AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2000
FILE NO. 333-07275
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 /X/
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 ALFS, 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 VALUE RESERVE
Glenbrook Life and Annuity Company Prospectus dated May 1, 2000
3100 Sanders Road, Northbrook, IL 60062
Telephone Number: 1-800-776-6978
Glenbrook Life and Annuity Company ("Glenbrook") is offering The Glenbrook Value
Reserve, a group and individual deferred annuity contract ("Contract"). The
Contract can be either a "Flexible Payment Contract," which permits you to add
additional payments after the initial payment, or it can be a "Single Payment
Contract," which does not offer that flexibility. This prospectus contains
information about the Contract that you should know before investing. Please
keep it for future reference.
The Contracts are available through ALFS, 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.
IMPORTANT The Contracts may be distributed through broker-dealers
NOTICES that have relationships with banks or other financial
institutions or by employees of such banks. 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
Page
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
Annual Statements
Appendix A - Market Value Adjustment
<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
SEC
Settlement Value
Systematic Withdrawal Program
*In certain states, the Contract is only available as a group Contract. In
these states, we will issue you a certificate that summarizes the
provisions of the group Contract. References to "Contract" in this
prospectus include certificates, unless the context requires otherwise.
<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.
Flexible Payments You can purchase a Contract with as little as
or ($2,000 for a "Qualified Contract," which is
Single Payment a $5,000 Contract issued with a qualified
plan). You can add to a Flexible Payment
Contract as often and as much as you like.
You must maintain a minimum account size of
$2,000.
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.
Expenses You will bear the following expenses:
o Withdrawal charge of 7% on amounts
withdrawn(with exceptions, and decreasing
in later years).
o State premium tax (if your state imposes
one).
Guaranteed The Contract offers fixed interest rates that
Interest we guarantee for specified periods we call
"Guarantee Periods." To find out what the
current rates are on the Guarantee Periods,
call us at 1-800-776-6978.
Special Services For your convenience, we offer these
special services:
o Automatic Additions Program (Flexible
Payment Contracts only).
o Systematic Withdrawal Program 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)
Death Benefits If you die or if the Contractowner is not a
natural person and the Annuitant dies
before the Payout Start Date, we will
pay benefits as described in the Contract.
Withdrawals You may withdraw some or all of your Contract
value("Contract Value") at any time prior to
the Payout Start Date. 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 required 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.
Issue Payout Start
Date Accumulation Phase Date Payout Phase
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You buy You save for You elect to You can receive Or you can
a Contract retirement receive income income payments receive
payments or for a set period income
receive a lump payments
sum payment for life
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 1-800-776-6978 if you have any question about how the Contract
works.
<PAGE>
THE CONTRACT
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CONTRACT OWNER
The Glenbrook Value Reserve 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 for Flexible Payment Contracts, the amount and timing of your purchase
payments,
o the amount and timing of your 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 the last surviving Contract Owner dies, 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. At issue, the maximum age of either owner, or annuitant if the owner is
a non-natural person, cannot exceed age 90.
You can use the Contract with or without a qualified plan. A "qualified plan" is
a 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.) The Contract requires that there be an Annuitant at all times
during the Accumulation Phase and on the Payout Start Date. The Annuitant must
be a natural person and may not be older than 90 at issue if the owner is a
non-natural person. If the owner is a natural person, there is not a maximum age
limit for the Annuitant.
You initially designate an Annuitant in your application. If the Contract owner
is a natural person, you may change the Annuitant at any time prior to the
Payout Start Date. Once we receive your change request, any change will be
effective at the time you sign the written notice. We are not liable for any
payment we make or other action we take before receiving any written request
from you. Prior to the payout start date 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:
(i) the youngest Contract owner; otherwise
(ii) the youngest Beneficiary.
<PAGE>
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.
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 your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you (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 $5,000 ($2,000 for Qualified
Contracts). You may make additional purchase payments to a Flexible Payment
Contract at any time prior to 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. For Flexible Payment Contracts, we reserve the right to limit
the maximum amount of purchase payments we will accept as well as the number of
additional purchase payments we will accept. We reserve the right to reject any
application in our sole discretion.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account to your Flexible Payment Contract. 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. We will credit interest to your purchase payment
from the Issue Date and, under the Flexible Payment Contract, from the date of
receipt for additional purchase payments.
RIGHT TO CANCEL
You may cancel your Contract within the Cancellation Period, which is the 20-day
period following receipt of your 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 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. We currently offer Guarantee Periods of 1, 2, 3, 4, 5, 6, 7,
8, 9 and 10 years in length for the Flexible Payment Contract, and a limited
number of Guarantee Periods for the single payment Contract. In the future we
may offer Guarantee Periods of different lengths ranging from 1 to 15 years, or
stop offering some Guarantee Periods.
You must select a Guarantee Period for each purchase payment. If you do not
select a Guarantee Period for a purchase payment, we will assign the same period
used for the most recent purchase payment. You may allocate the purchase
payment(s) to one Guarantee Period or many Guarantee Periods.
Amounts allocated to Guarantee Periods become part of our general account, which
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 allocate to a Guarantee Period 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
that particular time. We will not change the interest rate that we credit to a
particular allocation 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 Glenbrook at
1-800-776-6978.
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 (under a Flexible
Payment Contract) 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:
Example
Purchase Payment..........................$10,000
Guarantee Period 5 years
Annual Interest Rate....................... 4.50%
<PAGE>
END OF CONTRACT YEAR
<TABLE>
<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) X1.045
------
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X1.045
------
$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
</TABLE>
Total Interest Credited During Guarantee Period = $2,461.82($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5 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 an adjustment that reflects changes in interest rates since the
time you invested the amount withdrawn. We call this adjustment a "Market Value
Adjustment," and we describe it below. 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.
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 expired Guarantee Period. The new
Guarantee Period will begin on the day the previous Guarantee Period ends.
The new interest rate will be our then 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 ends. The new interest rate will be our then
current declared rate for those Guarantee Period(s); or
3) withdraw all or a portion of your money from the expired Guarantee Period
without incurring a Market Value Adjustment (a withdrawal charge may
apply). During the first 30 days of a renewal Guarantee Period, any amount
withdrawn will not reflect any interest earned during the 30-day period.
The amount withdrawn will be deemed to have been withdrawn on the day the
previous Guarantee Period ended. 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.
<PAGE>
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken during the first
30 days of a renewal Guarantee Period, are subject to a Market Value Adjustment.
A Market Value Adjustment also may apply when you apply your Contract Value to
an Income Plan (other than during the 30-day period described above). A positive
Market Value Adjustment may apply to the payment of the death benefit.
We will not apply the Market Value Adjustment to withdrawals you make:
o to satisfy IRS minimum distribution rules for the Contract,
o within the Free Withdrawal Amount described under "Expenses" below
o that qualify for the confinement and terminal illness waivers, described
under "Expenses" below.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time the amount being withdrawn was allocated to a Guarantee Period to the
time you withdraw 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 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. As such, you bear the investment risk associated with 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.
Generally, if the Treasury Rate at the time you allocate money to a Guarantee
Period is lower than the applicable current Treasury Rate, 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 5 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 the same duration 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 5 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 of up to 7% of the Contract Value you
withdraw. However, each year you may withdraw up to 10% of the funds initially
allocated to the Guarantee Period from which you are making the withdrawal
without paying a withdrawal charge. We measure each year from the commencement
of the relevant Guarantee Period. Unused portions of this 10% "Free Withdrawal
Amount" are not carried forward to future years or other Guarantee Periods. We
will deduct withdrawal charges, if applicable, from the amount paid unless you
instruct otherwise.
The withdrawal charge percentage declines to 0% over a seven-year period
according to the following schedule:
Number of Complete Years Since
We Received the Purchase
Payment Being Withdrawn: 0 1 2 3 4 5 6 7+
Applicable Charge: 7% 7% 6% 5% 4% 3% 2% 0%
We determine the withdrawal charge by multiplying the percentage corresponding
to the purchase payment year times the amount withdrawn in excess of the Free
Withdrawal Amount.
We treat the oldest purchase payments as being withdrawn first. We will deduct
withdrawal charges, if applicable, from the amount paid. For federal income tax
purposes, earnings under your Contract are considered to come out first,
regardless of which Guarantee Period(s) you choose to withdraw your money from.
This means you pay taxes on your withdrawal to the extent of any earnings in the
Contract.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date;
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract;
o at the expiration of 5- and 6-year Guarantee Periods, withdrawals made
within the first 30 days of their renewal Guarantee Periods; or
o withdrawals that qualify for a waiver as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts.
Withdrawals may be subject to tax penalties or income tax and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
Confinement Waiver. For Flexible Payment Contracts only, we will waive the
withdrawal charge and any Market Value Adjustment 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 not a natural person,
are first 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;
<PAGE>
2) you must request the withdrawal and provide written proof of the
stay to us 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 the stay in a
long term care facility.
Terminal Illness Waiver. For Flexible Payment Contracts only, we will waive the
withdrawal charge and any Market Value Adjustment on all withdrawals taken prior
to the Payout Start Date under your Contract if:
1) you (or the Annuitant if the Contract owner is not a natural
person) are first diagnosed by a physician as having a terminal
illness (as defined in the Contract) at least 30 days after the Issue
Date; and
2) you claim this benefit and deliver adequate proof of diagnosis to
us.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waiver. You should
consult your Contract for further details on these variations. Also, even if you
do not need to pay our withdrawal charge because of these waivers, you still may
be required to pay taxes or tax penalties on the amount withdrawn. You should
consult your tax adviser to determine the effect of a withdrawal on your taxes.
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 some time 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 your total
Contract Value, prior to applying your money to an Income Plan.
<PAGE>
ACCESS TO YOUR MONEY
- ------------------------------------------------------------------------------
You can withdraw some or all of your money 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(s) from which you would like to withdraw
your money. If none is specified, then any withdrawal request would be
incomplete and could not be honored.
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, we may require that you 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 call our
customer support unit at 1-800-776-6978, for details.
Income taxes may apply to systematic withdrawals. Please consult your tax
advisor before taking any withdrawal.
We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
MINIMUM CONTRACT VALUE
If the amount you withdraw reduces the Contract Value to less than $2,000, we
will treat the withdrawal as a request for total withdrawal of the Contract
Value. A total withdrawal of the Contract Value will terminate the Contract. We
will, however, ask you to confirm your withdrawal request before terminating
your Contract. If you surrender your Contract, we will pay you its Contract
Value adjusted by any applicable Market Value Adjustment, less any applicable
withdrawal charges and taxes.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to six months from the date we
receive your withdrawal request.
<PAGE>
INCOME PAYMENTS
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PAYOUT START DATE
The Payout Start Date is the day that we apply your Contract Value, adjusted by
the Market Value Adjustment, less any applicable taxes, to an Income Plan. The
Payout Start Date must be:
o at least 30 days after the Issue Date; and
o no later than the Annuitant's 90th birthday, or the 10th Contract
anniversary, if later.
You may change the Payout Start Date 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 as described in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. 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. After the Payout Start Date, you may not make withdrawals or change your
choice of Income Plan.
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 as required by the Contract.
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 as required by the
Contract.
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 will be greater than the income payments made
under the same Income Plan with a minimum specified period for guaranteed
payments.
We may make other Income Plans available. You may obtain information about them
by writing or calling us.
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 may
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 still 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.
<PAGE>
We will apply your Contract Value, adjusted by a Market Value Adjustment, less
applicable taxes to your Income Plan on the Payout Start Date. If the amount
available to apply under an Income Plan is not enough to provide an initial
payment of at least $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:
1) adjusting your Contract Value on the Payout Start Date by any
applicable Market Value Adjustment;
2) deducting any applicable premium tax; and
3) 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 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.
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 company or other legal
entity.
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.
<PAGE>
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1) the Contract Value as of the date we determine the death benefit, or
2) the Settlement Value (that is, the amount that would have been payable
on a full withdrawal of the Contract Value) on the date that we
determine the death benefit.
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 a death certificate;
o a certified copy of a decree of a court of competent jurisdiction as to a
finding of death; or
o any other proof acceptable to us.
DEATH BENEFIT PAYMENTS
A death benefit will be paid:
1) if the Contract owner elects to receive the death benefit distributed
in a single payment within 180 days of the date of death, and
2) if the death benefit is paid as of the day we determine the value of
the death benefit. Otherwise, we will pay the Settlement Value. The
Settlement Value paid will be the Settlement Value next computed after
the requested distribution date for payment or on the mandatory
distribution date of 5 years after the date of death. We are currently
waiving the 180 day limit, but we reserve the right to enforce the
limitation in the future.
In any event, the entire value of the Contract must be distributed within 5
years after the date of death unless an Income Plan is elected or a surviving
spouse continues the Contract in accordance with the provisions described below.
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
may receive the death benefit in one or more distributions.
2) If the Contract owner is a natural person, the Contract owner may
elect to receive the death benefit in one or more distributions or by
periodic payments through an Income Plan. 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 one 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. The single
withdrawal amount is in addition to the annual Free Withdrawal Amount.
If the Contract is continued and there is no Annuitant, the new
Annuitant will be the surviving spouse.
<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 headquarters 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 substantially
all of Glenbrook's liabilities under its various insurance 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
ALFS, Inc., 3100 Sanders Road, Northbrook, Illinois, a wholly owned subsidiary
of Allstate Life Insurance Company, acts as the principal underwriter of the
Contracts. ALFS is registered as a broker-dealer under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and is a member of the National
Association of Securities Dealers, Inc.
Contracts are sold by registered representatives of unaffiliated broker-dealers
or bank employees who are licensed insurance agents appointed by Glenbrook,
either individually or through an incorporated insurance agency and who have
entered into a selling agreement with ALFS and Glenbrook to sell the Contract.
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.
<PAGE>
Commissions paid may vary, but in aggregate are not anticipated to exceed 8% of
any purchase payment. In addition, under certain circumstances, certain sellers
of the Contracts may be paid persistency bonuses which will take into account,
among other things, the length of time purchase payments have been held under a
Contract, and Contract values. A persistency bonus is not expected to exceed
1.20%, on an annual basis, of the Contract values considered in connection with
the bonus. These commissions are intended to cover distribution expenses.
The underwriting agreement between Glenbrook and ALFS provides that we will
reimburse ALFS for any liability to Contract owners arising out of services
rendered or Contracts issued.
We and ALFS reserve the right to offer the Contract at a special interest
rate(s) for specific time periods to customers of certain broker-dealers. We and
ALFS may also negotiate special commissions with such broker-dealers.
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 applicable state 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
have failed to operate properly in or after the year 1999, if the software was
not reprogrammed or replaced ("Year 2000 Issue"). Glenbrook believes that many
of its counterparties and suppliers also had potential Year 2000 Issues which
could affect Glenbrook. In 1995, Allstate Insurance Company commenced a four
phase plan intended to mitigate and/or prevent the adverse effects of Year 2000
Issues. These strategies included 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 included Glenbrook actively working with its major
external counterparties and suppliers to assess their compliance efforts and
Glenbrook's exposure to them. Because of the accuracy of this plan, and its
timely completion, Glenbrook has experienced no material impacts on its results
of operations, liquidity or financial position due to the Year 2000 issue. Year
2000 costs are 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 five 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 owner's death,
o attributable to the owner being disabled, or
o for a first time home purchase (first time home purchases are subject to a
lifetime limit of $10,000).
<PAGE>
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 annuity 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 annuity 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 owner. If the
owner of the Contract is a non-natural person, the Annuitant is treated as the
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 owner attains age 59 1/2;
o made as a result of the owner's death or disability;
o made in substantially equal periodic payments over the owner's life or
life expectancy,
o made under an immediate annuity; or
o attributable to investment in the Contract before August 14, 1982.
<PAGE>
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 income on
qualified plan and IRA investments is tax deferred and annuities held by such
plans do not receive any additional tax deferral. You should review the
features, including all benefits and expenses, prior to purchasing a variable
annuity in a qualified plan or IRA. Glenbrook reserves the right to limit the
availability of the Contract for use with any Qualified Plans listed below. 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.
<PAGE>
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 December 31, 1988, 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 to not
have taxes withheld.
<PAGE>
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from Glenbrook's Annual Report on
Form 10-K for the year ended December 31, 1999 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
Glenbrook's annual report on Form 10-K for the year ended December 31, 1999
("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 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:
1-800-776-6978).
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 1-800-776-6978.
<PAGE>
A-1
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period
for the week preceding the 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 equal to the Guarantee Period
for the week preceding the receipt of the withdrawal request, death
benefit request, or income payment request. If a note with a
maturity of the original Guarantee Period is not available, we will
use a weighted average.
"Treasury Rate" means the U.S. Treasury Note Constant Maturity
weekly yield as reported in Federal Reserve Bulletin Release H.15.
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, from a Guarantee
Period, other than amounts withdrawn or applied from a renewal Guarantee Period
during the first 30 days thereof.
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
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.
EXAMPLE 1: (Assumes declining interest rates)
<TABLE>
<S> <C> <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 Amount in excess of Free Withdrawal Amount (.10 X 10,000) = $1,000
the Free Withdrawal Amount: Amount in Excess: $11,411.66 - $1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .06 X $10,411.66 = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.2%
N = 2 years
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .042) X (5) = .0054
Market Value Adjustment = Market Value Adjustment
Factor X Amount Subject to Market Value Adjustment:
= .0054 X $10,411.66 = $56.22
Step 5. Calculate the amount received by Contract owners
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>
EXAMPLE 2: (Assumes rising interest rates)
<TABLE>
<S> <C> <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 Amount in excess of Free Withdrawal Amount (.10 X 10,000) = $1,000
the Free Withdrawal Amount: Amount in Excess: $11,411.66 - 1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .06 X $10,411.66 = $624.70
Step 4. Calculate the Market Value Adjustment: I = 4.5%
J = 4.8%
N = 2 years
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.045 - .048) X (5) = -.0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to
Market Value Adjustment
= -.0054 X $10,411.66 = - $56.22
Step 5. Calculate the amount received by Contract owners
as a result of full withdrawal at the end of Contract
Year 3: $11,411.66 - $624.70 - $56.22 = $10,730.74
</TABLE>
<PAGE>
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 the initial filing of
this Registration Statement (File No. 333-07275) dated June 28, 1996.) (2) None
(4) Form of Glenbrook Life and Annuity Company Flexible Premium Deferred
Variable Annuity Contract (Previously filed in the initial filing of this
Registration Statement (File No. 333-07275) dated June 28, 1996.)
(5)(a) Opinion of General Counsel re: Legality (Previously filed in the initial
filing of this Registration Statement (File No. 333-07275) dated June 28, 1996.)
(5)(b) Opinion and Consent of General Counsel re: Legality (Previously filed in
Post-Effective Amendment No. 3 to this Registration Statement (File No.
333-07275) dated April 29, 1999.)
(8) None
(11) None
(12) None
(15) None
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24)Powers of Attorney for Thomas J. Wilson, II, Michael J. Velotta, John R.
Hunter, Kevin R. Slawin, Samuel H. Pilch, Sarah R. Donahue, Timothy N.
Vander Pas, Brent H. Hamann, G. Craig Whitehead, filed herewith.
(25) None
(26) None
(27) Not applicable
(99) Form of Resolution of Board of Directors (Incorporated herein by reference
to Post-Effective Amendment No. 1 to Registrant's Form S-1 Registration
Statement (File No. 033-91916) 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
As required by the Securities Act of 1933, Registrant certifies that it has
reasonable grounds to believe that it meets 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 in the Township of
Northfield, State of Illinois on the 4th day of April, 2000.
GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
By:/s/ MICHAEL J. VELOTTA
---------------------------------
Michael J. Velotta
Vice President, Secretary and 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 on the 4th day of April, 2000.
*/THOMAS J. WILSON, II President, Chief Operating Officer
Thomas J. Wilson, II and Director,(Principal Executive Officer)
/s/ MICHAEL J. VELOTTA Vice President, Secretary,
Michael J. Velotta General Counsel and Director
*/JOHN R. HUNTER Vice President and Director
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
Kevin R. Slawin (Principal Financial Officer)
*/SAMUEL H. PILCH Controller
Samuel H. Pilch (Principal Accounting Officer)
*/SARAH R. DONAHUE Assistant Vice President and Director
Sarah R. Donahue
*/TIMOTHY N. VANDER PAS Assistant Vice President and Director
Timothy N. VanderPas
*/BRENT H. HAMANN Director
Brent H. Hamann
*/G. CRAIG WHITEHEAD Assistant Vice President and Director
G. Craig Whitehead
*/By Michael J. Velotta, pursuant to Powers of Attorney filed herewith
<PAGE>
Exhibit Index
Exhibit No. Description
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24) Powers of Attorney for Thomas J. Wilson, II,
Michael J. Velotta, John R. Hunter, Kevin R. Slawin,
Samuel H. Pilch, Sarah R. Donahue, Timothy N. Vander
Pas, Brent H. Hamann, G. Craig Whitehead.
Exhibit 23(a)
Independent Auditors' Consent
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 4 to Registration Statement 333-07275 of Glenbrook Life and Annuity Company
on Form S-3 of our report dated February 25, 2000, appearing in the Annual
Report on Form 10-K of Glenbrook Life and Annuity Company for the year ended
December 31, 1999, 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 5, 2000
<PAGE>
Exhibit 23(b)
Consent of Freedman, Levy, Kroll & Simonds
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 the
Form S-3 Registration Statement of Glenbrook Life and Annuity Company (File No.
333-07275).
/s/ FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 3, 2000
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Thomas J. Wilson, II, whose
signature appears below, constitutes and appoints Michael J. Velotta, his
attorney-in-fact, with power of substitution in any and all capacities, to sign
any Form S-3 registration statements and amendments thereto for the Glenbrook
Life and Annuity Company Separate Account A Contract 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 4, 2000
/s/ THOMAS J. WILSON, II
---------------------------
Thomas J. Wilson, II
President, Chief Operating Officer,
(Principal Executive Officer) and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Michael J. Velotta whose signature
appears below, constitutes and appoints Thomas J. Wilson, II his
attorney-in-fact, with power of substitution in any and all capacities, to sign
any Form S-3 registration statements and amendments thereto for the Glenbrook
Life and Annuity Company Separate Account A Contract 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 4, 2000
/s/ MICHAEL J. VELOTTA
---------------------------
Michael J. Velotta
Vice President, Secretary,
General Counsel and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Sarah R. Donahue, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, her attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/ SARAH R. DONAHUE
--------------------
Sarah R. Donahue
Assistant Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Brent H. Hamann, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/ BRENT H. HAMANN
--------------------
Brent H. Hamann
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that John R. Hunter, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/ JOHN R. HUNTER
--------------------
John R. Hunter
Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Timothy N. Vander Pas, whose
signature appears below, constitutes and appoints Thomas J. Wilson, II, and
Michael J. Velotta, and each of them, his attorney-in-fact, with power of
substitution in any and all capacities, to sign any Form S-3 registration
statements and amendments thereto for the Glenbrook Life and Annuity Company
Separate Account A Contract 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 each of said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
April 4, 2000
/s/ TIMOTHY N. VANDER PAS
---------------------------
Timothy N. Vander Pas
Assistant Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that G. Craig Whitehead, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/ G. CRAIG WHITEHEAD
---------------------------
G. Craig Whitehead
Assistant Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Kevin R. Slawin, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/KEVIN R. SLAWIN
----------------------
Kevin R. Slawin
Vice President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
GLENBROOK VALUE RESERVE
Know all men by these presents that Samuel L. Pilch, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any Form S-3 registration statements and
amendments thereto for the Glenbrook Life and Annuity Company Separate Account A
Contract 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 each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 4, 2000
/s/ SAMUEL L. PILCH
--------------------
Samuel L. Pilch
Controller (Principal Accounting Officer)
