AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1999
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FILE NO. 033-92842
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GLENROOK LIFE AND ANNUITY COMPANY
(Exact Name of Registrant)
ARIZONA 35-1113325
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
847/402-2400
(Address and Phone Number of Principal Executive Office)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847/402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
RICHARD T. CHOI, ESQUIRE TERRY R. YOUNG, ESQUIRE
FREEDMAN, LEVY, KROLL & SIMONDS ALLSTATE LIFE FINANCIAL SERVICES, INC.
1050 CONNECTICUT AVENUE, N.W. 3100 SANDERS ROAD
SUITE 825 NORTHBROOK, IL 60062
WASHINGTON, D.C. 20036-5366
Approximate date of commencement of proposed sale to the public: The annuity
contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
<PAGE>
THE GLENBROOK CHOICE PLUS
Glenbrook Life and Annuity Company Prospectus dated May 1, 1999
3100 Sanders Road, Northbrook, IL 60062
Telephone Number: 1-800-755-5275
Glenbrook Life and Annuity Company ("Glenbrook") is offering The Glenbrook
Choice Plus, an individual flexible premium deferred annuity contract
("Contract"). This prospectus contains information about the Contract that you
should know before investing. Please keep it for future reference.
The Contracts are available through Allstate Life Financial Services, Inc., the
principal underwriter for the Contracts.
The Securities and Exchange Commission has not approved
or disapproved the securities described in this
prospectus, nor has it passed on the accuracy or the
adequacy of this prospectus. Anyone who tells you
otherwise is committing a federal crime.
The Contracts may be distributed through broker-dealers
that have relationships with banks or other
IMPORTANT financial institutions or by employees of such banks.
NOTICES However, the Contracts are not deposits, or
obligations of, or guaranteed by such institutions
or any federal regulatory agency. Investment
in the Contracts involves investment risks,
including possible loss of principal.
The Contracts are not FDIC insured.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
Overview Important Terms............................................
The Contract At A Glance...................................
How the Contract Works.....................................
The Contract...............................................
Purchases and Contract
Value......................................................
Contract Features Guarantee Periods..........................................
Expenses...................................................
Access To Your Money.......................................
Income Payments............................................
Death Benefits.............................................
More Information:
Glenbrook...............................................
Other Information The Contract............................................
Qualified Plans.........................................
Legal Matters...........................................
Year 2000...............................................
Taxes......................................................
Experts....................................................
Annual Reports and Other Documents.........................
Appendix A - Market Value Adjustment ......................
</TABLE>
<PAGE>
IMPORTANT TERMS
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This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
Accumulation Phase......................................
Annuitant...............................................
Automatic Additions Program.............................
Automatic Laddering Program.............................
Beneficiary.............................................
Cancellation Period.....................................
Contract ...............................................
Contract Value..........................................
Contract Owner ("You") .................................
Death Benefit...........................................
Due Proof of Death......................................
Free Withdrawal Amount..................................
Glenbrook ("We")........................................
Guarantee Periods......................................
Income Plan ............................................
Issue Date .............................................
Market Value Adjustment ................................
Payout Phase............................................
Payout Start Date .....................................
Qualified Contracts.....................................
Systematic Withdrawal Program...........................
<PAGE>
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
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Flexible Payments
You can purchase a Contract with as little
as $3,000 ($2,000 for a "Qualified
Contract," which is a Contract issued with
qualified plans). You can add to your
Contract as often and as much as you like,
but each payment must be at least $100.
---------------------------------- -----------------------------------------
Right to Cancel You may cancel your Contract within 20
days of receipt or any longer period your
state may require ("Cancellation Period")
and receive a full refund of your purchase
payments (a higher amount apply to
Contracts issued in California).
---------------------------------- -----------------------------------------
Expenses You will bear the following expenses:
o Withdrawal charge of up to 7% on
amounts withdrawn (with exceptions)
o State premium tax (if your state
imposes one)
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Guaranteed Interest
The Contract offers fixed interest rates
that we guarantee for specified periods
we call "Guarantee Periods." To find out
what the current rates are on the
Guarantee Periods, call us at
1-800-755-5275.
---------------------------------- -----------------------------------------
Special Services For your convenience, we offer these
special services:
o Automatic Additions Program
o Systematic Withdrawal Program
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Income Payments The Contract offers three income payment
plans:
o life income with guaranteed payments
o a joint and survivor life income with
guaranteed payments
o guaranteed payments for a specified
period (5 to 30 years)
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Death Benefits If you die or if the Contract
owner is not a natural person and the
Annuitant dies before the Payout Start
Date, we will pay the death benefit
described in the Contract.
----------------------------------- ----------------------------------------
<PAGE>
----------------------------------- ----------------------------------------
Withdrawals You may withdraw some or all of your
Contract value ("Contract Value") at
anytime prior to the Payout Start Date. In
general, you must withdraw at least $50 at
a time. If you withdraw Contract Value
from a Guarantee Period before its
maturity, a withdrawal charge, Market
Value Adjustment, and taxes (including a
10% penalty tax for withdrawals before age
59 1/2)
may apply.
----------------------------------- ----------------------------------------
<PAGE>
HOW THE CONTRACT WORKS
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The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner)
save for retirement because you can invest in the Contract and pay no federal
income taxes on any earnings until you withdraw them. You do this during what we
call the "Accumulation Phase" of the Contract. The Accumulation Phase begins on
the date we issue your Contract (we call that date the "Issue Date") and
continues until the Payout Start Date, which is the date we apply your money to
provide income payments. During the Accumulation Phase, you may allocate your
purchase payments to one or more Guarantee Periods. During each Guarantee
Period, your money will earn a fixed rate of interest that we declare
periodically.
Second, the Contract can help you plan for retirement because you can use
it to receive retirement income for life and/or for a pre-set number of years,
by selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last income payment provided by the Income Plan you
select. During the Payout Phase, we guarantee the amount of your payments, which
will remain fixed. The amount of money you accumulate under your Contract during
the Accumulation Phase and apply to an Income Plan will determine the amount of
your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Issue Payout Start
Date Accumulation Phase Date Payout Phase
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| | | ?
You save for retirement
You buy You elect to receive income You can receive Or you can
a Contract payments or receive a lump sum income payments receive
payment for a set period income payments
for life
</TABLE>
As the Contract owner, you exercise all of the rights and privileges
provided by the Contract. If you die, any surviving Contract owner or, if there
is none, the Beneficiary will exercise the rights and privileges provided by the
Contract. See "The Contract." In addition, if you die before the Payout Start
Date, we will pay a death benefit to any surviving Contract owner or, if there
is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any question about how the
Contract works.
<PAGE>
THE CONTRACT
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CONTRACT OWNER
The Glenbrook Choice Plus is a contract between you, the Contract owner, and
Glenbrook, a life insurance company. As the Contract owner, you may exercise all
of the rights and privileges provided to you by the Contract. That means it is
up to you to select or change (to the extent permitted):
o the amount and timing of your purchase payments and withdrawals,
o the programs you want to use to invest or withdraw money,
o the income payment plan you want to use to receive retirement income,
o the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
o the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when you die, and
o any other rights that the Contract provides.
If you die, any surviving Contract owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person.
You can use the Contract with or without a qualified plan. A qualified plan is a
personal retirement savings plan, such as an IRA or tax-sheltered annuity, that
meets the requirements of the Internal Revenue Code. Qualified plans may limit
or modify your rights and privileges under the Contract. We use the term
"Qualified Contract" to refer to a Contract issued with a qualified plan. See
"Qualified Plans" on page __.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). You initially designate an Annuitant in your application. You
may change the Annuitant at any time prior to the Payout Start Date (only if the
Contract owner is a natural person. You may designate a joint Annuitant, who is
a second person on whose life income payments depend. Joint Annuitants are
permitted only on or after the Payout Start Date. If the Annuitant dies prior to
the Payout Start Date, the new Annuitant will be:
o the youngest Contract owner; otherwise,
o the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
<PAGE>
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly.
If you did not name a Beneficiary or if the named Beneficiary is no longer
living, the Beneficiary will be:
o a contingent Beneficiary whom you named or, if none,
o your spouse, or, if he or she is no longer alive,
o your surviving children equally, if living, or, if you have no
surviving children,
o your estate.
If more than one Beneficiary survives you (or the Annuitant, if the Contract
owner is not a natural person), we will divide the death benefit among your
Beneficiaries according to your most recent written instructions. If you have
not given us written instructions, we will pay the death benefit in equal
amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Glenbrook officer may approve a change in or waive any provision of the
Contract. Any change or waiver must be in writing. None of our agents has the
authority to change or waive the provisions of the Contract. We may not change
the terms of the Contract, without your consent, except to conform the Contract
to applicable law or changes in the law. If a provision of the Contract is
inconsistent with state law, we will follow state law.
ASSIGNMENT
We will not honor an assignment of an interest in a Contract as collateral or
security for a loan. However, you may assign periodic income payments under the
Contract prior to the Payout Start Date. No Beneficiary may assign benefits
under the Contract until the Beneficiary becomes the Contract owner. We will not
be bound by any assignment until you sign it and file it with us. We are not
responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. You should consult with an
attorney before trying to assign your Contract.
<PAGE>
PURCHASES AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified
Contract). All subsequent purchase payments must be at least $100. You may make
purchase payments at any time until the earlier of the Payout Start Date and the
end of the Contract year ("Contract Year") in which the oldest Contract owner
attains age 91. We reserve the right to limit the maximum amount of purchase
payments we will accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account. Please call or write us for an enrollment form.
ALLOCATION OF PURCHASE PAYMENTS
For each purchase payment, you must select one or more Guarantee Periods. A
Guarantee Period is a period of years during which you will earn a guaranteed
interest rate on your money. You must allocate at least $100 to any one
Guarantee Period at the time you make your purchase payment or select a renewal
Guarantee Period.
We will apply your purchase payment to the Guarantee Period you select. If you
do not select a Guarantee Period for a purchase payment, we will allocate the
purchase payment to the same period used for the most recent purchase payment.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 20 day period after you receive the Contract, or such
longer period that your state may require. You may return it by delivering it or
mailing it to us. If you exercise this "Right to Cancel," the Contract
terminates and we will pay you the full amount of your purchase payments
invested in the Guarantee Periods or any greater amount your state may require.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
purchase payments you have invested in the Guarantee Periods, plus earnings
thereon, and less any amounts previously withdrawn.
<PAGE>
GUARANTEE PERIODS
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Each payment allocated to a Guarantee Period earns interest at a specified rate
that we guarantee. You must allocate at least $100 to a Guarantee Period at the
time you make a purchase payment or select a new Guarantee Period. Guarantee
Periods may range from 1 to 10 years. We are currently offering Guarantee
Periods of 1, 3, 5, 6, 7, 8, 9 or 10 years in length. In the future we may offer
Guarantee Periods of different lengths or stop offering some Guarantee Periods.
Amounts invested in Guarantee Periods become part of our general account. The
general account supports our insurance and annuity obligations. The general
account consists of our general assets other than those in segregated asset
accounts. We have sole discretion to invest the assets of the general account,
subject to applicable law. Any money you invest in the general account does not
entitle you to share in the investment experience of the general account.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular investment until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. We determine the interest
rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your sales representative or our customer support
unit at 1-800-755-5275.
The interest rate will never be less than the minimum guaranteed rate stated in
the Contract.
HOW WE CREDIT INTEREST
We will credit interest to your initial purchase payment from the Issue Date. We
will credit interest to your additional purchase payments from the date we
receive them. We will credit interest daily to each amount allocated to a
Guarantee Period at a rate that compounds to the annual interest rate that we
declared at the beginning of the applicable Guarantee Period.
The following example illustrates how a purchase payment would grow, given an
assumed Guarantee Period and annual interest rate:
Purchase Payment..............................$10,000
Guarantee Period..............................5 years
Annual Interest Rate........................... 4.50%
END OF CONTRACT YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
------ ------ ------ ------ ------
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X 1.045
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X 1.045
$10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X 1.045
$11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X 1.045
$11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X 1.045
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82 -$10,000)
</TABLE>
This example assumes no withdrawals during the entire five year Guarantee
Period. If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. The hypothetical interest rate
is for illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for any
given Guarantee Period may be more or less than shown above but will never be
less than the guaranteed minimum rate stated in the Contract.
RENEWALS
Prior to the end of each Guarantee Period, we will mail you a notice asking you
what to do with your money. During the 30-day period after the end of the
Guarantee Period, you may:
1) take no action. We will automatically apply your money to a new
Guarantee Period of the same length as the expiring Guarantee Period.
The new Guarantee Period will begin on the day the previous Guarantee
Period ends. The new interest rate will be our current declared rate
for a Guarantee Period of that length; or
2) instruct us to apply your money to one or more new Guarantee Periods
that may be available. The new Guarantee Period(s) will begin on the
day the previous Guarantee Period(s) ends. The interest rate for each
new Guarantee Period will be our then current declared rates for that
Guarantee Period; or
3) withdraw all or a portion of your money from the expired Guarantee
Period without incurring a Market Value Adjustment (or a withdrawal
charge to the extent of the Free Withdrawal Amount). In this case, the
amount withdrawn will be deemed withdrawn on the day the Guarantee
Period expired. Amounts not withdrawn or applied to Guarantee Periods
as described above will be applied to a new Guarantee Period of the
same length as the previous Guarantee Period. The new Guarantee Period
will begin on the day the previous Guarantee Period ended.
Under our Automatic Laddering Program, you may choose, in advance, to use
Guarantee Periods of the same length for all renewals. You can select this
Program at any time during the Accumulation Phase, including on the Issue Date.
We will apply renewals to Guarantee Periods of the selected length until you
direct us in writing to stop. We may stop offering this Program at any time. For
additional information on the Automatic Laddering Program, please call our
customer support unit at 1-800-755-5275.
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken within the first
30 days of a renewal Guarantee Period, are subject to a Market Value Adjustment.
A Market Value Adjustment also applies upon payment of a death benefit under the
Contract, and when you apply amounts currently invested in a Guarantee Period to
an Income Plan, other than during the first 30 days of a renewal Guarantee
Period.
We will not apply the Market Value Adjustment on withdrawals you make:
o to satisfy IRS minimum distribution rules for the Contract, or
o within the "Free Withdrawal Amount," described under "Expenses" below.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the Treasury Rate for a period equal to the Guarantee Period at its
inception to the Treasury Rate for a period equal to the time remaining in the
Guarantee Period when you remove your money. "Treasury Rate" means the U.S.
Treasury Note Constant Maturity Yield as reported in Federal Reserve Bulletin
Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than the purchase payments plus interest at the minimum guaranteed interest rate
under the Contract.
Generally, if the Treasury Rate at the time you allocate money to a Guarantee
Period is lower than the applicable current Treasury Rate for a period equal to
the time remaining in the Guarantee Period, then the Market Value Adjustment
will result in a lower amount payable to you. Conversely, if the Treasury Rate
at the time you allocate money to a Guarantee Period is higher than the
applicable current Treasury Rate, then the Market Value Adjustment will result
in a higher amount payable to you.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of five years and the Treasury Rate for that duration is 4.50%. Assume
that at the end of 3 years, you make a partial withdrawal. If, at that later
time, the current Treasury Rate for a 2 year period is 4.00%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current Treasury Rate for the 2 year
period is 5.00%, then the Market Value Adjustment will be negative, which will
result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
EXPENSES
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As a Contract owner, you will bear the charges and expenses described below.
WITHDRAWAL CHARGE
We may assess a withdrawal charge on the purchase payment(s) you withdraw.
During each year (as measured from the commencement of a Guarantee Period), you
can withdraw up to 10% of the money invested in that Guarantee Period without
paying the charge. Unused portions of this 10% Free Withdrawal Amount are not
carried forward to future years or other Guarantee Periods.
The withdrawal charge is a percentage of the Contract Value you withdraw in
excess of the Free Withdrawal Amount. The percentage depends on the year we
received the purchase payment you are withdrawing, as follows:
Number of Complete Years
Since We Received the Payment
Being Withdrawn: 0 1 2 3 4 5 and later
Applicable Charge: 7% 7% 6% 5% 4% 0%
We treat the oldest purchase payments as being withdrawn first. We will deduct
withdrawal charges, if applicable, from the amount paid. We do not apply a
withdrawal charge in the following situations:
o on the Payout Start Date;
o the death of the Contract owner (Annuitant if Contract owner is not a
natural person);
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; or
o withdrawals made within 30 days of the beginning of their renewal Guarantee
Periods (to the extent of the Free Withdrawal Amount).
Confinement Waiver. We will waive the withdrawal charge on all withdrawals taken
prior to the Payout Start Date under your Contract if the following conditions
are satisfied:
1) you or the Annuitant, if the Contract is owned by a company or other legal
entity, are confined to a long term care facility or a hospital for at
least 90 consecutive days. You or the Annuitant must enter the long term
care facility or hospital at least 30 days after the Issue Date;
2) you must request the withdrawal and provide written proof of the stay no
later than 90 days following the end of your or the Annuitant's stay at the
long term care facility or hospital; and
3) a physician must have prescribed the stay and the stay must be medically
necessary (as defined in the Contract).
You may not claim this benefit if you, or the Annuitant, or a member of your or
the Annuitant's immediate family, is the physician prescribing your or the
Annuitant's stay in a long term care facility.
Withdrawals may be subject to tax penalties, income tax, and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisors
regarding any withdrawals.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may discontinue this practice sometime in the future and deduct premium taxes
from the purchase payments.
Premium taxes generally range from 0% to 4%, depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from the
Contract Value before applying the Contract Value to an Income Plan.
<PAGE>
ACCESS TO YOUR MONEY
- ------------------------------------------------------------------------------
You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date. You may not make any withdrawals or surrender your Contract
once the Payout Phase has begun.
You must specify the Guarantee Period from which you would like to withdraw your
money. Withdrawals must be at least $50. If the amount you withdraw reduces the
amount invested in any Guarantee Period to less than $100, we will treat the
withdrawal request as a request to withdraw the entire amount in that Guarantee
Period.
The amount you receive may be reduced by a withdrawal charge, income tax
withholding, 10% tax penalty, and any premium taxes. The amount you receive may
be increased or reduced by a Market Value Adjustment.
If you request a total withdrawal, you must return your Contract to us.
SYSTEMATIC WITHDRAWAL PROGRAM
You may make partial withdrawals automatically. We call these "systematic
withdrawals." Please consult with your sales representative or our customer
support unit at 1-800-755-5275 for details.
MINIMUM CONTRACT VALUE
If a withdrawal would reduce your Contract Value to less than $2,000, we will
treat the request as a request to withdraw the entire Contract Value. Your
Contract will terminate if you withdraw all of your Contract Value. We will,
however, ask you to confirm your withdrawal request before terminating your
Contract.
RETURN OF PURCHASE PAYMENTS GUARANTEE
When you withdraw your money, a withdrawal charge and a Market Value Adjustment
may apply. However, if you decide to surrender your Contract, we guarantee that
the amount you receive upon surrender will never be less than the sum of your
initial and any subsequent purchase payments, less amounts previously withdrawn
(prior to withholding and the deduction of any taxes if applicable). Premium
taxes and income tax withheld may reduce the amount you receive on surrender to
less than the sum of your initial and any subsequent purchase payments. This
guarantee does not apply to earnings on purchase payments. The renewal of a
Guarantee Period does not in any way change this guarantee.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to six months from the date we
receive your withdrawal request or such shorter time state law may require.
<PAGE>
INCOME PAYMENTS
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PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that we apply your money to provide income payments under an Income
Plan. The Payout Start Date must be:
o at least one month after the Issue Date; and
o no later than the day the Annuitant reaches age 90, or the 10th
anniversary of the Contract's Issue Date, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract. You may not
change the Income Plan after your Contract Value has been applied to an Income
Plan on the Payout Start Date.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designated. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years.
The three Income Plans available under the Contract are:
Income Plan 1 -- Life Income With Guaranteed Payments. Under this plan,
we make periodic income payments for at least as long as the Annuitant
lives. If the Annuitant dies before we have made all of the guaranteed
income payments, we will continue to pay the remainder of the
guaranteed income payments to the Contract owner.
Income Plan 2 -- Joint and Survivor Life Income With Guaranteed
Payments. Under this plan, we make periodic income payments for at
least as long as either the Annuitant or the joint Annuitant is alive.
If both the Annuitant and the joint Annuitant die before we have made
all of the guaranteed income payments, we will continue to pay the
remainder of the guaranteed income payments to the Contract owner.
Income Plan 3 -- Guaranteed Payments for a Specified Period. Under this
plan, we make periodic income payments for the period you have chosen.
These payments do not depend on the Annuitant's life. You may elect to
receive guaranteed payments for periods ranging from 5 to 30 years.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer Guarantee Periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we will
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant is alive before
we make each payment. Please note that under such Income Plans, if you elect to
take no minimum guaranteed payments, it is possible that the payee could receive
only 1 income payment if the Annuitant and any joint Annuitant both die before
the second income payment, or only 2 income payments if they die before the
third income payment, and so on.
We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us.
We will apply your Contract Value, adjusted by any Market Value Adjustment, less
applicable taxes, to your Income Plan on the Payout Start Date. If your monthly
payments would be less than $20, and state law permits, we may:
o pay you the Contract Value, adjusted by any Market Value Adjustment and
less any applicable taxes, in a lump sum instead of the periodic payments
you have chosen, or
o reduce the frequency of your payments so that each payment will be at least
$20.
INCOME PAYMENTS
We guarantee income payment amounts for the duration of the Income Plan. We
calculate income payments by:
o adjusting your Contract Value on the Payout Start Date by any applicable
Market Value Adjustment;
o deducting any applicable premium tax; and
o applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as
we are offering at that time.
We may defer making fixed income payments for a period of up to six months or
such shorter time as state law may require. If we defer payments for 30 days or
more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is to be used in connection with an employment-related retirement
or benefit plan and we do not offer unisex annuity tables in your state, you
should consult with legal counsel as to whether the purchase of a Contract is
appropriate.
<PAGE>
DEATH BENEFITS
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We will pay a death benefit if, prior to the Payout Start Date:
1) any Contract owner dies, or
2) the Annuitant dies, if the Contract is owned by a non-natural person.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the Contract Value
plus any positive Market Value Adjustment applied in excess of the Free
Withdrawal Amount. Any applicable taxes may be deducted.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary.
A claim for a distribution on death must include "Due Proof of Death." We will
accept the following documentation as Due Proof of Death:
o a certified copy of the death certificate;
o a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or
o any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
The Contract owner eligible to receive death benefits has the following options:
1) If the Contract owner is not a natural person, then the Contract owner must
receive the death benefit in a lump sum within 5 years of the date of
death.
2) Otherwise, within 60 days of the date when the death benefit is calculated,
the Contract owner may elect to receive the death benefit under an Income
Plan or in a lump sum. Payments from the Income Plan must begin within 1
year of the date of death and must be payable throughout:
o the life of the Contract owner; or
o a period not to exceed the life expectancy of the Contract owner; or
o the life of the Contract owner with payments guaranteed for a period
not to exceed the life expectancy of the Contract owner.
Any death benefit payable in a lump sum must be paid within 5 years of the
date of death. If no election is made, funds will be distributed at the end
of the 5 year period.
3) If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect one of the options listed above or may
continue the Contract in the Accumulation Phase as if the death had not
occurred. If the Contract is continued in the Accumulation Phase, the
surviving spouse may make a single withdrawal of any amount within 1 year
of the date of death without incurring a withdrawal charge. However, any
applicable Market Value Adjustment, determined as of the date of the
withdrawal, will apply.
<PAGE>
MORE INFORMATION
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GLENBROOK
Glenbrook is the issuer of the Contract. Glenbrook is a stock life insurance
company organized under the laws of the State of Arizona in 1998. Previously,
Glenbrook was organized under the laws of the State of Illinois in 1992.
Glenbrook was originally organized under the laws of the State of Indiana in
1965. From 1965 to 1983 Glenbrook was known as "United Standard Life Assurance
Company" and from 1983 to 1992 as "William Penn Life Assurance Company of
America."
Glenbrook is currently licensed to operate in the District of Columbia and all
states except New York. We intend to offer the Contract in those jurisdictions
in which we are licensed. Our home office is located at 3100 Sanders Road,
Northbrook, Illinois, 60062.
Glenbrook is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company, a stock property-liability insurance company incorporated
under the laws of Illinois. All of the outstanding capital stock of Allstate
Insurance Company is owned by The Allstate Corporation.
Glenbrook and Allstate Life entered into a reinsurance agreement effective June
5, 1992. Under the reinsurance agreement, Allstate Life reinsures all of
Glenbrook's liabilities under its various contracts. The reinsurance agreement
provides us with financial backing from Allstate Life. However, it does not
create a direct contractual relationship between Allstate Life and you. In other
words, the obligations of Allstate Life under the reinsurance agreement are to
Glenbrook; Glenbrook remains the sole obligor under the Contract to you.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns A+ (Superior) to Allstate Life which automatically reinsures all
net business of Glenbrook. A.M. Best Company also assigns Glenbrook the rating
of A+(r) because Glenbrook automatically reinsures all net business with
Allstate Life. Standard & Poor's Insurance Rating Services assigns an AA+ (Very
Strong) financial strength rating and Moody's assigns an Aa2 (Excellent)
financial strength rating to Glenbrook. Glenbrook shares the same ratings of its
parent, Allstate Life. We may from time to time advertise these ratings in our
sales literature.
THE CONTRACT
Allstate Life Financial Services, Inc. ("ALFS") located at 3100 Sanders Road,
Northbrook, IL 60062-7154 serves as a distributor of the contracts. ALFS is a
wholly-owned subsidiary of Allstate Life Insurance Company. ALFS is a registered
broker-dealer under the Securities Exchange Act of 1934 as amended ("Exchange
Act"), and is a member of the National Association of Securities Dealers. ALFS
is also registered with the Securities and Exchange Commission as an investment
adviser.
We will pay commissions to broker-dealers who sell the Contracts. Commissions
paid may vary, but we estimate that total commissions paid both on the sale of a
Contract and upon renewal of a Guaranteed Period, will not exceed 8%. Sometimes
we also pay the broker-dealer a persistency bonus in addition to the standard
commissions. In some states, Contracts may be sold by representatives or
employees of banks that may be acting as broker-dealers without separate
registration under the Exchange Act, pursuant to legal and regulatory
exceptions.
Glenbrook does not pay ALFS a commission for distribution of the Contracts. The
underwriting agreement with ALFS provides that we will reimburse ALFS for any
liability to Contract owners arising from services rendered or Contracts issued.
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Glenbrook on
certain federal securities law matters. All matters of state insurance law
pertaining to the Contracts, including the validity of the Contracts and
Glenbrook's right to issue such Contracts under state insurance law, have been
passed upon by Michael J. Velotta, General Counsel of Glenbrook.
YEAR 2000
Glenbrook is heavily dependent upon complex computer systems for all phases of
its operations, including customer service, and policy and contract
administration. Since many of Glenbrook's older computer software programs
recognize only the last two digits of the year in any date, some software may
fail to operate properly in or after the year 1999, if the software is not
reprogrammed or replaced ("Year 2000 Issue"). Glenbrook believes that many of
its counterparties and suppliers also have Year 2000 Issues which could affect
Glenbrook. In 1995, Allstate Insurance Company commenced a plan intended to
mitigate and/or prevent the adverse effects of Year 2000 Issues. These
strategies include normal development and enhancement of new and existing
systems, upgrades to operating systems already covered by maintenance agreements
and modifications to existing systems to make them Year 2000 compliant. The plan
also includes Glenbrook actively working with its major external counterparties
and suppliers to assess their compliance efforts and Glenbrook's exposure to
them. Glenbrook presently believes that it will resolve the Year 2000 Issue in a
timely manner, and the financial impact will not materially affect its results
of operations, liquidity or financial position. Year 2000 costs are and will be
expensed as incurred.
<PAGE>
TAXES
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The following discussion is general and is not intended as tax advice. We make
no guarantee regarding the tax treatment of any Contract or transaction
involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax advisor.
TAXATION OF GLENBROOK
Glenbrook is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code ("Tax Code" or "Code").
TAXATION OF ANNUITIES IN GENERAL
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the owner is a natural
person. As a general rule, annuity contracts owned by non-natural persons such
as corporations, trusts, or other entities are not treated as annuity contracts
for federal income tax purposes. The income on such contracts is taxed as
ordinary income received or accrued by the owner during the taxable year.
Contracts will generally be treated as held by a natural person if the nominal
owner is a trust that holds the Contract for the benefit of a natural person.
Please see a competent tax advisor to discuss other possible exceptions to the
nonnatural owner rule.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that is not taxable is
equal to the payment times the ratio of the investment in the contract (i.e.,
nondeductible IRA contributions, after tax contributions to qualified plans) to
the contract value.
You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments. If you make a full withdrawal under a
non-Qualified Contract or a Qualified Contract, the amount received will be
taxable only to the extent it exceeds the investment in the Contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are taxable only to the extent that distributions exceed
contributions. "Qualified distributions" from Roth IRAs are not taxable.
"Qualified distributions" are any distributions made more than 5 taxable years
after the taxable year of the first contribution to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2,
o made to a beneficiary after the Contract owner's death,
o attributable to the Contract owner being disabled, or
o for a first time home purchase (first time home purchases are subject
to a lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. The amount excluded from income
is determined by multiplying the payment by the ratio of the investment in the
Contract (adjusted for any refund feature or period certain) to the total
expected value of annuity payments for the term of the Contract. The annuity
payments will be fully taxable after the total amount of the investment in the
Contract is excluded using these ratios. If you die, and annuity payments cease
before the total amount of the investment in the Contract is recovered, the
unrecovered amount will be allowed as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
(1) if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
(2) if distributed under an Income Plan, the amounts are taxed in the same
manner as an annuity payment.
IRS Required Distribution at Death Rules. To qualify as an annuity contract for
federal income tax purposes, a non-Qualified Contract must provide:
(1) if any Contract owner dies on or after the Payout Start Date, but before
the entire interest in the Contract has been distributed, the remaining
portion of such interest must be distributed at least as rapidly as under
the method of distribution being used as of the date of the owner's death;
(2) if any Contract owner dies prior to the Payout Start Date, the entire
interest in the Contract must be distributed within 5 years after the date
of the owner's death.
The 5-year requirement is satisfied if:
o any portion of the Contract owner's interest which is payable to a
designated Beneficiary is distributed over the life of such
Beneficiary (or over a period not extending beyond the life expectancy
of the Beneficiary), and
o the distributions begin within 1 year of the Contract owner's death.
If the Contract owner's designated Beneficiary is a surviving spouse, the
Contract may be continued with the surviving spouse as the new Contract owner.
If the owner of the Contract is a non-natural person, the Annuitant is treated
as the Contract owner for purposes of applying the distribution at death rules.
In addition, a change in the Annuitant on a Contract owned by a non-natural
person is treated as the death of the owner.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
o made on or after the date the Contract owner attains age 59 1/2;
o made as a result of the Contract owner's death or disability;
o made in substantially equal periodic payments over the Contract owner's
life or life expectancy,
o made under an immediate annuity; or
o attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Glenbrook (or its affiliates) to the same owner during any calendar
year will be aggregated and treated as one annuity contract for purposes of
determining the taxable amount of a distribution.
TAX QUALIFIED CONTRACTS
The Contract may be used with several types of qualified plans. The tax rules
applicable to participants in qualified plans vary according to the type of plan
and the terms and conditions of the plan. Qualified plan participants, and
Contract owners, Annuitants and Beneficiaries under the Contract may be subject
to the terms and conditions of the qualified plan regardless of the terms of the
Contract.
TYPES OF QUALIFIED PLANS
IRAs Section 408 of the Code permits eligible individuals to contribute to an
individual retirement plan known as an IRA. IRAs are subject to limitations on
the amount that can be contributed and on the time when distributions may
commence. Certain distributions from other types of qualified plans may be
"rolled over" on a tax-deferred basis into an IRA. An IRA generally may not
provide life insurance, but it may provide a death benefit that equals the
greater of the premiums paid or the Contract Value. The Contract provides a
death benefit that in certain situations, may exceed the greater of the payments
or the contract value. If the IRS treats the death benefit as violating the
prohibition on investment in life insurance contracts, the Contract would not
qualify as an IRA.
Roth IRAs. Section 408A of the Code permits eligible individuals to make
nondeductible contributions to an individual retirement plan known as a Roth
IRA. Roth IRAs are subject to limitations on the amount that can be contributed.
In certain instances, distributions from Roth IRAs are excluded from gross
income. Subject to certain limits, a traditional Individual Retirement Account
or Annuity may be converted or "rolled over" to a Roth IRA. The taxable portion
of a conversion or rollover distribution is included in gross income, but is
exempt from the 10% penalty tax on premature distributions.
Simplified Employee Pension Plans. Section 408(k) of the Code allows employers
to establish simplified employee pension plans for their employees using the
employees' IRAs if certain criteria are met. Under these plans the employer may,
within limits, make deductible contributions on behalf of the employees to their
individual retirement annuities. Employers intending to use the contract in
connection with such plans should seek competent advice.
Savings Incentive Match Plans for Employees (SIMPLE Plans). Sections 408(p) and
401(k) of the Tax Code allow employers with 100 or fewer employees to establish
SIMPLE retirement plans for their employees. SIMPLE plans may be structured as a
SIMPLE retirement account using an employee's IRA to hold the assets, or as a
Section 401(k) qualified cash or deferred arrangement. In general, a SIMPLE plan
consists of a salary deferral program for eligible employees and matching or
nonelective contributions made by employers. Employers intending to use the
Contract in conjunction with SIMPLE plans should seek competent tax and legal
advice.
Tax Sheltered Annuities. Section 403(b) of the Tax Code permits public school
employees and employees of certain types of tax-exempt organizations (specified
in Section 501(c)(3) of the Code) to have their employers purchase Contracts for
them. Subject to certain limitations, a Section 403(b) plan allows an employer
to exclude the purchase payments from the employees' gross income. A Contract
used for a Section 403(b) plan must provide that distributions attributable to
salary reduction contributions made after 12/31/88, and all earnings on salary
reduction contributions, may be made only:
1) on or after the date the employee:
o attains age 59 1/2,
o separates from service,
o dies, or
o becomes disabled; or
2) on account of hardship (earnings on salary reduction contributions may not
be distributed for hardship).
These limitations do not apply to withdrawals where Glenbrook is directed to
transfer some or all of the Contract Value to another 403(b) plan.
Corporate and Self-Employed Pension and Profit Sharing Plans. Sections 401(a)
and 403(a) of the Tax Code permit corporate employers to establish various types
of tax favored retirement plans for employees. The Tax Code permits
self-employed individuals to establish tax favored retirement plans for
themselves and their employees. Such retirement plans may permit the purchase of
Contracts to provide benefits under the plans.
State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current income taxes. The employees must be participants in an eligible
deferred compensation plan. Employees with Contracts under the plan are
considered general creditors of the employer. The employer, as owner of the
Contract, has the sole right to the proceeds of the Contract. Under these plans,
contributions made for the benefit of the employees will not be taxable to the
employees until distributed from the plan. However, all compensation deferred
under a 457 plan must remain the sole property of the employer. As property of
the employer, the assets of the plan are subject only to the claims of the
employer's general creditors, until such time as the assets become available to
the employee or a beneficiary.
INCOME TAX WITHHOLDING
Glenbrook is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
o required minimum distributions, or
o a series of substantially equal periodic payments made over a period of at
least 10 years, or,
o over the life (joint lives) of the participant (and beneficiary).
Glenbrook may be required to withhold federal and state income taxes on any
distributions from non-Qualified Contracts, or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election not to
have taxes withheld.
<PAGE>
EXPERTS
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The financial statements and the related financial statement schedule of
Glenbrook incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
ANNUAL REPORTS AND OTHER DOCUMENTS
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Glenbrook's annual report on Form 10-K for the year ended December 31, 1998
("Form 10-K Annual Report") is incorporated herein by reference, which means
that it is legally a part of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the
Securities and Exchange Commission ("SEC") under the Exchange Act are also
incorporated herein by reference, which means that they also legally become a
part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000945094. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of the SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at 3100 Sanders Road, Northbrook, Illinois 60062 (telephone :
1-800-755-5275).
ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your sales representative or call our customer
support unit at 1-800-755-5275.
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = Treasury Rate for a maturity equal to the Guarantee Period for the week
preceding establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the
withdrawal or death benefit request, or from the Payout Start Date to the end of
the Guarantee Period; and
J = the Treasury Rate for a maturity of length N for the week preceding the date
we determine the Market Value Adjustment. If a rate with a maturity of length N
is not available, we will use a weighted average. If N is less than or equal to
365 days, J will be the 1-year Treasury Rate.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I - J) X N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Free Withdrawal
Amount), paid as a death benefit, or applied to an Income Plan, out of a
Guarantee Period at any time other than during the 30 day period after the
Guarantee Period expires.
A-1
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: This illustration assumes that premium taxes are not applicable.
<TABLE>
<CAPTION>
EXAMPLE 1: (Assumes declining interest rates)
<S> <C>
Step 1. Calculate Contract Value at End of Contract Year 3: 10,000.00 X (1.0450)3 = $11,411.66
Step 2. Calculate the Free Withdrawal Amount: Free Withdrawal Amount (.10 X 10,000) = $1,000
Step 3. Calculate the Withdrawal Charge: .06 X ($11,411.66 - $1,000) = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.2%
N = 5 years - 3 years = 2 years
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .042) X (2) = .0054
Market Value Adjustment = Factor X Amount Subject to
Market Value Adjustment:
= .0054 X ($11,411.66 - 1,000) = $56.22
Step 5. Calculate the actual amount received by Customers as a
result of full withdrawal at the end of Contract Year 3: $11,411.66 - $624.70 + $56.22 = $10,843.18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE 2: (Assumes rising interest rates)
<S> <C>
Step 1. Calculate Contract Value at End of Contract Year 3: 10,000.00 X (1.045)3 = $11,411.66
Step 2. Calculate the Free Withdrawal Amount: Free Withdrawal Amount (.10 X 10,000) = $1,000
Step 3. Calculate the Withdrawal Charge: .06 X ($11,411.66 - $1,000) = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.8%
N = 5 years - 3 years = 2 years
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .048) X (2) = -.0054
Market Value Adjustment = Market Value Adjustment Factor
X Amount Subject to Market Value Adjustment
= -.0054 X ($11,411.66 - $1,000) = - $56.22
Step 5. Calculate the amount received by Customers as a
result of full withdrawal at the end of Contract Year 3: $11,411.66 - $624.70 - $56.22 = $10,730.74
</TABLE>
A-3
<PAGE>
back cover
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Glenbrook Life and Annuity Company ("Registrant") provide
that Registrant will indemnify its officers and directors for certain damages
and expenses that may be incurred in the performance of their duty to
Registrant. No indemnification is provided, however, when such person is
adjudged to be liable for negligence or misconduct in the performance of his or
her duty, unless indemnification is deemed appropriate by the court upon
application.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description
(1) Form of Underwriting Agreement (Previously filed in Post-Effective
Amendment No. 1 to this Registration Statement (File No. 033-92842) dated
April 9, 1996.)
(2) None
(4) Form of Glenbrook Life and Annuity Flexible Payment Deferred Annuity
Contract and Application (Previously filed in Post-Effective Amendment No.
2 to this Registration Statement (File No. 033-92842) dated April 1, 1997.)
(5)(a) Opinion of General Counsel re: Legality (Previously filed in
Post-Effective Amendment No. 2 to this Registration Statement (File No.
033-92842) dated April 1, 1997.)
5(b) Opinion of General Counsel re: Legality
(8) None
(11) None
(12) None
(15) None
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Attorneys
(24)(a) Powers of Attorney (Previously filed in Post-Effective Amendment No. 2
to this Registration Statement (File No. 033-92842) dated April 1, 1997.)
(24)(b) Power of Attorney for Thomas J. Wilson, II
(25) None
(26) None
(27) Not applicable
(99) Form of Resolution of Board of Directors (Previously filed in
Post-Effective Amendment No. 1 to this Registration Statement (File No.
033-92842) dated April 9, 1996.)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof ) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Glenbrook Life and Annuity Company, 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 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
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it will meet all of the
requirements for filing on Form S-3 and has duly caused this amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, and its seal to be hereunto affixed and attested, in the
Township of Northfield, State of Illinois on the 27th day of April, 1999.
GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
(SEAL)
Attest: /s/BRENDA D. SNEED By: /s/MICHAEL J. VELOTTA
------------------ ---------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary Vice President, Secretary and
and Assistant General Counsel General Counsel
Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed by the following persons in the
capacities indicated and on the 27th day of April, 1999.
*/LOUIS G. LOWER, II Chairman of the Board, Chief
Louis G. Lower, II Executive Officer and Director
(Principal Executive Officer)
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
Michael J. Velotta Counsel and Director
*/THOMAS J. WILSON, II Vice Chairman and Director
Thomas J. Wilson, II (Principal Operating Officer)
*/PETER H. HECKMAN President, Chief Operating Officer
Peter H. Heckman and Director
*/JOHN R. HUNTER Director
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
Kevin R. Slawin (Principal Financial Officer)
*/G. CRAIG WHITEHEAD Vice President and Director
G. Craig Whitehead
*/KEITH A. HAUSCHILDT Assistant Vice President and Controller
Keith A. Hauschildt (Principal Accounting Officer)
*/ By Michael J. Velotta, pursuant to Powers of Attorney previously filed or
filed herewith.
<PAGE>
EXHIBIT LIST
The following exhibits are filed herewith:
Exhibit No. Description
(5)(b) Opinion of General Counsel re: Legality
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Attorneys
(24)(b) Power of Attorney for Thomas J. Wilson, II
GLENBROOK LIFE AND ANNUITY COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, J5B
Northbrook, Illinois 60062
Direct Dial Number 847-402-2400
Facsimile 847-402-4371
Michael J. Velotta Please direct reply to:
Vice President, Secretary Post Office Box 3005
and General Counsel Northbrook, Illinois 60065-3005
April 14, 1999
TO: GLENBROOK LIFE AND ANNUITY COMPANY
NORTHBROOK, ILLINOIS 60062
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 033-92842
With reference to the Registration Statement on Form S-3 filed by
Glenbrook Life and Annuity Company (the "Company") with the Securities and
Exchange Commission covering the Flexible Payment Deferred Annuity Contracts, I
have examined such documents and such law as I have considered necessary and
appropriate, and on the basis of such examination, it is my opinion that as of
December 28, 1999:
1. The Company is duly organized and existing under the laws of the State
of Arizona and has been duly authorized to do business by the Director
of Insurance of the State of Arizona.
2. The securities registered by the above Registration Statement when
issued will be valid, legal and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the
above referenced Registration Statement and to the use of my name under the
caption "Legal Matters" in the Prospectus constituting a part of the
Registration Statement.
Sincerely,
/s/ MICHAEL J. VELOTTA
- -------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 4 to Registration Statement No. 033-92842 Glenbrook Life and Annuity Company
to Form S-1 on Form S-3 of of our report dated February 19, 1999, appearing in
the Annual Report on Form 10-K of Glenbrook Life and Annuity Company for the
year ended December 31, 1998, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Chicago, Illinois
April 26, 1999
Freedman, Levy, Kroll & Simonds
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal Matters"
in the prospectus contained in Post-Effective Amendment No. 4 to Form S-1 on the
Form S-3 Registration Statement of Glenbrook Life and Annuity Company (File No.
033-92842).
/s/FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 26, 1999
POWER OF ATTORNEY
WITH RESPECT TO
GLENBROOK LIFE AND ANNUITY COMPANY
Know all men by these presents that Thomas J. Wilson, II, whose
signature appears below, constitutes and appoints Louis G. Lower, II and Michael
J. Velotta, each acting individually, his attorney-in-fact, with power of
substitution and in any and all capacities, to sign any registration statements
and amendments thereto for the Glenbrook Life and Annuity Company and related
Contracts and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 23, 1999
Date
/s/Thomas J. Wilson, II
Thomas J. Wilson, II
Vice Chairman and Director
