12.11 $12.01 $12.21 $10.95 $11.03 $10.91 $11.06
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in 1.04 1.08 1.10 1.15 .95 1.03 .91 1.06
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 5,084.50 10,767.39 7,111.83 17,630.19 821.90 2,425.21 1,650.00 22,880.14
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM SHORT-TERM MATURITY
BOND INVESTMENT DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.89 $11.00 $11.06 $10.96 $10.34 $10.41 $10.45 $10.33
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $11.50 $11.64 $11.74 $11.66 $10.89 $11.00 $11.06 $10.96
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .61 .64 .68 .70 .55 .59 .61 .63
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 2,375.51 5,795.00 3,416.04 4,002.64 1,209.69 2,989.60 2,031.38 12,503.20
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(16) O*(16) U*(16) Z*(16)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $10.06 $10.07 $10.08 $10.09 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $10.34 $10.41 $10.45 $10.33 $10.06 $10.07 $10.08 $10.09
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in .28 .34 .37 .24 .06 .07 .08 .09
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 244.56 1,038.88 1,603.91 219.54 - - - -
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
MAXIM FOUNDERS BLUE CHIP
INVESTMENT DIVISION+
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A*(18) O*(18) U*(18) Z*(18)
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $14.84 $14.93 $15.03 $15.13 $12.08 $12.12 $12.17 $12.22
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $17.35 $17.51 $17.67 $17.83 $14.84 $14.93 $15.03 $15.13
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in 2.51 2.58 2.64 2.70 2.76 2.81 2.86 2.91
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 26,408.73 35,164.52 60,073.36 107,167.86 18,873.51 25,096.49 33,623.10 50,196.47
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ------------------------------------------------ -------------------------------------------------
1996 By Category 1995 By Category
- ---------------------------- ------------------------------------------------ -------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
A O U Z A O U Z
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at beginning of $10.89 $10.90 $10.92 $10.93 $10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Value at end of period $12.08 $12.12 $12.17 $12.22 $10.89 $10.90 $10.92 $10.93
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Increase (decrease) in 1.19 1.22 1.25 1.29 .89 .90 .92 .93
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
Number of Accumulation 10,571.44 15,356.64 12,390.53 26,371.06 1,177.80 5,184.26 2,940.80 4,666.32
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ------------ ----------- ---------- ------------ -------------
MAXIM T. ROWE PRICE MIDCAP
GROWTH INVESTMENT DIVISION+
- ---------------------------- ----------------------------------------------- --------------------------------------------------
1998 By Category 1997 By Category
- ---------------------------- ----------------------------------------------- --------------------------------------------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
A O U Z A*(17) O*(17) U*(17) Z*(17)
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at beginning of $11.04 $11.06 $11.07 $11.09 10.00 $10.00 $10.00 $10.00
period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Value at end of period $13.40 $13.45 $13.50 $13.55 $11.04 $11.06 $11.07 $11.09
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Increase (decrease) in 2.36 2.39 2.43 2.46 1.04 1.06 1.07 1.09
value of Accumulation Units
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
Number of Accumulation 15,971.70 28,827.46 23,055.16 79,644.98 - - - 1,485.90
Units outstanding at end
of period
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -------------
</TABLE>
Current Accumulation Unit
Values can be obtained by
calling GWL&A toll free at
1-800-338-4015.
- ---------------
Mortality & Expense Charge Contract Value
A =.75% $0 - $9,999.99
O =.50% $10,000 - $24,999.99
U =.25% $25,000 - $49,999.99
Z =.00% $50,000 and greater
(1) The inception date for the Maxim Small-Cap Index A and Maxim Stock Index A
Investment Divisions was
June 20, 1995.
(2) The inception date for the Maxim Foreign Equity A Investment Division was
June 23, 1995.
(3) The inception date for the Maxim Money Market A and Maxim Money Market Z
Investment Divisions was
July 5, 1995.
(4) The inception date for the Maxim Stock Index U, Maxim Ariel Small-Cap Value
U, Maxim Value Index U, and Maxim U.S. Government Mortgage Securities U
Investment Divisions was July 12, 1995.
(5) The inception date for the Maxim Foreign Equity O, Maxim Small-Cap Index O,
Maxim Growth Index O, Maxim Stock Index O, Maxim Ariel Small-Cap Value O, Maxim
Value Index O, Maxim U.S. Government Mortgage Securities O, Maxim Investment
Grade Corporate Bond O and Maxim Loomis Sayles Corporate Bond O Investment
Divisions was July 24, 1995. (6) The inception date for the Maxim Growth Index
Z, Maxim Investment Grade Corporate Bond Z, Maxim U.S. Government Mortgage
Securities Z, and Maxim Loomis Sayles Corporate Bond Z Investment Divisions was
July 26, 1995. (7) The inception date for the Maxim Loomis Sayles Small-Cap
Value Z, Maxim Ariel Small-Cap Value Z, and Maxim Loomis Sayles Small-Cap Value
O Investment Divisions was August 3, 1995. (8) The inception date for the Maxim
Small-Cap Index Z, Maxim Stock Index Z, Maxim Growth Index A, Maxim Loomis
Sayles Small-Cap Value A, Maxim Ariel Small-Cap Value A, Maxim Value Index A,
Maxim U.S. Government Mortgage Securities A, Investment Grade Corporate Bond A,
and Maxim Loomis Sayles Corporate Bond A Investment Divisions was August 9,
1995. (9) The inception date for the Maxim Small-Cap Index U, and the Maxim
Growth Index U Investment Divisions was September 8, 1995. (10)The inception
date for the Maxim Value Index Z Investment Division was September 13, 1995.
(11)The inception date for the Maxim Investment Grade Corporate Bond U, and
Maxim Loomis Sayles Corporate Bond U Investment Divisions was September 19,
1995. (12)The inception date for the Maxim Foreign Equity U Investment Division
was October 3, 1995. (13)The inception date for the Maxim Foreign Equity Z
Investment Division was October 4, 1995. (14)The inception date for the Maxim
Loomis Sayles Small-Cap Value Investment Division was November 17, 1995. (15)The
inception date for the Maxim Money Market O, and the Maxim Money Market U
Investment Divisions was November 30, 1995. (16)The inception date for the Maxim
Short-Term Maturity Bond Investment Division was March 13, 1996. The unit values
began July 31, 1995 at $10.00 (17) The inception date for the Maxim T. Rowe
Price MidCap Growth Investment Division was June 30, 1997. (18) The inception
date for the Maxim Founders Blue Chip Investment Division was July 24, 1995. On
June 30, 1997, the Eligible Fund was changed from the Total Return Portfolio to
the Maxim Founders Blue Chip Portfolio.
+ On April 7, 1999, the Maxim Series Fund Board of Directors authorized changes
in the names of the indicated portfolios to include the name of the Fund. At the
same time, the names of certain portfolios were also changed in order to include
the name of the applicable sub-adviser. Specifically, the Blue Chip Portfolio
was changed to the Maxim Founders Blue Chip Portfolio, the Small-Cap Value
Portfolio was changed to the Maxim Ariel Small-Cap Value Portfolio, the
Small-Cap Aggressive Growth Portfolio was changed to the Maxim Loomis Sayles
Small-Cap Value Portfolio, the Corporate Bond Portfolio was changed to the Maxim
Loomis Sayles Corporate Bond Portfolio, and the MidCap Growth Portfolio was
changed to the Maxim T. Rowe Price MidCap Growth Portfolio.
<PAGE>
Appendix B
Appendix B
Net Investment Factor
The following formula is what we use to calculate the value of an Accumulation
Unit. The Net Investment Factor is determined by dividing (a) by (b), and
subtracting (c) from the result where:
(a) is the net result of:
(i) the net asset value per share of the portfolio shares determined as of the
end of the current Valuation Period, plus
(ii)the per share amount of any dividend (or, if applicable, capital gain
distributions) made by the portfolio on shares if the "ex-dividend" date
occurs during the current Valuation Period, minus or plus
(iii) a per unit charge or credit for any taxes incurred by or provided for
in the Variable Sub-Account, which is determined by GWL&A to have
resulted from the investment operations of the Variable Sub-Account;
and
(b) is the net asset value per share of the portfolio shares determined as of
the end of the immediately preceding Valuation Period; and
(c) is an amount representing the Mortality and Expense Risk Charge deducted
from each Variable Sub-Account on a daily basis.
The Net Investment Factor may be greater than, less than, or equal to one.
Therefore, the Accumulation Unit Value may increase, decrease or remain
unchanged.
The net asset value per share referred to in paragraphs (a) (i) and (b) above,
reflect the investment performance of the portfolio as well as the payment of
portfolio expenses.
<PAGE>
Part B
RETIREMENT PLAN SERIES
ACCOUNT
Individual Flexible
Premium Variable Annuity
Contracts
issued by
Great-West Life & Annuity
Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800)
495-4952
STATEMENT OF
ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the Prospectus, dated May 1, 1999, which is
available without charge by contacting Great-West Life & Annuity Insurance
Company ("GWL&A") at the above address or at the above telephone number.
May 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT
AUDITORS.................................................................B-III
UNDERWRITER..............................................................B-III
CALCULATION OF PERFORMANCE
DATA.....................................................................B-IV
FINANCIAL
STATEMENTS.........................................................B-V
<PAGE>
Part B
V
CUSTODIAN AND INDEPENDENT
AUDITORS
.........A. Custodian
......... The assets of Retirement Plan Series Account (the "Series Account")
are held by GWL&A. The assets of the Series Account are kept physically
segregated and held separate and apart from the general account of GWL&A. GWL&A
maintains records of all purchases and redemptions of shares of the Fund.
Additional protection for the assets of the Series Account is afforded by
blanket fidelity bonds issued to The Great-West Life Assurance Company
("Great-West") in the amount of $50 million (Canadian), which cover all officers
and employees of GWL&A.
.........B. Independent Auditors
......... The accounting firm of Deloitte & Touche LLP performs certain
accounting and auditing services for GWL&A and the Series Account. The principal
business address of Deloitte & Touche LLP is 555 Seventeenth Street, Suite 3600,
Denver, Colorado 80202-3942.
......... The consolidated financial statements of GWL&A as of December 31, 1998
and 1997 and each of the three years in the period ended December 31, 1998, as
well as the financial statements of the Series Account for the years ended
December 31, 1998 and 1997, which are included in this Statement of Additional
Information have been audited by Deloitte & Touche LLP, independent auditors, as
set forth in their reports appearing herein and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.
UNDERWRITER
.........The offering of the Contracts is made on a continuous basis by One
Orchard Equities, Inc., a wholly owned subsidiary of GWL&A. Previously the
Contracts were offered through, Great-West, an affiliate of GWL&A. No payments
were made to Great-West for the years 1994 through 1997 and no payment was made
to One Orchard Equities, Inc. in 1998.
<PAGE>
CALCULATION OF PERFORMANCE
DATA
A........Yield and Effective Yield Quotations for the Money Market Investment
Division
.........The yield quotation for the Money Market Investment Division set forth
in the Prospectus is for the seven-day period ended December 31, 1998 and is
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 in the Money Market Investment Division at the beginning of
the period, subtracting a hypothetical charge reflecting deductions from
Participant accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to the nearest hundredth of one percent.
.........The effective yield quotation for the Money Market Investment Division
set forth in the Prospectus is for the seven-day period ended December 31, 1998
and is carried to the nearest hundredth of one percent, 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 in the Money
Market Investment Division at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from Participant accounts, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula:
.........EFFECTIVE YIELD = [(BASE PERIOD RETURN +1 365/7]-1.
.........For purposes of the yield and effective yield computations, the
hypothetical charge reflects all deductions that are charged to all Participant
accounts in proportion to the length of the base period, and for any fees that
vary with the size of the account, the account size is assumed to be the Money
Market Investment Division's mean account size. The specific percentage
applicable to a particular withdrawal would depend on a number of factors
including the length of time the Contract Owner has participated under the
Contracts. No deductions or sales loads are assessed upon annuitization under
the Contracts. Realized gains and losses from the sale of securities and
unrealized appreciation and depreciation of the Money Market Investment Division
and the Fund are excluded from the calculation of yield.
<PAGE>
B........Total Return Quotations for All Investment Divisions
.........The total return quotations for all Investment Divisions, other than
the Money Market, set forth in the Prospectus are average annual total return
quotations for the one-year period ended December 31, 1998. The quotations are
computed by finding the average annual compounded rates of return over the
relevant periods that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
.........P(1+T)N = ERV
.........Where: P = a hypothetical initial payment of $1,000
......... T =
average annual total return
......... N =
number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the particular period at the end of the particular period
For purposes of the total return quotations for these Investment Divisions, the
calculations take into effect all fees that are charged to the Contract Value,
and for any fees that vary with the size of the account, the account size is
assumed to be the respective Investment Divisions' mean account size. The
calculations also assume a complete redemption as of the end of the particular
period.
FINANCIAL STATEMENTS
The financial statements of GWL&A as contained herein should be
considered only as bearing upon GWL&A's ability to meet its obligations under
the Contracts, and they should not be considered as bearing on the investment
performance of the Series Account. The variable interest of Contract Owners
under the Contract is affected solely by the investment results of the Series
Account.
<PAGE>
PART B
FINANCIAL STATEMENTS
<PAGE>
RETIREMENT PLAN SERIES
ACCOUNT
===========================
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
AND INDEPENDENT AUDITORS'
REPORT
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners of
Retirement Plan Series Account of
Great-West Life & Annuity Insurance Company
We have audited the accompanying statement of assets and liabilities of
Retirement Plan Series Account of Great-West Life & Annuity Insurance Company
(the "Series Account") as of December 31, 1998, and the related statements of
operations for the year then ended, by investment division, and the statements
of changes in net assets for each of the two years in the period then ended, by
investment division. These financial statements are the responsibility of the
Series Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the custodian. 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 Retirement Plan Series Account
of Great-West Life & Annuity Insurance Company as of December 31, 1998, the
results of its operations for the year then ended, by investment division, and
the changes in its net assets for each of the two years in the period then
ended, by investment division, in conformity with generally accepted accounting
principles.
March 25, 1999
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT - WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Shares Cost Value
Investments in underlying affiliated funds:
Maxim Series Fund, Inc. Blue Chip Portfolio 3,524,209 $ $ 4,034,670
3,829,734
Maxim Series Fund, Inc. Corporate Bond Portfolio 1,828,901 2,033,430
2,180,116
Maxim Series Fund, Inc. Foreign Equity Portfolio 962,103 937,838
969,118
Maxim Series Fund, Inc. Growth Index Portfolio 5,499,405 13,350,118
11,165,149
Maxim Series Fund, Inc. Investment Grade Corporate Bond Portfolio 991,791 1,290,275
1,297,723
Maxim Series Fund, Inc. MidCap Growth Portfolio 1,467,595 1,977,082
1,724,581
Maxim Series Fund, Inc. Money Market Portfolio 4,269,190 4,271,359
4,271,706
Maxim Series Fund, Inc. Short-Term Maturity Bond Portfolio 177,556 181,172
182,743
Maxim Series Fund, Inc. Small-Cap Aggressive Growth Portfolio 4,022,775 5,825,681
6,151,912
Maxim Series Fund, Inc. Small-Cap Index Portfolio 2,899,751 2,296,848
3,177,519
Maxim Series Fund, Inc. Small-Cap Value Portfolio 2,513,878 2,397,729
2,392,990
Maxim Series Fund, Inc. Stock Index Portfolio 4,441,666 15,910,486
14,101,183
Maxim Series Fund, Inc. U.S. Government Mortgage Securities Portfolio 1,974,354 2,342,086
2,354,385
Maxim Series Fund, Inc. Value Index Portfolio 4,500,019 8,386,980 8,529,105
--------------- ------------
Total Investments $ 62,185,839 $ 65,377,879
============= ============
Other assets and liabilities:
Net Premiums (Redemptions) Due and Accrued 166,507
Due to Great-West Life & Annuity Insurance Company
(9,221)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 5) $ 65,535,165
=============
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
PERIOD TO DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Maxim Maxim Foreign G
Maxim Corporate Bond Equity Maxim
Blue Chip Portfolio Portfolio Growth Index
Portfolio Portfolio
Investment Investment Investment Investment
Division Division Division Division
-------------------------------------------------------------------
INVESTMENT INCOME 187,450 $ 207,245 $ 21,827 $ 558,191
EXPENSES - mortality and expense risks 6,620 4,098 2,590 21,243
----------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) _180,830 203,147 19,237 536,948
--------- ---------- ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 72,703 (41,090) (35,017) 814,681
Net change in unrealized appreciation (depreciation)
on investments 197,782 (112,781) 63,279 1,594,098
-------- --------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 270,485 (153,871) 28,262 2,408,779
--------- ---------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 451,315 $ 49,276 $ 47,499 $2,945,727
=========== ============ ============ ===========
Maxim
Investment
Grade Corporate Maxim MidCap Maxim Money
Bond Portfolio Growth Market
Portfolio Portfolio
Investment Investment Investment
Division Division Division
- --------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 47,050 $ 367 $ 111,595
EXPENSES - mortality and expense risks 1,521 1,507 4,153
----------- ---------- ----------
NET INVESTMENT INCOME (LOSS) 45,529 (1,140) 107,442
---------- ---------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 6,904 (32,258) (88)
Net change in unrealized appreciation (depreciation)
on investments (5,012) 252,339 (347)
---------- --------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 1,892 220,081 (435)
---------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 47,421 $218,941 $107,007
========== ========= ========
</TABLE>
See notes to financial statements. (Continued)
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
PERIOD TO DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Maxim Maxim
Short-Term Small-Cap Maxim Maxim
Maturity Bond Aggressive Small-Cap Small-Cap
Portfolio Growth Index Value
Portfolio Portfolio Portfolio
Investment Investment Investment Investment
Division Division Division Division
-----------------------------------------------------------
INVESTMENT INCOME $6,603 $177,486 $785,356 $81,697
EXPENSES - mortality and expense risks 464 15,098 6,013 _ 4,933
-------- -------------------------- ---------
NET INVESTMENT INCOME (LOSS) 6,139 162,388 779,343 76,764
------- ----------- ------------ ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 1,118 27,148 (53,917) (333,530)
Net change in unrealized appreciation (depreciation)
on investments (651) (313,210) (783,109) 412,656
---------- ----------- ------------ ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 467 (286,062) (837,026) 79,126
--------- ----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $6,606 $(123,674) $ (57,683) $155,890
====== ========== ============ ==========
Maxim U.S.
Government Maxim Value
Maxim Stock Mortgage Index
Index Securities Portfolio Total
Portfolio Portfolio Retirement
Plan Series
Account
--------------
Investment Investment Investment
Division Division Division
----------------------------------------------------------
INVESTMENT INCOME $ 612,495 $97,957 $720,275 $3,615,594
EXPENSES - mortality and expense risks 25,684 2,664 _ 16,919 113,507
------------ ----------- ---------- ------------
NET INVESTMENT INCOME (LOSS) 586,811 95,293 703,356 3,502,087
------------ ---------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 450,967 15,254 612,006 1,504,881
Net change in unrealized appreciation (depreciation)
on investments 1,877,061 (12,062) (385,651) 2,784,392
------------ ---------- --------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 2,328,028 3,192 226,355 4,289,273
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,914,839 $98,485 $929,711 $7,791,360
=========== ======== ========== ==========
- ----------------------------------------------------------------------------------------------------------------------
Maxim Foreign Equity Maxim Growth Index Portfolio
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 19,237 $ 52,576 $ 536,948 $ 169,868
Net realized gain (loss) on investments (35,017) 9,037 814,681 97,228
Net change in unrealized appreciation (depreciation)
in investments 63,279 (111,625) 1,594,098 518,182
---------- ---------- ----------- -----------
Increase (decrease) in net assets resulting from
operations 47,499 (50,012) 2,945,727 885,278
---------- ---------- ----------- -----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 427,878 490,380 6,366,726 2,734,704
Redemptions: (256,537) (124,468) (1,520,505) (405,921)
Net transfers: (78,216) 17,955 349,937 (171,623)
----------- ----------- ----------- -------------
Increase (decrease) in net assets resulting from
unit transactions 93,125 383,867 5,196,158 2,157,160
---------- --------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS 140,624 333,855 8,141,885 3,042,438
NET ASSETS:
Beginning of period 797,428 463,573 5,359,865 2,317,427
--------- --------- ----------- -----------
End of period $938,052 $797,428 $3,501,750 $5,359,865
======== ======== =========== ==========
</TABLE>
See notes to financial statements. (Concluded)
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1998 and 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Maxim Blue Chip Maxim Corporate Bond Portfolio
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 180,830 $ 47,483 $ 203,147 $ 95,150
Net realized gain (loss) on investments 72,703 241,401 (41,090) 43,015
Net change in unrealized appreciation (depreciation)
in investments 197,782 2,543 (112,781) (38,334)
---------- ------------- ------------ -------------
Increase (decrease) in net assets resulting from
operations 451,315 291,427 49,276 99,831
---------- ----------- ------------- -------------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 1,889,058 1,067,383 1,284,493 879,962
Redemptions: (329,501) (113,517) (214,254) (81,928)
Net transfers: 115,625 (112,886) (331,474) (139,435)
---------- ------------- -------------- -------------
Increase (decrease) in net assets resulting from
unit transactions 1,675,182 840,980 738,765 658,599
---------- ------------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS 2,126,497 1,132,407 788,041 758,430
NET ASSETS:
Beginning of period 1,919,298 786,891 1,250,405 491,975
------------ ------------ ----------- ------------
End of period $4,045,795 $1,919,298 $2,038,446 $1,250,405
========== ========== =========== ===========
See notes to financial statements.
</TABLE>
(Continued)
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1998 and 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Maxim Investment Grade
Corporate Bond Portfolio Maxim MidCap Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 45,529 $ 22,927 $ (1,140) $ 25
Net realized gain (loss) on investments 6,904 4,008 (32,258) -
Net change in unrealized appreciation
(depreciation) in investments (5,012) (2,037) 252,339 162
------------- ------------ ---------- ---------
Increase (decrease) in net assets resulting
from operations 47,421 24,898 218,941 187
------------ ---------- ---------- ---------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 745,015 213,945 1,785,975 16,286
Redemptions: (87,114) (17,461) (180,139) -
Net transfers: 23,495 (15,039) 150,881 -
------------ ------------ ----------- ------------
Increase (decrease) in net assets resulting
from unit transactions 681,396 181,445 1,756,717 16,286
------------ -------- ----------- -------
INCREASE (DECREASE) IN NET ASSETS 728,817 206,343 1,975,658 16,473
NET ASSETS:
Beginning of period 494,114 287,771 16,473 -
------------ --------- ------------- -------------
End of period $1,222,931 $494,114 $1,992,131 $16,473
========== ======== ========== =======
---------------------------------------------------------------------------------------------------------------
Maxim Money Market Portfolio Maxim Short-Term Maturity
Bond Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 107,442 $ 64,988 $ 6,139 $ 5,245
Net realized gain (loss) on investments (88) - 1,118 612
Net change in unrealized appreciation
(depreciation) in investments (651)
----------- -----------------------------
(347) - (887)
----- - -----
Increase (decrease) in net assets resulting
from operations 107,007 64,988 6,606 4,971
------------ ------------- ----------- -------------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 2,142,045 2,092,245 141,892 54,058
Redemptions: (831,283) (1,832,570) (186,650) (19,165)
Net transfers: 1,178,878 336,121 14,092 133,335
----------- ------------ ----------- -----------
Increase (decrease) in net assets resulting
from unit transactions 2,489,640 595,796 (30,666) 168,228
----------- ------------ ------------ ----------
INCREASE (DECREASE) IN NET ASSETS 2,596,647 660,784 (24,060) 173,198
NET ASSETS:
Beginning of period 1,699,003 1,038,219 205,574 32,376
----------- ----------- --------- ------------
End of period $4,295,650 $1,699,003 $181,514 $ 205,574
========== ========== ======== ==========
</TABLE>
See notes to financial statements.
(Continued)
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1998 and 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Maxim Small-Cap Aggressive
Growth Portfolio Maxim Small-Cap Index
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $162,388 $512,174 $779,343 $291,828
Net realized gain (loss) on investments 27,148 225,343 (53,917) 109,311
Net change in unrealized appreciation
(depreciation) in investments (313,210) (91,548) (783,109) (109,743)
--------- -------- --------- ---------
Increase (decrease) in net assets resulting
from operations (123,674) 645,969 (57,683) 291,396
--------- --------- -------- -------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 3,016,962 2,760,572 999,814 934,471
Redemptions: (1,037,336) (464,001) (420,525) (244,346)
Net transfers: (481,780) 4,345 (212,203) (66,138)
------------- -------------- ------------ -------------
Increase (decrease) in net assets resulting
from unit transactions 1,497,846 2,300,916 367,086 623,987
------------ ------------ ------------- ------------
INCREASE (DECREASE) IN NET ASSETS 1,374,172 2,946,885 309,403 915,383
NET ASSETS:
Beginning of period 4,452,140 1,505,255 1,987,169 1,071,786
------------- ------------ ----------- -----------
End of period $5,826,312 $4,452,140 $2,296,572 $1,987,169
=========== =========== =========== ===========
- -----------------------------------------------------------------------------------------------------------
Maxim Small-Cap Value Maxim Stock Index Portfolio
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $76,764 $604,333 $586,811 $ 462,089
Net realized gain (loss) on investments (333,530) 96,680 450,967 1,607,874
Net change in unrealized appreciation
(depreciation) in investments 412,656 (460,984) 1,877,061 (482,950)
-------- --------- ---------- -----------
Increase (decrease) in net assets resulting
from operations 155,890 240,029 2,914,839 1,587,013
------- ------- ---------- ---------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 1,250,733 849,806 6,517,884 4,478,832
Redemptions: (272,975) (174,975) (1,648,751) (479,748)
Net transfers: (228,275) 144,413 (423,894) (460,494)
------------ -------------- -------------- ------------
Increase (decrease) in net assets resulting
from unit transactions 749,483 819,244 4,445,239 3,538,590
------------ -------------- ------------ ---------
INCREASE (DECREASE) IN NET ASSETS 905,373 1,059,273 7,360,078 5,125,603
NET ASSETS:
Beginning of period 1,492,566 433,293 8,635,783 3,510,180
---------- ------------ ------------ ----------
End of period $2,397,939 $1,492,566 $15,995,861 $8,635,783
=========== =========== ============ ==========
</TABLE>
See notes to financial statements. (Continued)
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1998 and 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Maxim U.S. Government Mortgage Total Retirement Plan Series
Securities Portfolio Maxim Value Index Portfolio Account
Investment Division Investment Division Investment Division
1998 1997 1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 95,293 $ 44,709 $ 703,356 317,836 3,502,087 2,691,231
Net realized gain (loss) on investments 15,254 11,258 612,006 232,205 1,504,881 2,777,972
Net change in unrealized appreciation
(depreciation) in investments (12,062) 1,203 (385,651) 371,104 2,784,392 (404,914)
------------- ----------- ----------- ----------- ----------- ------------
Increase (decrease) in net assets resulting
from operations 98,485 57,170 929,711 921,145 7,791,360 5,064,289
------- ---------- ----------- ----------- ----------- -----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 1,213,921 443,907 3,855,784 2,498,715 31,638,180 19,515,266
Redemptions: (185,833) (57,076) (1,123,222) (329,654) (8,294,625) (4,344,830)
Net transfers: 181,859 70,003 (238,716) 246,107 20,209 (13,336)
------------- ----------- ------------ ----------- ------- ------------
Increase (decrease) in net assets resulting
from unit transactions 1,209,947 456,834 2,493,846 2,415,168 23,363,764 15,157,100
------------ ---------- ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS 1,308,432 514,004 3,423,557 3,336,313 31,155,124 20,221,389
NET ASSETS:
Beginning of period 949,898 435,894 5,120,325 1,784,012 34,380,041 14,158,652
------------- ---------- ------------ ----------- ----------- -----------
End of period $2,258,330 $949,898 $8,543,882 $5,120,325 65,535,165 $34,380,041
=========== ========= =========== =========== =========== ===========
</TABLE>
See notes to financial statements. (Continued)
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
1. HISTORY OF THE SERIES ACCOUNT
The Retirement Plan Series Account of Great-West Life & Annuity Insurance
Company (the Series Account) is a separate account of Great-West Life &
Annuity Insurance Company (the Company) established under Colorado law.
The Series Account commenced operations on June 1, 1995. The Series
Account is registered with the Securities and Exchange Commission as a
unit investment trust under the provisions of the Investment Company Act
of 1940, as amended.
2. Significant Accounting Policies
The following is a summary of significant accounting policies of the
Series Account, which are in accordance with the accounting principles
generally accepted in the investment company industry.
Security Transactions - Security transactions are recorded on the trade
date. Cost of investments sold is determined on the basis of identified
cost.
Dividend income is accrued as of the ex-dividend date and expenses are
accrued on a daily basis.
Security Valuation - The investments in shares of the underlying funds are
valued at the closing net asset value per share as determined by the
appropriate fund/portfolio at the end of each day.
The cost of investments represents shares of the underlying funds that
were purchased by the Series Account. Purchases are made at the net asset
value from net purchase payments or through reinvestment of all
distributions from the underlying fund.
Federal Income Taxes - The Series Account income is automatically applied
to increase contract reserves. Under the existing federal income tax law,
this income is not taxed to the extent that it is applied to increase
reserves under a contract. The Company reserves the right to charge the
Series Account for federal income taxes attributable to the Series Account
if such taxes are imposed in the future.
Net Transfers - Net transfers include transfers between investment
divisions of the Series Account as well as transfers between other
investment options of the Company.
3. CHARGES UNDER THE CONTRACT
Charges Incurred for Total or Partial Surrenders - The administrative
surrender fee is $50 if the contract is surrendered in whole during the
first 12 months and $25 if the contract is surrendered in part during the
first 12 months.
Deductions for Variable Asset Charge - The Company deducts an amount,
computed daily, from the net asset value of the Series Account
investments, equal to an annual rate of .75% (category A), .50% (category
O), .25% (category U), or .00% (category Z) depending on the size of the
contract. This charge is designed to compensate the Company for its
assumption of certain mortality, death benefit and expense risks.
Premium Taxes - The Company presently intends to pay any premium tax
levied by any governmental entity as a result of the existence of the
participant accounts or the Series Account.
If the above charges prove insufficient to cover actual costs and assumed
risks, the loss will be borne by the Company; conversely, if the amounts
deducted prove more than sufficient, the excess will be a profit to the
Company.
4. RELATED PARTY SERVICES
The Company's parent, The Great-West Life Assurance Company, served as
investment advisor to Maxim Series Fund, Inc. (an affiliate) through
October 31, 1996. Effective November 1, 1996, a wholly owned subsidiary of
the Company, GW Capital Management, Inc., serves as investment advisor.
Fees are assessed against the average daily net asset value of the
affiliated funds to compensate GW Capital Management, Inc. for investment
advisory services.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
5. SELECTED DATA
The following is a summary of selected data for a
unit of capital and net assets of the Series
Account.
--------------------------------------------------------------------------------------
Maxim Blue Chip Portfolio Maxim Corporate Bond Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
14.84 14.93 15.03 15.13 13.42 13.58 13.50 13.76
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
17.35 17.51 17.67 17.83 13.77 13.98 13.93 14.23
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 26,408.73 35,164.52 60,073.36 107,167.86 12,931.10 33,672.28 38,152.86 60,299.36
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
458 616 1,061 1,910 178 471 532 858
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
12.08 12.12 12.17 12.22 11.99 12.11 12.01 12.21
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
14.84 14.93 15.03 15.13 13.42 13.58 13.50 13.76
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 18,873.51 25,096.49 33,623.10 50,196.47 11,596.69 24,206.54 22,675.77 33,423.75
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
280 375 505 759 156 329 306 460
-----------=====================----------------------=====================-----------
1996
--------------------------------------------------------------------------------------
Beginning Unit Value
$ $ $ $ $ $ $ $
10.89 10.90 10.92 10.93 10.95 11.03 10.91 11.06
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
12.08 12.12 12.17 12.22 11.99 12.11 12.01 12.21
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 10,571.44 15,356.64 12,390.53 26,371.06 5,084.50 10,767.39 7,111.83 17,630.19
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
128 186 151 322 61 130 85 215
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.89 10.90 10.92 10.93 10.95 11.03 10.91 11.06
================================----------------------=====================-----------
Number of Units
Outstanding 1,177.80 5,184.26 2,940.80 4,666.32 821.90 2,425.21 1,650.00 22,880.14
=========== ----------- ===========-----------
===================== =====================
Net Assets (000's)
$ $ $ $ $ $ $ $
13 57 32 51 9 27 18 253
================================-----------================================-----------
(Continued)
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim Foreign Equity Portfolio Maxim Growth Index Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 06/01/95 06/01/95 06/01/95 06/01/95 07/24/95 07/24/95 07/24/95 07/24/95
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
10.30 10.31 10.36 10.43 18.18 18.29 18.41 18.53
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.01 11.05 11.13 11.23 24.77 24.99 25.21 25.44
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 14,150.08 17,599.47 22,714.22 29,845.49 64,431.56 109,295.25114,929.12 246,772.24
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
156 194 253 335 1,596 2,731 2,898 6,277
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
11.00 10.99 11.01 11.06 14.17 14.22 14.28 14.34
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.30 10.31 10.36 10.43 18.18 18.29 18.41 18.53
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 13,468.10 18,078.02 19,626.37 25,784.14 43,323.40 65,415.29 68,910.66 113,708.46
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
139 186 203 269 787 1,197 1,269 2,107
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $ $ $ $ $
10.30 10.27 10.26 10.28 11.69 11.71 11.72 11.74
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.00 10.99 11.01 11.06 14.17 14.22 14.28 14.34
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 9,442.18 12,679.40 10,789.35 9,174.83 23,490.03 35,100.60 38,890.98 64,886.39
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
104 139 119 101 333 499 555 930
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.30 10.27 10.26 10.28 11.69 11.71 11.72 11.74
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 2,788.66 1,670.77 2,190.94 1,192.47 3,339.10 10,056.69 9,367.33 19,673.41
=========== ==========-----------================================-----------
================================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
29 17 22 12 39 118 110 231
====================== ========== -----------
================================ ===========
(Continued)
<PAGE>
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim MidCap Portfolio
Maxim Investment Grade Corporate Bond
Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 07/24/95 07/24/95 07/24/95 07/24/95 06/30/97 06/30/97 06/30/97 06/30/97
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
11.37 11.51 11.46 11.66 11.04 11.06 11.07 11.09
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
12.09 12.26 12.24 12.48 13.40 13.45 13.50 13.55
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 8,742.38 10,556.44 19,279.56 60,223.73 15,971.70 28,827.46 23,055.16 79,644.98
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
106 129 236 752 214 388 311 1,079
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
10.72 10.82 10.75 10.91 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.37 11.51 11.46 11.66 11.04 11.06 11.07 11.09
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 6,517.10 8,451.89 8,892.12 18,942.32 - - - 1,485.90
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
74 97 102 221 - - - 16
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $
10.48 10.55 10.45 10.58
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $
10.72 10.82 10.75 10.91
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 4,019.39 5,887.41 2,497.98 14,123.28
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $
43 64 27 154
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $
10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $
10.48 10.55 10.45 10.58
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 756.56 1,298.14 2,523.64 7,411.72
=========== ==========-----------================================-----------
================================----------------------=====================-----------
Net Assets (000's)
$ $ $ $
8 14 26 78
====================== ========== -----------
================================ ===========
(Continued)
<PAGE>
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim Money Market Portfolio Maxim Short-Term Maturity Bond Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 07/05/95 07/05/95 07/05/95 07/05/95 03/13/96 03/13/96 03/13/96 03/13/96
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
11.14 10.93 11.06 11.36 10.89 11.00 11.06 10.96
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.63 11.46 11.61 11.95 11.50 11.64 11.74 11.66
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 20,837.46 41,474.94 75,566.21 226,071.77 2,375.51 5,795.00 3,416.04 4,002.64
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
242 475 877 2,701 27 67 40 47
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
10.66 10.47 10.54 10.79 10.34 10.41 10.45 10.33
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.14 10.93 11.06 11.36 10.89 11.00 11.06 10.96
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 12,004.78 26,660.24 32,201.63 80,773.05 1,209.69 2,989.60 2,031.38 12,503.20
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
134 291 356 918 13 33 22 137
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $ $ $ $ $
10.23 10.02 10.05 10.27 10.06 10.07 10.08 10.09
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.66 10.47 10.54 10.79 10.34 10.41 10.45 10.33
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 9,449.98 12,173.70 15,907.37 59,518.32 244.56 1,038.88 1,603.91 219.54
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
101 127 168 642 3 11 17 2
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.23 10.02 10.05 10.27 10.06 10.07 10.08 10.09
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 2,395.98 926.69 1,445.29 44,935.09 - - - -
================================-----------=========== -----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
25 9 15 461 - - - -
================================-----------================================-----------
======================================================================================
(Continued)
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim Small-Cap Aggressive Growth Maxim Small-Cap Index Portfolio
Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 08/03/95 08/03/95 08/03/95 08/03/95 06/01/95 06/01/95 06/01/95 06/01/95
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
19.03 19.16 19.27 19.40 15.95 16.04 16.15 16.25
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
18.46 18.63 18.79 18.96 15.58 15.71 15.85 15.99
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 42,420.28 65,931.45 77,252.32 124,677.56 23,227.78 28,845.27 31,905.16 61,018.77
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
783 1,228 1,451 2,364 362 453 506 976
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
15.40 15.46 15.52 15.59 13.28 13.33 13.38 13.43
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
19.03 19.16 19.27 19.40 15.95 16.04 16.15 16.25
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 37,737.28 64,185.86 59,544.98 69,924.71 21,596.15 22,264.86 29,959.15 49,337.14
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
718 1,230 1,148 1,357 344 357 484 802
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $ $ $ $ $
11.93 11.95 11.96 11.98 11.60 11.62 11.63 11.65
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
15.40 15.46 15.52 15.59 13.28 13.33 13.38 13.43
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 19,250.73 30,001.51 23,175.18 24,716.11 13,245.31 17,113.51 20,809.07 28,991.22
================================-----------================================-----------
-----------=====================----------------------=====================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
296 464 360 385 176 228 278 389
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.93 11.95 11.96 11.98 11.60 11.62 11.63 11.65
================================-----------================================-----------
-----------=====================-----------================================-----------
Number of Units
Outstanding 1,064.47 5,718.10 1,398.81 4,726.93 2,240.54 5,959.11 3,318.14 14,397.06
=====================-----------=========== ===========-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
13 68 17 57 26 69 39 168
================================-----------================================-----------
======================================================================================
(Continued)
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim Small-Cap Value Portfolio Maxim Stock Index Portfolio
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 07/12/95 07/12/95 07/12/95 07/12/95 06/01/95 06/01/95 06/01/95 06/01/95
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
16.37 16.48 16.59 16.69 18.42 18.45 18.56 18.68
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
17.60 17.76 17.92 18.08 23.18 23.27 23.48 23.69
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 15,277.80 25,248.80 36,738.60 56,570.22 57,660.73 123,326.43138,697.83 360,224.24
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
269 448 658 1,023 1,336 2,870 3,256 8,533
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
12.90 12.95 13.00 13.06 14.01 14.00 14.06 14.11
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
16.37 16.48 16.59 16.69 18.42 18.45 18.56 18.68
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 12,300.05 17,280.05 29,579.62 30,895.89 53,406.89 93,690.46 101,305.87 216,413.98
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
201 285 491 516 984 1,728 1,881 4,043
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $ $ $ $ $
11.02 11.04 11.05 11.07 11.59 11.55 11.57 11.58
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
12.90 12.95 13.00 13.06 14.01 14.00 14.06 14.11
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 5,037.63 7,695.51 12,528.51 8,094.84 30,565.13 48,278.77 50,780.90 119,929.73
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
65 100 163 106 428 676 714 1,692
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.02 11.04 11.05 11.07 11.59 11.55 11.57 11.58
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 773.21 1,371.51 5,416.35 2,801.92 4,042.63 11,673.47 18,708.73 55,122.00
=========== ==========-----------===================== -----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
9 15 60 31 47 135 216 639
================================-----------================================-----------
======================================================================================
(Continued)
5. SELECTED DATA
--------------------------------------------------------------------------------------
Maxim U.S. Government Mortgage Securities Maxim Value Index Portfolio
Portfolio
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
A O U Z A O U Z
Date Commenced 07/12/95 07/12/95 07/12/95 07/12/95 07/12/95 07/12/95 07/12/95 07/12/95
Operations
1998
Beginning Unit Value
$ $ $ $ $ $ $ $
11.67 11.80 11.88 11.95 18.40 18.52 18.64 18.76
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
12.40 12.58 12.69 12.81 20.90 21.09 21.28 21.47
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 14,629.83 20,647.77 33,304.47 108,890.83 41,606.69 81,338.97 94,959.15 183,410.06
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
181 260 423 1,394 870 1,715 2,021 3,938
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1997
Beginning Unit Value
$ $ $ $ $ $ $ $
10.82 10.92 10.96 11.00 13.82 13.88 13.93 13.99
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
11.67 11.80 11.88 11.95 18.40 18.52 18.64 18.76
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 8,773.99 15,501.18 17,934.40 37,775.13 34,549.99 61,417.45 65,117.93 113,775.97
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
102 183 213 452 636 1,137 1,214 2,134
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1996
Beginning Unit Value
$ $ $ $ $ $ $ $
10.45 10.52 10.54 10.55 11.55 11.56 11.58 11.60
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.82 10.92 10.96 11.00 13.82 13.88 13.93 13.99
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 5,272.40 8,847.40 7,526.42 18,157.75 16,778.01 32,274.09 32,323.22 46,735.19
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
57 97 82 200 232 448 450 654
================================-----------================================-----------
-----------=====================----------------------=====================-----------
1995
Beginning Unit Value
$ $ $ $ $ $ $ $
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
================================-----------================================-----------
================================-----------================================-----------
Ending Unit Value
$ $ $ $ $ $ $ $
10.45 10.52 10.54 10.55 11.55 11.56 11.58 11.60
================================-----------================================-----------
================================-----------================================-----------
Number of Units
Outstanding 731.02 5,864.01 1,624.61 7,344.94 1,666.79 7,395.18 12,134.89 18,036.45
================================-----------================================-----------
================================-----------================================-----------
Net Assets (000's)
$ $ $ $ $ $ $ $
8 62 17 77 19 86 141 209
================================-----------================================-----------
======================================================================================
(Concluded)
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
===========================
CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997
AND 1996
AND INDEPENDENT AUDITORS'
REPORT
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets of Great-West Life
& Annuity Insurance Company (an indirect wholly-owned subsidiary of The
Great-West Life Assurance Company) and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of income, stockholder's equity,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Great-West Life & Annuity Insurance
Company and subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 25, 1999
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C>
1998 1997
-------------------- ------------------
ASSETS
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value
$2,298,936 and $2,151,476) $ 2,199,818 $ 2,082,716
Available-for-sale, at fair value (amortized
cost
$6,752,532 and $6,541,422) 6,936,726 6,698,629
Common stock, at fair value (cost $41,932 and 48,640 39,021
$34,414)
Mortgage loans on real estate, net 1,133,468 1,235,594
Real estate, net 73,042 93,775
Policy loans 2,858,673 2,657,116
Short-term investments, available-for-sale (cost
approximates fair value) 420,169 399,131
-------------------- ------------------
Total Investments 13,670,536 13,205,982
Cash 176,119 126,278
Reinsurance receivable
Related party 5,006 1,950
Other 187,952 82,414
Deferred policy acquisition costs 238,901 255,442
Investment income due and accrued 157,587 165,827
Other assets 311,078 121,543
Premiums in course of collection 84,940 77,008
Deferred income taxes 191,483 193,820
Separate account assets 10,099,543 7,847,451
-------------------- ------------------
TOTAL ASSETS $ 25,123,145 $ 22,077,715
==================== ==================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
1998 1997
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
POLICY BENEFIT LIABILITIES:
Policy reserves
Related party 555,300 17,774
Other 11,284,414 11,084,945
Policy and contract claims 491,932 375,499
Policyholders' funds 181,779 165,106
Provision for policyholders' dividends 69,530 62,937
GENERAL LIABILITIES:
Due to Parent Corporation 52,877 126,656
Repurchase agreements 244,258 325,538
Commercial paper 39,731 54,058
Other liabilities 761,505 689,967
Undistributed earnings on participating business 143,717 141,865
Separate account liabilities 10,099,543 7,847,451
------------- ------------
Total Liabilities 23,924,586 20,891,796
------------- ------------
COMMITMENTS AND CONTINGENCIES
<TABLE>
<S> <C> <C>
1998 1997
STOCKHOLDER'S EQUITY: ------------- ------------
Preferred stock, $1 par value, 50,000,000 shares authorized
Series A, cumulative, 1,500 shares authorized,
liquidation value of $100,000 per share,
0 and 600 shares issued and outstanding 60,000
Series B, cumulative, 1,500 shares authorized,
liquidation value of $100,000 per share,
0 and 200 shares issued and outstanding 20,000
Series C, cumulative, 1,500 shares authorized,
none outstanding
Series D, cumulative, 1,500 shares authorized,
none outstanding
Series E, non-cumulative, 2,000,000 shares
authorized, liquidation value of $20.90 per share,
0 and 2,000,000 shares issued and outstanding 41,800
Common stock, $1 par value; 50,000,000 shares
authorized; 7,032,000 shares issued and outstanding 7,032 7,032
Additional paid-in capital 699,556 690,748
Accumulated other comprehensive income 61,560 52,807
Retained earnings 430,411 313,532
------------- --------------
Total Stockholder's Equity 1,198,559 1,185,919
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 25,123,145 $ 22,077,715
============= ==============
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- -------------
REVENUES:
Premiums
Related party (net of premiums
recaptured totaling $0,
$155,798, and $164,839) $ 46,191 $ 155,798 $ 164,839
Other (net of premiums ceded
totaling $86,409, $61,152, and $60,589) 948,672 677,381 664,610
Fee income 516,052 420,730 347,519
Net investment income
Related party (9,416) (8,957) (26,082)
Other 906,776 890,630 860,719
Net realized gains (losses) on investments 38,173 9,800 (21,078)
------------- ------------- -------------
2,446,448 2,145,382 1,990,527
------------- ------------- -------------
BENEFITS AND EXPENSES:
Life and other policy benefits (net of
reinsurance recoveries totaling $81,205,
$44,871 and $52,675) 768,474 543,903 515,750
Increase in reserves
Related party 46,191 155,798 164,839
Other 78,851 90,013 64,359
Interest paid or credited to contractholders 491,616 527,784 561,786
Provision for policyholders' share of earnings
(losses) on participating business 5,908 3,753 (7)
Dividends to policyholders 71,429 63,799 49,237
------------- ------------- -------------
1,462,469 1,385,050 1,355,964
Commissions 144,246 102,150 106,561
Operating expenses (income):
Related party (4,542) (6,292) 304,599
Other 517,676 431,714 33,435
Premium taxes 30,848 24,153 25,021
------------- ------------- -------------
2,150,697 1,936,775 1,825,580
INCOME BEFORE INCOME TAXES 295,751 208,607 164,947
------------- ------------- -------------
PROVISION FOR INCOME TAXES:
Current 81,770 61,644 45,934
Deferred 17,066 (11,797) (15,562)
------------- ------------- -------------
98,836 49,847 30,372
------------- ------------- -------------
NET INCOME $ 196,915 $ 158,760 $ 134,575
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Other
Preferred Stock Common Stock Paid-in Comprehensive Retained
-------------------------- -----------------------
Shares Amount Shares Amount Capital Income Earnings Total
------------ ----------- ----------- --------- ------------- ------------- ---------- ------------
BALANCE, JANUARY 1, 1996 2,000,800 121,800 7,032,000 7,032 657,265 58,763 148,261 993,121
Net income 134,575 134,575
Other comprehensive loss (43,812) (43,812)
------------
Total comprehensive income 90,763
------------
Capital contributions 7,000 7,000
Dividends (56,670) (56,670)
------------ ----------- ----------- --------- -------------------------------------- ------------
BALANCE, DECEMBER 31, 1996 2,000,800 121,800 7,032,000 7,032 664,265 14,951 226,166 1,034,214
Net income 158,760 158,760
Other comprehensive income 37,856 37,856
------------
Total comprehensive income 196,616
------------
Capital contributions 26,483 26,483
Dividends (71,394) (71,394)
------------ ----------- ----------- --------- ------------- ------------- ---------- ------------
BALANCE, DECEMBER 31, 1997 2,000,800 121,800 7,032,000 7,032 690,748 52,807 313,532 1,185,919
Net income 196,915 196,915
Other comprehensive income 8,753 8,753
------------
Total comprehensive income 205,668
------------
Capital contributions 8,808 8,808
Dividends (80,036) (80,036)
Purchase of preferred shares (2,000,800) (121,800) (121,800)
------------ ----------- ----------- --------- ------------ -------------- ---------- ------------
BALANCE, DECEMBER 31, 1998 0 0 7,032,000 7,032 699,556 61,560 430,411 1,198,559
============ =========== =========== ========= =========== =============== ========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
87
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- ------------
OPERATING ACTIVITIES:
Net income $ 196,915 $ 158,760 $ 134,575
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain (loss) allocated to participating
policyholders 5,908 3,753 (7)
Amortization of investments (15,068) 409 15,518
Realized losses (gains) on disposal of
investments and provisions for mortgage
loans and real estate (38,173) (9,800) 21,078
Amortization 55,550 46,929 49,454
Deferred income taxes 17,066 (11,824) (14,658)
Changes in assets and liabilities:
Policy benefit liabilities 938,444 498,114 358,393
Reinsurance receivable (43,643) 112,594 136,966
Accrued interest and other receivables 28,467 30,299 24,778
Other, net (184,536) 64,465 (13,676)
------------- ------------- ------------
Net cash provided by operating activities 960,930 893,699 712,421
------------- ------------- ------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to maturity
Sales 9,920
Maturities and redemptions 471,432 359,021 516,838
Available-for-sale
Sales 6,169,678 3,174,246 3,569,608
Maturities and redemptions 1,268,323 771,737 803,369
Mortgage loans 211,026 248,170 235,907
Real estate 16,456 36,624 2,607
Common stock 3,814 17,211 1,888
Purchases of investments:
Fixed maturities
Held-to-maturity (584,092) (439,269) (453,787)
Available-for-sale (7,410,485) (4,314,722) (4,753,154)
Mortgage loans (100,240) (2,532) (23,237)
Real estate (4,581) (64,205) (15,588)
Common stock (10,020) (29,608) (12,113)
------------- ------------- ------------
Net cash provided by (used in)
investing activities $ 41,231 $ (243,327) $ (127,662)
============= ============= ============
</TABLE>
(Continued)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
-------------- -------------- -------------
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits $ (507,237) $ (577,538) $ (413,568)
Due to Parent Corporation (73,779) (19,522) 1,457
Dividends paid (80,036) (71,394) (56,670)
Net commercial paper repayments (14,327) (30,624) (172)
Net repurchase agreements (repayments)
borrowings (81,280) 38,802 (88,563)
Capital contributions 8,808 11,000 7,000
Purchase of preferred shares (121,800)
Acquisition of subsidiary (82,669)
-------------- -------------- -------------
-------------- -------------- -------------
Net cash used in financing activities (952,320) (649,276) (550,516)
-------------- -------------- -------------
NET INCREASE IN CASH 49,841 1,096 34,243
CASH, BEGINNING OF YEAR 126,278 125,182 90,939
-------------- -------------- -------------
CASH, END OF YEAR $ 176,119 $ 126,278 $ 125,182
============== ============== =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 111,493 $ 86,829 $ 103,700
Interest 13,849 15,124 15,414
</TABLE>
See notes to consolidated financial statements. (Concluded)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998, 1997,
AND 1996 (Amounts in Thousands, except Share Amounts)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance Company (the Company)
is an indirect wholly-owned subsidiary of The Great-West Life Assurance
Company (the Parent Corporation). The Company is an insurance company
domiciled in the State of Colorado. The Company offers a wide range of
life insurance, health insurance, and retirement and investment products
to individuals, businesses, and other private and public organizations
throughout the United States.
Basis of Presentation - 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 revenues and expenses during the reporting period. Actual
results could differ from those estimates. The consolidated financial
statements include the accounts of the Company and its subsidiaries. All
material intercompany transactions and balances have been eliminated in
consolidation.
Certain reclassifications, primarily related to the presentation of
related party transactions and the classification of the release of a
contingent liability (see Note 10) have been made to the 1997 and 1996
financial statements.
Investments - Investments are reported as follows:
1. Management determines the classification of fixed maturities at
the time of purchase. Fixed maturities are classified as
held-to-maturity when the Company has the positive intent and
ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost unless fair value is less
than cost and the decline is deemed to be other than temporary,
in which case they are written down to fair value and a new cost
basis is established.
Fixed maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the net unrealized gains and
losses reported as accumulated other comprehensive income in
stockholder's equity. The net unrealized gains and losses on
derivative financial instruments used to hedge available-for-sale
securities are also included in other comprehensive income.
The amortized cost of fixed maturities classified as
held-to-maturity or available-for-sale is adjusted for
amortization of premiums and accretion of discounts using the
effective interest method over the estimated life of the related
bonds. Such amortization is included in net investment income.
Realized gains and losses, and declines in value judged to be
other-than-temporary are included in net realized gains (losses)
on investments.
2. Mortgage loans on real estate are carried at their unpaid
balances adjusted for any unamortized premiums or discounts and
any valuation reserves. Interest income is accrued on the unpaid
principal balance. Discounts and premiums are amortized to net
investment income using the effective interest method. Accrual of
interest is discontinued on any impaired loans where collection
of interest is doubtful.
The Company maintains an allowance for credit losses at a level
that, in management's opinion, is sufficient to absorb possible
credit losses on its impaired loans and to provide adequate
provision for any possible losses inherent in the loan portfolio.
Management's judgment is based on past loss experience, current
and projected economic conditions, and extensive situational
analysis of each individual loan. The measurement of impaired
loans is based on the fair value of the collateral.
3. Real estate is carried at cost. The carrying value of real estate
is subject to periodic evaluation of recoverability.
4. Investments in common stock are carried at fair value.
5. Policy loans are carried at their unpaid balances.
6. Short-term investments include securities purchased with initial
maturities of one year or less and are carried at amortized cost.
The Company considers short-term investments to be
available-for-sale and amortized cost approximates fair value.
7. Gains and losses realized on disposal of investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit accounts.
Deferred Policy Acquisition Costs - Policy acquisition costs, which
primarily consist of sales commissions related to the production of new
and renewal business, have been deferred to the extent recoverable.
Other costs capitalized include expenses associated with the Company's
group sales representatives. These costs are variable in nature and are
dependent upon sales volume. Deferred costs associated with the annuity
products are being amortized over the life of the contracts in
proportion to the emergence of gross profits. Retrospective adjustments
of these amounts are made when the Company revises its estimates of
current or future gross profits. Deferred costs associated with
traditional life insurance are amortized over the premium paying period
of the related policies in proportion to premium revenues recognized.
Amortization of deferred policy acquisition costs totaled $51,724,
$44,298, and $47,089 in 1998, 1997, and 1996, respectively.
Separate Accounts - Separate account assets and related liabilities are
carried at fair value. The Company's separate accounts invest in shares
of Maxim Series Fund, Inc. and Orchard Series Fund, Inc., both
diversified, open-end management investment companies which are
affiliates of the Company, shares of other external mutual funds, or
government or corporate bonds. Investment income and realized capital
gains and losses of the separate accounts accrue directly to the
contractholders and, therefore, are not included in the Company's
statements of income. Revenues to the Company from the separate accounts
consist of contract maintenance fees, administrative fees, and mortality
and expense risk charges.
Life Insurance and Annuity Reserves - Life insurance and annuity policy
reserves with life contingencies of $6,866,478 and $5,741,596 at
December 31, 1998 and 1997, respectively, are computed on the basis of
estimated mortality, investment yield, withdrawals, future maintenance
and settlement expenses, and retrospective experience rating premium
refunds. Annuity contract reserves without life contingencies of
$4,908,964 and $5,346,516 at December 31, 1998 and 1997, respectively,
are established at the contractholder's account value.
Reinsurance - Policy reserves ceded to other insurance companies are
carried as a reinsurance receivable on the balance sheet (see Note 3).
The cost of reinsurance related to long-duration contracts is accounted
for over the life of the underlying reinsured policies using assumptions
consistent with those used to account for the underlying policies.
Policy and Contract Claims - Policy and contract claims include
provisions for reported life and health claims in process of settlement,
valued in accordance with the terms of the related policies and
contracts, as well as provisions for claims incurred and unreported
based primarily on prior experience of the Company.
Participating Fund Account - Participating life and annuity policy
reserves are $4,108,314 and $3,901,297 at December 31, 1998 and 1997,
respectively. Participating business approximates 32.7% and 50.5% of the
Company's ordinary life insurance in force and 71.9% and 91.1% of
ordinary life insurance premium income at December 31, 1998 and 1997,
respectively.
The amount of dividends to be paid from undistributed earnings on
participating business is determined annually by the Board of Directors.
Amounts allocable to participating policyholders are consistent with
established Company practice.
The Company has established a Participating Policyholder Experience
Account (PPEA) for the benefit of all participating policyholders which
is included in the accompanying consolidated balance sheet. Earnings
associated with the operation of the PPEA are credited to the benefit of
all participating policyholders. In the event that the assets of the
PPEA are insufficient to provide contractually guaranteed benefits, the
Company must provide such benefits from its general assets.
The Company has also established a Participation Fund Account (PFA) for
the benefit of the participating policyholders previously transferred to
the Company from the Parent under an assumption reinsurance transaction.
The PFA is part of the PPEA. Earnings derived from the operation of the
PFA net of a management fee paid to the Company accrue solely for the
benefit of the acquired participating policyholders.
Recognition of Premium and Fee Income and Benefits and Expenses - Life
insurance premiums are recognized when due. Annuity premiums with life
contingencies are recognized as received. Accident and health premiums
are earned on a monthly pro rata basis. Revenues for annuity and other
contracts without significant life contingencies consist of contract
charges for the cost of insurance, contract administration, and
surrender fees that have been assessed against the contract account
balance during the period. Fee income is derived primarily from
contracts for claim processing or other administrative services and from
assets under management. Fees from contracts for claim processing or
other administrative services are recorded as the services are provided.
Fees from assets under management, which consist of contract maintenance
fees, administration fees and mortality and expense risk changes, are
recognized when due. Benefits and expenses on policies with life
contingencies impact premium income by means of the provision for future
policy benefit reserves, resulting in recognition of profits over the
life of the contracts. The average crediting rate on annuity products
was approximately 6.3%, 6.6%, and 6.8% in 1998, 1997, and 1996.
Income Taxes - Income taxes are recorded using the asset and liability
approach, which requires, among other provisions, the recognition of
deferred tax assets and liabilities for expected future tax consequences
of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, all
expected future events (other than the enactments or changes in the tax
laws or rules) are considered. Although realization is not assured,
management believes it is more likely than not that the deferred tax
asset, net of a valuation allowance, will be realized.
Repurchase Agreements and Securities Lending - The Company enters into
repurchase agreements with third-party broker/dealers in which the
Company sells securities and agrees to repurchase substantially similar
securities at a specified date and price. Such agreements are accounted
for as collateralized borrowings. Interest expense on repurchase
agreements is recorded at the coupon interest rate on the underlying
securities. The repurchase fee received or paid is amortized over the
term of the related agreement and recognized as an adjustment to
investment income.
The Company requires collateral in an amount greater than or equal to
102% of the borrowing for all securities lending transactions.
The Company implemented Statement of Financial Accounting Standards
(SFAS) No. 125 "Accounting for Transfer and Servicing of Financial
Assets and Extinguishments of Liabilities" in 1998 as it relates to
repurchase agreements and securities lending arrangements. The
implementation of this statement had no material effect on the Company's
financial statements.
Derivatives - The Company makes limited use of derivative financial
instruments to manage interest rate, market, and foreign exchange risk.
Such hedging activity consists of interest rate swap agreements,
interest rate floors and caps, foreign currency exchange contracts and
equity swaps. The differential paid or received under the terms of these
contracts is recognized as an adjustment to net investment income on the
accrual method. Gains and losses on foreign exchange contracts are
deferred and recognized in net investment income when the hedged
transactions are realized.
Interest rate swap agreements are used to convert the interest rate on
certain fixed maturities from a floating rate to a fixed rate. Interest
rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amount. Interest rate floors and caps are interest
rate protection instruments that require the payment by a counter-party
to the Company of an interest rate differential. The differential
represents the difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a notional principal
amount. Foreign currency exchange contracts are used to hedge the
foreign exchange rate risk associated with bonds denominated in other
than U.S. dollars. Equity swap transactions generally involve the
exchange of variable market performance of a basket of securities for a
fixed interest rate.
Although derivative financial instruments taken alone may expose the
Company to varying degrees of market and credit risk when used solely
for hedging purposes, these instruments typically reduce overall market
and interest rate risk. The Company controls the credit risk of its
financial contracts through credit approvals, limits, and monitoring
procedures. As the Company generally enters into transactions only with
high quality institutions, no losses associated with non-performance on
derivative financial instruments have occurred or are expected to occur.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting
for Derivative Instruments and for Hedging Activities". This Statement
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. This Statement is
effective for the Company beginning January 1, 2000, and earlier
adoption is encouraged. The Company has not adopted this Statement as of
December 31, 1998. Management has not determined the impact of the
Statement on the Company's financial position or results of operations.
Stock Options - In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation", which was effective for the
Company beginning January 1, 1996. This Statement requires expanded
disclosures of stock-based compensation arrangements with employees and
encourages (but does not require) compensation cost to be measured based
on the fair value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company has continued to apply APB Opinion No.
25 to stock-based compensation awards to employees and has disclosed the
required pro forma effect on net income (see Note 13).
2. ACQUISITION
On July 8, 1998, the Company paid $82,669 in cash to acquire all of the
outstanding shares of Anthem Health & Life Insurance Company (AH&L). The
purchase price was based on AH&L's adjusted book value, and is subject
to further minor adjustments. The results of AH&L's operations, which
had an insignificant effect on net income, have been combined with those
of the Company since the date of acquisition.
The acquisition was accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to the net
assets acquired based on their estimated fair values. The fair value of
tangible assets acquired and liabilities assumed was $379,934 and
$317,440, respectively. The balance of the purchase price, $20,175, was
recorded as excess cost over net assets acquired (goodwill) and is being
amortized over 30 years on a straight-line basis. Management intends to
finalize its allocation of the purchase price within a year of the
transaction, which will likely result in a reallocation of the purchase
price, which is not expected to be material.
3. RELATED-PARTY TRANSACTIONS
On December 31, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $859 in
premium income and an increase in reserves, associated with certain
policies, as a result of this transaction. Of the $137,638 in reserves
that were recorded as a result of this transaction, $136,779 was
recorded under SFAS No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments" ("SFAS No. 97"), accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
December 31, 1998 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 24,600 Policy reserves 137,638
Deferred income taxes 3,816
Policy loans 82,649
Due from Parent Corporation 19,753
Other 6,820
----------- -----------
137,638 137,638
In connection with this transaction, the Parent Corporation made a
capital contribution of $5,608 to the Company.
On September 30, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $45,332
in premium income and an increase in reserves as a result of this
transaction. Of the $428,152 in reserves that were recorded as a result
of this transaction, $382,820 was recorded under SFAS No. 97 accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
September 30, 1998 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
<TABLE>
<S> <C> <C>
Bonds $ 147,475 Policy reserves $ 428,152
Mortgages 82,637 Due to Parent Corporation 20,820
Cash 134,900
Deferred policy acquisition 9,724
costs
Deferred income taxes 15,762
Policy loans 56,209
Other 2,265
---------- -----------
$ 448,972 $ 448,972
</TABLE>
In connection with this transaction, the Parent Corporation made a
capital contribution of $3,200 to the Company.
On September 30, 1998, the Company purchased furniture, fixtures and
equipment from the Parent Corporation for $25,184. In February 1997, the
Company purchased the corporate headquarters properties from the Parent
Corporation for $63,700.
On June 30, 1997, the Company recaptured all remaining pieces of an
individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The Company
recorded $155,798 in premium income and an increase in reserves as a
result of this transaction. The Company recorded, at the Parent
Corporation's carrying amount, which approximates estimated fair value,
the following at June 30, 1997 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 160,000 Policy reserves 155,798
Bonds 17,975 Due to Parent Corporation 20,373
Other 60 Deferred income taxes 2,719
Undistributed earnings on
participating business (855)
----------- ---------------
178,035 178,035
In connection with this transaction, the Parent Corporation made a
capital contribution of $11,000 to the Company.
On October 31, 1996, the Company recaptured certain pieces of an
individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The Company
recorded $164,839 in premium income and an increase in reserves as a
result of this transaction. The Company recorded, at the Parent
Corporation's carrying amount, which approximates estimated fair value,
the following at October 31, 1996 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 162,000 Policy reserves 164,839
Mortgages 19,753 Due to Parent Corporation 16,180
Other 118 Deferred income taxes 1,283
Undistributed earnings on
participating business (431)
------------ --------------
181,871 181,871
In connection with this transaction, the Parent Corporation made a
capital contribution of $7,000 to the Company.
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to the
Company. All related employee benefit plan assets and liabilities were
also transferred to the Company (see Note 9). The transfer did not have
a material effect on the Company's operating expenses as the actual
costs associated with the employees and the benefit plans were charged
previously to the Company under administrative service agreements
between the Company and the Parent Corporation.
Prior to January 1997, the Parent Corporation administered, distributed,
and underwrote business for the Company and administered the Company's
investment portfolio under various administrative agreements. Since
January 1, 1997, the Company has performed these services for the U.S.
operations of the Parent Corporation. The following represents revenue
from or payments made to the Parent Corporation for services provided
pursuant to these service agreements. The amounts recorded are based
upon management's best estimate of actual costs incurred and resources
expended based upon number of policies and/or certificates in force.
<TABLE>
Years Ended December 31,
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------
1998 1997 1996
------------ ------------ ------------
Investment management revenue (expense) $ 475 $ 801 $ (14,800)
Administrative and underwriting revenue
(payments) 4,542 6,292 (304,599)
</TABLE>
At December 31, 1998 and 1997, due to Parent Corporation includes
$17,930 and $8,957 due on demand and $34,947 and $117,699 of notes
payable which bear interest and mature at various dates through June 15,
2008. These notes may be prepaid in whole or in part at any time without
penalty; the issuer may not demand payment before the maturity date. The
amounts due on demand to the Parent Corporation bear interest at the
public bond rate (6.1% and 7.1% at December 31, 1998 and 1997,
respectively) while the remainder bear interest at various rates ranging
from 5.4% to 6.6%. Interest expense attributable to these payables was
$9,891, $9,758, and $11,282 for the years ended December 31, 1998, 1997
and 1996, respectively.
4. 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 risks to other insurance enterprises under
excess coverage and co-insurance contracts. The Company retains a
maximum of $1.5 million of coverage per individual life.
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Failure of reinsurers to honor their obligations could
result in losses to the Company. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk
arising from similar geographic regions, activities, or economic
characteristics of the reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. At December 31, 1998 and
1997, the reinsurance receivable had a carrying value of $192,958 and
$84,364, respectively.
The following schedule details life insurance in force and life and
accident/health premiums:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ceded Assumed Percentage
Primarily to Primarily of Amount
Gross the Parent from Other Net Assumed
Amount Corporation Companies Amount to Net
------------- ------------- ------------- ------------- ------------
December 31, 1998:
Life insurance in force:
Individual $ 34,017,379 $ 4,785,079 $ 8,948,442 $ 38,180,742 23.44%
Group 81,907,539 2,213,372 84,120,911 2.63%
============= ============= ============= =============
Total $ 115,924,918 $ 4,785,079 $ 11,161,814 $ 122,301,653
============= ============= ============= =============
Premium Income:
Life $ 352,710 $ 24,720 $ 65,452 $ 393,442 16.6%
insurance
571,992 61,689 74,284 584,587 12.7%
Accident/health
============= ============= ============= =============
Total $ 924,702 $ 86,409 $ 139,736 $ 978,029
============= ============= ============= =============
December 31, 1997:
Life insurance in force:
Individual $ 24,598,679 $ 4,040,398 $ 3,667,235 $ 24,225,516 15.1%
Group 51,179,343 2,031,477 53,210,820 3.8%
============= ============= ============= =============
Total $ 75,778,022 $ 4,040,398 $ 5,698,712 $ 77,436,336
============= ============= ============= =============
Premium Income:
Life $ 320,456 $ (127,388) $ 19,923 $ 467,767 4.1%
insurance
341,837 32,645 34,994 344,186 10.0%
Accident/health
============= ============= ============= =============
Total $ 662,293 $ (94,743) $ 54,917 $ 811,953
============= ============= ============= =============
December 31, 1996:
Life insurance in force:
Individual $ 23,409,823 $ 5,246,079 $ 3,482,118 $ 21,645,862 16.1%
Group 47,682,237 1,817,511 49,499,748 3.7%
============= ============= ============= =============
Total $ 71,092,060 $ 5,246,079 $ 5,299,629 $ 71,145,610
============= ============= ============= =============
Premium Income:
Life $ 307,516 $ (111,743) $ 19,633 $ 438,892 4.2%
insurance
339,284 7,493 34,242 366,033 9.4%
Accident/health
============= ============= ============= =============
Total $ 646,800 $ (104,250) $ 53,875 $ 804,925
============= ============= ============= =============
</TABLE>
<PAGE>
5. NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Net investment income is summarized as follows:
<TABLE>
Years Ended December 31,
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------
1998 1997 1996
------------- ------------- -------------
Investment income:
Fixed maturities and short-term $ 638,079 $ 633,975 $ 601,913
investments
Mortgage loans on real estate 110,170 118,274 140,823
Real estate 20,019 20,990 5,292
Policy loans 180,933 194,826 175,746
Other 285 18 1,316
------------- ------------- -------------
949,486 968,083 925,090
Investment expenses, including interest
on
amounts charged by the Parent 52,126 86,410 90,453
Corporation
of $9,891, $9,758, and $11,282
------------- ------------- -------------
Net investment income $ 897,360 $ 881,673 $ 834,637
============= ============= =============
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
-------------------------------------------
1998 1997 1996
------------- ------------ --------------
Realized gains (losses):
Fixed maturities $ 38,391 $ 15,966 $ (11,624)
Mortgage loans on real estate 424 1,081 1,143
Real estate 363
Provisions (642) (7,610) (10,597)
============= ============ ==============
Net realized gains (losses) on investment $ 38,173 $ 9,800 $ (21,078)
============= ============ ==============
<PAGE>
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1998 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
----------- ------------ ----------- ----------- -----------
Held-to-Maturity:
U.S. Treasury
Securities
and obligations of $ 34,374 $ 1,822 $ $ 36,196 $ 34,374
U.S.
Government Agencies
Collateralized mortgage
obligations 194
10,135 9,941 10,135
Public utilities 213,256 12,999 460 225,795 213,256
Corporate bonds 1,809,957 78,854 3,983 1,884,828 1,809,957
Foreign governments 782
10,133 10,915 10,133
State and 121,963 9,298 131,261 121,963
municipalities
----------- ------------ ----------- ----------- -----------
$ 2,199,818 $ 103,755 $ 4,637 $ 2,298,936 $ 2,199,818
=========== ============ ========= =========== ===========
Available-for-Sale:
U.S. Treasury
Securities
and obligations of
U.S.
Government Agencies:
Collateralized
mortgage
obligations $ 863,479 $ 39,855 $ 1,704 $ 901,630 $ 901,630
Direct mortgage
pass-
through 467,100 4,344 692 470,752 470,752
certificates
Other 191,138 1,765 788 192,115 192,115
Collateralized mortgage
obligations 926,797 16,260 1,949 941,108 941,108
Public utilities 464,096 14,929 36 478,989 478,989
Corporate bonds 3,557,209 123,318 17,420 3,663,107 3,663,107
Foreign governments 2,732
56,505 59,237 59,237
State and 226,208 4,588 1,008 229,788 229,788
municipalities
----------- ------------ ----------- ----------- -----------
$ 6,752,532 $ 207,791 $ 23,597 $ 6,936,726 $ 6,936,726
=========== ============ =========== =========== ===========
Fixed maturities owned at December 31, 1997 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
----------- ------------ ------------ ----------- -----------
Held-to-Maturity:
U.S. Treasury
Securities
and obligations of
U.S.
Government Agencies $ $ 1,186 $ 25 $ $
25,883 27,044 25,883
Collateralized
mortgage
obligations 174
5,006 5,180 5,006
Public utilities 11,214 3 256,605 245,394
245,394
Corporate bonds 1,668,710 57,036 3,069 1,722,677 1,668,710
Foreign governments 659
10,268 10,927 10,268
State and 1,588 129,043 127,455
municipalities 127,455
----------- ------------ ------------ ----------- -----------
$ 2,082,716 $ 71,857 $ 3,097 $ 2,151,476 $ 2,082,716
=========== ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ----------- ----------- ----------- -----------
Available-for-Sale:
U.S. Treasury Securities
and obligations of
U.S.
Government Agencies:
Collateralized
mortgage
obligations $ $ 17,339 $ 310 $ 670,004 $ 670,004
652,975
Direct mortgage
pass-
through 7,911 2,668 922,459 922,459
certificates 917,216
Other 1,794 244 298,887 298,887
297,337
Collateralized mortgage
obligations 19,494 1,453 700,199 700,199
682,158
Public utilities 8,716 1,320 556,831 556,831
549,435
Corporate bonds 3,265,039 107,740 4,350 3,368,429 3,368,429
Foreign governments 4,115 60 135,641 135,641
131,586
State and municipalities 503 46,179 46,179
45,676
------------ ----------- ----------- ----------- -----------
$ 6,541,422 $ 167,612 $ 10,405 $ 6,698,629 $ 6,698,629
============ =========== =========== =========== ===========
</TABLE>
The collateralized mortgage obligations consist primarily of sequential
and planned amortization classes with final stated maturities of two to
thirty years and average lives of less than one to fifteen years.
Prepayments on all mortgage-backed securities are monitored monthly and
amortization of the premium and/or the accretion of the discount
associated with the purchase of such securities is adjusted by such
prepayments.
See Note 8 for additional information on policies regarding estimated fair
value of fixed maturities.
The amortized cost and estimated fair value of fixed maturity investments
at December 31, 1998, by projected maturity, are shown below. Actual
maturities will likely differ from these projections because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
Held-to-Maturity Available-for-Sale
------------------------------ --------- --------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
------------- -------------- ------------ --------------
Due in one year or less 316,174 321,228 235,842 252,067
Due after one year
through five years 925,016 961,592 1,279,123 1,309,202
Due after five years
through ten years 675,444 722,685 769,278 803,498
Due after ten years 130,480 138,119 449,273 457,785
Mortgage-backed
securities 10,135 9,941 2,257,376 2,313,490
Asset-backed securities 142,569 145,371 1,761,640 1,800,684
============= ============== ============= =============
2,199,818 2,298,936 6,752,532 6,936,726
============= ============== ============= =============
Proceeds from sales of securities available-for-sale were $6,169,678,
$3,174,246, and $3,569,608 during 1998, 1997, and 1996, respectively. The
realized gains on such sales totaled $41,136, $20,543, and $24,919 for
1998, 1997, and 1996, respectively. The realized losses totaled $8,643,
$10,643, and $40,748 for 1998, 1997, and 1996, respectively. During the
years 1998, 1997, and 1996 held-to-maturity securities with an amortized
cost of $9,920, $0, and $0 were sold due to credit deterioration with
insignificant gains and losses.
At December 31, 1998 and 1997, pursuant to fully collateralized securities
lending arrangements, the Company had loaned $115,168 and $162,817 of
fixed maturities, respectively.
The Company engages in hedging activities to manage interest rate and
exchange risk. The following table summarizes the 1998 financial hedge
instruments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Notional Strike/Swap
December 31, 1998 Amount Rate Maturity
------------------------ -------------- ------------------------- ---------------------
Interest Rate Floor $ 100,000 4.50% (LIBOR) 11/99
Interest Rate Caps 1,070,000 6.75% - 11.82% (CMT) 12/99 - 10/03
Interest Rate Swaps 242,451 4.95% - 9.35% 08/99 - 02/03
Foreign Currency
Exchange Contracts 34,123 N/A 05/99 - 07/06
Equity Swap 95,652 4.00% 12/99
The following table summarizes the 1997 financial hedge instruments:
Notional Strike/Swap
December 31, 1997 Amount Rate Maturity
------------------------ -------------- -------------------------- ---------------------
Interest Rate Floor $ 100,000 4.5% (LIBOR) 1999
Interest Rate Caps 565,000 6.75% - 11.82% (CMT) 1999 - 2002
Interest Rate Swaps 212,139 6.20% - 9.35% 01/98 - 02/03
Foreign Currency
Exchange Contracts 57,168 N/A 09/98 - 07/06
Equity Swap 100,000 5.64% 12/98
</TABLE>
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment guidelines designed to
emphasize a diversified and geographically dispersed portfolio of
mortgages collateralized by commercial and industrial properties located
in the United States. The Company's policy is to obtain collateral
sufficient to provide loan-to-value ratios of not greater than 75% at the
inception of the mortgages. At December 31, 1998, approximately 33% of the
Company's mortgage loans were collateralized by real estate located in
California.
The following represents impairments and other information with respect to
impaired loans:
<TABLE>
<S> <C> <C>
1998 1997
--------------- -------------
Loans with related allowance for credit losses of
$2,492 and $2,493 $ 13,192 $ 13,193
Loans with no related allowance for credit losses 10,420 20,013
Average balance of impaired loans during the year 31,193 37,890
Interest income recognized (while impaired) 2,308 2,428
Interest income received and recorded (while impaired)
using the cash basis method of recognition 2,309 2,484
</TABLE>
As part of an active loan management policy and in the interest of
maximizing the future return of each individual loan, the Company may from
time to time modify the original terms of certain loans. These
restructured loans, all performing in accordance with their modified terms
that are not impaired, aggregated $52,913 and $64,406 at December 31, 1998
and 1997, respectively.
<PAGE>
The following table presents changes in allowance for credit losses:
1998 1997 1996
------------- ------------- --------------
Balance, beginning of year 67,242 65,242 63,994
Provision for loan losses 642 4,521 4,470
Chargeoffs (787) (2,521) (3,468)
Recoveries 145 246
============= ============= ==============
Balance, end of year 67,242 67,242 65,242
============= ============= ==============
7. COMMERCIAL PAPER
The Company has a commercial paper program that is partially supported by
a $50,000 standby letter-of-credit. At December 31, 1998, commercial paper
outstanding had maturities ranging from 69 to 118 days and interest rates
ranging from 5.10% to 5.22%. At December 31, 1997, maturities ranged from
41 to 99 days and interest rates ranged from 5.6% to 5.8%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
December 31,
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------- ------------- -------------
ASSETS:
Fixed maturities and
short-term investments $ 9,556,713 $ 9,655,831 $ 9,180,476 $ 9,249,235
Mortgage loans on real
estate 1,133,468 1,160,568 1,235,594 1,261,949
Policy loans 2,858,673 2,858,673 2,657,116 2,657,116
Common stock 48,640 48,640 39,021 39,021
LIABILITIES:
Annuity contract reserves
without life contingencies 4,908,964 4,928,800 5,346,516 5,373,818
Policyholders' funds 181,779 181,779 165,106 165,106
Due to Parent Corporation 52,877 52,877 126,656 124,776
Repurchase agreements 244,258 244,258 325,538 325,538
Commercial paper 39,731 39,731 54,058 54,058
HEDGE CONTRACTS:
Interest rate floor 17 17 25 25
Interest rate caps 971 971 130 130
Interest rate swaps 6,125 6,125 4,265 4,265
Foreign currency exchange
contracts 689 689 3,381 3,381
Equity swap (8,150) (8,150) 856 856
</TABLE>
The estimated fair value of financial instruments have been determined
using available information and appropriate valuation methodologies.
However, considerable judgement is necessarily required to interpret
market data to develop estimates of fair value. Accordingly, the estimates
presented are not necessarily indicative of the amounts the Company could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.
The estimated fair value of fixed maturities that are publicly traded are
obtained from an independent pricing service. To determine fair value for
fixed maturities not actively traded, the Company utilized discounted cash
flows calculated at current market rates on investments of similar quality
and term.
Mortgage loans fair value estimates generally are based on a discounted
cash flow basis. A discount rate "matrix" is incorporated whereby the
discount rate used in valuing a specific mortgage generally corresponds to
that mortgage's remaining term. The rates selected for inclusion in the
discount rate "matrix" reflect rates that the Company would quote if
placing loans representative in size and quality to those currently in the
portfolio.
Policy loans accrue interest generally at variable rates with no fixed
maturity dates and, therefore, estimated fair value approximates carrying
value.
The fair value of annuity contract reserves without life contingencies is
estimated by discounting the cash flows to maturity of the contracts,
utilizing current crediting rates for similar products.
The estimated fair value of policyholders' funds is the same as the
carrying amount as the Company can change the crediting rates with 30 days
notice.
The estimated fair value of due to Parent Corporation is based on
discounted cash flows at current market spread rates on high quality
investments.
The carrying value of repurchase agreements and commercial paper is a
reasonable estimate of fair value due to the short-term nature of the
liabilities.
The estimated fair value of financial hedge instruments, all of which are
held for other than trading purposes, is the estimated amount the Company
would receive or pay to terminate the agreement at each year-end, taking
into consideration current interest rates and other relevant factors.
Included in the net gain position for interest rates swaps are $0 of
unrealized losses in 1998 and 1997. Included in the net gain position for
foreign currency exchange contracts are $932 and $0 of loss exposures in
1998 and 1997, respectively.
9. EMPLOYEE BENEFIT PLANS
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to the
Company. See Note 3 for further discussion.
The Company's Parent had previously accounted for the pension plan under
the Canadian Institute of Chartered Accountants (CICA) guidelines and had
recorded a prepaid pension asset of $19,091. As U.S. generally accepted
accounting principles do not materially differ from these CICA guidelines
and the transfer was between related parties, the prepaid pension asset
was transferred at carrying value. As a result, the Company recorded the
following effective January 1, 1997:
Prepaid pension cost 19,091 Undistributed earnings on 3,608
participating business
Stockholder's equity 15,483
------------ -----------
19,091 19,091
The following table summarizes changes from 1997 to 1998 and from 1996 to
1997, in the benefit obligations and in plan assets for the Company's
defined benefit pension plan and post-retirement medical plan. There is no
additional minimum pension liability required to be recognized. There were
no amendments to the plans due to the acquisition of AH&L.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post-Retirement
Pension Benefits Medical Plan
------------------------- ------------------------
1998 1997 1998 1997
----------- ------------ ----------- -----------
Change in benefit obligation
Benefit obligation at beginning of $ 115,057 $ 96,417 $ 19,454 $ 16,160
year
Service cost 6,834 5,491 1,365 1,158
Interest cost 7,927 7,103 1,341 1,191
Actuarial gain (loss) 5,117 9,470 (1,613) 1,500
Benefits paid (3,630) (3,424) (603) (555)
----------- ------------ ----------- -----------
Benefit obligation at end of year 131,305 115,057 19,944 19,454
----------- ------------ ----------- -----------
Change in plan assets
Fair value of plan assets at
beginning of year 162,879 138,221
Actual return on plan assets 23,887 28,082
Benefits paid (3,630) (3,424)
----------- ------------ ----------- -----------
Fair value of plan assets at end of
year 183,136 162,879
----------- ------------ ----------- -----------
Funded status 51,831 47,822 (19,944) (19,454)
Unrecognized net actuarial loss (11,405) (6,326) (113) 1,500
Unrecognized net obligation or
(asset)
at transition (19,684) (21,198) 14,544 15,352
=========== ============ =========== ===========
Prepaid (accrued) benefit cost $ 20,742 $ 20,298 $ (5,513) $ (2,602)
=========== ============ =========== ===========
Weighted-average assumptions as of
December 31
Discount rate 6.50% 7.00% 6.50% 7.00%
Expected return on plan assets 8.50% 8.50% 8.50% 8.50%
Rate of compensation increase 4.00% 4.50% 4.00% 4.50%
Components of net periodic
benefit cost
Service cost $ 6,834 $ 5,491 $ 1,365 $ 1,158
Interest cost 7,927 7,103 1,341 1,191
Expected return on plan assets (13,691) (12,286)
Amortization of transition (1,514) (1,514) 808 808
obligation
----------- ----------- ---------- ----------
=========== =========== ========== ==========
Net periodic (benefit) cost $ (444) $ (1,206) $ 3,514 $ 3,157
=========== =========== ========== ==========
</TABLE>
The Company-sponsored post-retirement medical plan (medical plan) provides
health benefits to employees. The medical plan is contributory and
contains other cost sharing features, which may be adjusted annually for
the expected general inflation rate. The Company's policy will be to fund
the cost of the medical plan benefits in amounts determined at the
discretion of management.
<PAGE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the medical plan. For measurement purposes, a 6.5% annual
rate of increase in the per capita cost of covered health care benefits
was assumed. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:
1-Percentage 1-Percentage
Point Point
Increase Decrease
-------------- ----------------
Effect on total of service and interest cost
on components 649 1,140
Effect on post-retirement benefit obligation 4,129 3,098
The Company sponsors a defined contribution 401(k) retirement plan which
provides eligible participants with the opportunity to defer up to 15% of
base compensation. The Company matches 50% of the first 5% of participant
pre-tax contributions. Company contributions for the years ended December
31, 1998 and 1997 totaled $3,915 and $3,475, respectively.
The Company has a deferred compensation plan providing key executives with
the opportunity to participate in an unfunded, deferred compensation
program. Under the program, participants may defer base compensation and
bonuses, and earn interest on their deferred amounts. The program is not
qualified under Section 401 of the Internal Revenue Code. The total of
participant deferrals, which is reflected in other liabilities, was
$16,102 and $13,952 at December 31, 1998 and 1997, respectively. The
participant deferrals earn interest at a rate based on the average 10-year
composite government securities rate plus 1.5%. The interest expense
related to this plan was $1,185 and $1,019 in 1998 and 1997, respectively.
The Company also provides a supplemental executive retirement plan (SERP)
to certain key executives. This plan provides key executives with certain
benefits upon retirement, disability, or death based upon total
compensation. The Company has purchased individual life insurance policies
with respect to each employee covered by this plan. The Company is the
owner and beneficiary of the insurance contracts. The incremental expense
for this plan for 1998 and 1997 was $2,840 and $2,531, respectively. The
total liability of $9,349 and $6,509 as of December 31, 1998 and 1997 is
included in other liabilities.
10. FEDERAL INCOME TAXES
The following is a reconciliation between the federal income tax rate and
the Company's effective rate after giving effect to the reclassifications
discussed below:
1998 1997 1996
----------- ----------- ---------
Federal tax rate 35.0 % 35.0 % 35.0 %
Change in tax rate resulting from:
Settlement of Parent tax exposures (20.2) (18.9)
Provision for contingencies 7.7 3.4
Prior year tax adjustment (1.5) 0.5 (1.4)
Other, net (0.1) 0.9 0.3
=========== =========== =========
Total 33.4 % 23.9 % 18.4 %
=========== =========== =========
The Company's income tax provision was favorably impacted in 1997 and 1996
by releases of contingent liabilities relating to taxes of the Parent
Corporation's U.S. branch associated with blocks of business that were
transferred from the Parent Corporation's U.S. branch to the Company from
1989 to 1993; the Company had agreed to the transfer of these tax
liabilities as part of the transfer of this business. The releases
recorded in 1997 and 1996 reflected the resolution of certain tax issues
with the Internal Revenue Service (IRS) relating to the 1990-1991 and
1988-1989 audit years, respectively. The releases totaled $42,150 for 1997
and $31,200 for 1996; however, $15,100 of the release in 1997 was
attributable to participating policyholders and therefore had no effect on
the net income of the Company since that amount was credited to the
provision for policyholders' share of earnings (losses).
The 1997 and 1996 releases were recorded in revenues in the Company's
prior financial statements, but have been reclassified in the accompanying
consolidated financial statements as a component of the current income tax
provisions for those years.
In addition to these releases of contingent tax liabilities, the Company's
income tax provisions for 1997 and 1996 also reflect increases for other
contingent items relating to open tax years where the Company determined
it was probable that additional taxes could be owed based on changes in
facts and circumstances. The increase in 1997 was $16,000, of which
$10,100 was attributable to participating policyholders and therefore had
no effect on the net income of the Company. The increase in 1996 was
$5,600. These increases in contingent tax liabilities have been reflected
as a component of the deferred income tax provisions for 1997 and 1996 as
the Company does not expect near term resolution of these contingencies.
Excluding the effect of the 1997 and 1996 tax items discussed above, the
effective tax rates for 1997 and 1996 were 34.1% and 33.9%, respectively.
Temporary differences which give rise to the deferred tax assets and
liabilities as of December 31, 1998 and 1997 are as follows:
<TABLE>
<S> <C> <C>
1998 1997
--------------------------- -------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Asset Liability Asset Liability
------------- ------------ ------------ -----------
Policyholder reserves 143,244 159,767
Deferred policy acquisition costs 39,933 47,463
Deferred acquisition cost proxy
tax 100,387 79,954
Investment assets 19,870 5,574
Net operating loss carryforwards 2,867 9,427
Other 6,566 1,279
------------- ------------ ------------ -----------
Subtotal 253,064 59,803 250,427 53,037
Valuation allowance (1,778) (3,570)
============= ============ ============ ===========
Total Deferred Taxes 251,286 59,803 246,857 53,037
============= ============ ============ ===========
</TABLE>
Amounts included in investment assets above include $34,556 and $30,085
related to the unrealized gains on the Company's fixed maturities
available-for-sale at December 31, 1998 and 1997, respectively.
The Company files a separate tax return and, therefore, losses incurred by
subsidiaries cannot be offset against operating income of the Company. At
December 31, 1998, the Company's subsidiaries had approximately $8,193 of
net operating loss carryforwards, expiring through the year 2011. The tax
benefit of subsidiaries' net operating loss carryforwards, net of a
valuation allowance of $0 and $1,809 are included in the deferred tax
assets at December 31, 1998 and 1997, respectively.
The Company's valuation allowance was increased (decreased) in 1998, 1997,
and 1996 by $(1,792), $34, and $1,463, respectively, as a result of the
re-evaluation by management of future estimated taxable income in its
subsidiaries.
Under pre-1984 life insurance company income tax laws, a portion of life
insurance company gain from operations was not subject to current income
taxation but was accumulated, for tax purposes, in a memorandum account
designated as "policyholders' surplus account." The aggregate accumulation
in the account is $7,742 and the Company does not anticipate any
transactions, which would cause any part of the amount to become taxable.
Accordingly, no provision has been made for possible future federal income
taxes on this accumulation.
11. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income". This
Statement establishes new rules for reporting and display of comprehensive
income and its components; however, the adoption of this Statement had no
impact on the Company's net income or stockholders' equity. This Statement
requires unrealized gains or losses on the Company's available-for-sale
securities and related offsets for reserves and deferred policy
acquisition costs, which prior to adoption were reported separately in
stockholder's equity, to be included in other comprehensive income. Prior
year financial statements have been reclassified to conform to the
requirements of Statement No. 130.
Other comprehensive income at December 31, 1998 is summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ------------------------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising
during
the period $ 39,430 $ (13,800) $ 25,630
Less: reclassification adjustment
for
(gains) losses realized in net (14,350) 5,022 (9,328)
income
-------------- ---------------- ------------
Net unrealized gains 25,080 (8,778) 16,302
Reserve and DAC adjustment (11,614) 4,065 (7,549)
-------------- ---------------- ------------
============== ================ ============
Other comprehensive income $ 13,466 $ (4,713) $ 8,753
============== ================ ============
Other comprehensive income at December 31, 1997 is summarized as follows:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ---------------- --------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising
during
the period $ 80,821 $ (28,313) $ 52,508
Less: reclassification adjustment
for
(gains) losses realized in net 2,012 (704) 1,308
income
-------------- ---------------- --------------
Net unrealized gains 82,833 (29,017) 53,816
Reserve and DAC adjustment (24,554) 8,594 (15,960)
============== ================ ==============
Other comprehensive income $ 58,279 $ (20,423) $ 37,856
============== ================ ==============
Other comprehensive loss at December 31, 1996 is summarized as follows:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ---------------- --------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses)
arising during the period $ (125,559) $ 43,971 $ (81,588)
Less: reclassification adjustment
for
(gains) losses realized in net 19,381 (6,783) 12,598
income
-------------- ---------------- --------------
Net unrealized gains (losses) (106,178) 37,188 (68,990)
--------------
Reserve and DAC adjustment 38,736 (13,558) 25,178
============== ================ ==============
Other comprehensive loss $ (67,442) $ 23,630 $ (43,812)
============== ================ ==============
</TABLE>
12. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND OTHER MATTERS
Effective September 30, 1998, the Company purchased all of its outstanding
series of preferred stock, which were owned by the Parent Corporation, for
$121,800.
The Company's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for December
31 are as follows:
1998 1997 1996
--------------- ------------- -------------
(Unaudited)
Net income 225,863 $ 181,312 $ 180,634
Capital and surplus 727,124 759,429 713,324
The maximum amount of dividends which can be paid to stockholders by
insurance companies domiciled in the State of Colorado are subject to
restrictions relating to statutory surplus and statutory net gain from
operations. Statutory surplus and net gains from operations at December
31, 1998 were $727,124 and $225,586 (unaudited), respectively. The Company
should be able to pay up to $225,586 (unaudited) of dividends in 1999.
Dividends of $6,692, $8,854, and $8,587 were paid on preferred stock in
1998, 1997, and 1996, respectively. In addition, dividends of $73,344,
$62,540, and $48,083 were paid on common stock in 1998, 1997, and 1996,
respectively. Dividends are paid as determined by the Board of Directors.
The Company is involved in various legal proceedings, which arise in the
ordinary course of its business. In the opinion of management, after
consultation with counsel, the resolution of these proceedings should not
have a material adverse effect on its financial position or results of
operations.
13. STOCK OPTIONS
The Company is an indirect subsidiary of Great-West Lifeco Inc. (Lifeco).
Lifeco has a stock option plan (the Lifeco plan) that provides for the
granting of options for common shares of Lifeco to certain officers and
employees of Lifeco and its subsidiaries, including the Company. Options
may be awarded at no less than the market price on the date of the grant.
Termination of employment prior to vesting results in forfeiture of the
options, unless otherwise determined by a committee that administers the
Lifeco plan. As of December 31, 1998, 1997 and 1996, stock available for
award under the Lifeco plan aggregated 1,424,400, 3,440,000 and 6,244,000
shares.
The plan provides for the granting of options with varying terms and
vesting requirements. The basic options under the plan become exercisable
twenty percent per year commencing on the first anniversary of the grant
and expire ten years from the date of grant. Options granted in 1997 and
1998 totaling 1,832,000 and 278,000, respectively, become exercisable if
certain long-term cumulative financial targets are attained. If
exercisable, the exercise period runs from April 1, 2002 to June 26, 2007.
Additional options granted in 1998 totaling 380,000 become exercisable if
certain sales or financial targets are attained. During 1998, 30,000 of
these options vested and accordingly, the Company recognized compensation
expense of $116. If exercisable, the exercise period runs from the date
that the particular options become exercisable until January 27, 2008.
The following table summarizes the status of, and changes in, Lifeco
options outstanding and the weighted-average exercise price (WAEP) for the
years ended December 31. As the options granted relate to Canadian stock,
the values, which are presented in U.S. dollars, will fluctuate as a
result of exchange rate fluctuations:
<PAGE>
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---------------------- ---------------------- ----------------------
Options WAEP Options WAEP Options WAEP
------------ -------- ----------- -------- ----------- ---------
Outstanding, Jan. 1, 5,736,000 $ 7.71 4,104,000 $ 6.22 0 $ .00
Granted 988,000 13.90 1,932,000 10.82 4,104,000 6.62
Exercised 99,176 6.33 16,000 5.95 0 .00
Expired or canceled 80,000 13.05 284,000 6.12 0 .00
============ ======== =========== ======== =========== =========
Outstanding, Dec. 31, 6,544,824 8.07 5,736,000 7.71 4,104,000 6.22
============ ======== =========== ======== =========== =========
Options exercisable
at year-end 1,652,424 $ 5.72 760,800 $ 5.96 0 $ .00
============ ======== =========== ======== =========== =========
Weighted average fair
value of options
granted during year $ 1.18 $ 2.65 $ 4.46
============ =========== ===========
The following table summarizes the range of exercise prices for
outstanding Lifeco common stock options at December 31, 1998:
Outstanding Exercisable
---------------------------------------- ----------------------------
Average Average
Exercise Average Exercise Exercise
Price Range Options Life Price Options Price
------------------- -------------- ---------- ----------- ------------- ------------
$ 5.54 - $ 7.36 3,804,824 7.62 $ 5.61 1,622,424 $ 5.58
$10.61 - $13.23 2,740,000 8.70 $ 11.48 30,000 $ 13.23
</TABLE>
Of the exercisable Lifeco options, 1,622,424 relate to basic option grants
and 30,000 relate to variable grants.
Power Financial Corporation (PFC), which is the parent corporation of
Lifeco, has a stock option plan (the PFC plan) that provides for the
granting of options for common shares of PFC to key employees of PFC and
its affiliates. Prior to the creation of the Lifeco plan in April 1996,
certain officers of the Company participated in the PFC plan. Under the
PFC plan, options may be awarded at no less than the market price on the
date of the grant. Termination of employment prior to vesting results in
forfeiture of the options, unless otherwise determined by a committee that
administers the PFC plan. As of December 31, 1998, 1997 and 1996, stock
available for award under the PFC plan aggregated 4,400,800, 4,400,800 and
5,440,800 shares.
Options granted to officers of the Company under the PFC plan become
exercisable twenty percent per year commencing on the date of the grant
and expire ten years from the date of grant.
The following table summarizes the status of, and changes in, PFC options
outstanding and the weighted-average exercise price (WAEP) for the years
ended December 31. As the options granted relate to Canadian stock, the
values, which are presented in U.S. dollars, will fluctuate as a result of
exchange rate fluctuations:
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---------------------- ---------------------- ---------------------
Options WAEP Options WAEP Options WAEP
----------- --------- ----------- -------- ----------- --------
Outstanding, Jan. 1, 1,076,000 $ 3.05 1,329,200 $ 3.14 1,436,000 $ 3.17
Exercised 720,946 3.60 253,200 2.68 106,800 2.95
=========== ========= =========== ======== =========== ========
Outstanding, Dec. 31, 355,054 2.89 1,076,000 3.05 1,329,200 3.14
=========== ========= =========== ======== =========== ========
Options exercisable
at year-end 355,054 $ 2.89 1,076,000 $ 3.05 1,301,200 $ 3.15
=========== ========= =========== ======== =========== ========
</TABLE>
As of December 31, 1998, the PFC options outstanding have exercise prices
between $2.25 and $3.44 and a weighted-average remaining contractual life
of 2.99 years.
The Company accounts for stock-based compensation using the intrinsic
value method prescribed by APB No. 25, "Accounting for Stock Issued to
Employees", under which compensation expenses for stock options are
generally not recognized for stock option awards granted at or above fair
market value. Had compensation expense for the Company's stock option plan
been determined based upon fair values at the grant dates for awards under
the plan in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income, would have been reduced by $727,
$608, and $257, in 1998, 1997, and 1996, respectively. The fair value of
each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumption used for those options granted in 1998, 1997, and 1996,
respectively: dividend yield of 3.00%, expected volatility of 34.05%,
24.04%, and 15.61%, risk-free interest rates of 4.79%, 4.72%, and 4.67%,
and expected lives of 7.5 years.
14. SEGMENT INFORMATION
The Company has two reportable segments: Employee Benefits and Financial
Services. The Employee Benefits segment markets group life and health and
401(k) products to small and mid-sized corporate employers. The Financial
Services segment markets and administers savings products to public and
not-for-profit employers and individuals and offers life insurance
products to individuals and businesses.
The accounting policies of the segments are the same as those described in
Note 1. The Company evaluates performance based on profit or loss from
operations after income taxes.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately as each
segment has unique distribution channels.
The Company's operations are not materially dependent on one or a few
customers, brokers or agents.
Summarized segment financial information for the year ended and as of
December 31 was as follows:
Year ended December 31, 1998
Operations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
Benefits Services U.S.
-------------- -------------- -------------
Revenue:
Premium income $ 746,898 $ 247,965 $ 994,863
Fee income 444,649 71,403 516,052
Net investment income 95,118 802,242 897,360
Realized investment gains (losses) 8,145 30,028 38,173
-------------- -------------- -------------
Total revenue 1,294,810 1,151,638 2,446,448
Benefits and Expenses:
Benefits 590,058 872,411 1,462,469
Operating expenses 546,959 141,269 688,228
-------------- -------------- -------------
Total benefits and expenses 1,137,017 1,013,680 2,150,697
Net operating income before income
taxes 157,793 137,958 295,751
Income taxes 50,678 48,158 98,836
============== ============== =============
Net income $ 107,115 $ 89,800 $ 196,915
============== ============== =============
</TABLE>
<PAGE>
Assets:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
Benefits Services U.S.
--------------- -------------- --------------
Investment assets $ 1,434,691 $ 12,235,845 $ 13,670,536
Separate account assets 5,704,313 4,395,230 10,099,543
Other assets 567,126 785,940 1,353,066
=============== ============== ==============
Total assets $ 7,706,130 $ 17,417,015 $ 25,123,145
=============== ============== ==============
Year ended December 31, 1997
Operations:
Employee Financial Total
Benefits Services U.S.
-------------- ------------- -------------
Revenue:
Premium income $ 465,143 $ 368,036 $ 833,179
Fee income 358,005 62,725 420,730
Net investment income 100,067 781,606 881,673
Realized investment gains (losses) 3,059 6,741 9,800
-------------- ------------- -------------
Total revenue 926,274 1,219,108 2,145,382
Benefits and Expenses:
Benefits 371,333 1,013,717 1,385,050
Operating expenses 427,969 123,756 551,725
-------------- ------------- -------------
Total benefits and expenses 799,302 1,137,473 1,936,775
Net operating income before income
taxes 126,972 81,635 208,607
Income taxes 28,726 21,121 49,847
-------------
============== =============
Net income $ 98,246 $ 60,514 $ 158,760
============== =============
===============================================================================================================
Assets:
Employee Financial Total
Benefits Services U.S.
--------------- -------------- --------------
Investment assets $ 1,346,944 $ 11,859,038 $ 13,205,982
Separate account assets 4,533,516 3,313,935 7,847,451
Other assets 355,764 668,518 1,024,282
=============== ============== ==============
Total assets $ 6,236,224 $ 15,841,491 $ 22,077,715
=============== ============== ==============
</TABLE>
<PAGE>
Year ended December 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Operations:
Employee Financial Total
Benefits Services U.S.
--------------- -------------- -------------
Revenue:
Premium income $ 486,565 $ 342,884 $ 829,449
Fee income 321,074 26,445 347,519
Net investment income 87,511 747,126 834,637
Realized investment gains (losses) (2,661) (18,417) (21,078)
--------------- -------------- -------------
Total revenue 892,489 1,098,038 1,990,527
Benefits and Expenses:
Benefits 406,143 949,821 1,355,964
Operating expenses 368,258 101,358 469,616
--------------- -------------- -------------
Total benefits and expenses 774,401 1,051,179 1,825,580
Net operating income before income
taxes 118,088 46,859 164,947
Income taxes 22,874 7,498 30,372
=============== ============== =============
Net income $ 95,214 $ 39,361 $ 134,575
=============== ============== =============
The following table, which summarizes premium and fee income by segment,
represents supplemental information:
1998 1997 1996
------------- ------------- -------------
Premium Income
Employee Benefits
Group Life & Health $ 746,898 $ 465,143 $ 486,565
------------- ------------- -------------
Total Employee Benefits 746,898 465,143 486,565
------------- ------------- -------------
Financial Services
Savings 16,765 22,634 26,655
Individual Insurance 231,200 345,402 316,229
------------- ------------- -------------
Total Financial Services 247,965 368,036 342,884
------------- ------------- -------------
Premium income $ 994,863 $ 833,179 $ 829,449
============= ============= =============
Fee Income
Employee Benefits
Group Life & Health $ 366,805 $ 305,302 $ 276,688
401(k) 77,844 52,703 44,386
------------- ------------- -------------
------------- ------------- -------------
Total Employee Benefits 444,649 358,005 321,074
------------- ------------- -------------
------------- ------------- -------------
Financial Services
Savings 71,403 62,725 26,445
------------- ------------- -------------
Total Financial Services 71,403 62,725 26,445
------------- ------------- -------------
============= ============= =============
Fee income $ 516,052 $ 420,730 $ 347,519
============= ============= =============
</TABLE>
<PAGE>
XIV
Part C
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)
Financial Statements
The financial statements for Retirement Plan Series Account for
the years ended December 31, 1998 and 1997 as well as the
financial statements for Great-West Life & Annuity Insurance
Company for the years ended December 31, 1998, 1997 and 1996 are
included in Part B.
(b)
Exhibits
Exhibits (1), (2), (3), and (6) are incorporated by
reference to Registrant's Form N-4 Registration
Statement filed September
13,
1994.
(4) Exhibit 4 is incorporated by reference to Registrant's registration
statement filed on May 6, 1998.
(5) Exhibit 5 is incorporated by reference to Registrant's registration
statement filed on May 6, 1998. (7) Not applicable (8) Not applicable
(9) Exhibit 9 is incorporated by reference to Registrant's
registration statement dated September 13, 1994. (10) (a) Written
Consent of Jorden Burt Boros Cicchetti Berenson & Johnson, LLP.
(b) Written Consent of Deloitte & Touche LLP.
Not Applicable
(12) Not Applicable
(13) Exhibit 13 is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 to its Registration Statement dated April 24, 1997.
Item 25. Directors and
Officers of the Depositor
Position and Offices
Name
Principal Business Address
with Depositor
James Balog
2205 North Southwinds
Vero Beach, Florida 39263
Boulevard
Director
James W. Burns, O.C.
(4)
Director
Orest T. Dackow
(3)
Director
Andre Desmarais
(4)
Director
Paul Desmarais, Jr.
(4)
Director
Robert G. Graham
574 Spoonbill Drive
Sarasota, FL 34236
Director
Robert Gratton
(5)
Chairman
N. Berne Hart
2552 East Alameda Avenue
Denver, Colorado 80209
Director
Kevin P. Kavanagh
(1)
Director
William Mackness
61 Waterloo Street
Winnipeg, Manitoba R3N 0S3
Director
William T. McCallum
(3) Director, President and Chief Executive Officer
Jerry E.A. Nickerson
H.B. Nickerson & Sons
Limited Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C.,
Q.C. (4)
Director
Michel Plessis-Belair,
F.C.A. (4)
Director
Brian E. Walsh
Trinity L.P.
Director
115 Putnam Ave.
Greenwich, Connecticut
06830
John A. Brown (3) Senior Vice President, Sales,
Financial Services
Donna A. Goldin
(2) Executive Vice President and Chief Operating Officer, One Corporation
Mitchell T. Graye
(3) Executive Vice President and Chief Financial Officer
John T. Hughes (3) Senior Vice President, Chief
Investment Officer
D. Craig Lennox
(3)
Senior Vice President,
General Counsel and
Secretary
Dennis Low (3) Executive Vice President,
Financial Services
Alan D. MacLennan (2) Executive Vice President,
Employee Benefits
Steve H. Miller (2) Senior Vice President,
Employee Benefits Sales
James D. Motz (2) Executive Vice President,
Employee Benefits
Charles P. Nelson (3) Senior Vice President,
Public/Nonprofit Markets
Marty Rosenbaum (2) Senior Vice President,
Employee Benefits
Operations
Greg E. Seller (3) Senior Vice President, Major Accounts
Robert K. Shaw (3) Senior Vice President, Individual Markets
Douglas L. Wooden (3) Executive Vice President, Financial Services
- ----------------------------------------
(1) 100 Osborne
Street North, Winnipeg,
Manitoba, Canada R3C 3A5.
(2) 8505 East Orchard
Road, Englewood, Colorado
80111.
(3) 8515 East Orchard
Road, Englewood, Colorado
80111.
(4) Power Corporation
of Canada, 751 Victoria
Square, Montreal, Quebec,
Canada H2Y 2J3.
(5) Power Financial
Corporation, 751 Victoria
Square, Montreal, Quebec,
Canada H2Y 2J3.
<PAGE>
Item 26. Persons controlled by or under common control with the Depositor or
Registrant
ORGANIZATIONAL CHART
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Power Corporation of Canada
100% - 2795957 Canada Inc.
100% - 171263 Canada Inc.
67.7% - Power Financial Corporation
81.2% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company 100% - GWL&A
Financial (Nova Scotia) Inc.
100% - GWL&A Financial Inc.
100% - Great-West Life & Annuity Insurance Company
100% - First Great-West Life & Annuity Insurance Company
100% - GW Capital Management, LLC
100% - Orchard Capital Management, LLC
100% - Greenwood Investments, Inc.
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Arizona, Inc.
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of South Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Health Plan of Ohio, Inc.
100% - One Health Plan of Tennessee, Inc.
100% - One Health Plan of Oregon, Inc.
100% - One Health Plan of Florida, Inc.
100% - One Health Plan of Indiana, Inc.
100% - One Health Plan of Massachusetts, Inc.
100% - One Health Plan of Maine, Inc.
100% - One Health Plan of New Jersey, Inc.
100% - One Health Plan of New Hampshire, Inc.
100% - One Health Plan of Pennsylvania, Inc.
100% - One Health Plan, Inc. (Vermont)
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp
Equities, Inc. 95% - Maxim
Series Fund, Inc.* 100% -
Greenwood Property Corporation
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties, Ltd.
92% - Orchard Series Fund**
* New England Life Insurance Company - 5%
** New England Life Insurance Company - 8%
</TABLE>
<PAGE>
Item 27. Number of
Contract Owners
As of February 28, 1999, there were 2,957 Contract Owners.
Item 28. Indemnification
Provisions exist under the Colorado General Corporation Code and the Bylaws of
GWL&A whereby GWL&A may indemnify a director, officer, or controlling person of
GWL&A against liabilities arising under the Securities Act of 1933. The
following excerpts contain the substance of these provisions:
Colorado Business
Corporation Act
Article 109 -
INDEMNIFICATION
Section 7-109-101.
Definitions.
As used
in this Article:
(1) "Corporation" includes any domestic or foreign entity that
is a predecessor of the corporation by reason of a merger,
consolidation, or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of
a corporation or an individual who, while a director of a
corporation, is or was serving at the corporation's request as
a director, officer, partner, trustee, employee, fiduciary or
agent of another domestic or foreign corporation or other
person or employee benefit plan. A director is considered to
be serving an employee benefit plan at the corporation's
request if his or her duties to the corporation also impose
duties on or otherwise involve services by, the director to
the plan or to participants in or beneficiaries of the plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect
to a proceeding to pay a judgment, settlement, penalty,
fine, including an excise tax assessed with respect to an
employee benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in the corporation and, when
used with respect to a person other than a director as
contemplated in Section 7-109-107, means the office in the
corporation held by the officer or the employment, fiduciary,
or agency relationship undertaken by the employee, fiduciary,
or agent on behalf of the corporation. "Official capacity"
does not include service for any other domestic or foreign
corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or
informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to the
proceeding because the person is or was a director against
liability incurred in any proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official
capacity with the corporation, that his or
her conduct was in the corporation's best
interests; or
(II) In all other cases, that his or her
conduct was at least not opposed to the
corporation's best interests; and
(c) In the case of any criminal proceeding, the
person had no reasonable cause to believe his or her
conduct was unlawful.
(2)
A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the
interests of the participants in or beneficiaries of the plan
is conduct that satisfies the requirements of subparagraph
(II) of paragraph (b) of subsection (1) of this section.
A director's conduct with respect to an employee benefit plan
for a purpose that the director did not reasonably believe to
be in the interests of the participants in or beneficiaries of
the plan shall be deemed not to satisfy the requirements of
subparagraph (a) of subsection (1) of this section.
(3)
The termination of any proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere
or its equivalent, is not, of itself, determinative that the
director did not meet the standard of conduct described in
this section.
(4) A corporation may not indemnify a director under this
section:
(a) In connection with a proceeding by or in the
right of the corporation in which the director was
adjudged liable to the corporation; or
(b) In connection with any proceeding charging that
the director derived an improper personal benefit,
whether or not involving action in his official
capacity, in which proceeding the director was
adjudged liable on the basis that he or she derived
an improper personal benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of a corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Section 7-109-103.
Mandatory Indemnification
of Directors.
Unless limited by the articles of incorporation, a corporation
shall be required to indemnify a person who is or was a director of the
corporation and who was wholly successful, on the merits or otherwise,
in defense of any proceeding to which he was a party, against
reasonable expenses incurred by him in connection with the proceeding.
Section 7-109-104.
Advance of Expenses to
Directors.
(1)
A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in
advance of the final disposition of the proceeding if:
(a) The director furnishes the corporation a written
affirmation of his good-faith belief that he has met
the standard of conduct described in Section
7-109-102;
(b) The director furnishes the corporation a written
undertaking, executed personally or on the director's
behalf, to repay the advance if it is ultimately
determined that he or she did not meet such standard
of conduct; and
(c)
A determination is made that the facts then know to
those making the determination would not preclude
indemnification under this article.
(2)
The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the
director, but need not be secured and may be accepted without
reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in Section
7-109-106.
Section 7-109-105.
Court-Ordered
Indemnification of
Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to a
proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after
giving any notice the court considers necessary, may order
indemnification in the following manner:
(a) If it determines the director is entitled to mandatory
indemnification under section 7-109-103, the court shall
order indemnification, in which case the court shall also
order the corporation to pay the director's reasonable
expenses incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director met the
standard of conduct set forth in section 7-109-102 (1) or
was adjudged liable in the circumstances described in
Section 7-109-102 (4), the court may order such
indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which
liability shall have been adjudged in the circumstances
described Section 7-109-102 (4) is limited to reasonable
expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered
indemnification.
Section 7-109-106. Determination and Authorization of
Indemnification of Directors.
(1)
A corporation may not indemnify a director under Section
7-109-102 unless authorized in the specific case after a
determination has been made that indemnification of the
director is permissible in the circumstances because he has
met the standard of conduct set forth in Section 7-109-102.
A corporation shall not advance expenses to a director under
Section 7-109-104 unless authorized in the specific case after
the written affirmation and undertaking required by Section
7-109-104(1)(a) and (1)(b) are received and the determination
required by Section 7-109-104(1)(c) has been made.
(2)
The determinations required to be made subsection (1) of this
section shall be made:
(a) By the board of directors by a majority vote of
those present at a meeting at which a quorum is
present, and only those directors not parties to the
proceeding shall be counted in satisfying the quorum.
(b) If a quorum cannot be obtained, by a majority
vote of a committee of the board of directors
designated by the board of directors, which committee
shall consist of two or more directors not parties to
the proceeding; except that directors who are parties
to the proceeding may participate in the designation
of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in
paragraph (a) of subsection (2) of this section, and the
committee cannot be established under paragraph (b) of
subsection (2) of this section, or even if a quorum is
obtained or a committee designated, if a majority of the
directors constituting such quorum or such committee so
directs, the determination required to be made by subsection
(1) of this section shall be made:
(a) By independent legal counsel selected by a vote
of the board of directors or the committee in the
manner specified in paragraph (a) or (b) of
subsection (2) of this section or, if a quorum of the
full board cannot be obtained and a committee cannot
be established, by independent legal counsel selected
by a majority vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible;
except that, if the determination that indemnification is
permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses
shall be made by the body that selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees,
Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section 7-109-103,
and is entitled to apply for court-ordered indemnification under section
7-109-105, in each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses
to an officer, employee, fiduciary, or agent of the
corporation to the same extent as a director; and
(c) A corporation may indemnify and advance expenses
to an officer, employee, fiduciary, or agent who is
not a director to a greater extent, if not
inconsistent with public policy, and if provided for
by its bylaws, general or specific action of its
board of directors or
shareholders,
or
contract.
Section 7-109-108.
Insurance.
A corporation may purchase and maintain insurance on behalf of a person
who is or was a director, officer, employee, fiduciary, or agent of the
corporation and who, while a director, officer, employee, fiduciary, or agent of
the corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of any other
domestic or foreign corporation or other person or of an employee benefit plan
against any liability asserted against or incurred by the person in that
capacity or arising out of his or her status as a director, officer, employee,
fiduciary, or agent whether or not the corporation would have the power to
indemnify the person against such liability under the Section 7-109-102,
7-109-103 or 7-109-107. Any such insurance may be procured from any insurance
company designated by the board of directors, whether such insurance company is
formed under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the corporation
has an equity or any other interest through stock ownership or otherwise.
Section 7-109-109.
Limitation of
Indemnification of
Directors.
(1)
A provision concerning a corporation's indemnification of, or
advance of expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract, except
for an insurance policy or otherwise, is valid only to the
extent the provision is not inconsistent with Sections
7-109-101 to 7-109-108. If the articles of incorporation limit
indemnification or advance of expenses, indemnification or
advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a
proceeding at a time when he or she has not been made a named
defendant or respondent in the proceeding.
Section 7-109-110. Notice
to Shareholders of
Indemnification of
Director.
If a corporation indemnifies or advances expenses to a director under
this article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the indemnification or
advance to the shareholders with or before the notice of the next shareholders'
meeting. If the next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given to the
shareholders at or before the time the first shareholder signs a writing
consenting to such action.
Bylaws of GWL&A
Article II, Section 11.
Indemnification of
Directors.
(1) In this section, the following terms shall have the following
meanings:
(a) "expenses" means reasonable expenses incurred in a legal proceeding,
including expenses of investigation and preparation, expenses in
connection with an appearance as a witness, and fees and disbursement
of counsel, accountants or other experts;
(b) "liability" means an obligation incurred with respect to a proceeding
to pay a judgment, settlement, penalty or fine;
(c) "party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding;
(d) "proceeding" means any threatened, pending or completed action,
suit, or proceeding whether civil, criminal, administrative or
investigative, and whether formal or informal.
(2) Subject to applicable law, if any person who is a director,
officer or employee of the corporation is made a party to a
proceeding because the person is or was a director, officer
or employee of the corporation, the corporation shall
indemnify the person, or the estate or personal
representative of the person, from and against all liability
and expenses incurred by the person in the proceeding (and
advance to the person expenses incurred in the proceeding)
if, with respect to the matter(s) giving rise to the
proceeding:
(a) the person conducted himself or herself in good faith;
and
(b) the person reasonably believed that his or her conduct was in the
corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no reasonable cause
to believe that his or her conduct was unlawful; and
(d) if the person is or was an employee of the corporation, the person acted in
the ordinary course of the person's employment with the corporation.
(3) Subject to applicable law, if any person who is or was serving as a
director, officer or employee of another company or entity at the request
of the corporation is made a party to a proceeding because the person is or
was serving as a director, officer or employee of the other company or
entity, the corporation shall indemnify the person, or the estate or
personal representative of the person, from and against all liability and
expenses incurred by the person in the proceeding (and advance to the
person expenses incurred in the proceeding) if:
(i) the person is or was appointed to serve at the request of the corporation
as a director, officer or employee of the other company or entity in
accordance with Indemnification Procedures approved by the Board of
Directors of the corporation; and
(ii) with respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith; and
(b) the person reasonably believed that his or her conduct was at least
not opposed to the corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful; and
(d) if the person is or was an employee of the other company or entity,
the person acted in the ordinary course of the person's employment
with the other company or entity.
Item 29. Principal
Underwriter
(a)
Orchard Series Fund
(b)
Directors and Officers of
One Orchard.
Position and Offices
Name
Principal Business Address
with Underwriter
Steven H. Miller
8505 E. Orchard Road
President and
Englewood, Colorado 80111 Director
Alan D. Mac Lennan
8505 E. Orchard Road
Director
Englewood, Colorado 80111
Stanley Kenyon
Bldg. 400, Suite 1200
Director
1000 Abernathy Road
Atlanta, GA 30328
Glen R. Derback
8515 E. Orchard Road
Treasurer
Englewood, Colorado 80111
Beverly A. Byrne
8515 E. Orchard Road
Secretary
Englewood, Colorado 80111
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name of Principal Net Underwriting Compensation Commissions Brokerage
Compensation
Underwriter Discounts and on Redemption
Commissions
One Orchard
-0- -0- -0- -0-
</TABLE>
Item 30. Location of
Accounts and Records
All accounts, books, or other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained by the Registrant through GWL&A, 8515 E. Orchard Road, Englewood,
Colorado 80111.
Item 31. Management
Services
Not Applicable.
Item 32. Undertakings
(a) Registrant 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 variable annuity contracts may
be accepted.
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a postcard or similar written
communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant 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) GWL&A represents that the fees and charges deducted under the
Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by GWL&A.
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant hereby certifies that it meets all the
requirements for effectiveness pursuant to Rule 485(b) and has duly caused this
Post-Effective Amendment No. 7 to its Registration Statement on Form N-4 to be
signed on its behalf, in the City of Englewood, State of Colorado, on this 29th
day of April, 1999.
RETIREMENT PLAN
SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum,President and
Chief Executive Officer of Great-West
Life & Annuity Insurance Company
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Depositor)
By: /s/ William T. McCallum
William T. McCallum,
President and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities with Great-West Life
& Annuity Insurance Company and on the dates indicated:
Signature and Title
Date
/s/ Robert Gratton
April 29, 1999
Director and Chairman of
the Board
(Robert Gratton)
/s/ William T. McCallum
April 29, 1999
Director, President and
Chief
Executive Officer (William
T. McCallum)
Signature and Title
Date
/s/ Glen Ray Derback
April 29, 1999
Vice President and
Controller
(Glen Ray Derback)
/s/ James Balog
*
April 29, 1999
Director, (James Balog)
/s/ James W. Burns*
April 29, 1999
Director, (James W. Burns)
/s/ Orest T. Dackow*
April 29, 1999
Director, (Orest T. Dackow)
- -------------------------------
_______, 1999
Director, (Andre Desmarais)
/s/ Paul Desmarais, Jr. *
April 29, 1999
Director, (Paul Desmarais,
Jr.)
/s/ Robert G. Graham*
April 29, 1999
Director, (Robert G.
Graham)
/s/ N. Berne Hart*
April 29, 1999
Director, (N. Berne Hart)
Signature and Title
Date
/s/ Kevin P. Kavanagh*
April 29, 1999
Director, (Kevin P.
Kavanagh)
/s/ William Mackness*
April 29, 1999
Director, (William Mackness)
/s/ Jerry Edgar Alan Nickerson*
April 29, 1999
Director, (Jerry Edgar Alan Nickerson)
/s/ P. Michael Pitfield*
April 29, 1999
Director, (P. Michael
Pitfield)
_______, 1999
Director, (Michel Plessis-Belair)
/s/ Brian E. Walsh*
April 29, 1999
Director, (Brian E. Walsh)
By: /s/ D.C. Lennox
April 29, 1999 D.C.
Lennox
*Attorney-in-fact pursuant to Powers of Attorney filed with the Registration
Statement on September 13, 1994 and Post-Effective Amendment No. 2 to this
Registration Statement.
Exhibit 10(a) Written Consent of Jorden Burt Boros Cicchetti Berenson & Johnson
LLP
<PAGE>
Jorden Burt Boros
Cicchetti Berenson &
Johnson LLP
Suite 400E
1025 Thomas Jefferson
Street, N.W.
Washington, D.C. 20007
(202) 965-8100
April 29, 1999
Great-West Life & Annuity
Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
RE: Retirement Plan Series Account
Post-Effective Amendment
No. 7 to the Registration
Statement on Form N-4
File Nos. 33-83928; 811-8762
Ladies and Gentlemen:
We have acted as counsel to Great-West Life & Annuity Insurance
Company, a Colorado corporation, regarding the federal securities laws
applicable to the issuance and sale of the Contracts described in the
above-referenced registration statement. We hereby consent to the reference to
us under the heading "Legal Matters" in the prospectus filed today with the
Securities and Exchange Commission. In giving this consent, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.
Very Truly Yours,
/s/ Jorden Burt Boros
Cicchetti Berenson &
Johnson LLP
Jorden Burt Boros
Cicchetti Berenson &
Johnson LLP
Exhibit 10(b)
Written Consent of
Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS'
CONSENT
We consent to the use in this Post-Effective Amendment No. 7 to Registration
Statement No. 33-83928 of Retirement Plan Series Account of Great-West Life &
Annuity Insurance Company of our report dated March 25, 1999 on the financial
statements of Retirement Plan Series Account of Great-West Life & Annuity
Insurance Company and our report dated January 25, 1999 on the consolidated
financial statements of Great-West Life & Annuity Insurance Company appearing in
the Statement of Additional Information, which is a part of such Registration
Statement, and to the references to us under the headings "Condensed Financial
Information" appearing in the Prospectus, which is also a part of such
Registration Statement, and "Independent Auditors" appearing in the Statement of
Additional Information.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
April 29, 1999
