COLI VUL-2 GWLA 497c Combined Document
Great-West Life & Annuity Insurance Company
A Stock Company
8515 East Orchard Road
Greenwood Village, Colorado 80111
(303) 737-3000
Executive Benefit VUL II — Prospectus
A Flexible Premium Variable Universal Life Insurance Policy
offered by Great-West Life & Annuity Insurance Company
in connection with its COLI VUL-2 Series Account
This prospectus describes Executive Benefit VUL II, a flexible premium variable universal life insurance policy (the "Policy") offered by Great-West Life & Annuity Insurance Company ("Great-West," "Company, " "we," “our” or "us"). The Policy is designed for use by corporations and employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. The Policy is designed to meet the definition of a "life insurance contract" for federal income tax purposes.
The Policy allows "you," the Owner, within certain limits to:
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• | choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change; |
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• | choose the amount and timing of Premium payments, within certain limits; |
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• | allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment objectives change; and |
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• | access your Account Value through loans and partial withdrawals or total surrenders. |
This prospectus contains important information you should understand before purchasing a Policy, including a description of the material rights and obligations under the Policy. We use certain special terms that are defined in Appendix A. Your Policy and any endorsements are the formal contractual agreement between you and the Company. It is important that you read the Policy and endorsements which reflect other variations. You should keep this prospectus on file for future reference.
The Policy that we are currently issuing became available on May 1, 2011. Policies issued before May 1, 2011 are described in a separate prospectus.
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 1, 2014
Table of Contents
Summary of the Policy and its Benefits
This is a summary of some of the most important features of your Policy. The Policy is more fully described in the remainder of this prospectus. Please read this prospectus carefully. Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply.
1. Corporate-Owned Variable Life Insurance. We will issue Policies to corporations and employers and to certain individuals to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We will issue Policies on the lives of prospective Insureds who meet our underwriting standards.
2. The Series Account. We have established a separate account to fund the variable benefits under the Policy. The assets of the Series Account are insulated from the claims of our general creditors.
3. Premium Payments. You must pay us an Initial Premium to put your Policy in force. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100.00. Thereafter, you choose the amount and timing of Premium payments, within certain limits.
4. Fixed Account. You may allocate some or all of your net payments and/or make Transfers from the Sub-Accounts to the Fixed Account. The Fixed Account is part of our General Account. We own the assets in the General Account, and we use these assets to support our insurance and annuity obligations other than those funded by our separate accounts. These Fixed Account assets are subject to our general liabilities from business operations. Subject to applicable law, we have sole discretion over investment of the Fixed Account assets. We bear the full investment risk for all amounts allocated or transferred to the Fixed Account.
We guarantee that the amounts allocated to the Fixed Account will be credited interest at a net effective annual interest rate of at least the minimum interest rate indicated in your Policy. At our discretion, we will review the interest rate at least once a year. We may reset the interest rate monthly. The Fixed Account is not affected by the investment performance of the Sub-Accounts. Policy value in the Fixed Account will be reduced by the Policy fees and charges we deduct and the effects of any Policy transactions (loans, withdrawals, and Transfers) on your Policy value in the Fixed Account.
5. Free Look Period. You may return your Policy to us for any reason within ten days of receiving it, or such longer period as required by applicable state law (in some states, up to 30 days for replacement policies), and depending on state law, receive (i) the greater of your Premiums, less any withdrawals, or your Account Value, or (ii) your Account Value plus the return of any expense charges deducted. The money you contribute to the Policy will be invested at your direction, except that in some states during your free look period your Premiums will be allocated to the Great-West Money Market Division.
6. Investment Options and Funds. You may allocate your net Premium payments among the available investment divisions ("Divisions") or the Fixed Account.
Each Division invests exclusively in shares of a single Fund. Each Fund has its own distinct investment objective and policies, which are described in the accompanying prospectuses for the Funds.
You may Transfer amounts from one Division to another or the Fixed Account, subject to the restrictions described herein.
7. Death Benefit. You may choose from among two death benefit options –
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1. | a fixed benefit equal to the Total Face Amount of your Policy; or |
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2. | a variable benefit equal to the sum of the Total Face Amount and your Account Value. |
For each option, the death benefit may be greater if necessary to satisfy federal tax law requirements.
We will deduct any outstanding Policy Debt and unpaid Policy charges before we pay a death benefit. In addition, prior partial withdrawals may reduce the Death Benefit Proceeds under the first option.
At any time, you may increase or decrease the Total Face Amount, subject to our approval and other requirements set forth in the Policy.
After the first Policy Year, you may change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect –
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2. | the investment performance of the Divisions you select; |
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3. | the value of the Fixed Account. |
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4. | any Policy loans or partial withdrawals; |
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5. | your Loan Account balance; and |
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6. | the charges we deduct under the Policy. |
9. Accessing Your Account Value. You may borrow from us using your Account Value as collateral. Loans may be treated as taxable income if your Policy is a "modified endowment contract" (“MEC”) for federal income tax purposes and you have had positive net investment performance.
There are no surrender charges associated with your Policy. You may surrender your Policy for its Cash Surrender Value plus return of expense charge, if applicable. The return of expense charge is a percentage of your Account Value and is described in greater detail on page 22.
You may withdraw a portion of your Account Value at any time while your Policy is in force.
A withdrawal may reduce your death benefit.
We will charge an administrative fee not greater than $25 per withdrawal on partial withdrawals after the first in a Policy Year.
10. Supplemental Benefits. The following optional riders are available –
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1. | term life insurance; and |
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2. | change of Insured (not available to individual Owners). |
We will deduct the cost, if any, of the rider(s) from your Account Value on a monthly basis.
11. Paid-Up Life Insurance. If the Insured reaches Attained Age 121 and your Policy is in force, the Account Value, less Policy Debt, will be applied as a single Premium to purchase "paid-up" insurance. "Paid-up" insurance is a policy where all premiums have been paid and there are no additional premiums due. Your Account Value will remain in the Series Account allocated to the Divisions or the Fixed Account in accordance with your instructions. The death benefit under this paid-up insurance will be fixed by the Internal Revenue Code of 1986, as amended (“Code”) for Insureds age 99. As your Account Value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly.
12. Reinstatement. If your Policy terminates due to insufficient value, we will reinstate it within three years at your Request, subject to certain conditions.
13. Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate.
If you withdraw part of the Cash Surrender Value, your Policy’s death benefit may be reduced and you may incur taxes and tax penalties.
14. Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account.
The Death Benefit Proceeds and your Account Value will be reduced by the amount of any partial withdrawals.
15. Policy Loans. You may borrow from us using your Account Value as collateral. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made.
The minimum Policy loan amount is $500.
16. Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time. Each increase or decrease in the Total Face Amount must be at least $25,000. Minimum face amount is $100,000.
17. Target Premium. Your target Premium is actuarially determined and will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) and equals the maximum Premium payable such that the Policy remains compliant with the Code. The target Premium is used to determine your expense charged applied to the Premium and the sales compensation we pay. Payment of the target premium does not guarantee that your Policy will not lapse, and you may need to pay additional Premiums to keep your Policy in force. Each increase to the Total Face Amount is considered to be a new segment to the Policy. Each segment will have a separate target Premium associated with it.
18. State Variations. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. These differences include, among other things, free look rights, issue age limitations, and the general availability of riders. This prospectus describes the material rights and obligations of an Owner, and the maximum fees and charges for all Policy features and benefits are set forth in the fee table of this prospectus. See your policy for specific variations because any such state variations will be included in your policy or in riders or endorsements attached to your policy. See your agent or contact us for specific information that is applicable to your state.
Policy Risks
1. Account Value Not Guaranteed. Your Account Value is not guaranteed. Your Account Value fluctuates based on the performance of the investment options you select. The investment options you select may not perform to your expectations. Your Account Value may also be affected by charges under your Policy.
2. Not Suitable as Short-Term Savings Vehicle. The Policy is designed for long-term financial planning. Accordingly, you should not purchase the Policy if you need access to the Account Value within a short time. Before purchasing a Policy, consider whether the long-term nature of the Policy is consistent with the purposes for which it is being considered.
3. Risk of Contract Lapse. Your Policy may terminate if your Account Value at the beginning of any Policy Month is insufficient to pay the Policy’s monthly charges.
If your Policy would terminate due to insufficient value, we will send you notice and allow you a 61-day grace period.
If, within the grace period, you do not make a Premium payment sufficient to cover all accrued and unpaid charges and deductions, your Policy will terminate at the end of the grace period without further notice.
4. Limitations on Withdrawals. Partial withdrawals of Account Value are permitted at any time the Policy is in force. As noted above, the amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A maximum administrative fee of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. Please note that withdrawals reduce your Account Value and your Death Benefit Proceeds. In addition, withdrawals may have tax consequences.
5. Limitations on Transfers. Subject to our rules as they may exist from time to time, you may at any time Transfer to another Division all or a portion of the Account Value allocated to a Division. In addition, we do not intend to enforce the restrictions on Transfers set forth in your Policy except in cases of identified market timing unless the Sub-Account has additional restrictions that are noted in the respective Fund’s prospectus. See “Market Timing & Excessive Trading” on page 26. Certain limitations apply to Transfers into and out of the Fixed Account. See "Fixed Account Transfers" on page 26.
6. Limitations or Charges on Surrender of Policy. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. Upon surrender of your Policy, the insurance coverage and all other benefits under the Policy will terminate.
There are no surrender charges associated with your Policy. However, the surrender of your Policy may have tax consequences.
7. Risks of Taking a Policy Loan. As noted above, you may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made. The minimum Policy loan amount is $500.
Taking a Policy loan may increase the risk that your Policy will lapse, will reduce your Account Value, and may reduce the death benefit. In addition, if your Policy is a MEC for tax purposes, taking a Policy loan may have tax consequences.
8. Adverse Tax Consequences. Your Policy is structured to meet the definition of a life insurance contract under the Code. Current federal tax law generally excludes all death benefits from the gross income of the Beneficiary of a life insurance policy. Generally, you are not taxed on any increase in the Account Value until it is withdrawn, but are taxed on surrender proceeds and the proceeds of any partial withdrawals if those amounts, when added to all previous non-taxable distributions, exceed the total Premium paid. Amounts received upon surrender or withdrawals in excess of Premiums are treated as ordinary income.
Under certain circumstances, a Policy may become a MEC for federal tax purposes. This may occur if you reduce the Total Face Amount of your Policy or pay excessive Premiums. We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC without your written permission. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC, but instead will promptly refund the money to you. If you elect to have a MEC contract, you can return the money to us with a signed form of acceptance.
Under current tax law, Death Benefit Proceeds under MECs generally are excluded from the gross income of the Beneficiary. Withdrawals and Policy loans, however, are treated first as income, to the extent of any gain, and then as a return of Premium. The income portion of the distribution is includable in your taxable income and taxed at ordinary income tax rates. A 10% penalty tax is also generally imposed on the taxable portion of any amount received before age 59 ½.
9. General Account Risk. Great-West's general obligations and any guaranteed benefits under the Policy are supported by our General Account (and not by the Series Account) and are subject to Great-West's claims-paying ability. An Owner should look to the financial strength of Great-West for its claims-paying ability. Assets in the General Account are not segregated for the exclusive benefit of any particular Policy or obligation. General Account assets are also available to Great-West's general creditors and the conduct of our routine business activities, such as the payment of salaries, rent and other ordinary business expenses. For more information about Great-West's financial strength, you may review our financial statements and/or check our current rating with one or more of the independent sources that rate insurance companies for their financial strength and stability. Such ratings are subject to change and have no bearing on the performance of the Funds.
Fund Risks
The Policy currently offers several variable investment options, each of which is a Division of the Series Account. Each Division uses its assets to purchase, at their net asset value, shares of a Fund. The Divisions are referred to as “variable” because their investment experience depends upon the investment experience of the Funds in which they
invest.
We do not guarantee that the Funds will meet their investment objectives. Your Account Value may increase or decrease in value depending on the investment performance of the Funds. You bear the risk that those Funds may not meet their investment objectives. A comprehensive discussion of the risks of each Fund may be found in each Fund’s prospectus, including detailed information concerning investment objectives, strategies, and their investment risk. You may obtain a copy of the Fund prospectuses without charge by contacting us at 888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund's prospectus.
Fee Tables
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or Transfer cash value between investment options.
Transaction Fees
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Charge | When Charge is Deducted | Amount Deducted |
Maximum Expense Charge Imposed on Premium* | Upon each Premium payment | Maximum: 10% of Premium
Current: 6.0%
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Sales Load** | Upon each Premium Payment. | Maximum: 6.5% of Premium
Current: 2.5% of Premium up to target and 1.0% of Premium in excess of target |
Premium Tax**
| Upon each Premium payment | Maximum: 3.5% of Premium |
Partial Withdrawal Fee | Upon partial withdrawal | Maximum: $25 deducted from Account Value for all partial withdrawals after the first made in the same Policy Year.
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Change of Death Benefit Option Fee | Upon change of option | Maximum: $100 deducted from Account Value for each change of death benefit option.
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Transfer Fee | At time of Transfer for all Transfers in excess of 12 made in the same Policy Year
| Maximum: $10/Transfer |
Loan Interest | Upon issuance of Policy loan | Maximum: the Moody’s Corporate Bond Yield Average – Monthly Average Corporates |
* The Expense Charge consists of the Sales Load plus the Premium Tax.
** The Sales Load and Premium Tax comprise (and are not in addition to) the Expense Charge.
The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses.
Periodic Charges Other Than Fund Operating Expenses
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Charge | When Charge is Deducted | Amount Deducted |
Cost of Insurance (per $1000 Net Amount at Risk)
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Minimum & Maximum Cost of Insurance Charge
| Monthly | Guaranteed: Minimum: $0.02 per $1000. Maximum: $83.33 per $1000.
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Cost of Insurance Charge for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)
| Monthly | Guaranteed:
$0.21 per $1000.
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Mortality and Expense Risk Charge | Monthly | Guaranteed: 0.90% (of average daily net assets) annually.
Current: 0.50% for Policy Years 1-20, and 0.10% thereafter. |
Service Charge |
Monthly | Maximum: $15/month
Current: $10.00/month, Policy Years 1-3 and $7.50/month, Policy Years 4+
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Supplemental Benefit Charges
Currently, we are offering the following supplemental optional riders. The charges for the rider you select are deducted monthly from your Account Value as part of the Monthly Deduction described on page of this prospectus. The benefits provided under each rider are summarized in “Other Provisions and Benefits” beginning on page 31 below.
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Change of Insured Rider* | Upon change of Insured | Minimum: $100 per change. Maximum: $400 per change. |
Change of Insured Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)*
| | $400 per change. |
Term Life Insurance Rider | Monthly | Guaranteed: Minimum COI: $0.02 per $1000.
Maximum COI: $83.33 per $1000.
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Term Life Insurance Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) | Monthly | Guaranteed:
$0.21 per $1000. |
*/ Not available for individual Owners.
The next table shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time that you own the Policy. More detail concerning each Fund’s fee and expenses is contained in the prospectus for each Fund.
Total Annual Fund Operating Expenses1
(Expenses that are deducted from Fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses)
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| Minimum | Maximum |
Total Annual Fund Operating
| .29% | 1.87% |
THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS, WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
1 Expenses are shown as a percentage of a Fund's average net assets as of December 31, 2013. The expenses above include fees and expenses incurred indirectly by the Great-West Profile Funds and the Great-West Lifetime Funds as a result of investing in shares of acquired funds, if any. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Funds have agreed to waive their fees and/or reimburse the Funds’ expenses in order to keep the expenses below specified limits. In some cases, these expense limitations may be contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. Please see the prospectus for each Fund for information regarding the expenses for each Fund, including fee reduction and/or expense reimbursement arrangements, if applicable. The management fees and other expenses of the Funds are more fully described in the Fund prospectuses.
Description of Depositor, Registrant, and Funds
Great-West Life & Annuity Insurance Company
Great-West is a stock life insurance company organized under the laws of the state of Colorado. Our offices are located at 8515 East Orchard Road, Greenwood Village, Colorado 80111.
We are authorized to do business in 49 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on October 8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
The Series Account
The Series Account is a segregated asset account of Great-West. We use the Series Account to fund benefits payable under the Policy. The Series Account may also be used to fund benefits payable under other life insurance policies issued by us.
We own the assets of the Series Account, which we hold separate and apart from our General Account assets. The income, gains or losses, realized or unrealized, from assets allocated to the Series Account are credited to or charged against the Series Account without regard to our other income, gains or losses. The income, gains, and losses credited to, or charged against, the Series Account reflect the Series Account’s own investment experience and not the investment experience of Great-West’s other assets. The assets of the Series Account may not be used to pay any liabilities of Great-West other than those arising from the Policies (and any other life insurance policies issued by us and funded by the Series Account).
In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including Series Account assets that are treated as company assets under applicable income tax law. These benefits, which reduce our overall corporate income tax liability may include dividends received deductions and foreign tax credits which can be material. We do not pass these benefits through to the Series Account or our other separate accounts, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no reduction in the dollar amount of dividends that the Series Account receives; and (ii) under applicable income tax law, Owners are not the owners of the assets generating the benefits.
Great-West is obligated to pay all amounts promised to Owners under the Policies (and any other life insurance policies issued by us and funded by the Series Account).
We will at all times maintain assets in the Series Account with a total market value at least equal to the reserves and other liabilities relating to the variable benefits under all policies participating in the Series Account.
The Series Account is divided into Divisions. Each Division invests exclusively in shares of a corresponding Fund. We may in the future add new or delete existing Divisions. The income, gains or losses, realized or unrealized, from assets allocated to each Division are credited to or charged against that Division without regard to the other income, gains or losses of the other Divisions.
All amounts allocated to a Division will be used to purchase shares of the corresponding Fund. The Divisions will at all times be fully invested in Fund shares. We maintain records of all purchases and redemptions of shares of the Funds.
The Investment Options and Funds
The Policy offers a number of Divisions or Sub-Accounts. Each Division invests in a single Fund. Each Fund is a mutual fund registered under the Investment Company Act of 1940, as amended (the “1940 Act”), or a separate series of shares of such a mutual fund. More comprehensive information, including a discussion of potential risks, is found in the current prospectuses for the Funds. The fund prospectuses should be read in connection with this prospectus. YOU MAY OBTAIN A PROSPECTUS AND, IF AVAILABLE, A FUND SUMMARY, CONTAINING COMPLETE INFORMATION ON EACH FUND, WITHOUT CHARGE, UPON REQUEST BY CONTACTING US AT 888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund's prospectus.
Each Fund holds its assets separate from the assets of the other Funds, and each Fund has its own distinct investment objective and policies. Each Fund operates as a separate investment fund, and the income, gains and losses of one Fund generally have no effect on the investment performance of any other Fund.
The Funds are NOT available to the general public directly. The Funds are available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans.
Some of the Funds have been established by investment advisers that manage publicly available mutual funds having similar names and investment objectives. While some of the Funds may be similar to, and may in fact be modeled after publicly available mutual funds, the Funds are not otherwise directly related to any publicly available mutual fund. Consequently, the investment performance of publicly available mutual funds and any similarly named Fund may differ substantially.
Payments We Receive. Some of the Funds’ investment advisers or affiliates may compensate us for providing the administrative, recordkeeping and reporting services they would normally be required to provide for individual shareholders or cost savings experienced by the investment advisers or affiliates of the Funds. Such compensation is typically a percentage of Series Account assets invested in the relevant Fund and generally may range up to 0.35% of net assets. GWFS Equities, Inc. (“GWFS”), a broker-dealer and subsidiary of Great-West and the principal underwriter and distributor of the Policy, may also receive Rule 12b-1 fees (ranging up to 0.25%) directly from certain Funds for providing distribution related services related to shares of Funds offered in connection with a Rule 12b-1 plan. If GWFS receives 12b-1 fees, combined compensation for administrative and distribution related services generally ranges up to 0.60% annually of Series Account assets invested in a Fund.
If you purchased the Policy through a broker-dealer or other financial intermediary (such as a bank), the Funds and their related companies may pay the intermediary for services provided with regard to the sale of Fund shares to the Divisions under the Policy. The amount and/or structure of the compensation can possibly create conflict of interest as it may influence the broker-dealer or other intermediary and your salesperson to present this Policy (and certain Divisions under the Policy) over other investment alternatives. The variations in compensation, however, may also reflect differences in sales effort or ongoing customer services expected of the broker-dealer or other intermediary or your salesperson. You may ask your salesperson about variations and how he or she and his or her broker-dealer are compensated for selling the Policy or visit your financial intermediary's Web site for more information.
Payments We Make. In addition to the direct cash compensation described above for sales of the Policies, Great-West and/or its affiliates may also pay GWFS agents additional cash and non-cash incentives to promote the sale of the Policies and other products distributed by GWFS, including Funds of Great-West Funds, Inc., which are available Funds under the Policies. Great-West and/or its affiliates may sponsor various contests and promotions subject to applicable FINRA regulations in which GWFS agents may receive prizes such as travel awards, merchandise and cash. Subject to applicable FINRA regulations, Great-West and/or its affiliates may also pay for travel expenses, meals, lodging and entertainment of salespersons in connection with educational and sales promotional programs and sponsor speakers, educational seminars and charitable events.
Cash incentive payments may vary depending on the arrangement in place at any particular time. Cash incentives payable to GWFS agents may be based on certain performance measurements, including a percentage of the net amount invested in certain Funds available under the Policy. These additional payments could be viewed as creating conflicts of interest. In some cases, the payment of incentive-based compensation may create a financial incentive for a GWFS agent to recommend or sell the Policy instead of other products or recommend certain Funds under the Policy over other Funds, which may not necessarily be to your benefit.
Closed Divisions.
Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund.
Effective May 1, 2013, the Division investing in the following Fund was closed to new Owners: Invesco VI Global Health Care Fund. Owners with amounts invested in this Fund as of May 1, 2013, may continue to allocate premium payments and Transfer amounts into and out of this Division.
Effective May 1, 2014, the Divisions investing in the following Funds were closed to new Owners: Columbia VP Small Cap Value Fund and Putnam VT Global Health Care Fund. Owners with amounts invested in these Funds as of May 1, 2014, may continue to allocate premium payments and Transfer amounts into and out of these Divisions.
Fund Investment Objectives. The investment objectives of the Funds are briefly described below:
Alger Portfolios (advised by Fred Alger Management, Inc.)
Alger Small Cap Growth Portfolio (Class I-2 Shares) The Fund seeks long-term capitalization.
American Century Variable Portfolios, Inc. (advised by American Century Investment Management, Inc.)
American Century Investments VP Value Fund (Class I Shares) The Fund seeks long-term capital growth. Income is a secondary objective.
American Century Investments VP VistaSM Fund (Class I Shares) The Fund seeks long-term capital growth.
American Funds Insurance Series (advised by Capital Research and Management Company)
American Funds IS Growth Fund (Class 2 Shares) The Fund’s investment objective is to provide growth of capital.
American Funds IS Global Small Capitalization Fund (Class 2 Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS International Fund (Class 2 Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS New World Fund (Class 2 Shares) The Fund’s investment objective is long-term capital appreciation.
Columbia Variable Portfolio (advised by Columbia Management Advisers, LLC)
Small Cap Value Fund (Class 1 Shares) The Fund seeks long-term capital appreciation. Effective May 1, 2014, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Davis Variable Account Fund, Inc. (advised by Davis Selected Advisors, L.P.)
Davis Financial Fund The Fund’s investment objective is long-term growth of capital.
Davis Value Fund The Fund’s investment objective is long-term growth of capital.
Delaware VIP Trust (advised by Delaware Management Company)
Delaware VIP Small Cap Value Series (Service Shares) The Fund seeks capital appreciation.
Dreyfus Stock Index Fund (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) The Fund seeks to match the total return of the Standard & Poor's 500 Composite Stock Price Index.
Dreyfus Variable Investment Fund (advised by The Dreyfus Corporation of New York, New York)
Dreyfus VIF International Equity Portfolio (Initial Shares) The Fund seeks capital growth. Newton Capital Management Limited is the sub-adviser to this Fund.
DWS (advised by Deutsche Investment Management Americas Inc.)
DWS Variable Series II: DWS Alternative Asset Allocation VIP (Class A Shares) The Fund seeks capital appreciation. RREEF America L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Core Equity VIP (Class A Shares) The Fund seeks long-term growth of capital, current income and growth of income.
DWS Variable Series II: DWS Small Mid Cap VIP (Class A Shares) The Fund seeks long-term capital appreciation. Dreman Value Management L.L.C. is the subadviser for the Fund.
DWS Variable Series I: DWS Global Small Cap VIP (Class A Shares) (formerly known as DWS Global Small Cap Growth VIP) The Fund seeks above-average capital appreciation over the long term.
DWS Variable Series II: DWS High Income VIP (Class A Shares) The Fund seeks to provide a high level of current income.
DWS Investments VIT Funds: DWS Small Cap Index VIP (Class A Shares) The Fund seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small US companies. Northern Trust Investments, N.A. is the sub-adviser for the Fund.
Fidelity Variable Insurance Products (VIP) Fund (advised by Fidelity Management & Research Company)
Fidelity VIP Contrafund® Portfolio (Service Class 2 Shares) The Fund seeks long-term capital appreciation. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Fidelity VIP Mid Cap Portfolio (Service Class 2 Shares) The Fund seeks long-term growth of capital. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Goldman Sachs Variable Investment Trust (advised by Goldman Sachs Asset Management)
Goldman Sachs Mid Cap Value Fund (Institutional Class Shares) The Fund seeks long-term capital appreciation.
Great-West Funds, Inc. (advised by Great-West Capital Management, LLC, a wholly owned subsidiary of Great-West)
Great-West Ariel Mid Cap Value Fund The Fund seeks long-term capital appreciation.
Great-West Bond Index Fund The Fund seeks results that track the total return of the fixed income securities
that comprise the Barclays Capital Aggregate Bond Index.
Great-West Federated Bond Fund The Fund seeks to provide total return, consisting of two components: (1) changes in the market value of its portfolio holdings (both realized and unrealized appreciation); and (2) income received from its portfolio holdings.
Great-West International Index Fund The Fund seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the MSCI EAFE (Europe, Australasia, Far East) Index.
Great-West Loomis Sayles Bond Fund The Fund seeks high total investment return through a combination of current income and capital appreciation. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West Loomis Sayles Small Cap Value Fund The Fund seeks long-term capital growth. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West MFS International Value Fund The Fund seeks long-term capital growth. Massachusetts Financial Service Company is the sub-adviser to this Fund.
Great-West Money Market Fund The Fund seeks as high a level of current income as is consistent with the preservation of capital and liquidity.
Investment in the Great-West Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this Fund.
Great-West Multi-Manager Large Cap Growth Fund The Fund seeks long-term growth of capital. Pioneer Investment Management, Inc. and J.P. Morgan Investment Management, Inc. are the sub-advisers to the Fund.
Great-West Real Estate Index Fund The Fund seeks investment results, before fees and expenses, that track the total return of a benchmark index that measures the performance of publicly traded equity real estate investment trusts.
Great-West S&P MidCap 400® Index Fund The Fund seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the Standard & Poor’s MidCap 400® Index.
Great-West Short Duration Bond Fund The Fund seeks maximum total return that is consistent with preservation of capital and liquidity.
Great-West T. Rowe Price Equity Income Fund The Fund seeks substantial dividend income and also long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West T. Rowe Price Mid Cap Growth Fund The Fund seeks long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund The Fund seeks current income with capital appreciation and growth of income. Franklin Advisers, Inc. is the sub-advisor to this Fund.
Great-West U.S. Government Mortgage Securities Fund The Fund seeks the highest level of return consistent with preservation of capital and substantial credit protection.
Great-West Profile I Funds
Each of the following five Profile Funds seeks to provide an asset allocation program designed to meet certain investment goals based on an investor’s risk tolerance, investment time horizon and personal objectives.
Great-West Aggressive Profile I Fund seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments.
Great-West Moderately Aggressive Profile I Fund seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments and, to a lesser degree, fixed income securities.
Great-West Moderate Profile I Fund seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Conservative Profile I Fund seeks capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments, and, to a lesser degree, equity investments.
Great-West Conservative Profile I Fund seeks capital preservation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments.
Great-West Lifetime Funds
Great-West Lifetime 2015 Fund II -Class T The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2015, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2025 Fund II - Class T The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2025, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2035 Fund II - Class T The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2035, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2045 Fund II - Class T The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2045, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2055 Fund II - Class T The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2055, the investment objective is to seek income and, secondarily, capital growth.
Invesco Variable Insurance Funds (advised by Invesco Advisors, Inc.)
Invesco V.I. Global Real Estate Fund (Series I Shares) The Fund’s investment objective is total return through growth of capital and current income. Invesco Asset Management Limited is the sub-adviser for this Fund.
Invesco V.I. International Growth Fund (Series I Shares) The Fund’s investment objective is long-term growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares) The Fund's objective is long-term growth of capital.
Janus Aspen Series (advised by Janus Capital Management, LLC)
Janus Aspen Balanced Portfolio (Institutional Shares) The Fund seeks long-term growth of capital consistent
with preservation of capital and balanced by current income.
Janus Aspen Flexible Bond Portfolio (Institutional Shares) The Fund seeks to obtain maximum total return consistent with the preservation of capital.
Janus Aspen Forty Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Global Technology Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Overseas Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Neuberger Berman Advisers Management Trust (advised by Neuberger Berman Management Incorporated)
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) The Fund seeks growth of capital.
Neuberger Berman AMT Socially Responsive Portfolio (Class I Shares) The Fund seeks long-term growth of capital.
PIMCO Variable Insurance Trust (advised by Pacific Investment Management Company, LLC)
PIMCO VIT High Yield Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Low Duration Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Shares) The Fund seeks maximum real return, consistent with preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
Putnam Variable Trust (advised by Putnam Investment Management, LLC)
Putnam VT Equity Income Fund (Class IA Shares) The Fund seeks capital growth and current income.
Putnam VT Global Health Care Fund (Class IA Shares) The Fund seeks capital appreciation. Effective May 1, 2014, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of this Divisions.
Putnam VT High Yield Fund (Class IA Shares) The Fund seeks high current income. Capital growth is a secondary goal when consistent with achieving high current income.
Putnam VT International Growth Fund Class (IA Shares) The Fund seeks long-term capital appreciation.
Putnam VT Multi-Cap Value Fund (Class IA Shares) (formerly known as Putnam VT MidCap Value Fund) The Fund seeks capital appreciation and, as a secondary objective, current income.
Royce Capital Fund (advised by Royce & Associates, LLC)
Royce Micro-Cap Portfolio (Service Class Shares) The Fund’s investment goal is long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares) The Fund’s investment goal is long-term growth of capital.
T. Rowe Price Variable Insurance Portfolio (advised by T. Rowe Price Associates, Inc.)
T. Rowe Price Health Sciences Portfolio - Class II Shares The Fund seeks long-term capital appreciation.
Van Eck Worldwide Insurance Trust (advised by Van Eck Associates Corporation)
Van Eck VIP Global Hard Assets (Initial Class Shares) The Fund seeks long term capital appreciation by primarily investing in hard asset securities. Income is a secondary consideration.
You should contact your representative for further information on the availability of the Divisions.
Each Fund is subject to certain investment restrictions and policies that may not be changed without the approval of a majority of the shareholders of the Fund. See the Fund prospectuses for further information.
We automatically reinvest all dividends and capital gain distributions from the Funds in shares of the distributing Fund at their net asset value. The income and realized and unrealized gains or losses on the assets of each Division are separate and are credited to, or charged against, the particular Division without regard to income, gains or losses from any other Division or from any other part of our business. We will use amounts you allocate to a Division to purchase shares in the corresponding Fund and will redeem shares in the Funds to meet Policy obligations or make adjustments in reserves. The Funds are required to redeem their shares at net asset value and to make payment within seven days.
The Funds may also be available to separate accounts offering variable annuity, variable life products and qualified plans of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interests of the Series Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of Owners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Owners, including withdrawal of the Series Account from participation in the Funds that are involved in the conflict or substitution of shares of other Funds.
Voting. We are the legal owner of all shares of the Funds held in the Divisions of the Series Account. In general, you do not have a direct right to vote the Fund shares held in the Divisions of the Series Account. However, under current law, you are entitled to give us instructions on how to vote the shares held in the Divisions. At regular and special shareholder meetings, we will vote the shares held in the Divisions in accordance with those instructions received from Owners who have an interest in the respective Divisions.
We will vote shares held in each Division for which no timely instructions from Owners are received, together with shares not attributable to a Policy, in the same proportion as those shares in that Division for which instructions are received.
The number of shares in each Division for which instructions may be given by an Owner is determined by dividing the portion of the Account Value derived from participation in that Division, if any, by the value of one share of the corresponding Fund. We will determine the number as of the record date chosen by the Fund. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders' meeting.
We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in our next communication to Owners.
This description reflects our current view of applicable federal securities law. Should the applicable federal securities laws change so as to permit us to vote shares held in the Series Account in our own right, we may elect to do so.
Fixed Account
The Fixed Account is part of our General Account. We have absolute ownership of the assets in the Fixed Account. Except as limited by law, we have sole control over the investment of the General Account assets. You do not share in the investment experience of the General Account, but are allowed to allocate and transfer Account Value into the Fixed Account. We assume the risk of investment gain or loss on this amount. All assets in the General Account are subject to our general liabilities from business operations. The Fixed Account does not participate in the investment performance of the Sub-Accounts.
The Fixed Account is not registered with the SEC under the Securities Act of 1933. Neither the Fixed Account nor the General Account have been registered as an investment company under the 1940 Act. As a result, neither the Fixed Account nor the General Account are generally subject to regulation under either Act. However, certain disclosures may be subject to generally applicable provisions of the federal securities laws regarding the accuracy of statements made in registration statements.
The Fixed Account offers a guarantee of principal, after deductions for fees and expenses. We also guarantee that amounts you allocated to the Fixed Account will earn interest at a rate of at least the minimum guaranteed interest rate indicated in your Policy. We do not rely on predetermined formulas to set Fixed Account interest rates. We will review the interest rate at least once a year, but at the Company’s discretion we may reset the interest rate monthly.
The Fixed Account may not be available in all states.
Employer-Financed Insurance Purchase Arrangements--Tax and Other Legal Issues
In addition to corporations and other employers, the Policy is also available for purchase by individuals whose employers will pay some or all of the Premiums due under the Policy pursuant to an employer-financed insurance purchase arrangement. In such cases, references in this prospectus to the “Owner” of the Policy will refer to the individual and, depending on the context, references to the “payment of premiums” will refer to payments to Great-West under the Policy by the employer and/or by the employee.
Employers and employees contemplating the purchase of a Policy as a part of an employer-financed insurance purchase arrangement should consult qualified legal and tax counsel with regard to the issues presented by such a transaction. For this purpose, an employer-financed insurance purchase arrangement is a plan or arrangement which contemplates that an employer will pay one or more Premiums for the purchase of a Policy that will be owned, subject to certain restrictions, by an employee or by a person or entity designated by the employee.
The general considerations applicable to such a purchase include the following:
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1. | Payments by the employer under an employer-financed insurance purchase arrangement will only be deductible for income tax purposes when the payments are taxable to the employee with respect to whom they are made. |
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2. | Imposition of certain types of restrictions, specifically a substantial risk of forfeiture, on the purchased Policy may defer both the deductibility of the payments to the employer and their taxability to the employee. |
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3. | The payment of some or all of the Premiums by the employer may create an ERISA welfare benefit plan which is subject to the reporting, disclosure, fiduciary and enforcement provisions of ERISA. |
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4. | The payment of some or all of the Premiums by the employer will not prevent the Owner from being treated as the owner of the Policy for federal income tax purposes. |
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5. | Under some circumstances, the failure of the employer to make one or more of the planned Premiums under the Policy may cause a lapse of the Policy. |
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6. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial and tax benefits of the ownership of the Policy outweigh the costs, such as sales loads and cost of insurance charges that will be incurred as a result of the purchase and ownership of |
the Policy.
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7. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the designation of another person or entity as the owner of the Policy will have adverse consequences under applicable gift, estate, or inheritance tax laws. |
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8. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial performance of the Policy will support any planned withdrawals or borrowings under the Policy. |
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9. | In an employer-financed insurance purchase arrangement, the procedures described below on pages 26-27, which are designed to prevent or minimize market timing and excessive trading by Owners may, in certain circumstances, require us to perform standardized trade monitoring; in other circumstances such monitoring will be performed by the Fund. Certain Funds require us to provide reports of the Owner’s trading activity, if prohibited trading, as defined by the Fund, is suspected. The determination of whether there is prohibited trading based on the Funds’ definition of prohibited trading may be made by us or by the Fund. The Fund determines the restrictions imposed, which could be one of the four restrictions described on page 26 or by restricting the Owner from making Transfers into the identified Fund for the period of time specified by the Fund. |
Charges and Deductions
The Policy has insurance features and investment features, and there are costs related to each. This section describes the fees and charges that we may make under the Policy to compensate for: (1) the services and benefits we provide; (2) the costs and expenses we incur; and (3) the risks we assume. The fees and charges we deduct under this Policy may result in a profit to us.
Expense Charge Applied to Premium. We will deduct a maximum charge of 10% from each Premium payment, which is broken down as follows. A maximum of 6.5% will be deducted as sales load to compensate us in part for sales and promotional expenses in connection with selling the Policies, such as commissions, the cost of preparing sales literature, other promotional activities and other direct and indirect expenses. A maximum of 3.5% of Premium will be used to cover Premium taxes and certain federal income tax obligations resulting from the receipt of Premiums. All states and some cities and municipalities impose taxes on Premiums paid for life insurance, which generally range from 2% to 4% of Premium but may exceed 4% in some states. The amount of your state's Premium tax may be higher or lower than the amount attributable to Premium taxes that we deduct from your Premium payments.
The current expense charge applied to Premium for sales load is 2.5% of Premium up to target and 1.0% of Premium in excess of target for Policy Years 1 through 10. Your target Premium will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) which equals the maximum Premium payable under the seven-pay test such that the Policy remains compliant with 7702A of the Code. Thereafter, there is no charge for sales load. The current expense charge applied to Premium to cover our Premium taxes and the federal tax obligation described above is 3.5% in all Policy Years.
Where permitted by applicable state insurance law, if your Policy is surrendered for the Surrender Benefit (Account Value less any outstanding Policy loans and less accrued loan interest) within the first seven Policy Years, we will return a percentage of the expense charge. The return of expense charge will be a percentage of your Account Value on the date the Request for surrender was received by us at our Corporate Headquarters. This amount will be in addition to the Surrender Benefit.
The return of expense charge is based on the following:
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Policy Year | Percentage of Account Value Returned |
Year 1 | 7% |
Year 2 | 6% |
Year 3 | 5% |
Year 4 | 4% |
Year 5 | 3% |
Year 6 | 2% |
Year 7 | 1% |
Year 8 | 0% |
As described under the heading "Term Life Insurance Rider" on page 31, we may offer a term life insurance rider that may have the effect of reducing the sales charge you pay on purchasing an equivalent amount of insurance. We offer this rider in circumstances that result in the savings of sales and distribution expenses and administrative costs. To qualify, a corporation, employer, or other purchaser must satisfy certain criteria such as, for example, the number of Policies it expects to purchase and the expected Total Face Amount under all such Policies. Generally, the sales contacts and effort and administrative costs per Policy depend on factors such as the number of Policies purchased by a single Owner, the purpose for which the Policies are purchased, and the characteristics of the proposed Insureds. The amount of reduction and the criteria for qualification are related to the sales effort and administrative costs resulting from sales to a qualifying Owner. Great-West from time to time may modify on a uniform basis both the amounts of reductions and the criteria for qualification. Reductions in these charges will not be unfairly discriminatory against any person, including the affected Owners funded by the Series Account.
Mortality and Expense Risk Charge. This charge is for the mortality and expense risks we assume with respect to the Policy. It is based on an annual rate that we accrue against each Division of the Series Account on a daily basis and deduct on the first day of each Policy month by cancelling accumulation units on a pro-rata basis across all Sub-Accounts. We convert the mortality and expense risk charge into a daily rate by dividing the annual rate by 365. The mortality and expense risk charge will be determined by us from time to time based on our expectations of future interest, mortality experience, persistency, expenses and taxes, but will not exceed 0.90% annually. Currently, the charge is 0.50% for Policy Years 1 through 20 and 0.10% thereafter. On surrender and payment of the death benefit, we will deduct the pro-rata portion of the mortality and expense charge that has accrued.
Because the value of your Sub-Accounts can vary from month-to-month, the monthly deduction for the mortality and expense risk charge will also vary. If the amount the mortality and expense risk charge is insufficient to cover the costs resulting from the mortality and expense risks that we assume, we will bear the loss. If the amount we charge is more than sufficient to cover such costs, we will make a profit on the charge. To the extent that we do make a profit from this charge, we may use this profit for any corporate purpose, including the payment of administrative, marketing, distribution, and other expenses in connection with the Policies.
The mortality risk we assume is that the group of lives insured under the Policies may, on average, live for shorter periods of time than we estimated. The expense risk we assume is that the costs of issuing and administering Policies may be more than we estimated.
Monthly Deduction. We make a monthly deduction from your Account Value on the Policy Date and the first day of each Policy Month. This monthly deduction will be charged proportionally to the amounts in the Divisions.
The monthly deduction equals the sum of (1), (2), (3), (4) and (5) where:
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(1) | is the cost of insurance charge (the monthly risk charge) equal to the current monthly risk rate (described below) multiplied by the net amount at risk divided by 1,000; |
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(2) | is the service charge; |
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(3) | is the monthly cost of any additional benefits provided by riders which are a part of your Policy; |
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(4) | is any extra risk charge if the Insured is in a rated class as specified in your Policy; and |
(5) is the accrued mortality and expense charge.
The net amount at risk equals:
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• | the death benefit divided by 1.00327374; less |
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• | your Account Value on the first day of a Policy Month prior to assessing the monthly deduction. |
If there are increases in the Total Face Amount other than increases caused by changes in the death benefit option, the monthly deduction described above is determined separately for the initial Total Face Amount and each increase in the Total Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the most recent increase in the death benefit and then to each increase in the Total Face Amount in the reverse order in which the increases were made.
Monthly Risk Rates. The monthly risk rate is used to determine the cost of insurance charge (monthly risk charge) for providing insurance coverage under the Policy. The monthly risk rate is applied to the amount at risk. The monthly risk rates (except for any such rate applicable to an increase in the Total Face Amount) are based on the length of time your Policy has been in force and the Insured's sex (in the case of non-unisex Policies) and Issue Age. If the Insured is in a rated class as specified in your Policy, we will deduct an extra risk charge that reflects that class rating. The monthly risk rates applicable to each increase in the Total Face Amount are based on the length of time the increase has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age, and class rating, if any. The monthly risk rates will be determined by us from time to time based on our expectations of future experience with respect to mortality, investment earnings, persistency, capital and reserve requirements, interest rates and expenses (including taxes), but will not exceed the guaranteed maximum monthly risk rates based on the 2001 Commissioner's Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table ("2001 CSO"). Currently, the guaranteed minimum monthly risk charge is $0.02 per $1000 and the guaranteed maximum is $83.33 per $1000. If your Policy is issued in Montana, unisex rates are charged and these rates will never exceed the male Smoker Ultimate Mortality Table.
The guaranteed maximum monthly risk rates reflect any class rating applicable to the Policy. We have filed a detailed statement of our methods for computing Account Values with the insurance department in each jurisdiction where the Policy was delivered. These values are equal to or exceed the minimum required by law.
The monthly risk rate is greater on policies that require less underwriting to be performed regardless of the health of the individual. Monthly risk rate charges will be greatest on guaranteed issue policies, followed by simplified issue policies, then fully underwritten policies.
Service Charge. We will deduct a maximum of $15 from your Account Value on the first day of each Policy Month to cover our administrative costs, such as salaries, postage, telephone, office equipment and periodic reports. This charge may be increased or decreased by us from time to time based on our expectations of future expenses, but will never exceed $15 per Policy Month. The service charge will be deducted proportionally from the Divisions. The current service charge is $10 per Policy Month for Policy Years 1 through 3 and $7.50 per Policy Month thereafter.
Transfer Fee. A maximum administrative charge of $10 per Transfer of Account Value from one Division to other Divisions will be deducted from your Account Value for all Transfers in excess of 12 made in the same Policy Year. The allocation of your Initial Premium from the Great-West Money Market Division to your selected Divisions will not count toward the 12 free Transfers. Similarly, Transfers made under dollar cost averaging and periodic rebalancing under the rebalancer option are not subject to the fee and do not count as Transfers for this purpose (except a one-time rebalancing under the rebalancer option will count as one Transfer). All Transfers Requested on the same Business Day will be aggregated and counted as one Transfer. The current charge is $10 per Transfer.
Partial Withdrawal Fee. A maximum administrative fee of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. The partial withdrawal fee will be deducted proportionally from all Divisions.
Surrender Charges. Your Policy has no surrender charges.
Change of Death Benefit Option Fee. A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option. The change of death benefit fee will be deducted proportionally
from all Divisions.
Fund Expenses. You indirectly bear the charges and expenses of the Funds whose shares are held by the Divisions to which you allocate your Account Value. The Series Account purchases shares of the Funds at net asset value. Each Fund's net asset value reflects investment advisory fees and administrative expenses already deducted from the Fund's assets. For more information concerning the investment advisory fees and other charges against the Funds, see the Fund prospectuses and the statements of additional information for the Funds, which are available upon Request.
We may receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the services we provide or the cost savings resulting from the arrangement and, therefore, may differ between Funds. See "Payments We Receive" on page 14.
General Description of Policy
Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply. The Policy described in this prospectus is offered to corporations and other employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We issue Policies on the lives of prospective Insureds who meet our underwriting standards.
Policy Rights
Owner. While the Insured is alive, unless you have assigned any of these rights, you may:
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• | transfer ownership to a new Owner; |
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• | name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured; |
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• | change or revoke a contingent owner; |
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• | change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable); |
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• | exercise all other rights in the Policy; |
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• | increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and |
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• | change the death benefit option, subject to the other provisions of the Policy. |
When you transfer your rights to a new Owner, you automatically revoke any prior contingent owner designation. When you want to change or revoke a prior Beneficiary designation, you have to specify that action. You do not affect a prior Beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation.
You do not need the consent of a Beneficiary or a contingent owner in order to exercise any of your rights. However, you must give us written notice satisfactory to us of the Requested action. Your Request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before it was received by us.
Beneficiary. The Beneficiary has no rights in the Policy until the death of the Insured, except an irrevocable Beneficiary cannot be changed without the consent of that Beneficiary. If a Beneficiary is alive at that time, the Beneficiary will be entitled to payment of the Death Benefit Proceeds as they become due.
Policy Limitations
Allocation of Net Premiums. Except as otherwise described herein, your net Premium will be allocated in accordance with the allocation percentages you select. Percentages must total 100% and can be up to two decimal places.
We will credit Premium payments received prior to the end of the free look period as described in the “Free Look Period” section of this prospectus on page 34.
You may change your allocation percentages at any time by Request.
Transfers Among Divisions. Subject to our rules as they may exist from time to time, you may at any time after the Free-Look Period Transfer to another Division all or a portion of the Account Value allocated to a Division. We will make Transfers pursuant to a Request.
Transfers may be Requested by indicating the Transfer of either a specified dollar amount or a specified percentage of the Division's value from which the Transfer will be made.
Transfer privileges are subject to our consent. We reserve the right to impose limitations on Transfers, including, but not limited to: (1) the minimum amount that may be Transferred; and (2) the minimum amount that may remain in a Division following a Transfer from that Division. In addition, we do not intend to enforce the restriction on Transfers set forth in your Policy except in cases of identified market timing unless the Sub-Account has additional restrictions that are noted in the respective Fund’s prospectus. See “Market Timing & Excessive Trading” on pages 26-7.
A fee of $10 per Transfer will apply for all Transfers in excess of 12 made in a Policy Year. We may increase or decrease the Transfer charge; however, it is guaranteed to never exceed $10 per Transfer. All Transfers Requested on the same Business Day will count as only one Transfer toward the 12 free Transfers. The Transfer of your Initial Premium from the Great-West Money Market Fund Division to your selected Divisions does not count toward the 12 free Transfers. Likewise, any Transfers under dollar cost averaging or periodic rebalancing of your Account Value under the rebalancer option do not count toward the 12 free Transfers (a one time rebalancing, however, will be counted as one Transfer).
Fixed Account Transfers. Transfers into the Fixed Account are limited to once every 60 days. Transfers from the Fixed Account may only be made once per year. The maximum to be transferred out will be the greater of 25% of your balance in the Fixed Account or the amount of the transfer in the previous 365 day period.
Market Timing & Excessive Trading. The Policies are intended for long-term investment and not for the purpose of market timing or excessive trading activity. Market timing activity may dilute the interests of Owners in the Funds. Market timing generally involves frequent or unusually large transfers that are intended to take advantage of short-term fluctuations in the value of a Fund's portfolio securities and the reflection of that change in the Fund's share price. In addition, frequent or unusually large transfers may harm performance by increasing Fund expenses and disrupting Fund management strategies. For example, excessive trading may result in forced liquidations of portfolio securities or cause the Fund to keep a relatively higher cash position, resulting in increased brokerage costs and lost investment opportunities.
We maintain procedures designed to discourage market timing and excessive trading by Owners. As part of those procedures, we will rely on the Funds to monitor for such activity. If a Fund believes such activity has occurred, we will scrutinize the Owner’s activity and request a determination from the Fund as to whether such activity constitutes market timing or excessive trading. If the Fund determines that the activity constitutes market timing or excessive trading, we will contact the Owner in writing to request that market timing and/or excessive trading stop immediately. We will then provide a subsequent report of the Owner's trading activity to the Fund. If the Fund determines that the Owner has not ceased improper trading, and upon request of the Fund, we will inform the Owner in writing that a trading restriction is being implemented. The four possible trading restrictions are:
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• | Restrict the Owner to inquiry-only access for the web and voice response unit so that the Owner will only be permitted to make Transfer Requests by written Request mailed to us through U.S. mail ("U.S. Mail Restriction"); the Owner will not be permitted to make Transfer Requests via overnight mail, fax, the web, or the call center. Once the U.S. Mail Restriction has been in place for 180 days, the restricted Owner may Request that we lift the U.S. Mail Restriction by signing, dating and returning a form to us whereby the Owner acknowledges the potentially harmful effects of market timing and/or excessive trading on Funds and other investors, represents that no further market timing or excessive trading will occur, and acknowledges that we may implement further restrictions, if necessary, to stop improper trading by the Owner; |
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• | Close the applicable Fund to all new monies, including contributions and Transfers in; |
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• | Restrict all Owners to one purchase in the applicable Fund per 90 day period; or |
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• | Remove the Fund as an investment option and convert all allocations in that Fund to a different investment option. |
The discretionary nature of our procedures creates a risk that we may treat some Owners differently than others.
Our market timing and excessive trading procedures are such that we do not impose trading restrictions unless or until a Fund first detects and notifies us of potential market timing or excessive trading activity. Accordingly, we cannot prevent all market timing or excessive trading transfer activity before it occurs, as it may not be possible to identify it unless and until a trading pattern is established. To the extent the Funds do not detect and notify us of market timing and/or excessive trading or the trading restrictions we impose fail to curtail it, it is possible that a market timer or excessive trader may be able to make market timing and/or excessive trading transactions with the result that the management of the Funds may be disrupted and the Owners may suffer detrimental effects such as increased costs, reduced performance, and dilution of their interests in the affected Funds.
We endeavor to ensure that our procedures are uniformly and consistently applied to all Owners, and we do not exempt any Owners from these procedures. In addition, we do not enter into agreements with Owners whereby we permit market timing or excessive trading. Subject to applicable state law and the terms of each Policy, we reserve the right without prior notice to modify, restrict, suspend or eliminate the Transfer privileges (including telephone Transfers) at any time, to require that all Transfer Requests be made by you and not by your designee, and to require that each Transfer Request be made by a separate communication to us. We also reserve the right to require that each Transfer Request be submitted in writing and be signed by you.
The Funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. The prospectuses for the Funds should describe any such policies and procedures. The frequent trading policies and procedures of a Fund may be different, and more or less restrictive, than the frequent trading policies and procedures of other Funds and the policies and procedures we have adopted to discourage market timing and excessive trading. For example, a Fund may impose a redemption fee. Owners should also be aware that we may not have the contractual obligation or the operational capacity to apply the frequent trading policies and procedures of the respective Funds that would be affected by the Transfers.
We may revise our market timing and excessive trading policy and related procedures at our sole discretion, at any time and without prior notice, as we deem necessary or appropriate to comply with state or federal regulatory requirements or to impose additional or alternative restrictions on Owners engaging in market timing or excessive trading. In addition, our orders to purchase shares of the Funds are generally subject to acceptance by the Fund, and in some cases a Fund may reject or reverse our purchase order. Therefore, we reserve the right to reject any Owner's Transfer Request if our order to purchase shares of the Fund is not accepted by, or is reversed by, an applicable Fund.
You should note that other insurance companies and retirement plans may invest in the Funds and that those companies or plans may or may not have their own policies and procedures on frequent transfers. You should also know that the purchase and redemption orders received by the Funds generally are “omnibus” orders from intermediaries such as retirement plans or separate accounts funding variable insurance contracts. Omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of variable insurance contracts. The nature of such orders may limit the Funds' ability to apply their respective frequent trading policies and procedures. As a result, there is a risk that the Funds may not be able to detect potential market timing and/or excessive trading activities in the omnibus orders they receive. We cannot guarantee that the Funds will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that invest in the Funds. If the policies and procedures of other insurance companies or retirement plans fail to successfully discourage frequent transfer activity, it may affect the value of your investments in the Funds. In addition, if a Fund believes that an omnibus order we submit may reflect one or more Transfer Requests from an Owner engaged in frequent transfer activity, the Fund may reject the entire omnibus order and thereby interfere with our ability to satisfy your Request even if you have not made frequent transfers. For Transfers into more than one investment option, we may reject or reverse the entire Transfer Request if any part of it is not accepted by or is reversed by a Fund.
Exchange of Policy. You may exchange your Policy for a new policy issued by Great-West that does not provide for variable benefits. The new policy will have the same Policy Date, Issue Age, and Insured as your Policy on the date of the exchange. The exchange must be made within 24 Policy Months after the Issue Date of your Policy and all Policy Debt must be repaid.
The cash value of your current Policy will be applied to the new policy as the Initial Premium.
Age Requirements. An Insured's Issue Age must be between 20 and 85 for Policies issued on a fully underwritten basis and between 20 and 70 for Policies issued on a guaranteed underwriting or a simplified underwriting basis.
Policy or Registrant Changes
Addition, Deletion or Substitution of Investment Options. Shares of any or all of the Funds may not always be available for purchase by the Divisions of the Series Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, shares of other registered open-end investment companies or unit investment trusts may be substituted both for Fund shares already purchased by the Series Account and/or as the security to be purchased in the future, provided that these substitutions have been approved by the SEC, to the extent necessary. We also may close a Division to future Premium allocations and Transfers of Account Value. A Division closing may affect dollar cost averaging and the rebalancer option. We also reserve the right to add Divisions, or to eliminate or combine existing Divisions or to Transfer assets between Divisions, or from any Division to our General Account. In the event of any substitution or other act described in this paragraph, we may make appropriate amendment to the Policy to reflect the change.
The Series Account. We reserve the right to operate the Series Account in any form permitted by law, to take any action necessary to comply with applicable law or obtain and continue any exemption from applicable laws, to assess a charge for taxes attributable to the operation of the Series Account or for other taxes, as described in "Charges and Deductions" beginning on page 22 of this prospectus, and to change the way in which we assess other charges, as long as the total other charges do not exceed the maximum guaranteed charges under the Policies.
Entire Contract. Your entire contract with us consists of the Policy, including the attached copy of your application and any attached copies of supplemental applications for increases in the Total Face Amount, any endorsements and any riders. Any illustrations prepared in connection with the Policy do not form a part of our contract with you and are intended solely to provide information about how values under the Policy, such as Cash Surrender Value, death benefit and Account Value, will change with the investment experience of the Divisions, and such information is based solely upon data available at the time such illustrations are prepared.
Alteration. Sales representatives do not have any authority to either alter or modify your Policy or to waive any of its provisions. The only persons with this authority are our president, secretary, or one of our vice presidents.
Modification. Upon notice to you, we may modify the Policy if such a modification –
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• | is necessary to make the Policy or the Series Account comply with any law or regulation issued by a governmental agency to which we are, or the Series Account is, subject; |
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• | is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy; |
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• | is necessary to reflect a change in the operation of the Series Account or the Divisions; or |
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• | adds, deletes or otherwise changes Division options. |
We also reserve the right to modify certain provisions of the Policy as stated in those provisions. In the event of any such modification, we may make appropriate amendment to the Policy to reflect such modification.
Assignments. During the lifetime of the Insured, you may assign all or some of your rights under the Policy. All assignments must be filed at our Corporate Headquarters and must be in written form satisfactory to us. The assignment will then be effective as of the date you signed the form, subject to any action taken before we received it. We are not responsible for the validity or legal effect of any assignment.
Notice and Elections. To be effective, all notices and elections under the Policy must be in writing, signed by you, and received by us at our Corporate Headquarters. Certain exceptions may apply. Unless otherwise provided in the Policy, all notices, Requests and elections will be effective when received at our Corporate Headquarters complete with all necessary information.
Account Value
Your Account Value is the sum of your interests in each Division you have chosen, plus your interests in the Fixed Account, plus the amount in your Loan Account. The Account Value varies depending upon the Premiums paid, expense
charges applied to Premium, mortality and expense risk charge, service charges, monthly risk charges, partial withdrawals, fees, Policy loans and the net investment factor (described below) for the Divisions to which your Account Value is allocated and the interest credited to the Fixed Account.
We measure the amounts in the Divisions in terms of Units and Unit Values. On any given date, your interest in a Division is equal to the Unit Value multiplied by the number of Units credited to you in that Division. Amounts allocated to a Division will be used to purchase Units of that Division. Units are redeemed when you make partial withdrawals, undertake Policy loans or Transfer amounts from a Division, and for the payment of service charges, monthly mortality and expense charges, monthly risk charges and other fees. The number of Units of each Division purchased or redeemed is determined by dividing the dollar amount of the transaction by the Unit Value for the Division. The Unit Value for each Division was established at $10 for the first Valuation Date of the Division. The Unit Value for any subsequent Valuation Date is equal to the Unit Value for the preceding Valuation Date multiplied by the net investment factor (determined as provided below). The Unit Value of a Division for any Valuation Date is determined as of the close of the Valuation Period ending on that Valuation Date.
Transactions are processed on the date we receive a Premium at our Corporate Headquarters or upon approval of a Request. If your Premium or Request is received on a date that is not a Valuation Date, or after the close of the NYSE on a Valuation Date, the transaction will be processed on the next Valuation Date.
The Account Value on the Policy Date equals:
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• | that portion of net Premium received and allocated to the Division, plus |
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• | that portion of net Premium received and allocated to the Fixed Account, less |
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• | the service charges due on the Policy Date, less |
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• | the monthly risk charge due on the Policy Date, less |
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• | the monthly mortality and expense risk charge due on the Policy Date, less |
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• | the monthly risk charge for any riders due on the Policy Date. |
We apply your Initial Premium on the Policy Date, which will be the Issue Date (if we have already received your Initial Premium) or the Business Day we receive a Premium equal to, or in excess of, the Initial Premium after we have approved your application.
The Account Value attributable to each Division of the Series Account on the subsequent Valuation Dates is equal to:
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• | the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division's net investment factor, plus |
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• | that portion of net Premium received and allocated to the Division during the current Valuation Period, plus |
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• | that portion of the value of the Loan Account Transferred to the Division upon repayment of a Policy loan during the current Valuation Period, plus |
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• | any amounts Transferred by you to the Division from another Division during the current Valuation Period, less |
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• | any amounts Transferred by you from the Division to another Division during the current Valuation Period, less |
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• | that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less |
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• | that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less |
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• | that portion of fees due in connection with a partial withdrawal charged to the Division, less |
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• | the pro-rata portion of the mortality and expense risk charge accrued and charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the service charge for the Policy Month just beginning charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the monthly risk charge for the Policy Month just beginning charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the mortality and expense risk charge for the Policy Month just ending charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that Division's portion of the cost for any riders and any extra risk charge if the Insured is in a rated class as specified in your Policy, for the Policy Month just beginning. |
Net Investment Factor. The net investment factor for each Division for any Valuation Period is determined by dividing (1) by (2) where:
(1) is the net result of:
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• | the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus |
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• | the per share amount of any dividend or other distribution declared on Fund shares held in the Division if the "ex-dividend" date occurs during the current Valuation Period, plus or minus |
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• | a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the current Valuation Period which are determined by us to be attributable to the operation of the Division; and |
(2) is the net result of:
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• | the net asset value of a Fund share held in the Division determined as of the end of the preceding Valuation Period, plus or minus |
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• | a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the preceding Valuation Period which are determined by us to be attributable to the operation of the Division. |
The net investment factor may be greater or less than or equal to one. Therefore, the Unit Value may increase, decrease or remain unchanged.
The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of each Fund. These fees and expenses are not fixed or specified under the terms of the Policy, may differ between Funds, and may vary from year to year. Fund fees and expenses are described in each Fund prospectus.
The Fixed Account Value is:
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• | Premiums, less Expense Charges, allocated to the Fixed Account; plus |
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• | Sub-Account Value transferred to the Fixed Account; plus |
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• | Interest credited to the Fixed Account; minus |
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• | Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus |
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• | The portion of any accrued policy fees and charges allocated to the Fixed Account; minus |
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• | Loans from the Fixed Account; minus |
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• | Transfers from the Fixed Account, including any applicable transfer charges. |
During any Policy Month the Fixed Account Value will be calculated on a consistent basis. For purposes of crediting interest, policy value deducted, transferred or withdrawn from the Fixed Account is accounted for on a first in first out basis.
The mortality and expense risk charge for the Valuation Period is the annual mortality and expense risk charge divided by 365 multiplied by the number of days in the Valuation Period.
Splitting Units. We reserve the right to split or combine the value of Units. In effecting any such change, strict equity will be preserved and no such change will have a material effect on the benefits or other provisions of your Policy.
Other Provisions and Benefits
Misstatement of Age or Sex (Non-Unisex Policy). If the age or (in the case of a non-unisex Policy) sex of the Insured is stated incorrectly in your Policy application or rider application, we will adjust the amount payable appropriately as described in the Policy.
If we determine that the Insured was not eligible for coverage under the Policy after we discover a misstatement of the Insured's age, our liability will be limited to a return of Premiums paid, less any partial withdrawals, any Policy Debt, and the cost for riders.
Suicide. If the Insured, whether sane or insane, commits suicide within two years after your Policy's Issue Date (one year if your Policy is issued in Colorado or North Dakota), we will not pay any part of the Death Benefit Proceeds. We will pay the Beneficiary the Premiums paid, less the amount of any Policy Debt, any partial withdrawals and the cost for riders.
If the Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Total Face Amount (one year if your Policy is issued in Colorado or North Dakota), then our liability as to that increase will be the cost of insurance for that increase and that portion of the Account Value attributable to that increase. The Total Face Amount of the Policy will be reduced to the Total Face Amount that was in effect prior to the increase.
Incontestability. All statements made in the application or in a supplemental application are representations and not warranties. We relied and will continue to rely on those statements when approving the issuance, increase in face amount, increase in death benefit over Premium paid, or change in death benefit option of the Policy. In the absence of fraud, we can use no statement in defense of a claim or to cancel the Policy for misrepresentation unless the statement was made in the application or in a supplemental application. In the absence of fraud, after the Policy has been in force during the lifetime of the Insured for a period of two years from its Issue Date, we cannot contest it except for non-payment of Premiums. However, any increase in the Total Face Amount which is effective after the Issue Date will be incontestable only after such increase has been in force during the lifetime of the Insured for two years from the effective date of coverage of such increase.
Paid-Up Life Insurance. When the Insured reaches Attained Age 121 (if your Policy is in force at that time), the entire Account Value of your Policy (less outstanding Policy Debt) will be applied as a single Premium to purchase "paid-up" insurance which means all premiums have been paid and there are no additional premiums due. Outstanding Policy Debt will be repaid at this time. This repayment may be treated as a taxable distribution to you if your Policy is not a MEC. The net single Premium for this insurance will be based on the 2001 Commissioner's Standard Ordinary, Sex Distinct, Non-Smoker Mortality Table and 4% interest. The cash value of your paid-up insurance, which initially is equal to the net single Premium, will remain in the Divisions of the Series Account in accordance with your then current allocation. While the paid-up life insurance is in effect your assets will remain in the Series Account. You may change your Division allocation instructions and you may Transfer your cash value among the Divisions. All charges under your Policy, to the extent applicable, will continue to be assessed, except we will no longer make a deduction each Policy Month for the monthly risk charge. Your death benefit will be fixed by the Code for insured age 99. As your cash value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly. You may surrender the paid-up insurance Policy at any time and, if surrendered within 30 days of a Policy Anniversary, its cash value will not be less than it was on that Policy Anniversary. Please see "Federal Income Tax Considerations -- Treatment When Insured Reaches Attained Age 121" on page 42.
Supplemental Benefits. The following supplemental benefit riders are available, subject to certain limitations. An additional monthly risk charge will be assessed for each rider that is in force as part of the monthly deduction from your Account Value. If a supplemental benefit rider is terminated, the monthly risk charge for such rider will end immediately. See fee tables beginning on page 10.
Term Life Insurance Rider. This rider provides term life insurance on the Insured. Coverage is renewable annually until the Insured's Attained Age 121. The amount of coverage provided under this rider varies from month to month as described below. We will pay the rider's death benefit to the Beneficiary when we receive Due Proof of death of the Insured while this rider is in force.
This rider provides the same three death benefit options as your Policy. The option you choose under the rider must at all times be the same as the option you have chosen for your Policy. The rider's death benefit will be determined at the
beginning of each Policy Month in accordance with one of those options. For each of the options, any outstanding Policy Debt will reduce your death benefit.
If you purchase this rider, the Total Face Amount shown on your Policy's specifications page will be equal to the minimum amount of coverage provided by this rider plus the base face amount (which is the minimum death benefit under your Policy without the rider’s death benefit). The minimum allocation of Total Face Amount between your Policy and the rider is 10% and 90% at inception, respectively. The total Death Benefit Payable under the rider and the Policy will be determined as described in "Death Benefit" below, using the Total Face Amount shown on your Policy’s specifications page.
Coverage under this rider will take effect on the latter of:
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• | the Policy Date of the Policy to which this rider is attached; or |
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• | the date this rider is delivered and the first rider premium is paid to the Company |
The monthly risk rate for this rider will be the same as that used for the Policy and the monthly risk charge for the rider will be determined by multiplying the monthly risk rate by the rider's death benefit. This charge will be calculated on the first day of each Policy Month and added to the Policy's monthly risk charge.
If you purchase this rider, the sales load and return of expense charge will be proportionately lower as a result of a reduction in commission payments. Commissions payable to sales representatives for the sale of the Policy are calculated based on the total Premium payments. As a result, this rider generally is not offered in connection with any Policy with annual Premium payments of less than $100,000, except for policies issued on a guaranteed issue basis. In our discretion, we may decline to offer this rider or refuse to consent to a proposed allocation of coverage between a Policy and term rider.
If this rider is offered, the commissions will vary depending on the allocation of your coverage between the Policy and the term rider. The same initial Death Benefit will result in the highest commission when there is no term rider, with the commission declining as the portion of the Death Benefit coverage allocated to the term rider increases. Thus, the lowest commission amount is payable, and the lowest amount of sales load deducted from your Premiums will occur, when the maximum term rider is purchased.
You may terminate this rider by Request. This rider also will terminate on the earliest of the following dates:
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• | the date the Policy is surrendered or terminated; |
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• | the expiration of the grace period of the Policy; or |
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• | the death of the Insured. |
Change of Insured Rider (Not available to individual Owners). This rider permits you to change the Insured under your Policy or any Insured that has been named by virtue of this rider. Before we change the Insured you must provide us with (1) a Request for the change signed by you and approved by us; (2) Evidence of Insurability for the new Insured; (3) evidence that there is an insurable interest between you and the new Insured; (4) evidence that the new Insured's age, at the nearest birthday, is under 70 years; and (5) evidence that the new Insured was born prior to the Policy Date. We may charge a fee for administrative expenses when you change the Insured. The minimum charge is $100 per change and the maximum charge is $400 per change. When a change of Insured takes effect, Premiums will be based on the new Insured's age, sex, mortality class and the Premium rate in effect on the Policy Date.
Report to Owner. We will maintain all records relating to the Series Account and the Divisions and the Fixed Account. We will send you a report at least once each Policy Year within 30 days after a Policy Anniversary. The report will show current Account Value, current allocation in each Division, death benefit, Premiums paid, investment experience since your last report, deductions made since the last report, and any further information that may be required by laws of the state in which your Policy was issued. It will also show the balance of any outstanding Policy loans and accrued interest on such loans. There is no charge for this report.
In addition, we will send you the financial statements of the Funds and other reports as specified in the 1940 Act. We also will mail you confirmation notices or other appropriate notices of Policy transactions quarterly or more frequently within the time periods specified by law. Please give us prompt written notice of any address change. Please read your
statements and confirmations carefully and verify their accuracy and contact us promptly with any questions.
Dollar Cost Averaging. By Request, you may elect dollar cost averaging in order to purchase Units of the Divisions over a period of time. There is no charge for this service.
Dollar cost averaging permits you to automatically Transfer a predetermined dollar amount, subject to our minimum, at regular intervals from any one or more designated Divisions to one or more of the remaining, then available Divisions. The Unit Value will be determined on the dates of the Transfers. You must specify the percentage to be Transferred into each designated Division. Transfers may be set up on any one of the following frequency periods: monthly, quarterly, semiannually, or annually. The Transfer will be initiated one frequency period following the date of your Request. We will provide a list of Divisions eligible for dollar cost averaging that may be modified from time to time. Amounts Transferred through dollar cost averaging are not counted against the 12 free Transfers allowed in a Policy Year. You may not participate in dollar cost averaging and the rebalancer option (described below) at the same time. Participation in dollar cost averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. We reserve the right to modify, suspend, or terminate dollar cost averaging at any time.
Rebalancer Option. By Request, you may elect the rebalancer option in order to automatically Transfer Account Value among the Divisions on a periodic basis. There is no charge for this service. This type of transfer program automatically reallocates your Account Value so as to maintain a particular percentage allocation among Divisions chosen by you. The amount allocated to each Division will grow or decline at different rates depending on the investment experience of the Divisions. Rebalancing does not change your Premium allocation unless that option is checked on the rebalancer Request. Your Premium allocation can also be changed by written Request at the address on the first page of this prospectus.
You may Request that rebalancing occur one time only, in which case the Transfer will take place on the date of the Request. This Transfer will count as one Transfer towards the 12 free Transfers allowed in a Policy Year.
You may also choose to rebalance your Account Value on a quarterly, semiannual, or annual basis, in which case the first Transfer will be initiated one frequency period following the date of your Request. On that date, your Account Value will be automatically reallocated to the selected Divisions. Thereafter, your Account Value will be rebalanced once each frequency period. In order to participate in the rebalancer option, your entire Account Value must be included. Transfers made with these frequencies will not count against the 12 free Transfers allowed in a Policy Year.
You must specify the percentage of Account Value to be allocated to each Division and the frequency of rebalancing. You may terminate the rebalancer option at any time by Request.
You may not participate in the rebalancer option and dollar cost averaging at the same time. Participation in the rebalancer option does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate the rebalancer option at any time.
Non-Participating. The Policy does not pay dividends.
Premiums
Policy Application, Issuance and Initial Premium. To purchase a Policy, you must submit an application to our Corporate Headquarters. We will then follow our underwriting procedures designed to determine the insurability of the applicant. We may require full underwriting, which includes a medical examination and further information, before your application may be approved. We also may offer the Policy on a simplified underwriting or guaranteed issue basis. Applicants must be acceptable risks based on our applicable underwriting limits and standards. We will not issue a Policy until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application for any lawful reason or to "rate" an Insured as a substandard risk, which will result in increased monthly risk rates. The monthly risk rate also may vary depending on the type of underwriting we use.
You must specify certain information in the application, including the Total Face Amount, the death benefit option and supplemental benefits, if any. The Total Face Amount generally may not be decreased below $100,000.
Upon approval of the application, we will issue to you a Policy on the life of the Insured. A specified Initial Premium must be paid before we issue the Policy. The effective date of coverage for your Policy (which we call the "Policy Date") will be the date we receive a Premium equal to or in excess of the specified Initial Premium after we have approved your application. If your Premium payment is received on the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that month.
We generally do not accept Premium payments before approval of an application; however, at our discretion, we may elect to do so. While your application is in underwriting, if we accept your Premium payment before approval of your application, we will provide you with temporary insurance coverage in accordance with the terms of our temporary insurance agreement. In our discretion, we may limit the amount of Premium we accept and the amount of temporary coverage we provide. If we approve your application, we will allocate your Premium payment to the Series Account or Fixed Account on the Policy Date, as described below. Otherwise, we will promptly return your payment to you. We will not credit interest to your Premium payment for the period while your application is in underwriting.
We reserve the right to change the terms or conditions of your Policy to comply with differences in applicable state law. Variations from the information appearing in this prospectus due to individual state requirements are described in supplements that are attached to this prospectus or in endorsements to the Policy, as appropriate.
Free Look Period. During the free look period (ten days or longer where required by state law), you may cancel your Policy. If you exercise the free look privilege, you must return the Policy to our Corporate Headquarters or to the representative from whom you purchased the Policy.
Generally, net Premium will be allocated to the Divisions you selected on the application. However, under certain circumstances described below, the net Premium will first be allocated to the Great-West Money Market Division and remain there until the next Valuation Date following the end of the free look period. On that date, the Sub-Account value held in the Great-West Money Market Division will be allocated to the Division(s) selected by you. If your Premium payments are received after 4:00 PM EST/EDT, such payments will be credited on the next Valuation Date. Regardless of when the payment is credited, you will receive the utilized values from the date we received your payment.
During the free look period, you may change your Division allocations and your allocation percentages, however, depending on whether your state permits the immediate investment of your premium, changes made during the free look period may not take effect until after the free look period has expired.
Policies returned during the free look period will be void from the Issue Date. In some states, we will refund your current Account Value plus the return of any expense charges deducted. In those states, this amount may be higher or lower than your Premium payments, which means you bear the investment risk during the free look period.
Certain states require that we return the greater of your Account Value (less any surrenders, withdrawals and distributions already received) or the amount of the Premiums received. In those states, we will allocate your net Premium payments to the Great-West Money Market Fund Division. We will Transfer the Account Value in that Division to the other Divisions of the Series Account in accordance with your most recent allocation instructions on file at the end of the free look period.
Premium. All Premium payments must be made payable to "Great-West Life & Annuity Insurance Company" and mailed to our Corporate Headquarters. The Initial Premium will be due and payable on or before your Policy's Issue Date. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100. You may pay additional Premium payments to us in the amounts and at the times you choose, subject to the limitations described below. To find out whether your Premium payment has been received, contact us at the address or telephone number shown on the first page of this prospectus.
We reserve the right to limit the number of Premium payments we accept on an annual basis. No Premium payment may be less than $100 per Policy without our consent, although we will accept a smaller Premium payment if necessary to keep your Policy in force. We reserve the right to restrict or refuse any Premium payments that exceed the Initial Premium amount shown on your Policy. We also reserve the right not to accept a Premium payment that causes the death benefit to increase by an amount that exceeds the Premium received. Evidence of insurability satisfactory to us may be required before we accept any such Premium.
We will not accept Premium payments that would, in our opinion, cause your Policy to fail to qualify as life insurance under applicable federal tax law. If a Premium payment is made in excess of these limits, we will accept only that portion of the Premium within those limits, and will refund the remainder to you.
Net Premiums. The net Premium is the amount you pay as the Premium less any expense charges applied to Premiums. See "Charges and Deductions - - Expense Charge Applied to Premium," on page 22.
Planned Periodic Premiums. While you are not required to make additional Premium payments according to a fixed schedule, you may select a planned periodic Premium schedule and corresponding billing period, subject to our limits. We will send you reminder notices for the planned periodic Premium, unless you Request to have reminder notices suspended. You are not required, however, to pay the planned periodic Premium; you may increase or decrease the planned periodic Premium subject to our limits, and you may skip a planned payment or make unscheduled payments. Depending on the investment performance of the Divisions you select, the planned periodic Premium may not be sufficient to keep your Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of your Policy.
Death Benefits
Death Benefit. If your Policy is in force at the time of the Insured's death, we will pay the Beneficiary an amount based on the death benefit option you select once we have received Due Proof of the Insured's death. The amount payable will be:
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• | the amount of the selected death benefit option, less |
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• | the value of any Policy Debt on the date of the Insured's death, less |
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• | any accrued and unpaid Policy charges. |
We will pay this amount to the Beneficiary in one lump sum, unless the Beneficiary and we agree on another form of settlement. We will pay interest, at a rate not less than that required by law, on the amount of Death Benefit Proceeds, if payable in one lump sum, from the date of the Insured's death to the date of payment.
In order to meet the definition of life insurance under the Code, section 7702 of the Code defines alternative testing procedures for the minimum death benefit under a Policy. See "Federal Income Tax Considerations - Tax Status of the Policy," on page 39. Your Policy must qualify under the cash value accumulation test (“CVAT”).
Under the CVAT testing procedures, there is a minimum death benefit required at all times equal to your Account Value multiplied by a pre-determined factor. The factors used to determine the minimum death benefit vary by age. The factors (expressed as percentages) used for the CVAT are set forth in your Policy.
The Policy has two death benefit options.
Option 1. The "Level Death" Option. Under this option, the death benefit is –
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• | the Policy's Total Face Amount on the date of the Insured's death less any partial withdrawals; or, if greater, |
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• | the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to minimize your cost of insurance (monthly risk charge).
Option 2. The "Coverage Plus" Option. Under this option, the death benefit is –
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• | the sum of the Total Face Amount and Account Value of the Policy on the date of the Insured's death less any partial withdrawals; or, if greater, |
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• | the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to maximize your death benefit.
Your Account Value and death benefit fluctuate based on the performance of the investment options you select and the expenses and deductions charged to your account. See the “Account Value” and “Charges and Deductions” sections of this prospectus.
There is no minimum death benefit guarantee associated with this Policy.
Changes in Death Benefit Option. After the first Policy Year, but not more than once each Policy Year, you may change the death benefit option by Request. Any change will be effective on the first day of the Policy Month following the date we approve your Request. A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option.
A change in the death benefit option will not change the amount payable upon the death of the Insured on the date of change. Any change is subject to the following conditions:
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• | If the change is from option 1 to option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the Account Value. Evidence of insurability may be required. |
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• | If the change is from option 2 to option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the Account Value. |
Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time within certain limits.
Minimum Changes. Each increase or decrease in the Total Face Amount must be at least $25,000. We reserve the right to change the minimum amount by which you may change the Total Face Amount.
Increases in Total Face Amount. To Request an increase in Total Face Amount, you must provide satisfactory evidence of the Insured's insurability. Once approved by us, an increase will become effective on the Policy Anniversary following our approval of your Request, subject to the deduction of the first Policy Month's monthly risk charge, service charge, any extra risk charge if the Insured is in a rated class and the cost of any riders.
Each increase to the Total Face Amount is considered to be a new segment to the Policy. When an increase is approved, Premium is allocated against the original Policy segment up to the seven-pay Premium limit established on the Issue Date. Any excess Premium is then allocated toward the new segment. Each segment will have a separate target Premium associated with it. The expense charge applied to Premium is higher up to target and lower for Premium in excess of the target as described in detail in the “Charges and Deductions” section of this prospectus. The expense charge formula will apply to each segment based on the target Premium for that segment. In addition, each segment will have a new incontestability period and suicide exclusion period as described in the "Other Provisions and Benefits" section of this prospectus.
Decreases in Total Face Amount. A decrease in Total Face Amount will become effective at the beginning of the next Policy Month following our approval of your Request. The Total Face Amount after the decrease must be at least $100,000.
For purposes of the incontestability provision of your Policy, any decrease in Total Face Amount will be applied in the following order:
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• | first, to the most recent increase; |
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• | second, to the next most recent increases, in reverse chronological order; and |
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• | finally, to the initial Total Face Amount. |
Surrenders and Withdrawals
Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate. To surrender your Policy, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork
necessary for you to Request the surrender of your Policy. The proceeds of a surrender will be payable within seven days of our receipt of the completed Request.
We will determine your Cash Surrender Value (minus any charges not previously deducted) as of the end of the first Valuation Date after we receive your Request for surrender.
If you withdraw part of the Cash Surrender Value, your Policy's death benefit will be reduced and you may incur taxes and tax penalties.
You may borrow from us using your Account Value as collateral.
A surrender may have tax consequences, including tax penalties. See “Federal Income Tax Considerations – Tax Treatment of Policy Benefits,” beginning on page 40 of this prospectus.
Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A partial withdrawal fee will be deducted from your Account Value for all partial withdrawals after the first made during the same Policy Year. This administrative fee is guaranteed to be no greater than $25. To Request a partial withdrawal, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork necessary for you to request a withdrawal from your Policy. The proceeds of any such partial withdrawal will be payable within seven days of our receipt of the completed Request.
The Death Benefit Proceeds will be reduced by the amount of any partial withdrawals.
Your Account Value will be reduced by the amount of a partial withdrawal. The amount of a partial withdrawal will be withdrawn from the Divisions and the Fixed Account in proportion to the amounts in the Divisions and the Fixed Account bearing on your Account Value. You cannot repay amounts taken as a partial withdrawal. Any subsequent payments received by us will be treated as additional Premium payments and will be subject to our limitations on Premiums.
A partial withdrawal may have tax consequences. See "Federal Income Tax Considerations - - Tax Treatment of Policy Benefits," beginning on page 40 of this prospectus.
Loans
Policy Loans. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made less any accrued loan interest and less the current monthly deductions remaining for the balance of the Policy Year. When a Policy loan is made, a portion of your Account Value equal to the amount of the Policy loan will be allocated to the Loan Account as collateral for the loan. This amount will not be affected by the investment experience of the Series Account while the loan is outstanding and will be subtracted from the Divisions in proportion to the amounts in the Divisions bearing on your Account Value. The minimum Policy loan amount is $500.
The interest rate on the Policy loan will be determined annually, using a simple interest formula, at the beginning of each Policy Year. Specific loan interest rate information can be obtained by calling 1-888-353-2654. That interest rate will be guaranteed for that Policy Year and will apply to all Policy loans outstanding during that Policy Year. Interest is due and payable on each Policy Anniversary. Interest not paid when due will be added to the principal amount of the loan and will bear interest at the loan interest rate.
Presently, the maximum interest rate for Policy loans is the Moody's Corporate Bond Yield Average - Monthly Average Corporates, which is published by Moody's Investor Service, Inc. If the Moody’s Corporate Bond Yield Average ceases to be published, the maximum interest rate for Policy loans will be derived from a substantially similar average adopted by your state's Insurance Commissioner.
We must reduce our Policy loan interest rate if the maximum loan interest rate is lower than the loan interest rate for the previous Policy Year by one-half of one percent or more.
We may increase the Policy loan interest rate but such increase must be at least one-half of one percent. No increase may be made if the Policy loan interest rate would exceed the maximum loan interest rate. We will send you advance notice of any increase in the Policy loan rate.
Interest will be credited to amounts held in the Loan Account using a compound interest formula. The rate will be no less than the Policy loan interest rate then in effect less a maximum of 0.9%.
All payments we receive from you will be treated as Premium payments unless we have received notice, in form satisfactory to us, that the funds are for loan repayment. If you have a Policy loan, it is generally advantageous to repay the loan rather than make a Premium payment because Premium payments incur expense charges whereas loan repayments do not. Loan repayments will first reduce the outstanding balance of the Policy loan and then accrued but unpaid interest on such loans. We will accept repayment of any Policy loan at any time while the Policy is in force. Amounts paid to repay a Policy loan will be allocated to the Divisions in accordance with your allocation instructions then in effect at the time of repayment. Any amount in the Loan Account used to secure the repaid loan will be allocated back to the Sub-Accounts.
A Policy loan, whether or not repaid, will affect the Death Benefit Proceeds, payable upon the Insured's death, and the Account Value because the investment results of the Divisions do not apply to amounts held in the Loan Account. The longer a loan is outstanding, the greater the effect is likely to be, depending on the investment results of the Divisions while the loan is outstanding. The effect could be favorable or unfavorable.
Lapse and Reinstatement
Lapse and Continuation of Coverage. If you cease making Premium payments, coverage under your Policy and any riders to the Policy will continue until your Account Value, less any Policy Debt, is insufficient to cover the monthly deduction. When that occurs, the grace period will go into effect.
Grace Period. If the first day of a Policy Month occurs during the Valuation Period and your Account Value, less any Policy Debt, is not sufficient to cover the monthly deduction for that Policy Month, then your Policy will enter the grace period described below. If you do not pay sufficient additional Premiums during the grace period, your Policy will terminate without value.
The grace period will allow 61 days for the payment of Premium sufficient to keep the Policy in force. Any such Premium must be in an amount sufficient to cover deductions for the monthly risk charge, the service charge, the cost for any riders and any extra risk charge if the Insured is in a rated class for the next two Policy Months. Notice of Premium due will be mailed to your last known address or the last known address of any assignee of record at least 31 days before the date coverage under your Policy will cease. If the Premium due is not paid within the grace period, then the Policy and all rights to benefits will terminate without value at the end of the 61-day period. The Policy will continue to remain in force during this grace period. If the Death Benefit Proceeds become payable by us during the grace period, then any due and unpaid Policy charges will be deducted from the amount payable by us.
Termination of Policy. Your Policy will terminate on the earliest of the date we receive your Request to surrender, the expiration date of the grace period due to insufficient value or the date of death of the Insured. Upon lapse or termination, the Policy no longer provides insurance benefits.
Reinstatement. Before the Insured's death, we will reinstate your Policy, provided that the Policy has not been surrendered, and provided further that:
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• | you make your reinstatement Request within three years from the date of termination; |
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• | you submit satisfactory Evidence of Insurability to us; |
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• | you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period; |
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• | you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and |
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• | you repay or reinstate any Policy loan that was outstanding on the date coverage ceased, including interest at 6.00% per year compounded annually from the date coverage ceased to the date of reinstatement of your Policy. |
A reinstated Policy's Total Face Amount may not exceed the Total Face Amount at the time of termination. Your Account Value on the reinstatement date will reflect:
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• | the Account Value at the time of termination; plus |
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• | net Premiums attributable to Premiums paid to reinstate the Policy; less |
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• | the monthly expense charge; less |
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• | the monthly cost of insurance charge applicable on the date of reinstatement; less |
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• | The expense charge applied to Premium. |
The effective date of reinstatement will be the date the application for reinstatement is approved by us.
Deferral of Payment. We will usually pay any amount due from the Series Account within seven days after the Valuation Date following your Request giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment of any amount payable from the Series Account on death, surrender, partial withdrawal, or Policy loan may be postponed whenever:
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• | the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted; |
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• | the SEC, by order, permits postponement for the protection of Owners; or |
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• | an emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonably practicable, or it is not reasonably practicable to determine the value of the assets of the Series Account. |
Federal Income Tax Considerations
The following summary provides a general description of the federal income tax considerations associated with the Policy and does not purport to be complete or to cover all situations. This discussion is not intended as tax advice. You should consult counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the Internal Revenue Service’s (the "IRS") current interpretation of current federal income tax laws. We make no representation as to the likelihood of continuation of the current federal income tax laws or of the current interpretations by the IRS. We do not make any guarantee regarding the tax status of any Policy or any transaction regarding the Policy.
The Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the use of the Policy in any such arrangement is contemplated, you should consult a qualified tax adviser for advice on the tax attributes and consequences of the particular arrangement.
Tax Status of the Policy
A Policy has certain tax advantages when treated as a life insurance contract within the meaning of section 7702 of the Code. We believe that the Policy meets the section 7702 definition of a life insurance contract and will take whatever steps are appropriate and reasonable to attempt to cause the Policy to comply with section 7702. We reserve the right to amend the Policy to comply with any future changes in the Code, any regulations or rulings under the Code and any other requirements imposed by the IRS.
Diversification of Investments. Section 817(h) of the Code requires that the investments of each Division of the Series Account be "adequately diversified" in accordance with certain Treasury Department regulations. Disqualification of the Policy as a life insurance contract for failure to comply with the diversification requirements would result in the imposition on you of federal income tax at ordinary income tax rates with respect to the earnings allocable to the Policy in the year of the failure and all prior years prior to the receipt of payments under the Policy. We believe that the Divisions will be adequately diversified.
Policy Owner Control. In connection with its issuance of temporary and proposed regulations under Section 817(h) in 1986, the Treasury Department announced that those regulations did not "provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor (i.e., the Owner), rather than the insurance company to be treated as the owner of the assets in the account" (which would result in the current taxation of the income on those assets to the Owner). In Revenue Ruling 2003-91, the IRS provided such guidance by describing the circumstances under which the owner of a variable contract will not possess sufficient control over the assets underlying the contract to be treated as the owner of those assets for federal income tax purposes. Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract is to be treated as the owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances. We do not believe that your ownership rights under the Policy would result in your being treated as the Owner of the assets of the Policy under Rev. Rul. 2003-91. However, we do not know whether additional guidance will be provided by the IRS on this issue and what standards may be contained in such guidance. Therefore, we reserve the right to modify the Policy as necessary to attempt to prevent an Owner from being considered the owner of a pro rata share of the assets of the Policy.
The following discussion assumes that your Policy will qualify as a life insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
Life Insurance Death Benefit Proceeds. In general, the amount of the Death Benefit Payable under your Policy is excludible from your Beneficiary’s gross income under the Code.
If the death benefit is not received in a lump sum and is, instead, applied under a proceeds option agreed to by us and the Beneficiary, payments generally will be prorated between amounts attributable to the death benefit, which will be excludible from the Beneficiary's income, and amounts attributable to interest (occurring after the Insured's death), which will be includable in the Beneficiary's income.
Tax Deferred Accumulation. Any increase in your Account Value is generally not taxable to you. If you receive or are deemed to receive amounts from the Policy before the Insured dies, see the following section entitled “Distributions” for a more detailed discussion of the taxability of such payments.
Depending on the circumstances, any of the following transactions may have federal income tax consequences:
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• | the exchange of a Policy for a life insurance, endowment or annuity contract; |
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• | a change in the death benefit option; |
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• | a change in the ownership of a Policy; |
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• | a change of the named Insured; or |
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• | an assignment of a Policy. |
In addition, federal, state and local transfer and other tax consequences of ownership or receipt of Death Benefit Proceeds will depend on your circumstances and those of the named Beneficiary. Whether partial withdrawals (or other amounts deemed to be distributed) constitute income subject to federal income tax depends, in part, upon whether your Policy is considered a MEC.
Surrenders. If you surrender your Policy, you will recognize ordinary income to the extent the Account Value exceeds the "investment in the contract," which is generally the total of Premiums and other consideration paid for the Policy, less all amounts previously received under the Policy to the extent those amounts were excludible from gross income.
Modified Endowment Contracts. Section 7702A of the Code treats certain life insurance contracts as MECs. In general, a Policy will be treated as a MEC if total Premiums paid at any time during the first seven Policy Years exceed the sum of the net level Premiums which would have been paid on or before that time if the Policy provided for paid-up future benefits after the payment of seven level annual Premiums ("seven-pay test"). In addition, a Policy may be treated as a MEC if there is a "material change" to the Policy.
We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC without instruction to do so from you. We will promptly notify you or your agent of the excess cash received. We will not process the Premium payment unless we receive a MEC acceptance form or Policy change form within 48 hours of receipt of the excess funds. If paperwork is received that allows us to process the excess cash, the effective date will be the date of the new paperwork.
Further, if a transaction occurs which decreases the Total Face Amount of your Policy during the first seven years, we will retest your Policy, as of the date of its purchase, based on the lower Total Face Amount to determine compliance with the seven-pay test. Also, if a decrease in Total Face Amount occurs within seven years of a "material change," we will retest your Policy for compliance as of the date of the "material change." Failure to comply in either case would result in the Policy's classification as a MEC regardless of our efforts to provide a payment schedule that would not otherwise violate the seven-pay test.
The rules relating to whether a Policy will be treated as a MEC are complex and cannot be fully described in the limited confines of this summary. Therefore, you should consult with a competent tax adviser to determine whether a particular transaction will cause your Policy to be treated as a MEC.
Distributions
Distributions Under a Policy That Is Not a MEC. If your Policy is not a MEC, a distribution is generally treated first as a tax-free recovery of the "investment in the contract," and then as a distribution of taxable income to the extent the distribution exceeds the "investment in the contract." An exception is made for cash distributions that occur in the first 15 Policy Years as a result of a decrease in the death benefit or other change that reduces benefits under the Policy that are made for purposes of maintaining compliance with section 7702. Such distributions are taxed in whole or part as ordinary income (to the extent of any gain in the Policy) under rules prescribed in section 7702.
If your Policy is not a MEC, Policy loans and loans secured by the Policy are generally not treated as distributions. Such loans are instead generally treated as your indebtedness.
Finally, if your Policy is not a MEC, distributions (including distributions upon surrender), Policy loans and loans secured by the Policy are not subject to the ten percent additional tax applicable to distributions from a MEC.
Distributions Under Modified Endowment Contracts. If treated as a MEC, your Policy will be subject to the following tax rules:
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• | First, partial withdrawals are treated as ordinary income subject to ordinary income tax up to the amount equal to the excess (if any) of your Account Value immediately before the distribution over the "investment in the contract" at the time of the distribution. |
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• | Second, Policy loans and loans secured by a Policy are treated as partial withdrawals and taxed accordingly. Any past-due loan interest that is added to the amount of the loan is treated as a loan. |
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• | Third, a ten percent additional penalty tax is imposed on that portion of any distribution (including distributions upon surrender), Policy loans, or loans secured by a Policy, that is included in income, except where the distribution or loan is made to a taxpayer that is a natural person, and: |
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1. | is made when the taxpayer is age 59½ or older; |
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2. | is attributable to the taxpayer becoming disabled; or |
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3. | is part of a series of substantially equal periodic payments (not less frequently than annually) for the duration of the taxpayer’s life (or life expectancy) or for the duration of the longer of the taxpayer’s or the Beneficiary's life (or life expectancies). |
Multiple Policies. All MECs issued by us (or our affiliates) to you during any calendar year will be treated as a single MEC for purposes of determining the amount of a Policy distribution that is taxable to you.
Treatment When Insured Reaches Attained Age 121. As described above, when the Insured reaches Attained Age 121, we will issue you a "paid-up" life insurance Policy. We believe that the paid-up life insurance Policy will continue to qualify as a "life insurance contract" under the Code. However, there is some uncertainty regarding this treatment. It is possible, therefore, that you would be viewed as constructively receiving the Cash Surrender Value in the year in which the Insured attains age 121 and would realize taxable income at that time, even if the Death Benefit Proceeds were not distributed at that time. In addition, any outstanding Policy Debt will be repaid at that time. This repayment may be treated as a taxable distribution to you, if your contract is not a MEC.
The IRS has issued Revenue Procedure 2010-28 providing a safe harbor concerning the application of Sections 7702 and 7702A to life insurance contracts that have mortality guarantees based on the 2001 CSO Table and which may continue in force after an insured attains age 100. If a contract satisfies all the requirements of Sections 7702 and 7702A using all of the Age 100 Safe Harbor Testing Method requirements set forth in Rev. Proc. 2010-28, the IRS will not challenge the qualification of that contract under Sections 7702 and 7702A. Rev. Proc. 2010-28 also states that “No adverse inference should be drawn with respect to the qualification of a contract as a life insurance contract under §7702, or its status as not a MEC under §7702A, merely by reason of a failure to satisfy all of the requirements of [the Age 100 Safe Harbor].”
Federal Income Tax Withholding. We are required to withhold 10% on that portion of a Policy distribution that is taxable, unless you direct us in writing not to do so at or before the time of the Policy distribution. As the Owner you are responsible for the payment of any taxes and early distribution penalties that may be due on Policy distributions.
Beginning in 2014, we may be required to withhold at a rate of 30% under the Foreign Account Tax Compliance Act ("FATCA") on certain distributions to foreign financial institutions and non-financial foreign entities holding accounts on behalf of and/or the assets of U.S. persons unless the foreign entities provide us with certain certifications regarding their status under FATCA on the applicable IRS forms. Prospective purchasers with accounts in foreign financial institutions or non-financial foreign entities are advised to consult with a competent tax advisor regarding the application of FATCA to their purchase situation.
Actions to Ensure Compliance with the Tax Law. We believe that the maximum amount of Premiums we intend to permit for the Policies will comply with the Code definition of a "life insurance contract." We will monitor the amount of your Premiums, and, if you pay a Premium during a Policy Year that exceeds those permitted by the Code, we will promptly refund the Premium or a portion of the Premium before any allocation to the Funds. We reserve the right to increase the death benefit (which may result in larger charges under a Policy) or to take any other action deemed necessary to ensure the compliance of the Policy with the federal tax definition of a life insurance contract.
Trade or Business Entity Owns or Is Directly or Indirectly a Beneficiary of the Policy. Where a Policy is owned by other than a natural person, the Owner's ability to deduct interest on business borrowing unrelated to the Policy can be impacted as a result of its ownership of cash value life insurance. No deduction will be allowed for a portion of a taxpayer's otherwise deductible interest expense unless the Policy covers only one individual, and such individual is, at the time first covered by the Policy, a 20 percent owner of the trade or business entity that owns the Policy, or an officer, director, or employee of such trade or business.
Although this limitation generally does not apply to Policies held by natural persons, if a trade or business (other than one carried on as a sole proprietorship) is directly or indirectly the Beneficiary under a Policy (e.g., pursuant to a split-dollar agreement), the Policy will be treated as held by such trade or business. The effect will be that a portion of the trade or business entity's deduction for its interest expenses will be disallowed unless the above exception for a 20 percent owner, employee, officer or director applies.
The portion of the entity's interest deduction that is disallowed will generally be a pro rata amount which bears the same ratio to such interest expense as the taxpayer's average unborrowed cash value bears to the sum of the taxpayer's average unborrowed cash value and average adjusted bases of all other assets. Any corporate or business use of the life insurance should be carefully reviewed by your tax adviser with attention to these rules as well as any other rules and possible tax law changes that could occur with respect to corporate-owned life insurance.
In Revenue Ruling 2011-9, the IRS held that the status of an insured as an employee “at the time first covered” for purposes of Section 264(f) does not carry over from a contract given up in a Section 1035 tax-free exchange to a contract received in such an exchange. Therefore, the pro rata interest expense disallowance exception of Section 264(f)(4) does not apply to new Policies received in Section 1035 tax-free exchanges unless such Policies also qualify for the exception provided by Section 264(f)(4) of the Code.
Employer-Owned Life Insurance. The Pension Protection Act of 2006 added a new section to the Code that denies the tax-free treatment of death benefits payable under an employer-owned life insurance contract unless certain notice and consent requirements are met and either (1) certain rules relating to the insured employee’s status are satisfied or (2) certain rules relating to the payment of the “amount received under the contract” to, or for the benefit of, certain beneficiaries or successors of the insured employee are satisfied. The new rules apply to life insurance contracts owned by corporations (including S corporations), individual sole proprietors, estates and trusts and partnerships that are engaged in a trade or business. Any business contemplating the purchase of a Policy on the life of an employee should consult with its legal and tax advisers regarding the applicability of the new legislation to the proposed purchase.
Split Dollar Life Insurance. A tax adviser should also be consulted with respect to the split dollar regulations if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. Any business contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax adviser.
Alternative Minimum Tax. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal corporate alternative minimum tax, if the policy owner is subject to that tax.
Other Employee Benefit Programs. Complex rules may apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of employee benefits. These Policy owners also must consider whether the Policy was applied for by, or issued to, a person having an insurable interest under applicable state law, as the lack of insurable interest may, among other things, affect the qualification of the Policy as life insurance for federal income tax purposes and the right of the Beneficiary to death benefits. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult your legal advisor.
Policy Loan Interest. Generally, no tax deduction is allowed for interest paid or accrued on any indebtedness under a Policy.
Change of Insured Rider. The Company makes no representations concerning the tax effects of the change of insured rider. Owners are responsible for seeking tax counsel regarding the tax effects of the Rider. The Company reserves the right to refund cash value exceeding allowable limits for tax exempt purposes, or that would be charged as current interest income to Owners.
Investment Income Surtax. In taxable years beginning in 2013, taxable distributions from life insurance policies are considered “investment income” for purposes of the newly enacted Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts as follows: an amount equal to the lesser of (a) “net investment income”; or (b) the excess of a taxpayer’s modified adjusted gross income over a specified income threshold ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for everyone else). The IRS has issued regulations that treat taxable distributions from life insurance policies as “Net investment income.” Please consult the impact of the Investment Income Surtax on you with a competent tax advisor.
Our Taxes. We are taxed as a life insurance company under part I of subchapter L of the Code. The operations of the Series Account are taxed as part of our operations. Investment income and realized capital gains are not taxed to the extent that they are applied under the Policies. As a result of the Omnibus Budget Reconciliation Act of 1990, we are generally required to capitalize and amortize certain Policy acquisition expenses over a ten year period rather than currently deducting such expenses. This so-called "deferred acquisition cost" tax ("DAC tax") applies to the deferred acquisition expenses of a Policy and results in a significantly higher corporate income tax liability for Great-West. We reserve the right to adjust the amount of a charge to Premium to compensate us for these anticipated higher corporate
income taxes.
A portion of the expense charges applied to Premium is used to offset the federal, state or local taxes that we incur which are attributable to the Series Account or the Policy. We reserve the right to adjust the amount of this charge.
Summary.
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• | We do not make any guarantees about the Policy's tax status. |
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• | We believe the Policy will be treated as a life insurance contract under federal tax laws. |
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• | Death benefits generally are not subject to federal income tax. |
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• | Investment gains are normally not taxed unless distributed to you before the Insured dies. |
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• | If you pay more Premiums than permitted under the seven-pay test, your Policy will be a MEC. |
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• | If your Policy becomes a MEC, partial withdrawals, Policy loans and surrenders may incur taxes and tax penalties. |
Corporate Tax Shelter Requirements
The Company does not believe that any purchase of a Policy by an Owner pursuant to this offering will be subject to the tax shelter registration, customer list or reporting requirements under the Code and implementing regulations. All Owners that are corporations are advised to consult with their own tax and/or legal counsel and advisers, to make their own determination as to the applicability of the disclosure requirements of IRC § 6011 and Treas. Reg. Section 1.6011-4 to their federal income tax returns.
Legal Proceedings
There are no pending legal proceedings that would have an adverse material effect on the Series Account or on GWFS. Great-West is engaged in various kinds of routine litigation that, in our judgment, is not material to its total assets or material with respect to the Series Account.
Legal Matters
Pursuant to Commodity Futures Trading Commission Rule 4.5, Great-West has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Therefore, it is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
Beverly A. Byrne, Senior Vice President, Legal and Chief Compliance Officer of Great-West, has passed upon all matters of Colorado law pertaining to the Policy, including the validity of the Policy and our right to issue the Policy under Colorado law. The law firm of Carlton Fields Jorden Burt, P.A., 1025 Thomas Jefferson St., N.W., Suite 400 East, Washington, D.C. 20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
Abandoned Property Requirements
Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including proceeds of life insurance policies) under various circumstances. This “escheatment” is revocable, however, and the state is obligated to pay the applicable proceeds if the property owner steps forward to claim it with the proper documentation. To help prevent such escheatment, it is important that you keep your policy and other information on file with us up to date, including the names, contact information, and identifying information for owners, beneficiaries, and other payees. Such updates should be communicated by writing to the Company at 8515 E. Orchard Road, 9T2, Greenwood Village, CO 80111, by calling 888-353-2654, by sending an email to gwexecbenefits@greatwest.com or via the web at www.greatwest.com/executivebenefits.
Financial Statements
Great-West's consolidated financial statements, which are included in the Statement of Additional Information (“SAI”),
should be considered only as bearing on our ability to meet our obligations with respect to the death benefit and our assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares held in the Series Account.
Appendix A – Glossary of Terms
Unless otherwise defined in this prospectus, capitalized terms shall have the meaning set forth below.
Account Value – The sum of the value of your interests in the Divisions, the Fixed Account and the Loan Account. This amount reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan Account balance; and (5) the charges we deduct under the Policy.
Attained Age – The age of the Insured, nearest birthday, as of the Policy Date and each Policy Anniversary thereafter.
Beneficiary – The person(s) named by the Owner to receive the Death Benefit Proceeds upon the death of the Insured.
Business Day – Any day that we are open for business. We are open for business every day that the NYSE is open for trading.
Cash Surrender Value – is equal to:
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(a) | Account Value on the effective date of the surrender; less |
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(b) | outstanding Policy loans and accrued loan interest, if any; less |
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(c) | any monthly cost of insurance charges. |
Corporate Headquarters – Great-West Life & Annuity Insurance Company, 8515 East Orchard Road, Greenwood Village, Colorado 80111, or such other address as we may hereafter specify to you by written notice.
Death Benefit Proceeds – The amount determined in accordance with the terms of the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt, and increased by the amounts payable under any supplemental benefits.
Divisions – Divisions into which the assets of the Series Account are divided, each of which corresponds to and contains shares of a Fund. Divisions may also be referred to as "investment divisions" or "sub-accounts" in the prospectus, SAI or Series Account financial statements.
Due Proof – Such evidence as we may reasonably require in order to establish that Death Benefit Proceeds are due and payable.
Effective Date – The date on which the first Premium payment is credited to the Policy.
Evidence of Insurability – Information about an Insured that is used to approve or reinstate this Policy or any additional benefit.
Fixed Account – A division of our General Account that provides a fixed interest rate. This account is not part of and does not depend on the investment performance of the Sub-Accounts.
Fund – An underlying mutual fund in which a Division invests. Each Fund is an investment company registered with the SEC or a separate investment series of a registered investment company.
General Account – All of our assets other than those held in a separate investment account.
Initial Premium – The initial Premium amount specified in a Policy.
Insured – The person whose life is insured under the Policy.
Issue Age – The Insured’s age as of the Insured’s birthday nearest the Policy Date.
Issue Date – The date on which we issue a Policy.
Loan Account – All outstanding loans plus credited loan interest held in the General Account of the Company. The
Loan Account is not part of the Series Account.
Loan Account Value – The sum of all outstanding loans plus credited loan interest for this Policy.
MEC – Modified Endowment Contract. For more information regarding MECs, see “Modified Endowment Contracts” on page 41.
NYSE – New York Stock Exchange.
Owner – The person(s) named in the application who is entitled to exercise all rights and privileges under the Policy, while the Insured is living. The purchaser of the Policy will be the Owner unless otherwise indicated in the application.
Policy Anniversary – The same day in each succeeding year as the day of the year corresponding to the Policy Date.
Policy Date – The effective date of coverage under this Policy. The Policy Months, Policy Years and Policy Anniversaries are measured from the Policy Date.
Policy Debt – The principal amount of any outstanding loan against the Policy plus accrued but unpaid interest on such loan.
Policy Month – The one-month period commencing on the same day of the month as the Policy Date.
Policy Year – The one-year period commencing on the Policy Date or any Policy Anniversary and ending on the next Policy Anniversary.
Premiums – Amounts received and allocated to the Sub-Account(s) and the Fixed Account prior to any deductions.
Request – Any instruction in a form, written, telephoned or computerized, satisfactory to the Company and received in good order at the Corporate Headquarters from the Owner or the Owner’s assignee (as specified in a form acceptable to the Company) or the Beneficiary, (as applicable) as required by any provision of this Policy or as required by the Company. The Request is subject to any action taken or payment made by the Company before it was processed.
SEC – The United States Securities and Exchange Commission.
Series Account – The segregated investment account established by the Company as a separate account under Colorado law named the COLI VUL –2 Series Account. It is registered as a unit investment trust under the 1940 Act.
Sub-Account – Sub-division(s) of the Owner's Account Value containing the value credited to the Owner from the Series Account. Sub-Accounts may also be referred to as “investment divisions” or “Divisions” in the prospectus, SAI or Series Account financial statements.
Surrender Benefit – Account Value less any outstanding Policy loans and less accrued loan interest.
Total Face Amount – The amount of life insurance coverage you request as specified in your Policy.
Transaction Date – The date on which any Premium payment or Request from the Owner will be processed by the Company. Premium payments and Requests received after 4:00 p.m. EST/EDT will be deemed to have been received on the next Business Day. Requests will be processed and the Sub-Account value will be valued on the day that the Premium payments or Request is received and the NYSE is open for trading.
Transfer – The moving of money from one or more Division(s) or the Fixed Account to one or more Division(s) or the Fixed Account.
Unit – An accounting unit of measurement that we use to calculate the value of each Division.
Unit Value – The value of each Unit in a Division.
Valuation Date – The date on which the net asset value of each Fund is determined. A Valuation Date is each day that the NYSE is open for regular business. The value of a Division’s assets is determined at the end of each Valuation Date (generally 4:00 p.m. EST/EDT). To determine the value of an asset on a day that is not a Valuation Date, the value of that asset as of the end of the previous Valuation Date will be used.
Valuation Period – The period of time from one determination of Unit Values to the next following determination of Unit Values. We will determine Unit Value for each Valuation Date as of the close of the NYSE (generally 4:00 p.m. EST/EDT) on that Valuation Date.
The SAI is a document that includes additional information about the Series Account, including the financial statements of both Great-West and of each of the Divisions of the Series Account. The SAI is incorporated by reference as a matter of law into the prospectus, which means that it is legally part of the prospectus. The SAI is available upon request, without charge. To request the SAI or other information about the Policy, or to make any inquires about the Policy, contact Great-West toll-free at 888-353-2654 or via email at www.greatwest.com/executivebenefits.
Information about the Series Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Series Account are available on the SEC’s website at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing at the Public Reference Section of the Commission, 100 F Street, N.E., Washington, D.C. 20549-0102.
Investment Company Act File No. 811-09201
Great-West Life & Annuity Insurance Company
A Stock Company
8515 East Orchard Road
Greenwood Village, Colorado 80111
(303) 737-3000
Executive Benefit VUL — Prospectus
A Flexible Premium Variable Universal Life Insurance Policy
offered by Great-West Life & Annuity Insurance Company
in connection with its COLI VUL-2 Series Account
This prospectus describes a flexible premium variable universal life insurance policy (the "Policy") offered by Great-West Life & Annuity Insurance Company ("Great-West," "Company, " "we," “our” or "us"). The Policy offered under this prospectus is no longer issued to new purchasers. The Policy offered under this prospectus has not been offered for sale since April 30, 2011; however, you may make additional Premium payments as permitted under your Policy.
The Policy is designed for use by corporations and employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. The Policy is designed to meet the definition of a "life insurance contract" for federal income tax purposes.
The Policy allows "you," the Owner, within certain limits to:
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• | choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change; |
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• | choose the amount and timing of Premium payments, within certain limits; |
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• | allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment objectives change; and |
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• | access your Account Value through loans and partial withdrawals or total surrenders. |
This prospectus contains important information you should understand before purchasing a Policy, including a description of the material rights and obligations under the Policy. We use certain special terms that are defined in Appendix A. Your Policy and any endorsements are the formal contractual agreement between you and the Company. It is important that you read the Policy and endorsements which reflect other variations. You should keep this prospectus on file for future reference. The Policy that we are currently issuing, Executive Benefit VUL II, is offered under a separate prospectus.
The Policy and Fixed Account endorsement (and optional Term Life Insurance Rider) that we issued until April 30, 2011 became available on January 1, 2009. The Policy and optional Term Life Insurance Rider described in this prospectus are based on state-required 2001 CSO mortality tables, as defined below. Before January 1, 2009, we issued an earlier version of the Policy (“Pre-2009 Policy”) and optional Rider, which were based on 1980 CSO mortality tables. Many of the Pre-2009 Policies and optional Riders still remain outstanding. The Pre-2009 Policy differs somewhat from the Policy that we issued until April 30, 2011, and certain of the information in this prospectus, therefore, does not apply to those Pre-2009 Policies. Appendix B to this prospectus explains the information that applies instead to the Pre-2009 Policy and Pre-2009 optional Rider. Therefore, if you own a Pre-2009 Policy (issued prior to January 1, 2009), you should also refer to Appendix B at the end of this prospectus for information about how your Pre-2009 Policy and optional Rider differs from the Policy that we issued until April 30, 2011.
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 1, 2014
Table of Content |
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Summary of the Policy and its Benefits. | 5 |
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Policy Risks | 7 |
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Fund Risks | 8 |
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Fee Tables | 9 |
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Transaction Fees | 9 |
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Periodic Charges Other Than Fund Operating Expenses | 10 |
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Supplemental Benefit Charges | 11 |
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Total Annual Fund Operating Expenses | 11 |
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Description of Depositor, Registrant, and Funds | 12 |
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Great-West Life & Annuity Insurance Company | 12 |
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The Series Account | 12 |
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The Investment Options and Funds | 12 |
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Payments We Receive | 13 |
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Payments We Make | 13 |
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Fund Investment Objectives | 14 |
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Fixed Account | 19 |
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Employer-Financed Insurance Purchase Arrangements--Tax and Other Legal Issues | 20 |
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Charges and Deductions | 21 |
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Expense Charge Applied to Premium | 21 |
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Mortality and Expense Risk Charge | 22 |
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Monthly Deduction | 22 |
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Monthly Risk Rates | 22 |
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Service Charge | 23 |
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Transfer Fee | 23 |
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Partial Withdrawal Fee | 23 |
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Surrender Charges | 23 |
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Change of Death Benefit Option Fee | 23 |
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Fund Expenses | 23 |
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General Description of Policy | 23 |
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Policy Rights | 24 |
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Owner | 24 |
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Beneficiary | 24 |
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Policy Limitations | 24 |
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Allocation of Net Premiums | 24 |
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Transfers Among Divisions | 24 |
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Fixed Account Transfers | 25 |
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Market Timing & Excessive Trading | 25 |
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Exchange of Policy | 26 |
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Age Requirements | 26 |
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Policy or Registrant Changes | 26 |
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Addition, Deletion or Substitution of Investment Options | 26 |
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Entire Contract | 27 |
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Alteration | 27 |
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Table of Content |
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Modification | 27 |
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Assignments | 27 |
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Notice and Elections | 27 |
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Account Value | 27 |
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Net Investment Factor | 28 |
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Splitting Units | 29 |
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Other Provisions and Benefits | 29 |
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Misstatement of Age or Sex (Non-Unisex Policy) | 29 |
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Suicide | 29 |
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Incontestability | 29 |
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Paid-Up Life Insurance | 30 |
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Supplemental Benefits | 30 |
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Term Life Insurance Rider | 30 |
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Change of Insured Rider | 31 |
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Report to Owner | 31 |
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Dollar Cost Averaging | 31 |
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Rebalancer Option | 31 |
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Non-Participating | 32 |
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Premiums | 32 |
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Policy Application, Issuance and Initial Premium | 32 |
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Free Look Period | 32 |
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Premium | 33 |
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Net Premiums | 33 |
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Planned Periodic Premiums | 33 |
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Death Benefits | 33 |
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Death Benefit | 33 |
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Changes in Death Benefit Option | 34 |
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Changes in Total Face Amount | 34 |
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Surrenders and Withdrawals | 35 |
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Surrenders | 35 |
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Partial Withdrawal | 35 |
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Loans | 36 |
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Policy Loans | 36 |
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Lapse and Reinstatement | 36 |
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Lapse and Continuation of Coverage | 36 |
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Grace Period | 36 |
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Termination of Policy | 37 |
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Reinstatement | 37 |
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Deferral of Payment | 37 |
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Federal Income Tax Considerations | 37 |
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Tax Status of the Policy | 38 |
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Diversification of Investments | 38 |
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Policy Owner Control | 38 |
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Table of Content |
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Tax Treatment of Policy Benefits | 38 |
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Life Insurance Death Benefit Proceeds | 38 |
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Tax Deferred Accumulation | 38 |
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Surrenders | 39 |
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Modified Endowment Contracts | 39 |
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Distributions | 39 |
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Distributions Under a Policy that is Not a Modified Endowment Contract | 39 |
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Distributions Under Modified Endowment Contracts | 39 |
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Multiple Policies | 40 |
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Treatment When Insured Reaches Attained Age 121 | 40 |
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Federal Income Tax Withholding | 40 |
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Actions to Ensure Compliance with the Tax Law | 40 |
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Trade or Business Entity Owns or is Directly or Indirectly a Beneficiary of the Policy | 40 |
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Employer Owned Life Insurance | 41 |
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Our Taxes | 41 |
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Corporate Tax Shelter Requirements | 42 |
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Legal Proceedings | 42 |
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Legal Matters | 42 |
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Abandoned Property Requirements | 42 |
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Financial Statements | 43 |
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Appendix A - Glossary of Terms | A-1 |
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Appendix B - Information About How A Pre-2009 Policy and Optional Term Insurance Rider (Issued Prior to January 1, 2009) Differs from the Policy and Optional Rider that We Issued until April 30, 201144 | B-1 |
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Summary of the Policy and its Benefits
This is a summary of some of the most important features of your Policy. The Policy is more fully described in the remainder of this prospectus. Please read this prospectus carefully. Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply.
1. Corporate-Owned Variable Life Insurance. We will issue Policies to corporations and employers and to certain individuals to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We will issue Policies on the lives of prospective Insureds who meet our underwriting standards.
2. The Series Account. We have established a separate account to fund the variable benefits under the Policy. The assets of the Series Account are insulated from the claims of our general creditors.
3. Premium Payments. You must pay us an Initial Premium to put your Policy in force. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100.00. Thereafter, you choose the amount and timing of Premium payments, within certain limits.
4. Fixed Account. You may allocate some or all of your net payments and/or make Transfers from the Sub-Accounts to the Fixed Account. The Fixed Account is part of our General Account. We own the assets in the General Account, and we use these assets to support our insurance and annuity obligations other than those funded by our separate accounts. These Fixed Account assets are subject to our general liabilities from business operations. Subject to applicable law, we have sole discretion over investment of the Fixed Account assets. We bear the full investment risk for all amounts allocated or transferred to the Fixed Account.
We guarantee that the amounts allocated to the Fixed Account will be credited interest at a net effective annual interest rate of at least 3.00%, the minimum interest rate provide in your Policy. At our discretion, we will review the interest rate at least once a year. We may reset the interest rate monthly. The Fixed Account is not affected by the investment performance of the Sub-Accounts. Policy value in the Fixed Account will be reduced by the Policy fees and charges we deduct and the effects of any Policy transactions (loans, withdrawals, and Transfers) on your Policy value in the Fixed Account.
5. Free Look Period. You may return your Policy to us for any reason within ten days of receiving it, or such longer period as required by applicable state law (in some states, up to 30 days for replacement policies), and depending on state law, receive (i) the greater of your Premiums, less any withdrawals, or your Account Value, or (ii) your Account Value plus the return of any expense charges deducted. The money you contribute to the Policy will be invested at your direction, except that in some states during your free look period your Premiums will be allocated to the Great-West Money Market Division.
6. Investment Options and Funds. You may allocate your net Premium payments among the available investment divisions ("Divisions") or the Fixed Account.
Each Division invests exclusively in shares of a single Fund. Each Fund has its own distinct investment objective and policies, which are described in the accompanying prospectuses for the Funds.
You may Transfer amounts from one Division to another or the Fixed Account, subject to the restrictions described herein.
7. Death Benefit. You may choose from among two death benefit options –
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1. | a fixed benefit equal to the Total Face Amount of your Policy; or |
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2. | a variable benefit equal to the sum of the Total Face Amount and your Account Value. |
For each option, the death benefit may be greater if necessary to satisfy federal tax law requirements.
We will deduct any outstanding Policy Debt and unpaid Policy charges before we pay a death benefit. In addition, prior partial withdrawals may reduce the Death Benefit Proceeds under the first option.
At any time, you may increase or decrease the Total Face Amount, subject to our approval and other requirements set forth in the Policy.
After the first Policy Year, you may change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect –
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2. | the investment performance of the Divisions you select; |
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3. | the value of the Fixed Account. |
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4. | any Policy loans or partial withdrawals; |
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5. | your Loan Account balance; and |
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6. | the charges we deduct under the Policy. |
9. Accessing Your Account Value. You may borrow from us using your Account Value as collateral. Loans may be treated as taxable income if your Policy is a "modified endowment contract" (“MEC”) for federal income tax purposes and you have had positive net investment performance.
There are no surrender charges associated with your Policy. You may surrender your Policy for its Cash Surrender Value plus return of expense charge, if applicable. The return of expense charge is a percentage of your Account Value and is described in greater detail on .
You may withdraw a portion of your Account Value at any time while your Policy is in force.
A withdrawal may reduce your death benefit.
We will charge an administrative fee not greater than $25 per withdrawal on partial withdrawals after the first in a Policy Year.
10. Supplemental Benefits. The following optional riders are available –
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1. | term life insurance; and |
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2. | change of Insured (not available to individual Owners). |
We will deduct the cost, if any, of the rider(s) from your Account Value on a monthly basis.
11. Paid-Up Life Insurance. If the Insured reaches Attained Age 121 and your Policy is in force, the Account Value, less Policy Debt, will be applied as a single Premium to purchase "paid-up" insurance. "Paid-up" insurance is a policy where all premiums have been paid and there are no additional premiums due. Your Account Value will remain in the Series Account allocated to the Divisions or the Fixed Account in accordance with your instructions. The death benefit under this paid-up insurance will be fixed by the Internal Revenue Code of 1986, as amended (“Code”) for Insureds age 99. As your Account Value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly.
12. Reinstatement. If your Policy terminates due to insufficient value, we will reinstate it within three years at your Request, subject to certain conditions.
13. Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate.
If you withdraw part of the Cash Surrender Value, your Policy’s death benefit may be reduced and you may incur taxes and tax penalties.
14. Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account.
The Death Benefit Proceeds and your Account Value will be reduced by the amount of any partial withdrawals.
15. Policy Loans. You may borrow from us using your Account Value as collateral. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made.
The minimum Policy loan amount is $500.
16. Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time. Each increase or decrease in the Total Face Amount must be at least $25,000. Minimum face amount is $100,000.
17. Target Premium. Your target Premium is actuarially determined and will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) and equals the maximum Premium payable such that the Policy remains compliant with the Code. The target Premium is used to determine your expense charged applied to the Premium and the sales compensation we pay. Payment of the target premium does not guarantee that your Policy will not lapse, and you may need to pay additional Premiums to keep your Policy in force. Each increase to the Total Face Amount is considered to be a new segment to the Policy. Each segment will have a separate target Premium associated with it.
18. State Variations. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. These differences include, among other things, free look rights, issue age limitations, and the general availability of riders. This prospectus describes the material rights and obligations of an Owner, and the maximum fees and charges for all Policy features and benefits are set forth in the fee table of this prospectus. See your Policy for specific variations because any such state variations will be included in your Policy or in riders or endorsements attached to your Policy. See your agent or contact us for specific information that is applicable to your state.
Policy Risks
1. Account Value Not Guaranteed. Your Account Value is not guaranteed. Your Account Value fluctuates based on the performance of the investment options you select. The investment options you select may not perform to your expectations. Your Account Value may also be affected by charges under your Policy.
2. Not Suitable as Short-Term Savings Vehicle. The Policy is designed for long-term financial planning. Accordingly, you should not purchase the Policy if you need access to the Account Value within a short time. Before purchasing a Policy, consider whether the long-term nature of the Policy is consistent with the purposes for which it is being considered.
3. Risk of Contract Lapse. Your Policy may terminate if your Account Value at the beginning of any Policy Month is insufficient to pay the Policy’s monthly charges.
If your Policy would terminate due to insufficient value, we will send you notice and allow you a 61-day grace period.
If, within the grace period, you do not make a Premium payment sufficient to cover all accrued and unpaid charges and deductions, your Policy will terminate at the end of the grace period without further notice.
4. Limitations on Withdrawals. Partial withdrawals of Account Value are permitted at any time the Policy is in force. As noted above, the amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A maximum administrative fee of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. Please note that withdrawals reduce your Account Value and your Death Benefit Proceeds. In addition, withdrawals may have tax consequences.
5. Limitations on Transfers. Subject to our rules as they may exist from time to time, you may at any time Transfer to another Division all or a portion of the Account Value allocated to a Division. Certain limitations apply to Transfers into and out of the Fixed Account. See "Fixed Account Transfers" on page 28.
6. Limitations or Charges on Surrender of Policy. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. Upon surrender of your Policy, the insurance coverage and all other benefits under the Policy will terminate.
There are no surrender charges associated with your Policy. However, the surrender of your Policy may have tax consequences.
7. Risks of Taking a Policy Loan. As noted above, you may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made. The minimum Policy loan amount is $500.
Taking a Policy loan may increase the risk that your Policy will lapse, will reduce your Account Value, and may reduce the death benefit. In addition, if your Policy is a MEC for tax purposes, taking a Policy loan may have tax consequences.
8. Adverse Tax Consequences. Your Policy is structured to meet the definition of a life insurance contract under the Code. Current federal tax law generally excludes all death benefits from the gross income of the Beneficiary of a life insurance policy. Generally, you are not taxed on any increase in the Account Value until it is withdrawn, but are taxed on surrender proceeds and the proceeds of any partial withdrawals if those amounts, when added to all previous non-taxable distributions, exceed the total Premium paid. Amounts received upon surrender or withdrawals in excess of Premiums are treated as ordinary income.
Under certain circumstances, a Policy may become a MEC for federal tax purposes. This may occur if you reduce the Total Face Amount of your Policy or pay excessive Premiums. We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC without your written permission. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC, but instead will promptly refund the money to you. If you elect to have a MEC contract, you can return the money to us with a signed form of acceptance.
Under current tax law, Death Benefit Proceeds under MECs generally are excluded from the gross income of the Beneficiary. Withdrawals and Policy loans, however, are treated first as income, to the extent of any gain, and then as a return of Premium. The income portion of the distribution is includable in your taxable income and taxed at ordinary income tax rates. A 10% penalty tax is also generally imposed on the taxable portion of any amount received before age 59 ½.
9. General Account Risk. Great-West's general obligations and any guaranteed benefits under the Policy are supported by our General Account (and not by the Series Account) and are subject to Great-West's claims-paying ability. An Owner should look to the financial strength of Great-West for its claims-paying ability. Assets in the General Account are not segregated for the exclusive benefit of any particular Policy or obligation. General Account assets are also available to Great-West's general creditors and the conduct of our routine business activities, such as the payment of salaries, rent and other ordinary business expenses. For more information about Great-West's financial strength, you may review our financial statements and/or check our current rating with one or more of the independent sources that rate insurance companies for their financial strength and stability. Such ratings are subject to change and have no bearing on the performance of the Funds.
Fund Risks
The Policy currently offers several variable investment options, each of which is a Division of the Series Account. Each Division uses its assets to purchase, at their net asset value, shares of a Fund. The Divisions are referred to as “variable” because their investment experience depends upon the investment experience of the Funds in which they invest.
We do not guarantee that the Funds will meet their investment objectives. Your Account Value may increase or decrease in value depending on the investment performance of the Funds. You bear the risk that those Funds may not meet their investment objectives. A comprehensive discussion of the risks of each Fund may be found in each Fund’s prospectus, including detailed information concerning investment objectives, strategies, and their investment risk. You may obtain a copy of the Fund prospectuses without charge by contacting us at 888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund's prospectus.
Fee Tables
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or Transfer cash value between investment options.
Transaction Fees
|
| | |
Charge | When Charge is Deducted | Amount Deducted |
Maximum Expense Charge Imposed on Premium* | Upon each Premium payment | Maximum: 10% of Premium
Current: 9.0% of Premium up to target and 6.5% of Premium in excess of target
|
Sales Load** | Upon each Premium payment | Maximum: 6.5% of Premium
Current: 5.5% of Premium up to target and 3.0% of Premium in excess of target |
Premium Tax** | Upon each Premium payment | Maximum: 3.5% of Premium
|
Partial Withdrawal Fee | Upon partial withdrawal | Maximum: $25 deducted from Account Value for all partial withdrawals after the first made in the same Policy Year.
|
Change of Death Benefit Option Fee | Upon change of option | Maximum: $100 deducted from Account Value for each change of death benefit option.
|
Transfer Fee | At time of Transfer for all Transfers in excess of 12 made in the same Policy Year
| Maximum: $10/Transfer |
Loan Interest | Upon issuance of Policy loan | Maximum: the Moody’s Corporate Bond Yield Average – Monthly Average Corporates |
* The Expense Charge consists of the Sales Load plus the Premium Tax.
** The Sales Load and Premium Tax comprise (and are not in addition to) the Expense Charge.
The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses.
Periodic Charges Other Than Fund Operating Expenses
|
| | |
Charge | When Charge is Deducted | Amount Deducted |
Cost of Insurance (per $1000 Net Amount at Risk)
| | |
Minimum & Maximum Cost of Insurance Charge
| Monthly | Guaranteed: Minimum: $0.02 per $1000. Maximum: $83.33 per $1000.
|
Cost of Insurance Charge for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)
| Monthly | Guaranteed:
$0.21 per $1000.
|
Mortality and Expense Risk Charge | Monthly | Guaranteed: 0.90% (of average daily net assets) annually.
Current: 0.40% for Policy Years 1-5, 0.25% for Policy Years 6-20, and 0.10% thereafter. |
Service Charge |
Monthly | Maximum: $15/month
Current: $10.00/month, Policy Years 1-3 and $7.50/month, Policy Years 4+
|
|
| | |
Supplemental Benefit Charges
Currently, we are offering the following supplemental optional riders. The charges for the rider you select are deducted monthly from your Account Value as part of the Monthly Deduction described on page 24 of this prospectus. The benefits provided under each rider are summarized in “Other Provisions and Benefits” beginning on page 32 below.
|
Change of Insured Rider* | Upon change of Insured | Minimum: $100 per change. Maximum: $400 per change. |
Change of Insured Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)*
| | $400 per change. |
Term Life Insurance Rider | Monthly | Guaranteed: Minimum COI: $0.02 per $1000.
Maximum COI: $83.33 per $1000.
|
Term Life Insurance Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) | Monthly | Guaranteed:
$0.21 per $1000. |
*/ Not available to individual Owners.
The next table shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time that you own the Policy. More detail concerning each Fund’s fee and expenses is contained in the prospectus for each Fund.
Total Annual Fund Operating Expenses1
(Expenses that are deducted from Fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses)
|
| | |
| Minimum | Maximum |
Total Annual Fund Operating
| .29% | 2.13% |
THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
1 Expenses are shown as a percentage of a Fund's average net assets as of December 31, 2013. The expenses above include fees and expenses incurred indirectly by the Great-West Profile Funds and the Great-West Lifetime Funds as a result of investing in shares of acquired funds, if any. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Funds have agreed to waive their fees and/or reimburse the Funds’ expenses in order to keep the expenses below specified limits. In some cases, these expense limitations may be contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. Please see the prospectus for each Fund for information regarding the expenses for each Fund, including fee reduction and/or expense reimbursement arrangements, if applicable. The management fees and other expenses of the Funds are more fully described in the Fund prospectuses.
Description of Depositor, Registrant, and Funds
Great-West Life & Annuity Insurance Company
Great-West is a stock life insurance company organized under the laws of the state of Colorado. Our offices are located at 8515 East Orchard Road, Greenwood Village, Colorado 80111.
We are authorized to do business in 49 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on October 8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
The Series Account
The Series Account is a segregated asset account of Great-West. We use the Series Account to fund benefits payable under the Policy. The Series Account may also be used to fund benefits payable under other life insurance policies issued by us.
We own the assets of the Series Account, which we hold separate and apart from our General Account assets. The
income, gains or losses, realized or unrealized, from assets allocated to the Series Account are credited to or charged against the Series Account without regard to our other income, gains or losses. The income, gains, and losses credited to, or charged against, the Series Account reflect the Series Account’s own investment experience and not the investment experience of Great-West’s other assets. The assets of the Series Account may not be used to pay any liabilities of Great-West other than those arising from the Policies (and any other life insurance policies issued by us and funded by the Series Account).
In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including Series Account assets that are treated as company assets under applicable income tax law. These benefits, which reduce our overall corporate income tax liability may include dividends received deductions and foreign tax credits which can be material. We do not pass these benefits through to the Series Account or our other separate accounts, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no reduction in the dollar amount of dividends that the Series Account receives; and (ii) under applicable income tax law, Owners are not the owners of the assets generating the benefits.
Great-West is obligated to pay all amounts promised to Owners under the Policies (and any other life insurance policies issued by us and funded by the Series Account).
We will at all times maintain assets in the Series Account with a total market value at least equal to the reserves and other liabilities relating to the variable benefits under all policies participating in the Series Account.
The Series Account is divided into Divisions. Each Division invests exclusively in shares of a corresponding Fund. We may in the future add new or delete existing Divisions. The income, gains or losses, realized or unrealized, from assets allocated to each Division are credited to or charged against that Division without regard to the other income, gains or losses of the other Divisions.
All amounts allocated to a Division will be used to purchase shares of the corresponding Fund. The Divisions will at all times be fully invested in Fund shares. We maintain records of all purchases and redemptions of shares of the Funds.
The Investment Options and Funds
The Policy offers a number of Divisions or Sub-Accounts. Each Division invests in a single Fund. Each Fund is a mutual fund registered under the Investment Company Act of 1940, as amended (the “1940 Act”), or a separate series of shares of such a mutual fund. More comprehensive information, including a discussion of potential risks, is found in the current prospectuses for the Funds. The fund prospectuses should be read in connection with this prospectus. YOU MAY OBTAIN A PROSPECTUS AND, IF AVAILABLE, A FUND SUMMARY, CONTAINING COMPLETE INFORMATION ON EACH FUND, WITHOUT CHARGE, UPON REQUEST BY CONTACTING US AT 888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund's prospectus.
Each Fund holds its assets separate from the assets of the other Funds, and each Fund has its own distinct investment objective and policies. Each Fund operates as a separate investment fund, and the income, gains and losses of one Fund generally have no effect on the investment performance of any other Fund.
The Funds are NOT available to the general public directly. The Funds are available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans.
Some of the Funds have been established by investment advisers that manage publicly available mutual funds having similar names and investment objectives. While some of the Funds may be similar to, and may in fact be modeled after publicly available mutual funds, the Funds are not otherwise directly related to any publicly available mutual fund. Consequently, the investment performance of publicly available mutual funds and any similarly named Fund may differ substantially.
Payments We Receive. Some of the Funds’ investment advisers or affiliates may compensate us for providing the administrative, recordkeeping and reporting services they would normally be required to provide for individual shareholders or cost savings experienced by the investment advisers or affiliates of the Funds. Such compensation is
typically a percentage of Series Account assets invested in the relevant Fund and generally may range up to 0.35% of net assets. GWFS Equities, Inc. (“GWFS”), a broker-dealer and subsidiary of Great-West and the principal underwriter and distributor of the Policy, may also receive Rule 12b-1 fees (ranging up to 0.25%) directly from certain Funds for providing distribution related services related to shares of Funds offered in connection with a Rule 12b-1 plan. If GWFS receives 12b-1 fees, combined compensation for administrative and distribution related services generally ranges up to 0.60% annually of Series Account assets invested in a Fund.
If you purchased the Policy through a broker-dealer or other financial intermediary (such as a bank), the Funds and their related companies may pay the intermediary for services provided with regard to the sale of Fund shares to the Divisions under the Policy. The amount and/or structure of the compensation can possibly create conflict of interest as it may influence the broker-dealer or other intermediary and your salesperson to present this Policy (and certain Divisions under the Policy) over other investment alternatives. The variations in compensation, however, may also reflect differences in sales effort or ongoing customer services expected of the broker-dealer or other intermediary or your salesperson. You may ask your salesperson about variations and how he or she and his or her broker-dealer are compensated for selling the Policy or visit your financial intermediary's Web site for more information.
Payments We Make. In addition to the direct cash compensation described above for sales of the Policies, Great-West and/or its affiliates may also pay GWFS agents additional cash and non-cash incentives to promote the sale of the Policies and other products distributed by GWFS, including Funds of Great-West Funds, Inc., which are available Funds under the Policies. Great-West and/or its affiliates may sponsor various contests and promotions subject to applicable FINRA regulations in which GWFS agents may receive prizes such as travel awards, merchandise and cash. Subject to applicable FINRA regulations, Great-West and/or its affiliates may also pay for travel expenses, meals, lodging and entertainment of salespersons in connection with educational and sales promotional programs and sponsor speakers, educational seminars and charitable events.
Cash incentive payments may vary depending on the arrangement in place at any particular time. Cash incentives payable to GWFS agents may be based on certain performance measurements, including a percentage of the net amount invested in certain Funds available under the Policy. These additional payments could be viewed as creating conflicts of interest. In some cases, the payment of incentive-based compensation may create a financial incentive for a GWFS agent to recommend or sell the Policy instead of other products or recommend certain Funds under the Policy over other Funds, which may not necessarily be to your benefit.
Closed Divisions. Effective April 1, 2004, the Divisions investing in the following Funds were closed to new Owners: American Century VP International Fund (Class I Shares), American Century VP Income & Growth Fund (Class I Shares), AIM V.I. Core Stock Fund (now known as the Invesco V.I. Core Equity Fund) (Class I Shares) and Neuberger Berman AMT Guardian Portfolio (I Shares). However, Owners with amounts invested in the aforementioned Divisions as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2005, the Divisions investing in the following Funds were closed to new Owners: AIM V.I. Technology Fund (Series I Shares), Federated American Leaders Fund II (Primary Shares) (now known as Federated Clover Value Fund II (Primary Shares)), Federated International Equity Fund II, Fidelity VIP Growth Portfolio (Service Class 2 Shares); Janus Aspen Worldwide Growth Portfolio (Institutional Shares), Maxim Small-Cap Growth Portfolio (formerly the Maxim Trusco Small-Cap Growth Portfolio, which was formerly the Maxim MFS® Small-Cap Growth Portfolio), Neuberger Berman AMT Mid-Cap Growth Portfolio (I Shares). However, Owners with amounts invested in the aforementioned Divisions as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2005, the Division investing in the following Fund was closed to all Owners: AIM V.I. Financial Services Fund (Series I Shares). Premium payments and Transfers are not permitted into this Division.
Effective May 1, 2006, the Division investing in Maxim Ariel Mid-Cap Value Portfolio was closed to new Owners. However, Owners with amounts invested in this Fund as of May 1, 2006, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Effective February 23, 2007, the Division investing in Dreyfus IP Emerging Leaders Portfolio (Initial Shares) was closed to all Owners and no Premium payments or Transfers are permitted into this Division.
Effective May 1, 2007, the Divisions investing in the following Funds were closed to new Owners: AIM V.I. Global Health Care (Series I Shares), American Century VP Ultra (Class I Shares) and Dreyfus VIF Appreciation Portfolio (Initial Shares). However, Owners with amounts transferred in the aforementioned Divisions as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2008, the Divisions investing in the following Funds were closed to new Owners: Dreyfus IP Technology Growth (Initial Shares), Federated High Income Bond Fund II (Primary Shares), Neuberger Berman AMT Small Cap Growth (S Shares) (formerly Neuberger Berman AMT Fasciano (S Shares)). However, Owners with amounts transferred in the aforementioned Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2009, the Divisions investing in the following Funds were closed to new Owners: Dreyfus IP MidCap Stock (Initial Shares); Fidelity VIP Investment Grade Bond (Service Class 2 Shares); and Neuberger Berman AMT Partners (I Shares).
Effective May 1, 2009, each of the following three Putnam Funds (IB Shares) are replaced with IA Shares: Putnam VT High Yield Fund; Putnam VT International New Opportunities Fund; and Putnam VT MidCap Value Fund.
Effective April 30, 2010, the Division investing in the Federated Kaufmann Fund is closed to new Owners, however, Owners with amounts transferred in to aforementioned Division as of April 30, 2010, may continue to allocate Premium payments and Transfer amounts into and out of such Division.
Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund.
Effective May 1, 2013, the Division investing in the following Fund was closed to new Owners: Invesco VI Global Health Care Fund. Owners with amounts invested in this Fund as of May 1, 2013, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Effective May 1, 2014, the Divisions investing in the following Funds were closed to new owners: Columbia VP Small Cap Value Fund and Putnam VT Global Health Care Fund. Owners with amounts invested in these Funds as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of these Divisions.
Fund Investment Objectives. The investment objectives of the Funds are briefly described below:
Alger Portfolios (advised by Fred Alger Management, Inc.)
Alger Small Cap Growth Portfolio (Class I-2 Shares) The Fund seeks long-term capitalization.
American Century Variable Portfolios, Inc. (advised by American Century Investment Management, Inc.)
American Century Investments VP Income & Growth Fund (Class I Shares) The Fund seeks capital growth. Income is a secondary objective. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
American Century Investments VP International Fund (Class I Shares) The Fund seeks capital growth. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
American Century Investments VP Ultra® Fund (Class I Shares) The Fund seeks long-term capital growth. Effective May 1, 2007, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in the Division as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
American Century Investments VP Value Fund (Class I Shares) The Fund seeks long-term capital growth. Income is a secondary objective.
American Century Investments VP VistaSM Fund (Class I Shares) The Fund seeks long-term capital growth.
American Funds Insurance Series (advised by Capital Research and Management Company)
American Funds IS Growth Fund (Class 2 Shares) The Fund’s investment objective is to provide growth of capital.
American Funds IS Global Small Capitalization Fund (Class 2 Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS International Fund (Class 2 Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS New World Fund (Class 2 Shares) The Fund’s investment objective is long-term capital appreciation.
Columbia Variable Portfolio (advised by Columbia Management Advisers, LLC)
Small Cap Value (Class 1 Shares) The Fund seeks long-term capital appreciation. Effective May 1, 2014, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Davis Variable Account Fund, Inc. (advised by Davis Selected Advisors, L.P.)
Davis Financial Fund The Fund’s investment objective is long-term growth of capital.
Davis Value Fund The Fund’s investment objective is long-term growth of capital.
Delaware VIP Trust (advised by Delaware Management Company)
Delaware VIP Small Cap Value Series (Service Shares) The Fund seeks capital appreciation.
Dreyfus Stock Index Fund (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) The Fund seeks to match the total return of the Standard & Poor's 500 Composite Stock Price Index.
Dreyfus Investment Portfolios (advised by The Dreyfus Corporation of New York, New York)
Dreyfus IP MidCap Stock Portfolio (Initial Shares) The Fund seeks investment returns that are greater than the total return performance of publicly traded common stocks of medium-sized domestic companies in the aggregate as represented by the Standard & Poor’s MidCap 400® Index. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Dreyfus IP Technology Growth Portfolio (Initial Shares) The Fund seeks capital appreciation. The Fund may also sell stocks when the managers’ evaluation of a sector has changed. Effective May 1, 2008, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Dreyfus Variable Investment Fund (advised by The Dreyfus Corporation of New York, New York)
Dreyfus VIF Appreciation Portfolio (Initial Shares) The Fund seeks long-term capital growth consistent with the preservation of capital. Its secondary goal is current income. Fayez Sarofim & Co. is the sub-adviser to this Fund. Effective May 1, 2007, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in the Division as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Dreyfus VIF International Equity Portfolio (Initial Shares) The Fund seeks capital growth. Newton Capital Management Limited is the sub-adviser to this Fund.
DWS (advised by Deutsche Investment Management Americas Inc.)
DWS Variable Series II: DWS Alternative Asset Allocation VIP (Class A Shares) The Fund seeks capital appreciation. RREEF America L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Small Mid Cap Value VIP (Class A Shares) The Fund seeks long-term capital appreciation. Dreman Value Management L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Core Equity VIP (Class A Shares) The Fund seeks long-term growth of capital, current income and growth of income.
DWS Variable Series I: DWS Global Small Cap VIP (Class A Shares) (formerly known as DWS Global Small Cap Growth VIP) The Fund seeks above-average capital appreciation over the long term.
DWS Variable Series II: DWS High Income VIP (Class A Shares) The Fund seeks to provide a high level of current income.
DWS Variable Series II: DWS Large Cap Value VIP (Class A Shares)) The Fund seeks to achieve a high rate of total return. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
DWS Investments VIT Funds: DWS Small Cap Index VIP (Class A Shares) The Fund seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small US companies. Northern Trust Investments, N.A. is the sub-adviser for the Portfolio.
Federated Insurance Series
Federated High Income Bond Fund II (Primary Shares) The Fund seeks high current income. Effective May 1, 2008, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division. Advised by Federated Investment Management Company.
Federated Kaufmann Fund II (Primary Shares) The Fund seeks capital appreciation. Effective April 30, 2009, the Division investing this Fund was closed to new Owners; however, Owners with amounts in the Division as of April 30, 2010, may continue to allocate Premium payments and Transfer amounts into and out of this Division. Advised by Federated Equity Management Company of Pennsylvania.
Fidelity Variable Insurance Products (VIP) Fund (advised by Fidelity Management & Research Company)
Fidelity VIP Contrafund® Portfolio (Service Class 2 Shares) The Fund seeks long-term capital appreciation. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Fidelity VIP Growth Portfolio (Service Class 2 Shares) The Fund seeks to achieve capital appreciation. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts
invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Fidelity VIP Investment Grade Bond Portfolio (Service Class 2 Shares) The Fund seeks to provide as high a level of current income as is consistent with the preservation of capital. Fidelity Investments Money Management, Inc. and other investment advisers serve as sub-advisers for the Fund. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Fidelity VIP Mid Cap Portfolio (Service Class 2 Shares) The Fund seeks long-term growth of capital. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Goldman Sachs Variable Investment Trust (advised by Goldman Sachs Asset Management)
Goldman Sachs Mid Cap Value Fund (Institutional Class Shares) The Fund seeks long-term capital appreciation.
Great-West Funds, Inc. (advised by Great-West Capital Management, LLC, a wholly owned subsidiary of Great-West)
Great-West Ariel Mid Cap Value Fund (Initial Class) The Fund seeks long-term capital appreciation.
Great-West Bond Index Fund (Initial Class) The Fund seeks results that track the total return of the fixed income securities that comprise the Barclays Capital U.S. Aggregate Bond Index.
Great-West Federated Bond Fund (Initial Class) The Fund seeks to provide total return, consisting of two components: (1) changes in the market value of its portfolio holdings (both realized and unrealized appreciation); and (2) income received from its portfolio holdings.
Great-West International Index Fund (Initial Class) The Fund seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the MSCI EAFE (Europe, Australasia, Far East) Index.
Great-West Loomis Sayles Bond Fund (Initial Class) The Fund seeks high total investment return through a combination of current income and capital appreciation. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West Loomis Sayles Small Cap Value Fund (Initial Class) The Fund seeks long-term capital growth. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West MFS International Value Fund (Initial Class) The Fund seeks long-term capital growth. Massachusetts Financial Service Company is the sub-adviser to this Fund. Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund.
Great-West Money Market Fund The Fund seeks as high a level of current income as is consistent with the preservation of capital and liquidity.
Investment in the Great-West Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this Fund.
Great-West Multi-Manager Large Cap Growth Fund (Initial Class) The Fund seeks long-term growth of capital. Pioneer Investment Management, Inc. and J.P. Morgan Investment Management Inc. are the sub-advisers to this Fund.
Great-West Real Estate Index Fund (Initial Class) The Fund seeks investment results, before fees and expenses, that track the total return of a benchmark index that measures the performance of publicly traded equity real
estate investment trusts.
Great-West S&P MidCap 400® Index Fund (Initial Class) The Fund seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the Standard & Poor’s MidCap 400® Index.
Great-West Short Duration Bond Fund (Initial Class) The Fund seeks maximum total return that is consistent with preservation of capital and liquidity.
Great-West Small Cap Growth Fund (Initial Class)The Fund seeks long-term capital growth. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division. Silvant Capital Management, LLC is the sub-adviser for this Fund.
Great-West T. Rowe Price Equity Income Fund (Initial Class) The Fund seeks substantial dividend income and also long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West T. Rowe Price Mid Cap Growth Fund (Initial Class) The Fund seeks long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund (Initial Class) The Fund seeks current income with capital appreciation and growth of income. Franklin Advisers, Inc. is the sub-adviser to this Fund.
Great-West U.S. Government Mortgage Securities Fund (Initial Class) The Fund seeks the highest level of return consistent with preservation of capital and substantial credit protection.
Great-West Profile I Funds
Each of the following five Profile Funds seeks to provide an asset allocation program designed to meet certain investment goals based on an investor’s risk tolerance, investment time horizon and personal objectives.
Great-West Aggressive Profile I Fund (Initial Class) seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments.
Great-West Moderately Aggressive Profile I Fund (Initial Class) seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments and, to a lesser degree, fixed income securities.
Great-West Moderate Profile I Fund (Initial Class) seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Conservative Profile I Fund (Initial Class) seeks capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments, and, to a lesser degree, equity investments.
Great-West Conservative Profile I Fund (Initial Class) seeks capital preservation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments.
Great-West Lifetime Funds
Great-West Lifetime 2015 Fund II ( Class T) The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2015, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2025 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2025, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2035 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2035, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2045 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2045, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2055 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its current asset allocation. After 2055, the investment objective is to seek income and, secondarily, capital growth.
Invesco Variable Insurance Funds (advised by Invesco Advisers, Inc.)
Invesco V.I. Core Equity Fund (Series I Shares) The Fund’s investment objective is long-term growth of capital. Effective April 1, 2004, the AIM V.I. Core Stock Fund was closed to new Owners; Owners with amounts invested in this Division as of April 1, 2004, were permitted to continue to allocate Premium payments and Transfer amounts into and out of this Division. Effective May 1, 2006, the AIM V.I. Core Stock Fund merged into the AIM V.I. Core Equity Fund. Following the transaction, this Division investing in the AIM V.I. Core Equity Fund continues to be closed to new Owners; however, Owners with amounts invested in this Division may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Invesco V.I. Diversified Dividend Fund (Series I Shares) The Fund’s investment objective is to provide reasonable current income and long-term growth of income and capital. Effective May 1, 2005, the Division investing in this Fund was closed to all Owners and no Premium payments or Transfers are permitted into the Division.
Invesco V.I. Global Health Care Fund (Series I Shares) The Fund’s investment objective is long-term growth of capital. Effective May 1, 2007, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of this Divisions.
Invesco V.I. Global Real Estate Fund (Series I Shares) The Fund’s investment objective is total return through growth of capital and current income. Invesco Asset Management Limited is the sub-adviser for this Fund.
Invesco V.I. International Growth Fund (Series I Shares) The Fund’s investment objective is long-term growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares) The Fund's objective is long-term growth of capital.
Invesco V.I. Technology Fund (Series I Shares) The Fund’s investment objective is long-term growth of capital. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Janus Aspen Series (advised by Janus Capital Management, LLC)
Janus Aspen Balanced Portfolio (Institutional Shares) The Fund seeks long-term growth of capital consistent with preservation of capital and balanced by current income.
Janus Aspen Flexible Bond Portfolio (Institutional Shares) The Fund seeks to obtain maximum total return,
consistent with the preservation of capital.
Janus Aspen Forty Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Global Technology Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Overseas Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Global Research Portfolio (Institutional Shares) The Fund seeks long-term growth of capital. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman Advisers Management Trust (advised by Neuberger Berman Management Incorporated)
Neuberger Berman AMT Guardian Portfolio (Class I Shares) The Fund seeks long-term growth of capital; current income is a secondary goal. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Mid-Cap Growth Portfolio (Class I Shares) The Fund seeks growth of capital. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Large Cap Value Portfolio (Class I Shares) The Fund seeks growth of capital. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) The Fund seeks growth of capital.
Neuberger Berman AMT Small Cap Growth Portfolio (Class S Shares) The Fund seeks long-term capital growth. Effective May 1, 2008, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Socially Responsive Portfolio (Class I Shares) The Fund seeks long-term growth of capital by investing in securities of companies that meet the Fund’s financial criteria and social policy.
PIMCO Variable Insurance Trust (advised by Pacific Investment Management Company, LLC)
PIMCO VIT High Yield Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Low Duration Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Shares) The Fund seeks maximum real return, consistent with preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
Putnam Variable Trust (advised by Putnam Investment Management, LLC)
Putnam VT Equity Income Fund (Class IA Shares) The Fund seeks capital growth and current income.
Putnam VT Global Health Care Fund (Class IA Shares) The Fund seeks capital appreciation. Effective May 1, 2014, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Putnam VT High Yield Fund (Class IA Shares) The Fund seeks high current income. Capital growth is a secondary goal when consistent with achieving high current income.
Putnam VT International Growth Fund Class (IA Shares) The Fund seeks long-term capital appreciation.
Putnam VT Multi-Cap Value Fund (Class IA Shares) (formerly known as Putnam VT MidCap Value Fund )The Fund seeks capital appreciation and, as a secondary objective, current income.
Royce Capital Fund (advised by Royce & Associates, LLC)
Royce Micro-Cap Portfolio (Service Class Shares) The Fund’s investment goal is long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares) The Fund’s investment goal is long-term growth of capital.
T. Rowe Price Variable Insurance Portfolio (advised by T. Rowe Price Associates, Inc.)
T. Rowe Price Health Sciences Portfolio - Class II Shares The Fund seeks long-term capital appreciation.
Van Eck Worldwide Insurance Trust (advised by Van Eck Associates Corporation)
Van Eck VIP Emerging Markets Fund (Initial Class Shares) The Fund seeks long-term capital appreciation by investing primarily in equity securities in emerging markets around the world. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Van Eck VIP Global Hard Assets Fund (Initial Class Shares) The Fund seeks long term capital appreciation by primarily investing in hard asset securities. Income is a secondary consideration.
You should contact your representative for further information on the availability of the Divisions.
Each Fund is subject to certain investment restrictions and policies that may not be changed without the approval of a majority of the shareholders of the Fund. See the Fund prospectuses for further information.
We automatically reinvest all dividends and capital gain distributions from the Funds in shares of the distributing Fund at their net asset value. The income and realized and unrealized gains or losses on the assets of each Division are separate and are credited to, or charged against, the particular Division without regard to income, gains or losses from any other Division or from any other part of our business. We will use amounts you allocate to a Division to purchase shares in the corresponding Fund and will redeem shares in the Funds to meet Policy obligations or make adjustments in reserves. The Funds are required to redeem their shares at net asset value and to make payment within seven days.
The Funds may also be available to separate accounts offering variable annuity, variable life products and qualified plans of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interests of the Series Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of Owners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Owners, including withdrawal of the Series Account from participation in the Funds that
are involved in the conflict or substitution of shares of other Funds.
Voting. We are the legal owner of all shares of the Funds held in the Divisions of the Series Account. In general, you do not have a direct right to vote the Fund shares held in the Divisions of the Series Account. However, under current law, you are entitled to give us instructions on how to vote the shares held in the Divisions. At regular and special shareholder meetings, we will vote the shares held in the Divisions in accordance with those instructions received from Owners who have an interest in the respective Divisions.
We will vote shares held in each Division for which no timely instructions from Owners are received, together with shares not attributable to a Policy, in the same proportion as those shares in that Division for which instructions are received.
The number of shares in each Division for which instructions may be given by an Owner is determined by dividing the portion of the Account Value derived from participation in that Division, if any, by the value of one share of the corresponding Fund. We will determine the number as of the record date chosen by the Fund. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders' meeting.
We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in our next communication to Owners.
This description reflects our current view of applicable federal securities law. Should the applicable federal securities laws change so as to permit us to vote shares held in the Series Account in our own right, we may elect to do so.
Fixed Account
The Fixed Account is part of our General Account. We assume the risk of investment gain or loss on this amount. All assets in the General Account are subject to our general liabilities from business operations. The Fixed Account does not participate in the investment performance of the Sub-Accounts.
The Fixed Account is not registered with the SEC under the Securities Act of 1933. Neither the Fixed Account nor the General Account have been registered as an investment company under the 1940 Act. As a result, neither the Fixed Account nor the General Account are generally subject to regulation under either Act. However, certain disclosures may be subject to generally applicable provisions of the federal securities laws regarding the accuracy of statements made in registration statements.
The Fixed Account offers a guarantee of principal, after deductions for fees and expenses. We also guarantee that the amounts you allocate to the Fixed Account will earn interest at a rate of at least the minimum guaranteed interest rate indicated in your Policy. We do not rely on predetermined formulas to set Fixed Account interest rates. We will review the interest rate at least once a year, but at the Company’s discretion we may reset the interest rate monthly.
The Fixed Account may not be available in all states.
Employer-Financed Insurance Purchase Arrangements--Tax and Other Legal Issues
In addition to corporations and other employers, the Policy is also available for purchase by individuals whose employers will pay some or all of the Premiums due under the Policy pursuant to an employer-financed insurance purchase arrangement. In such cases, references in this prospectus to the “Owner” of the Policy will refer to the individual and, depending on the context, references to the “payment of premiums” will refer to payments to Great-West under the Policy by the employer and/or by the employee.
Employers and employees contemplating the purchase of a Policy as a part of an employer-financed insurance purchase arrangement should consult qualified legal and tax counsel with regard to the issues presented by such a transaction.
For this purpose, an employer-financed insurance purchase arrangement is a plan or arrangement which contemplates that an employer will pay one or more Premiums for the purchase of a Policy that will be owned, subject to certain restrictions, by an employee or by a person or entity designated by the employee.
The general considerations applicable to such a purchase include the following:
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1. | Payments by the employer under an employer-financed insurance purchase arrangement will only be deductible for income tax purposes when the payments are taxable to the employee with respect to whom they are made. |
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2. | Imposition of certain types of restrictions, specifically a substantial risk of forfeiture, on the purchased Policy may defer both the deductibility of the payments to the employer and their taxability to the employee. |
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3. | The payment of some or all of the Premiums by the employer may create an ERISA welfare benefit plan which is subject to the reporting, disclosure, fiduciary and enforcement provisions of ERISA. |
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4. | The payment of some or all of the Premiums by the employer will not prevent the Owner from being treated as the owner of the Policy for federal income tax purposes. |
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5. | Under some circumstances, the failure of the employer to make one or more of the planned Premiums under the Policy may cause a lapse of the Policy. |
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6. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial and tax benefits of the ownership of the Policy outweigh the costs, such as sales loads and cost of insurance charges that will be incurred as a result of the purchase and ownership of the Policy. |
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7. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the designation of another person or entity as the owner of the Policy will have adverse consequences under applicable gift, estate, or inheritance tax laws. |
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8. | An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial performance of the Policy will support any planned withdrawals or borrowings under the Policy. |
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9. | In an employer-financed insurance purchase arrangement, the procedures described below on page , which are designed to prevent or minimize market timing and excessive trading by Owners may, in certain circumstances, require us to perform standardized trade monitoring; in other circumstances such monitoring will be performed by the Fund. Certain Funds require us to provide reports of the Owner’s trading activity, if prohibited trading, as defined by the Fund, is suspected. The determination of whether there is prohibited trading based on the Funds’ definition of prohibited trading may be made by us or by the Fund. The Fund determines the restrictions imposed, which could be one of the four restrictions described on page 28 or by restricting the Owner from making Transfers into the identified Fund for the period of time specified by the Fund. |
Charges and Deductions
The Policy has insurance features and investment features, and there are costs related to each. This section describes the fees and charges that we may make under the Policy to compensate for: (1) the services and benefits we provide; (2) the costs and expenses we incur; and (3) the risks we assume. The fees and charges we deduct under this Policy may result in a profit to us.
Expense Charge Applied to Premium. We will deduct a maximum charge of 10% from each Premium payment, which is broken down as follows. A maximum of 6.5% will be deducted as sales load to compensate us in part for sales and promotional expenses in connection with selling the Policies, such as commissions, the cost of preparing sales literature, other promotional activities and other direct and indirect expenses. A maximum of 3.5% of Premium will be
used to cover Premium taxes and certain federal income tax obligations resulting from the receipt of Premiums. All states and some cities and municipalities impose taxes on Premiums paid for life insurance, which generally range from 2% to 4% of Premium but may exceed 4% in some states. The amount of your state's Premium tax may be higher or lower than the amount attributable to Premium taxes that we deduct from your Premium payments.
The current expense charge applied to Premium for sales load is 5.5% of Premium up to target and 3.0% of Premium in excess of target for Policy Years 1 through 10. Your target Premium will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) which equals the maximum Premium payable under the seven-pay test such that the Policy remains compliant with section 7702A of the Code. Thereafter, there is no charge for sales load. The current expense charge applied to Premium to cover our Premium taxes and the federal tax obligation described above is 3.5% in all Policy Years.
Where permitted by applicable state insurance law and for corporate owned policies only, if your Policy is surrendered for the Surrender Benefit (Account Value less any outstanding Policy loans and less accrued loan interest) within the first seven Policy Years, we will return a percentage of the expense charge. The return of expense charge will be a percentage of your Account Value on the date the Request for surrender was received by us at our Corporate Headquarters. This amount will be in addition to the Surrender Benefit.
The return of expense charge is based on the following:
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Policy Year | Percentage of Account Value Returned |
Year 1 | 6% |
Year 2 | 5% |
Year 3 | 4% |
Year 4 | 3% |
Year 5 | 2% |
Year 6 | 1% |
Year 7+ | 0% |
As described under the heading "Term Life Insurance Rider" on page 33, we may offer a term life insurance rider that may have the effect of reducing the sales charge you pay on purchasing an equivalent amount of insurance. We offer this rider in circumstances that result in the savings of sales and distribution expenses and administrative costs. To qualify, a corporation, employer, or other purchaser must satisfy certain criteria such as, for example, the number of Policies it expects to purchase and the expected Total Face Amount under all such Policies. Generally, the sales contacts and effort and administrative costs per Policy depend on factors such as the number of Policies purchased by a single Owner, the purpose for which the Policies are purchased, and the characteristics of the proposed Insureds. The amount of reduction and the criteria for qualification are related to the sales effort and administrative costs resulting from sales to a qualifying Owner. Great-West from time to time may modify on a uniform basis both the amounts of reductions and the criteria for qualification. Reductions in these charges will not be unfairly discriminatory against any person, including the affected Owners funded by the Series Account.
Mortality and Expense Risk Charge. This charge is for the mortality and expense risks we assume with respect to the Policy. It is based on an annual rate that we accrue against each Division of the Series Account on a daily basis and deduct on the first day of each Policy month by cancelling accumulation units on a pro-rata basis across all Sub-Accounts. We convert the mortality and expense risk charge into a daily rate by dividing the annual rate by 365. The mortality and expense risk charge will be determined by us from time to time based on our expectations of future interest, mortality experience, persistency, expenses and taxes, but will not exceed 0.90% annually. Currently, the charge is 0.40% for Policy Years 1 through 5, 0.25% for Policy Years 6 through 20 and 0.10% thereafter. On surrender and payment of the death benefit, we will deduct the pro-rata portion of the mortality and expense charge that has accrued.
Because the value of your Sub-Accounts can vary from month-to-month, the monthly deduction for the mortality and expense risk charge will also vary. If the amount the mortality and expense risk charge is insufficient to cover the costs resulting from the mortality and expense risks that we assume, we will bear the loss. If the amount we
charge is more than sufficient to cover such costs, we will make a profit on the charge. To the extent that we do make a profit from this charge, we may use this profit for any corporate purpose, including the payment of administrative, marketing, distribution, and other expenses in connection with the Policies.
The mortality risk we assume is that the group of lives insured under the Policies may, on average, live for shorter periods of time than we estimated. The expense risk we assume is that the costs of issuing and administering Policies may be more than we estimated.
Monthly Deduction. We make a monthly deduction from your Account Value on the Policy Date and the first day of each Policy Month. This monthly deduction will be charged proportionally to the amounts in the Divisions.
The monthly deduction equals the sum of (1), (2), (3), (4) and (5) where:
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(1) | is the cost of insurance charge (the monthly risk charge) equal to the current monthly risk rate (described below) multiplied by the net amount at risk divided by 1,000; |
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(2) | is the service charge; |
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(3) | is the monthly cost of any additional benefits provided by riders which are a part of your Policy; and |
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(4) | is any extra risk charge if the Insured is in a rated class as specified in your Policy; and |
(5) is the accrued mortality and expense charge.
The net amount at risk equals:
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• | the death benefit divided by 1.00327374; less |
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• | your Account Value on the first day of a Policy Month prior to assessing the monthly deduction. |
If there are increases in the Total Face Amount other than increases caused by changes in the death benefit option, the monthly deduction described above is determined separately for the initial Total Face Amount and each increase in the Total Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the most recent increase in the death benefit and then to each increase in the Total Face Amount in the reverse order in which the increases were made.
Monthly Risk Rates. The monthly risk rate is used to determine the cost of insurance charge (monthly risk charge) for providing insurance coverage under the Policy. The monthly risk rate is applied to the amount at risk. The monthly risk rates (except for any such rate applicable to an increase in the Total Face Amount) are based on the length of time your Policy has been in force and the Insured's sex (in the case of non-unisex Policies) and Issue Age. If the Insured is in a rated class as specified in your Policy, we will deduct an extra risk charge that reflects that class rating. The monthly risk rates applicable to each increase in the Total Face Amount are based on the length of time the increase has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age, and class rating, if any. The monthly risk rates will be determined by us from time to time based on our expectations of future experience with respect to mortality, persistency, interest rates, expenses and taxes, but will not exceed the guaranteed maximum monthly risk rates based on the 2001 Commissioner's Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table ("2001 CSO"). Currently, the guaranteed minimum monthly risk charge is $0.02 per $1000 and the guaranteed maximum is $83.33 per $1000. If your Policy is issued in Montana, unisex rates are charged and these rates will never exceed the male Smoker Ultimate Mortality Table.
The guaranteed maximum monthly risk rates reflect any class rating applicable to the Policy. We have filed a detailed statement of our methods for computing Account Values with the insurance department in each jurisdiction where the Policy was delivered. These values are equal to or exceed the minimum required by law.
The monthly risk rate is greater on policies that require less underwriting to be performed regardless of the health of the individual. Monthly risk rate charges will be greatest on guaranteed issue policies, followed by simplified issue policies, then fully underwritten policies.
Service Charge. We will deduct a maximum of $15 from your Account Value on the first day of each Policy Month to cover our administrative costs, such as salaries, postage, telephone, office equipment and periodic reports. This charge may be increased or decreased by us from time to time based on our expectations of future expenses, but will
never exceed $15 per Policy Month. The service charge will be deducted proportionally from the Divisions. The current service charge is $10 per Policy Month for Policy Years 1 through 3 and $7.50 per Policy Month thereafter.
Transfer Fee. A maximum administrative charge of $10 per Transfer of Account Value from one Division to other Divisions will be deducted from your Account Value for all Transfers in excess of 12 made in the same Policy Year. The allocation of your Initial Premium from the Great-West Money Market Division to your selected Divisions will not count toward the 12 free Transfers. Similarly, Transfers made under dollar cost averaging and periodic rebalancing under the rebalancer option are not subject to the fee and do not count as Transfers for this purpose (except a one-time rebalancing under the rebalancer option will count as one Transfer). All Transfers Requested on the same Business Day will be aggregated and counted as one Transfer. The current charge is $10 per Transfer.
Partial Withdrawal Fee. A maximum administrative fee of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. The partial withdrawal fee will be deducted proportionally from all Divisions.
Surrender Charges. Your Policy has no surrender charges.
Change of Death Benefit Option Fee. A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option. The change of death benefit fee will be deducted proportionally from all Divisions.
Fund Expenses. You indirectly bear the charges and expenses of the Funds whose shares are held by the Divisions to which you allocate your Account Value. The Series Account purchases shares of the Funds at net asset value. Each Fund's net asset value reflects investment advisory fees and administrative expenses already deducted from the Fund's assets. For more information concerning the investment advisory fees and other charges against the Funds, see the Fund prospectuses and the statements of additional information for the Funds, which are available upon Request.
We may receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the services we provide or the cost savings resulting from the arrangement and, therefore, may differ between Funds. See "Payments We Receive" on page 12.
General Description of Policy
Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply. The Policy described in this prospectus is offered to corporations and other employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We issue Policies on the lives of prospective Insureds who meet our underwriting standards.
Policy Rights
Owner. While the Insured is alive, unless you have assigned any of these rights, you may:
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• | transfer ownership to a new Owner; |
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• | name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured; |
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• | change or revoke a contingent owner; |
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• | change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable); |
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• | exercise all other rights in the Policy; |
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• | increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and |
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• | change the death benefit option, subject to the other provisions of the Policy. |
When you transfer your rights to a new Owner, you automatically revoke any prior contingent owner designation. When you want to change or revoke a prior Beneficiary designation, you have to specify that action. You do not affect a prior Beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation.
You do not need the consent of a Beneficiary or a contingent owner in order to exercise any of your rights. However, you must give us written notice satisfactory to us of the Requested action. Your Request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before it was received by us.
Beneficiary. The Beneficiary has no rights in the Policy until the death of the Insured, except an irrevocable Beneficiary cannot be changed without the consent of that Beneficiary. If a Beneficiary is alive at that time, the Beneficiary will be entitled to payment of the Death Benefit Proceeds as they become due.
Policy Limitations
Allocation of Net Premiums. Except as otherwise described herein, your net Premium will be allocated in accordance with the allocation percentages you select. Percentages must total 100% and can be up to two decimal places.
We will credit Premium payments received prior to the end of the free look period as described in the “Free Look Period” section of this prospectus on page 35.
You may change your allocation percentages at any time by Request.
Transfers Among Divisions. Subject to our rules as they may exist from time to time, you may at any time after the Free-Look Period Transfer to another Division all or a portion of the Account Value allocated to a Division. We will make Transfers pursuant to a Request.
Transfers may be Requested by indicating the Transfer of either a specified dollar amount or a specified percentage of the Division's value from which the Transfer will be made.
Transfer privileges are subject to our consent. We reserve the right to impose limitations on Transfers, including, but not limited to: (1) the minimum amount that may be Transferred; and (2) the minimum amount that may remain in a Division following a Transfer from that Division.
A fee of $10 per Transfer will apply for all Transfers in excess of 12 made in a Policy Year. We may increase or decrease the Transfer charge; however, it is guaranteed to never exceed $10 per Transfer. All Transfers Requested on the same Business Day will count as only one Transfer toward the 12 free Transfers. The Transfer of your Initial Premium from
the Great-West Money Market Division to your selected Divisions does not count toward the 12 free Transfers. Likewise, any Transfers under dollar cost averaging or periodic rebalancing of your Account Value under the rebalancer option do not count toward the 12 free Transfers (a one time rebalancing, however, will be counted as one Transfer).
Fixed Account Transfers. Transfers into the Fixed Account are limited to once every 60 days. Transfers from the Fixed Account may only be made once per year. The maximum to be transferred out will be the greater of 25% of your balance in the Fixed Account or the amount of the transfer in the previous 365 day period.
Market Timing & Excessive Trading. The Policies are intended for long-term investment and not for the purpose of market timing or excessive trading activity. Market timing activity may dilute the interests of Owners in the Funds. Market timing generally involves frequent or unusually large transfers that are intended to take advantage of short-term fluctuations in the value of a Fund's portfolio securities and the reflection of that change in the Fund's share price. In addition, frequent or unusually large transfers may harm performance by increasing Fund expenses and disrupting Fund management strategies. For example, excessive trading may result in forced liquidations of portfolio securities or cause the Fund to keep a relatively higher cash position, resulting in increased brokerage costs and lost investment opportunities.
We maintain procedures designed to discourage market timing and excessive trading by Owners. As part of those procedures, we will rely on the Funds to monitor for such activity. If a Fund believes such activity has occurred, we will scrutinize the Owner’s activity and request a determination from the Fund as to whether such activity constitutes market timing or excessive trading. If the Fund determines that the activity constitutes market timing or excessive trading, we will contact the Owner in writing to request that market timing and/or excessive trading stop immediately. We will then provide a subsequent report of the Owner's trading activity to the Fund. If the Fund determines that the Owner has not ceased improper trading, and upon request of the Fund, we will inform the Owner in writing that a trading restriction is being implemented. The four possible trading restrictions are:
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• | Restrict the Owner to inquiry-only access for the web and voice response unit so that the Owner will only be permitted to make Transfer Requests by written Request mailed to us through U.S. mail ("U.S. Mail Restriction"); the Owner will not be permitted to make Transfer Requests via overnight mail, fax, the web, or the call center. Once the U.S. Mail Restriction has been in place for 180 days, the restricted Owner may Request that we lift the U.S. Mail Restriction by signing, dating and returning a form to us whereby the Owner acknowledges the potentially harmful effects of market timing and/or excessive trading on Funds and other investors, represents that no further market timing or excessive trading will occur, and acknowledges that we may implement further restrictions, if necessary, to stop improper trading by the Owner; |
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• | Close the applicable Fund to all new monies, including contributions and Transfers in; |
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• | Restrict all Owners to one purchase in the applicable Fund per 90 day period; or |
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• | Remove the Fund as an investment option and convert all allocations in that Fund to a different investment option. |
The discretionary nature of our procedures creates a risk that we may treat some Owners differently than others.
Our market timing and excessive trading procedures are such that we do not impose trading restrictions unless or until a Fund first detects and notifies us of potential market timing or excessive trading activity. Accordingly, we cannot prevent all market timing or excessive trading transfer activity before it occurs, as it may not be possible to identify it unless and until a trading pattern is established. To the extent the Funds do not detect and notify us of market timing and/or excessive trading or the trading restrictions we impose fail to curtail it, it is possible that a market timer or excessive trader may be able to make market timing and/or excessive trading transactions with the result that the management of the Funds may be disrupted and the Owners may suffer detrimental effects such as increased costs, reduced performance, and dilution of their interests in the affected Funds.
We endeavor to ensure that our procedures are uniformly and consistently applied to all Owners, and we do not exempt any Owners from these procedures. In addition, we do not enter into agreements with Owners whereby we permit market timing or excessive trading. Subject to applicable state law and the terms of each Policy, we reserve the right without prior notice to modify, restrict, suspend or eliminate the Transfer privileges (including telephone Transfers) at any time, to require that all Transfer Requests be made by you and not by your designee, and to require that each Transfer Request be made by a separate communication to us. We also reserve the right to require that each Transfer Request be submitted in writing and be signed by you.
The Funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. The prospectuses for the Funds should describe any such policies and procedures. The frequent trading policies and procedures of a Fund may be different, and more or less restrictive, than the frequent trading policies and procedures of other Funds and the policies and procedures we have adopted to discourage market timing and excessive trading. For example, a Fund may impose a redemption fee. Owners should also be aware that we may not have the contractual obligation or the operational capacity to apply the frequent trading policies and procedures of the respective Funds that would be affected by the Transfers.
We may revise our market timing and excessive trading policy and related procedures at our sole discretion, at any time and without prior notice, as we deem necessary or appropriate to comply with state or federal regulatory requirements or to impose additional or alternative restrictions on Owners engaging in market timing or excessive trading. In addition, our orders to purchase shares of the Funds are generally subject to acceptance by the Fund, and in some cases a Fund may reject or reverse our purchase order. Therefore, we reserve the right to reject any Owner's Transfer Request if our order to purchase shares of the Fund is not accepted by, or is reversed by, an applicable Fund.
You should note that other insurance companies and retirement plans may invest in the Funds and that those companies or plans may or may not have their own policies and procedures on frequent transfers. You should also know that the purchase and redemption orders received by the Funds generally are “omnibus” orders from intermediaries such as retirement plans or separate accounts funding variable insurance contracts. Omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of variable insurance contracts. The nature of such orders may limit the Funds' ability to apply their respective frequent trading policies and procedures. As a result, there is a risk that the Funds may not be able to detect potential market timing and/or excessive trading activities in the omnibus orders they receive. We cannot guarantee that the Funds will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that invest in the Funds. If the policies and procedures of other insurance companies or retirement plans fail to successfully discourage frequent transfer activity, it may affect the value of your investments in the Funds. In addition, if a Fund believes that an omnibus order we submit may reflect one or more Transfer Requests from an Owner engaged in frequent transfer activity, the Fund may reject the entire omnibus order and thereby interfere with our ability to satisfy your Request even if you have not made frequent transfers. For Transfers into more than one investment option, we may reject or reverse the entire Transfer Request if any part of it is not accepted by or is reversed by a Fund.
Exchange of Policy. You may exchange your Policy for a new policy issued by Great-West that does not provide for variable benefits. The new policy will have the same Policy Date, Issue Age, and Insured as your Policy on the date of the exchange. The exchange must be made within 24 Policy Months after the Issue Date of your Policy and all Policy Debt must be repaid.
The cash value of your current Policy will be applied to the new policy as the Initial Premium.
Age Requirements. An Insured's Issue Age must be between 20 and 85 for Policies issued on a fully underwritten basis and between 20 and 70 for Policies issued on a guaranteed underwriting or a simplified underwriting basis.
Policy or Registrant Changes
Addition, Deletion or Substitution of Investment Options. Shares of any or all of the Funds may not always be available for purchase by the Divisions of the Series Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, shares of other registered open-end investment companies or unit investment trusts may be substituted both for Fund shares already purchased by the Series Account and/or as the security to be purchased in the future, provided that these substitutions have been approved by the SEC, to the extent necessary. We also may close a Division to future Premium allocations and Transfers of Account Value. A Division closing may affect dollar cost averaging and the rebalancer option. We reserve the right to operate the Series Account in any form permitted by law, to take any action necessary to comply with applicable law or obtain and continue any exemption from applicable laws, to assess a charge for taxes attributable to the operation of the Series Account or for other taxes, as described in "Charges and Deductions" beginning on page 23 of this prospectus, and to change the way in which we assess other charges, as long as the total other charges do not exceed the maximum guaranteed charges under the Policies. We also reserve the right to add Divisions, or to eliminate or combine existing Divisions or to Transfer assets between Divisions, or from any Division to our General Account. In the event of any substitution or other act described
in this paragraph, we may make appropriate amendment to the Policy to reflect the change.
Entire Contract. Your entire contract with us consists of the Policy, including the attached copy of your application and any attached copies of supplemental applications for increases in the Total Face Amount, any endorsements and any riders. Any illustrations prepared in connection with the Policy do not form a part of our contract with you and are intended solely to provide information about how values under the Policy, such as Cash Surrender Value, death benefit and Account Value, will change with the investment experience of the Divisions, and such information is based solely upon data available at the time such illustrations are prepared.
Alteration. Sales representatives do not have any authority to either alter or modify your Policy or to waive any of its provisions. The only persons with this authority are our president, secretary, or one of our vice presidents.
Modification. Upon notice to you, we may modify the Policy if such a modification –
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• | is necessary to make the Policy or the Series Account comply with any law or regulation issued by a governmental agency to which we are, or the Series Account is, subject; |
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• | is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy; |
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• | is necessary to reflect a change in the operation of the Series Account or the Divisions; or |
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• | adds, deletes or otherwise changes Division options. |
We also reserve the right to modify certain provisions of the Policy as stated in those provisions. In the event of any such modification, we may make appropriate amendment to the Policy to reflect such modification.
Assignments. During the lifetime of the Insured, you may assign all or some of your rights under the Policy. All assignments must be filed at our Corporate Headquarters and must be in written form satisfactory to us. The assignment will then be effective as of the date you signed the form, subject to any action taken before we received it. We are not responsible for the validity or legal effect of any assignment.
Notice and Elections. To be effective, all notices and elections under the Policy must be in writing, signed by you, and received by us at our Corporate Headquarters. Certain exceptions may apply. Unless otherwise provided in the Policy, all notices, Requests and elections will be effective when received at our Corporate Headquarters complete with all necessary information.
Account Value
Your Account Value is the sum of your interests in each Division you have chosen, plus your interests in the Fixed Account, plus the amount in your Loan Account. The Account Value varies depending upon the Premiums paid, expense charges applied to Premium, mortality and expense risk charge, service charges, monthly risk charges, partial withdrawals, fees, Policy loans and the net investment factor (described below) for the Divisions to which your Account Value is allocated and the interest credited to the Fixed Account.
We measure the amounts in the Divisions in terms of Units and Unit Values. On any given date, your interest in a Division is equal to the Unit Value multiplied by the number of Units credited to you in that Division. Amounts allocated to a Division will be used to purchase Units of that Division. Units are redeemed when you make partial withdrawals, undertake Policy loans or Transfer amounts from a Division, and for the payment of service charges, monthly mortality and expense charges, monthly risk charges and other fees. The number of Units of each Division purchased or redeemed is determined by dividing the dollar amount of the transaction by the Unit Value for the Division. The Unit Value for each Division was established at $10 for the first Valuation Date of the Division. The Unit Value for any subsequent Valuation Date is equal to the Unit Value for the preceding Valuation Date multiplied by the net investment factor (determined as provided below). The Unit Value of a Division for any Valuation Date is determined as of the close of the Valuation Period ending on that Valuation Date.
Transactions are processed on the date we receive a Premium at our Corporate Headquarters or upon approval of a Request. If your Premium or Request is received on a date that is not a Valuation Date, or after the close of the NYSE on a Valuation Date, the transaction will be processed on the next Valuation Date.
The Account Value on the Policy Date equals:
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• | that portion of net Premium received and allocated to the Division, plus |
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• | that portion of net Premium received and allocated to the Fixed Account, less |
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• | the service charges due on the Policy Date, less |
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• | the monthly risk charge due on the Policy Date, less |
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• | the monthly risk charge for any riders due on the Policy Date. |
We apply your Initial Premium on the Policy Date, which will be the Issue Date (if we have already received your Initial Premium) or the Business Day we receive a Premium equal to, or in excess of, the Initial Premium after we have approved your application.
The Account Value attributable to each Division of the Series Account on the subsequent Valuation Dates is equal to:
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• | the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division's net investment factor, plus |
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• | that portion of net Premium received and allocated to the Division during the current Valuation Period, plus |
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• | that portion of the value of the Loan Account Transferred to the Division upon repayment of a Policy loan during the current Valuation Period, plus |
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• | any amounts Transferred by you to the Division from another Division during the current Valuation Period, less |
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• | any amounts Transferred by you from the Division to another Division during the current Valuation Period, less |
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• | that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less |
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• | that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less |
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• | that portion of fees due in connection with a partial withdrawal charged to the Division, less |
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• | the mortality and expense risk charge for each day in the Valuation Period, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the service charge for the Policy Month just beginning charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the monthly risk charge for the Policy Month just beginning charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that portion of the mortality and expense risk charge for the Policy Month just ending charged to the Division, less |
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• | if the first day of a Policy Month occurs during the current Valuation Period, that Division's portion of the cost for any riders and any extra risk charge if the Insured is in a rated class as specified in your Policy, for the Policy Month just beginning. |
Net Investment Factor. The net investment factor for each Division for any Valuation Period is determined by dividing (1) by (2) where:
(1) is the net result of:
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• | the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus |
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• | the per share amount of any dividend or other distribution declared on Fund shares held in the Division if the "ex-dividend" date occurs during the current Valuation Period, plus or minus |
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• | a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the current Valuation Period which are determined by us to be attributable to the operation of the Division; and |
(2) is the net result of:
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• | the net asset value of a Fund share held in the Division determined as of the end of the preceding Valuation Period, plus or minus |
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• | a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the preceding Valuation Period which are determined by us to be attributable to the operation of the Division. |
The net investment factor may be greater or less than or equal to one. Therefore, the Unit Value may increase, decrease or remain unchanged.
The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of each Fund. These fees and expenses are not fixed or specified under the terms of the Policy, may differ between Funds, and may vary from year to year. Fund fees and expenses are described in each Fund prospectus.
The Fixed Account Value is:
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• | Premiums, less expense charges, allocated to the Fixed Account; plus |
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• | Sub-Account Value transferred to the Fixed Account; plus |
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• | Interest credited to the Fixed Account; minus |
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• | Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus |
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• | The portion of any accrued policy fees and charges allocated to the Fixed Account; |
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• | Loans from the Fixed Account; minus |
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• | Transfers from the Fixed Account, including any applicable transfer charges. |
During any Policy Month the Fixed Account Value will be calculated on a consistent basis. For purposes of crediting interest, policy value deducted, transferred or withdrawn from the Fixed Account is accounted for on a first in first out basis.
The mortality and expense risk charge for the Valuation Period is the annual mortality and expense risk charge divided by 365 multiplied by the number of days in the Valuation Period.
Splitting Units. We reserve the right to split or combine the value of Units. In effecting any such change, strict equity will be preserved and no such change will have a material effect on the benefits or other provisions of your Policy.
Other Provisions and Benefits
Misstatement of Age or Sex (Non-Unisex Policy). If the age or (in the case of a non-unisex Policy) sex of the Insured is stated incorrectly in your Policy application or rider application, we will adjust the amount payable appropriately as described in the Policy.
If we determine that the Insured was not eligible for coverage under the Policy after we discover a misstatement of the Insured's age, our liability will be limited to a return of Premiums paid, less any partial withdrawals, any Policy Debt, and the cost for riders.
Suicide. If the Insured, whether sane or insane, commits suicide within two years after your Policy's Issue Date (one year if your Policy is issued in Colorado or North Dakota), we will not pay any part of the Death Benefit Proceeds. We will pay the Beneficiary the Premiums paid, less the amount of any Policy Debt, any partial withdrawals and the cost for riders.
If the Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Total Face Amount (one year if your Policy is issued in Colorado or North Dakota), then our liability as to that increase will be the cost of insurance for that increase and that portion of the Account Value attributable to that increase. The Total Face Amount of the Policy will be reduced to the Total Face Amount that was in effect prior to the increase.
Incontestability. All statements made in the application or in a supplemental application are representations and not warranties. We relied and will continue to rely on those statements when approving the issuance, increase in face amount, increase in death benefit over Premium paid, or change in death benefit option of the Policy. In the absence of fraud, we can use no statement in defense of a claim or to cancel the Policy for misrepresentation unless the statement was made in the application or in a supplemental application. In the absence of fraud, after the Policy has been in force during the lifetime of the Insured for a period of two years from its Issue Date, we cannot contest it except for non-payment of Premiums. However, any increase in the Total Face Amount which is effective after the Issue Date will be incontestable only after such increase has been in force during the lifetime of the Insured for two years from the effective
date of coverage of such increase.
Paid-Up Life Insurance. When the Insured reaches Attained Age 121 (if your Policy is in force at that time), the entire Account Value of your Policy (less outstanding Policy Debt) will be applied as a single Premium to purchase "paid-up" insurance which means all premiums have been paid and there are no additional premiums due. Outstanding Policy Debt will be repaid at this time. This repayment may be treated as a taxable distribution to you if your Policy is not a MEC. The net single Premium for this insurance will be based on the 2001 Commissioner's Standard Ordinary, Sex Distinct, Non-Smoker Mortality Table and 4% interest. The cash value of your paid-up insurance, which initially is equal to the net single Premium, will remain in the Divisions of the Series Account in accordance with your then current allocation. While the paid-up life insurance is in effect your assets will remain in the Series Account. You may change your Division allocation instructions and you may Transfer your cash value among the Divisions. All charges under your Policy, to the extent applicable, will continue to be assessed, except we will no longer make a deduction each Policy Month for the monthly risk charge. Your death benefit will be fixed by the Code for insured age 99. As your cash value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly. You may surrender the paid-up insurance Policy at any time and, if surrendered within 30 days of a Policy Anniversary, its cash value will not be less than it was on that Policy Anniversary. Please see "Federal Income Tax Considerations -- Treatment When Insured Reaches Attained Age 121" on page 43.
Supplemental Benefits. The following supplemental benefit riders are available, subject to certain limitations. An additional monthly risk charge will be assessed for each rider that is in force as part of the monthly deduction from your Account Value. If a supplemental benefit rider is terminated, the monthly risk charge for such rider will end immediately. See fee tables beginning on page 9.
Term Life Insurance Rider. This rider provides term life insurance on the Insured. Coverage is renewable annually until the Insured's Attained Age 121. The amount of coverage provided under this rider varies from month to month as described below. We will pay the rider's death benefit to the Beneficiary when we receive Due Proof of death of the Insured while this rider is in force.
This rider provides the same three death benefit options as your Policy. The option you choose under the rider must at all times be the same as the option you have chosen for your Policy. The rider's death benefit will be determined at the beginning of each Policy Month in accordance with one of those options. For each of the options, any outstanding Policy Debt will reduce your death benefit.
If you purchase this rider, the Total Face Amount shown on your Policy's specifications page will be equal to the minimum amount of coverage provided by this rider plus the base face amount (which is the minimum death benefit under your Policy without the rider’s death benefit). The minimum allocation of Total Face Amount between your Policy and the rider is 10% and 90% at inception, respectively. The total Death Benefit Payable under the rider and the Policy will be determined as described in "Death Benefit" below, using the Total Face Amount shown on your Policy’s specifications page.
Coverage under this rider will take effect on the latter of:
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• | the Policy Date of the Policy to which this rider is attached; or |
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• | the date this rider is delivered and the first rider premium is paid to the Company |
The monthly risk rate for this rider will be the same as that used for the Policy and the monthly risk charge for the rider will be determined by multiplying the monthly risk rate by the rider's death benefit. This charge will be calculated on the first day of each Policy Month and added to the Policy's monthly risk charge.
If you purchase this rider, the sales load and return of expense charge will be proportionately lower as a result of a reduction in commission payments. Commissions payable to sales representatives for the sale of the Policy are calculated based on the total Premium payments. As a result, this rider generally is not offered in connection with any Policy with annual Premium payments of less than $100,000, except for policies issued on a guaranteed issue basis. In our discretion, we may decline to offer this rider or refuse to consent to a proposed allocation of coverage between a Policy and term rider.
If this rider is offered, the commissions will vary depending on the allocation of your coverage between the Policy and the term rider. The same initial Death Benefit will result in the highest commission when there is no term rider, with the commission declining as the portion of the Death Benefit coverage allocated to the term rider increases. Thus, the lowest commission amount is payable, and the lowest amount of sales load deducted from your Premiums will occur, when the maximum term rider is purchased.
You may terminate this rider by Request. This rider also will terminate on the earliest of the following dates:
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• | the date the Policy is surrendered or terminated; |
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• | the expiration of the grace period of the Policy; or |
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• | the death of the Insured. |
Change of Insured Rider (Not available to individual purchasers). This rider permits you to change the Insured under your Policy or any Insured that has been named by virtue of this rider. Before we change the Insured you must provide us with (1) a Request for the change signed by you and approved by us; (2) Evidence of Insurability for the new Insured; (3) evidence that there is an insurable interest between you and the new Insured; (4) evidence that the new Insured's age, at the nearest birthday, is under 70 years; and (5) evidence that the new Insured was born prior to the Policy Date. We may charge a fee for administrative expenses when you change the Insured. The minimum charge is $100 per change and the maximum charge is $400 per change. When a change of Insured takes effect, Premiums will be based on the new Insured's age, sex, mortality class and the Premium rate in effect on the Policy Date.
Report to Owner. We will maintain all records relating to the Series Account and the Divisions and the Fixed Account. We will send you a report at least once each Policy Year within 30 days after a Policy Anniversary. The report will show current Account Value, current allocation in each Division, death benefit, Premiums paid, investment experience since your last report, deductions made since the last report, and any further information that may be required by laws of the state in which your Policy was issued. It will also show the balance of any outstanding Policy loans and accrued interest on such loans. There is no charge for this report.
In addition, we will send you the financial statements of the Funds and other reports as specified in the 1940 Act. We also will mail you confirmation notices or other appropriate notices of Policy transactions quarterly or more frequently within the time periods specified by law. Please give us prompt written notice of any address change. Please read your statements and confirmations carefully and verify their accuracy and contact us promptly with any questions.
Dollar Cost Averaging. By Request, you may elect dollar cost averaging in order to purchase Units of the Divisions over a period of time. There is no charge for this service.
Dollar cost averaging permits you to automatically Transfer a predetermined dollar amount, subject to our minimum, at regular intervals from any one or more designated Divisions to one or more of the remaining, then available Divisions. The Unit Value will be determined on the dates of the Transfers. You must specify the percentage to be Transferred into each designated Division. Transfers may be set up on any one of the following frequency periods: monthly, quarterly, semiannually, or annually. The Transfer will be initiated one frequency period following the date of your Request. We will provide a list of Divisions eligible for dollar cost averaging that may be modified from time to time. Amounts Transferred through dollar cost averaging are not counted against the 12 free Transfers allowed in a Policy Year. You may not participate in dollar cost averaging and the rebalancer option (described below) at the same time. Participation in dollar cost averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. We reserve the right to modify, suspend, or terminate dollar cost averaging at any time.
Rebalancer Option. By Request, you may elect the rebalancer option in order to automatically Transfer Account Value among the Divisions on a periodic basis. There is no charge for this service. This type of transfer program automatically reallocates your Account Value so as to maintain a particular percentage allocation among Divisions chosen by you. The amount allocated to each Division will grow or decline at different rates depending on the investment experience of the Divisions. Rebalancing does not change your Premium allocation unless that option is checked on the rebalancer Request. Your Premium allocation can also be changed by written Request at the address on the first page of this prospectus.
You may Request that rebalancing occur one time only, in which case the Transfer will take place on the date of the Request. This Transfer will count as one Transfer towards the 12 free Transfers allowed in a Policy Year.
You may also choose to rebalance your Account Value on a quarterly, semiannual, or annual basis, in which case the first Transfer will be initiated one frequency period following the date of your Request. On that date, your Account Value will be automatically reallocated to the selected Divisions. Thereafter, your Account Value will be rebalanced once each frequency period. In order to participate in the rebalancer option, your entire Account Value must be included. Transfers made with these frequencies will not count against the 12 free Transfers allowed in a Policy Year.
You must specify the percentage of Account Value to be allocated to each Division and the frequency of rebalancing. You may terminate the rebalancer option at any time by Request.
You may not participate in the rebalancer option and dollar cost averaging at the same time. Participation in the rebalancer option does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate the rebalancer option at any time.
Non-Participating. The Policy does not pay dividends.
Premiums
Policy Application, Issuance and Initial Premium. To purchase a Policy, you must submit an application to our Corporate Headquarters. We will then follow our underwriting procedures designed to determine the insurability of the applicant. We may require full underwriting, which includes a medical examination and further information, before your application may be approved. We also may offer the Policy on a simplified underwriting or guaranteed issue basis. Applicants must be acceptable risks based on our applicable underwriting limits and standards. We will not issue a Policy until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application for any lawful reason or to "rate" an Insured as a substandard risk, which will result in increased monthly risk rates. The monthly risk rate also may vary depending on the type of underwriting we use.
You must specify certain information in the application, including the Total Face Amount, the death benefit option and supplemental benefits, if any. The Total Face Amount generally may not be decreased below $100,000.
Upon approval of the application, we will issue to you a Policy on the life of the Insured. A specified Initial Premium must be paid before we issue the Policy. The effective date of coverage for your Policy (which we call the "Policy Date") will be the date we receive a Premium equal to or in excess of the specified Initial Premium after we have approved your application. If your Premium payment is received on the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that month.
We generally do not accept Premium payments before approval of an application; however, at our discretion, we may elect to do so. While your application is in underwriting, if we accept your Premium payment before approval of your application, we will provide you with temporary insurance coverage in accordance with the terms of our temporary insurance agreement. In our discretion, we may limit the amount of Premium we accept and the amount of temporary coverage we provide. If we approve your application, we will allocate your Premium payment to the Series Account or Fixed Account on the Policy Date, as described below. Otherwise, we will promptly return your payment to you. We will not credit interest to your Premium payment for the period while your application is in underwriting.
We reserve the right to change the terms or conditions of your Policy to comply with differences in applicable state law. Variations from the information appearing in this prospectus due to individual state requirements are described in supplements that are attached to this prospectus or in endorsements to the Policy, as appropriate.
Free Look Period. During the free look period (ten days or longer where required by state law), you may cancel your Policy. If you exercise the free look privilege, you must return the Policy to our Corporate Headquarters or to the representative from whom you purchased the Policy.
Generally, net Premium will be allocated to the Divisions you selected on the application. However, under certain circumstances described below, the net Premium will first be allocated to the Great-West Money Market Division and remain there until the next Valuation Date following the end of the free look period. On that date, the Sub-Account value held in the Great-West Money Market Division will be allocated to the Division(s) selected by you. If your
Premium payments are received after 4:00 PM EST/EDT, such payments will be credited on the next Valuation Date. Regardless of when the payment is credited, you will receive the utilized values from the date we received your payment.
During the free look period, you may change your Division allocations and your allocation percentages, however depending on whether your state permits the immediate investment of your premium, changes made during the free look period may not take effect until after the free look period has expired.
Policies returned during the free look period will be void from the Issue Date. In some states, we will refund your current Account Value plus the return of any expense charges deducted. In those states, this amount may be higher or lower than your Premium payments, which means you bear the investment risk during the free look period.
Certain states require that we return the greater of your Account Value (less any surrenders, withdrawals and distributions already received) or the amount of the Premiums received. In those states, we will allocate your net Premium payments to the Great-West Money Market Division. We will Transfer the Account Value in that Division to the other Divisions of the Series Account in accordance with your most recent allocation instructions on file at the end of the free look period.
Premium. All Premium payments must be made payable to "Great-West Life & Annuity Insurance Company" and mailed to our Corporate Headquarters. The Initial Premium will be due and payable on or before your Policy's Issue Date. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100. You may pay additional Premium payments to us in the amounts and at the times you choose, subject to the limitations described below. To find out whether your Premium payment has been received, contact us at the address or telephone number shown on the first page of this prospectus.
We reserve the right to limit the number of Premium payments we accept on an annual basis. No Premium payment may be less than $100 per Policy without our consent, although we will accept a smaller Premium payment if necessary to keep your Policy in force. We reserve the right to restrict or refuse any Premium payments that exceed the Initial Premium amount shown on your Policy. We also reserve the right not to accept a Premium payment that causes the death benefit to increase by an amount that exceeds the Premium received. Evidence of insurability satisfactory to us may be required before we accept any such Premium.
We will not accept Premium payments that would, in our opinion, cause your Policy to fail to qualify as life insurance under applicable federal tax law. If a Premium payment is made in excess of these limits, we will accept only that portion of the Premium within those limits, and will refund the remainder to you.
Net Premiums. The net Premium is the amount you pay as the Premium less any expense charges applied to Premiums. See "Charges and Deductions - - Expense Charge Applied to Premium," on page 23.
Planned Periodic Premiums. While you are not required to make additional Premium payments according to a fixed schedule, you may select a planned periodic Premium schedule and corresponding billing period, subject to our limits. We will send you reminder notices for the planned periodic Premium, unless you Request to have reminder notices suspended. You are not required, however, to pay the planned periodic Premium; you may increase or decrease the planned periodic Premium subject to our limits, and you may skip a planned payment or make unscheduled payments. Depending on the investment performance of the Divisions you select, the planned periodic Premium may not be sufficient to keep your Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of your Policy.
Death Benefits
Death Benefit. If your Policy is in force at the time of the Insured's death, we will pay the Beneficiary an amount based on the death benefit option you select once we have received Due Proof of the Insured's death. The amount payable will be:
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• | the amount of the selected death benefit option, less |
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• | the value of any Policy Debt on the date of the Insured's death, less |
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• | any accrued and unpaid Policy charges. |
We will pay this amount to the Beneficiary in one lump sum, unless the Beneficiary and we agree on another form of settlement. We will pay interest, at a rate not less than that required by law, on the amount of Death Benefit Proceeds, if payable in one lump sum, from the date of the Insured's death to the date of payment.
In order to meet the definition of life insurance under the Code, section 7702 of the Code defines alternative testing procedures for the minimum death benefit under a Policy. See "Federal Income Tax Considerations - Tax Status of the Policy," on page 41. Your Policy must qualify under the cash value accumulation test (“CVAT”).
Under the CVAT testing procedures, there is a minimum death benefit required at all times equal to your Account Value multiplied by a pre-determined factor. The factors used to determine the minimum death benefit vary by age. The factors (expressed as percentages) used for the CVAT are set forth in your Policy.
The Policy has two death benefit options.
Option 1. The "Level Death" Option. Under this option, the death benefit is –
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• | the Policy's Total Face Amount on the date of the Insured's death less any partial withdrawals; or, if greater, |
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• | the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to minimize your cost of insurance (monthly risk charge).
Option 2. The "Coverage Plus" Option. Under this option, the death benefit is –
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• | the sum of the Total Face Amount and Account Value of the Policy on the date of the Insured's death less any partial withdrawals; or, if greater, |
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• | the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to maximize your death benefit.
Your Account Value and death benefit fluctuate based on the performance of the investment options you select and the expenses and deductions charged to your account. See the “Account Value” and “Charges and Deductions” sections of this prospectus.
There is no minimum death benefit guarantee associated with this Policy.
Changes in Death Benefit Option. After the first Policy Year, but not more than once each Policy Year, you may change the death benefit option by Request. Any change will be effective on the first day of the Policy Month following the date we approve your Request. A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option.
A change in the death benefit option will not change the amount payable upon the death of the Insured on the date of change. Any change is subject to the following conditions:
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• | If the change is from option 1 to option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the Account Value. Evidence of insurability may be required. |
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• | If the change is from option 2 to option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the Account Value. |
Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time within certain limits.
Minimum Changes. Each increase or decrease in the Total Face Amount must be at least $25,000. We reserve the right to change the minimum amount by which you may change the Total Face Amount.
Increases in Total Face Amount. To Request an increase in Total Face Amount, you must provide satisfactory evidence
of the Insured's insurability. Once approved by us, an increase will become effective on the Policy Anniversary following our approval of your Request, subject to the deduction of the first Policy Month's monthly risk charge, service charge, any extra risk charge if the Insured is in a rated class and the cost of any riders.
Each increase to the Total Face Amount is considered to be a new segment to the Policy. When an increase is approved, Premium is allocated against the original Policy segment up to the seven-pay Premium limit established on the Issue Date. Any excess Premium is then allocated toward the new segment. Each segment will have a separate target Premium associated with it. The expense charge applied to Premium is higher up to target and lower for Premium in excess of the target as described in detail in the “Charges and Deductions” section of this prospectus. The expense charge formula will apply to each segment based on the target Premium for that segment. In addition, each segment will have a new incontestability period and suicide exclusion period as described in the "Other Provisions and Benefits" section of this prospectus.
Decreases in Total Face Amount. A decrease in Total Face Amount will become effective at the beginning of the next Policy Month following our approval of your Request. The Total Face Amount after the decrease must be at least $100,000.
For purposes of the incontestability provision of your Policy, any decrease in Total Face Amount will be applied in the following order:
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• | first, to the most recent increase; |
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• | second, to the next most recent increases, in reverse chronological order; and |
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• | finally, to the initial Total Face Amount. |
Surrenders and Withdrawals
Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate. To surrender your Policy, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork necessary for you to Request the surrender of your Policy. The proceeds of a surrender will be payable within seven days of our receipt of the completed Request.
We will determine your Cash Surrender Value (minus any charges not previously deducted) as of the end of the first Valuation Date after we receive your Request for surrender.
If you withdraw part of the Cash Surrender Value, your Policy's death benefit will be reduced and you may incur taxes and tax penalties.
You may borrow from us using your Account Value as collateral.
A surrender may have tax consequences, including tax penalties. See “Federal Income Tax Considerations – Tax Treatment of Policy Benefits,” beginning on page 41 of this prospectus.
Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A partial withdrawal fee will be deducted from your Account Value for all partial withdrawals after the first made during the same Policy Year. This administrative fee is guaranteed to be no greater than $25. To Request a partial withdrawal, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork necessary for you to request a withdrawal from your Policy. The proceeds of any such partial withdrawal will be payable within seven days of our receipt of the completed Request.
The Death Benefit Proceeds will be reduced by the amount of any partial withdrawals.
Your Account Value will be reduced by the amount of a partial withdrawal. The amount of a partial withdrawal will be withdrawn from the Divisions in proportion to the amounts in the Divisions bearing on your Account Value. You cannot repay amounts taken as a partial withdrawal. Any subsequent payments received by us will be treated as additional Premium payments and will be subject to our limitations on Premiums.
A partial withdrawal may have tax consequences. See "Federal Income Tax Considerations - - Tax Treatment of Policy Benefits," beginning on page 41 of this prospectus.
Loans
Policy Loans. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made less any accrued loan interest and less the current monthly deductions remaining for the balance of the Policy Year. When a Policy loan is made, a portion of your Account Value equal to the amount of the Policy loan will be allocated to the Loan Account as collateral for the loan. This amount will not be affected by the investment experience of the Series Account while the loan is outstanding and will be subtracted from the Divisions in proportion to the amounts in the Divisions bearing on your Account Value. The minimum Policy loan amount is $500.
The interest rate on the Policy loan will be determined annually, using a simple interest formula, at the beginning of each Policy Year. Specific loan interest rate information can be obtained by calling 1-888-353-2654 . That interest rate will be guaranteed for that Policy Year and will apply to all Policy loans outstanding during that Policy Year. Interest is due and payable on each Policy Anniversary. Interest not paid when due will be added to the principal amount of the loan and will bear interest at the loan interest rate.
Presently, the maximum interest rate for Policy loans is the Moody's Corporate Bond Yield Average - Monthly Average Corporates, which is published by Moody's Investor Service, Inc. If the Moody’s Corporate Bond Yield Average ceases to be published, the maximum interest rate for Policy loans will be derived from a substantially similar average adopted by your state's Insurance Commissioner.
We must reduce our Policy loan interest rate if the maximum loan interest rate is lower than the loan interest rate for the previous Policy Year by one-half of one percent or more.
We may increase the Policy loan interest rate but such increase must be at least one-half of one percent. No increase may be made if the Policy loan interest rate would exceed the maximum loan interest rate. We will send you advance notice of any increase in the Policy loan rate.
Interest will be credited to amounts held in the Loan Account using a compound interest formula. The rate will be no less than the Policy loan interest rate then in effect less a maximum of 0.9%.
All payments we receive from you will be treated as Premium payments unless we have received notice, in form satisfactory to us, that the funds are for loan repayment. If you have a Policy loan, it is generally advantageous to repay the loan rather than make a Premium payment because Premium payments incur expense charges whereas loan repayments do not. Loan repayments will first reduce the outstanding balance of the Policy loan and then accrued but unpaid interest on such loans. We will accept repayment of any Policy loan at any time while the Policy is in force. Amounts paid to repay a Policy loan will be allocated to the Divisions in accordance with your allocation instructions then in effect at the time of repayment. Any amount in the Loan Account used to secure the repaid loan will be allocated back to the Sub-Accounts.
A Policy loan, whether or not repaid, will affect the Death Benefit Proceeds, payable upon the Insured's death, and the Account Value because the investment results of the Divisions do not apply to amounts held in the Loan Account. The longer a loan is outstanding, the greater the effect is likely to be, depending on the investment results of the Divisions while the loan is outstanding. The effect could be favorable or unfavorable.
Lapse and Reinstatement
Lapse and Continuation of Coverage. If you cease making Premium payments, coverage under your Policy and any riders to the Policy will continue until your Account Value, less any Policy Debt, is insufficient to cover the monthly deduction. When that occurs, the grace period will go into effect.
Grace Period. If the first day of a Policy Month occurs during the Valuation Period and your Account Value, less any Policy Debt, is not sufficient to cover the monthly deduction for that Policy Month, then your Policy will enter the grace period described below. If you do not pay sufficient additional Premiums during the grace period, your Policy
will terminate without value.
The grace period will allow 61 days for the payment of Premium sufficient to keep the Policy in force. Any such Premium must be in an amount sufficient to cover deductions for the monthly risk charge, the service charge, the cost for any riders and any extra risk charge if the Insured is in a rated class for the next two Policy Months. Notice of Premium due will be mailed to your last known address or the last known address of any assignee of record at least 31 days before the date coverage under your Policy will cease. If the Premium due is not paid within the grace period, then the Policy and all rights to benefits will terminate without value at the end of the 61-day period. The Policy will continue to remain in force during this grace period. If the Death Benefit Proceeds become payable by us during the grace period, then any due and unpaid Policy charges will be deducted from the amount payable by us.
Termination of Policy. Your Policy will terminate on the earliest of the date we receive your Request to surrender, the expiration date of the grace period due to insufficient value or the date of death of the Insured. Upon lapse or termination, the Policy no longer provides insurance benefits.
Reinstatement. Before the Insured's death, we will reinstate your Policy, provided that the Policy has not been surrendered, and provided further that:
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• | you make your reinstatement Request within three years from the date of termination; |
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• | you submit satisfactory Evidence of Insurability to us; |
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• | you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period; |
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• | you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and |
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• | you repay or reinstate any Policy loan that was outstanding on the date coverage ceased, including interest at 6.00% per year compounded annually from the date coverage ceased to the date of reinstatement of your Policy. |
A reinstated Policy's Total Face Amount may not exceed the Total Face Amount at the time of termination. Your Account Value on the reinstatement date will reflect:
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• | the Account Value at the time of termination; plus |
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• | net Premiums attributable to Premiums paid to reinstate the Policy; less |
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• | the monthly expense charge; less |
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• | the monthly cost of insurance charge applicable on the date of reinstatement; less |
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• | The expense charge applied to Premium. |
The effective date of reinstatement will be the date the application for reinstatement is approved by us.
Deferral of Payment. We will usually pay any amount due from the Series Account within seven days after the Valuation Date following your Request giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment of any amount payable from the Series Account on death, surrender, partial withdrawal, or Policy loan may be postponed whenever:
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• | the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted; |
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• | the SEC, by order, permits postponement for the protection of Owners; or |
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• | an emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonably practicable, or it is not reasonably practicable to determine the value of the assets of the Series Account. |
Federal Income Tax Considerations
The following summary provides a general description of the federal income tax considerations associated with the Policy and does not purport to be complete or to cover all situations. This discussion is not intended as tax advice. You should consult counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the Internal Revenue Service’s (the "IRS") current interpretation of current federal income tax laws. We make no representation as to the likelihood of continuation of the current federal income tax laws or of the current interpretations by the IRS. We do not make any guarantee regarding the tax status of any Policy or any transaction regarding the Policy.
The Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the use of the Policy in any such arrangement is contemplated, you should consult a qualified tax adviser for advice on the tax attributes and consequences of the particular arrangement.
Tax Status of the Policy
A Policy has certain tax advantages when treated as a life insurance contract within the meaning of section 7702 of the Code. We believe that the Policy meets the section 7702 definition of a life insurance contract and will take whatever steps are appropriate and reasonable to attempt to cause the Policy to comply with section 7702. We reserve the right to amend the Policy to comply with any future changes in the Code, any regulations or rulings under the Code and any other requirements imposed by the IRS.
Diversification of Investments. Section 817(h) of the Code requires that the investments of each Division of the Series Account be "adequately diversified" in accordance with certain Treasury Department regulations. Disqualification of the Policy as a life insurance contract for failure to comply with the diversification requirements would result in the imposition on you of federal income tax at ordinary income tax rates with respect to the earnings allocable to the Policy in the year of the failure and all prior years prior to the receipt of payments under the Policy. We believe that the Divisions will be adequately diversified.
Policy Owner Control. In connection with its issuance of temporary and proposed regulations under Section 817(h) in 1986, the Treasury Department announced that those regulations did not "provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor (i.e., the Owner), rather than the insurance company to be treated as the owner of the assets in the account" (which would result in the current taxation of the income on those assets to the Owner). In Revenue Ruling 2003-91, the IRS provided such guidance by describing the circumstances under which the owner of a variable contract will not possess sufficient control over the assets underlying the contract to be treated as the owner of those assets for federal income tax purposes. Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract is to be treated as the owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances. We do not believe that your ownership rights under the Policy would result in your being treated as the Owner of the assets of the Policy under Rev. Rul. 2003-91. However, we do not know whether additional guidance will be provided by the IRS on this issue and what standards may be contained in such guidance. Therefore, we reserve the right to modify the Policy as necessary to attempt to prevent an Owner from being considered the owner of a pro rata share of the assets of the Policy.
The following discussion assumes that your Policy will qualify as a life insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
Life Insurance Death Benefit Proceeds. In general, the amount of the Death Benefit Payable under your Policy is excludible from your Beneficiary’s gross income under the Code.
If the death benefit is not received in a lump sum and is, instead, applied under a proceeds option agreed to by us and the Beneficiary, payments generally will be prorated between amounts attributable to the death benefit, which will be excludible from the Beneficiary's income, and amounts attributable to interest (occurring after the Insured's death), which will be includable in the Beneficiary's income.
Tax Deferred Accumulation. Any increase in your Account Value is generally not taxable to you. If you receive or are deemed to receive amounts from the Policy before the Insured dies, see the following section entitled “Distributions” for a more detailed discussion of the taxability of such payments.
Depending on the circumstances, any of the following transactions may have federal income tax consequences:
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• | the exchange of a Policy for a life insurance, endowment or annuity contract; |
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• | a change in the death benefit option; |
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• | a change in the ownership of a Policy; |
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• | a change of the named Insured; or |
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• | an assignment of a Policy. |
In addition, federal, state and local transfer and other tax consequences of ownership or receipt of Death Benefit Proceeds will depend on your circumstances and those of the named Beneficiary. Whether partial withdrawals (or other amounts deemed to be distributed) constitute income subject to federal income tax depends, in part, upon whether your Policy is considered a MEC.
Surrenders. If you surrender your Policy, you will recognize ordinary income to the extent the Account Value exceeds the "investment in the contract," which is generally the total of Premiums and other consideration paid for the Policy, less all amounts previously received under the Policy to the extent those amounts were excludible from gross income.
Modified Endowment Contracts. Section 7702A of the Code treats certain life insurance contracts as MECs. In general, a Policy will be treated as a MEC if total Premiums paid at any time during the first seven Policy Years exceed the sum of the net level Premiums which would have been paid on or before that time if the Policy provided for paid-up future benefits after the payment of seven level annual Premiums ("seven-pay test"). In addition, a Policy may be treated as a MEC if there is a "material change" to the Policy.
We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC without instruction to do so from you. We will promptly notify you or your agent of the excess cash received. We will not process the Premium payment unless we receive a MEC acceptance form or Policy change form within 48 hours of receipt of the excess funds. If paperwork is received that allows us to process the excess cash, the effective date will be the date of the new paperwork.
Further, if a transaction occurs which decreases the Total Face Amount of your Policy during the first seven years, we will retest your Policy, as of the date of its purchase, based on the lower Total Face Amount to determine compliance with the seven-pay test. Also, if a decrease in Total Face Amount occurs within seven years of a "material change," we will retest your Policy for compliance as of the date of the "material change." Failure to comply in either case would result in the Policy's classification as a MEC regardless of our efforts to provide a payment schedule that would not otherwise violate the seven-pay test.
The rules relating to whether a Policy will be treated as a MEC are complex and cannot be fully described in the limited confines of this summary. Therefore, you should consult with a competent tax adviser to determine whether a particular transaction will cause your Policy to be treated as a MEC.
Distributions
Distributions Under a Policy That Is Not a MEC. If your Policy is not a MEC, a distribution is generally treated first as a tax-free recovery of the "investment in the contract," and then as a distribution of taxable income to the extent the distribution exceeds the "investment in the contract." An exception is made for cash distributions that occur in the first 15 Policy Years as a result of a decrease in the death benefit or other change that reduces benefits under the Policy that are made for purposes of maintaining compliance with section 7702. Such distributions are taxed in whole or part as ordinary income (to the extent of any gain in the Policy) under rules prescribed in section 7702.
If your Policy is not a MEC, Policy loans and loans secured by the Policy are generally not treated as distributions. Such loans are instead generally treated as your indebtedness.
Finally, if your Policy is not a MEC, distributions (including distributions upon surrender), Policy loans and loans secured by the Policy are not subject to the ten percent additional tax applicable to distributions from a MEC.
Distributions Under Modified Endowment Contracts. If treated as a MEC, your Policy will be subject to the following
tax rules:
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• | First, partial withdrawals are treated as ordinary income subject to ordinary income tax up to the amount equal to the excess (if any) of your Account Value immediately before the distribution over the "investment in the contract" at the time of the distribution. |
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• | Second, Policy loans and loans secured by a Policy are treated as partial withdrawals and taxed accordingly. Any past-due loan interest that is added to the amount of the loan is treated as a loan. |
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• | Third, a ten percent additional penalty tax is imposed on that portion of any distribution (including distributions upon surrender), Policy loan, or loan secured by a Policy, that is included in income, except where the distribution or loan is made to a taxpayer that is a natural person, and: |
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1. | is made when the taxpayer is age 59½ or older; |
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2. | is attributable to the taxpayer becoming disabled; or |
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3. | is part of a series of substantially equal periodic payments (not less frequently than annually) for the duration of the taxpayer’s life (or life expectancy) or for the duration of the longer of the taxpayer’s or the Beneficiary's life (or life expectancies). |
Multiple Policies. All MECs issued by us (or our affiliates) to you during any calendar year will be treated as a single MEC for purposes of determining the amount of a Policy distribution that is taxable to you.
Treatment When Insured Reaches Attained Age 121. As described above, when the Insured reaches Attained Age 121, we will issue you a "paid-up" life insurance Policy. We believe that the paid-up life insurance Policy will continue to qualify as a "life insurance contract" under the Code. However, there is some uncertainty regarding this treatment. It is possible, therefore, that you would be viewed as constructively receiving the Cash Surrender Value in the year in which the Insured attains age 121 and would realize taxable income at that time, even if the Death Benefit Proceeds were not distributed at that time. In addition, any outstanding Policy Debt will be repaid at that time. This repayment may be treated as a taxable distribution to you, if your contract is not a MEC.
The IRS has issued Revenue Procedure 2010-28 providing a safe harbor concerning the application of Sections 7702 and 7702A to life insurance contracts that have mortality guarantees based on the 2001 CSO Table and which may continue in force after an insured attains age 100. If a contract satisfies all the requirements of Sections 7702 and 7702A using all of the Age 100 Safe Harbor Testing Method requirements set forth in Rev. Proc. 2010-28, the IRS will not challenge the qualification of that contract under Sections 7702 and 7702A. Rev. Proc. 2010-28 also states that “No adverse inference should be drawn with respect to the qualification of a contract as a life insurance contract under §7702, or its status as not a MEC under §7702A, merely by reason of a failure to satisfy all of the requirements of [the Age 100 Safe Harbor].”
Federal Income Tax Withholding. We are required to withhold 10% on that portion of a Policy distribution that is taxable, unless you direct us in writing not to do so at or before the time of the Policy distribution. As the Owner you are responsible for the payment of any taxes and early distribution penalties that may be due on Policy distributions.
Beginning in 2014, we may be required to withhold at a rate of 30% under the Foreign Account Tax Compliance Act ("FATCA") on certain distributions to foreign financial institutions and non-financial foreign entities holding accounts on behalf of and/or the assets of U.S. persons unless the foreign entities provide us with certain certifications regarding their status under FATCA on the applicable IRS forms. Prospective purchasers with accounts in foreign financial institutions or non-financial foreign entities are advised to consult with a competent tax advisor regarding the application of FATCA to their purchase situation.
Actions to Ensure Compliance with the Tax Law. We believe that the maximum amount of Premiums we intend to permit for the Policies will comply with the Code definition of a "life insurance contract." We will monitor the amount of your Premiums, and, if you pay a Premium during a Policy Year that exceeds those permitted by the Code, we will promptly refund the Premium or a portion of the Premium before any allocation to the Funds. We reserve the right to increase the death benefit (which may result in larger charges under a Policy) or to take any other action deemed necessary to ensure the compliance of the Policy with the federal tax definition of a life insurance contract.
Trade or Business Entity Owns or Is Directly or Indirectly a Beneficiary of the Policy. Where a Policy is owned by other than a natural person, the Owner's ability to deduct interest on business borrowing unrelated to the Policy can
be impacted as a result of its ownership of cash value life insurance. No deduction will be allowed for a portion of a taxpayer's otherwise deductible interest expense unless the Policy covers only one individual, and such individual is, at the time first covered by the Policy, a 20 percent owner of the trade or business entity that owns the Policy, or an officer, director, or employee of such trade or business.
Although this limitation generally does not apply to Policies held by natural persons, if a trade or business (other than one carried on as a sole proprietorship) is directly or indirectly the Beneficiary under a Policy (e.g., pursuant to a split-dollar agreement), the Policy will be treated as held by such trade or business. The effect will be that a portion of the trade or business entity's deduction for its interest expenses will be disallowed unless the above exception for a 20 percent owner, employee, officer or director applies.
The portion of the entity's interest deduction that is disallowed will generally be a pro rata amount which bears the same ratio to such interest expense as the taxpayer's average unborrowed cash value bears to the sum of the taxpayer's average unborrowed cash value and average adjusted bases of all other assets. Any corporate or business use of the life insurance should be carefully reviewed by your tax adviser with attention to these rules as well as any other rules and possible tax law changes that could occur with respect to corporate-owned life insurance.
In Revenue Ruling 2011-9, the IRS held that the status of an insured as an employee “at the time first covered” for purposes of Section 264(f) does not carry over from a contract given up in a Section 1035 tax-free exchange to a contract received in such an exchange. Therefore, the pro rata interest expense disallowance exception of Section 264(f)(4) does not apply to new Policies received in Section 1035 tax-free exchanges unless such Policies also qualify for the exception provided by Section 264(f)(4) of the Code.
Employer-Owned Life Insurance. The Pension Protection Act of 2006 added a new section to the Code that denies the tax-free treatment of death benefits payable under an employer-owned life insurance contract unless certain notice and consent requirements are met and either (1) certain rules relating to the insured employee’s status are satisfied or (2) certain rules relating to the payment of the “amount received under the contract” to, or for the benefit of, certain beneficiaries or successors of the insured employee are satisfied. The new rules apply to life insurance contracts owned by corporations (including S corporations), individual sole proprietors, estates and trusts and partnerships that are engaged in a trade or business. Any business contemplating the purchase of a Policy on the life of an employee should consult with its legal and tax advisers regarding the applicability of the new legislation to the proposed purchase.
Split Dollar Life Insurance. A tax adviser should also be consulted with respect to the 2003 split dollar regulations if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. Any business contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax adviser.
Alternative Minimum Tax. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal corporate alternative minimum tax, if the policy owner is subject to that tax.
Other Employee Benefit Programs. Complex rules may apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of employee benefits. These Policy owners also must consider whether the Policy was applied for by, or issued to, a person having an insurable interest under applicable state law, as the lack of insurable interest may, among other things, affect the qualification of the Policy as life insurance for federal income tax purposes and the right of the Beneficiary to death benefits. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult your legal adviser.
Policy Loan Interest. Generally, no tax deduction is allowed for interest paid or accrued on any indebtedness under a Policy.
Change of Insured Rider. The Company makes no representations concerning the tax effects of the change of insured rider. Owners are responsible for seeking tax counsel regarding the tax effects of the Rider. The Company reserves the right to refund cash value exceeding allowable limits for tax exempt purposes, or that would be charged as current interest income to Owners.
Investment Income Surtax. In taxable years beginning in 2013, taxable distributions from life insurance policies are considered “investment income” for purposes of the newly enacted Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts as follows: an amount equal to the lesser of (a) “net investment income”; or (b) the excess of a taxpayer’s modified adjusted gross income over a specified income threshold ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for everyone else). The IRS has issued regulations that treat taxable distributions from life insurance policies as “Net investment income.” Please consult the impact of the Investment Income Surtax on you with a competent tax advisor.
Our Taxes. We are taxed as a life insurance company under part I of subchapter L of the Code. The operations of the Series Account are taxed as part of our operations. Investment income and realized capital gains are not taxed to the extent that they are applied under the Policies. As a result of the Omnibus Budget Reconciliation Act of 1990, we are generally required to capitalize and amortize certain Policy acquisition expenses over a ten year period rather than currently deducting such expenses. This so-called "deferred acquisition cost" tax ("DAC tax") applies to the deferred acquisition expenses of a Policy and results in a significantly higher corporate income tax liability for Great-West. We reserve the right to adjust the amount of a charge to Premium to compensate us for these anticipated higher corporate income taxes.
A portion of the expense charges applied to Premium is used to offset the federal, state or local taxes that we incur which are attributable to the Series Account or the Policy. We reserve the right to adjust the amount of this charge.
Summary.
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• | We do not make any guarantees about the Policy's tax status. |
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• | We believe the Policy will be treated as a life insurance contract under federal tax laws. |
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• | Death benefits generally are not subject to federal income tax. |
| |
• | Investment gains are normally not taxed unless distributed to you before the Insured dies. |
| |
• | If you pay more Premiums than permitted under the seven-pay test, your Policy will be a MEC. |
| |
• | If your Policy becomes a MEC, partial withdrawals, Policy loans and surrenders may incur taxes and tax penalties. |
Corporate Tax Shelter Requirements
The Company does not believe that any purchase of a Policy by an Owner pursuant to this offering will be subject to the tax shelter registration, customer list or reporting requirements under the Code and implementing regulations. All Owners that are corporations are advised to consult with their own tax and/or legal counsel and advisers, to make their own determination as to the applicability of the disclosure requirements of IRC § 6011 and Treas. Reg. Section 1.6011-4 to their federal income tax returns.
Legal Proceedings
There are no pending legal proceedings that would have an adverse material effect on the Series Account or on GWFS. Great-West is engaged in various kinds of routine litigation that, in our judgment, is not material to its total assets or material with respect to the Series Account.
Legal Matters
Pursuant to Commodity Futures Trading Commission Rule 4.5, Great-West has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Therefore, it is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
Beverly A. Byrne, Senior Vice President, Legal and Chief Compliance Officer of Great-West, has passed upon all matters of Colorado law pertaining to the Policy, including the validity of the Policy and our right to issue the Policy under Colorado law. The law firm of Carlton Fields Jorden Burt, P.A., 1025 Thomas Jefferson St., N.W., Suite 400 East, Washington, D.C. 20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
Abandoned Property Requirements
Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including proceeds of life insurance policies) under various circumstances. This “escheatment” is revocable, however, and the state is obligated to pay the applicable proceeds if the property owner steps forward to claim it with the proper documentation. To help prevent such escheatment, it is important that you keep your policy and other information on file with us up to date, including the names, contact information, and identifying information for owners, beneficiaries, and other payees. Such updates should be communicated by writing to the Company at 8515 E. Orchard Road, 9T2, Greenwood Village, CO 80111, by calling 888-353-2654, by sending an email to gwexecbenefits@greatwest.com or via the web at www.greatwest.com/executivebenefits.
Financial Statements
Great-West's consolidated financial statements, which are included in the Statement of Additional Information (“SAI”), should be considered only as bearing on our ability to meet our obligations with respect to the death benefit and our assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares held in the Series Account.
Appendix A – Glossary of Terms
Unless otherwise defined in this prospectus, capitalized terms shall have the meaning set forth below.
Account Value – The sum of the value of your interests in the Divisions, the Fixed Account and the Loan Account. This amount reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan Account balance; and (5) the charges we deduct under the Policy.
Attained Age – The age of the Insured, nearest birthday, as of the Policy Date and each Policy Anniversary thereafter.
Beneficiary – The person(s) named by the Owner to receive the Death Benefit Proceeds upon the death of the Insured.
Business Day – Any day that we are open for business. We are open for business every day that the NYSE is open for trading.
Cash Surrender Value – is equal to:
| |
(a) | Account Value on the effective date of the surrender; less |
| |
(b) | outstanding Policy loans and accrued loan interest, if any; less |
| |
(c) | any monthly cost of insurance charges. |
Corporate Headquarters – Great-West Life & Annuity Insurance Company, 8515 East Orchard Road, Greenwood Village, Colorado 80111, or such other address as we may hereafter specify to you by written notice.
Death Benefit Proceeds – The amount determined in accordance with the terms of the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt, and increased by the amounts payable under any supplemental benefits.
Divisions – Divisions into which the assets of the Series Account are divided, each of which corresponds to and contains shares of a Fund. Divisions may also be referred to as "investment divisions" or "sub-accounts" in the prospectus, SAI or Series Account financial statements.
Due Proof – Such evidence as we may reasonably require in order to establish that Death Benefit Proceeds are due and payable.
Effective Date – The date on which the first Premium payment is credited to the Policy.
Evidence of Insurability – Information about an Insured that is used to approve or reinstate this Policy or any additional benefit.
Fixed Account – A division of our General Account that provides a fixed interest rate. This account is not part of and does not depend on the investment performance of the Sub-Accounts. The Fixed Account is not an available option for Pre-2009 Policies.
Fund – An underlying mutual fund in which a Division invests. Each Fund is an investment company registered with the SEC or a separate investment series of a registered investment company.
General Account – All of our assets other than those held in a separate investment account.
Initial Premium – The initial Premium amount specified in a Policy.
Insured – The person whose life is insured under the Policy.
Issue Age – The Insured’s age as of the Insured’s birthday nearest the Policy Date.
Issue Date – The date on which we issue a Policy.
Loan Account – All outstanding loans plus credited loan interest held in the General Account of the Company. The Loan Account is not part of the Series Account.
Loan Account Value – The sum of all outstanding loans plus credited loan interest for this Policy.
MEC – Modified Endowment Contract. For more information regarding MECs, see “Modified Endowment Contracts” on page 42.
NYSE – New York Stock Exchange.
Owner – The person(s) named in the application who is entitled to exercise all rights and privileges under the Policy, while the Insured is living. The purchaser of the Policy will be the Owner unless otherwise indicated in the application.
Policy Anniversary – The same day in each succeeding year as the day of the year corresponding to the Policy Date.
Policy Date – The effective date of coverage under this Policy. The Policy Months, Policy Years and Policy Anniversaries are measured from the Policy Date.
Policy Debt – The principal amount of any outstanding loan against the Policy plus accrued but unpaid interest on such loan.
Policy Month – The one-month period commencing on the same day of the month as the Policy Date.
Policy Year – The one-year period commencing on the Policy Date or any Policy Anniversary and ending on the next Policy Anniversary.
Pre-2009 Policy – A Policy issued before January 1, 2009. Owners of a Pre-2009 Policy may continue to make additional premium payments. For information about how the Pre-2009 Policy differs from the Policy that we offer until April 30, 2011, please see Appendix B.
Premiums – Amounts received and allocated to the Sub-Account(s) prior to any deductions.
Request – Any instruction in a form, written, telephoned or computerized, satisfactory to the Company and received in good order at the Corporate Headquarters from the Owner or the Owner’s assignee (as specified in a form acceptable to the Company) or the Beneficiary, (as applicable) as required by any provision of this Policy or as required by the Company. The Request is subject to any action taken or payment made by the Company before it was processed.
SEC – The United States Securities and Exchange Commission.
Series Account – The segregated investment account established by the Company as a separate account under Colorado law named the COLI VUL –2 Series Account. It is registered as a unit investment trust under the 1940 Act.
Sub-Account – Sub-division(s) of the Owner's Account Value containing the value credited to the Owner from the Series Account. Sub-Accounts may also be referred to as “investment divisions” or “Divisions” in the prospectus, SAI or Series Account financial statements.
Surrender Benefit – Account Value less any outstanding Policy loans and less accrued loan interest.
Total Face Amount – The amount of life insurance coverage you request as specified in your Policy.
Transaction Date – The date on which any Premium payment or Request from the Owner will be processed by the Company. Premium payments and Requests received after 4:00 p.m. EST/EDT will be deemed to have been received on the next Business Day. Requests will be processed and the Sub-Account value will be valued on the day that the Premium payments or Request is received and the NYSE is open for trading.
Transfer – The moving of money from one or more Division(s) or the Fixed Account to one or more Division(s) or
the Fixed Account.
Unit – An accounting unit of measurement that we use to calculate the value of each Division.
Unit Value – The value of each Unit in a Division.
Valuation Date – The date on which the net asset value of each Fund is determined. A Valuation Date is each day that the NYSE is open for regular business. The value of a Division’s assets is determined at the end of each Valuation Date (generally 4:00 p.m. EST/EDT). To determine the value of an asset on a day that is not a Valuation Date, the value of that asset as of the end of the previous Valuation Date will be used.
Valuation Period – The period of time from one determination of Unit Values to the next following determination of Unit Values. We will determine Unit Value for each Valuation Date as of the close of the NYSE (generally 4:00 p.m. EST/EDT) on that Valuation Date.
Appendix B –
Information About How a Pre-2009 Policy and Optional Term Insurance Rider (Issued Prior to January 1, 2009) Differs from the Policy and Optional Rider that We Issued until April 30, 2011
Prior to January 1, 2009, we issued and earlier version of this Policy (the “Pre-2009 Policy”). The Pre-2009 Policy is no longer offered for sale. However, many Pre-2009 Policies remain outstanding and most of the information in the prospectus is applicable. However, this Appendix B explains the differences between the Pre-2009 Policy from the description in the rest of the prospectus, which describes Policies we issued until April 30, 2011. If you own a Pre-2009 (issued prior to January 1, 2009), you should read this Appendix B for information as to your Pre-2009 Policy differs from the Policy described in the rest of the prospectus.
1. Different Cost of Insurance Charge Amounts
Certain information as to how we calculate the cost of insurance changes for the Policy we issued until April 30, 2011 is set forth under “Monthly Risk Rates” on page 25 of the prospectus. That discussion applies to the Pre-2009 policy with one exception. References to the 2001 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table do not apply to the Pre-2009 Policy. Instead, these statements would refer to the 1980 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table.
The cost of insurance charges under the Pre-2009 Policy differ from those charged under the Policy issued on or after January 1, 2009 as provided in the tables below. Specifically, under the Pre-2009 Policy the minimum cost of insurance charge is $.08 per $1000 and under a Policy issued on or after January 1, 2009, the minimum cost of insurance charge is $.02 per $1000.
2. Fee Tables
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Pre-2009 Policy. The first table describes the fees and expenses that you will pay at the time that you buy the Pre-2009 Policy, surrender the Pre-2009 Policy, or Transfer cash value between investment options.
Transaction Fees
|
| | |
Cost of Insurance (per $1000 Net Amount at Risk
| | |
Minimum & Maximum Cost of Insurance Charge
| Monthly | Guaranteed: Minimum: $0.08 per $1000. Maximum: $83.33 per $1000.
|
Cost of Insurance Charge for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)
| Monthly | Guaranteed:
$0.41 per $1000.
|
Mortality and Expense Risk Fees | Monthly | Guaranteed: 0.90% annually.
Current: 0.40% for Policy Years 1-5, 0.25% for Policy Years 6-20, and 0.10% thereafter. |
Service Charge |
Monthly | Maximum: $15/month
Current: $10.00/month, Policy Years 1-3 and $7.50/month, Policy Years 4+
|
|
| | |
Supplemental Benefit Charges
The charges for the rider you selected are deducted monthly from your Account Value as part of the Monthly Deduction described on page 24 of this prospectus. The benefits provided under each rider are summarized in “Other Provisions and Benefits” beginning on page 32.
|
| | |
Change of Insured Rider* | Upon change of Insured | Minimum: $100 per change. Maximum: $400 per change. |
Change of Insured Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)*
| | $400 per change. |
Term Life Insurance Rider | Monthly | Guaranteed: Minimum COI: $0.08 per $1000.
Maximum COI: $83.33 per $1000.
|
Term Life Insurance Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) | Monthly | Guaranteed:
$0.41 per $1000. |
*/ Not available to individual Owners.
3. Paid-Up Life Insurance
For the Pre-2009 Policy, if the Insured reached Attained Age 100 and the Policy is in force, the Account Value, less Policy Debt, will be applied as a single Premium to purchase “paid-up” insurance. This is different from the age disclosed on pages 11, 33 and 43 of the prospectus for the Policy that we issued until April 30, 2011.
4. Term Life Insurance Rider
For the Pre-2009 Policy, the rider is renewable annually until the Insured’s Attained Age 100. This is different from the age disclosed on page 33 of the prospectus for the Policy that we issued until April 30, 2011. In addition, the cost of insurance charges under the Pre-2009 Policy Term Life Insurance Rider differ from those charged under the Term Life Insurance Rider issued on or after January 1, 2009 as provided in the table above. Specifically, under the Pre-2009 Policy Term Life Insurance Rider, the minimum cost of insurance charge is $.08 per $1000 and under a Term Life Insurance Rider issued on or after January 1, 2009, the minimum cost of insurance charge is $.02 per $1000.
5. Fixed Account
For the Pre-2009 Policy, the Fixed Account is not an available investment option.
| |
6. | Definition of Account Value |
Because the Fixed Account is not an option for Pre-2009 Policies, the term of Account Value is defined as "the sum of the value of your interests in the Divisions and the Loan Account. This amount reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan Account balance; and (5) the charges we deduct under the Policy."
The SAI is a document that includes additional information about the Series Account, including the financial statements of both Great-West and of each of the Divisions of the Series Account. The SAI is incorporated by reference as a matter of law into the prospectus, which means that it is legally part of the prospectus. The SAI is available upon request, without charge. To request the SAI or other information about the Policy, or to make any inquires about the Policy, contact Great-West toll-free at 888-353-2654 or via email at www.greatwest.com/executivebenefits.
Information about the Series Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Series Account are available on the SEC’s website at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing at the Public Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549-0102.
Investment Company Act File No. 811-09201
COLI VUL-2 SERIES ACCOUNT
Flexible Premium Variable
Universal Life Insurance Policies
Issued by:
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Greenwood Village, Colorado 80111
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. It contains information in addition to the information in the prospectus for the Policy. The prospectus for the Policy, which we may amend from time to time, contains the basic information you should know before purchasing a Policy. This Statement of Information should be read in conjunction with the prospectus, dated May 1, 2014, which is available without charge by contacting Great-West Life & Annuity Insurance Company at (888) 353-2654 or via e-mail at www.greatwest.com/executivebenefits.
May 1, 2014
Table of Contents
General Information and History of Great-West and the Series Account
Great-West Life & Annuity Insurance Company (“Great-West,” the “Company,” “we” or “us”) is a stock life insurance company that was originally organized under the laws of the state of Kansas as the National Interment Association. Our name was changed to Ranger National Life Insurance Company in 1963 and to Insuramerica Corporation in 1980 prior to changing to our current name in February 1982. In September 1990, we redomesticated under the laws of Colorado.
We are authorized to do business in forty-nine states, the District of Columbia, Puerto Rico, U.S. Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on October 8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
We established the COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company (the “Series Account”) in accordance with Colorado law on November 25, 1997. The Series Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940.
State Regulation
We are subject to the laws of Colorado governing life insurance companies and to regulation by Colorado’s Commissioner of Insurance, whose agents periodically conduct an examination of our financial condition and business operations. We are also subject to the insurance laws and regulations of all the jurisdictions in which we are authorized to do business.
We are required to file an annual statement with the insurance regulatory authority of those jurisdictions where we are authorized to do business relating to our business operations and financial condition as of December 31st of the preceding year.
Independent Registered Public Accounting Firm
The financial statements and financial highlights of each of the investment divisions of the COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing in the Registration Statement. The consolidated financial statements and the related financial statement schedule of Great-West Life & Annuity Insurance Company and subsidiaries included in this Statement of Additional Information included in the Registration Statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing in the Registration Statement. Such financial statements and financial statement schedule have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
Underwriters
The offering of the Policy is made on a continuous basis by GWFS Equities, Inc. ("GWFS Equities"), an indirect wholly owned subsidiary of Great-West, whose principal business address is 8515 East Orchard Road, Greenwood Village, Colorado 80111. GWFS Equities is registered with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") as a broker-dealer and is a member of the Financial Industry Regulatory Authority (“FINRA”).
GWFS Equities has received no underwriting commissions in connection with this offering in each of the last three
fiscal years.
Licensed insurance agents will sell the Policy in those states where the Policy may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the Exchange Act, which are members of FINRA and which have entered into selling agreements with GWFS Equities. GWFS Equities also acts as the general distributor of certain annuity contracts issued by us. The maximum sales commission payable to our agents, independent registered insurance agents and other registered broker-dealers is 25% of Premium. In addition, asset-based trail commissions may be paid. A sales representative may be required to return all or a portion of the commissions paid if: (i) a Policy terminates prior to the second Policy Anniversary; or (ii) a Policy is surrendered for the Surrender Benefit within the first six Policy Years and applicable state insurance law permits a return of expense charge.
Underwriting Procedures
We will issue on a fully underwritten basis applicants up to 300% of our standard current mortality assumptions. We will issue on a simplified basis based on case characteristics, such as required Policy size, average age of group and the industry of the group using our standard mortality assumptions. We will issue on a guaranteed basis for larger groups based on case characteristics such as the size of the group, Policy size, average age of group, industry, and group location.
Illustrations
Upon Request, we will provide you an illustration of Cash Surrender Value, Account Value and death benefits. The first illustration you Request during a Policy Year will be provided to you free of charge. Thereafter, each additional illustration Requested during the same Policy Year will be provided to you for a nominal fee not to exceed $50.
Financial Statements
The consolidated financial statements of Great-West as contained herein should be considered only as bearing upon Great-West's ability to meet its obligations under the Policies, and they should not be considered as bearing on the investment performance of the Series Account. The variable interest of Owners under the Policies are affected solely by the investment results of the Series Account. The financial statements of the Series Account are also included herein.
Great-West Life & Annuity
Insurance Company
(a wholly-owned subsidiary of
GWL&A Financial Inc.)
Consolidated Balance Sheets as of December 31, 2013
and 2012, and Related Consolidated Statements of
Income, Comprehensive Income, Stockholder’s Equity
and Cash Flows for Each of the Three Years in the Period
Ended December 31, 2013 and Report of Independent
Registered Public Accounting Firm
Great-West Life & Annuity Insurance Company
TABLE OF CONTENTS |
| |
| Page |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2013: | |
Consolidated Balance Sheets as of December 31, 2013 and 2012 | |
Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 | |
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011 | 5 |
Consolidated Statements of Stockholder’s Equity for the years ended December 31, 2013, 2012 and 2011 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011 | |
Notes to the Consolidated Financial Statements | |
SUPPLEMENTAL INSURANCE INFORMATION AS OF DECEMBER 31, 2013: | |
Schedule III as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Great-West Life & Annuity Insurance Company
Greenwood Village, Colorado
We have audited the accompanying consolidated balance sheets of Great-West Life & Annuity Insurance Company and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedule listed in the Table of Contents. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Great-West Life & Annuity Insurance Company and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
March 7, 2014
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Balance Sheets
December 31, 2013 and 2012
(In Thousands, Except Share Amounts)
|
| | | | | | | |
| December 31, |
| 2013 | | 2012 |
Assets | | | |
Investments: | | | |
Fixed maturities, available-for-sale, at fair value (amortized cost $17,807,359 and $16,756,216) | $ | 18,469,544 |
| | $ | 18,188,344 |
|
Fixed maturities, held for trading, at fair value (amortized cost $333,892 and $356,012) | 336,055 |
| | 367,600 |
|
Mortgage loans on real estate (net of allowances of $2,890 and $2,890 | 3,134,255 |
| | 2,881,758 |
|
Policy loans | 4,185,472 |
| | 4,260,200 |
|
Short-term investments, available-for-sale(amortized cost $294,287 and $266,332) | 294,287 |
| | 266,332 |
|
Limited partnership and other corporation interests | 79,236 |
| | 124,814 |
|
Other investments | 17,574 |
| | 21,328 |
|
Total investments | 26,516,423 |
| | 26,110,376 |
|
| | | |
Other assets: | | | |
Cash | 7,491 |
| | 11,387 |
|
Reinsurance receivable | 588,533 |
| | 638,797 |
|
Deferred acquisition costs ("DAC") and value of business acquired ("VOBA") | 343,288 |
| | 204,461 |
|
Investment income due and accrued | 270,024 |
| | 257,028 |
|
Collateral under securities lending agreements | 18,534 |
| | 142,022 |
|
Due from parent and affiliates | 91,057 |
| | 82,828 |
|
Goodwill | 105,255 |
| | 105,255 |
|
Other intangible assets | 15,155 |
| | 18,249 |
|
Other assets | 707,856 |
| | 609,623 |
|
Assets of discontinued operations | 29,007 |
| | 33,053 |
|
Separate account assets | 26,630,904 |
| | 24,605,526 |
|
Total assets | $ | 55,323,527 |
| | $ | 52,818,605 |
|
See notes to consolidated financial statements. (Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Balance Sheets
December 31, 2013 and 2012
(In Thousands, Except Share Amounts)
|
| | | | | | | |
| December 31, |
| 2013 | | 2012 |
Liabilities and stockholder's equity | | | |
Policy benefit liabilities: | | | |
Future policy benefits | $ | 24,609,155 |
| | $ | 23,480,618 |
|
Policy and contract claims | 345,261 |
| | 321,375 |
|
Policyholders' funds | 345,689 |
| | 374,821 |
|
Provision for policyholders' dividends | 62,797 |
| | 63,102 |
|
Undistributed earnings on participating business | 10,776 |
| | 10,393 |
|
Total policy benefit liabilities | 25,373,678 |
| | 24,250,309 |
|
| | | |
General liabilities: | | | |
Due to parent and affiliates | 541,793 |
| | 544,447 |
|
Commercial paper | 98,990 |
| | 97,987 |
|
Payable under securities lending agreements | 18,534 |
| | 142,022 |
|
Deferred income tax liabilities, net | 106,849 |
| | 288,995 |
|
Other liabilities | 648,040 |
| | 719,969 |
|
Liabilities of discontinued operations | 29,007 |
| | 33,053 |
|
Separate account liabilities | 26,630,904 |
| | 24,605,526 |
|
Total liabilities | 53,447,795 |
| | 50,682,308 |
|
| | | |
Commitments and contingencies | | | |
| | | |
Stockholder's equity: | | | |
Preferred stock, $1 par value, 50,000,000 shares authorized; none issued and outstanding | — |
| | — |
|
Common stock, $1 par value, 50,000,000 shares; 7,032,000 shares issued and outstanding | 7,032 |
| | 7,032 |
|
Additional paid-in capital | 774,115 |
| | 771,041 |
|
Accumulated other comprehensive income | 345,754 |
| | 635,699 |
|
Retained earnings | 748,831 |
| | 722,525 |
|
Total stockholder's equity | 1,875,732 |
| | 2,136,297 |
|
Total liabilities and stockholder's equity | $ | 55,323,527 |
| | $ | 52,818,605 |
|
See notes to consolidated financial statements. (Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Statements of Income
Years Ended December 31, 2013, 2012 and 2011
(In Thousands)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Revenues | | | | | |
Premium income | $ | 464,093 |
| | $ | 422,153 |
| | $ | 523,216 |
|
Fee income | 618,244 |
| | 535,823 |
| | 486,795 |
|
Other revenue | 7,355 |
| | — |
| | — |
|
Net investment income | 1,091,389 |
| | 1,191,551 |
| | 1,158,486 |
|
Realized investment gains (losses), net: | | | | | |
Total other-than-temporary losses | (372 | ) | | (5,138 | ) | | (19,467 | ) |
Other-than-temporary (gains) losses transferred to other comprehensive income | (434 | ) | | (61 | ) | | 10,005 |
|
Other realized investment gains (losses), net | (13,330 | ) | | 121,916 |
| | 33,957 |
|
Total realized investment gains (losses), net | (14,136 | ) | | 116,717 |
| | 24,495 |
|
Total revenues | 2,166,945 |
| | 2,266,244 |
| | 2,192,992 |
|
Benefits and expenses: | | | | | |
Life and other policy benefits | 650,584 |
| | 682,088 |
| | 645,567 |
|
Increase (decrease) in future policy benefits | 5,575 |
| | (66,697 | ) | | 18,828 |
|
Interest paid or credited to contract holders | 505,698 |
| | 519,499 |
| | 529,349 |
|
Provision for policyholders' share of earnings (losses) on participating business | 3,976 |
| | (580 | ) | | 2,884 |
|
Dividends to policyholders | 66,258 |
| | 64,000 |
| | 67,334 |
|
Total benefits | 1,232,091 |
| | 1,198,310 |
| | 1,263,962 |
|
General insurance expenses | 650,347 |
| | 596,649 |
| | 566,693 |
|
Amortization of DAC and VOBA | 59,645 |
| | 60,479 |
| | 28,820 |
|
Interest expense | 37,329 |
| | 37,387 |
| | 37,462 |
|
Total benefits and expenses | 1,979,412 |
| | 1,892,825 |
| | 1,896,937 |
|
Income before income taxes | 187,533 |
| | 373,419 |
| | 296,055 |
|
Income tax expense | 58,791 |
| | 135,305 |
| | 93,818 |
|
Net income | $ | 128,742 |
| | $ | 238,114 |
| | $ | 202,237 |
|
See notes to consolidated financial statements.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31, 2013, 2012 and 2011
(In Thousands)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Net income | $ | 128,742 |
| | $ | 238,114 |
| | $ | 202,237 |
|
Components of other comprehensive income (loss) | | | | | |
Unrealized holding gains (losses) arising on available-for-sale fixed maturity investments | (718,735 | ) | | 534,028 |
| | 511,663 |
|
Unrealized holding gains (losses) arising on cash flow hedges | 3,102 |
| | (18,881 | ) | | 21,014 |
|
Reclassification adjustment for (gains) losses realized in net income | (42,982 | ) | | (107,713 | ) | | (74,165 | ) |
Net unrealized gains (losses) related to investments | (758,615 | ) | | 407,434 |
| | 458,512 |
|
Future policy benefits, DAC and VOBA adjustments | 190,995 |
| | (83,835 | ) | | (100,216 | ) |
Employee benefit plan adjustment | 121,551 |
| | (68,650 | ) | | (49,566 | ) |
Other, net | 312,546 |
| | (152,485 | ) | | (149,782 | ) |
Other comprehensive income (loss) before income taxes | (446,069 | ) | | 254,949 |
| | 308,730 |
|
Income tax expense (benefit) related to items of other comprehensive income | (156,124 | ) | | 89,232 |
| | 108,056 |
|
Other comprehensive income (loss) (1) | (289,945 | ) | | 165,717 |
| | 200,674 |
|
Total comprehensive income (loss) | $ | (161,203 | ) | | $ | 403,831 |
| | $ | 402,911 |
|
(1) Other comprehensive income (loss) includes the non-credit component of impaired losses on fixed maturities available-for-sale, net of future policy benefits, DAC and VOBA adjustments and income taxes, in the amounts of $18,388, $26,583 and $13,590 for the years ended December 31, 2013, 2012 and 2011, respectively.
See notes to consolidated financial statements.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Statements of Stockholder's Equity
Years Ended December 31, 2013, 2012 and 2011
(In Thousands)
|
| | | | | | | | | | | | | | | | | | | |
| Common stock | | Additional paid-in capital | | Accumulated other comprehensive income (loss) | | Retained earnings | | Total |
Balances, January 1, 2011 | $ | 7,032 |
| | $ | 764,644 |
| | $ | 269,308 |
| | $ | 672,928 |
| | $ | 1,713,912 |
|
Net Income | | | | | | | 202,237 |
| | 202,237 |
|
Other comprehensive income (loss), net of income taxes | | | | | 200,674 |
| | | | 200,674 |
|
Dividends | | | | | | | (206,353 | ) | | (206,353 | ) |
Capital contribution - stock-based compensation | | | 1,786 |
| | | | | | 1,786 |
|
Income tax benefit on stock-based compensation | | | 1,817 |
| | | | | | 1,817 |
|
Balances, December 31, 2011 | 7,032 |
| | 768,247 |
| | 469,982 |
| | 668,812 |
| | 1,914,073 |
|
Net income | | | | | | | 238,114 |
| | 238,114 |
|
Other comprehensive income (loss), net of income taxes | | | | | 165,717 |
| | | | 165,717 |
|
Dividends | | | | | | | (184,401 | ) | | (184,401 | ) |
Capital contribution - stock-based compensation | | | 2,314 |
| | | | | | 2,314 |
|
Income tax benefit on stock-based compensation | | | 480 |
| | | | | | 480 |
|
Balances, December 31, 2012 | 7,032 |
| | 771,041 |
| | 635,699 |
| | 722,525 |
| | 2,136,297 |
|
Net income | | | | | | | 128,742 |
| | 128,742 |
|
Other comprehensive income (loss), net of income taxes | | | | | (289,945 | ) | | | | (289,945 | ) |
Dividends | | | | | | | (102,436 | ) | | (102,436 | ) |
Capital contribution - stock-based compensation | | | 2,578 |
| | | | | | 2,578 |
|
Income tax benefit on stock-based compensation | | | 496 |
| | | | | | 496 |
|
Balances, December 31, 2013 | $ | 7,032 |
| | $ | 774,115 |
| | $ | 345,754 |
| | $ | 748,831 |
| | $ | 1,875,732 |
|
See notes to consolidated financial statements.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Statements of Cash Flows
Years Ended December 31, 2013, 2012 and 2011
(In Thousands)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
| | | (Restated, See Note 2) | | (Restated, See Note 2) |
Cash flows from operating activities: | | | | | |
Net income | $ | 128,743 |
| | $ | 238,114 |
| | $ | 202,237 |
|
Adjustments to reconcile net income to net cash provided | | | | | |
by operating activities: | | | | | |
Earnings allocated to participating policyholders | (804 | ) | | (580 | ) | | 2,884 |
|
Amortization of premiums (accretion of discounts) | | | | | |
on investments, net | (20,751 | ) | | (28,495 | ) | | (41,220 | ) |
Net realized (gains) losses on investments | (38,517 | ) | | (126,938 | ) | | (62,088 | ) |
Net proceeds (purchases) of trading securities | 23,677 |
| | (220,646 | ) | | 3,597 |
|
Interest credited to contractholders | 507,987 |
| | 515,356 |
| | 525,347 |
|
Depreciation and amortization | 81,061 |
| | 82,595 |
| | 48,094 |
|
Deferral of acquisition costs | (80,486 | ) | | (94,826 | ) | | (57,108 | ) |
Deferred income taxes | (24,087 | ) | | 45,371 |
| | 23,617 |
|
Amortization of low-income housing partnerships | 31,918 |
| | 39,621 |
| | 43,070 |
|
Other, net | 2,432 |
| | (2,681 | ) | | (4,037 | ) |
Changes in assets and liabilities: | | | | | |
Policy benefit liabilities | (49,980 | ) | | (192,755 | ) | | (148,298 | ) |
Reinsurance receivable | 12,013 |
| | (15,893 | ) | | 1,131 |
|
Accrued interest and other receivables | (12,448 | ) | | (8,654 | ) | | (8,769 | ) |
Other assets | (106,923 | ) | | (98,042 | ) | | (8,176 | ) |
Other liabilities | 78,829 |
| | (37,444 | ) | | 45,515 |
|
Net cash provided by operating activities | 532,663 |
| | 94,103 |
| | 565,796 |
|
| | | | | |
Cash flows from investing activities: | | | | | |
Proceeds from sales, maturities and redemptions of investments: | | | | | |
Fixed maturities, available-for-sale | 4,022,064 |
| | 4,308,965 |
| | 2,337,213 |
|
Mortgage loans on real estate | 289,531 |
| | 172,950 |
| | 96,848 |
|
Limited partnership interests, other corporation interests | | | | | |
and other investments | 22,200 |
| | 12,530 |
| | 15,802 |
|
Purchases of investments: | | | | | |
Fixed maturities, available-for-sale | (5,012,792 | ) | | (5,284,686 | ) | | (3,368,821 | ) |
Mortgage loans on real estate | (562,940 | ) | | (524,396 | ) | | (899,234 | ) |
Limited partnership interests, other corporation interests | | | | | |
and other investments | (3,706 | ) | | (5,577 | ) | | (7,874 | ) |
Net change in short-term investments | (27,955 | ) | | 81,058 |
| | 1,576,779 |
|
Net change in repurchase agreements | — |
| | — |
| | (936,762 | ) |
Policy loans, net | (4,370 | ) | | 4,983 |
| | (41,408 | ) |
Purchases of furniture, equipment and software | (20,618 | ) | | (23,525 | ) | | (19,990 | ) |
Net cash used in investing activities | (1,298,586 | ) | | (1,257,698 | ) | | (1,247,447 | ) |
See notes to consolidated financial statements. (Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Consolidated Statements of Cash Flows
Years Ended December 31, 2013, 2012 and 2011
(In Thousands)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
| | | (Restated, See Note 2) | | (Restated, See Note 2) |
Cash flows from financing activities: | | | | | |
Contract deposits | $ | 2,601,820 |
| | $ | 2,881,112 |
| | $ | 2,544,213 |
|
Contract withdrawals | (1,780,048 | ) | | (1,636,066 | ) | | (1,716,544 | ) |
Change in due to/from parent and affiliates | (14,724 | ) | | 37,598 |
| | 87,743 |
|
Dividends paid | (102,436 | ) | | (184,401 | ) | | (206,353 | ) |
Proceeds from financing element derivatives | 51,832 |
| | 64,354 |
| | — |
|
Payments for and interest (paid) received on financing element derivatives, net | (9,756 | ) | | 4,470 |
| | — |
|
Net commercial paper borrowings | 1,003 |
| | 451 |
| | 5,855 |
|
Change in book overdrafts | 13,840 |
| | (609 | ) | | (31,963 | ) |
Income tax benefit of stock option exercises | 496 |
| | 480 |
| | 1,817 |
|
Net cash provided by financing activities | 762,027 |
| | 1,167,389 |
| | 684,768 |
|
| | | | | |
Net increase (decrease) in cash | (3,896 | ) | | 3,794 |
| | 3,117 |
|
Cash, beginning of year | 11,387 |
| | 7,593 |
| | 4,476 |
|
Cash, end of year | $ | 7,491 |
| | $ | 11,387 |
| | $ | 7,593 |
|
| | | | | |
Supplemental disclosures of cash flow information: | | | | | |
Net cash (paid) received during the year for: | | | | | |
Income taxes | $ | (10,327 | ) | | $ | 53,281 |
| | $ | 67,806 |
|
Interest | (37,329 | ) | | (37,387 | ) | | (37,463 | ) |
| | | | | |
Non-cash investing and financing transactions during the years: | | | | | |
Share-based compensation expense | $ | (2,578 | ) | | $ | (2,314 | ) | | $ | (1,786 | ) |
Fair value of assets acquired in settlement of fixed maturity investments | — |
| | (1,125 | ) | | (13,021 | ) |
Real estate acquired in satisfaction of debt | — |
| | — |
| | (2,140 | ) |
Assets received from limited partnership investment distribution | (5,119 | ) | | — |
| | — |
|
Fixed maturity investments, available-for-sale acquired in reinsurance termination (See Note 4) | (44,104 | ) | | — |
| | — |
|
Policy loans acquired in reinsurance termination (See Note 4) | (6,468 | ) | | — |
| | — |
|
Fixed maturity investments, available-for-sale acquired in mortgage transfer (See Note 4) | (28,959 | ) | | — |
| | — |
|
See notes to consolidated financial statements. (Concluded)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
1. Organization and Significant Accounting Policies
Organization
Great-West Life & Annuity Insurance Company (“GWLA”) and its subsidiaries (collectively, the “Company”) is a direct wholly-owned subsidiary of GWL&A Financial Inc. (“GWL&A Financial”), a holding company formed in 1998. GWL&A Financial is a direct wholly-owned subsidiary of Great-West Lifeco U.S. Inc. (“Lifeco U.S.”) and an indirect wholly-owned subsidiary of Great-West Lifeco Inc. (“Lifeco”), a Canadian holding company. The Company offers a wide range of life insurance, retirement and investment products to individuals, businesses and other private and public organizations throughout the United States. The Company is an insurance company domiciled in the State of Colorado and is subject to regulation by the Colorado Division of Insurance.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries over which it exercises control. Intercompany transactions and balances have been eliminated in consolidation.
The Company identified an error in its historical accounting for certain cross currency and interest rate swaps accounted for as cash flow hedges, as there was an initial net investment at the inception of the hedges that was deemed an other-than-insignificant financing element at inception and the fair value at inception was not zero or somewhat near zero. Accordingly, the Company determined that it was using an incorrect effectiveness measure, and the swaps did not qualify for hedge accounting. During the fourth quarter of 2013, $21,469 previously presented in accumulated other comprehensive income, has been recorded as an out-of-period adjustment to net investment income. The Company believes the effects of this error are immaterial to prior periods.
Reclassification
Certain amounts reported in the consolidated financial statements and notes to the consolidated financial statements as of and for the years ended December 31, 2012 and 2011 have been reclassified to conform to current period presentation.
Use of Estimates
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required to account for items and matters such as, but not limited to, the valuation of investments and derivatives in the absence of quoted market values, impairment of investments, accounting for derivative financial instruments, valuation of DAC, valuation of unearned revenue liabilities (“URL”), valuation of policy benefit liabilities, valuation of employee benefits plan obligation and the valuation of deferred tax assets or liabilities, net. Actual results could differ from those estimates.
During the year ended December 31, 2012, the Company had an $18,240 decrease in the general mortgage provision allowance as a result of revised assumptions primarily related to the improvement in general economic conditions, the stability of loss levels within the commercial real estate market and the stability of the Company’s own commercial mortgage portfolio.
Summary of Significant Accounting Policies
Investments
Investments are reported as follows:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
| |
1. | The Company classifies the majority of its fixed maturity investments as available-for-sale. Included in fixed maturities are perpetual debt investments which primarily consist of junior subordinated debt instruments that have no stated maturity date but pay fixed or floating interest in perpetuity. All available-for-sale fixed maturity investments are recorded at fair value with the related net unrealized gain or loss, net of policyholder related amounts and deferred taxes, recorded in accumulated other comprehensive income (loss) (“AOCI”). The Company recognizes the acquisition of its public fixed maturity investments on a trade date basis. Net unrealized gains and losses related to participating contract policies that cannot be distributed are recorded as undistributed earnings on participating business. |
Premiums and discounts are recognized as a component of net investment income using the scientific interest method, realized gains and losses are included in net realized investment gains (losses) and declines in value determined to be other-than-temporary are included in total other-than-temporary losses.
The Company purchases fixed maturity securities which are classified as held for trading. Assets in the held for trading category are carried at fair value with changes in fair value reported in net investment income.
The recognition of income on certain investments (e.g. loan-backed securities, including mortgage-backed and asset-backed securities) is dependent upon market conditions, which may result in prepayments and changes in amounts to be earned. Prepayments on all mortgage-backed and asset-backed securities are monitored monthly and amortization of the premium and/or the accretion of the discount associated with the purchase of such securities are adjusted by such prepayments.
| |
2. | Mortgage loans on real estate consist of domestic commercial collateralized loans and are carried at their unpaid principal balances adjusted for any unamortized premiums or discounts, origination fees and mortgage provision allowances. Interest income is accrued on the unpaid principal balance for all loans, except for loans on non-accrual status. Premiums, discounts and origination fees are amortized to net investment income using the scientific interest method. Prepayment penalty fees are recognized in other realized investment gains upon receipt. |
The Company actively manages its mortgage loan portfolio by completing ongoing comprehensive analysis of factors such as debt service coverage ratios, loan-to-value ratios, payment status, default or legal status, annual collateral property evaluations and general market conditions. On a quarterly basis, the Company reviews the above primary credit quality indicators in its internal risk assessment of loan impairment and credit loss. Management’s risk assessment process is subjective and includes the categorization of all loans, based on the above mentioned credit quality indicators, into one of the following categories:
| |
• | Performing - generally indicates the loan has standard market risk and is within its original underwriting guidelines. |
| |
• | Non-performing - generally indicates there is a potential for loss due to the deterioration of financial/monetary default indicators or potential foreclosure. Due to the potential for loss, these loans are evaluated for impairment. |
The Company’s mortgage provision allowance is reviewed quarterly. The determination of the calculation and the adequacy of the mortgage provision allowance and mortgage impairments involve judgments that incorporate qualitative and quantitative Company and industry mortgage performance data. Management’s periodic evaluation and assessment of the adequacy of the mortgage provision allowance and the need for mortgage impairments is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the fair value of the underlying collateral, composition of the loan portfolio, current economic conditions, loss experience and other relevant factors. Loans included in the non-performing category and other loans with certain substandard credit quality indicators are individually reviewed to determine if a specific impairment is required. Risk is mitigated through first position collateralization, guarantees, loan covenants and borrower reporting requirements. Since the Company does not originate or hold uncollateralized mortgages, loans are generally not deemed fully uncollectable. Generally, unrecoverable amounts are written off during the final stage of the foreclosure process.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Loan balances are considered past due when payment has not been received based on contractually agreed upon terms. For loan balances greater than 90 days past due or in the process of foreclosure, all accrual of interest is discontinued. The Company resumes interest accrual on loans when a loan returns to current status. Interest accrual may also resume under new terms when loans are restructured or modified.
On a quarterly basis, any loans with terms that were modified during that period are reviewed to determine if the loan modifications constitute a troubled debt restructuring (“TDR”). In evaluating whether a loan modification constitutes a TDR, it must be determined that the modification is a significant concession and the debtor is experiencing financial difficulties.
| |
3. | Limited partnership and other corporation interests are accounted for using either the cost or equity method of accounting. The Company uses the cost method on investments where it has a minor equity interest and no significant influence over the entity’s operations. The Company uses the equity method when it has a partnership interest that is considered more than minor, although the Company has no significant influence over the entity’s operations. Also included in limited partnership interests are limited partnerships established for the purpose of investing in low-income housing that qualify for federal and state tax credits. These interests are carried at amortized cost as determined using the effective yield method. |
In the normal course of its activities, the Company is involved with other entities that are considered variable interest entities (“VIE”). An entity would be determined to be a primary beneficiary, and thus consolidated when the entity has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. When the Company becomes involved with a VIE and when the nature of the Company’s involvement with the entity changes, in order to determine if the Company is the primary beneficiary and must consolidate the entity, it evaluates:
| |
• | The structure and purpose of the entity; |
| |
• | The risks and rewards created by and shared through the entity and |
| |
• | The entity’s participants’ ability to direct the activities, receive its benefits and absorb its losses. |
The Company performs ongoing qualitative analyses of its involvement with VIEs to determine if consolidation is required.
| |
4. | Policy loans are carried at their unpaid balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policy. |
| |
5. | Short-term investments include securities purchased with initial maturities of one year or less and are generally carried at fair value which is approximated from amortized cost. The Company classifies its short-term investments as available-for-sale. |
| |
6. | The Company participates in a securities lending program in which the Company lends securities that are held as part of its general account investment portfolio to third parties. The Company does not enter into these types of transactions for liquidity purposes, but rather for yield enhancements on its investment portfolio. The borrower can return and the Company can request the loaned securities at any time. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest received on such securities during the loan term. Securities lending transactions are accounted for as secured borrowings. The securities lending agent indemnifies the Company against borrower risk, meaning that the lending agent agrees contractually to replace securities not returned due to a borrower default. The Company generally requires initial collateral in an amount greater than or equal to 102% of the fair value of domestic securities loaned and 105% of foreign securities loaned. Such collateral is used to replace the securities loaned in event of default by the borrower. Acceptable collateral is generally defined as government securities, letters of credit and/or cash collateral. Some cash collateral may be invested in short-term repurchase agreements which are also collateralized by U.S. Government or U.S. Government Agency securities. |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
| |
7. | The Company’s other-than-temporary impairments (“OTTI”) accounting policy requires that a decline in the value of a security below its cost or amortized cost basis be assessed to determine if the decline is other-than-temporary. The assessment of whether an OTTI has occurred on fixed maturity investments where management does not intend to sell the fixed maturity investment and it is not more likely than not the Company will be required to sell the fixed maturity investment before recovery of its amortized cost basis, is based upon management’s case-by-case evaluation of the underlying reasons for the decline in fair value of each individual security. Management considers a wide range of factors, as described below, regarding the security issuer and uses its best judgment in evaluating the cause of the decline in its estimated fair value and in assessing the prospects for near-term recovery. |
Considerations used by the Company in the impairment evaluation process include, but are not limited to, the following:
| |
• | The extent to which estimated fair value is below cost; |
| |
• | The decline in fair value is attributable to specific adverse conditions affecting a particular instrument, its issuer, an industry or geographic area; |
| |
• | The length of time for which the estimated fair value has been below cost; |
| |
• | Downgrade of a fixed maturity investment by a credit rating agency; |
| |
• | Deterioration of the financial condition of the issuer; |
| |
• | The payment structure of the fixed maturity investment and the likelihood of the issuer being able to make payments in the future; and |
| |
• | Whether dividends have been reduced or eliminated or scheduled interest payments have not been made. |
If either (a) management has the intent to sell a fixed maturity investment or (b) it is more likely than not the Company will be required to sell a fixed maturity investment before its anticipated recovery, a charge is recorded in net realized investment losses equal to the difference between the fair value and cost or amortized cost basis of the security. If management does not intend to sell the security and it is not more likely than not the Company will be required to sell the fixed maturity investment before recovery of its amortized cost basis, but the present value of the cash flows expected to be collected (discounted at the effective interest rate implicit in the fixed maturity investment prior to impairment) is less than the amortized cost basis of the fixed maturity investment (referred to as the credit loss portion), an OTTI is considered to have occurred. In this instance, total OTTI is bifurcated into two components: the amount related to the credit loss, which is recognized in current period earnings; and the amount attributed to other factors (referred to as the non-credit portion), which is recognized as a separate component in AOCI. The expected cash flows utilized during the impairment evaluation process are determined using judgment and the best information available to the Company including default rates, credit ratings, collateral characteristics and current levels of subordination. After the recognition of an OTTI, a fixed maturity investment is accounted for as if it had been purchased on the measurement date of the OTTI, with an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in earnings. The difference between the new amortized cost basis and the future cash flows is accreted into net investment income. The Company continues to estimate the present value of cash flows expected to be collected over the life of the security.
Fair Value
Certain assets and liabilities are recorded at fair value on the Company’s consolidated balance sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company categorizes its assets and liabilities measured at fair value on a recurring basis into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Company’s assets and liabilities recorded at fair value on a recurring basis have been categorized based upon the following fair value hierarchy:
| |
• | Level 1 inputs utilize observable, quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Financial assets and liabilities utilizing Level 1 inputs include certain money market funds. |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
| |
• | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The fair values for some Level 2 securities are obtained from pricing services. The inputs used by the pricing services are reviewed at least quarterly or when the pricing vendor issues updates to its pricing methodology. For fixed maturity securities and separate account assets and liabilities, inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Additional inputs utilized for assets and liabilities classified as Level 2 are: |
| |
◦ | Asset-backed, residential mortgage-backed, commercial mortgage-backed securities and collateralized debt obligations - new issue data, monthly payment information, collateral performance and third party real estate analysis. |
| |
◦ | U.S. states and their subdivisions - material event notices. |
| |
◦ | Short-term investments - valued based on amortized cost. |
| |
◦ | Derivative instruments - trading activity, swap curves, credit spreads, currency volatility, net present value of cash flows and news sources. |
| |
◦ | Separate account assets and liabilities - exchange rates, various index data and news sources, amortized cost (which approximates fair value), trading activity, swap curves, credit spreads, recovery rates, restructuring, currency volatility, net present value of cash flows and quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
| |
◦ | Common collective trusts - the net asset value based on the underlying trust investments. |
| |
• | Level 3 inputs are unobservable and include situations where there is little, if any, market activity for the asset or liability. In general, the prices of Level 3 securities are obtained from single broker quotes and internal pricing models. If the broker’s inputs are largely unobservable, the valuation is classified as a Level 3. Broker quotes are validated through an internal analyst review process, which includes validation through known market conditions and other relevant data, as noted below. Internal models are usually cash flow based utilizing characteristics of the underlying collateral of the security such as default rate and other relevant data. Inputs utilized for securities classified as Level 3 are as follows: |
| |
◦ | Corporate debt securities - unadjusted single broker quotes which may be in an illiquid market or otherwise deemed unobservable. |
| |
◦ | Asset-backed securities - internal models utilizing asset-backed securities index spreads. |
| |
◦ | Separate account assets - single broker quotes which may be in an illiquid market or otherwise deemed unobservable or net asset value per share of the underlying investments. |
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Overall, transfers between levels are attributable to a change in the observability of inputs. Assets and liabilities are transferred to a lower level in the hierarchy when a significant input cannot be corroborated with market observable data. This may occur when market activity decreases and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred to a higher level in the hierarchy when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity including recent trades, a specific event, or one or more significant input(s) becoming observable. All transfers between levels are recognized at the beginning of the reporting period in which the transfer occurred.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The policies and procedures utilized to review, account for and report on the value and level of the Company’s securities were determined and implemented by the Finance division. The Investments division is responsible for the processes related to security purchases and sales and provides valuation and leveling input to the Finance division when necessary. Both divisions within the Company have worked in conjunction to establish thorough pricing, review, approval, accounting and reporting policies and procedures around the securities valuation process.
Internal pricing models may be used to value certain Level 3 securities. These models have been created by the Company based on specific characteristics of the portfolio, such as the high level of illiquidity, the low level of market making and trading activity and the collateralized nature of certain securities. These models are recalibrated monthly by adjusting the inputs based on current public security market conditions and how those conditions apply to the Company’s portfolio. Internal model input assumptions may include: prepayment speeds, constant default rates and the Asset Backed Securities Index (“ABX Index”) spread adjusted by an internally calculated liquidity premium. The primary inputs into the internal pricing models are the constant default rate and the internally adjusted ABX Index spread. Additionally, a monthly comparison of the internally developed model prices to pricing vendor evaluations is performed and analyzed. The Company determined the use of internal models was more accurate for certain securities categorized as Level 3 primarily because the internally adjusted ABX Index spread is a better indication of fair value than spread assumptions used by external pricing models in illiquid markets. The internally adjusted ABX Index spread captures exposure to similar cash flows as the Company’s portfolio in a liquid and actively traded market and includes additional spread assumptions for potential illiquidity of the underlying collateral.
In some instances, securities are priced using external broker quotes. In most cases, when broker quotes are used as pricing inputs, more than one broker quote is obtained. External broker quotes are reviewed internally by comparing the quotes to similar securities in the public market and/or to vendor pricing, if available. Additionally, external broker quotes are compared to market reported trade activity to ascertain whether the price is reasonable, reflective of the current market prices and takes into account the characteristics of the Company’s securities.
Derivative financial instruments
The Company enters into derivative transactions which include the use of interest rate swaps, interest rate swaptions, cross-currency swaps, U.S. government treasury futures contracts, Eurodollar futures contracts, futures on equity indices, interest rate swap futures and other forward contracts. The Company uses these derivative instruments to manage various risks, including interest rate and foreign currency exchange rate risk associated with its invested assets and liabilities. Derivative instruments are not used for speculative reasons. Certain of the Company’s over-the-counter (“OTC”) derivatives are cleared and settled through a central clearing counterparty while others are bilateral contracts between the Company and a counterparty.
All derivatives, regardless of hedge accounting treatment, are recorded in other assets and other liabilities at fair value. At inception of a derivative transaction, the hedge relationship and risk management objective is documented and the designation of the derivative is determined based on specific criteria of the transaction. Accounting for the ongoing changes in the fair value of a derivative depends on the intended use of the derivative. If the derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in AOCI and are recognized in the consolidated income statements when the hedged item affects earnings. If the derivative is designated as a fair value hedge, the changes in its fair value and of the fair value of the hedged item attributable to the hedged risk are recognized in earnings in net investment income. Changes in the fair value of derivatives not qualifying for hedge accounting or where hedge accounting is not elected and the over effective portion of cash flow hedges are recognized in net investment income in the period of the change. Termination of derivative contracts prior to expiration generally result in investment gains and losses. Fluctuations in interest rates, foreign currencies or equity markets may cause the Company to experience volatility in net income.
As part of its hedging strategy, the Company may enter into certain derivative transactions where a cash investment is made by one party. Certain derivative instruments that contain a financing element at inception and where the Company is deemed to be the borrower are included in financing activities in the consolidated statements of cash flows. The cash flows from all other derivative transactions are included in operating activities.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The Company uses derivative financial instruments for risk management purposes associated with certain invested assets and policy liabilities. Derivatives are used to (a) hedge the economic effects of interest rate and stock market movements on the Company’s guaranteed minimum withdrawal benefit liability, (b) hedge the economic effect of a large increase in interest rates on the Company’s general account life insurance, group pension liabilities and certain separate account life insurance liabilities, (c) hedge the economic risks of other transactions such as future asset acquisitions or dispositions, the timing of liability pricing, currency risks on non-U.S. dollar denominated assets and fee revenue based on equity market performance and (d) convert floating rate assets to fixed rate assets for asset/liability management purposes.
The Company controls the credit risk of its derivative contracts through credit approvals, limits, monitoring procedures and in many cases, requiring collateral. The Company’s exposure is limited to the portion of the fair value of derivative instruments that exceeds the value of the collateral held and not to the notional or contractual amounts of the derivatives.
Collateral agreements are regularly entered into as part of the underlying agreements with counterparties to mitigate counterparty credit risk.
Derivatives in a net asset position may have cash or securities pledged as collateral to the Company in accordance with the collateral support agreements with the counterparty. This collateral is held in a custodial account for the benefit of the Company. Unrestricted cash collateral is included in other assets and the obligation to return it is included in other liabilities. The cash collateral is reinvested in a government money market fund. Cash collateral pledged by the Company is included in other assets.
Cash
Cash includes only amounts in demand deposit accounts.
Book overdrafts occur when checks have been issued by the Company, but have not been presented to the Company’s disbursement bank accounts for payment. These bank accounts allow the Company to delay funding of the issued checks until they are presented for payment. This delay in funding results in a temporary source of financing. The activity related to book overdrafts is included in the financing activities in the consolidated statement of cash flows. The book overdrafts, in the amount of $13,840 and zero, are included in other liabilities at December 31, 2013 and 2012, respectively.
Internal use software
Purchased software costs, as well as certain internal and external costs incurred to develop internal use computer software during the application development stage, are capitalized and amortized using the straight-line method over the software’s estimated useful life, ranging from five to seven years. Capitalized internal use software development costs, net of accumulated amortization, in the amounts of $50,134 and $48,280, are included in other assets at December 31, 2013 and 2012, respectively. The Company capitalized $14,640, $17,593 and $16,676 of internal use software development costs during the years ended December 31, 2013, 2012 and 2011, respectively.
Deferred acquisition costs and value of business acquired
The Company incurs costs in connection with the acquisition of new and renewal insurance business. Costs that vary directly with and relate to the successful production of new business are deferred as DAC. These costs consist primarily of commissions, costs associated with the Company’s sales representatives and policy issuance and underwriting expenses related to the production of successfully acquired new business or the acquisition of insurance or annuity contracts. A success factor is derived from actual contracts issued by the Company from requests for proposals or applications received. VOBA represents the estimated fair value of insurance or annuity contracts acquired either directly through the acquisition of another insurance company or through the acquisition of insurance or annuity contracts through assumption reinsurance transactions. The recoverability of such costs is dependent upon the future profitability of the related business.
DAC and VOBA associated with the annuity products and flexible premium universal life insurance products are being amortized over the life of the contracts in proportion to the emergence of gross profits. Retrospective adjustments of
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
these amounts are made when the Company revises its estimates of current or future gross profits. DAC and VOBA associated with traditional life insurance are amortized over the premium-paying period of the related policies in proportion to premium revenues recognized. DAC and VOBA, for applicable products, are adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI.
Goodwill and other intangible assets
Goodwill is the excess of cost over the fair value of assets acquired and liabilities assumed in connection with an acquisition. It is considered an indefinite lived asset and therefore is not amortized. The Company tests goodwill for impairment annually or more frequently if events or circumstances indicate that there may be justification for conducting an interim test. If the carrying value of goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income in the period in which the impairment is identified.
Other intangible assets represent the estimated fair value of the portion of the purchase price that was allocated to the value of customer relationships in various acquisitions. These intangible assets have been assigned values using various methodologies, including present value of projected future cash flows, analysis of similar transactions that have occurred or could be expected to occur in the market and replacement or reproduction cost. The initial valuations of these intangible assets were supported by an independent valuation study commissioned by the Company. Other identified intangible assets with finite lives are amortized over their estimated useful lives, which initially ranged from 4 to 14 years (weighted average 13 years), primarily based on the cash flows generated by these assets.
Separate accounts
Separate account assets and related liabilities are carried at fair value in the accompanying consolidated balance sheets. The Company issues variable annuity contracts and variable universal life contracts through separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder and therefore are not included in the Company’s consolidated statements of income.
Revenues to the Company from the separate accounts consist of contract maintenance fees, investment management fees, administrative fees and mortality and expense risk charges.
The Company’s separate accounts invest in shares of Great-West Funds, Inc. (“Great-West Funds”) and Putnam Funds, open-end management investment companies, which are affiliates of the Company, and shares of other non-affiliated mutual funds and government and corporate bonds.
Life insurance and annuity future benefits
Life insurance and annuity future benefits with life contingencies in the amounts of $14,296,153 and $13,808,516 at December 31, 2013 and 2012, respectively, are computed on the basis of assumed investment yield, mortality, morbidity and expenses, including a margin for adverse deviation. These future policy benefits are calculated as the present value of future benefits (including dividends) and expenses less the present value of future net premiums. The assumptions used in calculating the future policy benefits generally vary by plan, year of issue and policy duration. Additionally, these future policy benefits are established for claims that have been incurred but not reported based on factors derived from past experience.
Annuity contract benefits without life contingencies in the amounts of $10,263,043 and $9,622,357 at December 31, 2013 and 2012, respectively, are established at the contract holder’s account value, which is equal to cumulative deposits and credited interest, less withdrawals and mortality and expense and/or administrative service charges. The Company’s general account also has some immediate annuities. Future benefits for immediate annuities without life contingent payouts are computed on the basis of assumed investment yield and expenses.
Reinsurance ceded
In the normal course of its business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks to other insurance enterprises under excess coverage, quota share, yearly renewable term, coinsurance and modified coinsurance contracts. For each of its reinsurance agreements, the
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Company determines if the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. If the Company determines that a reinsurance agreement does not provide indemnification against loss or liability relating to insurance risk, the Company records the agreement using the deposit method of accounting. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.
Policy benefits and policy and contract claims ceded to other insurance companies are carried as a reinsurance receivable in the accompanying consolidated balance sheets. The cost of reinsurance related to long duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.
Policy and contract claims
Policy and contract claims include provisions for claims incurred but not reported and claims in the process of settlement. The provision for claims incurred but not reported is valued based primarily on the Company’s prior experience. Claims in the process of settlement are valued in accordance with the terms of the related policies and contracts.
Participating business
The Company has participating policies in which the policyholder shares in the Company’s earnings through policyholder dividends that reflect the difference between the assumptions used in the premium charged and the actual experience on those policies. The amount of dividends to be paid is determined by the Board of Directors.
Participating life and annuity policy benefit liabilities were $6,754,435 and $6,748,375 at December 31, 2013 and 2012, respectively. Participating business composes approximately 9% of the Company’s individual life insurance in-force at December 31, 2013 and 2012, and 32%, 20% and 19% of individual life insurance premium income for the years ended December 31, 2013, 2012 and 2011, respectively. The policyholder’s share of net income on participating policies that cannot be distributed to the Company’s stockholder is excluded from stockholder’s equity and recorded as undistributed earnings on participating business in the consolidated balance sheet.
Policy benefit liability - unearned revenue liability
Unearned revenue liability relates to universal life and investment products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized over the life of the contracts in proportion to the emergence of gross profits, similar to DAC. Such amortization is recorded in fee income.
Recognition of premium and fee income and benefits and expenses
Life insurance premiums are recognized when due. Annuity contract premiums with life contingencies are recognized as received. Revenues for annuity and other contracts without significant life contingencies consist of contract charges for the cost of insurance and contract administration and surrender fees that have been assessed against the contract account balance during the period and are recognized when earned. Fees from assets under management, assets under administration, shareholder servicing, mortality and expense risk charges, administration and record-keeping services and investment advisory services are recognized when due. Benefits and expenses on policies with life contingencies are associated with earned premiums so as to result in recognition of profits over the life of the contracts. Premiums and policyholder benefits and expenses are presented net of reinsurance.
Net investment income
Interest income from fixed maturities and mortgage loans on real estate is recognized when earned.
Realized investment gains (losses) and derivative financial instruments
Realized investment gains and losses are reported as a component of revenues and are determined on a specific identification basis. Realized investment gains and losses also result from the termination of derivative contracts prior to expiration that are not designated as hedges for accounting purposes and certain fair-value hedge relationships.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Income taxes
Income taxes are recorded using the asset and liability method in which deferred tax assets and liabilities are recorded for expected future tax consequences of events that have been recognized in either the Company’s consolidated financial statements or consolidated tax returns. In estimating future tax consequences, all expected future events, other than enactments or changes in the tax laws or rules, are considered. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized. Although realization is not assured, management believes it is more likely than not that the deferred tax asset will be realized. The effect on deferred taxes from a change in tax rates is recognized in income in the period that includes the enactment date.
Share-based compensation
Lifeco maintains the Great-West Lifeco Inc. Stock Option Plan (the “Lifeco plan”) that provides for the granting of options on its common shares to certain of its officers and employees and those of its subsidiaries, including the Company. The Company uses the fair value method to recognize the cost of share-based employee compensation under the Lifeco plan.
The Company maintains a Performance Share Unit Plan (“PSU plan”) for senior executives of the Company. Under the PSU plan, performance share units are granted to certain senior executives of the Company, having a value equal to the participants’ deferred incentive compensation for the period. The Company uses the fair value method to recognize the cost of share-based employee compensation under the PSU plan.
2. Restatement of the December 31, 2012 and 2011 Statements of Cash Flows
The accompanying statements of cash flows for the years ended December 31, 2012 and 2011 have been restated to reflect the following corrections of misstatements identified subsequent to the issuance of the December 31, 2012 audited financial statements:
| |
• | During the fourth quarter of 2013, the Company recorded a cumulative out-of-period adjustment in connection with certain derivative instruments not qualifying for hedge accounting due to ineffectiveness. These derivative instruments were deemed to have a financing element at inception which should be classified as a financing activity instead of an operating activity within the statement of cash flows. As a result, net cash provided by operating activities was overstated by $68,824 and net cash provided by financing activities was understated by the same amount for the year ended December 31, 2012. The Company believes the effects of this error are immaterial to the prior period. |
| |
• | The Company purchases interests in limited partnerships in order to obtain low-income housing tax credits. It accounts for the low-income housing partnerships utilizing the effective yield method as prescribed in ASC 323-740 Investments - Equity Method and Joint Ventures - Income Taxes. The Company has previously classified the amortization of low-income housing partnerships under the effective yield method as proceeds from the sales, maturities and redemptions of investments within investing activities. In 2013 it was determined that the amortization of the low-income housing partnerships should have been classified as an adjustment to reconcile net income to net cash provided by operating activities. As a result of this misstatement, net cash provided by operating activities was understated by $39,621 and $43,070 for the years ended December 31, 2012 and 2011, respectively, and the cash provided by investing activities was overstated by the same amounts for the same periods. The Company believes the effects of this error are immaterial to the prior periods. |
| |
• | The Company holds certain forward settling to be announced (“TBA”) securities that are accounted for as derivative instruments as the Company does not regularly accept delivery of such securities when issued. In certain limited circumstances, the Company will accept delivery of the securities from one broker and then immediately deliver the securities to another broker. In these limited circumstances, the Company recorded the purchase and sale of the securities as an equal and offsetting purchase and sale of investments in the net cash provided by investing activities. Because the Company did not hold the securities as an investment, the cash flows should be accounted for net within operating activities. As a |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
result of this misstatement, both proceeds from sales, maturities and redemptions of investments and purchases of investments were overstated by $4,123,283 and $3,036,701 for the years ended December 31, 2012 and 2011, respectively. The Company believes the effects of this error are immaterial to the prior periods.
The following table summarizes the effect of the adjustments the Company made to its financial statements:
|
| | | | | | | | | | | |
| As previously reported | | Adjustments | | As restated |
Statements of Cash Flows | |
| | |
| | |
|
2012 | |
| | |
| | |
|
Amortization of low-income housing partnerships | $ | — |
| | $ | 39,621 |
| | $ | 39,621 |
|
Other liabilities | 31,380 |
| | (68,824 | ) | | (37,444 | ) |
Net cash provided by operating activities | 123,306 |
| | (29,203 | ) | | 94,103 |
|
Proceeds from sales, maturities and redemptions of investments: | |
| | |
| | |
|
Fixed maturities, available-for-sale | 8,432,248 |
| | (4,123,283 | ) | | 4,308,965 |
|
Limited partnership interests, other corporation interests and other investments | 52,151 |
| | (39,621 | ) | | 12,530 |
|
Purchases of investments: | |
| | |
| | |
|
Fixed maturities, available-for-sale | (9,407,969 | ) | | 4,123,283 |
| | (5,284,686 | ) |
Net cash used in investing activities | (1,218,077 | ) | | (39,621 | ) | | (1,257,698 | ) |
Proceeds from financial element derivatives | — |
| | 64,354 |
| | 64,354 |
|
Payments for and interest (paid) received on financial element derivatives, net | — |
| | 4,470 |
| | 4,470 |
|
Net cash provided by financing activities | 1,098,565 |
| | 68,824 |
| | 1,167,389 |
|
2011 | |
| | |
| | |
|
Amortization of low-income housing partnerships | - |
| | 43,070 |
| | 43,070 |
|
Net cash provided by operating activities | 522,726 |
| | 43,070 |
| | 565,796 |
|
Proceeds from sales, maturities and redemptions of investments: | |
| | |
| | |
|
Fixed maturities, available-for-sale | 5,373,914 |
| | (3,036,701 | ) | | 2,337,213 |
|
Limited partnership interests, other corporation interests and other investments | 58,872 |
| | (43,070 | ) | | 15,802 |
|
Purchases of investments: | |
| | |
| | |
|
Fixed maturities, available-for-sale | (6,405,522 | ) | | 3,036,701 |
| | (3,368,821 | ) |
Net cash used in investing activities | (1,204,377 | ) | | (43,070 | ) | | (1,247,447 | ) |
3. Application of Recent Accounting Pronouncements
Recently adopted accounting pronouncements
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11 Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU No. 2011-11”). ASU No. 2011-11 provides for entities to disclose information about financial instruments and derivative instruments that are either offset in the balance sheet (presented on a net basis), or subject to an enforceable master netting arrangement or similar arrangement. ASU No. 2011-11 was effective for fiscal years and interim periods within those years beginning on or after January 1, 2013. The Company adopted the provisions of ASU No. 2011-11 for its fiscal year beginning January 1, 2013. The adoption did not have an impact on the Company’s consolidated financial statements; see additional disclosures required for balance sheet offsetting in Note 7. ASU No. 2011-11 was subsequently amended by ASU No. 2013-01.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
In January 2013, the FASB issued ASU No. 2013-01 Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU No. 2013-01”). ASU No. 2013-01 clarifies that the scope of ASU No. 2011-11 applies to derivatives, repurchase agreements, reverse repurchase agreements, securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 was effective for fiscal years and interim periods within those years beginning on or after January 1, 2013. The Company adopted the provisions of ASU No. 2013-01 for its fiscal year beginning January 1, 2013. The adoption did not have an impact on the Company’s consolidated financial statements; see additional disclosures required for balance sheet offsetting in Note 7.
In February 2013, the FASB issued ASU No. 2013-02 Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU No. 2013-02”). ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income for each applicable component of net income on a prospective basis. ASU No. 2013-02 supersedes the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU No. 2011-05 and ASU No. 2011-12. ASU No. 2013-02 was effective for fiscal years and interim periods within those years beginning after December 15, 2012. The Company adopted the provisions of ASU No. 2013-02 for its fiscal year beginning January 1, 2013. The adoption did not have an impact on the Company’s consolidated financial statements; see additional disclosures required for amounts reclassified out of accumulated other comprehensive income in Note 14.
Future adoption of new accounting pronouncements
In January 2014, the FASB issued ASU No. 2014-01 Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. ASU No. 2014-01 permits reporting entities to make an accounting election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those pre-existing investments. The Company uses the effective yield method for its investments in qualified affordable housing projects. ASU 2014-01 is effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of this guidance on its financial statements.
4. Related Party Transactions
In the normal course of its business, the Company enters into reinsurance agreements with related parties. Included in the consolidated balance sheets are the following related party amounts:
|
| | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 |
Reinsurance receivable | $ | 502,471 |
| | $ | 533,446 |
|
Future policy benefits (1) | $ | 1,887,182 |
| | $ | 2,034,581 |
|
(1) Future policy benefits have been restated from $1,990,579 at December 31, 2012. The Company believes the effects of this error are immaterial to the prior period.
Included in the consolidated statements of income are the following related party amounts:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Premium income, net of related party premiums ceded of $(30,114), $18,112, and $11,559 (1)(4) | $ | 137,785 |
| | $ | 85,873 |
| | $ | 113,588 |
|
Life and other policy benefits, net of reinsurance recoveries of $(536), $12,562 and $468 (2)(5) | 216,809 |
| | 215,880 |
| | 235,922 |
|
Increase (decrease) in future policy benefits (3) | (2,556 | ) | | (39,439 | ) | | (66,820) |
|
(1) Premium income, net of related party premiums ceded has been restated from $96,439 and $129,072 for the years ended December 31, 2012 and 2011, respectively. The Company believes the effects of this error are immaterial to the prior periods.
(2) Life and other policy benefits, net of reinsurance recoveries have been restated from $99,321 and $106,790 for the years ended December 31, 2012 and 2011, respectively. The Company believes the effects of this error are immaterial to the prior periods.
(3) Increase (decrease) in future policy benefits has been restated from $70,554 for the year ended December 31, 2011. The Company believes the effects of this error are immaterial to the prior period.
(4) Related party premiums ceded have been restated from $6,912 for the year ended December 31, 2011. The Company believes the effects of this error are immaterial to the prior period.
(5) Reinsurance recoveries have been restated from $6,426 for the year ended December 31, 2011. The Company believes the effects of this error are immaterial to the prior period.
The Company provides certain administrative and operational services and investment services for The Great-West Life Assurance Company (“GWL”) and The Canada Life Assurance Company (“CLAC”), wholly-owned subsidiaries of Lifeco. Additionally, the Company receives payroll-related services from GWL. The Company also provides investment services for London Reinsurance Group, an indirect subsidiary of GWL. The following table presents revenue, expenses incurred and expense reimbursement from related parties for services provided pursuant to these service agreements. These amounts, in accordance with the terms of the various contracts, are based upon estimated costs incurred, including a profit charge, and resources expended based upon the number of policies, certificates in-force and/or administered assets.
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Investment management and administrative revenue included in fee income and net investment income | $ | 7,073 |
| | $ | 7,770 |
| | $ | 7,492 |
|
Administrative and underwriting expense reimbursements included as a reduction to general insurance expense | 1,971 |
| | 1,698 |
| | 3,629 |
|
Administrative and underwriting expense included in general insurance expense | (2,556 | ) | | (2,610 | ) | | — |
|
Total | $ | 6,488 |
| | $ | 6,858 |
| | $ | 11,121 |
|
The following table summarizes amounts due from parent and affiliates:
|
| | | | | | | | | | | | |
| | | | | | December 31, |
Related party | | Indebtedness | | Due date | | 2013 | | 2012 |
GWL&A Financial Inc. | | On account | | On demand | | $ | 23,396 |
| | $ | 17,236 |
|
Great-West Lifeco U.S. Inc. | | On account | | On demand | | 64,786 |
| | 62,350 |
|
Other related party receivables | | On account | | On demand | | 2,875 |
| | 3,242 |
|
Total | | | | | | $ | 91,057 |
| | $ | 82,828 |
|
The following table summarizes amounts due to parent and affiliates:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | |
| | | | | | December 31, |
Related party | | Indebtedness | | Due date | | 2013 | | 2012 |
GWL&A Financial Inc. (1) | | Surplus note | | November 2034 | | $ | 194,418 |
| | $ | 194,390 |
|
GWL&A Financial Inc. (2) | | Surplus note | | May 2046 | | 333,400 |
| | 333,400 |
|
GWL&A Financial Inc. | | Note interest | | May 2014 | | 4,701 |
| | 4,701 |
|
London Life Financial Corporation | | On account | | On demand | | 1,722 |
| | 1,735 |
|
The Great-West Life Assurance Company | | On account | | On demand | | 1,514 |
| | 2,568 |
|
The Canada Life Assurance Company | | On account | | On demand | | 6,038 |
| | 7,653 |
|
Total | | | | | | $ | 541,793 |
| | $ | 544,447 |
|
(1) A note payable to GWL&A Financial was issued as a surplus note on November 15, 2004, with a face amount of $195,000 and carrying amounts of $194,418 and 194,390 at December 31, 2013 and 2012, respectively. The surplus note bears interest at the rate of 6.675% per annum, payable in arrears on each May 14 and November 14. The note matures on November 14, 2034.
(2) A note payable to GWL&A Financial was issued as a surplus note on May 19, 2006, with a face amount and carrying amount of $333,400. The surplus note bears interest initially at the rate of 7.203% per annum, payable in arrears on each May 16 and November 16 until May 16, 2016. After May 16, 2016, the surplus note bears an interest rate of 2.588% plus the then-current three-month London Interbank Offering Rate (“LIBOR”). The surplus note is redeemable by the Company at the principal amount plus any accrued and unpaid interest after May 16, 2016. The note matures on May 16, 2046.
Payments of principal and interest under the surplus notes shall be made only out of surplus funds of the Company and only with prior written approval of the Commissioner of Insurance of the State of Colorado when the Commissioner of Insurance is satisfied that the financial condition of the Company warrants such action pursuant to applicable Colorado law. Payments of principal and interest on the surplus notes are payable only if at the time of such payment and after giving effect to the making thereof, the Company’s surplus would not fall below two and one half times the authorized control level as required by the most recent risk-based capital calculations.
Interest expense attributable to these related party debt obligations was $37,059 for the years ended December 31, 2013 and 2012, and $37,163 for the year ended December 31, 2011. Included in other liabilities on the consolidated balance sheets at December 31, 2013 and 2012 is $4,701 of interest payable attributable to these related party debt obligations.
The Company’s wholly owned subsidiary, Great-West Life & Annuity Insurance Company of South Carolina (“GWSC”) and CLAC are parties to a reinsurance agreement pursuant to which GWSC assumes term life insurance from CLAC. GWL&A Financial obtained two letters of credit for the benefit of the Company as collateral under the GWSC and CLAC reinsurance agreement for policy liabilities and capital support. The first letter of credit is for $1,173,000 and renews annually until it expires on December 31, 2027. The second letter of credit is for $70,000 and renews annually for an indefinite period of time. At December 31, 2013 and 2012 there were no outstanding amounts related to the letters of credit.
Included within reinsurance receivable in the consolidated balance sheets are $495,140 and $486,514 of funds withheld assets as of December 31, 2013 and 2012, respectively. CLAC pays the Company, on a quarterly basis, interest on the funds withheld balance at a rate of 4.55% per annum. The interest income, in the amount of $20,876, $19,382 and $18,376, is included in net investment income for the years ended December 31, 2013 2012 and 2011, respectively.
A subsidiary of the Company, Great-West Capital Management, LLC, serves as a Registered Investment Advisor to Great-West Funds, Inc., an affiliated open-end management investment company, to several affiliated insurance company separate accounts and to Great-West Trust Company, LLC, an affiliated trust company. Great-West Trust Company, LLC, serves as trustee to several collective investment trusts. Included in fee income on the consolidated
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
statements of income are $107,854, $84,137 and $69,172 of advisory, management and trustee fee income from these affiliated entities for the years ended December 31, 2013, 2012 and 2011, respectively.
The Company’s separate accounts invest in shares of Great-West Funds, Inc. and Putnam Funds, which are affiliates of the Company and shares of other non-affiliated mutual funds and government and corporate bonds. The Company’s separate accounts include mutual funds or other investment options that purchase guaranteed interest annuity contracts issued by the Company. During the years ended December 31, 2013, 2012 and 2011, these purchases totaled $198,107, $131,593 and $112,117, respectively. As the general account investment contracts are also included in the separate account balances in the accompanying consolidated balance sheets, the Company has reduced the separate account assets and liabilities by $333,074 and $289,730 at December 31, 2013 and 2012, respectively, to eliminate these amounts in its consolidated balance sheets at those dates.
On January 1, 2013, the Company terminated its reinsurance agreement with its affiliate, CLAC, pursuant to which it had ceded certain participating life business on a coinsurance basis.
Participating policyholders share in the financial results of the participating business in the form of policyholder dividends. The policyholder dividends can be distributed directly to the policyholders in the form of cash or through an increase in benefits such as paid-up additions. The participating policyholder earnings that cannot be distributed to the shareholder are not included in the Company’s condensed consolidated net income and are reflected in liabilities in undistributed earnings on participating business in the Company’s condensed consolidated balance sheets.
The Company recorded, at fair value, the following on January 1, 2013, in its condensed consolidated balance sheet in connection with the termination of the reinsurance agreement:
|
| | | | | | | | |
Assets | | Liabilities |
Fixed maturities, available-for-sale | $ | 44,104 |
| | Undistributed earnings on participating business | $ | 4,781 |
|
Policy loans | 6,468 |
| | Due to parent and affiliates | 3,841 |
|
Reinsurance receivable | (42,297 | ) | | | |
Investment income due and accrued | 347 |
| | | |
Total | $ | 8,622 |
| | Total | $ | 8,622 |
|
The Company recorded the following on January 1, 2013, in its condensed consolidated statement of income in connection with the termination of the reinsurance agreement:
|
| | | |
Premium income | $ | 42,297 |
|
Other revenue | 7,355 |
|
Total | 49,652 |
|
Increase (decrease) in future policy benefits | 41,297 |
|
Dividends to policyholders | 1,000 |
|
Total | 42,297 |
|
Participating policyholders' net income before income taxes | 7,355 |
|
Income tax expense | 2,574 |
|
Participating policyholders' income | 4,781 |
|
Provision for policyholders' share of earnings on participating business | 4,781 |
|
Net income available to shareholder | $ | — |
|
In 2013, the Company performed its regular review of the investment portfolios. As a result of that review on December 1, 2013, the Company transferred $3,862 of cash and two mortgages with a market value of $28,959 to CLAC in exchange for four fixed maturity investments with a market value of $32,821. As a result of that transaction, the Company recognized realized investment loss of $1,041.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
5. Summary of Investments
The following tables summarize fixed maturity investments classified as available-for-sale and the non-credit-related component of OTTI in AOCI:
|
| | | | | | | | | | | | | | | | | | | | | |
| | Fixed maturities: | | December 31, 2013 |
| | Amortized cost | | Gross unrealized gains | | Gross unrealized losses | | Estimated fair value and carrying value | | OTTI (gain) loss included in AOCI (1) |
| |
| | U.S. government direct obligations and U.S. agencies | | $ | 3,044,185 |
| | $ | 43,827 |
| | $ | 23,373 |
| | $ | 3,064,639 |
| | $ | — |
|
| | Obligations of U.S. states and their subdivisions | | 1,763,797 |
| | 196,742 |
| | 16,952 |
| | 1,943,587 |
| | — |
|
| | Foreign government securities | | 2,617 |
| | — |
| | 14 |
| | 2,603 |
| | — |
|
| | Corporate debt securities (2) | | 10,454,252 |
| | 568,261 |
| | 223,532 |
| | 10,798,981 |
| | (2,553 | ) |
| | Asset-backed securities | | 1,553,510 |
| | 131,277 |
| | 29,150 |
| | 1,655,637 |
| | (98,502 | ) |
| | Residential mortgage-backed securities | | 244,723 |
| | 8,335 |
| | 3,473 |
| | 249,585 |
| | (129 | ) |
| | Commercial mortgage-backed securities | | 731,688 |
| | 21,951 |
| | 11,515 |
| | 742,124 |
| | — |
|
| | Collateralized debt obligations | | 12,587 |
| | 14 |
| | 213 |
| | 12,388 |
| | — |
|
| | Total fixed maturities | | $ | 17,807,359 |
| | $ | 970,407 |
| | $ | 308,222 |
| | $ | 18,469,544 |
| | $ | (101,184 | ) |
(1) Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses. OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that had previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.
(2) Includes perpetual debt investments with amortized cost of $172,054 and estimated fair value of $143,644.
|
| | | | | | | | | | | | | | | | | | | | | |
| | Fixed maturities: | | December 31, 2012 |
| | Amortized cost | | Gross unrealized gains | | Gross unrealized losses | | Estimated fair value and carrying value | | OTTI (gain) loss included in AOCI (1) |
| |
| | U.S. government direct obligations and U.S. agencies | | $ | 2,735,917 |
| | $ | 101,568 |
| | $ | 3,411 |
| | $ | 2,834,074 |
| | $ | — |
|
| | Obligations of U.S. states and their subdivisions | | 1,676,289 |
| | 342,445 |
| | 229 |
| | 2,018,505 |
| | — |
|
| | Corporate debt securities (2) | | 9,511,411 |
| | 974,231 |
| | 111,551 |
| | 10,374,091 |
| | (2,293 | ) |
| | Asset-backed securities | | 1,795,122 |
| | 120,471 |
| | 54,454 |
| | 1,861,139 |
| | (66,293 | ) |
| | Residential mortgage-backed securities | | 407,715 |
| | 17,900 |
| | 30 |
| | 425,585 |
| | (240 | ) |
| | Commercial mortgage-backed securities | | 616,011 |
| | 48,247 |
| | 1,303 |
| | 662,955 |
| | — |
|
| | Collateralized debt obligations | | 13,751 |
| | 14 |
| | 1,770 |
| | 11,995 |
| | — |
|
| | Total fixed maturities | | $ | 16,756,216 |
| | $ | 1,604,876 |
| | $ | 172,748 |
| | $ | 18,188,344 |
| | $ | (68,826 | ) |
(1) Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses. OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that had previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.
(2) Includes perpetual debt investments with amortized cost of $226,069 and estimated fair value of $153,100.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
See Note 8 for additional discussion regarding fair value measurements.
The amortized cost and estimated fair value of fixed maturity investments classified as available-for-sale, based on estimated cash flows, are shown in the table below. Actual maturities will likely differ from these projections because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
| | | | | | | |
| December 31, 2013 |
| Amortized cost | | Estimated fair value |
Maturing in one year or less | $ | 602,136 |
| | $ | 634,727 |
|
Maturing after one year through five years | 3,146,981 |
| | 3,404,667 |
|
Maturing after five years through ten years | 3,936,775 |
| | 4,146,699 |
|
Maturing after ten years | 4,759,492 |
| | 4,783,596 |
|
Mortgage-backed and asset-backed securities | 5,361,975 |
| | 5,499,855 |
|
| $ | 17,807,359 |
| | $ | 18,469,544 |
|
Mortgage-backed (commercial and residential) and asset-backed securities include those issued by U.S. government and U.S. agencies.
The following table summarizes information regarding the sales of securities classified as available-for-sale:
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Proceeds from sales (1) | $ | 2,518,568 |
| | $ | 2,697,809 |
| | $ | 921,888 |
|
Gross realized gains from sales | 71,758 |
| | 113,984 |
| | 104,893 |
|
Gross realized losses from sales | 27,792 |
| | 4,371 |
| | 23,138 |
|
(1) Proceeds from sales have been restated from $6,821,062 and $3,958,589 for the years ended December 31, 2012 and 2011, respectively. The Company believes the effects of this error are immaterial to the prior periods.
Included in net investment income are unrealized gains (losses) of ($9,447), ($634) and $12,935 on held-for-trading fixed maturity investments still held at December 31, 2013, 2012 and 2011, respectively.
Mortgage loans on real estate - The following table summarizes the carrying value of the mortgage loan portfolio by component:
|
| | | | | | | |
| December 31, 2013 | | December 31, 2012 |
Principal | $ | 3,124,626 |
| | $ | 2,866,411 |
|
Unamortized premium (discount) and fees, net | 12,519 |
| | 18,237 |
|
Mortgage provision allowance | (2,890 | ) | | (2,890 | ) |
Total mortgage loans | $ | 3,134,255 |
| | $ | 2,881,758 |
|
The average recorded investment of impaired mortgage loans was zero, $1,034 and $5,822 for the years ended December 31, 2013, 2012 and 2011, respectively.
The recorded investment of the mortgage loan portfolio categorized as performing was $3,137,145 and $2,884,648 as of December 31, 2013 and 2012, respectively.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following table summarizes activity in the mortgage provision allowance:
|
| | | | | | | | | | | |
| Year ended December, 31 |
| 2013 | | 2012 | | 2011 |
| Commercial mortgages | | Commercial mortgages | | Commercial mortgages |
Beginning balance | $ | 2,890 |
| | $ | 21,130 |
| | $ | 16,300 |
|
Provision increases | 273 |
| | 1,067 |
| | 4,830 |
|
Charge-off | (273 | ) | | (992 | ) | | - |
|
Recovery | - |
| | (75 | ) | | - |
|
Provision decreases | - |
| | (18,240 | ) | | - |
|
Ending balance | $ | 2,890 |
| | $ | 2,890 |
| | $ | 21,130 |
|
Allowance ending balance by basis of impairment method: | | | | | |
Collectively evaluated for impairment | $ | 2,890 |
| | $ | 2,890 |
| | $ | 21,130 |
|
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method: | $ | 3,137,145 |
| | $ | 2,884,648 |
| | $ | 2,534,217 |
|
Individually evaluated for impairment | 13,906 |
| | 14,970 |
| | 18,493 |
|
Collectively evaluated for impairment | 3,123,239 |
| | 2,869,678 |
| | 2,515,724 |
|
Limited partnership and other corporation interests - At December 31, 2013 and 2012, the Company had $79,236 and $124,814, respectively, invested in limited partnership and other corporation interests. Included in limited partnership interests are investments in low-income housing partnerships that qualify for federal and state tax credits and ownership interests in pooled investment funds.
The Company has determined each investment in low-income housing limited partnerships (“LIHLP”) to be considered a VIE. Although the Company is involved with the VIE, it determined that consolidation was not required because it has no power to direct the activities that most significantly impact the entities’ economic performance.
As a 99% limited partner in various upper-tier LIHLPs, the Company has few or no voting rights, but expects to receive the tax credits allocated to the partnership and operating losses from depreciation and interest expense. The Company is only an equity investor and views the LIHLP as a single investment. The general partner of the LIHLPs is most closely involved in the development and management of the LIHLP project. The general partner has a small ownership of the partnership, which requires a de minimus capital contribution. This equity investment is reduced based on fees paid at inception by the limited partner; therefore, the general partner does not qualify as having an equity investment at risk in the LIHLP project. However, the limited partner does not have the direct or indirect ability through voting rights or similar rights to make decisions about the general partner’s activities that have a significant effect on the success of the partnership.
The carrying value and maximum exposure to loss in relation to the activities of the VIEs was $31,563 and $71,370 at December 31, 2013 and 2012, respectively.
Special deposits and securities lending - The Company had securities on deposit with government authorities as required by certain insurance laws with fair values of $14,072 and $15,791 at December 31, 2013 and 2012, respectively.
The Company participates in a securities lending program whereby securities are loaned to third parties. Securities with a cost or amortized cost of $28,178 and $138,654 and estimated fair values of $27,166 and $138,297 were on loan under the program at December 31, 2013 and 2012, respectively. The Company received restricted cash of $18,534 and $142,022 and securities with a fair value of $9,424 and zero as collateral at December 31, 2013 and 2012, respectively.
Unrealized losses on fixed maturity investments classified as available-for-sale - The following tables summarize unrealized investment losses, including the non-credit-related portion of OTTI losses reported in AOCI,
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
by class of investment:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Fixed maturities: | | December 31, 2013 |
| Less than twelve months | | Twelve months or longer | | Total |
| Estimated fair value | | Unrealized loss and OTTI | | Estimated fair value | | Unrealized loss and OTTI | | Estimated fair value | | Unrealized loss and OTTI |
U.S. government direct obligations and U.S. agencies | | $ | 2,399,373 |
| | $ | 23,156 |
| | $ | 5,192 |
| | $ | 217 |
| | $ | 2,404,565 |
| | $ | 23,373 |
|
Obligations of U.S. states and their subdivisions | | 214,979 |
| | 16,713 |
| | 837 |
| | 239 |
| | 215,816 |
| | 16,952 |
|
Foreign government securities | | 2,603 |
| | 14 |
| | — |
| | — |
| | 2,603 |
| | 14 |
|
Corporate debt securities | | 2,632,093 |
| | 144,367 |
| | 511,376 |
| | 79,165 |
| | 3,143,469 |
| | 223,532 |
|
Asset-backed securities | | 305,377 |
| | 12,763 |
| | 305,740 |
| | 16,387 |
| | 611,117 |
| | 29,150 |
|
Residential mortgage-backed securities | | 32,131 |
| | 3,454 |
| | 1,011 |
| | 19 |
| | 33,142 |
| | 3,473 |
|
Commercial mortgage-backed securities | | 177,395 |
| | 6,703 |
| | 48,825 |
| | 4,812 |
| | 226,220 |
| | 11,515 |
|
Collateralized debt obligations | | — |
| | — |
| | 12,356 |
| | 213 |
| | 12,356 |
| | 213 |
|
Total fixed maturities | | $ | 5,763,951 |
| | $ | 207,170 |
| | $ | 885,337 |
| | $ | 101,052 |
| | $ | 6,649,288 |
| | $ | 308,222 |
|
Total number of securities in an unrealized loss position | | | | 458 |
| | | | 109 |
| | | | 567 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fixed maturities: | | December 31, 2012 |
| | Less than twelve months | | Twelve months or longer | | Total |
| | Estimated fair value | | Unrealized loss and OTTI | Estimated fair value | | Unrealized loss and OTTI | Estimated fair value | | Unrealized loss and OTTI |
| |
| | U.S. government direct obligations and U.S. agencies | | $ | 538,612 |
| | $ | 3,270 |
| | $ | 7,252 |
| | $ | 141 |
| | $ | 545,864 |
| | $ | 3,411 |
|
| | Obligations of U.S. states and their subdivisions | | 25,679 |
| | 229 |
| | — |
| | — |
| | 25,679 |
| | 229 |
|
| | Corporate debt securities | | 527,280 |
| | 12,287 |
| | 291,611 |
| | 99,264 |
| | 818,891 |
| | 111,551 |
|
| | Asset-backed securities | | 30,810 |
| | 97 |
| | 647,715 |
| | 54,357 |
| | 678,525 |
| | 54,454 |
|
| | Residential mortgage-backed securities | | 9,834 |
| | 8 |
| | 1,210 |
| | 22 |
| | 11,044 |
| | 30 |
|
| | Commercial mortgage-backed securities | | 34,727 |
| | 169 |
| | 35,960 |
| | 1,134 |
| | 70,687 |
| | 1,303 |
|
| | Collateralized debt obligations | | — |
| | — |
| | 11,963 |
| | 1,770 |
| | 11,963 |
| | 1,770 |
|
| | Total fixed maturities | | $ | 1,166,942 |
| | $ | 16,060 |
| | $ | 995,711 |
| | $ | 156,688 |
| | $ | 2,162,653 |
| | $ | 172,748 |
|
| | Total number of securities in an unrealized loss position | | | | 85 |
| | | | 133 |
| | | | 218 |
|
Fixed maturity investments - Total unrealized losses and OTTI increased by $135,474, or 78%, from December 31, 2012 to December 31, 2013. The increase in unrealized losses was in the less than twelve months category which increased by $191,110 from December 31, 2012 to December 31, 2013.
This increase was across most asset classes and was due to higher interest rates resulting in generally lower valuations of these fixed maturity securities. The number of securities with unrealized losses in the less than twelve months category increased from 85 at December 31, 2012 to 458 at December 31, 2013. The securities continue to be rated investment grade.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Total unrealized losses greater than twelve months decreased by $55,636 from December 31, 2012 to December 31, 2013. Corporate debt securities account for 78%, or $79,165, of the unrealized losses and OTTI greater than twelve months. Non-investment grade corporate securities account for $12,095 of unrealized losses and OTTI greater than twelve months and $10,276 of the losses are on perpetual debt investments issued by banks in the United Kingdom, which have bank ratings of BBB+ or higher. The Company determined the majority of the unrealized losses on perpetual securities were due to widening credit spreads and low London Interbank Offered Rate (“LIBOR”) based coupon rates on the securities, which are not expected to compromise the issuers’ ability to service the investments. Management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.
Asset-backed securities account for 16% of the unrealized losses and OTTI greater than twelve months. The present value of the cash flows expected to be collected is not less than amortized cost and management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.
See Note 8 for additional discussion regarding fair value measurements.
Other-than-temporary impairment recognition - The Company recorded OTTI on fixed maturity investments as follows:
|
| | | | | | | | | | | | | | | | |
Fixed maturities: | | Year ended December 31, 2013 |
OTTI recognized in realized gains/(losses) | | OTTI recognized in OCI (1) | | Total |
Credit related | | Non-credit related | Non-credit related |
Asset-backed securities | | $ | 3 |
| | $ | — |
| | $ | — |
| | $ | 3 |
|
Residential mortgage-backed securities | | 170 |
| | — |
| | (434 | ) | | (264 | ) |
Total fixed maturities | | $ | 173 |
| | $ | — |
| | $ | (434 | ) | | $ | (261 | ) |
(1) Amounts are recognized in OCI in the period incurred.
|
| | | | | | | | | | | | | | | | |
Fixed maturities: | | Year ended December 31, 2012 |
OTTI recognized in realized gains/(losses) | | OTTI recognized in OCI (2) | | Total |
Credit related (1) | | Non-credit related | Non-credit related |
Corporate debt securities | | $ | 254 |
| | $ | — |
| | $ | — |
| | $ | 254 |
|
Asset-backed securities | | 4,429 |
| | — |
| | (61 | ) | | 4,368 |
|
Total fixed maturities | | $ | 4,683 |
| | $ | — |
| | $ | (61 | ) | | $ | 4,622 |
|
(1) All of the $4,429 in credit related OTTI is bifurcated credit loss recognized on two asset-backed fixed maturities.
(2) Amounts are recognized in OCI in the period incurred.
|
| | | | | | | | | | | | | | | | |
Fixed maturities: | | Year ended December 31, 2011 |
OTTI recognized in realized gains/(losses) | | OTTI recognized in OCI (2) | | Total |
Credit related (1) | | Non-credit related | Non-credit related |
Corporate debt securities | | $ | 501 |
| | $ | — |
| | $ | — |
| | $ | 501 |
|
Asset-backed securities | | 6,264 |
| | — |
| | 10,005 |
| | 16,269 |
|
Total fixed maturities | | $ | 6,765 |
| | $ | — |
| | $ | 10,005 |
| | $ | 16,770 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
(1) All of the $6,264 in credit related OTTI is bifurcated credit loss recognized on one asset-backed fixed maturity.
(2) Amounts are recognized in OCI in the period incurred.
The OTTI on fixed maturity securities where the loss portion is bifurcated and the credit related component is recognized in realized investment gains (losses) is summarized as follows:
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Beginning balance | $ | 167,788 |
| | $ | 186,999 |
| | $ | 181,611 |
|
Additions: | | | | | |
Initial impairments - credit loss on securities not previously impaired | — |
| | 4,429 |
| | 6,264 |
|
Credit loss recognized on securities previously impaired | 173 |
| | — |
| | — |
|
Reductions: | | | | | |
Due to sales, maturities, or payoffs during the period | — |
| | (23,640 | ) | | (876 | ) |
Ending balance | $ | 167,961 |
| | $ | 167,788 |
| | $ | 186,999 |
|
Net Investment Income
The following table summarizes net investment income
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Investment income: | | | | | |
Fixed maturity and short-term investments | $ | 766,367 |
| | $ | 808,215 |
| | $ | 821,582 |
|
Mortgage loans on real estate | 147,944 |
| | 138,411 |
| | 117,796 |
|
Policy loans | 206,718 |
| | 213,300 |
| | 218,663 |
|
Limited partnership interests | 9,131 |
| | 7,566 |
| | 6,915 |
|
Net interest on funds withheld balances under reinsurance agreements, related party | 20,876 |
| | 19,382 |
| | 18,376 |
|
Derivative instruments (1) | (44,610 | ) | | 16,008 |
| | (11,613 | ) |
Other | 3,321 |
| | 5,222 |
| | 3,113 |
|
| 1,109,747 |
| | 1,208,104 |
| | 1,174,832 |
|
Investment expenses | (18,358 | ) | | (16,553 | ) | | (16,346 | ) |
Net investment income | $ | 1,091,389 |
| | $ | 1,191,551 |
| | $ | 1,158,486 |
|
(1) Includes gains (losses) on the hedged asset for fair value hedges.
Realized Investment Gains (Losses)
The following table summarizes realized investment gains (losses):
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Realized investment gains (losses): | | | | | |
Fixed maturity and short-term investments | $ | 37,312 |
| | $ | 105,675 |
| | $ | 78,637 |
|
Derivative instruments | (62,077 | ) | | (10,221 | ) | | (47,264 | ) |
Mortgage loans on real estate (1) | 10,895 |
| | 21,471 |
| | (4,633 | ) |
Other | (266 | ) | | (208 | ) | | (2,245 | ) |
Realized investment gains (losses) | $ | (14,136 | ) | | $ | 116,717 |
| | $ | 24,495 |
|
(1) Includes provision for mortgage impairments.
Included in net investment income and realized investment gains (losses) are amounts allocable to the participating fund account. This allocation is based upon the activity in a specific block of investments that are segmented for the benefit of the participating fund account.
In 2012 and 2011, the realized gains (losses) on the provision for mortgage impairments, net of recoveries, was $17,248 and $(4,830), respectively. The 2012 and 2011, realized gains (losses) on mortgage loan activity not related to the provision was $4,223 and $197 and was included in Other. In the current year, all mortgage loan activity has been included in a single line item.
6. Derivative Financial Instruments
Derivative transactions are generally entered into pursuant to master agreements and other contracts with approved counterparties that provide for a single net payment to be made by one party to the other on a daily basis, periodic payment dates, or at the due date, expiration or termination of the agreement.
Certain derivative master agreements contain provisions that would allow the counterparties to require immediate settlement of all derivative instruments in a net liability position if the Company were to default on any debt obligations over a certain threshold. The aggregate fair value of derivative instruments with credit-risk-related contingent features that were in a net liability position was $167,743 and $55,875 as of December 31, 2013 and 2012, respectively. The Company had pledged collateral related to these derivatives of $143,540 and $43,360 as of December 31, 2013 and 2012, respectively, in the normal course of business. If the credit-risk-related contingent features were triggered on December 31, 2013 the fair value of assets that could be required to settle the derivatives in a net liability position was $24,203.
At December 31, 2013 and 2012, the Company had pledged $143,710 and $54,400, respectively, of unrestricted cash collateral to counterparties in the normal course of business.
At December 31, 2013, the Company estimated $7,841 of net derivative gains related to cash flow hedges included in AOCI will be reclassified into net income within the next twelve months.
Types of derivative instruments and derivative strategies
Interest rate contracts
Cash flow hedges
Interest rate swap agreements are used to convert the interest rate on certain debt securities from a floating rate to a fixed rate. Interest rate futures are used to manage the interest rate risks of forecasted acquisitions of fixed rate maturity investments. These derivatives are primarily structured to hedge interest rate risk inherent in the assumptions used to price certain liabilities.
Fair value hedges
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Interest rate swap agreements are used to convert the interest rate on certain debt securities from a fixed rate to a floating rate to manage the interest rate risk of the change in the fair value of certain fixed rate maturity investments. Interest rate futures are used to manage the interest rate risk of the change in the fair value of certain fixed rate maturity investments.
Not designated as hedging instruments
The Company enters into certain transactions in which derivatives are hedging an economic risk but hedge accounting is not elected. These derivative instruments include: exchange-traded interest rate swap futures, OTC interest rate swaptions, OTC interest rate swaps, exchange-traded Eurodollar interest rate futures and treasury interest rate futures. Certain of the Company’s OTC derivatives are cleared and settled through a central clearing counterparty while others are bilateral contracts between the Company and a counterparty.
The derivative instruments mentioned above are economic hedges and used to manage risk. These transactions are used to offset changes in liabilities including those in variable annuity products, hedge the economic effect of a large increase in interest rates, manage the potential variability in future interest payments due to a change in credited interest rates and the related change in cash flows due to increased surrenders and manage interest rate risks of forecasted acquisitions of fixed rate maturity investments and forecasted liability pricing.
Cross-currency contracts
Cross-currency swaps are used to manage the foreign currency exchange rate risk associated with investments denominated in other than U.S. dollars. The Company uses cross-currency swaps to convert interest and principal payments on foreign denominated debt instruments into U.S. dollars. Cross-currency swaps may be designated as cash flow hedges; however, hedge accounting is not always elected.
Equity contracts
Futures on equity indices are used to reduce the Company’s exposure to equity market risks; however, hedge accounting is not elected. The Company is hedging the risk of declining equity market values having an adverse effect on fee income collected on equity funds. The Company also uses futures on equity indices to offset changes in guaranteed minimum withdrawal benefit liabilities.
Other contracts
The Company uses forward settling TBA securities to gain exposure to the investment risk and return of agency mortgage-backed securities (pass-throughs). These transactions enhance the return on the Company’s investment portfolio and provide a more liquid and cost effective method of achieving these goals than purchasing or selling individual agency mortgage-backed pools. As the Company does not regularly accept delivery of such securities, they are accounted for as derivatives but hedge accounting is not elected. These transactions are disclosed as Other forward contracts.
The following tables summarize derivative financial instruments:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | |
| December 31, 2013 |
Notional amount | | Net derivatives | | Asset derivatives | | Liability derivatives |
Fair value | Fair value (1) | Fair value (1) |
Hedge designation/derivative type: | | | | | | | |
Derivatives designated as hedges: | | | | | | | |
Cash flow hedges: | | | | | | | |
Interest rate swaps | $ | 184,200 |
| | $ | 13,829 |
| | $ | 13,829 |
| | $ | — |
|
Cross-currency swaps | 102,545 |
| | (7,843 | ) | | — |
| | 7,843 |
|
Total cash flow hedges | 286,745 |
| | 5,986 |
| | 13,829 |
| | 7,843 |
|
Fair value hedges: | | | | | | | |
Interest rate swaps | 78,000 |
| | 4,951 |
| | 5,098 |
| | 147 |
|
Total fair value hedges | 78,000 |
| | 4,951 |
| | 5,098 |
| | 147 |
|
Total derivatives designated as hedges | 364,745 |
| | 10,937 |
| | 18,927 |
| | 7,990 |
|
Derivatives not designated as hedges: | | | | | | | |
Interest rate swaps | 55,600 |
| | (2,038 | ) | | 1,454 |
| | 3,492 |
|
Futures on equity indices | 3,483 |
| | — |
| | — |
| | — |
|
Interest rate futures | 16,233 |
| | — |
| | — |
| | — |
|
Interest rate swaptions | 494,774 |
| | 1,176 |
| | 1,176 |
| | — |
|
Cross-currency swaps | 557,676 |
| | (154,340 | ) | | 1,921 |
| | 156,261 |
|
Total derivatives not designated as hedges | 1,127,766 |
| | (155,202 | ) | | 4,551 |
| | 159,753 |
|
Total cash flow hedges, fair value hedges and derivatives not designated as hedges | $ | 1,492,511 |
| | $ | (144,265 | ) | | $ | 23,478 |
| | $ | 167,743 |
|
(1) The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets.
|
| | | | | | | | | | | | | | | |
| December 31, 2012 |
Notional amount | | Net derivatives | | Asset derivatives | | Liability derivatives |
| Fair value | | Fair value (1) | | Fair value (1) |
Hedge designation/derivative type: | | | | | | | |
Derivatives designated as hedges: | | | | | | | |
Cash flow hedges: | | | | | | | |
Interest rate swaps | $ | 184,200 |
| | $ | 26,113 |
| | $ | 26,113 |
| | $ | — |
|
Cross-currency swaps | 424,248 |
| | (81,109 | ) | | 4,643 |
| | 85,752 |
|
Total cash flow hedges | 608,448 |
| | (54,996 | ) | | 30,756 |
| | 85,752 |
|
Fair value hedges: | | | | | | | |
Interest rate swaps | 183,776 |
| | (1,391 | ) | | 258 |
| | 1,649 |
|
Total fair value hedges | 183,776 |
| | (1,391 | ) | | 258 |
| | 1,649 |
|
Total derivatives designated as hedges | 792,224 |
| | (56,387 | ) | | 31,014 |
| | 87,401 |
|
Derivatives not designated as hedges: | | | | | | | |
Interest rate swaps | 29,264 |
| | 305 |
| | 1,062 |
| | 757 |
|
Futures on equity indices | 3,133 |
| | — |
| | — |
| | — |
|
Interest rate futures | 80,550 |
| | — |
| | — |
| | — |
|
Interest rate swaptions | 688,674 |
| | 342 |
| | 342 |
| | — |
|
Total derivatives not designated as hedges | 801,621 |
| | 647 |
| | 1,404 |
| | 757 |
|
Total cash flow hedges, fair value hedges and derivatives not designated as hedges | $ | 1,593,845 |
| | $ | (55,740 | ) | | $ | 32,418 |
| | $ | 88,158 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
(1) The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets.
Notional amounts are used to express the extent of the Company’s involvement in derivative transactions and represent a standard measurement of the volume of its derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received.
The Company had 46 and 75 swap transactions with an average notional amount of $3,175 and $8,685 during the years ended December 31, 2013 and 2012, respectively. During the years ended December 31, 2013 and 2012, the Company had 17 and 23 cross-currency swap transactions with an average notional amount of $13,881 and $12,710, respectively. The Company had 695 and 931 futures transactions with an average number of contracts per transaction of 9 and 11 during the years ended December 31, 2013 and 2012, respectively. The Company had 52 and 46 swaption transactions with an average notional amount of $5,040 and $5,528 during the years ended December 31, 2013 and 2012, respectively. The Company had 986 forward settling TBA security transactions with an average notional amount of $47,566 during the year ended December 31, 2013.
Significant changes in the derivative notional amount during the year ended December 31, 2013 were primarily due to the following:
| |
◦ | The net decrease of $337,307 in interest rate swaps, interest rate swaptions and futures was primarily due to (i) a change in the Company’s interest rate risk hedging strategy and (ii) the closing of fair value hedges associated with the concurrent sales of certain fixed rate maturity investments. |
| |
◦ | The increase of $235,973 in cross-currency swaps was due to additional swaps opened to hedge newly purchased assets denominated in British pounds and Euros. |
The Company recognized total derivative gains (losses) in net investment income of ($44,929), $12,567 and ($15,428) for the years ended December 31, 2013, 2012 and 2011, respectively. The Company recognized net investment gains (losses) on closed derivative positions of ($65,019), ($10,221) and ($38,794) for the years ended December 31, 2013, 2012 and 2011, respectively. The preceding amounts are shown net of any gains (losses) on the hedged assets in a fair value hedge that has been recorded in net investment income.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following tables present the effect of derivative instruments in the consolidated statement of income reported by cash flow hedges, fair value hedges and economic hedges:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain (loss) recognized in OCI on derivatives (Effective portion) | | Gain (loss) reclassified from OCI into net income (Effective portion) | | Gain (loss) recognized in net income on derivatives (Ineffective portion and amount excluded from effectiveness testing) |
|
| Year ended December 31, | | Year ended December 31, | | Year ended December 31, |
| 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 | | | | 2013 | | 2012 | | 2011 | | |
Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | |
Interest rate swaps | $ | (12,285 | ) | | $ | 5,220 |
| | $ | 21,322 |
| | $ | 5,067 |
| | $ | 2,856 |
| | $ | 2,820 |
| | (A) | | $ | — |
| | $ | — |
| | $ | 9 |
| | (A) |
Cross-currency swaps | 15,387 |
| | (24,101 | ) | | 1,123 |
| | — |
| | — |
| | — |
| | | | — |
| | — |
| | — |
| | |
Interest rate futures | — |
| | — |
| | — |
| | 63 |
| | 63 |
| | 43 |
| | (A) | | — |
| | — |
| | (92 | ) | | (A) |
Interest rate futures | — |
| | — |
| | (1,431 | ) | | — |
| | — |
| | — |
| | | | — |
| | — |
| | 6 |
| | (B) |
Total cash flow hedges | $ | 3,102 |
| | $ | (18,881 | ) | | $ | 21,014 |
| | $ | 5,130 |
| | $ | 2,919 |
| | $ | 2,863 |
| | | | $ | — |
| | $ | — |
| | $ | (77 | ) | | |
(A) Net investment income.
(B) Represents realized gains (losses) on closed positions recorded in realized investment gains (losses), net.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain (loss) on derivatives recognized in net income | | Gain (loss) on hedged assets recognized in net income |
|
| Year ended December 31, | | Year ended December 31, |
| 2013 | | 2012 | | 2011 | | | | 2013 | | 2012 | | 2011 | | |
Fair value hedges: | | | | | | | | | | | | | | | |
Interest rate swaps | $ | 6,342 |
| | $ | (380 | ) | | $ | (1,011 | ) | | (A) | | $ | — |
| | $ | — |
| | $ | — |
| | |
Interest rate swaps | 1,909 |
| | — |
| | — |
| | (B) | | — |
| | — |
| | — |
| | |
Interest rate futures | — |
| | — |
| | (285 | ) | | (A) | | — |
| | — |
| | — |
| | |
Interest rate futures | — |
| | — |
| | (8,311 | ) | | (B) | | — |
| | — |
| | — |
| | |
Items hedged in interest rate swaps | — |
| | — |
| | — |
| | | | (5,308 | ) | | 380 |
| | 1,011 |
| | (A) |
Items hedged in interest rate swaps | — |
| | — |
| | — |
| | | | (2,943 | ) | | — |
| | — |
| | (B) |
Items hedged in interest rate futures | — |
| | — |
| | — |
| | | | — |
| | — |
| | (2,002 | ) | | (A) |
Items hedged in interest rate futures | — |
| | — |
| | — |
| | | | — |
| | — |
| | 8,470 |
| | (B) |
Total fair value hedges (1) | $ | 8,251 |
| | $ | (380 | ) | | $ | (9,607 | ) | | | | $ | (8,251 | ) | | $ | 380 |
| | $ | 7,479 |
| | |
(1) Hedge ineffectiveness of zero, zero and ($2,128) was recognized during the years ended December 31, 2013, 2012 and 2011, respectively.
(A) Net investment income.
(B) Represents realized gains (losses) on closed positions recorded in realized investment gains (losses), net.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | | | |
| Gain (loss) on derivatives recognized in net income |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Derivatives not designated as hedging instruments: | | | | | | | | | | | |
Futures on equity indices | (97) |
| | (A) | | 2 |
| | (A) | | (32) |
| | (A) |
Futures on equity indices | (3,396) |
| | (B) | | (774) |
| | (B) | | 373 |
| | (B) |
Interest rate swaps | (3,668) |
| | (A) | | 8,620 |
| | (A) | | (12,351) |
| | (A) |
Interest rate swaps | (622) |
| | (B) | | (4,979) |
| | (B) | | (38,377) |
| | (B) |
Interest rate futures | (458) |
| | (A) | | 164 |
| | (A) | | 260 |
| | (A) |
Interest rate futures | 303 |
| | (B) | | (2,641) |
| | (B) | | (251) |
| | (B) |
Interest rate swaptions | 3,241 |
| | (A) | | 862 |
| | (A) | | (3,798) |
| | (A) |
Interest rate swaptions | (2,828) |
| | (B) | | (1,827) |
| | (B) | | (704) |
| | (B) |
Other forward contracts | (57,442) |
| | (B) | | - |
| | (B) | | - |
| | (B) |
Cross-currency swaps | (50,111) |
| | (A) | | - |
| | (A) | | - |
| | (A) |
|
Total derivatives not designated as hedging instruments | $ | (115,078 | ) | | | | $ | (573 | ) | | | | $ | (54,880 | ) | | |
(A) Net investment income.
(B) Represents realized gains (losses) on closed positions recorded in realized investment gains (losses), net.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
7. Summary of Offsetting Assets and Liabilities
The Company enters into derivative transactions with several approved counterparties. The Company’s derivative transactions are generally governed by International Swaps and Derivatives Association (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting in the event of default or bankruptcy of the Company’s counterparties. The Company’s ISDA Master Agreements generally include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its derivative transactions. These provisions have the effect of securing each party’s position to the extent of collateral held. The following tables summarize the effect of master netting arrangements on the Company’s financial position in the normal course of business and in the event of default or bankruptcy of the Company’s counterparties:
|
| | | | | | | | | | | | | | | |
| December 31, 2013 |
| | | Gross fair value not offset in balance sheets | | |
Financial instruments: | Gross fair value of recognized assets/liabilities (1) | | Financial instruments | | Cash collateral received/(pledged) | | Net fair value |
Derivative instruments (assets) (2) | $ | 25,250 |
| | $ | (25,023 | ) | | $ | — |
| | $ | 227 |
|
Derivative instruments (liabilities) (3) | 171,387 |
| | (25,023 | ) | | (143,540 | ) | | 2,824 |
|
| | | | | | | |
| December 31, 2012 |
| | | Gross fair value not offset in balance sheets | | |
Financial instruments: | Gross fair value of recognized assets/liabilities (1) | | Financial instruments | | Cash collateral received/(pledged) | | Net fair value |
Derivative instruments (assets) (2) | $ | 26,647 |
| | $ | (26,647 | ) | | $ | — |
| | $ | — |
|
Derivative instruments (liabilities) (3) | 87,093 |
| | (26,647 | ) | | (54,400 | ) | | 6,046 |
|
(1) The gross fair value of derivative instruments are not netted against offsetting liabilities for presentation on the consolidated balance sheets.
(2) The estimated fair value of derivative instrument assets is reported in other assets in the consolidated balance sheets and includes income and expense accruals.
(3) The estimated fair value of derivative instrument liabilities is reported in other liabilities in the consolidated balance sheets and includes income and expense accruals.
8. Fair Value Measurements
Recurring fair value measurements
The following tables present the Company’s financial assets and liabilities carried at fair value on a recurring basis by fair value hierarchy category:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | | |
| | Assets and liabilities measured at fair value on a recurring basis |
| | December 31, 2013 |
Assets | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | | Total |
Fixed maturities available-for-sale: | | | | | | | | |
U.S. government direct obligations and U.S. agencies | | $ | — |
| | $ | 3,064,639 |
| | $ | — |
| | $ | 3,064,639 |
|
Obligations of U.S. states and their subdivisions | | — |
| | 1,943,587 |
| | — |
| | 1,943,587 |
|
Foreign government securities | | — |
| | 2,603 |
| | — |
| | 2,603 |
|
Corporate debt securities | | — |
| | 10,792,329 |
| | 6,652 |
| | 10,798,981 |
|
Asset-backed securities | | — |
| | 1,402,679 |
| | 252,958 |
| | 1,655,637 |
|
Residential mortgage-backed securities | | — |
| | 249,585 |
| | — |
| | 249,585 |
|
Commercial mortgage-backed securities | | — |
| | 742,124 |
| | — |
| | 742,124 |
|
Collateralized debt obligations | | — |
| | 12,356 |
| | 32 |
| | 12,388 |
|
Total fixed maturities available-for-sale | | — |
| | 18,209,902 |
| | 259,642 |
| | 18,469,544 |
|
Fixed maturities held for trading: | | | | | | | | |
U.S. government direct obligations and U.S. agencies | | — |
| | 236,000 |
| | — |
| | 236,000 |
|
Corporate debt securities | | — |
| | 58,171 |
| | — |
| | 58,171 |
|
Asset-backed securities | | — |
| | 40,858 |
| | — |
| | 40,858 |
|
Commercial mortgage-backed securities | | — |
| | 1,026 |
| | — |
| | 1,026 |
|
Total fixed maturities held for trading | | — |
| | 336,055 |
| | — |
| | 336,055 |
|
Short-term investments available-for-sale lending agreements | | 254,378 |
| | 39,909 |
| | — |
| | 294,287 |
|
| | | | | | | | |
Collateral under securities lending agreements | | 18,534 |
| | — |
| | — |
| | 18,534 |
|
Collateral under derivative counterparty collateral agreements | | 143,710 |
| | — |
| | — |
| | 143,710 |
|
Derivative instruments designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 18,927 |
| | — |
| | 18,927 |
|
Derivative instruments not designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 1,454 |
| | — |
| | 1,454 |
|
Interest rate swaptions | | — |
| | 1,176 |
| | — |
| | 1,176 |
|
Cross-currency swaps | | — |
| | 1,921 |
| | — |
| | 1,921 |
|
Total derivative instruments | | — |
| | 23,478 |
| | — |
| | 23,478 |
|
Separate account assets | | 14,861,680 |
| | 11,769,224 |
| | — |
| | 26,630,904 |
|
Total assets | | $ | 15,278,302 |
| | $ | 30,378,568 |
| | $ | 259,642 |
| | $ | 45,916,512 |
|
Liabilities | | | | | | | | |
Payable under securities lending agreements | | $ | 18,534 |
| | $ | — |
| | $ | — |
| | $ | 18,534 |
|
Derivative instruments designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 147 |
| | — |
| | 147 |
|
Cross-currency swaps | | — |
| | 7,843 |
| | — |
| | 7,843 |
|
Derivative instruments not designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 3,492 |
| | — |
| | 3,492 |
|
Cross-currency swaps | | — |
| | 156,261 |
| | — |
| | 156,261 |
|
Total derivative instruments | | — |
| | 167,743 |
| | — |
| | 167,743 |
|
Separate account liabilities (1) | | 2 |
| | 166,325 |
| | — |
| | 166,327 |
|
Total liabilities | | $ | 18,536 |
| | $ | 334,068 |
| | $ | — |
| | $ | 352,604 |
|
| |
(1) | Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts. |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | | |
| | Assets and liabilities measured at fair value on a recurring basis |
| | December 31, 2012 |
Assets | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | | Total |
Fixed maturities available-for-sale: | | | | | | | | |
U.S. government direct obligations and U.S. agencies | | $ | — |
| | $ | 2,834,074 |
| | $ | — |
| | $ | 2,834,074 |
|
Obligations of U.S. states and their subdivisions | | — |
| | 2,018,505 |
| | — |
| | 2,018,505 |
|
Corporate debt securities | | — |
| | 10,372,269 |
| | 1,822 |
| | 10,374,091 |
|
Asset-backed securities | | — |
| | 1,595,601 |
| | 265,538 |
| | 1,861,139 |
|
Residential mortgage-backed securities | | — |
| | 425,585 |
| | — |
| | 425,585 |
|
Commercial mortgage-backed securities | | — |
| | 662,955 |
| | — |
| | 662,955 |
|
Collateralized debt obligations | | — |
| | 11,963 |
| | 32 |
| | 11,995 |
|
Total fixed maturities available-for-sale | | — |
| | 17,920,952 |
| | 267,392 |
| | 18,188,344 |
|
Fixed maturities held for trading: | | | | | | | | |
U.S. government direct obligations and U.S. agencies | | — |
| | 263,634 |
| | — |
| | 263,634 |
|
Corporate debt securities | | — |
| | 61,336 |
| | — |
| | 61,336 |
|
Asset-backed securities | | — |
| | 42,630 |
| | — |
| | 42,630 |
|
Total fixed maturities held for trading | | — |
| | 367,600 |
| | — |
| | 367,600 |
|
Short-term investments available-for-sale | | 19,459 |
| | 246,873 |
| | — |
| | 266,332 |
|
Collateral under securities lending agreements | | 142,022 |
| | — |
| | — |
| | 142,022 |
|
Collateral under derivative counterparty collateral agreements | | 54,400 |
| | — |
| | — |
| | 54,400 |
|
Derivative instruments designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 26,371 |
| | — |
| | 26,371 |
|
Cross-currency swaps | | — |
| | 4,643 |
| | — |
| | 4,643 |
|
Derivative instruments not designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 1,062 |
| | — |
| | 1,062 |
|
Interest rate swaptions | | — |
| | 342 |
| | — |
| | 342 |
|
Total derivative instruments | | — |
| | 32,418 |
| | — |
| | 32,418 |
|
Separate account assets | | 12,171,024 |
| | 12,434,502 |
| | — |
| | 24,605,526 |
|
Total assets | | $ | 12,386,905 |
| | $ | 31,002,345 |
| | $ | 267,392 |
| | $ | 43,656,642 |
|
Liabilities | | | | | | | | |
Payable under securities lending agreements | | $ | 142,022 |
| | $ | — |
| | $ | — |
| | $ | 142,022 |
|
Derivative instruments designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 1,649 |
| | — |
| | 1,649 |
|
Cross-currency swaps | | — |
| | 85,752 |
| | — |
| | 85,752 |
|
Derivative instruments not designated as hedges: | | | | | | | | |
Interest rate swaps | | — |
| | 757 |
| | — |
| | 757 |
|
Total derivative instruments | | — |
| | 88,158 |
| | — |
| | 88,158 |
|
Separate account liabilities (1) | | 14 |
| | 352,653 |
| | — |
| | 352,667 |
|
Total liabilities | | $ | 142,036 |
| | $ | 440,811 |
| | $ | — |
| | $ | 582,847 |
|
(1) Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.
The methods and assumptions used to estimate the fair value of the Company’s financial assets and liabilities carried at fair value on a recurring basis are as follows:
Fixed maturity investments
The fair values for fixed maturity investments are based upon market prices from independent pricing services. In cases where market prices are not readily available, such as for private fixed maturity investments, fair values are estimated by the Company. To determine estimated fair value for these instruments, the Company generally utilizes discounted cash flows calculated at current market rates on investments of similar quality and term. Fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments,
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty.
Short-term investments and securities lending agreements
The amortized cost of short-term investments, collateral under securities lending agreements and payable under securities lending agreements is a reasonable estimate of fair value due to their short-term nature and high credit quality of the issuers.
Derivative counterparty collateral agreements
Included in other assets is cash collateral received from or pledged to derivative counterparties and included in other liabilities is the obligation to return the cash collateral to the counterparties. The carrying value of the collateral is a reasonable estimate of fair value.
Derivative instruments
Included in other assets and other liabilities are derivative financial instruments. The estimated fair values of OTC derivatives, primarily consisting of cross-currency swaps, interest rate swaps and interest rate swaptions, are the estimated amounts the Company would receive or pay to terminate the agreements at the end of each reporting period, taking into consideration current interest rates and other relevant factors.
Separate account assets and liabilities
Separate account assets and liabilities primarily include investments in mutual fund, fixed maturity and short-term securities. Mutual funds are recorded at net asset value, which approximates fair value, on a daily basis. The fixed maturity and short-term investments are valued in the same manner, and using the same pricing sources and inputs as the fixed maturity and short-term investments of the Company.
The following tables present additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
|
| | | | | | | | | | | | | | | |
| Recurring Level 3 financial assets and liabilities |
| Year ended December 31, 2013 |
| Fixed maturities available-for-sale | | |
| Corporate debt securities | | Asset-backed securities | | Collateralized debt obligations | | Total |
Balance, January 1, 2013 | $ | 1,822 |
| | $ | 265,538 |
| | $ | 32 |
| | $ | 267,392 |
|
Realized and unrealized gains (losses) included in: | | | | | | | |
Other comprehensive income (loss) | (240 | ) | | 34,766 |
| | — |
| | 34,526 |
|
Settlements | (762 | ) | | (47,346 | ) | | — |
| | (48,108 | ) |
Transfers into Level 3 (1) | 5,832 |
| | — |
| | — |
| | 5,832 |
|
Balance, December 31, 2013 | $ | 6,652 |
| | $ | 252,958 |
| | $ | 32 |
| | $ | 259,642 |
|
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets held at December 31, 2013 | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
(1) Transfers into Level 3 are due primarily to decreased observability of inputs in valuation methodologies.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | | | | | |
| Recurring Level 3 financial assets and liabilities |
| Year ended December 31, 2012 |
| Fixed maturities available-for-sale | | | | |
| Corporate debt securities | | Asset-backed securities | | Collateralized debt obligations | | Separate accounts | | Total |
Balance, January 1, 2012 | $ | 36,496 |
| | $ | 279,021 |
| | $ | 22 |
| | $ | 2,118 |
| | $ | 317,657 |
|
Realized and unrealized gains (losses) included in: | | | | | | | | | |
Net income | (66 | ) | | — |
| | — |
| | (3,692 | ) | | (3,758 | ) |
Other comprehensive income (loss) | 102 |
| | 33,346 |
| | 11 |
| | 3,604 |
| | 37,063 |
|
Sales | (1,598 | ) | | — |
| | — |
| | (1,997 | ) | | (3,595 | ) |
Settlements | (874 | ) | | (41,809 | ) | | (1 | ) | | (33 | ) | | (42,717 | ) |
Transfers out of Level 3 (1) | (32,238 | ) | | (5,020 | ) | | — |
| | — |
| | (37,258 | ) |
Balance, December 31, 2012 | $ | 1,822 |
| | $ | 265,538 |
| | $ | 32 |
| | $ | — |
| | $ | 267,392 |
|
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets held at December 31, 2012 | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
(1) Transfers out of Level 3 are due primarily to increased observability of inputs in valuation methodologies as evidenced by corroboration of market prices with multiple pricing vendors and internal models.
|
| | | | | | | | | | | | | | | | | | | |
| Recurring Level 3 financial assets and liabilities |
| Year ended December 31, 2011 |
| Fixed maturities available-for-sale | | | | |
| Corporate debt securities | | Asset-backed securities | | Collateralized debt obligations | | Separate accounts | | Total |
Balance, January 1, 2011 | $ | 58,692 |
| | $ | 290,488 |
| | $ | 14 |
| | $ | 4,278 |
| | $ | 353,472 |
|
Realized and unrealized gains (losses) included in: | | | | | | | | | |
Net income | 3,961 |
| | (192 | ) | | — |
| | 37 |
| | 3,806 |
|
Other comprehensive income (loss) | 779 |
| | 20,031 |
| | 8 |
| | 260 |
| | 21,078 |
|
Sales | (14,430 | ) | | — |
| | — |
| | (1,847 | ) | | (16,277 | ) |
Settlements | (17,460 | ) | | (31,306 | ) | | — |
| | (158 | ) | | (48,924 | ) |
Transfers into Level 3 (1) | 7,333 |
| | — |
| | — |
| | 1,400 |
| | 8,733 |
|
Transfers out of Level 3 (1) | (2,379 | ) | | — |
| | — |
| | (1,852 | ) | | (4,231 | ) |
Balance, December 31, 2011 | $ | 36,496 |
| | $ | 279,021 |
| | $ | 22 |
| | $ | 2,118 |
| | $ | 317,657 |
|
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets held at December 31, 2011 | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
(1) Transfers into Level 3 are due primarily to decreased observability of inputs in valuation methodologies. Transfers out of Level 3 are due primarily to increased observability of inputs in valuation methodologies as evidenced by corroboration of market prices with multiple pricing vendors.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following table presents significant unobservable inputs used during the valuation of certain assets categorized within Level 3 of the recurring fair value measurements table:
|
| | | | | | | | | |
| December 31, 2013 |
| Fair Value | | Valuation Technique | | Unobservable Input | | Weighted Average |
Assets: | | | | | | | |
Fixed maturities available-for-sale: | | | | | | | |
Asset-backed securities(1) | $ | 252,902 |
| | Internal model pricing | | Prepayment speed assumption | | 9 |
| | | | | Constant default rate assumption | | 5 |
| | | | | Adjusted ABX Index spread assumption (2) | | 455 |
(1) Includes home improvement loans only.
(2) Includes an internally calculated liquidity premium adjustment of 217.
At December 31, 2013, after adjusting the ABX Index spread assumption by the liquidity premium, the overall discount rate ranged from 327 to 647 basis points. The constant default rate assumption ranged from 2.0 to 12.9.
|
| | | | | | | | | |
| December 31, 2012 |
| Fair Value | | Valuation Technique | | Unobservable Input | | Weighted Average |
Fixed maturities available-for-sale: | | | | | | | |
Asset-backed securities(1) | $ | 265,470 |
| | Internal model pricing | | Prepayment speed assumption | | 5 |
| | | | | Constant default rate assumption | | 5 |
| | | | | Adjusted ABX Index spread assumption (2) | | 655 |
(1) Includes home improvement loans only.
(2) Includes an internally calculated liquidity premium adjustment of 217.
At December 31, 2012, after adjusting the ABX Index spread assumption by the liquidity premium, the overall discount rate ranged from 384 to 918 basis points. The constant default rate assumption ranged from 1.2 to 7.9.
The significant unobservable inputs used in the fair value measurement of asset-backed securities are prepayment speed assumptions, constant default rate assumptions and the ABX Index spread adjusted by an internally calculated liquidity premium with the primary inputs being the constant default rate assumption and the adjusted ABX Index spread assumption. As the constant default rate assumption or the adjusted ABX Index spread assumption decreases, the price and therefore, the fair value, of the securities increases.
Fair value of financial instruments
The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments not carried at fair value on a recurring basis:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | | |
| | December 31, 2013 | | December 31, 2012 |
Assets | | Carrying amount | | Estimated fair value | | Carrying amount | | Estimated fair value |
Mortgage loans on real estate | | $ | 3,134,255 |
| | $ | 3,197,292 |
| | $ | 2,881,758 |
| | $ | 3,114,796 |
|
Policy loans | | 4,185,472 |
| | 4,185,472 |
| | 4,260,200 |
| | 4,260,200 |
|
Limited partnership interests | | 44,551 |
| | 42,433 |
| | 46,707 |
| | 43,954 |
|
Other investments | | 16,643 |
| | 42,814 |
| | 18,890 |
| | 45,050 |
|
Liabilities | | | | | | | | |
Annuity contract benefits without life contingencies | | $ | 10,263,043 |
| | $ | 9,986,464 |
| | $ | 9,622,357 |
| | $ | 9,731,734 |
|
Policyholders' funds | | 345,689 |
| | 345,689 |
| | 374,821 |
| | 374,821 |
|
Commercial paper | | 98,990 |
| | 98,990 |
| | 97,987 |
| | 97,987 |
|
Notes payable | | 532,519 |
| | 541,918 |
| | 532,491 |
| | 563,860 |
|
The methods and assumptions used to estimate the fair value of financial instruments not carried at fair value on a recurring basis are summarized as follows:
Mortgage loans on real estate
Mortgage loan fair value estimates are generally based on discounted cash flows. A discount rate matrix is used where the discount rate valuing a specific mortgage generally corresponds to that mortgage’s remaining term and credit quality. Management believes the discount rate used is comparable to the credit, interest rate, term, servicing costs and risks of loans similar to the portfolio loans that the Company would make today given its internal pricing strategy. The estimated fair value was classified as Level 2.
Policy loans
Policy loans are funds provided to policy holders in return for a claim on the policy. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of repayments, the Company believes the fair value of policy loans approximates carrying value. The estimated fair value was classified as Level 2.
Limited partnership interests
Limited partnership interests, accounted for using the cost method, represent the Company’s minor ownership interests in pooled investment funds. These funds employ varying investment strategies that principally make private equity investments across diverse industries and geographical focuses. The estimated fair value was determined using the partnership financial statement reported capital account or net asset value adjusted for other relevant information which may impact the exit value of the investments. Distributions by these investments are generated from investment gains, from operating income generated by the underlying investments of the funds and from liquidation of the underlying assets of the funds which are estimated to be liquidated over the next one to 10 years. The estimated fair value was classified as Level 3.
Other investments
Other investments primarily include real estate held for investment. The estimated fair value for real estate is based on the unadjusted annual appraised value which includes factors such as comparable property sales, property income analysis, and capitalization rates. The estimated fair value was classified as Level 2.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Annuity contract benefits without life contingencies
The estimated fair value of annuity contract benefits without life contingencies is estimated by discounting the projected expected cash flows to the maturity of the contracts utilizing risk-free spot interest rates plus a provision for the Company’s credit risk. The estimated fair value was classified as Level 2.
Policyholders’ funds
The carrying amount of policyholders’ funds approximates the fair value since the Company can change the interest credited rates with 30 days notice. The estimated fair value was classified as Level 2.
Commercial paper
The amortized cost of commercial paper is a reasonable estimate of fair value due to its short-term nature and the high credit quality of the obligor. The estimated fair value was classified as Level 2.
Notes payable
The estimated fair value of the notes payable to GWL&A Financial is based upon quoted market prices from independent pricing services of securities with characteristics similar to those of the notes payable. The estimated fair value was classified as Level 2.
9. Reinsurance
In the normal course of its business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks to other insurance enterprises under excess coverage, quota share, yearly renewable term, coinsurance and modified coinsurance contracts. The Company retains an initial maximum of $3,500 of coverage per individual life. This initial retention limit of $3,500 may increase due to automatic policy increases in coverage at a maximum rate of $175 per annum, with an overall maximum increase in coverage of $1,000.
Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. At December 31, 2013 and 2012, the reinsurance receivables had carrying values in the amounts of $588,533 and $638,797, respectively. Included in these amounts are $502,471 and $533,446 at December 31, 2013 and 2012, respectively, associated with reinsurance agreements with related parties. At December 31, 2013 and 2012, 85% and 83%, respectively, of the total reinsurance receivable was due from CLAC, a related party.
The Company assumes risk from approximately 40 insurers and reinsurers by participating in yearly renewable term and coinsurance pool agreements. When assuming risk, the Company seeks to generate revenue while maintaining reciprocal working relationships with these partners as they also seek to limit their exposure to loss on any single life.
Maximum capacity to be retained by the Company is dictated at the treaty level and is monitored annually to ensure the total risk retained on any one life is limited to a maximum retention of $4,500.
The following tables summarize life insurance in-force and total premium income at and for the year ended December 31, 2013:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | |
| Life insurance in-force |
| Individual | | Group | | Total |
Written and earned direct | $ | 51,660,487 |
| | $ | 40,520,417 |
| | $ | 92,180,904 |
|
Reinsurance ceded | (9,512,583 | ) | | — |
| | (9,512,583 | ) |
Reinsurance assumed | 66,209,732 |
| | — |
| | 66,209,732 |
|
Net | $ | 108,357,636 |
| | $ | 40,520,417 |
| | $ | 148,878,053 |
|
|
Percentage of amount assumed to net | 61% | | 0% | | 44% |
|
| | | | | | | | | | | |
| Premium income |
| Life insurance | | Annuities | | Total |
Written and earned direct | $ | 315,100 |
| | $ | 4,000 |
| | $ | 319,100 |
|
Reinsurance ceded | (1,338 | ) | | (88 | ) | | (1,426 | ) |
Reinsurance assumed | 146,419 |
| | — |
| | 146,419 |
|
Net | $ | 460,181 |
| | $ | 3,912 |
| | $ | 464,093 |
|
The following tables summarize life insurance in-force and total premium income at and for the year ended December 31, 2012:
|
| | | | | | | | | | | |
| Individual | | Group | | Total |
Written and earned direct | $ | 51,324,176 |
| | $ | 38,587,771 |
| | $ | 89,911,947 |
|
Reinsurance ceded (1) | (9,719,234 | ) | | — |
| | (9,719,234 | ) |
Reinsurance assumed (2) | 71,161,149 |
| | — |
| | 71,161,149 |
|
Net | $ | 112,766,091 |
| | $ | 38,587,771 |
| | $ | 151,353,862 |
|
|
Percentage of amount assumed to net | 63% | | 0% | | 48% |
(1) Reinsurance ceded has been restated from $(11,138,163) at December 31, 2012. The Company believes the effects of this error are immaterial to the prior period.
(2) Reinsurance assumed has been restated from $72,580,078 at December 31, 2012. The Company believes the effects of this error are immaterial to the prior period.
|
| | | | | | | | | | | |
| Premium income |
| Life insurance | | Annuities | | Total |
Written and earned direct | $ | 323,236 |
| | $ | 3,712 |
| | $ | 326,948 |
|
Reinsurance ceded | (53,950 | ) | | 3,648 |
| | (50,302 | ) |
Reinsurance assumed | 145,507 |
| | — |
| | 145,507 |
|
Net | $ | 414,793 |
| | $ | 7,360 |
| | $ | 422,153 |
|
The following table summarizes total premium income for the year ended December 31, 2011:
|
| | | | | | | | | | | |
| Premium income |
| Life insurance | | Annuities | | Total |
Written and earned direct | $ | 395,419 |
| | $ | 1,960 |
| | $ | 397,379 |
|
Reinsurance ceded | (40,654 | ) | | (66 | ) | | (40,720 | ) |
Reinsurance assumed | 166,557 |
| | — |
| | 166,557 |
|
Net | $ | 521,322 |
| | $ | 1,894 |
| | $ | 523,216 |
|
Reinsurance recoveries for life and other policy benefits were $34,716, $46,492 and $36,876 for the years ended December 31, 2013, 2012, and 2011, respectively.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
10. Deferred Acquisition Costs and Value of Business Acquired
The following table summarizes activity in DAC and VOBA:
|
| | | | | | | | | | | |
| DAC | | VOBA | | Total |
Balance, January 1, 2011 | $ | 158,526 |
| | $ | 46,405 |
| | $ | 204,931 |
|
Capitalized additions | 57,108 |
| | — |
| | 57,108 |
|
Amortization and writedowns | (25,184 | ) | | (3,636 | ) | | (28,820 | ) |
Unrealized investment (gains) losses | (12,669 | ) | | (717 | ) | | (13,386 | ) |
Balance, December 31, 2011 | 177,781 |
| | 42,052 |
| | 219,833 |
|
Capitalized additions | 94,826 |
| | — |
| | 94,826 |
|
Amortization and writedowns | (51,434 | ) | | (9,045 | ) | | (60,479 | ) |
Unrealized investment (gains) losses | (48,757 | ) | | (962 | ) | | (49,719 | ) |
Balance, December 31, 2012 | 172,416 |
| | 32,045 |
| | 204,461 |
|
Correction to Balance, January 1, 2013 (1) | 45,058 |
| | — |
| | 45,058 |
|
Capitalized additions | 80,486 |
| | — |
| | 80,486 |
|
Amortization and writedowns | (55,490 | ) | | (4,155 | ) | | (59,645 | ) |
Unrealized investment (gains) losses | 71,601 |
| | 1,327 |
| | 72,928 |
|
Balance, December 31, 2013 | $ | 314,071 |
| | $ | 29,217 |
| | $ | 343,288 |
|
(1) The January 1, 2013 DAC balance has been restated. During 2013, management reviewed its practices related to the accounting for certain fees paid by customers at the onset of an insurance contract and the related acquisition costs incurred by the Company on the sale of the insurance contract in the Company’s executive benefits market. Management concluded that the fees paid by the customers should be deferred as unearned revenue liability and the acquisition costs should be deferred as DAC in the consolidated balance sheet. The Company has previously accounted for the fees paid by customers as a reduction of the DAC in the consolidated balance sheet. The misstatement was corrected by an opening adjustment to DAC on January 1, 2013. The Company believes the effects of this error are immaterial to the prior period.
The estimated future amortization of VOBA for the years ended December 31, 2014 through December 31, 2018 is approximately $3,900 per annum.
11. Goodwill and Other Intangible Assets
The balance of goodwill, all of which is within the Retirement Services segment, at December 31, 2013 and 2012 was $105,255.
The following tables summarize other intangible assets, all of which are within the Retirement Services segment:
|
| | | | | | | | | | | |
| December 31, 2013 |
| Gross carrying amount | | Accumulated amortization | | Net book value |
Customer relationships | $ | 36,314 |
| | $ | (21,159 | ) | | $ | 15,155 |
|
|
| | | | | | | | | | | |
| December 31, 2012 |
| Gross carrying amount | | Accumulated amortization | | Net book value |
Customer relationships | $ | 36,314 |
| | $ | (18,065 | ) | | $ | 18,249 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Amortization expense for other intangible assets included in general insurance expenses was $3,094, $3,606 and $3,787 for the years ended December 31, 2013, 2012 and 2011, respectively. Except for goodwill, the Company has no intangible assets with indefinite lives. The Company did not incur costs to renew or extend the term of acquired intangible assets during the year ended December 31, 2013.
The estimated future amortization of other intangible assets using current assumptions, which are subject to change, for the years ended December 31, 2014 through December 31, 2018 is approximately $2,400 per annum.
12. Commercial Paper
The Company maintains a commercial paper program that is partially supported by a $50,000 corporate credit facility.
The following table provides information regarding the Company’s commercial paper program:
|
| | | |
| December 31, |
| 2013 | | 2012 |
Face value | $98,990 | | $97,987 |
Carrying value | 98,990 | | 97,987 |
Effective interest rate | 0.2% - 0.3% | | 0.3% - 0.4% |
Maturity range (days) | 2 - 22 | | 3 - 74 |
13. Stockholder’s Equity and Dividend Restrictions
At December 31, 2013 and 2012, the Company had 50,000,000 shares of $1 par value preferred stock authorized, none of which was issued or outstanding at either date. In addition, the Company has 50,000,000 shares of $1 par value common stock authorized, 7,032,000 of which were issued and outstanding at both December 31, 2013 and 2012.
The Company’s net income and capital and surplus, as determined in accordance with statutory accounting principles and practices as prescribed by the National Association of Insurance Commissioners (“NAIC”), is as follows:
|
| | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | | December 31, |
| 2013 | | 2012 | | 2011 | | | 2013 | | 2012 |
Net income | $ | 175,292 |
| | $ | 147,741 |
| | $ | 155,998 |
| | Capital and surplus | $ | 1,200,609 |
| | $ | 1,109,498 |
|
Regulatory compliance is determined by a ratio of a company’s total adjusted capital (“TAC”) to its authorized control level risk-based capital (“ACL”), as determined in accordance with statutory accounting principles and practices as prescribed by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is 200% of ACL. The Company’s risk-based capital ratio was in excess of the required amount as of December 31, 2013.
Dividends are paid as determined by the Board of Directors, subject to restrictions as discussed below. During the years ended December 31, 2013, 2012 and 2011, the Company paid dividends in the amounts of $102,436, $184,401 and $206,353, respectively, to its parent company, GWL&A Financial.
The maximum amount of dividends that can be paid to stockholders by insurance companies domiciled in the State of Colorado, without prior approval of the Insurance Commissioner, is subject to restrictions relating to statutory capital and surplus and statutory net gain from operations. As filed with the Colorado Division of Insurance, the statutory capital and surplus and net gain from operations at and for the year ended December 31, 2013 were $1,200,609 and $218,016, respectively. Based on the as filed amounts, the Company may pay up to $218,016 of dividends during the year ended December 31, 2014 without the prior approval of the Colorado Insurance Commissioner. Prior to any payments of dividends, the Company seeks approval from the Colorado Insurance Commissioner.
14. Other Comprehensive Income
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following tables present the accumulated balances for each classification of other comprehensive income (loss):
|
| | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2013 |
| Unrealized holding gains (losses) arising on fixed maturities, available-for-sale | | Unrealized holding gains (losses) arising on cash flow hedged | | Future policy benefits, DAC and VOBA adjustments | | Employee benefit plan adjustment | | Total |
Balances, January 1, 2013 | $ | 927,678 |
| | $ | 24,962 |
| | $ | (194,147 | ) | | $ | (122,794 | ) | | $ | 635,699 |
|
Other comprehensive income (loss) before reclassifications | (467,178 | ) | | 2,016 |
| | 124,147 |
| | 68,422 |
| | (272,593 | ) |
Amounts reclassified from AOCI | (26,477 | ) | | (1,461 | ) | | — |
| | 10,586 |
| | (17,352 | ) |
Net current period other comprehensive income (loss) | (493,655 | ) | | 555 |
| | 124,147 |
| | 79,008 |
| | (289,945 | ) |
Balances, December 31, 2013 | $ | 434,023 |
| | $ | 25,517 |
| | $ | (70,000 | ) | | $ | (43,786 | ) | | $ | 345,754 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2012 |
| Unrealized holding gains (losses) arising on fixed maturities, available-for-sale | | Unrealized holding gains (losses) arising on cash flow hedged | | Future policy benefits, DAC and VOBA adjustments | | Employee benefit plan adjustment | | Total |
Balances, January 1, 2012 | $ | 646,805 |
| | $ | 41,003 |
| | $ | (139,655 | ) | | $ | (78,171 | ) | | $ | 469,982 |
|
Other comprehensive income (loss) before reclassifications | 347,118 |
| | (12,273 | ) | | (54,492 | ) | | (50,771 | ) | | 229,582 |
|
Amounts reclassified from AOCI | (66,245 | ) | | (3,768 | ) | | — |
| | 6,148 |
| | (63,865 | ) |
Net current period other comprehensive income (loss) | 280,873 |
| | (16,041 | ) | | (54,492 | ) | | (44,623 | ) | | 165,717 |
|
Balances, December 31, 2012 | $ | 927,678 |
| | $ | 24,962 |
| | $ | (194,147 | ) | | $ | (122,794 | ) | | $ | 635,699 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Year ended December 31, 2011 |
| Unrealized holding gains (losses) arising on fixed maturities, available-for-sale | | Unrealized holding gains (losses) arising on cash flow hedged | | Future policy benefits, DAC and VOBA adjustments | | Employee benefit plan adjustment | | Total |
Balances, January 1, 2011 | $ | 360,570 |
| | $ | 29,205 |
| | $ | (74,514 | ) | | $ | (45,953 | ) | | $ | 269,308 |
|
Other comprehensive income (loss) before reclassifications | 332,581 |
| | 13,659 |
| | (65,141 | ) | | (34,978 | ) | | 246,121 |
|
Amounts reclassified from AOCI | (46,346 | ) | | (1,861 | ) | | — |
| | 2,760 |
| | (45,447 | ) |
Net current period other comprehensive income (loss) | 286,235 |
| | 11,798 |
| | (65,141 | ) | | (32,218 | ) | | 200,674 |
|
Balances, December 31, 2011 | $ | 646,805 |
| | $ | 41,003 |
| | $ | (139,655 | ) | | $ | (78,171 | ) | | $ | 469,982 |
|
The following tables present the composition of other comprehensive income (loss):
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | |
| Year ended December 31, 2013 |
| Before-tax amount | | Tax (expense) benefit | | Net-of-tax amount |
Unrealized holding gains (losses) arising during the period on available-for-sale fixed maturity investments | $ | (718,735 | ) | | $ | 251,557 |
| | $ | (467,178 | ) |
Unrealized holding gains (losses) arising during the period on cash flow hedges | 3,102 |
| | (1,086 | ) | | 2,016 |
|
Reclassification adjustment for (gains) losses realized in net income | (42,982 | ) | | 15,044 |
| | (27,938 | ) |
Net unrealized gains (losses) | (758,615 | ) | | 265,515 |
| | (493,100 | ) |
Future policy benefits, DAC and VOBA adjustments | 190,995 |
| | (66,848 | ) | | 124,147 |
|
Net unrealized gains (losses) | (567,620 | ) | | 198,667 |
| | (368,953 | ) |
Employee benefit plan adjustment | 121,551 |
| | (42,543 | ) | | 79,008 |
|
Other comprehensive income (loss) | $ | (446,069 | ) | | $ | 156,124 |
| | $ | (289,945 | ) |
|
| | | | | | | | | | | |
| Year ended December 31, 2012 |
| Before-tax amount | | Tax (expense) benefit | | Net-of-tax amount |
Unrealized holding gains (losses) arising during the period on available-for-sale fixed maturity investments | $ | 534,028 |
| | $ | (186,910 | ) | | $ | 347,118 |
|
Unrealized holding gains (losses) arising during the period on cash flow hedges | (18,881 | ) | | 6,608 |
| | (12,273 | ) |
Reclassification adjustment for (gains) losses realized in net income | (107,713 | ) | | 37,700 |
| | (70,013 | ) |
Net unrealized gains (losses) | 407,434 |
| | (142,602 | ) | | 264,832 |
|
Future policy benefits, DAC and VOBA adjustments | (83,835 | ) | | 29,343 |
| | (54,492 | ) |
Net unrealized gains (losses) | 323,599 |
| | (113,259 | ) | | 210,340 |
|
Employee benefit plan adjustment | (68,650 | ) | | 24,027 |
| | (44,623 | ) |
Other comprehensive income (loss) | $ | 254,949 |
| | $ | (89,232 | ) | | $ | 165,717 |
|
|
| | | | | | | | | | | |
| Year ended December 31, 2011 |
| Before-tax amount | | Tax (expense) benefit | | Net-of-tax amount |
Unrealized holding gains (losses) arising during the period on available-for-sale fixed maturity investments | $ | 511,663 |
| | $ | (179,082 | ) | | $ | 332,581 |
|
Unrealized holding gains (losses) arising during the period on cash flow hedges | 21,014 |
| | (7,355 | ) | | 13,659 |
|
Reclassification adjustment for (gains) losses realized in net income | (74,165 | ) | | 25,958 |
| | (48,207 | ) |
Net unrealized gains (losses) | 458,512 |
| | (160,479 | ) | | 298,033 |
|
Future policy benefits, DAC and VOBA adjustments | (100,216 | ) | | 35,075 |
| | (65,141 | ) |
Net unrealized gains (losses) | 358,296 |
| | (125,404 | ) | | 232,892 |
|
Employee benefit plan adjustment | (49,566 | ) | | 17,348 |
| | (32,218 | ) |
Other comprehensive income (loss) | $ | 308,730 |
| | $ | (108,056 | ) | | $ | 200,674 |
|
The following table presents the reclassifications out of accumulated other comprehensive income (loss):
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | |
Details about accumulated other comprehensive income (loss) components | | Amount reclassified from accumulated other comprehensive income (loss) | | Affected line item in the statement where net income is presented |
Unrealized (gains) losses arising on fixed maturities available-for-sale | | $ | (40,734 | ) | | Other realized investment gains, net |
| | (40,734 | ) | | Total before tax |
| | (14,257 | ) | | Tax expense or benefit |
| | $ | (26,477 | ) | | Net of tax |
| | |
| | |
Unrealized (gains) losses arising on cash flow hedges | | $ | (2,248 | ) | | Net investment income |
| | (2,248 | ) | | Total before tax |
| | (787 | ) | | Tax expense or benefit |
| | $ | (1,461 | ) | | Net of tax |
| | | | |
Amortization of employee benefit plan items | | |
| | |
Prior service costs (benefits) | | $ | (666 | ) | (1) | |
Actuarial gains/(losses) | | 16,952 |
| (1) | |
| | $ | 16,286 |
| | Total before tax |
| | 5,700 |
| | Tax expense or benefit |
| | 10,586 |
| | Net of tax |
| | | | |
Total reclassification for the period | | $ | (17,352 | ) | | Net of tax |
(1) These accumulated other comprehensive income components are included in the computation of net periodic (benefit) cost of employee benefit plans (see Note 16 for additional details).
15. General Insurance Expenses
The following table summarizes the significant components of general insurance expenses:
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Compensation | $ | 359,280 |
| | $ | 335,212 |
| | $ | 303,514 |
|
Commissions | 184,238 |
| | 180,529 |
| | 156,461 |
|
Other | 106,829 |
| | 80,908 |
| | 106,718 |
|
Total general insurance expenses | $ | 650,347 |
| | $ | 596,649 |
| | $ | 566,693 |
|
16. Employee Benefit Plans
Defined Benefit Pension, Post-Retirement Medical and Supplemental Executive Retirement Plans
The Company has a noncontributory Defined Benefit Pension Plan covering substantially all of its employees that were hired before January 1, 1999. Prior to December 31, 2012, the Company accounted for the Defined Benefit Pension Plan as the direct legal obligation of the Company and accounted for the corresponding plan obligations on its Balance Sheet and Statements of Income. Effective December 31, 2012, the Company transferred the sponsorship of the Defined Benefit Pension Plan to GWL&A Financial, the Company’s immediate parent. Despite the change in sponsorship of the Defined Benefit Pension Plan, the Company will continue to account for the corresponding plan obligations on its Balance Sheet and Statements of Income.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Benefits for the Defined Benefit Pension Plan are based principally on an employee’s years of service and compensation levels near retirement. The Company’s policy for funding the Defined Benefit Pension Plans is to make annual contributions, which equal or exceed regulatory requirements.
The Company sponsors an unfunded Post-Retirement Medical Plan (the “Medical Plan”) that provides health benefits to retired employees who are not Medicare eligible. The medical plan is contributory and contains other cost sharing features which may be adjusted annually for the expected general inflation rate. The Company’s policy is to fund the cost of the medical plan benefits in amounts determined at the discretion of management.
The Company also provides Supplemental Executive Retirement Plans to certain key executives. These plans provide key executives with certain benefits upon retirement, disability or death based upon total compensation. The Company has purchased individual life insurance policies with respect to each employee covered by this plan. The Company is the owner and beneficiary of the insurance contracts.
A December 31 measurement date is used for the employee benefit plans.
The following tables provide a reconciliation of the changes in the benefit obligations, fair value of plan assets and the underfunded status for the Company’s Defined Benefit Pension, Post-Retirement Medical and Supplemental Executive Retirement plans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| Year Ended December 31, | | Year Ended December 31, | | Year Ended December 31, | | Year Ended December 31, |
| 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
Change in projected benefit obligation: | | | | | | | | | | | | | | | |
Benefit obligation, January 1 | $ | 500,603 |
| | $ | 401,134 |
| | $ | 13,462 |
| | $ | 11,725 |
| | $ | 69,229 |
| | $ | 61,358 |
| | $ | 583,294 |
| | $ | 474,217 |
|
Service cost | 5,527 |
| | 4,350 |
| | 947 |
| | 817 |
| | 1,002 |
| | 991 |
| | 7,476 |
| | 6,158 |
|
Interest cost | 20,897 |
| | 20,945 |
| | 512 |
| | 569 |
| | 2,548 |
| | 2,912 |
| | 23,957 |
| | 24,426 |
|
Actuarial (gain) loss | (57,051 | ) | | 87,117 |
| | (3,221 | ) | | 974 |
| | (6,791 | ) | | 6,760 |
| | (67,063 | ) | | 94,851 |
|
Regular benefits paid | (13,574 | ) | | (12,943 | ) | | (619 | ) | | (623 | ) | | (3,683 | ) | | (2,792 | ) | | (17,876 | ) | | (16,358 | ) |
Benefit obligation, December 31 | $ | 456,402 |
| | $ | 500,603 |
| | $ | 11,081 |
| | $ | 13,462 |
| | $ | 62,305 |
| | $ | 69,229 |
| | $ | 529,788 |
| | $ | 583,294 |
|
Accumulated benefit obligation | $ | 440,666 |
| | $ | 491,712 |
| | $ | 11,081 |
| | $ | 13,462 |
| | $ | 54,195 |
| | $ | 58,135 |
| | $ | 505,942 |
| | $ | 563,309 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| Year Ended December 31, | | Year Ended December 31, | | Year Ended December 31, | | Year Ended December 31, |
| 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
Change in plan assets: | | | | | | | | | | | | | | | |
Value of plan assets, January 1 | $ | 336,534 |
| | $ | 293,336 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 336,534 |
| | $ | 293,336 |
|
Actual return on plan assets | 62,701 |
| | 38,541 |
| | — |
| | — |
| | — |
| | — |
| | 62,701 |
| | 38,541 |
|
Employer contributions | 18,674 |
| | 17,600 |
| | 619 |
| | 623 |
| | 3,683 |
| | 2,792 |
| | 22,976 |
| | 21,015 |
|
Benefits paid | (13,574 | ) | | (12,943 | ) | | (619 | ) | | (623 | ) | | (3,683 | ) | | (2,792 | ) | | (17,876 | ) | | (16,358 | ) |
Value of plan assets, December 31 | $ | 404,335 |
| | $ | 336,534 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 404,335 |
| | $ | 336,534 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| December 31, | | December 31, | | December 31, | | December 31, |
| 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
Under funded status at December 31 | $ | (52,067 | ) | | $ | (164,069 | ) | | $ | (11,081 | ) | | $ | (13,462 | ) | | $ | (62,305 | ) | | $ | (69,229 | ) | | $ | (125,453 | ) | | $ | (246,760 | ) |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following table presents amounts recognized in the consolidated balance sheets for the Company’s Defined Benefit Pension, Post-Retirement Medical and Supplemental Executive Retirement plans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| December 31, | | December 31, | | December 31, | | December 31, |
| 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
Amounts recognized in consolidated balance sheets: | | | | | | | | | | | | | | | |
Other liabilities | $ | (52,067 | ) | | $ | (164,069 | ) | | $ | (11,081 | ) | | $ | (13,462 | ) | | $ | (62,305 | ) | | $ | (69,229 | ) | | $ | (125,453 | ) | | $ | (246,760 | ) |
Accumulated other comprehensive income (loss) | (69,564 | ) | | (180,869 | ) | | 13,885 |
| | 12,662 |
| | (11,687 | ) | | (20,710 | ) | | (67,366 | ) | | (188,917 | ) |
The following table provides information regarding amounts in AOCI that have not yet been recognized as components of net periodic benefit cost at December 31, 2013:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| Gross | | Net of tax | | Gross | | Net of tax | | Gross | | Net of tax | | Gross | | Net of tax |
Net gain (loss) | $ | (69,500 | ) | | $ | (45,175 | ) | | $ | 9,043 |
| | $ | 5,878 |
| | $ | (7,619 | ) | | $ | (4,952 | ) | | $ | (68,076 | ) | | $ | (44,249 | ) |
Net prior service (cost) credit | (64 | ) | | (42 | ) | | 4,842 |
| | 3,147 |
| | (4,068 | ) | | (2,642 | ) | | 710 |
| | 463 |
|
| $ | (69,564 | ) | | $ | (45,217 | ) | | $ | 13,885 |
| | $ | 9,025 |
| | $ | (11,687 | ) | | $ | (7,594 | ) | | $ | (67,366 | ) | | $ | (43,786 | ) |
The following table provides information regarding amounts in AOCI that are expected to be recognized as components of net periodic benefit costs during the year ended December 31, 2014:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan | | Total |
| Gross | | Net of tax | | Gross | | Net of tax | | Gross | | Net of tax | | Gross | | Net of tax |
Net gain (loss) | $ | (2,579 | ) | | $ | (1,676 | ) | | $ | 520 |
| | $ | 338 |
| | $ | (369 | ) | | $ | (240 | ) | | $ | (2,428 | ) | | $ | (1,578 | ) |
Prior service (cost) credit | (51 | ) | | (33 | ) | | 1,706 |
| | 1,109 |
| | (933 | ) | | (606 | ) | | 722 |
| | 470 |
|
| $ | (2,630 | ) | | $ | (1,709 | ) | | $ | 2,226 |
| | $ | 1,447 |
| | $ | (1,302 | ) | | $ | (846 | ) | | $ | (1,706 | ) | | $ | (1,108 | ) |
The expected benefit payments for the Company’s Defined Benefit Pension, Post-Retirement Medical and Supplemental Executive Retirement plans for the years indicated are as follows:
|
| | | | | | | | | | | |
| Defined benefit pension plan | | Post-retirement medical plan | | Supplemental executive retirement plan |
2014 | $ | 14,442 |
| | $ | 640 |
| | $ | 3,450 |
|
2015 | 15,217 |
| | 626 |
| | 4,858 |
|
2016 | 16,574 |
| | 568 |
| | 3,305 |
|
2017 | 17,683 |
| | 573 |
| | 18,700 |
|
2018 | 19,264 |
| | 571 |
| | 2,806 |
|
2019 through 2023 | 122,349 |
| | 3,320 |
| | 14,486 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Net periodic (benefit) cost of the Defined Benefit Pension, Post-Retirement Medical and Supplemental Executive Retirement plans included in general insurance expenses in the accompanying consolidated statements of income includes the following components:
|
| | | | | | | | | | | |
| Defined benefit pension plan |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Components of net periodic cost: | | | | | |
Service cost | $ | 5,527 |
| | $ | 4,350 |
| | $ | 3,935 |
|
Interest cost | 20,897 |
| | 20,945 |
| | 20,286 |
|
Expected return on plan assets | (24,499 | ) | | (21,797 | ) | | (21,093 | ) |
Amortization of transition obligation | — |
| | — |
| | (1,388 | ) |
Amortization of unrecognized prior service cost | 51 |
| | 51 |
| | 51 |
|
Amortization of loss from earlier periods | 16,001 |
| | 9,941 |
| | 5,115 |
|
Net periodic cost | $ | 17,977 |
| | $ | 13,490 |
| | $ | 6,906 |
|
|
| | | | | | | | | | | |
| Post-retirement medical plan |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Components of net periodic benefit: | | | | | |
Service cost | $ | 947 |
| | $ | 817 |
| | $ | 622 |
|
Interest cost | 512 |
| | 569 |
| | 585 |
|
Amortization of unrecognized prior service benefit | (1,650 | ) | | (1,650 | ) | | (1,650 | ) |
Amortization of gain from earlier periods | (348 | ) | | (455 | ) | | (611 | ) |
Net periodic benefit | $ | (539 | ) | | $ | (719 | ) | | $ | (1,054 | ) |
|
| | | | | | | | | | | |
| Supplemental executive retirement plan |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Components of net periodic cost: | | | | | |
Service cost | $ | 1,002 |
| | $ | 991 |
| | $ | 916 |
|
Interest cost | 2,548 |
| | 2,912 |
| | 3,136 |
|
Amortization of unrecognized prior service cost | 933 |
| | 934 |
| | 2,584 |
|
Amortization of loss from earlier periods | 1,299 |
| | 637 |
| | 145 |
|
Net periodic cost | $ | 5,782 |
| | $ | 5,474 |
| | $ | 6,781 |
|
The following tables present the assumptions used in determining benefit obligations of the Defined Benefit Pension, Post-Retirement Medical and the Supplemental Executive Retirement plans:
|
| | | |
| Defined benefit pension plan |
| December 31, |
| 2013 | | 2012 |
Discount rate | 5.11% | | 4.19% |
Rate of compensation increase | 4.47% | | 3.14% |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | |
| Post-retirement medical plan |
| December 31, |
| 2013 | | 2012 |
Discount rate | 4.83% | | 3.74% |
Initial health care cost trend | 7.00% | | 7.50% |
Ultimate health care cost trend | 5.00% | | 5.25% |
Year ultimate trend is reached | 2018 | | 2018 |
|
| | | |
| Supplemental executive retirement plan |
| December 31, |
| 2013 | | 2012 |
Discount rate | 4.61% | | 3.79% |
Rate of compensation increase | 4.00% | | 4.00% |
The following tables present the assumptions used in determining the net periodic (benefit) cost of the Defined Benefit Pension, Post-Retirement Medical and the Supplemental Executive Retirement plans:
|
| | | |
| Defined benefit pension plan |
| Year Ended December 31, |
| 2013 | | 2012 |
Discount rate | 4.19% | | 5.23% |
Expected return on plan assets | 7.25% | | 7.25% |
Rate of compensation increase | 3.14% | | 3.14% |
|
| | | |
| Post-retirement medical plan |
| Year Ended December 31, |
| 2013 | | 2012 |
Discount rate | 3.74% | | 4.70% |
Initial health care cost trend | 7.50% | | 8.00% |
Ultimate health care cost trend | 5.25% | | 5.25% |
Year ultimate trend is reached | 2018 | | 2018 |
|
| | | |
| Supplemental executive retirement plan |
| Year Ended December 31, |
| 2013 | | 2012 |
Discount rate | 3.79% | | 4.87% |
Rate of compensation increase | 4.00% | | 5.00% |
The discount rate has been set based on the rates of return on high-quality fixed-income investments currently available and expected to be available during the period the benefits will be paid. In particular, the yields on bonds rated AA or better on the measurement date have been used to set the discount rate.
The following table presents the impact on the Post-Retirement Medical Plan that a one-percentage-point change in assumed health care cost trend rates would have on the following:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | |
| One percentage point increase | | One percentage point decrease |
Increase (decrease) on total service and interest cost on components | $ | 219 |
| | $ | (186 | ) |
Increase (decrease) on post-retirement benefit obligation | 1,401 |
| | (1,199 | ) |
The following table presents how the Company’s Defined Benefit Pension Plan assets are invested:
|
| | | |
| December 31, |
| 2013 | | 2012 |
Equity securities | 63% | | 56% |
Debt securities | 34% | | 41% |
Other | 3% | | 3% |
Total | 100% | | 100% |
The following tables present information about the Defined Benefit Retirement Plan’s assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value:
|
| | | | | | | | | | | | | | | |
| Defined Benefit Plan Assets Measured at Fair Value on a Recurring Basis |
| December 31, 2013 |
| Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | | Total |
Common collective trust funds: | | | | | | | |
Equity index funds | $ | — |
| | $ | 82,440 |
| | $ | — |
| | $ | 82,440 |
|
Midcap index funds | — |
| | 82,674 |
| | — |
| | 82,674 |
|
World equity index funds | — |
| | 8,186 |
| | — |
| | 8,186 |
|
U.S. equity market funds | — |
| | 83,209 |
| | — |
| | 83,209 |
|
Total common collective trust funds | — |
| | 256,509 |
| | — |
| | 256,509 |
|
| | | | | | | |
Fixed maturity investments: | | | | | | | |
U.S. government direct obligations and agencies | — |
| | 19,088 |
| | — |
| | 19,088 |
|
Obligations of U.S. states and their municipalities | — |
| | 14,973 |
| | — |
| | 14,973 |
|
Corporate debt securities | — |
| | 91,860 |
| | — |
| | 91,860 |
|
Asset-backed securities | — |
| | 7,902 |
| | — |
| | 7,902 |
|
Commercial mortgage-backed securities | — |
| | 2,647 |
| | — |
| | 2,647 |
|
Total fixed maturity investments | — |
| | 136,470 |
| | — |
| | 136,470 |
|
| | | | | | | |
Preferred stock | 700 |
| | — |
| | — |
| | 700 |
|
Limited partnership investments | — |
| | — |
| | 7,557 |
| | 7,557 |
|
Money market funds | 3,099 |
| | — |
| | — |
| | 3,099 |
|
Total defined benefit plan assets | $ | 3,799 |
| | $ | 392,979 |
| | $ | 7,557 |
| | $ | 404,335 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | |
| Defined Benefit Plan Assets Measured at Fair Value on a Recurring Basis |
| December 31, 2012 |
| Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | | Total |
Common collective trust funds: | | | | | | | |
Equity index funds | $ | — |
| | $ | 60,601 |
| | $ | — |
| | $ | 60,601 |
|
Midcap index funds | — |
| | 60,289 |
| | — |
| | 60,289 |
|
World equity index funds | — |
| | 6,798 |
| | — |
| | 6,798 |
|
U.S. equity market funds | — |
| | 60,723 |
| | — |
| | 60,723 |
|
Total common collective trust funds | — |
| | 188,411 |
| | — |
| | 188,411 |
|
| | | | | | | |
Fixed maturity investments: | | | | | | | |
U.S. government direct obligations and agencies | — |
| | 9,907 |
| | — |
| | 9,907 |
|
Obligations of U.S. states and their municipalities | — |
| | 16,899 |
| | — |
| | 16,899 |
|
Corporate debt securities | — |
| | 100,142 |
| | — |
| | 100,142 |
|
Asset-backed securities | — |
| | 8,386 |
| | — |
| | 8,386 |
|
Commercial mortgage-backed securities | — |
| | 2,961 |
| | — |
| | 2,961 |
|
Total fixed maturity investments | — |
| | 138,295 |
| | — |
| | 138,295 |
|
| | | | | | | |
Preferred stock | 134 |
| | — |
| | — |
| | 134 |
|
Limited partnership investments | — |
| | — |
| | 6,485 |
| | 6,485 |
|
Money market funds | 3,209 |
| | — |
| | — |
| | 3,209 |
|
Total defined benefit plan assets | $ | 3,343 |
| | $ | 326,706 |
| | $ | 6,485 |
| | $ | 336,534 |
|
The following tables present additional information about assets of the Defined Benefit Retirement Plan measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value
|
| | | | | | | |
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Limited partnership interest |
| | | |
| Year Ended December 31, |
| 2013 | | 2012 |
Balance, January 1 | $ | 6,485 |
| | $ | 7,116 |
|
Actual return on plan assets | 853 |
| | — |
|
Purchases | 630 |
| | 61 |
|
Issuances | (411 | ) | | (692 | ) |
Balance, December 31 | $ | 7,557 |
| | $ | 6,485 |
|
The investment objective of the Defined Benefit Pension Plan is to provide a risk-adjusted return that will ensure the payment of benefits while protecting against the risk of substantial investment losses. Correlations among the asset classes are used to identify an asset mix that the Company believes will provide the most attractive returns. Long-term return forecasts for each asset class using historical data and other qualitative considerations to adjust for projected economic forecasts are used to set the expected rate of return for the entire portfolio.
The Defined Benefit Pension Plan utilizes various investment securities. Generally, investment securities are exposed to various risks, such as interest rate risks, credit risk and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur and that such changes could materially affect the amounts reported.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The following table presents the ranges the Company targets for the allocation of invested Defined Benefit Pension Plan assets at December 31, 2014:
|
| |
| December 31, 2014 |
Equity securities | 25% - 80% |
Debt securities | 25% - 75% |
Other | 0% - 30% |
Management estimates the value of these investments will be recoverable. The Company does not expect any plan assets to be returned to it during the year ended December 31, 2014. The Company expects to make payments of approximately $640 with respect to its Post-Retirement Medical Plan and $3,450 with respect to its Supplemental Executive Retirement Plan during the year ended December 31, 2014. The Company expects to make a contribution of $13,525 to its Defined Benefit Pension Plan during the year ended December 31, 2014.
Other employee benefit plans
The Company has an executive deferred compensation plan providing key executives with the opportunity to participate in an unfunded deferred compensation program. Under the program, participants may defer base compensation and bonuses and earn interest on the amounts deferred. The program is not qualified under Section 401 of the Internal Revenue Code. Participant balances, which are reflected in other liabilities in the accompanying consolidated balance sheets, are $11,240 and $12,430 at December 31, 2013 and 2012, respectively. The participant deferrals earned interest at the average rates of 6.53% and 7.17% during the years ended December 31, 2013 and 2012, respectively. The interest rate is based on the Moody’s Average Annual Corporate Bond Index rate plus 0.45% for actively employed participants and fixed rates ranging from 5.13% to 7.91% for retired participants.
The Company offers an unfunded, non-qualified deferred compensation plan to a select group of management and highly compensated individuals. Participants defer a portion of their compensation and realize potential market gains or losses on the invested contributions. The program is not qualified under Section 401 of the Internal Revenue Code. Participant balances, which are included in other liabilities in the accompanying consolidated balance sheets are $14,536 and $12,239 at December 31, 2013 and 2012, respectively.
17. Income Taxes
The provision for income taxes is comprised of the following:
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Current | $ | 82,878 |
| | $ | 89,934 |
| | $ | 70,201 |
|
Deferred | (24,087 | ) | | 45,371 |
| | 23,617 |
|
Total income tax provision | $ | 58,791 |
| | $ | 135,305 |
| | $ | 93,818 |
|
The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective federal income tax rate:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Statutory federal income tax rate | 35.0 | % | | 35.0 | % | | 35.0 | % |
Income tax effect of: | | | | | |
Investment income not subject to federal tax | (4.6 | )% | | (2.3 | )% | | (2.7 | )% |
Tax credits | (2.0 | )% | | (1.3 | )% | | (2.1 | )% |
State income taxes, net of federal benefit | 3.3 | % | | 1.2 | % | | 0.7 | % |
Income tax contingency provisions | (0.4 | )% | | — | % | | 2.0 | % |
Other, net | — | % | | 3.6 | % | | (1.2 | )% |
Effective federal income tax rate | 31.3 | % | | 36.2 | % | | 31.7 | % |
A reconciliation of unrecognized tax benefits is as follows:
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2013 | | 2012 | | 2011 |
Balance, beginning of year | $ | 25,850 |
| | $ | 32,123 |
| | $ | 35,256 |
|
Additions to tax positions in the current year | — |
| | 6,230 |
| | 6,557 |
|
Reductions to tax positions in the current year | — |
| | — |
| | (420 | ) |
Additions to tax positions in the prior year | 1,497 |
| | 420 |
| | 4,785 |
|
Reductions to tax positions in the prior year | (180 | ) | | (10,219 | ) | | (9,858 | ) |
Reductions to tax positions from statutes expiring | (6,013 | ) | | (2,704 | ) | | (4,197 | ) |
Balance, end of year | $ | 21,154 |
| | $ | 25,850 |
| | $ | 32,123 |
|
Included in the unrecognized tax benefits of $21,154 at December 31, 2013 was $3,262 of tax benefits that, if recognized, would impact the annual effective tax rate. The Company anticipates additional increases in its unrecognized tax benefits of $3,000 to $4,000 in the next twelve months, primarily due to changes in the composition of the consolidated group.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in current income tax expense. The Company recognized approximately $(286), $208 and $2,629 in interest and penalties related to the uncertain tax positions during the years ended December 31, 2013, 2012 and 2011, respectively. The Company had approximately $4,126 and $4,412 accrued for the payment of interest and penalties at December 31, 2013 and 2012, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years 2009 and prior. Tax years 2010, 2011 and 2012 are open to federal examination by the I.R.S. The Company does not expect significant increases or decreases to unrecognized tax benefits relating to federal, state or local audits.
Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities. The tax effect of temporary differences, which give rise to the deferred tax assets and liabilities, is as follows:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | |
| December 31, |
| 2013 | | 2012 |
| Deferred tax asset | | Deferred tax liability | | Deferred tax asset | | Deferred tax liability |
Policyholder reserves | $ | — |
| | $ | 253,738 |
| | $ | — |
| | $ | 218,303 |
|
Deferred acquisition costs | 1,008 |
| | — |
| | 46,832 |
| | — |
|
Investment assets | — |
| | 203,363 |
| | — |
| | 496,096 |
|
Policyholder dividends | 11,479 |
| | — |
| | 11,586 |
| | — |
|
Net operating loss carryforward | 172,414 |
| | — |
| | 180,448 |
| | — |
|
Pension plan accrued benefit liability | 53,937 |
| | — |
| | 98,981 |
| | — |
|
Goodwill | — |
| | 25,563 |
| | — |
| | 24,045 |
|
Experience rated refunds | 5,509 |
| | — |
| | 10,908 |
| | — |
|
Tax credits | 131,052 |
| | — |
| | 106,552 |
| | — |
|
Other | 416 |
| | — |
| | — |
| | 5,858 |
|
Total deferred taxes | $ | 375,815 |
| | $ | 482,664 |
| | $ | 455,307 |
| | $ | 744,302 |
|
Amounts presented for investment assets above include $(209,434) and $(410,044) related to the net unrealized losses (gains) on the Company’s investments, which are classified as available-for-sale at December 31, 2013 and 2012, respectively.
The Company, together with certain of its subsidiaries, and Lifeco U.S. have entered into an income tax allocation agreement whereby Lifeco U.S. files a consolidated federal income tax return. Under the agreement, these companies are responsible for and will receive the benefits of any income tax liability or benefit computed on a separate tax return basis.
The Company has federal net operating loss carry forwards generated by a subsidiary that is included in the Lifeco U.S. consolidated federal income tax return. As of December 31, 2013, the subsidiary had net operating loss carry forwards expiring as follows:
|
| | | | |
Year | | Amount |
2020 | | $ | 100,433 |
|
2021 | | 113,002 |
|
2022 | | 136,796 |
|
2023 | | 81,693 |
|
2028 | | 9,327 |
|
Total | | $ | 441,251 |
|
During 2013 and 2012, the Company generated $25,013 and $30,965 of Guaranteed Federal Low Income Housing tax credit carryforwards, respectively. As of December 31, 2013, the total credit carryforward for Low Income Housing is $123,865. These credits will begin to expire in 2030.
Included in due from parent and affiliates at December 31, 2013 and 2012 is $65,186 and $4,353, respectively, of income taxes receivable from Lifeco U.S. related to the consolidated income tax return filed by the Company and certain subsidiaries. Included in the consolidated balance sheets at December 31, 2013 and 2012 is $7,736 and $12,585, respectively, of income taxes receivable in other assets primarily related to the separate state income tax returns filed by certain subsidiaries.
18. Segment Information
The Company has three reportable segments: Individual Markets, Retirement Services and Other.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
Individual Markets
The Individual Markets reporting and operating segment distributes life insurance and individual annuity products to both individuals and businesses through various distribution channels. Life insurance products in-force include participating and non-participating term life, whole life, universal life and variable universal life.
Retirement Services
The Retirement Services reporting and operating segment provides various retirement plan products and investment options as well as comprehensive administrative and record-keeping services for financial institutions and employers, which include educational, advisory, enrollment and communication services for employer-sponsored defined contribution plans and associated defined benefit plans.
Other
The Company’s Other reporting segment is substantially comprised of activity under the assumption of reinsurance between GWSC and CLAC (“the GWSC operating segment”), corporate items not directly allocated to the other operating segments and interest expense on long-term debt.
The accounting principles used to determine segment results are the same as those used in the consolidated financial statements. The Company evaluates performance of its reportable segments based on their profitability from operations after income taxes. Inter-segment transactions and balances have been eliminated in consolidation. The Company’s operations are not materially dependent on one or a few customers, brokers or agents.
The following tables summarize segment financial information:
|
| | | | | | | | | | | | | | | |
| Year ended December 31, 2013 |
| Individual Markets | | Retirement Services | | Other | | Total |
Revenue: | | | | | | | |
Premium income | $ | 354,202 |
| | $ | 3,954 |
| | $ | 105,937 |
| | $ | 464,093 |
|
Fee income | 94,037 |
| | 519,842 |
| | 4,365 |
| | 618,244 |
|
Other revenue | 7,355 |
| | — |
| | — |
| | 7,355 |
|
Net investment income | 688,279 |
| | 351,729 |
| | 51,381 |
| | 1,091,389 |
|
Realized investments gains (losses), net | 19,071 |
| | (33,233 | ) | | 26 |
| | (14,136 | ) |
Total revenues | 1,162,944 |
| | 842,292 |
| | 161,709 |
| | 2,166,945 |
|
Benefits and expenses: | | | | | | | |
Policyholder benefits | 921,096 |
| | 196,115 |
| | 114,880 |
| | 1,232,091 |
|
Operating expenses | 142,141 |
| | 538,209 |
| | 66,971 |
| | 747,321 |
|
Total benefits and expenses | 1,063,237 |
| | 734,324 |
| | 181,851 |
| | 1,979,412 |
|
Income (loss) before income taxes | 99,707 |
| | 107,968 |
| | (20,142 | ) | | 187,533 |
|
Income tax expense (benefit) | 34,265 |
| | 33,240 |
| | (8,714 | ) | | 58,791 |
|
Net income (loss) | $ | 65,442 |
| | $ | 74,728 |
| | $ | (11,428 | ) | | $ | 128,742 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | |
| December 31, 2013 |
| Individual Markets | | Retirement Services | | Other | | Total |
Assets: | | | | | | | |
Investments | $ | 14,563,978 |
| | $ | 10,370,421 |
| | $ | 1,582,024 |
| | $ | 26,516,423 |
|
Other assets | 1,179,332 |
| | 839,755 |
| | 128,106 |
| | 2,147,193 |
|
Separate account assets | 6,321,135 |
| | 20,309,769 |
| | — |
| | 26,630,904 |
|
Assets of continuing operations | $ | 22,064,445 |
| | $ | 31,519,945 |
| | $ | 1,710,130 |
| | 55,294,520 |
|
Assets of discontinued operations | | | | | | | 29,007 |
|
Total assets | | | | | | | $ | 55,323,527 |
|
|
| | | | | | | | | | | | | | | |
| Year ended December 31, 2012 |
| Individual Markets | | Retirement Services | | Other | | Total |
Revenue: | | | | | | | |
Premium income | $ | 314,350 |
| | $ | 3,670 |
| | $ | 104,133 |
| | $ | 422,153 |
|
Fee income | 74,985 |
| | 456,052 |
| | 4,786 |
| | 535,823 |
|
Net investment income | 729,885 |
| | 414,114 |
| | 47,552 |
| | 1,191,551 |
|
Realized investments gains (losses), net | 55,959 |
| | 60,726 |
| | 32 |
| | 116,717 |
|
Total revenues | 1,175,179 |
| | 934,562 |
| | 156,503 |
| | 2,266,244 |
|
Benefits and expenses: | | | | | | | |
Policyholder benefits | 882,726 |
| | 204,296 |
| | 111,288 |
| | 1,198,310 |
|
Operating expenses | 136,895 |
| | 492,427 |
| | 65,193 |
| | 694,515 |
|
Total benefits and expenses | 1,019,621 |
| | 696,723 |
| | 176,481 |
| | 1,892,825 |
|
Income (loss) before income taxes | 155,558 |
| | 237,839 |
| | (19,978 | ) | | 373,419 |
|
Income tax expense (benefit) | 50,869 |
| | 78,150 |
| | 6,286 |
| | 135,305 |
|
Net income (loss) | $ | 104,689 |
| | $ | 159,689 |
| | $ | (26,264 | ) | | $ | 238,114 |
|
|
| | | | | | | | | | | | | | | |
| December 31, 2012 |
| Individual Markets | | Retirement Services | | Other | | Total |
Assets: | | | | | | | |
Investments | $ | 14,797,517 |
| | $ | 9,761,036 |
| | $ | 1,551,823 |
| | $ | 26,110,376 |
|
Other assets | 1,172,932 |
| | 773,712 |
| | 123,006 |
| | 2,069,650 |
|
Separate account assets | 6,363,214 |
| | 18,242,312 |
| | — |
| | 24,605,526 |
|
Assets of continuing operations | $ | 22,333,663 |
| | $ | 28,777,060 |
| | $ | 1,674,829 |
| | 52,785,552 |
|
Assets of discontinued operations | | | | | | | 33,053 |
|
Total assets | | | | | | | $ | 52,818,605 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | | | | | |
| Year ended December 31, 2011 |
| Individual Markets | | Retirement Services | | Other | | Total |
Revenue: | | | | | | | |
Premium income | $ | 395,923 |
| | $ | 1,960 |
| | $ | 125,333 |
| | $ | 523,216 |
|
Fee income | 65,487 |
| | 416,405 |
| | 4,903 |
| | 486,795 |
|
Net investment income | 714,228 |
| | 399,222 |
| | 45,036 |
| | 1,158,486 |
|
Realized investments gains (losses), net | 20,533 |
| | 3,311 |
| | 651 |
| | 24,495 |
|
Total revenues | 1,196,171 |
| | 820,898 |
| | 175,923 |
| | 2,192,992 |
|
Benefits and expenses: | | | | | | | |
Policyholder benefits | 937,885 |
| | 222,642 |
| | 103,435 |
| | 1,263,962 |
|
Operating expenses | 109,005 |
| | 435,149 |
| | 88,821 |
| | 632,975 |
|
Total benefits and expenses | 1,046,890 |
| | 657,791 |
| | 192,256 |
| | 1,896,937 |
|
Income (loss) before income taxes | 149,281 |
| | 163,107 |
| | (16,333 | ) | | 296,055 |
|
Income tax expense (benefit) | 49,221 |
| | 50,869 |
| | (6,272 | ) | | 93,818 |
|
Net income (loss) | $ | 100,060 |
| | $ | 112,238 |
| | $ | (10,061 | ) | | $ | 202,237 |
|
19. Share-Based Compensation
Equity Awards
Lifeco, of which the Company is an indirect wholly-owned subsidiary, maintains the Great-West Lifeco Inc. Stock Option Plan (the “Lifeco plan”) that provides for the granting of options on its common shares to certain of its officers and employees and those of its subsidiaries, including the Company. Options are granted with exercise prices not less than the average market price of the shares on the five days preceding the date of the grant. The Lifeco plan provides for the granting of options with varying terms and vesting requirements with vesting commencing on the first anniversary of the grant, exercisable within 10 years from the date of grant.
Termination of employment prior to the vesting of the options results in the forfeiture of the unvested options, unless otherwise determined by Lifeco’s Compensation Committee. At its discretion the Compensation Committee may vest the unvested options of retiring option holders, with the options exercisable within five years from the date of retirement. In such event, the Company accelerates the recognition period to the date of retirement for any unrecognized share-based compensation cost related thereto and recognizes it in its earnings at that time.
Liability Awards
The Company maintains a Performance Share Unit Plan (“PSU plan”) for senior executives of the Company. Under the PSU plan, “performance share units” are granted to certain senior executives of the Company. Each performance unit has a value equal to one share of Lifeco common stock and is subject to adjustment for cash dividends paid to Lifeco stockholders, company earnings results as well as stock dividends and splits, consolidations and the like that affect shares of Lifeco common stock outstanding.
If the performance share units vest, they are payable in cash equal to the average closing price of Lifeco common stock for the twenty trading days prior to the date following the last day of the three-year performance period. The estimated fair value of the performance unit is based on the average closing price of Lifeco common stock for the twenty trading days prior to the grant. The performance share units generally vest in their entirety at the end of the three-year performance period based on continued service. The PSU plan contains a provision that permits all unvested performance share units to become vested upon death or retirement.
Performance share units are settled in cash and are recorded as liabilities until payout is made. Unlike share-settled awards, which have a fixed grant-date fair value, the fair value of unsettled or unvested liabilities awards is remeasured at the end of each reporting period based on the change in fair value of one share of Lifeco common stock. The liability and corresponding expense are adjusted accordingly until the award is settled.
Compensation Expense Related to Stock-Based Compensation
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
The compensation expense related to stock-based compensation was as follows:
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Lifeco Stock Plan | $ | 2,579 |
| | $ | 2,314 |
| | $ | 1,786 |
|
Performance Share Unit Plan | 6,860 |
| | 3,658 |
| | 1,161 |
|
Total compensation expense | $ | 9,439 |
| | $ | 5,972 |
| | $ | 2,947 |
|
Income tax benefits | $ | 2,732 |
| | $ | 1,729 |
| | $ | 752 |
|
The following table presents the total unrecognized compensation expense related to stock-based compensation at December 31, 2013 and the expected weighted average period over which these expenses will be recognized:
|
| | | | | |
| Expense | | Weighted average period (years) |
Lifeco Stock Plan | $ | 3,058 |
| | 1.7 |
Performance Share Unit Plan | 5,482 |
| | 1.3 |
Equity Award Activity
During the year ended December 31, 2013, Lifeco granted 591,400 stock options to employees of the Company. These stock options vest over five-year periods ending in March 2018. Compensation expense of $2,697 will be recognized in the Company’s financial statements over the vesting period of these stock options using the accelerated method of recognition.
The following table summarizes the status of, and changes in, the Lifeco plan options granted to Company employees which are outstanding. The options granted relate to underlying stock traded in Canadian dollars on the Toronto Stock Exchange; therefore, the amounts, which are presented in United States dollars, will fluctuate as a result of exchange rate fluctuations.
|
| | | | | | | | | | | |
| | | Weighted average |
| Shares under option | | Exercise price (Whole dollars) | | Remaining contractual term(Years) | | Aggregate intrinsic value (1) |
Outstanding, January 1, 2013 | 3,282,160 | | $ | 28.42 |
| | | | |
Granted | 591,400 | | 25.51 |
| | | | |
Exercised | (426,260) | | 26.01 |
| | | | |
Cancelled and Expired | (69,080) | | 25.45 |
| | | | |
Outstanding, December 31, 2013 | 3,378,220 | | 26.49 |
| | 6.3 | | $ | 16,180 |
|
| | | | | | | |
Vested and expected to vest, December 31, 2013 | 3,367,096 | | $ | 26.49 |
| | 6.3 | | $ | 16,121 |
|
| | | | | | | |
Exercisable, December 31, 2013 | 1,543,513 | | $ | 27.9 |
| | 4.8 | | $ | 5,626 |
|
(1) The aggregate intrinsic value is calculated as the difference between the market price of Lifeco common shares on December 31, 2013 and the exercise price of the option (only if the result is positive) multiplied by the number of options.
The following table presents additional information regarding stock options under the Lifeco plan:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Weighted average fair value of options granted | $ | 4.56 |
| | $ | 3.47 |
| | $ | 4.49 |
|
Intrinsic value of options exercised (1) | 1,437 |
| | 1,397 |
| | 1,197 |
|
Fair value of options vested | 1,843 |
| | 1,740 |
| | 1,541 |
|
(1) The intrinsic value of options exercised is calculated as the difference between the market price of Lifeco common shares on the date of exercise and the exercise price of the option multiplied by the number of options exercised.
The fair value of the options granted during was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions
|
| | | | | |
| Year Ended December 31, |
| 2013 | | 2012 | | 2011 |
Dividend yield | 4.53% | | 5.31% | | 4.59% |
Expected volatility | 26.73% | | 25.65% | | 25.22% |
Risk free interest rate | 1.38% | | 1.52% | | 2.62% |
Expected duration (years) | 6.0 | | 6.0 | | 5.5 |
Liability Award Activity
The following table summarizes the status of, and changes in, the Performance Share Unit Plan units granted to Company employees which are outstanding:
|
| | |
| Performance Units |
Outstanding, December 31, 2012 | 375,308 |
|
Granted | 184,314 |
|
Forfeited | (4,184 | ) |
Outstanding, December 31, 2013 | 555,438 |
|
| |
Vested and expected to vest, December 31, 2013 | 555,438 |
|
20. Commitments and Contingencies
Commitments
The following table summarizes the Company’s future purchase obligations and commitments:
|
| | | | | | | | | | | | | | | | | | | | |
| | Payment due by period |
| | | | | | | | | | |
| | Less than one year | | One to three years | | Three to five years | | More than five years | | Total |
Related party long-term debt - principal (1) | | — |
| | — |
| | — |
| | 528,400 |
| | 528,400 |
|
Related party long-term debt - interest (2) | | 37,031 |
| | 74,062 |
| | 74,062 |
| | 864,038 |
| | 1,049,193 |
|
Investment purchase obligations (3) | | 196,933 |
| | — |
| | — |
| | — |
| | 196,933 |
|
Operating leases (4) | | 5,361 |
| | 7,221 |
| | 3,765 |
| | 4,555 |
| | 20,902 |
|
Other liabilities (5) | | 45,819 |
| | 58,308 |
| | 58,250 |
| | 52,506 |
| | 214,883 |
|
Total | | $ | 285,144 |
| | $ | 139,591 |
| | $ | 136,077 |
| | $ | 1,449,499 |
| | $ | 2,010,311 |
|
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
(1) Related party long-term debt principal - Represents contractual maturities of principal due to the Company’s parent, GWL&A Financial, under the terms of two long-term surplus notes. The amounts shown in this table differ from the amounts included in the Company’s consolidated balance sheet because the amounts shown above do not consider the discount upon the issuance of one of the surplus notes.
(2) Related party long-term debt interest - One long-term surplus note bears interest at a fixed rate through maturity. The second surplus note bears interest initially at a fixed rate that will change in the future based upon the then current three-month London Interbank Offering Rate. The interest payments shown in this table are calculated based upon the contractual rates in effect on December 31, 2013 and do not consider the impact of future interest rate changes.
(3) Investment purchase obligations - The Company makes commitments to fund partnership interests, mortgage loans on real estate and other investments in the normal course of its business. As the timing of the fulfillment of the commitment to fund partnership interests cannot be predicted, such obligations are presented in the less than one year category. The timing of the funding of mortgage loans on real estate is based on the expiration date of the commitment. The amounts of these unfunded commitments at December 31, 2013 and 2012 were $196,933 and $127,255, of which $7,498 and $11,031 was related to cost basis limited partnership interests, respectively, all of which is due within one year from the dates indicated.
(4) Operating leases - The Company is obligated to make payments under various non-cancelable operating leases, primarily for office space. Contractual provisions exist that could increase the lease obligations presented, including operating expense escalation clauses. Management does not consider the impact of any such clauses to be material to the Company’s operating lease obligations. The Company incurred rent expense, net of sublease income, of $5,439, $5,764 and $5,645 for the years ended December 31, 2013, 2012 and 2011, respectively and is recorded in general insurance expense. The Company’s total future operating lease obligation will be reduced by minimum reimbursement of $10,905 due in the future under non-cancelable agreements.
From time to time, the Company enters into agreements or contracts, including capital leases, to purchase goods or services in the normal course of its business. However, these agreements and contracts are not material and are excluded from the table above.
(5) Other liabilities - Other liabilities include those other liabilities which represent contractual obligations not included elsewhere in the table above. If the timing of the payment of any other liabilities was sufficiently uncertain, the amounts were included in the less than one year category. Other liabilities presented in the table above include:
| |
• | Expected contributions to the Company’s defined benefit pension plan and benefit payments for the Post-Retirement Medical Plan and Supplemental Executive Retirement Plan through 2023. |
| |
• | Miscellaneous purchase obligations to acquire goods and services. |
| |
• | Unrecognized tax benefits |
The Company has a revolving credit facility agreement in the amount of $50,000 for general corporate purposes. The credit facility expires on March 1, 2018. Interest accrues at a rate dependent on various conditions and terms of borrowings. The agreement requires, among other things, the Company to maintain a minimum adjusted net worth, as defined, of $1,147,500 plus 50% of its net income, if positive and as defined in the credit facility agreement (both compiled on the unconsolidated statutory accounting basis prescribed by the NAIC), for each quarter ending after December 31, 2012. The Company was in compliance with all covenants at December 31, 2013 and 2012. At December 31, 2013 and 2012 there were no outstanding amounts related to the current and prior credit facilities.
Contingencies
The Company is involved in various legal proceedings that arise in the ordinary course of its business. In the opinion of management, after consultation with counsel, the resolutions of these proceedings are not expected to have a material effect on the Company’s consolidated financial position, results of its operations or cash flows.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Share Amounts)
21. Subsequent Event
On February 6, 2014, the Company’s Board of Directors declared dividends of $50,000 and $42,800, payable on March 14 and March 31, 2014, respectively, to its sole shareholder, GWL&A Financial.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Schedule III
Supplemental Insurance Information
(In Thousands)
|
| | | | | | | | | | | | | | | | |
| | As of and for the year ended December 31, 2013 |
| | Individual Markets Segment | | Retirement Services Segment | | Other Segment | | Total |
Deferred acquisition costs | | $ | 238,150 |
| | $ | 75,921 |
| | $ | — |
| | $ | 314,071 |
|
Future policy benefits, losses, claims and expenses | | 13,945,756 |
| | 10,229,678 |
| | 390,784 |
| | 24,566,218 |
|
Unearned premium reserves | | 42,937 |
| | — |
| | — |
| | 42,937 |
|
Other policy claims and benefits payable | | 740,056 |
| | 499 |
| | 23,968 |
| | 764,523 |
|
Premium income | | 354,202 |
| | 3,954 |
| | 105,937 |
| | 464,093 |
|
Net investment income | | 688,279 |
| | 351,729 |
| | 51,381 |
| | 1,091,389 |
|
Benefits, claims, losses and settlement expenses | | 921,096 |
| | 196,115 |
| | 114,880 |
| | 1,232,091 |
|
Amortization of deferred acquisition costs | | 34,650 |
| | 20,840 |
| | — |
| | 55,490 |
|
Other operating expenses | | 107,491 |
| | 517,369 |
| | 66,971 |
| | 691,831 |
|
|
| | As of and for the year ended December 31, 2012 |
| | Individual Markets Segment | | Retirement Services Segment | | Other Segment | | Total |
Deferred acquisition costs | | $ | 118,490 |
| | $ | 53,926 |
| | $ | — |
| | $ | 172,416 |
|
Future policy benefits, losses, claims and expenses | | 13,593,217 |
| | 9,491,094 |
| | 369,300 |
| | 23,453,611 |
|
Unearned premium reserves | | 27,007 |
| | — |
| | — |
| | 27,007 |
|
Other policy claims and benefits payable | | 744,504 |
| | 476 |
| | 24,711 |
| | 769,691 |
|
Premium income | | 314,350 |
| | 3,670 |
| | 104,133 |
| | 422,153 |
|
Net investment income | | 729,885 |
| | 414,114 |
| | 47,552 |
| | 1,191,551 |
|
Benefits, claims, losses and settlement expenses | | 882,726 |
| | 204,296 |
| | 111,288 |
| | 1,198,310 |
|
Amortization of deferred acquisition costs | | 28,926 |
| | 22,508 |
| | — |
| | 51,434 |
|
Other operating expenses | | 107,969 |
| | 469,919 |
| | 65,193 |
| | 643,081 |
|
|
| | Year Ended December 31, 2011 |
| | Individual Markets Segment | | Retirement Services Segment | | Other Segment | | Total |
Premium income | | $ | 395,923 |
| | $ | 1,960 |
| | $ | 125,333 |
| | $ | 523,216 |
|
Net investment income | | 714,228 |
| | 399,222 |
| | 45,036 |
| | 1,158,486 |
|
Benefits, claims, losses and settlement expenses | | 937,885 |
| | 222,643 |
| | 103,434 |
| | 1,263,962 |
|
Amortization of deferred acquisition costs | | 10,497 |
| | 14,687 |
| | — |
| | 25,184 |
|
Other operating expenses | | 98,509 |
| | 420,461 |
| | 88,821 |
| | 607,791 |
|
COLI VUL-2 Series Account
of Great-West Life &
Annuity Insurance
Company
Financial Statements for the Years Ended
December 31, 2013 and 2012
and Report of Independent Registered Public
Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Contract Owners of
COLI VUL-2 Series Account
and the Board of Directors of
Great-West Life & Annuity Insurance Company
We have audited the accompanying statements of assets and liabilities of each of the investment divisions which comprise COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company (the “Series Account”) as listed in Appendix A as of December 31, 2013, and the related statements of operations, the statements of changes in net assets, and the financial highlights in Note 4 for the periods presented. These financial statements and financial highlights are the responsibility of the Series Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform our audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Series Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Series Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013, by correspondence with the mutual fund companies. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the investment divisions constituting the COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company as of December 31, 2013, the results of their operations, the changes in their net assets, and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
April 8, 2014
COLI VUL-2 SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
APPENDIX A
ALGER SMALL CAP GROWTH PORTFOLIO
AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND
AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND
AMERICAN CENTURY INVESTMENTS VP ULTRA FUND
AMERICAN CENTURY INVESTMENTS VP VALUE FUND
AMERICAN CENTURY INVESTMENTS VP VISTA FUND
AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND
AMERICAN FUNDS IS GROWTH FUND
AMERICAN FUNDS IS INTERNATIONAL FUND
AMERICAN FUNDS IS NEW WORLD FUND
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND
DAVIS FINANCIAL PORTFOLIO
DAVIS VALUE PORTFOLIO
DREYFUS IP MIDCAP STOCK PORTFOLIO
DREYFUS IP TECHNOLOGY GROWTH PORTFOLIO
DREYFUS STOCK INDEX FUND
DREYFUS VIF APPRECIATION PORTFOLIO
DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO
DWS GLOBAL SMALL CAP GROWTH VIP
DWS HIGH INCOME VIP
DWS LARGE CAP VALUE VIP
DWS SMALL CAP INDEX VIP
DWS SMALL MID CAP VALUE VIP
FEDERATED HIGH INCOME BOND FUND II
FEDERATED KAUFMANN FUND II
FIDELITY VIP CONTRAFUND PORTFOLIO
FIDELITY VIP GROWTH PORTFOLIO
FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO
FIDELITY VIP MID CAP PORTFOLIO
GREAT-WEST AGGRESSIVE PROFILE I FUND
GREAT-WEST ARIEL MIDCAP VALUE FUND
GREAT-WEST ARIEL SMALL-CAP VALUE PORTFOLIO
COLI VUL-2 SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
APPENDIX A (Continued)
GREAT-WEST BOND INDEX FUND
GREAT-WEST CONSERVATIVE PROFILE I FUND
GREAT-WEST INVESCO ADR PORTFOLIO
GREAT-WEST LIFETIME 2015 FUND II
GREAT-WEST LIFETIME 2025 FUND II
GREAT-WEST LIFETIME 2045 FUND II
GREAT-WEST LOOMIS SAYLES BOND FUND
GREAT-WEST LOOMIS SAYLES SMALL-CAP VALUE FUND
GREAT-WEST MFS INTERNATIONAL VALUE FUND
GREAT-WEST MODERATE PROFILE I FUND
GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND
GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND
GREAT-WEST MONEY MARKET FUND
GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND
GREAT-WEST SHORT DURATION BOND FUND
GREAT-WEST SMALL-CAP GROWTH FUND
GREAT-WEST T. ROWE PRICE EQUITY/INCOME FUND
GREAT-WEST T. ROWE PRICE MIDCAP GROWTH FUND
GREAT-WEST TEMPLETON GLOBAL BOND FUND
GREAT-WEST U.S. GOVERNMENT MORTGAGE SECURITIES FUND
INVESCO V.I. CORE EQUITY FUND
INVESCO V.I. DIVERSIFIED DIVIDEND FUND
INVESCO V.I. GLOBAL HEALTH CARE FUND
INVESCO V.I. GLOBAL REAL ESTATE FUND
INVESCO V.I. INTERNATIONAL GROWTH FUND
INVESCO V.I. MID CAP CORE EQUITY FUND
INVESCO V.I. TECHNOLOGY FUND
JANUS ASPEN BALANCED PORTFOLIO
JANUS ASPEN FLEXIBLE BOND PORTFOLIO
JANUS ASPEN FORTY PORTFOLIO
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
JANUS ASPEN OVERSEAS PORTFOLIO
COLI VUL-2 SERIES ACCOUNT OF GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
APPENDIX A (Concluded)
JANUS ASPEN WORLDWIDE PORTFOLIO
NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO
NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO
NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO
NEUBERGER BERMAN AMT MID CAP PORTFOLIO
NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO
NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO
PIMCO VIT HIGH YIELD PORTFOLIO
PIMCO VIT LOW DURATION PORTFOLIO
PIMCO VIT REAL RETURN PORTFOLIO
PIMCO VIT TOTAL RETURN PORTFOLIO
PUTNAM VT EQUITY INCOME FUND
PUTNAM VT GLOBAL HEALTH CARE FUND
PUTNAM VT HIGH YIELD FUND
PUTNAM VT INTERNATIONAL GROWTH FUND
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO
VAN ECK VIP EMERGING MARKETS FUND
VAN ECK VIP GLOBAL HARD ASSETS FUND
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | ALGER SMALL CAP GROWTH PORTFOLIO | | AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND | | AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND | | AMERICAN CENTURY INVESTMENTS VP ULTRA FUND | | AMERICAN CENTURY INVESTMENTS VP VALUE FUND | | AMERICAN CENTURY INVESTMENTS VP VISTA FUND |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 446,243 |
| | $ | 25,234 |
| | $ | 556,152 |
| | $ | 35,997 |
| | $ | 718,792 |
| | $ | 127,578 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | | | | | 31,656 |
| | | | |
| Purchase payments receivable | | 13,997 |
| | | | | | | | 146 |
| | |
| | | | | | | | | | | | | |
| Total assets | | 460,240 |
| | 25,234 |
| | 556,152 |
| | 67,653 |
| | 718,938 |
| | 127,578 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | 13,997 |
| | | | | | | | 137 |
| | |
| Redemptions payable | | | | | | | | 31,656 |
| | 9 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | 13,997 |
| | | | | | 31,656 |
| | 146 |
| | |
| | | | | | | | | | | | | |
NET ASSETS | | $ | 446,243 |
| | $ | 25,234 |
| | $ | 556,152 |
| | $ | 35,997 |
| | $ | 718,792 |
| | $ | 127,578 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 446,243 |
| | $ | 25,234 |
| | $ | 556,152 |
| | $ | 35,997 |
| | $ | 718,792 |
| | $ | 127,578 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 3,630 |
| | 1,507 |
| | 45,439 |
| | 1,908 |
| | 23,329 |
| | 6,760 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 122.93 |
| | $ | 16.74 |
| | $ | 12.24 |
| | $ | 18.87 |
| | $ | 30.81 |
| | $ | 18.87 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 413,819 |
| | $ | 19,487 |
| | $ | 380,271 |
| | $ | 32,990 |
| | $ | 498,394 |
| | $ | 97,250 |
|
| Shares of investments: | | 13,672 |
| | 2,752 |
| | 51,783 |
| | 2,445 |
| | 85,064 |
| | 5,633 |
|
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND | | AMERICAN FUNDS IS GROWTH FUND | | AMERICAN FUNDS IS INTERNATIONAL FUND | | AMERICAN FUNDS IS NEW WORLD FUND | | COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND | | DAVIS FINANCIAL PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 114,270 |
| | $ | 2,332,190 |
| | $ | 1,860,123 |
| | $ | 982,803 |
| | $ | 271,038 |
| | $ | 31,771 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | | | 61,905 |
| | 47 |
| | 10 |
| | |
| Purchase payments receivable | | | | 920 |
| | 230 |
| | | | | | |
| | | | | | | | | | | | | |
| Total assets | | 114,270 |
| | 2,333,110 |
| | 1,922,258 |
| | 982,850 |
| | 271,048 |
| | 31,771 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | 916 |
| | | | | | | | |
| Redemptions payable | | | | 4 |
| | 62,135 |
| | 47 |
| | 10 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | | | 920 |
| | 62,135 |
| | 47 |
| | 10 |
| | |
| | | | | | | | | | | | | |
NET ASSETS | | $ | 114,270 |
| | $ | 2,332,190 |
| | $ | 1,860,123 |
| | $ | 982,803 |
| | $ | 271,038 |
| | $ | 31,771 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 114,270 |
| | $ | 2,332,190 |
| | $ | 1,860,123 |
| | $ | 982,803 |
| | $ | 271,038 |
| | $ | 31,771 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 9,385 |
| | 155,017 |
| | 163,801 |
| | 52,341 |
| | 12,129 |
| | 2,071 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 12.18 |
| | $ | 15.04 |
| | $ | 11.36 |
| | $ | 18.78 |
| | $ | 22.35 |
| | $ | 15.34 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 91,007 |
| | $ | 1,812,733 |
| | $ | 1,546,307 |
| | $ | 907,747 |
| | $ | 207,527 |
| | $ | 25,344 |
|
| Shares of investments: | | 4,526 |
| | 29,923 |
| | 87,949 |
| | 39,502 |
| | 13,247 |
| | 2,107 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DAVIS VALUE PORTFOLIO | | DREYFUS IP TECHNOLOGY GROWTH PORTFOLIO | | DREYFUS STOCK INDEX FUND | | DREYFUS VIF APPRECIATION PORTFOLIO | | DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO | | DWS GLOBAL SMALL CAP GROWTH VIP |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 294,201 |
| | $ | 28,610 |
| | $ | 17,779,535 |
| | $ | 752,500 |
| | $ | 126,030 |
| | $ | 80,109 |
|
| Investment income due and accrued | | | | | | 79,942 |
| | 3,123 |
| | | | |
| Receivable for investments sold | | | | | | 60,970 |
| | | | | | |
| Purchase payments receivable | | | | | | 930 |
| | | | 113 |
| | |
| | | | | | | | | | | | | |
| Total assets | | 294,201 |
| | 28,610 |
| | 17,921,377 |
| | 755,623 |
| | 126,143 |
| | 80,109 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | | | | | 103 |
| | |
| Redemptions payable | | | | | | 61,900 |
| | | | 10 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | | | | | 61,900 |
| | | | 113 |
| | |
| | | | | | | | | | | | | |
NET ASSETS | | $ | 294,201 |
| | $ | 28,610 |
| | $ | 17,859,477 |
| | $ | 755,623 |
| | $ | 126,030 |
| | $ | 80,109 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 294,201 |
| | $ | 28,610 |
| | $ | 17,859,477 |
| | $ | 755,623 |
| | $ | 126,030 |
| | $ | 80,109 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 17,239 |
| | 1,212 |
| | 1,125,051 |
| | 9,780 |
| | 6,266 |
| | 3,787 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 17.07 |
| | $ | 23.61 |
| | $ | 15.87 |
| | $ | 77.26 |
| | $ | 20.11 |
| | $ | 21.15 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 250,280 |
| | $ | 22,300 |
| | $ | 14,583,003 |
| | $ | 558,516 |
| | $ | 110,771 |
| | $ | 66,639 |
|
| Shares of investments: | | 21,825 |
| | 1,557 |
| | 435,346 |
| | 15,693 |
| | 6,537 |
| | 4,628 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DWS HIGH INCOME VIP | | DWS LARGE CAP VALUE VIP | | DWS SMALL CAP INDEX VIP | | DWS SMALL MID CAP VALUE VIP | | FEDERATED HIGH INCOME BOND FUND II | | FEDERATED KAUFMANN FUND II |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 79,854 |
| | $ | 145,840 |
| | $ | 2,481,398 |
| | $ | 1,816,532 |
| | $ | 26,725 |
| | $ | 28,946 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | | | 28,896 |
| | 62,683 |
| | | | 264 |
|
| Purchase payments receivable | | 125 |
| | | | 125 |
| | | | | | |
| | | | | | | | | | | | | |
| Total assets | | 79,979 |
| | 145,840 |
| | 2,510,419 |
| | 1,879,215 |
| | 26,725 |
| | 29,210 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | 117 |
| | | | | | | | | | |
| Redemptions payable | | 8 |
| | | | 29,021 |
| | 62,683 |
| | | | 264 |
|
| | | | | | | | | | | | | |
| Total liabilities | | 125 |
| | | | 29,021 |
| | 62,683 |
| | | | 264 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 79,854 |
| | $ | 145,840 |
| | $ | 2,481,398 |
| | $ | 1,816,532 |
| | $ | 26,725 |
| | $ | 28,946 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 79,854 |
| | $ | 145,840 |
| | $ | 2,481,398 |
| | $ | 1,816,532 |
| | $ | 26,725 |
| | $ | 28,946 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 5,115 |
| | 10,953 |
| | 140,234 |
| | 91,772 |
| | 1,074 |
| | 1,751 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 15.61 |
| | $ | 13.32 |
| | $ | 17.69 |
| | $ | 19.79 |
| | $ | 24.88 |
| | $ | 16.53 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 77,944 |
| | $ | 124,432 |
| | $ | 2,004,111 |
| | $ | 1,419,712 |
| | $ | 24,057 |
| | $ | 22,440 |
|
| Shares of investments: | | 11,473 |
| | 9,132 |
| | 140,271 |
| | 106,354 |
| | 3,738 |
| | 1,506 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | FIDELITY VIP CONTRAFUND PORTFOLIO | | FIDELITY VIP GROWTH PORTFOLIO | | FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO | | FIDELITY VIP MID CAP PORTFOLIO | | GREAT-WEST AGGRESSIVE PROFILE I FUND | | GREAT-WEST ARIEL MIDCAP VALUE FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 3,021,647 |
| | $ | 996,193 |
| | $ | 587,808 |
| | $ | 894,551 |
| | $ | 452,929 |
| | $ | 1,302,395 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | 1,325 |
| | | | | | 23,475 |
| | 4,659 |
|
| Purchase payments receivable | | 948 |
| | | | | | 1,475 |
| | 180 |
| | |
| | | | | | | | | | | | | |
| Total assets | | 3,022,595 |
| | 997,518 |
| | 587,808 |
| | 896,026 |
| | 476,584 |
| | 1,307,054 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | 43 |
| | | | | | 1,457 |
| | | | |
| Redemptions payable | | 905 |
| | 1,325 |
| | | | 18 |
| | 23,655 |
| | 4,659 |
|
| | | | | | | | | | | | | |
| Total liabilities | | 948 |
| | 1,325 |
| | | | 1,475 |
| | 23,655 |
| | 4,659 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 3,021,647 |
| | $ | 996,193 |
| | $ | 587,808 |
| | $ | 894,551 |
| | $ | 452,929 |
| | $ | 1,302,395 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 3,021,647 |
| | $ | 996,193 |
| | $ | 587,808 |
| | $ | 894,551 |
| | $ | 452,929 |
| | $ | 1,302,395 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 126,404 |
| | 68,818 |
| | 30,801 |
| | 22,844 |
| | 23,057 |
| | 32,782 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 23.9 |
| | $ | 14.48 |
| | $ | 19.08 |
| | $ | 39.16 |
| | $ | 19.64 |
| | $ | 39.73 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 2,352,574 |
| | $ | 732,795 |
| | $ | 627,490 |
| | $ | 786,349 |
| | $ | 399,331 |
| | $ | 1,206,778 |
|
| Shares of investments: | | 89,477 |
| | 17,610 |
| | 48,619 |
| | 25,128 |
| | 41,213 |
| | 761,634 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST BOND INDEX FUND | | GREAT-WEST CONSERVATIVE PROFILE I FUND | | GREAT-WEST LIFETIME 2025 FUND II | | GREAT-WEST LIFETIME 2045 FUND II | | GREAT-WEST LOOMIS SAYLES BOND FUND | | GREAT-WEST LOOMIS SAYLES SMALL-CAP VALUE FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 1,756,772 |
| | $ | 446,159 |
| | $ | 110,250 |
| | $ | 3,145 |
| | $ | 2,419,528 |
| | $ | 536,764 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | 113 |
| | 347 |
| | | | | | 561 |
| | |
| Purchase payments receivable | | | | 196 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Total assets | | 1,756,885 |
| | 446,702 |
| | 110,250 |
| | 3,145 |
| | 2,420,089 |
| | 536,764 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | | | | | | | |
| Redemptions payable | | 113 |
| | 543 |
| | | | | | 561 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | 113 |
| | 543 |
| | | | | | 561 |
| | |
| | | | | | | | | | | | | |
NET ASSETS | | $ | 1,756,772 |
| | $ | 446,159 |
| | $ | 110,250 |
| | $ | 3,145 |
| | $ | 2,419,528 |
| | $ | 536,764 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 1,756,772 |
| | $ | 446,159 |
| | $ | 110,250 |
| | $ | 3,145 |
| | $ | 2,419,528 |
| | $ | 536,764 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 137,017 |
| | 21,846 |
| | 7,298 |
| | 192 |
| | 70,584 |
| | 17,912 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 12.82 |
| | $ | 20.42 |
| | $ | 15.11 |
| | $ | 16.38 |
| | $ | 34.28 |
| | $ | 29.97 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 1,840,044 |
| | $ | 441,655 |
| | $ | 101,289 |
| | $ | 2,631 |
| | $ | 2,359,893 |
| | $ | 470,415 |
|
| Shares of investments: | | 132,587 |
| | 52,428 |
| | 7,196 |
| | 180 |
| | 176,350 |
| | 19,469 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST MFS INTERNATIONAL VALUE FUND | | GREAT-WEST MODERATE PROFILE I FUND | | GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND | | GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND | | GREAT-WEST MONEY MARKET FUND | | GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 3,499,727 |
| | $ | 235,020 |
| | $ | 237,344 |
| | $ | 294,620 |
| | $ | 9,459,246 |
| | $ | 113,181 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | 43,060 |
| | 21,495 |
| | 41,387 |
| | | | |
| Purchase payments receivable | | 945 |
| | 87 |
| | 850 |
| | 375 |
| | 530,902 |
| | |
| | | | | | | | | | | | | |
| Total assets | | 3,500,672 |
| | 278,167 |
| | 259,689 |
| | 336,382 |
| | 9,990,148 |
| | 113,181 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | 872 |
| | | | | | | | 530,751 |
| | |
| Redemptions payable | | 73 |
| | 43,147 |
| | 22,345 |
| | 41,762 |
| | 151 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | 945 |
| | 43,147 |
| | 22,345 |
| | 41,762 |
| | 530,902 |
| | |
| | | | | | | | | | | | | |
NET ASSETS | | $ | 3,499,727 |
| | $ | 235,020 |
| | $ | 237,344 |
| | $ | 294,620 |
| | $ | 9,459,246 |
| | $ | 113,181 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 3,499,727 |
| | $ | 235,020 |
| | $ | 237,344 |
| | $ | 294,620 |
| | $ | 9,459,246 |
| | $ | 113,181 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 359,106 |
| | 11,455 |
| | 11,767 |
| | 14,578 |
| | 726,943 |
| | 5,636 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 9.75 |
| | $ | 20.52 |
| | $ | 20.17 |
| | $ | 20.21 |
| | $ | 13.01 |
| | $ | 20.08 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 2,963,447 |
| | $ | 227,280 |
| | $ | 219,211 |
| | $ | 282,987 |
| | $ | 9,459,246 |
| | $ | 114,691 |
|
| Shares of investments: | | 315,007 |
| | 25,082 |
| | 23,315 |
| | 32,591 |
| | 9,459,246 |
| | 13,191 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST SHORT DURATION BOND FUND | | GREAT-WEST SMALL-CAP GROWTH FUND | | GREAT-WEST T. ROWE PRICE EQUITY/INCOME FUND | | GREAT-WEST T. ROWE PRICE MIDCAP GROWTH FUND | | GREAT-WEST TEMPLETON GLOBAL BOND FUND | | GREAT-WEST U.S. GOVERNMENT MORTGAGE SECURITIES FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 5,492,023 |
| | $ | 60,161 |
| | $ | 2,357,852 |
| | $ | 3,248,192 |
| | $ | 3,336,310 |
| | $ | 3,871,499 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | | | 773 |
| | 53,351 |
| | | | 26,904 |
|
| Purchase payments receivable | | | | | | 754 |
| | | | 148 |
| | |
| | | | | | | | | | | | | |
| Total assets | | 5,492,023 |
| | 60,161 |
| | 2,359,379 |
| | 3,301,543 |
| | 3,336,458 |
| | 3,898,403 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | | | | | 148 |
| | |
| Redemptions payable | | | | | | 1,527 |
| | 53,351 |
| | | | 26,904 |
|
| | | | | | | | | | | | | |
| Total liabilities | | | | | | 1,527 |
| | 53,351 |
| | 148 |
| | 26,904 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 5,492,023 |
| | $ | 60,161 |
| | $ | 2,357,852 |
| | $ | 3,248,192 |
| | $ | 3,336,310 |
| | $ | 3,871,499 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 5,492,023 |
| | $ | 60,161 |
| | $ | 2,357,852 |
| | $ | 3,248,192 |
| | $ | 3,336,310 |
| | $ | 3,871,499 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 412,682 |
| | 4,847 |
| | 110,092 |
| | 118,688 |
| | 235,958 |
| | 193,173 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 13.31 |
| | $ | 12.41 |
| | $ | 21.42 |
| | $ | 27.37 |
| | $ | 14.14 |
| | $ | 20.04 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 5,463,729 |
| | $ | 56,148 |
| | $ | 2,054,001 |
| | $ | 2,761,116 |
| | $ | 3,384,506 |
| | $ | 4,047,011 |
|
| Shares of investments: | | 529,607 |
| | 2,760 |
| | 119,144 |
| | 147,444 |
| | 348,258 |
| | 328,093 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | INVESCO V.I. CORE EQUITY FUND | | INVESCO V.I. DIVERSIFIED DIVIDEND FUND | | INVESCO V.I. GLOBAL HEALTH CARE FUND | | INVESCO V.I. GLOBAL REAL ESTATE FUND | | INVESCO V.I. INTERNATIONAL GROWTH FUND | | INVESCO V.I. MID CAP CORE EQUITY FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 836,690 |
| | $ | 13,407 |
| | $ | 74,126 |
| | $ | 1,145,662 |
| | $ | 2,993,736 |
| | $ | 322,246 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | 119 |
| | | | 27,643 |
| | | | |
| Purchase payments receivable | | | | | | 503 |
| | | | 897 |
| | 6,926 |
|
| | | | | | | | | | | | | |
| Total assets | | 836,690 |
| | 13,526 |
| | 74,629 |
| | 1,173,305 |
| | 2,994,633 |
| | 329,172 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | 503 |
| | | | 897 |
| | 6,917 |
|
| Redemptions payable | | | | 119 |
| | | | 27,643 |
| | | | 9 |
|
| | | | | | | | | | | | | |
| Total liabilities | | | | 119 |
| | 503 |
| | 27,643 |
| | 897 |
| | 6,926 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 836,690 |
| | $ | 13,407 |
| | $ | 74,126 |
| | $ | 1,145,662 |
| | $ | 2,993,736 |
| | $ | 322,246 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 836,690 |
| | $ | 13,407 |
| | $ | 74,126 |
| | $ | 1,145,662 |
| | $ | 2,993,736 |
| | $ | 322,246 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 45,152 |
| | 1,396 |
| | 3,081 |
| | 37,920 |
| | 200,361 |
| | 16,566 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 18.53 |
| | $ | 9.6 |
| | $ | 24.06 |
| | $ | 30.21 |
| | $ | 14.94 |
| | $ | 19.45 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 579,720 |
| | $ | 12,297 |
| | $ | 56,786 |
| | $ | 1,175,537 |
| | $ | 2,579,106 |
| | $ | 277,252 |
|
| Shares of investments: | | 21,772 |
| | 641 |
| | 2,528 |
| | 74,929 |
| | 84,760 |
| | 21,298 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | INVESCO V.I. TECHNOLOGY FUND | | JANUS ASPEN BALANCED PORTFOLIO | | JANUS ASPEN FLEXIBLE BOND PORTFOLIO | | JANUS ASPEN FORTY PORTFOLIO | | JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO | | JANUS ASPEN OVERSEAS PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 65,714 |
| | $ | 1,030,129 |
| | $ | 4,989,465 |
| | $ | 814,136 |
| | $ | 58,981 |
| | $ | 208,978 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | 3,750 |
| | 644 |
| | | | | | | | |
| Purchase payments receivable | | | | 481 |
| | 1,892 |
| | 600 |
| | | | 342 |
|
| | | | | | | | | | | | | |
| Total assets | | $ | 69,464 |
| | $ | 1,031,254 |
| | $ | 4,991,357 |
| | $ | 814,736 |
| | $ | 58,981 |
| | $ | 209,320 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | 1,892 |
| | 262 |
| | | | 323 |
|
| Redemptions payable | | 3,750 |
| | 1,125 |
| | | | 338 |
| | | | 19 |
|
| | | | | | | | | | | | | |
| Total liabilities | | 3,750 |
| | 1,125 |
| | 1,892 |
| | 600 |
| | | | 342 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 65,714 |
| | $ | 1,030,129 |
| | $ | 4,989,465 |
| | $ | 814,136 |
| | $ | 58,981 |
| | $ | 208,978 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 65,714 |
| | $ | 1,030,129 |
| | $ | 4,989,465 |
| | $ | 814,136 |
| | $ | 58,981 |
| | $ | 208,978 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 4,228 |
| | 45,359 |
| | 209,415 |
| | 29,634 |
| | 2,701 |
| | 7,104 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 15.54 |
| | $ | 22.71 |
| | $ | 23.83 |
| | $ | 27.47 |
| | $ | 21.84 |
| | $ | 29.42 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 57,305 |
| | $ | 938,949 |
| | $ | 5,120,086 |
| | $ | 658,844 |
| | $ | 41,780 |
| | $ | 189,424 |
|
| Shares of investments: | | 3,384 |
| | 34,031 |
| | 422,121 |
| | 15,263 |
| | 7,193 |
| | 4,973 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | JANUS ASPEN WORLDWIDE PORTFOLIO | | NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO | | NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO | | NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO | | NEUBERGER BERMAN AMT MID CAP PORTFOLIO | | NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 314,315 |
| | $ | 105,384 |
| | $ | 29,179 |
| | $ | 697,762 |
| | $ | 282,727 |
| | $ | 41,795 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | 1,252 |
| | | | | | | | | | 418 |
|
| Purchase payments receivable | | | | | | | | | | | | 154 |
|
| | | | | | | | | | | | | |
| Total assets | | 315,567 |
| | 105,384 |
| | 29,179 |
| | 697,762 |
| | 282,727 |
| | 42,367 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | | | | | | | |
| Redemptions payable | | 1,252 |
| | | | | | | | | | 572 |
|
| | | | | | | | | | | | | |
| Total liabilities | | 1,252 |
| | | | | | | | | | 572 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 314,315 |
| | $ | 105,384 |
| | $ | 29,179 |
| | $ | 697,762 |
| | $ | 282,727 |
| | $ | 41,795 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 314,315 |
| | $ | 105,384 |
| | $ | 29,179 |
| | $ | 697,762 |
| | $ | 282,727 |
| | $ | 41,795 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 30,823 |
| | 4,853 |
| | 1,450 |
| | 37,833 |
| | 16,727 |
| | 2,501 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 10.2 |
| | $ | 21.72 |
| | $ | 20.12 |
| | $ | 18.44 |
| | $ | 16.9 |
| | $ | 16.71 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 261,465 |
| | $ | 90,150 |
| | $ | 22,343 |
| | $ | 526,068 |
| | $ | 190,591 |
| | $ | 29,419 |
|
| Shares of investments: | | 8,061 |
| | 3,948 |
| | 1,940 |
| | 42,598 |
| | 6,884 |
| | 2,171 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO | | PIMCO VIT HIGH YIELD PORTFOLIO | | PIMCO VIT LOW DURATION PORTFOLIO | | PIMCO VIT REAL RETURN PORTFOLIO | | PIMCO VIT TOTAL RETURN PORTFOLIO | | PUTNAM VT EQUITY INCOME FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 17,654 |
| | $ | 447,882 |
| | $ | 4,287,085 |
| | $ | 1,177,562 |
| | $ | 8,388,463 |
| | $ | 225,292 |
|
| Investment income due and accrued | | | | 2,108 |
| | 2,747 |
| | 18,267 |
| | 36,521 |
| | |
| Receivable for investments sold | | 381 |
| | 23,846 |
| | 5,573 |
| | | | 24,092 |
| | |
| Purchase payments receivable | | | | 143 |
| | | | 93 |
| | 243 |
| | 947 |
|
| | | | | | | | | | | | | |
| Total assets | | 18,035 |
| | 473,979 |
| | 4,295,405 |
| | 1,195,922 |
| | 8,449,319 |
| | 226,239 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | | | | | 92 |
| | | | 947 |
|
| Redemptions payable | | 381 |
| | 23,989 |
| | 5,573 |
| | 1 |
| | 24,335 |
| | |
| | | | | | | | | | | | | |
| Total liabilities | | 381 |
| | 23,989 |
| | 5,573 |
| | 93 |
| | 24,335 |
| | 947 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 17,654 |
| | $ | 449,990 |
| | $ | 4,289,832 |
| | $ | 1,195,829 |
| | $ | 8,424,984 |
| | $ | 225,292 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 17,654 |
| | $ | 449,990 |
| | $ | 4,289,832 |
| | $ | 1,195,829 |
| | $ | 8,424,984 |
| | $ | 225,292 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 758 |
| | 22,776 |
| | 294,946 |
| | 74,114 |
| | 483,856 |
| | 9,364 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 23.29 |
| | $ | 19.76 |
| | $ | 14.54 |
| | $ | 16.13 |
| | $ | 17.41 |
| | $ | 24.06 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 12,820 |
| | $ | 445,097 |
| | $ | 4,349,641 |
| | $ | 1,318,875 |
| | $ | 8,698,635 |
| | $ | 168,925 |
|
| Shares of investments: | | 813 |
| | 55,500 |
| | 404,061 |
| | 93,457 |
| | 763,977 |
| | 10,963 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | | | | | | | | | | | |
DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | PUTNAM VT HIGH YIELD FUND | | PUTNAM VT INTERNATIONAL GROWTH FUND | | ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO | | ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO | | VAN ECK VIP EMERGING MARKETS FUND | | VAN ECK VIP GLOBAL HARD ASSETS FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
ASSETS: | | | | | | | | | | | | |
| Investments at fair value (1) | | $ | 118,161 |
| | $ | 31,068 |
| | $ | 225,974 |
| | $ | 1,041,854 |
| | $ | 32,914 |
| | $ | 641,139 |
|
| Investment income due and accrued | | | | | | | | | | | | |
| Receivable for investments sold | | | | | | | | | | | | |
| Purchase payments receivable | | | | 112 |
| | | | | | | | 202 |
|
| | | | | | | | | | | | | |
| Total assets | | 118,161 |
| | 31,180 |
| | 225,974 |
| | 1,041,854 |
| | 32,914 |
| | 641,341 |
|
| | | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | | |
| Payable for investments purchased | | | | 102 |
| | | | | | | | 202 |
|
| Redemptions payable | | | | 10 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Total liabilities | | | | 112 |
| | | | | | | | 202 |
|
| | | | | | | | | | | | | |
NET ASSETS | | $ | 118,161 |
| | $ | 31,068 |
| | $ | 225,974 |
| | $ | 1,041,854 |
| | $ | 32,914 |
| | $ | 641,139 |
|
| | | | | | | | | | | | | |
NET ASSETS REPRESENTED BY: | | | | | | | | | | | | |
| Accumulation units | | $ | 118,161 |
| | $ | 31,068 |
| | $ | 225,974 |
| | $ | 1,041,854 |
| | $ | 32,914 |
| | $ | 641,139 |
|
| | | | | | | | | | | | | |
ACCUMULATION UNITS OUTSTANDING | | 6,065 |
| | 1,547 |
| | 16,130 |
| | 60,304 |
| | 802 |
| | 8,710 |
|
| | | | | | | | | | | | | |
UNIT VALUE (ACCUMULATION) | | $ | 19.48 |
| | $ | 20.08 |
| | $ | 14.01 |
| | $ | 17.28 |
| | $ | 41.04 |
| | $ | 73.61 |
|
| | | | | | | | | | | | | |
(1) | Cost of investments: | | $ | 115,587 |
| | $ | 24,183 |
| | $ | 193,784 |
| | $ | 830,270 |
| | $ | 28,027 |
| | $ | 603,896 |
|
| Shares of investments: | | 16,572 |
| | 1,550 |
| | 17,765 |
| | 75,826 |
| | 2,209 |
| | 20,425 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Concluded) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | ALGER SMALL CAP GROWTH PORTFOLIO | | AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND | | AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND | | AMERICAN CENTURY INVESTMENTS VP ULTRA FUND | | AMERICAN CENTURY INVESTMENTS VP VALUE FUND | | AMERICAN CENTURY INVESTMENTS VP VISTA FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | | $ | 543 |
| | $ | 8,959 |
| | $ | 97 |
| | $ | 10,449 |
| | $ |
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | | | 543 |
| | 8,959 |
| | 97 |
| | 10,449 |
| | |
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | (1,794) |
| | (330) |
| | (1,701) |
| | 9,986 |
| | 20,845 |
| | 2,557 |
|
| Realized gain distributions | | 51,831 |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 50,037 |
| | (330) |
| | (1,701) |
| | 9,986 |
| | 20,845 |
| | 2,557 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 47,102 |
| | 7,288 |
| | 99,165 |
| | 2,635 |
| | 140,649 |
| | 25,973 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain on investments | | 97,139 |
| | 6,958 |
| | 97,464 |
| | 12,621 |
| | 161,494 |
| | 28,530 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 97,139 |
| | $ | 7,501 |
| | $ | 106,423 |
| | $ | 12,718 |
| | $ | 171,943 |
| | $ | 28,530 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND | | AMERICAN FUNDS IS GROWTH FUND | | AMERICAN FUNDS IS INTERNATIONAL FUND | | AMERICAN FUNDS IS NEW WORLD FUND | | COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND | | DAVIS FINANCIAL PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 809 |
| | $ | 21,922 |
| | $ | 23,807 |
| | $ | 12,626 |
| | $ | 2,335 |
| | $ | 168 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 809 |
| | 21,922 |
| | 23,807 |
| | 12,626 |
| | 2,335 |
| | 168 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain on sale of fund shares | | 4,918 |
| | 611,466 |
| | 51,619 |
| | 7,593 |
| | 8,612 |
| | 2,753 |
|
| Realized gain distributions | | | | | | | | 3,858 |
| | | | |
| | | | | | | | | | | | | |
| Net realized gain on investments | | 4,918 |
| | 611,466 |
| | 51,619 |
| | 11,451 |
| | 8,612 |
| | 2,753 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 18,161 |
| | 105,958 |
| | 269,981 |
| | 68,508 |
| | 56,463 |
| | 4,530 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain on investments | | 23,079 |
| | 717,424 |
| | 321,600 |
| | 79,959 |
| | 65,075 |
| | 7,283 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 23,888 |
| | $ | 739,346 |
| | $ | 345,407 |
| | $ | 92,585 |
| | $ | 67,410 |
| | $ | 7,451 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DAVIS VALUE PORTFOLIO | | DREYFUS IP TECHNOLOGY GROWTH PORTFOLIO | | DREYFUS STOCK INDEX FUND | | DREYFUS VIF APPRECIATION PORTFOLIO | | DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO | | DWS GLOBAL SMALL CAP GROWTH VIP |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 2,340 |
| | $ | | $ | 286,097 |
| | $ | 13,603 |
| | $ | 836 |
| | $ | 388 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 2,340 |
| | | | 286,097 |
| | 13,603 |
| | 836 |
| | 388 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain on sale of fund shares | | 2,349 |
| | 5,215 |
| | 564,468 |
| | 3,306 |
| | 3,066 |
| | 7,453 |
|
| Realized gain distributions | | 19,790 |
| | | | 166,265 |
| | 1,607 |
| | | | 4,124 |
|
| | | | | | | | | | | | | |
| Net realized gain on investments | | 22,139 |
| | 5,215 |
| | 730,733 |
| | 4,913 |
| | 3,066 |
| | 11,577 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 54,519 |
| | 3,549 |
| | 2,923,888 |
| | 114,760 |
| | 9,273 |
| | 8,502 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain on investments | | 76,658 |
| | 8,764 |
| | 3,654,621 |
| | 119,673 |
| | 12,339 |
| | 20,079 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 78,998 |
| | $ | 8,764 |
| | $ | 3,940,718 |
| | $ | 133,276 |
| | $ | 13,175 |
| | $ | 20,467 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DWS HIGH INCOME VIP | | DWS LARGE CAP VALUE VIP | | DWS SMALL CAP INDEX VIP | | DWS SMALL MID CAP VALUE VIP | | FEDERATED HIGH INCOME BOND FUND II | | FEDERATED KAUFMANN FUND II |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 4,108 |
| | $ | 2,187 |
| | $ | 32,140 |
| | $ | 16,556 |
| | $ | 3,199 |
| | $ |
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 4,108 |
| | 2,187 |
| | 32,140 |
| | 16,556 |
| | 3,199 |
| | |
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain on sale of fund shares | | 15 |
| | 23,305 |
| | 33,846 |
| | 231,299 |
| | 7,016 |
| | 3,238 |
|
| Realized gain distributions | | | | | | 77,262 |
| | | | | | 3,526 |
|
| | | | | | | | | | | | | |
| Net realized gain on investments | | 15 |
| | 23,305 |
| | 111,108 |
| | 231,299 |
| | 7,016 |
| | 6,764 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 514 |
| | 9,609 |
| | 462,192 |
| | 235,793 |
| | (7,971) |
| | 5,401 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 529 |
| | 32,914 |
| | 573,300 |
| | 467,092 |
| | (955) |
| | 12,165 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 4,637 |
| | $ | 35,101 |
| | $ | 605,440 |
| | $ | 483,648 |
| | $ | 2,244 |
| | $ | 12,165 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | FIDELITY VIP CONTRAFUND PORTFOLIO | | FIDELITY VIP GROWTH PORTFOLIO | | FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO | | FIDELITY VIP MID CAP PORTFOLIO | | GREAT-WEST AGGRESSIVE PROFILE I FUND | | GREAT-WEST ARIEL MIDCAP VALUE FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 22,845 |
| | $ | 406 |
| | $ | 12,919 |
| | $ | 2,192 |
| | $ | 7,857 |
| | $ | 16,102 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 22,845 |
| | 406 |
| | 12,919 |
| | 2,192 |
| | 7,857 |
| | 16,102 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 270,958 |
| | 91,953 |
| | (12,084) |
| | 12,185 |
| | 17,455 |
| | 30,316 |
|
| Realized gain distributions | | 800 |
| | 617 |
| | 7,389 |
| | 104,548 |
| | 33,384 |
| | 43,570 |
|
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 271,758 |
| | 92,570 |
| | (4,695) |
| | 116,733 |
| | 50,839 |
| | 73,886 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 464,267 |
| | 197,523 |
| | (28,648) |
| | 155,903 |
| | 50,541 |
| | 80,580 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 736,025 |
| | 290,093 |
| | (33,343) |
| | 272,636 |
| | 101,380 |
| | 154,466 |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 758,870 |
| | $ | 290,499 |
| | $ | (20,424 | ) | | $ | 274,828 |
| | $ | 109,237 |
| | $ | 170,568 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST ARIEL SMALL-CAP VALUE PORTFOLIO | | GREAT-WEST BOND INDEX FUND | | GREAT-WEST CONSERVATIVE PROFILE I FUND | | GREAT-WEST INVESCO ADR PORTFOLIO | | GREAT-WEST LIFETIME 2015 FUND II | | GREAT-WEST LIFETIME 2025 FUND II |
| | | (1) | | (2) | | | | (3) | | (4) | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 37 |
| | $ | 33,358 |
| | $ | 8,774 |
| | $ | 2,032 |
| | $ | | $ | 2,687 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 37 |
| | 33,358 |
| | 8,774 |
| | 2,032 |
| | | | 2,687 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 343,126 |
| | (1,780) |
| | 7,849 |
| | (1,752) |
| | 66 |
| | 451 |
|
| Realized gain distributions | | | | 7,703 |
| | 13,600 |
| | | | | | 2,887 |
|
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 343,126 |
| | 5,923 |
| | 21,449 |
| | (1,752) |
| | 66 |
| | 3,338 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (124,991) |
| | (83,272) |
| | (246) |
| | 6,887 |
| | (15) |
| | 6,655 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 218,135 |
| | (77,349) |
| | 21,203 |
| | 5,135 |
| | 51 |
| | 9,993 |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 218,172 |
| | $ | (43,991 | ) | | $ | 29,977 |
| | $ | 7,167 |
| | $ | 51 |
| | $ | 12,680 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) | For the period January 1, 2013 to December 18, 2013 | | | | | | | | | | | | |
(2) | For the period January 16, 2013 to December 31, 2013 | | | | | | | | | | | | |
(3) | For the period January 1, 2013 to April 30, 2013 | | | | | | | | | | | | |
(4) | For the period January 1, 2013 to March 11, 2013 | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST LIFETIME 2045 FUND II | | GREAT-WEST LOOMIS SAYLES BOND FUND | | GREAT-WEST LOOMIS SAYLES SMALL-CAP VALUE FUND | | GREAT-WEST MFS INTERNATIONAL VALUE FUND | | GREAT-WEST MODERATE PROFILE I FUND | | GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 71 |
| | $ | 83,380 |
| | $ | 2,973 |
| | $ | 73,530 |
| | $ | 8,705 |
| | $ | 4,139 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 71 |
| | 83,380 |
| | 2,973 |
| | 73,530 |
| | 8,705 |
| | 4,139 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain on sale of fund shares | | 43 |
| | 147,978 |
| | 202,237 |
| | 72,922 |
| | 816 |
| | 19,635 |
|
| Realized gain distributions | | 56 |
| | 22,956 |
| | 44,537 |
| | 0 |
| | 10,033 |
| | 11,982 |
|
| | | | | | | | | | | | | |
| Net realized gain on investments | | 99 |
| | 170,934 |
| | 246,774 |
| | 72,922 |
| | 10,849 |
| | 31,617 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 398 |
| | (49,484) |
| | (98,256) |
| | 504,467 |
| | 17,567 |
| | 7,121 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain on investments | | 497 |
| | 121,450 |
| | 148,518 |
| | 577,389 |
| | 28,416 |
| | 38,738 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 568 |
| | $ | 204,830 |
| | $ | 151,491 |
| | $ | 650,919 |
| | $ | 37,121 |
| | $ | 42,877 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND | | GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND | | GREAT-WEST SHORT DURATION BOND FUND | | GREAT-WEST SMALL-CAP GROWTH FUND | | GREAT-WEST T. ROWE PRICE EQUITY/INCOME FUND | | GREAT-WEST T. ROWE PRICE MIDCAP GROWTH FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 6,794 |
| | $ | 1,638 |
| | $ | 101,030 |
| | $ | 4,983 |
| | $ | 42,252 |
| | $ | 1,532 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 6,794 |
| | 1,638 |
| | 101,030 |
| | 4,983 |
| | 42,252 |
| | 1,532 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 8,414 |
| | 1,805 |
| | 116,728 |
| | 803 |
| | 79,233 |
| | (88,500) |
|
| Realized gain distributions | | 10,769 |
| | 26,257 |
| | 20,133 |
| | 10,391 |
| | 113,054 |
| | 259,661 |
|
| | | | | | | | | | | | | |
| Net realized gain on investments | | 19,183 |
| | 28,062 |
| | 136,861 |
| | 11,194 |
| | 192,287 |
| | 171,161 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 3,242 |
| | (5,354) |
| | (162,009) |
| | 2,628 |
| | 241,746 |
| | 702,881 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 22,425 |
| | 22,708 |
| | (25,148) |
| | 13,822 |
| | 434,033 |
| | 874,042 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 29,219 |
| | $ | 24,346 |
| | $ | 75,882 |
| | $ | 18,805 |
| | $ | 476,285 |
| | $ | 875,574 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST TEMPLETON GLOBAL BOND FUND | | GREAT-WEST U.S. GOVERNMENT MORTGAGE SECURITIES FUND | | INVESCO V.I. CORE EQUITY FUND | | INVESCO V.I. DIVERSIFIED DIVIDEND FUND | | INVESCO V.I. GLOBAL HEALTH CARE FUND | | INVESCO V.I. GLOBAL REAL ESTATE FUND |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 47,273 |
| | $ | 87,730 |
| | $ | 11,502 |
| | $ | 284 |
| | $ | 774 |
| | $ | 41,607 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 47,273 |
| | 87,730 |
| | 11,502 |
| | 284 |
| | 774 |
| | 41,607 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 338 |
| | (316) |
| | 31,205 |
| | 829 |
| | 30,402 |
| | 13,636 |
|
| Realized gain distributions | | 21,707 |
| | 261 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 22,045 |
| | (55) |
| | 31,205 |
| | 829 |
| | 30,402 |
| | 13,636 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (54,855) |
| | (172,644) |
| | 165,721 |
| | 1,072 |
| | 5,269 |
| | (44,218) |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | (32,810) |
| | (172,699) |
| | 196,926 |
| | 1,901 |
| | 35,671 |
| | (30,582) |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 14,463 |
| | $ | (84,969 | ) | | $ | 208,428 |
| | $ | 2,185 |
| | $ | 36,445 |
| | $ | 11,025 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | INVESCO V.I. INTERNATIONAL GROWTH FUND | | INVESCO V.I. MID CAP CORE EQUITY FUND | | INVESCO V.I. TECHNOLOGY FUND | | JANUS ASPEN BALANCED PORTFOLIO | | JANUS ASPEN FLEXIBLE BOND PORTFOLIO | | JANUS ASPEN FORTY PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 30,447 |
| | $ | 1,882 |
| | $ | | $ | 20,298 |
| | $ | 204,879 |
| | $ | 4,993 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 30,447 |
| | 1,882 |
| | | | 20,298 |
| | 204,879 |
| | 4,993 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain on sale of fund shares | | 26,746 |
| | 12,226 |
| | 3,687 |
| | 7,549 |
| | 161,865 |
| | 132,935 |
|
| Realized gain distributions | | | | 18,998 |
| | 5,198 |
| | 43,031 |
| | 95,257 |
| | |
| | | | | | | | | | | | | |
| Net realized gain on investments | | 26,746 |
| | 31,224 |
| | 8,885 |
| | 50,580 |
| | 257,122 |
| | 132,935 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 348,798 |
| | 26,670 |
| | 7,397 |
| | 90,192 |
| | (473,844) |
| | 76,595 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 375,544 |
| | 57,894 |
| | 16,282 |
| | 140,772 |
| | (216,722) |
| | 209,530 |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 405,991 |
| | $ | 59,776 |
| | $ | 16,282 |
| | $ | 161,070 |
| | $ | (11,843 | ) | | $ | 214,523 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO | | JANUS ASPEN OVERSEAS PORTFOLIO | | JANUS ASPEN WORLDWIDE PORTFOLIO | | NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO | | NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO | | NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | | $ | 10,398 |
| | $ | 3,549 |
| | $ | 752 |
| | $ | 320 |
| | $ | 7,426 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | | | 10,398 |
| | 3,549 |
| | 752 |
| | 320 |
| | 7,426 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 4,358 |
| | (364,298) |
| | 46,162 |
| | 240,678 |
| | 427,764 |
| | (86,504) |
|
| Realized gain distributions | | | | | | | | 4,777 |
| | | | |
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 4,358 |
| | (364,298) |
| | 46,162 |
| | 245,455 |
| | 427,764 |
| | (86,504) |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 11,281 |
| | 471,699 |
| | 29,272 |
| | (156,674) |
| | (355,168) |
| | 287,527 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain on investments | | 15,639 |
| | 107,401 |
| | 75,434 |
| | 88,781 |
| | 72,596 |
| | 201,023 |
|
| | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 15,639 |
| | $ | 117,799 |
| | $ | 78,983 |
| | $ | 89,533 |
| | $ | 72,916 |
| | $ | 208,449 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | NEUBERGER BERMAN AMT MID CAP PORTFOLIO | | NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO | | NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO | | PIMCO VIT HIGH YIELD PORTFOLIO | | PIMCO VIT LOW DURATION PORTFOLIO | | PIMCO VIT REAL RETURN PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | | $ | | $ | 109 |
| | $ | 25,889 |
| | $ | 65,643 |
| | $ | 21,937 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | | | | | 109 |
| | 25,889 |
| | 65,643 |
| | 21,937 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 19,975 |
| | 3,297 |
| | 3,145 |
| | 3,427 |
| | 63,216 |
| | (19,284) |
|
| Realized gain distributions | | | | | | | | | | | | 9,489 |
|
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 19,975 |
| | 3,297 |
| | 3,145 |
| | 3,427 |
| | 63,216 |
| | (9,795) |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 58,303 |
| | 11,981 |
| | 3,298 |
| | (3,318) |
| | (130,094) |
| | (137,604) |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | 78,278 |
| | 15,278 |
| | 6,443 |
| | 109 |
| | (66,878) |
| | (147,399) |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | 78,278 |
| | $ | 15,278 |
| | $ | 6,552 |
| | $ | 25,998 |
| | $ | (1,235 | ) | | $ | (125,462 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF OPERATIONS | | | | | | | | | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | PIMCO VIT TOTAL RETURN PORTFOLIO | | PUTNAM VT EQUITY INCOME FUND | | PUTNAM VT HIGH YIELD FUND | | PUTNAM VT INTERNATIONAL GROWTH FUND | | ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO | | ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INVESTMENT INCOME: | | | | | | | | | | | | |
| Dividends | | $ | 185,837 |
| | $ | 4,260 |
| | $ | 7,306 |
| | $ | 364 |
| | $ | 729 |
| | $ | 9,012 |
|
| | | | | | | | | | | | | |
NET INVESTMENT INCOME | | 185,837 |
| | 4,260 |
| | 7,306 |
| | 364 |
| | 729 |
| | 9,012 |
|
| | | | | | | | | | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | | | | | |
| Net realized gain (loss) on sale of fund shares | | 42,943 |
| | 17,753 |
| | 639 |
| | 78 |
| | (19,544) |
| | 40,679 |
|
| Realized gain distributions | | 74,256 |
| | | | | | | | 5,779 |
| | 52,405 |
|
| | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | 117,199 |
| | 17,753 |
| | 639 |
| | 78 |
| | (13,765) |
| | 93,084 |
|
| | | | | | | | | | | | | |
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (475,123) |
| | 36,176 |
| | 180 |
| | 5,343 |
| | 57,016 |
| | 182,586 |
|
| | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) on investments | | (357,924) |
| | 53,929 |
| | 819 |
| | 5,421 |
| | 43,251 |
| | 275,670 |
|
| | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | |
| RESULTING FROM OPERATIONS | | $ | (172,087 | ) | | $ | 58,189 |
| | $ | 8,125 |
| | $ | 5,785 |
| | $ | 43,980 |
| | $ | 284,682 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | |
| | | | | |
STATEMENT OF OPERATIONS | | | | |
YEAR ENDED DECEMBER 31, 2013 | | | | |
| | | | | |
| | | INVESTMENT DIVISIONS |
| | | VAN ECK VIP EMERGING MARKETS FUND | | VAN ECK VIP GLOBAL HARD ASSETS FUND |
| | | | | |
| | | | | |
INVESTMENT INCOME: | | | | |
| Dividends | | $ | 334 |
| | $ | 3,456 |
|
| | | | | |
NET INVESTMENT INCOME | | 334 |
| | 3,456 |
|
| | | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | |
| Net realized gain (loss) on sale of fund shares | | 144 |
| | (11,252) |
|
| Realized gain distributions | | | | 9,880 |
|
| | | | | |
| Net realized gain (loss) on investments | | 144 |
| | (1,372) |
|
| | | | | |
| Change in net unrealized appreciation | | | | |
| on investments | | 2,637 |
| | 46,376 |
|
| | | | | |
| Net realized and unrealized gain on investments | | 2,781 |
| | 45,004 |
|
| | | | | |
NET INCREASE IN NET ASSETS | | | | |
| RESULTING FROM OPERATIONS | | $ | 3,115 |
| | $ | 48,460 |
|
| | | | | |
| | | | | |
The accompanying notes are an integral part of these financial statements. | | | | (Concluded) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | ALGER SMALL CAP GROWTH PORTFOLIO | | AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND | | AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | | $ | (255 | ) | | $ | 543 |
| | $ | 457 |
| | $ | 8,959 |
| | $ | 3,028 |
|
| Net realized gain (loss) on investments | | 50,037 |
| | 26,158 |
| | (330) |
| | (1,266) |
| | (1,701) |
| | (8,426) |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 47,102 |
| | (13,317) |
| | 7,288 |
| | 4,120 |
| | 99,165 |
| | 99,456 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 97,139 |
| | 12,586 |
| | 7,501 |
| | 3,311 |
| | 106,423 |
| | 94,058 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 31,848 |
| | 1,528 |
| | 0 |
| | 2 |
| | 0 |
| | 0 |
|
| Transfers for contract benefits and terminations | | (17,874) |
| | (1,658) |
| | (5,166) |
| | (4,312) |
| | (6,313) |
| | (5,321) |
|
| Net transfers | | 199,823 |
| | 80,406 |
| | 0 |
| | 0 |
| | (36,717) |
| | (26,829) |
|
| Contract maintenance charges | | (134) |
| | (59) |
| | (21) |
| | (26) |
| | (324) |
| | (378) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 172 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 213,663 |
| | 80,217 |
| | (5,187) |
| | (4,164) |
| | (43,354) |
| | (32,528) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 310,802 |
| | 92,803 |
| | 2,314 |
| | (853) |
| | 63,069 |
| | 61,530 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 135,441 |
| | 42,638 |
| | 22,920 |
| | 23,773 |
| | 493,083 |
| | 431,553 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 446,243 |
| | $ | 135,441 |
| | $ | 25,234 |
| | $ | 22,920 |
| | $ | 556,152 |
| | $ | 493,083 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 3,081 |
| | 11,501 |
| | 4 |
| | 1,996 |
| | 186 |
| | 59,443 |
|
| Units redeemed | | (930) |
| | (12,718) |
| | (356) |
| | (2,299) |
| | (4,061) |
| | (44,929) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 2,151 |
| | (1,217) |
| | (352) |
| | (303) |
| | (3,875) |
| | 14,514 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | AMERICAN CENTURY INVESTMENTS VP ULTRA FUND | | AMERICAN CENTURY INVESTMENTS VP VALUE FUND | | AMERICAN CENTURY INVESTMENTS VP VISTA FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | (1) | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 97 |
| | $ | (91 | ) | | $ | 10,449 |
| | $ | 8,842 |
| | $ | | $ | (259 | ) |
| Net realized gain on investments | | 9,986 |
| | 2,491 |
| | 20,845 |
| | 593 |
| | 2,557 |
| | 2,906 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 2,635 |
| | 372 |
| | 140,649 |
| | 56,676 |
| | 25,973 |
| | 9,449 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 12,718 |
| | 2,772 |
| | 171,943 |
| | 66,111 |
| | 28,530 |
| | 12,096 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 2,938 |
| | 8,883 |
| | 46,982 |
| | 37,238 |
| | 1 |
| | 12,439 |
|
| Transfers for contract benefits and terminations | | (643) |
| | (1,477) |
| | (21,349) |
| | (7,546) |
| | (3,292) |
| | (3,132) |
|
| Net transfers | | 8,738 |
| | 2,114 |
| | (56,374) |
| | 30,706 |
| | 14,045 |
| | (15,434) |
|
| Contract maintenance charges | | (18) |
| | (28) |
| | (457) |
| | (352) |
| | (72) |
| | (72) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 11,015 |
| | 9,492 |
| | (31,198) |
| | 60,046 |
| | 10,682 |
| | (6,199) |
|
| | | | | | | | | | | | | |
| Total increase in net assets | | 23,733 |
| | 12,264 |
| | 140,745 |
| | 126,157 |
| | 39,212 |
| | 5,897 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 12,264 |
| | | | 578,047 |
| | 451,890 |
| | 88,366 |
| | 82,469 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 35,997 |
| | $ | 12,264 |
| | $ | 718,792 |
| | $ | 578,047 |
| | $ | 127,578 |
| | $ | 88,366 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 4,406 |
| | 7,248 |
| | 2,912 |
| | 30,242 |
| | 1,602 |
| | 7,443 |
|
| Units redeemed | | (3,389) |
| | (6,357) |
| | (4,296) |
| | (42,369) |
| | (937) |
| | (8,102) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 1,017 |
| | 891 |
| | (1,384) |
| | (12,127) |
| | 665 |
| | (659) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) | For the period January 13, 2012 to December 31, 2012. | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND | | AMERICAN FUNDS IS GROWTH FUND | | AMERICAN FUNDS IS INTERNATIONAL FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 809 |
| | $ | 982 |
| | $ | 21,922 |
| | $ | 16,388 |
| | $ | 23,807 |
| | $ | 11,715 |
|
| Net realized gain (loss) on investments | | 4,918 |
| | (3,686) |
| | 611,466 |
| | 29,415 |
| | 51,619 |
| | 8,846 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 18,161 |
| | 21,295 |
| | 105,958 |
| | 342,708 |
| | 269,981 |
| | 51,681 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 23,888 |
| | 18,591 |
| | 739,346 |
| | 388,511 |
| | 345,407 |
| | 72,242 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 11,630 |
| | 134,909 |
| | 54,208 |
| | 66,139 |
| | 828,456 |
|
| Transfers for contract benefits and terminations | | (1,474) |
| | (1,429) |
| | (71,740) |
| | (50,951) |
| | (251,592) |
| | (28,699) |
|
| Net transfers | | 4,069 |
| | (7,687) |
| | (1,377,365) |
| | 771,005 |
| | 75,337 |
| | 607,903 |
|
| Contract maintenance charges | | (47) |
| | (49) |
| | (1,172) |
| | (1,132) |
| | (1,041) |
| | (332) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 2,548 |
| | 2,465 |
| | (1,315,368) |
| | 773,130 |
| | (111,157) |
| | 1,407,328 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 26,436 |
| | 21,056 |
| | (576,022) |
| | 1,161,641 |
| | 234,250 |
| | 1,479,570 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 87,834 |
| | 66,778 |
| | 2,908,212 |
| | 1,746,571 |
| | 1,625,873 |
| | 146,303 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 114,270 |
| | $ | 87,834 |
| | $ | 2,332,190 |
| | $ | 2,908,212 |
| | $ | 1,860,123 |
| | $ | 1,625,873 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 3,947 |
| | 25,393 |
| | 81,176 |
| | 367,172 |
| | 34,281 |
| | 227,375 |
|
| Units redeemed | | (3,816) |
| | (23,953) |
| | (177,651) |
| | (240,433) |
| | (44,628) |
| | (71,193) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 131 |
| | 1,440 |
| | (96,475) |
| | 126,739 |
| | (10,347) |
| | 156,182 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | AMERICAN FUNDS IS NEW WORLD FUND | | COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND | | DAVIS FINANCIAL PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 12,626 |
| | $ | 540 |
| | $ | 2,335 |
| | $ | 372 |
| | $ | 168 |
| | $ | 684 |
|
| Net realized gain (loss) on investments | | 11,451 |
| | (1,585) |
| | 8,612 |
| | 8,205 |
| | 2,753 |
| | 27 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 68,508 |
| | 11,630 |
| | 56,463 |
| | 6,655 |
| | 4,530 |
| | 4,705 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 92,585 |
| | 10,585 |
| | 67,410 |
| | 15,232 |
| | 7,451 |
| | 5,416 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 78,899 |
| | 254,252 |
| | 94 |
| | 537 |
| | | | 4,430 |
|
| Transfers for contract benefits and terminations | | (28,772) |
| | (8,988) |
| | (3,054) |
| | (2,076) |
| | (3,668) |
| | (4,826) |
|
| Net transfers | | 533,595 |
| | 9,906 |
| | (16,297) |
| | 203,059 |
| | (1,881) |
| | (19,084) |
|
| Contract maintenance charges | | (308) |
| | (61) |
| | (99) |
| | (63) |
| | (29) |
| | (40) |
|
| Other, net | | (233) |
| | 0 |
| | 0 |
| | 0 |
| | (102) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 583,181 |
| | 255,109 |
| | (19,356) |
| | 201,457 |
| | (5,680) |
| | (19,520) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 675,766 |
| | 265,694 |
| | 48,054 |
| | 216,689 |
| | 1,771 |
| | (14,104) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 307,037 |
| | 41,343 |
| | 222,984 |
| | 6,295 |
| | 30,000 |
| | 44,104 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 982,803 |
| | $ | 307,037 |
| | $ | 271,038 |
| | $ | 222,984 |
| | $ | 31,771 |
| | $ | 30,000 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 38,982 |
| | 20,825 |
| | 2,949 |
| | 31,203 |
| | 843 |
| | 5,458 |
|
| Units redeemed | | (4,853) |
| | (5,522) |
| | (4,213) |
| | (18,235) |
| | (1,339) |
| | (7,451) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 34,129 |
| | 15,303 |
| | (1,264) |
| | 12,968 |
| | (496) |
| | (1,993) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DAVIS VALUE PORTFOLIO | | DREYFUS IP MIDCAP STOCK PORTFOLIO | | DREYFUS IP TECHNOLOGY GROWTH PORTFOLIO |
| | | 2013 | | 2012 | | 2012 | | 2013 | | 2012 |
| | | | | | | (1) | | | | |
| | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | |
| | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | |
| Net investment income (loss) | | $ | 2,340 |
| | $ | 3,864 |
| | $ | 282 |
| | $ | | $ | (108 | ) |
| Net realized gain on investments | | 22,139 |
| | 20,414 |
| | 26,720 |
| | 5,215 |
| | 9,130 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | |
| on investments | | 54,519 |
| | 5,220 |
| | (23,625) |
| | 3,549 |
| | 1,087 |
|
| | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | |
| from operations | | 78,998 |
| | 29,498 |
| | 3,377 |
| | 8,764 |
| | 10,109 |
|
| | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 10,174 |
| | 1 |
| | 0 |
| | 1 |
|
| Transfers for contract benefits and terminations | | (57,721) |
| | (7,696) |
| | (1,031) |
| | (5,076) |
| | (7,491) |
|
| Net transfers | | 969 |
| | 69,527 |
| | (75,602) |
| | (16,993) |
| | (49,676) |
|
| Contract maintenance charges | | (173) |
| | (182) |
| | (34) |
| | (34) |
| | (59) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | (126) |
| | |
| | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | |
| contract transactions | | (56,925) |
| | 71,823 |
| | (76,666) |
| | (22,229) |
| | (57,225) |
|
| | | | | | | | | | | |
| Total increase (decrease) in net assets | | 22,073 |
| | 101,321 |
| | (73,289) |
| | (13,465) |
| | (47,116) |
|
| | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | |
| Beginning of period | | 272,128 |
| | 170,807 |
| | 73,289 |
| | 42,075 |
| | 89,191 |
|
| | | | | | | | | | | |
| End of period | | $ | 294,201 |
| | $ | 272,128 |
| | $ | 0 |
| | $ | 28,610 |
| | $ | 42,075 |
|
| | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | |
| Units issued | | 3,272 |
| | 31,238 |
| | 186 |
| | 747 |
| | 3,481 |
|
| Units redeemed | | (7,308) |
| | (25,432) |
| | (6,183) |
| | (1,903) |
| | (7,014) |
|
| | | | | | | | | | | |
| Net increase (decrease) | | (4,036) |
| | 5,806 |
| | (5,997) |
| | (1,156) |
| | (3,533) |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
(1) | For the period January 1, 2012 to May 23, 2012. | | | | | | | | | | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DREYFUS STOCK INDEX FUND | | DREYFUS VIF APPRECIATION PORTFOLIO | | DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 286,097 |
| | $ | 75,130 |
| | $ | 13,603 |
| | $ | 21,620 |
| | $ | 836 |
| | $ | 217 |
|
| Net realized gain on investments | | 730,733 |
| | 775,698 |
| | 4,913 |
| | 3,083 |
| | 3,066 |
| | 20,247 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 2,923,888 |
| | (183,131) |
| | 114,760 |
| | 34,779 |
| | 9,273 |
| | 1,015 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 3,940,718 |
| | 667,697 |
| | 133,276 |
| | 59,482 |
| | 13,175 |
| | 21,479 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 386,795 |
| | 204,464 |
| | | | 1 |
| | 1,462 |
| | 1,367 |
|
| Transfers for contract benefits and terminations | | (518,737) |
| | (728,803) |
| | (8,152) |
| | (6,767) |
| | (14,931) |
| | (3,110) |
|
| Net transfers | | 10,188,966 |
| | (563,962) |
| | (7,431) |
| | 510 |
| | 87,371 |
| | (68,640) |
|
| Contract maintenance charges | | (8,146) |
| | (4,113) |
| | (444) |
| | (452) |
| | (97) |
| | (92) |
|
| Other, net | | (447) |
| | 155 |
| | | | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 10,048,431 |
| | (1,092,259) |
| | (16,027) |
| | (6,708) |
| | 73,805 |
| | (70,475) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 13,989,149 |
| | (424,562) |
| | 117,249 |
| | 52,774 |
| | 86,980 |
| | (48,996) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 3,870,328 |
| | 4,294,890 |
| | 638,374 |
| | 585,600 |
| | 39,050 |
| | 88,046 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 17,859,477 |
| | $ | 3,870,328 |
| | $ | 755,623 |
| | $ | 638,374 |
| | $ | 126,030 |
| | $ | 39,050 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 1,000,139 |
| | 487,877 |
| | 25 |
| | 10,040 |
| | 4,860 |
| | 5,973 |
|
| Units redeemed | | (196,983) |
| | (535,664) |
| | (251) |
| | (41,936) |
| | (880) |
| | (11,516) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 803,156 |
| | (47,787) |
| | (226) |
| | (31,896) |
| | 3,980 |
| | (5,543) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DWS GLOBAL SMALL CAP GROWTH VIP | | DWS HIGH INCOME VIP | | DWS LARGE CAP VALUE VIP |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 388 |
| | $ | 347 |
| | $ | 4,108 |
| | $ | (2 | ) | | $ | 2,187 |
| | $ | 2,823 |
|
| Net realized gain (loss) on investments | | 11,577 |
| | (1,321) |
| | 15 |
| | 24 |
| | 23,305 |
| | 4,329 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 8,502 |
| | 15,798 |
| | 514 |
| | 1,558 |
| | 9,609 |
| | 13,527 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 20,467 |
| | 14,824 |
| | 4,637 |
| | 1,580 |
| | 35,101 |
| | 20,679 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | (2) |
| | 20,413 |
| | 29,850 |
| | 0 |
| | 16,485 |
|
| Transfers for contract benefits and terminations | | (5,278) |
| | (8,513) |
| | (2,025) |
| | (1,901) |
| | (17,944) |
| | (16,726) |
|
| Net transfers | | (5,956) |
| | (151,034) |
| | | | 22,592 |
| | (42,986) |
| | (294,899) |
|
| Contract maintenance charges | | (59) |
| | (79) |
| | (87) |
| | (12) |
| | (124) |
| | (149) |
|
| Other, net | | (80) |
| | 0 |
| | 0 |
| | 0 |
| | (539) |
| | |
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (11,373) |
| | (159,628) |
| | 18,301 |
| | 50,529 |
| | (61,593) |
| | (295,289) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 9,094 |
| | (144,804) |
| | 22,938 |
| | 52,109 |
| | (26,492) |
| | (274,610) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 71,015 |
| | 215,819 |
| | 56,916 |
| | 4,807 |
| | 172,332 |
| | 446,942 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 80,109 |
| | $ | 71,015 |
| | $ | 79,854 |
| | $ | 56,916 |
| | $ | 145,840 |
| | $ | 172,332 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 2,084 |
| | 6,316 |
| | 1,329 |
| | 4,075 |
| | 10,412 |
| | 44,385 |
|
| Units redeemed | | (2,861) |
| | (18,114) |
| | (148) |
| | (540) |
| | (16,400) |
| | (74,551) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (777) |
| | (11,798) |
| | 1,181 |
| | 3,535 |
| | (5,988) |
| | (30,166) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | DWS SMALL CAP INDEX VIP | | DWS SMALL MID CAP VALUE VIP | | FEDERATED HIGH INCOME BOND FUND II |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 32,140 |
| | $ | 472 |
| | $ | 16,556 |
| | $ | 12,627 |
| | $ | 3,199 |
| | $ | 3,142 |
|
| Net realized gain on investments | | 111,108 |
| | 14,761 |
| | 231,299 |
| | 74,017 |
| | 7,016 |
| | 237 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 462,192 |
| | 18,161 |
| | 235,793 |
| | 72,643 |
| | (7,971) |
| | 2,501 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 605,440 |
| | 33,394 |
| | 483,648 |
| | 159,287 |
| | 2,244 |
| | 5,880 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 22,512 |
| | 31,835 |
| | 136,547 |
| | 36,587 |
| | | | 0 |
|
| Transfers for contract benefits and terminations | | (72,500) |
| | (10,649) |
| | (32,747) |
| | (35,681) |
| | (548) |
| | (581) |
|
| Net transfers | | 1,679,170 |
| | (6,824) |
| | (233,475) |
| | 124,639 |
| | (20,992) |
| | 0 |
|
| Contract maintenance charges | | (1,157) |
| | (151) |
| | (606) |
| | (587) |
| | (61) |
| | (77) |
|
| Other, net | | (207) |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 1,627,818 |
| | 14,211 |
| | (130,281) |
| | 124,958 |
| | (21,601) |
| | (658) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 2,233,258 |
| | 47,605 |
| | 353,367 |
| | 284,245 |
| | (19,357) |
| | 5,222 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 248,140 |
| | 200,535 |
| | 1,463,165 |
| | 1,178,920 |
| | 46,082 |
| | 40,860 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 2,481,398 |
| | $ | 248,140 |
| | $ | 1,816,532 |
| | $ | 1,463,165 |
| | $ | 26,725 |
| | $ | 46,082 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 132,997 |
| | 33,941 |
| | 61,894 |
| | 127,573 |
| | 3 |
| | 1,992 |
|
| Units redeemed | | (12,205) |
| | (36,284) |
| | (70,091) |
| | (136,750) |
| | (911) |
| | (2,596) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 120,792 |
| | (2,343) |
| | (8,197) |
| | (9,177) |
| | (908) |
| | (604) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | FEDERATED KAUFMANN FUND II | | FIDELITY VIP CONTRAFUND PORTFOLIO | | FIDELITY VIP GROWTH PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | | $ | (65 | ) | | $ | 22,845 |
| | $ | 20,600 |
| | $ | 406 |
| | $ | 1,029 |
|
| Net realized gain on investments | | 6,764 |
| | 3,355 |
| | 271,758 |
| | 235,753 |
| | 92,570 |
| | 173,560 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 5,401 |
| | 2,368 |
| | 464,267 |
| | (1,490) |
| | 197,523 |
| | (29,902) |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 12,165 |
| | 5,658 |
| | 758,870 |
| | 254,863 |
| | 290,499 |
| | 144,687 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 1 |
| | 70,538 |
| | 1,226,127 |
| | 0 |
| | 0 |
|
| Transfers for contract benefits and terminations | | (1,285) |
| | (1,213) |
| | (361,805) |
| | (85,996) |
| | (14,818) |
| | (13,209) |
|
| Net transfers | | (14,913) |
| | (2,764) |
| | (834,789) |
| | 265,039 |
| | (138,083) |
| | (315,408) |
|
| Contract maintenance charges | | (61) |
| | (67) |
| | (1,884) |
| | (1,334) |
| | (803) |
| | (845) |
|
| Other, net | | 0 |
| | 0 |
| | (1,056) |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (16,259) |
| | (4,043) |
| | (1,128,996) |
| | 1,403,836 |
| | (153,704) |
| | (329,462) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (4,094) |
| | 1,615 |
| | (370,126) |
| | 1,658,699 |
| | 136,795 |
| | (184,775) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 33,040 |
| | 31,425 |
| | 3,391,773 |
| | 1,733,074 |
| | 859,398 |
| | 1,044,173 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 28,946 |
| | $ | 33,040 |
| | $ | 3,021,647 |
| | $ | 3,391,773 |
| | $ | 996,193 |
| | $ | 859,398 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 487 |
| | 5,687 |
| | 18,889 |
| | 293,303 |
| | 36,211 |
| | 116,177 |
|
| Units redeemed | | (1,537) |
| | (6,025) |
| | (78,289) |
| | (220,654) |
| | (48,134) |
| | (123,958) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (1,050) |
| | (338) |
| | (59,400) |
| | 72,649 |
| | (11,923) |
| | (7,781) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO | | FIDELITY VIP MID CAP PORTFOLIO | | GREAT-WEST AGGRESSIVE PROFILE I FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 12,919 |
| | $ | 11,978 |
| | $ | 2,192 |
| | $ | 1,226 |
| | $ | 7,857 |
| | $ | 2,827 |
|
| Net realized gain (loss) on investments | | (4,695) |
| | 21,631 |
| | 116,733 |
| | 819,119 |
| | 50,839 |
| | 82,086 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (28,648) |
| | (4,775) |
| | 155,903 |
| | (474,880) |
| | 50,541 |
| | 41,930 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | | | |
| from operations | | (20,424) |
| | 28,834 |
| | 274,828 |
| | 345,465 |
| | 109,237 |
| | 126,843 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 3 |
| | 24,979 |
| | 95,108 |
| | 32,279 |
| | 35,185 |
|
| Transfers for contract benefits and terminations | | (14,656) |
| | (12,642) |
| | (70,707) |
| | (350,436) |
| | (38,027) |
| | (16,576) |
|
| Net transfers | | 10,508 |
| | (16,391) |
| | (1,011,603) |
| | (1,514,519) |
| | (51,986) |
| | (632,121) |
|
| Contract maintenance charges | | (347) |
| | (322) |
| | (614) |
| | (1,722) |
| | (337) |
| | (706) |
|
| Other, net | | 0 |
| | 236 |
| | (399) |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Decrease in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (4,495) |
| | (29,116) |
| | (1,058,344) |
| | (1,771,569) |
| | (58,071) |
| | (614,218) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (24,919) |
| | (282) |
| | (783,516) |
| | (1,426,104) |
| | 51,166 |
| | (487,375) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 612,727 |
| | 613,009 |
| | 1,678,067 |
| | 3,104,171 |
| | 401,763 |
| | 889,138 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 587,808 |
| | $ | 612,727 |
| | $ | 894,551 |
| | $ | 1,678,067 |
| | $ | 452,929 |
| | $ | 401,763 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 16,451 |
| | 61,316 |
| | 4,377 |
| | 89,659 |
| | 7,903 |
| | 114,754 |
|
| Units redeemed | | (17,092) |
| | (73,929) |
| | (39,755) |
| | (228,881) |
| | (11,199) |
| | (158,294) |
|
| | | | | | | | | | | | | |
| Net decrease | | (641) |
| | (12,613) |
| | (35,378) |
| | (139,222) |
| | (3,296) |
| | (43,540) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST ARIEL MIDCAP VALUE FUND | | GREAT-WEST ARIEL SMALL-CAP VALUE PORTFOLIO | | GREAT-WEST BOND INDEX FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 |
| | | | | | | (1) | | | | (2) |
| | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | |
| | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | |
| Net investment income | | $ | 16,102 |
| | $ | 2,739 |
| | $ | 37 |
| | $ | 3,020 |
| | $ | 33,358 |
|
| Net realized gain on investments | | 73,886 |
| | 55,806 |
| | 343,126 |
| | 7,936 |
| | 5,923 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | |
| on investments | | 80,580 |
| | (5,065) |
| | (124,991) |
| | 133,205 |
| | (83,272) |
|
| | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | |
| from operations | | 170,568 |
| | 53,480 |
| | 218,172 |
| | 144,161 |
| | (43,991) |
|
| | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | |
| Purchase payments received | | 62 |
| | 2,749 |
| | | | 1,100 |
| | 417 |
|
| Transfers for contract benefits and terminations | | (37,324) |
| | (4,671) |
| | (23,244) |
| | (10,565) |
| | (55,775) |
|
| Net transfers | | 892,471 |
| | (23,745) |
| | (1,048,692) |
| | (9,068) |
| | 1,857,013 |
|
| Contract maintenance charges | | (506) |
| | (470) |
| | (899) |
| | (928) |
| | (892) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | |
| contract transactions | | 854,703 |
| | (26,137) |
| | (1,072,835) |
| | (19,461) |
| | 1,800,763 |
|
| | | | | | | | | | | |
| Total increase (decrease) in net assets | | 1,025,271 |
| | 27,343 |
| | (854,663) |
| | 124,700 |
| | 1,756,772 |
|
| | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | |
| Beginning of period | | 277,124 |
| | 249,781 |
| | 854,663 |
| | 729,963 |
| | 0 |
|
| | | | | | | | | | | |
| End of period | | $ | 1,302,395 |
| | $ | 277,124 |
| | $ | 0 |
| | $ | 854,663 |
| | $ | 1,756,772 |
|
| | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | |
| Units issued | | 25,659 |
| | 17,347 |
| | 790 |
| | 50,758 |
| | 141,882 |
|
| Units redeemed | | (3,169) |
| | (27,531) |
| | (47,942) |
| | (68,977) |
| | (4,865) |
|
| | | | | | | | | | | |
| Net increase (decrease) | | 22,490 |
| | (10,184) |
| | (47,152) |
| | (18,219) |
| | 137,017 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
(1) | For the period January 1, 2013 to December 18, 2013. | | | | | | | | | | |
(2) | For the period January 16, 2013 to December 31, 2013. | | | | | | | | | | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST CONSERVATIVE PROFILE I FUND | | GREAT-WEST INVESCO ADR PORTFOLIO | | GREAT-WEST LIFETIME 2015 FUND II |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | (1) | | | | (2) | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 8,774 |
| | $ | 10,660 |
| | $ | 2,032 |
| | $ | 22,316 |
| | $ | | $ | 433 |
|
| Net realized gain (loss) on investments | | 21,449 |
| | (24,414) |
| | (1,752) |
| | (32,372) |
| | 66 |
| | 8,218 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (246) |
| | 56,470 |
| | 6,887 |
| | 60,501 |
| | (15) |
| | (1,370) |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 29,977 |
| | 42,716 |
| | 7,167 |
| | 50,445 |
| | 51 |
| | 7,281 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 39,242 |
| | 41,533 |
| | 2,949 |
| | 18,996 |
| | 103 |
| | 442 |
|
| Transfers for contract benefits and terminations | | (92,530) |
| | (13,800) |
| | (1,889) |
| | (7,988) |
| | (22) |
| | (810) |
|
| Net transfers | | 28,741 |
| | (103,847) |
| | (219,874) |
| | (354,352) |
| | (1,609) |
| | (78,342) |
|
| Contract maintenance charges | | (321) |
| | (530) |
| | (59) |
| | (270) |
| | 0 |
| | (52) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Decrease in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (24,868) |
| | (76,644) |
| | (218,873) |
| | (343,614) |
| | (1,528) |
| | (78,762) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 5,109 |
| | (33,928) |
| | (211,706) |
| | (293,169) |
| | (1,477) |
| | (71,481) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 441,050 |
| | 474,978 |
| | 211,706 |
| | 504,875 |
| | 1,477 |
| | 72,958 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 446,159 |
| | $ | 441,050 |
| | $ | 0 |
| | $ | 211,706 |
| | $ | 0 |
| | $ | 1,477 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 8,425 |
| | 54,069 |
| | 1,334 |
| | 27,394 |
| | 8 |
| | 7,093 |
|
| Units redeemed | | (9,806) |
| | (62,031) |
| | (18,693) |
| | (58,278) |
| | (122) |
| | (13,249) |
|
| | | | | | | | | | | | | |
| Net decrease | | (1,381) |
| | (7,962) |
| | (17,359) |
| | (30,884) |
| | (114) |
| | (6,156) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) | For the period January 1, 2013 to April 30, 2013. | | | | | | | | | | | | |
(2) | For the period January 1, 2013 to March 11, 2013. | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST LIFETIME 2025 FUND II | | GREAT-WEST LIFETIME 2045 FUND II | | GREAT-WEST LOOMIS SAYLES BOND FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 2,687 |
| | $ | 1,479 |
| | $ | 71 |
| | $ | 30 |
| | $ | 83,380 |
| | $ | 173,688 |
|
| Net realized gain (loss) on investments | | 3,338 |
| | 5,773 |
| | 99 |
| | (36) |
| | 170,934 |
| | 306,373 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 6,655 |
| | 4,380 |
| | 398 |
| | 363 |
| | (49,484) |
| | (42,566) |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 12,680 |
| | 11,632 |
| | 568 |
| | 357 |
| | 204,830 |
| | 437,495 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 22,449 |
| | 18,567 |
| | 661 |
| | 729 |
| | 57,657 |
| | 114,828 |
|
| Transfers for contract benefits and terminations | | (4,645) |
| | (3,854) |
| | (138) |
| | (129) |
| | (100,192) |
| | (54,500) |
|
| Net transfers | | 5,236 |
| | (659) |
| | (336) |
| | (939) |
| | (1,735,304) |
| | 929,704 |
|
| Contract maintenance charges | | (81) |
| | (126) |
| | (2) |
| | (3) |
| | (2,548) |
| | (3,326) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 22,959 |
| | 13,928 |
| | 185 |
| | (342) |
| | (1,780,387) |
| | 986,706 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 35,639 |
| | 25,560 |
| | 753 |
| | 15 |
| | (1,575,557) |
| | 1,424,201 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 74,611 |
| | 49,051 |
| | 2,392 |
| | 2,377 |
| | 3,995,085 |
| | 2,570,884 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 110,250 |
| | $ | 74,611 |
| | $ | 3,145 |
| | $ | 2,392 |
| | $ | 2,419,528 |
| | $ | 3,995,085 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 2,190 |
| | 19,906 |
| | 50 |
| | 255 |
| | 12,364 |
| | 267,659 |
|
| Units redeemed | | (549) |
| | (18,493) |
| | (37) |
| | (284) |
| | (67,696) |
| | (278,582) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 1,641 |
| | 1,413 |
| | 13 |
| | (29) |
| | (55,332) |
| | (10,923) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST LOOMIS SAYLES SMALL-CAP VALUE FUND | | GREAT-WEST MFS INTERNATIONAL VALUE FUND | | GREAT-WEST MODERATE PROFILE I FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 2,973 |
| | $ | 4,702 |
| | $ | 73,530 |
| | $ | 5,686 |
| | $ | 8,705 |
| | $ | 5,669 |
|
| Net realized gain (loss) on investments | | 246,774 |
| | 45,680 |
| | 72,922 |
| | 7,545 |
| | 10,849 |
| | (12,831) |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (98,256) |
| | 72,566 |
| | 504,467 |
| | 34,884 |
| | 17,567 |
| | 61,270 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 151,491 |
| | 122,948 |
| | 650,919 |
| | 48,115 |
| | 37,121 |
| | 54,108 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 59,946 |
| | 2,137 |
| | 263,306 |
| | (1) |
| | 6,932 |
| | 15,894 |
|
| Transfers for contract benefits and terminations | | (14,404) |
| | (28,334) |
| | (114,386) |
| | (4,536) |
| | (23,971) |
| | (10,652) |
|
| Net transfers | | (470,012) |
| | (113,050) |
| | 1,936,772 |
| | 564,616 |
| | 1,835 |
| | (508,510) |
|
| Contract maintenance charges | | (178) |
| | (333) |
| | (1,163) |
| | (130) |
| | (182) |
| | (468) |
|
| Other, net | | (118) |
| | 0 |
| | (802) |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (424,766) |
| | (139,580) |
| | 2,083,727 |
| | 559,949 |
| | (15,386) |
| | (503,736) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (273,275) |
| | (16,632) |
| | 2,734,646 |
| | 608,064 |
| | 21,735 |
| | (449,628) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 810,039 |
| | 826,671 |
| | 765,081 |
| | 157,017 |
| | 213,285 |
| | 662,913 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 536,764 |
| | $ | 810,039 |
| | $ | 3,499,727 |
| | $ | 765,081 |
| | $ | 235,020 |
| | $ | 213,285 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 20,092 |
| | 37,837 |
| | 308,462 |
| | 148,518 |
| | 5,464 |
| | 86,840 |
|
| Units redeemed | | (38,636) |
| | (62,889) |
| | (49,831) |
| | (72,517) |
| | (6,085) |
| | (121,002) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (18,544) |
| | (25,052) |
| | 258,631 |
| | 76,001 |
| | (621) |
| | (34,162) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND | | GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND | | GREAT-WEST MONEY MARKET FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 4,139 |
| | $ | 3,053 |
| | $ | 6,794 |
| | $ | 8,282 |
| | $ | | $ | (23,042 | ) |
| Net realized gain (loss) on investments | | 31,617 |
| | (8,035) |
| | 19,183 |
| | (26,493) |
| | 0 |
| | 0 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 7,121 |
| | 68,369 |
| | 3,242 |
| | 84,568 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | | | |
| from operations | | 42,877 |
| | 63,387 |
| | 29,219 |
| | 66,357 |
| | | | (23,042) |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 18,451 |
| | 20,318 |
| | 30,828 |
| | 20,312 |
| | 1,150,817 |
| | 2,036,837 |
|
| Transfers for contract benefits and terminations | | (75,860) |
| | (11,382) |
| | (33,238) |
| | (12,926) |
| | (586,526) |
| | (396,731) |
|
| Net transfers | | 66,306 |
| | (557,932) |
| | 43,425 |
| | (643,238) |
| | (822,590) |
| | (1,168,963) |
|
| Contract maintenance charges | | (211) |
| | (565) |
| | (205) |
| | (602) |
| | (6,998) |
| | (10,566) |
|
| Other, net | | (29) |
| | 0 |
| | (26) |
| | 0 |
| | 0 |
| | 468 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 8,657 |
| | (549,561) |
| | 40,784 |
| | (636,454) |
| | (265,297) |
| | 461,045 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 51,534 |
| | (486,174) |
| | 70,003 |
| | (570,097) |
| | (265,297) |
| | 438,003 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 185,810 |
| | 671,984 |
| | 224,617 |
| | 794,714 |
| | 9,724,543 |
| | 9,286,540 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 237,344 |
| | $ | 185,810 |
| | $ | 294,620 |
| | $ | 224,617 |
| | $ | 9,459,246 |
| | $ | 9,724,543 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 8,035 |
| | 42,824 |
| | 7,138 |
| | 54,623 |
| | 549,460 |
| | 1,297,616 |
|
| Units redeemed | | (7,359) |
| | (81,260) |
| | (4,989) |
| | (99,102) |
| | (569,848) |
| | (1,343,008) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 676 |
| | (38,436) |
| | 2,149 |
| | (44,479) |
| | (20,388) |
| | (45,392) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND | | GREAT-WEST SHORT DURATION BOND FUND | | GREAT-WEST SMALL-CAP GROWTH FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 1,638 |
| | $ | 62 |
| | $ | 101,030 |
| | $ | 132,781 |
| | $ | 4,983 |
| | $ | (154 | ) |
| Net realized gain on investments | | 28,062 |
| | 2,238 |
| | 136,861 |
| | 63,966 |
| | 11,194 |
| | 14,326 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (5,354) |
| | 19,291 |
| | (162,009) |
| | 77,783 |
| | 2,628 |
| | (4,698) |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 24,346 |
| | 21,591 |
| | 75,882 |
| | 274,530 |
| | 18,805 |
| | 9,474 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 21,621 |
| | 22,433 |
| | 172,973 |
| | 215,952 |
| | 0 |
| | 0 |
|
| Transfers for contract benefits and terminations | | (4,541) |
| | (5,135) |
| | (145,557) |
| | (151,783) |
| | (546) |
| | (761) |
|
| Net transfers | | (11,356) |
| | (23,442) |
| | (1,200,110) |
| | 28,355 |
| | 5,465 |
| | (34,228) |
|
| Contract maintenance charges | | (79) |
| | (138) |
| | (2,047) |
| | (1,851) |
| | (72) |
| | (138) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 5,645 |
| | (6,282) |
| | (1,174,741) |
| | 90,673 |
| | 4,847 |
| | (35,127) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 29,991 |
| | 15,309 |
| | (1,098,859) |
| | 365,203 |
| | 23,652 |
| | (25,653) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 83,190 |
| | 67,881 |
| | 6,590,882 |
| | 6,225,679 |
| | 36,509 |
| | 62,162 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 113,181 |
| | $ | 83,190 |
| | $ | 5,492,023 |
| | $ | 6,590,882 |
| | $ | 60,161 |
| | $ | 36,509 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 1,426 |
| | 15,569 |
| | 27,608 |
| | 595,455 |
| | 1,006 |
| | 16,209 |
|
| Units redeemed | | (1,131) |
| | (15,514) |
| | (117,050) |
| | (596,218) |
| | (418) |
| | (17,371) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 295 |
| | 55 |
| | (89,442) |
| | (763) |
| | 588 |
| | (1,162) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST T. ROWE PRICE EQUITY/INCOME FUND | | GREAT-WEST T. ROWE PRICE MIDCAP GROWTH FUND | | GREAT-WEST TEMPLETON GLOBAL BOND FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 42,252 |
| | $ | 15,162 |
| | $ | 1,532 |
| | $ | 17,635 |
| | $ | 47,273 |
| | $ | 17,613 |
|
| Net realized gain on investments | | 192,287 |
| | 56,114 |
| | 171,161 |
| | 144,530 |
| | 22,045 |
| | 7,830 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 241,746 |
| | 48,893 |
| | 702,881 |
| | 223,993 |
| | (54,855) |
| | 14,791 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 476,285 |
| | 120,169 |
| | 875,574 |
| | 386,158 |
| | 14,463 |
| | 40,234 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 158,580 |
| | 28,331 |
| | 69,476 |
| | 437,630 |
| | 252,614 |
| | 2,277,061 |
|
| Transfers for contract benefits and terminations | | (40,635) |
| | (14,466) |
| | (62,640) |
| | (102,018) |
| | (23,914) |
| | (50,770) |
|
| Net transfers | | 937,024 |
| | (15,573) |
| | (1,661,347) |
| | 1,039,018 |
| | 452,685 |
| | 202,427 |
|
| Contract maintenance charges | | (1,005) |
| | (595) |
| | (1,345) |
| | (1,977) |
| | (1,203) |
| | (319) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | (127) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 1,053,964 |
| | (2,303) |
| | (1,655,856) |
| | 1,372,653 |
| | 680,055 |
| | 2,428,399 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 1,530,249 |
| | 117,866 |
| | (780,282) |
| | 1,758,811 |
| | 694,518 |
| | 2,468,633 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 827,603 |
| | 709,737 |
| | 4,028,474 |
| | 2,269,663 |
| | 2,641,792 |
| | 173,159 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 2,357,852 |
| | $ | 827,603 |
| | $ | 3,248,192 |
| | $ | 4,028,474 |
| | $ | 3,336,310 |
| | $ | 2,641,792 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 77,242 |
| | 95,383 |
| | 47,854 |
| | 323,319 |
| | 58,166 |
| | 204,512 |
|
| Units redeemed | | (17,385) |
| | (106,198) |
| | (129,887) |
| | (269,004) |
| | (10,083) |
| | (30,752) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 59,857 |
| | (10,815) |
| | (82,033) |
| | 54,315 |
| | 48,083 |
| | 173,760 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | GREAT-WEST U.S. GOVERNMENT MORTGAGE SECURITIES FUND | | INVESCO V.I. CORE EQUITY FUND | | INVESCO V.I. DIVERSIFIED DIVIDEND FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 87,730 |
| | $ | 107,245 |
| | $ | 11,502 |
| | $ | 6,043 |
| | $ | 284 |
| | $ | 49 |
|
| Net realized gain (loss) on investments | | (55) |
| | 83,689 |
| | 31,205 |
| | 9,282 |
| | 829 |
| | 1,251 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (172,644) |
| | (82,193) |
| | 165,721 |
| | 77,063 |
| | 1,072 |
| | 48 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | | | |
| from operations | | (84,969) |
| | 108,741 |
| | 208,428 |
| | 92,388 |
| | 2,185 |
| | 1,348 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 42,399 |
| | 5,638 |
| | | | 2 |
| | 0 |
| | 1 |
|
| Transfers for contract benefits and terminations | | (47,264) |
| | (37,299) |
| | (13,516) |
| | (11,102) |
| | (279) |
| | (370) |
|
| Net transfers | | (67,846) |
| | 520,602 |
| | (87,951) |
| | (4,060) |
| | 8,460 |
| | (4,341) |
|
| Contract maintenance charges | | (1,313) |
| | (1,163) |
| | (585) |
| | (615) |
| | (15) |
| | (21) |
|
| Other, net | | 0 |
| | 195 |
| | | | 136 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (74,024) |
| | 487,973 |
| | (102,052) |
| | (15,639) |
| | 8,166 |
| | (4,731) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (158,993) |
| | 596,714 |
| | 106,376 |
| | 76,749 |
| | 10,351 |
| | (3,383) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 4,030,492 |
| | 3,433,778 |
| | 730,314 |
| | 653,565 |
| | 3,056 |
| | 6,439 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 3,871,499 |
| | $ | 4,030,492 |
| | $ | 836,690 |
| | $ | 730,314 |
| | $ | 13,407 |
| | $ | 3,056 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 20,720 |
| | 273,046 |
| | 960 |
| | 59,751 |
| | 1,934 |
| | 10,903 |
|
| Units redeemed | | (24,587) |
| | (320,008) |
| | (6,747) |
| | (60,553) |
| | (955) |
| | (11,698) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (3,867) |
| | (46,962) |
| | (5,787) |
| | (802) |
| | 979 |
| | (795) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | INVESTMENT DIVISIONS |
| | | INVESCO V.I. GLOBAL HEALTH CARE FUND | | INVESCO V.I. GLOBAL REAL ESTATE FUND | | INVESCO V.I. INTERNATIONAL GROWTH FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 774 |
| | $ | (239 | ) | | $ | 41,607 |
| | $ | 318 |
| | $ | 30,447 |
| | $ | 7,168 |
|
| Net realized gain (loss) on investments | | 30,402 |
| | 31,728 |
| | 13,636 |
| | (927) |
| | 26,746 |
| | 89,286 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 5,269 |
| | (4,773) |
| | (44,218) |
| | 19,250 |
| | 348,798 |
| | 46,083 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 36,445 |
| | 26,716 |
| | 11,025 |
| | 18,641 |
| | 405,991 |
| | 142,537 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 1,101 |
| | 88,236 |
| | 381,551 |
| | 202,590 |
| | 37,641 |
|
| Transfers for contract benefits and terminations | | (17,497) |
| | (8,817) |
| | (17,866) |
| | (9,943) |
| | (58,129) |
| | (185,729) |
|
| Net transfers | | (80,173) |
| | (43,668) |
| | 586,851 |
| | 29,701 |
| | 1,455,823 |
| | 269,429 |
|
| Contract maintenance charges | | (163) |
| | (182) |
| | (395) |
| | (87) |
| | (988) |
| | (809) |
|
| Other, net | | (44) |
| | 0 |
| | (140) |
| | 0 |
| | (757) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (97,877) |
| | (51,566) |
| | 656,686 |
| | 401,222 |
| | 1,598,539 |
| | 120,532 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (61,432) |
| | (24,850) |
| | 667,711 |
| | 419,863 |
| | 2,004,530 |
| | 263,069 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 135,558 |
| | 160,408 |
| | 477,951 |
| | 58,088 |
| | 989,206 |
| | 726,137 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 74,126 |
| | $ | 135,558 |
| | $ | 1,145,662 |
| | $ | 477,951 |
| | $ | 2,993,736 |
| | $ | 989,206 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 1,331 |
| | 12,532 |
| | 28,082 |
| | 22,172 |
| | 136,292 |
| | 168,850 |
|
| Units redeemed | | (6,169) |
| | (17,191) |
| | (6,411) |
| | (14,318) |
| | (14,723) |
| | (158,015) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (4,838) |
| | (4,659) |
| | 21,671 |
| | 7,854 |
| | 121,569 |
| | 10,835 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | INVESCO V.I. MID CAP CORE EQUITY FUND | | INVESCO V.I. TECHNOLOGY FUND | | JANUS ASPEN BALANCED PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 1,882 |
| | $ | (257 | ) | | $ | | $ | (136 | ) | | $ | 20,298 |
| | $ | 15,843 |
|
| Net realized gain on investments | | 31,224 |
| | 9,028 |
| | 8,885 |
| | 10,130 |
| | 50,580 |
| | 22,262 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 26,670 |
| | 12,179 |
| | 7,397 |
| | (2,847) |
| | 90,192 |
| | 21,998 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 59,776 |
| | 20,950 |
| | 16,282 |
| | 7,147 |
| | 161,070 |
| | 60,103 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 24,184 |
| | 37,583 |
| | | | (1) |
| | 84,553 |
| | 128,732 |
|
| Transfers for contract benefits and terminations | | (4,361) |
| | (4,160) |
| | (2,550) |
| | (2,509) |
| | (34,634) |
| | (38,578) |
|
| Net transfers | | 2,328 |
| | 2,413 |
| | (24,414) |
| | 8,476 |
| | 47,761 |
| | 272,760 |
|
| Contract maintenance charges | | (164) |
| | (80) |
| | (123) |
| | (137) |
| | (1,082) |
| | (632) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | (402) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 21,987 |
| | 35,756 |
| | (27,087) |
| | 5,829 |
| | 96,196 |
| | 362,282 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 81,763 |
| | 56,706 |
| | (10,805) |
| | 12,976 |
| | 257,266 |
| | 422,385 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 240,483 |
| | 183,777 |
| | 76,519 |
| | 63,543 |
| | 772,863 |
| | 350,478 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 322,246 |
| | $ | 240,483 |
| | $ | 65,714 |
| | $ | 76,519 |
| | $ | 1,030,129 |
| | $ | 772,863 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 5,683 |
| | 23,564 |
| | 887 |
| | 11,638 |
| | 10,416 |
| | 62,633 |
|
| Units redeemed | | (5,042) |
| | (21,255) |
| | (2,819) |
| | (10,689) |
| | (5,947) |
| | (43,346) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 641 |
| | 2,309 |
| | (1,932) |
| | 949 |
| | 4,469 |
| | 19,287 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | JANUS ASPEN FLEXIBLE BOND PORTFOLIO | | JANUS ASPEN FORTY PORTFOLIO | | JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 204,879 |
| | $ | 212,919 |
| | $ | 4,993 |
| | $ | 10,166 |
| | $ | | $ | (178 | ) |
| Net realized gain on investments | | 257,122 |
| | 107,315 |
| | 132,935 |
| | 313,362 |
| | 4,358 |
| | 7,200 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (473,844) |
| | 132,302 |
| | 76,595 |
| | (10,001) |
| | 11,281 |
| | 4,722 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | | | |
| from operations | | (11,843) |
| | 452,536 |
| | 214,523 |
| | 313,527 |
| | 15,639 |
| | 11,744 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 389,876 |
| | 232,071 |
| | 13,278 |
| | 71,448 |
| | 0 |
| | 0 |
|
| Transfers for contract benefits and terminations | | (84,217) |
| | (78,865) |
| | (45,427) |
| | (60,530) |
| | (1,502) |
| | (10,669) |
|
| Net transfers | | (1,481,753) |
| | 12,242 |
| | (775,421) |
| | (691,124) |
| | (9,061) |
| | (19,624) |
|
| Contract maintenance charges | | (559) |
| | (997) |
| | (646) |
| | (1,648) |
| | (14) |
| | (65) |
|
| Other, net | | 0 |
| | 185 |
| | (523) |
| | 0 |
| | (9) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (1,176,653) |
| | 164,636 |
| | (808,739) |
| | (681,854) |
| | (10,586) |
| | (30,358) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (1,188,496) |
| | 617,172 |
| | (594,216) |
| | (368,327) |
| | 5,053 |
| | (18,614) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 6,177,961 |
| | 5,560,789 |
| | 1,408,352 |
| | 1,776,679 |
| | 53,928 |
| | 72,542 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 4,989,465 |
| | $ | 6,177,961 |
| | $ | 814,136 |
| | $ | 1,408,352 |
| | $ | 58,981 |
| | $ | 53,928 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 19,663 |
| | 440,925 |
| | 28,433 |
| | 141,799 |
| | 669 |
| | 5,071 |
|
| Units redeemed | | (69,194) |
| | (492,927) |
| | (66,069) |
| | (193,186) |
| | (1,321) |
| | (7,350) |
|
| | | | | | | | | | | | | |
| Net decrease | | (49,531) |
| | (52,002) |
| | (37,636) |
| | (51,387) |
| | (652) |
| | (2,279) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | JANUS ASPEN OVERSEAS PORTFOLIO | | JANUS ASPEN WORLDWIDE PORTFOLIO | | NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 10,398 |
| | $ | 13,440 |
| | $ | 3,549 |
| | $ | 1,342 |
| | $ | 752 |
| | $ | 1,651 |
|
| Net realized gain (loss) on investments | | (364,298) |
| | 140,519 |
| | 46,162 |
| | 21,043 |
| | 245,455 |
| | 23,577 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 471,699 |
| | 159,885 |
| | 29,272 |
| | 46,569 |
| | (156,674) |
| | 171,440 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 117,799 |
| | 313,844 |
| | 78,983 |
| | 68,954 |
| | 89,533 |
| | 196,668 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 3,046 |
| | 20,594 |
| | | | 0 |
| | 0 |
| | (1) |
|
| Transfers for contract benefits and terminations | | (37,094) |
| | (101,404) |
| | (7,160) |
| | (4,838) |
| | (2,954) |
| | (52,766) |
|
| Net transfers | | (2,522,333) |
| | (382,616) |
| | (11,316) |
| | (215,726) |
| | (1,704,421) |
| | (7,789) |
|
| Contract maintenance charges | | (362) |
| | (2,456) |
| | (310) |
| | (248) |
| | (182) |
| | (1,382) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Decrease in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (2,556,743) |
| | (465,882) |
| | (18,786) |
| | (220,812) |
| | (1,707,557) |
| | (61,938) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (2,438,944) |
| | (152,038) |
| | 60,197 |
| | (151,858) |
| | (1,618,024) |
| | 134,730 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 2,647,922 |
| | 2,799,960 |
| | 254,118 |
| | 405,976 |
| | 1,723,408 |
| | 1,588,678 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 208,978 |
| | $ | 2,647,922 |
| | $ | 314,315 |
| | $ | 254,118 |
| | $ | 105,384 |
| | $ | 1,723,408 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 6,079 |
| | 146,325 |
| | 45,315 |
| | 48,176 |
| | 3,469 |
| | 112,366 |
|
| Units redeemed | | (102,093) |
| | (303,561) |
| | (46,495) |
| | (55,082) |
| | (108,788) |
| | (131,061) |
|
| | | | | | | | | | | | | |
| Net decrease | | (96,014) |
| | (157,236) |
| | (1,180) |
| | (6,906) |
| | (105,319) |
| | (18,695) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO | | NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO | | NEUBERGER BERMAN AMT MID CAP PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 320 |
| | $ | 3,412 |
| | $ | 7,426 |
| | $ | 3,527 |
| | $ | | $ | (579 | ) |
| Net realized gain (loss) on investments | | 427,764 |
| | 12,902 |
| | (86,504) |
| | 218,813 |
| | 19,975 |
| | 31,174 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (355,168) |
| | 195,671 |
| | 287,527 |
| | (100,974) |
| | 58,303 |
| | 1,575 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 72,916 |
| | 211,985 |
| | 208,449 |
| | 121,366 |
| | 78,278 |
| | 32,170 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 3 |
| | 13,199 |
| | 387,980 |
| | 0 |
| | 0 |
|
| Transfers for contract benefits and terminations | | (6,913) |
| | (46,182) |
| | (4,633) |
| | (34,696) |
| | (3,781) |
| | (4,056) |
|
| Net transfers | | (1,519,947) |
| | 0 |
| | (755,492) |
| | 1,569 |
| | (54,323) |
| | (57,697) |
|
| Contract maintenance charges | | (108) |
| | (602) |
| | (289) |
| | (409) |
| | (441) |
| | (469) |
|
| Other, net | | 0 |
| | 146 |
| | (9) |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (1,526,968) |
| | (46,635) |
| | (747,224) |
| | 354,444 |
| | (58,545) |
| | (62,222) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (1,454,052) |
| | 165,350 |
| | (538,775) |
| | 475,810 |
| | 19,733 |
| | (30,052) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 1,483,231 |
| | 1,317,881 |
| | 1,236,537 |
| | 760,727 |
| | 262,994 |
| | 293,046 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 29,179 |
| | $ | 1,483,231 |
| | $ | 697,762 |
| | $ | 1,236,537 |
| | $ | 282,727 |
| | $ | 262,994 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 26 |
| | 97,150 |
| | 6,198 |
| | 95,435 |
| | 748 |
| | 25,284 |
|
| Units redeemed | | (95,200) |
| | (121,791) |
| | (60,251) |
| | (81,188) |
| | (4,655) |
| | (23,681) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (95,174) |
| | (24,641) |
| | (54,053) |
| | 14,247 |
| | (3,907) |
| | 1,603 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO | | NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO | | PIMCO VIT HIGH YIELD PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | | $ | (92 | ) | | $ | 109 |
| | $ | 5 |
| | $ | 25,889 |
| | $ | 15,408 |
|
| Net realized gain on investments | | 3,297 |
| | 2,670 |
| | 3,145 |
| | 2,427 |
| | 3,427 |
| | 5,273 |
|
| Change in net unrealized appreciation | | | | | | | | | | | | |
| on investments | | 11,981 |
| | 3,462 |
| | 3,298 |
| | 2,563 |
| | (3,318) |
| | 10,530 |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 15,278 |
| | 6,040 |
| | 6,552 |
| | 4,995 |
| | 25,998 |
| | 31,211 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 1,738 |
| | (83) |
| | | | 1,651 |
| | 12,578 |
| | 20,635 |
|
| Transfers for contract benefits and terminations | | (1,371) |
| | (1,078) |
| | (16,947) |
| | (812) |
| | (130,357) |
| | (11,301) |
|
| Net transfers | | (10,998) |
| | (12,477) |
| | (3,456) |
| | (3,600) |
| | 87,348 |
| | 208,676 |
|
| Contract maintenance charges | | (42) |
| | (62) |
| | (28) |
| | (45) |
| | (359) |
| | (265) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | (119) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (10,673) |
| | (13,700) |
| | (20,431) |
| | (2,806) |
| | (30,909) |
| | 217,745 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 4,605 |
| | (7,660) |
| | (13,879) |
| | 2,189 |
| | (4,911) |
| | 248,956 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 37,190 |
| | 44,850 |
| | 31,533 |
| | 29,344 |
| | 454,901 |
| | 205,945 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 41,795 |
| | $ | 37,190 |
| | $ | 17,654 |
| | $ | 31,533 |
| | $ | 449,990 |
| | $ | 454,901 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 552 |
| | 23,554 |
| | 80 |
| | 8,438 |
| | 8,995 |
| | 152,342 |
|
| Units redeemed | | (1,296) |
| | (25,019) |
| | (1,185) |
| | (8,957) |
| | (10,564) |
| | (141,479) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (744) |
| | (1,465) |
| | (1,105) |
| | (519) |
| | (1,569) |
| | 10,863 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | PIMCO VIT LOW DURATION PORTFOLIO | | PIMCO VIT REAL RETURN PORTFOLIO | | PIMCO VIT TOTAL RETURN PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income | | $ | 65,643 |
| | $ | 69,055 |
| | $ | 21,937 |
| | $ | 16,013 |
| | $ | 185,837 |
| | $ | 122,853 |
|
| Net realized gain (loss) on investments | | 63,216 |
| | 95,892 |
| | (9,795) |
| | 245,084 |
| | 117,199 |
| | 259,901 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | (130,094) |
| | 33,608 |
| | (137,604) |
| | (114,221) |
| | (475,123) |
| | 74,367 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting | | | | | | | | | | | | |
| from operations | | (1,235) |
| | 198,555 |
| | (125,462) |
| | 146,876 |
| | (172,087) |
| | 457,121 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 0 |
| | 1,803,573 |
| | 82,409 |
| | 49,113 |
| | 164,413 |
| | 2,645,390 |
|
| Transfers for contract benefits and terminations | | (1,291,195) |
| | (657,196) |
| | (150,783) |
| | (462,937) |
| | (101,756) |
| | (122,217) |
|
| Net transfers | | (1,557,414) |
| | 2,897,035 |
| | 210,533 |
| | (239,569) |
| | 287,969 |
| | 845,083 |
|
| Contract maintenance charges | | (4,245) |
| | (3,371) |
| | (836) |
| | (1,586) |
| | (2,828) |
| | (1,793) |
|
| Other, net | | 0 |
| | 0 |
| | (687) |
| | 0 |
| | (1,146) |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | (2,852,854) |
| | 4,040,041 |
| | 140,636 |
| | (654,979) |
| | 346,652 |
| | 3,366,463 |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | (2,854,089) |
| | 4,238,596 |
| | 15,174 |
| | (508,103) |
| | 174,565 |
| | 3,823,584 |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 7,143,921 |
| | 2,905,325 |
| | 1,180,655 |
| | 1,688,758 |
| | 8,250,419 |
| | 4,426,835 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 4,289,832 |
| | $ | 7,143,921 |
| | $ | 1,195,829 |
| | $ | 1,180,655 |
| | $ | 8,424,984 |
| | $ | 8,250,419 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 127,922 |
| | 871,033 |
| | 41,424 |
| | 124,190 |
| | 73,165 |
| | 609,144 |
|
| Units redeemed | | (323,489) |
| | (598,383) |
| | (33,738) |
| | (171,401) |
| | (53,847) |
| | (434,247) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | (195,567) |
| | 272,650 |
| | 7,686 |
| | (47,211) |
| | 19,318 |
| | 174,897 |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | PUTNAM VT EQUITY INCOME FUND | | PUTNAM VT GLOBAL HEALTH CARE FUND | | PUTNAM VT HIGH YIELD FUND |
| | | 2013 | | 2012 | | 2012 | | 2013 | | 2012 |
| | | | | | | (1) | | | | |
| | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | |
| | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | |
| Net investment income (loss) | | $ | 4,260 |
| | $ | 3,436 |
| | $ | (4 | ) | | $ | 7,306 |
| | $ | 3,896 |
|
| Net realized gain on investments | | 17,753 |
| | 3,158 |
| | 2,780 |
| | 639 |
| | 1,364 |
|
| Change in net unrealized appreciation | | | | | | | | | | |
| on investments | | 36,176 |
| | 18,789 |
| | (1,426) |
| | 180 |
| | 2,536 |
|
| | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | |
| from operations | | 58,189 |
| | 25,383 |
| | 1,350 |
| | 8,125 |
| | 7,796 |
|
| | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | |
| Purchase payments received | | 20,149 |
| | 20,119 |
| | | | 6,599 |
| | 6,600 |
|
| Transfers for contract benefits and terminations | | (5,470) |
| | (4,392) |
| | | | (2,071) |
| | (1,424) |
|
| Net transfers | | (16,850) |
| | 29,993 |
| | (81,573) |
| | 31,745 |
| | 55,974 |
|
| Contract maintenance charges | | (195) |
| | (182) |
| | | | (58) |
| | (51) |
|
| Other, net | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | |
| contract transactions | | (2,366) |
| | 45,538 |
| | (81,573) |
| | 36,215 |
| | 61,099 |
|
| | | | | | | | | | | |
| Total increase (decrease) in net assets | | 55,823 |
| | 70,921 |
| | (80,223) |
| | 44,340 |
| | 68,895 |
|
| | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | |
| Beginning of period | | 169,469 |
| | 98,548 |
| | 80,223 |
| | 73,821 |
| | 4,926 |
|
| | | | | | | | | | | |
| End of period | | $ | 225,292 |
| | $ | 169,469 |
| | $ | 0 |
| | $ | 118,161 |
| | $ | 73,821 |
|
| | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | |
| Units issued | | 2,973 |
| | 17,109 |
| | 0 |
| | 2,746 |
| | 13,674 |
|
| Units redeemed | | (2,958) |
| | (14,309) |
| | (8,221) |
| | (777) |
| | (9,899) |
|
| | | | | | | | | | | |
| Net increase (decrease) | | 15 |
| | 2,800 |
| | (8,221) |
| | 1,969 |
| | 3,775 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
(1) | For the period January 1, 2012 to October 12, 2012. | | | | | | | | | | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | |
| | | | | | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | PUTNAM VT INTERNATIONAL GROWTH FUND | | ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO | | ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO |
| | | 2013 | | 2012 | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 364 |
| | $ | 379 |
| | $ | 729 |
| | $ | (1,138 | ) | | $ | 9,012 |
| | $ | (1,720 | ) |
| Net realized gain (loss) on investments | | 78 |
| | (466) |
| | (13,765) |
| | 38,716 |
| | 93,084 |
| | 276,438 |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | | | | | |
| on investments | | 5,343 |
| | 5,348 |
| | 57,016 |
| | 9,881 |
| | 182,586 |
| | (174,157) |
|
| | | | | | | | | | | | | |
| Increase in net assets resulting | | | | | | | | | | | | |
| from operations | | 5,785 |
| | 5,261 |
| | 43,980 |
| | 47,459 |
| | 284,682 |
| | 100,561 |
|
| | | | | | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | | | | | |
| Purchase payments received | | 1,462 |
| | 1,351 |
| | | | 60,928 |
| | 44,622 |
| | 643,910 |
|
| Transfers for contract benefits and terminations | | (3,076) |
| | (2,521) |
| | (44,113) |
| | (22,669) |
| | (9,483) |
| | (275,997) |
|
| Net transfers | | 3,610 |
| | (7,483) |
| | (265,848) |
| | (282,445) |
| | (159,933) |
| | (483,969) |
|
| Contract maintenance charges | | (25) |
| | (24) |
| | (154) |
| | (320) |
| | (382) |
| | (766) |
|
| Other, net | | (84) |
| | 0 |
| | (340) |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | | | | | |
| contract transactions | | 1,887 |
| | (8,677) |
| | (310,455) |
| | (244,506) |
| | (125,176) |
| | (116,822) |
|
| | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | 7,672 |
| | (3,416) |
| | (266,475) |
| | (197,047) |
| | 159,506 |
| | (16,261) |
|
| | | | | | | | | | | | | |
NET ASSETS: | | | | | | | | | | | | |
| Beginning of period | | 23,396 |
| | 26,812 |
| | 492,449 |
| | 689,496 |
| | 882,348 |
| | 898,609 |
|
| | | | | | | | | | | | | |
| End of period | | $ | 31,068 |
| | $ | 23,396 |
| | $ | 225,974 |
| | $ | 492,449 |
| | $ | 1,041,854 |
| | $ | 882,348 |
|
| | | | | | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | | | | | |
| Units issued | | 418 |
| | 1,928 |
| | 5,699 |
| | 79,960 |
| | 6,030 |
| | 80,346 |
|
| Units redeemed | | (301) |
| | (2,498) |
| | (31,979) |
| | (102,599) |
| | (14,385) |
| | (91,324) |
|
| | | | | | | | | | | | | |
| Net increase (decrease) | | 117 |
| | (570) |
| | (26,280) |
| | (22,639) |
| | (8,355) |
| | (10,978) |
|
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | | | | | (Continued) |
|
|
| | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | |
| | | | | | | | | |
STATEMENT OF CHANGES IN NET ASSETS | | | | | | | | |
YEARS ENDED DECEMBER 31, 2013 AND 2012 | | | | | | | | |
| | | | | | | | | |
| | | INVESTMENT DIVISIONS |
| | | VAN ECK VIP EMERGING MARKETS FUND | | VAN ECK VIP GLOBAL HARD ASSETS FUND |
| | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | | |
| | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | |
| | | | | | | | | |
OPERATIONS: | | | | | | | | |
| Net investment income (loss) | | $ | 334 |
| | $ | (54 | ) | | $ | 3,456 |
| | $ | 714 |
|
| Net realized gain (loss) on investments | | 144 |
| | 26 |
| | (1,372) |
| | (31,874) |
|
| Change in net unrealized appreciation (depreciation) | | | | | | | | |
| on investments | | 2,637 |
| | 4,334 |
| | 46,376 |
| | 49,352 |
|
| | | | | | | | | |
| Increase in net assets resulting | | | | | | | | |
| from operations | | 3,115 |
| | 4,306 |
| | 48,460 |
| | 18,192 |
|
| | | | | | | | | |
CONTRACT TRANSACTIONS: | | | | | | | | |
| Purchase payments received | | 0 |
| | 0 |
| | 63,176 |
| | 9,405 |
|
| Transfers for contract benefits and terminations | | (732) |
| | (275) |
| | (31,529) |
| | (10,791) |
|
| Net transfers | | 8,999 |
| | 5,000 |
| | 388,008 |
| | (178,385) |
|
| Contract maintenance charges | | (4) |
| | (2) |
| | (229) |
| | (185) |
|
| Other, net | | 0 |
| | 0 |
| | (191) |
| | |
| | | | | | | | | |
| Increase (decrease) in net assets resulting from | | | | | | | | |
| contract transactions | | 8,263 |
| | 4,723 |
| | 419,235 |
| | (179,956) |
|
| | | | | | | | | |
| Total increase (decrease) in net assets | | 11,378 |
| | 9,029 |
| | 467,695 |
| | (161,764) |
|
| | | | | | | | | |
NET ASSETS: | | | | | | | | |
| Beginning of period | | 21,536 |
| | 12,507 |
| | 173,444 |
| | 335,208 |
|
| | | | | | | | | |
| End of period | | $ | 32,914 |
| | $ | 21,536 |
| | $ | 641,139 |
| | $ | 173,444 |
|
| | | | | | | | | |
CHANGES IN UNITS OUTSTANDING: | | | | | | | | |
| Units issued | | 235 |
| | 1,164 |
| | 9,636 |
| | 7,929 |
|
| Units redeemed | | (21) |
| | (2,214) |
| | (3,531) |
| | (35,252) |
|
| | | | | | | | | |
| Net increase (decrease) | | 214 |
| | (1,050) |
| | 6,105 |
| | (27,323) |
|
| | | | | | | | | |
| | | | | | | | | |
The accompanying notes are an integral part of these financial statements. | | | | | | | | (Concluded) |
|
COLI VUL-2 SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2013
| |
1. | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES |
The COLI VUL-2 Series Account (the Series Account), a variable life separate account of Great-West Life & Annuity Insurance Company (the Company), is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and exists in accordance with regulations of the Colorado Division of Insurance. The Series Account is a funding vehicle for variable life insurance policies. The Series Account consists of numerous investment divisions (Investment Divisions), each being treated as an individual accounting entity for financial reporting purposes, and each investing all of its investible assets in the named underlying mutual fund.
Under applicable insurance law, the assets and liabilities of each of the Investment Divisions of the Series Account are clearly identified and distinguished from the Company's other assets and liabilities. The portion of the Series Account's assets applicable to the reserves and other contract liabilities with respect to the Series Account is not chargeable with liabilities arising out of any other business the Company may conduct.
The preparation of financial statements and financial highlights of each of the Investment Divisions in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and financial highlights and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Security Valuation
Mutual fund investments held by the Investment Divisions are valued at the reported net asset values of such underlying mutual funds, which value their investment securities at fair value.
The Series Account classifies its valuations into three levels based upon the transparency of inputs to the valuation of the Series Account’s investments. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. The three levels are defined as follows:
Level 1 - Valuations based on unadjusted quoted prices for identical securities in active markets.
Level 2 - Valuations based on either directly or indirectly observable inputs other than quoted prices included in Level 1. These may include quoted prices for similar assets in active markets.
Level 3 - Valuations based on inputs that are unobservable and significant to the fair value measurement and may include prices obtained from single broker quotes. Unobservable inputs reflect the reporting entity’s own assumptions and would be based on the best information available under the circumstances.
As of December 31, 2013, the only investments of each of the Investment Divisions of the Series Account were in underlying mutual funds that are actively traded, therefore 100% of the investments are valued using Level 1 inputs. The Series Account recognizes transfers between the levels as of the beginning of the quarter in which the transfer occurred. There were no transfers between Levels 1 and 2 during the year.
Security Transactions and Investment Income
Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date and the amounts distributed to the Investment Division for its share of dividends are reinvested in additional full and fractional shares of the related mutual funds.
Federal Income Taxes
The operations of each of the Investment Divisions of the Series Account are included in the federal income tax return of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code (IRC). The Company is included in the consolidated federal tax return of Great-West Lifeco U.S. Inc. Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of each of the Investment Divisions of the Series Account to the extent the earnings are credited under the contracts. Based on this, no charge is being made currently to the Series Account for federal income taxes. The Company will periodically review the status of the federal income tax policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts.
Purchase Payments Received
Purchase payments received from contract owners by the Company are credited as accumulation units, and are reported as Contract Transactions on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Net Transfers
Net transfers include transfers between Investment Divisions of the Series Account as well as transfers between other investment options of the Company, not included in the Series Account.
Other, net
The amounts reported as Other, net on the Statement of Changes in Net Assets of the applicable Investment Divisions consist of Loans from participant accounts and Loan repayments to participant accounts.
| |
2. | PURCHASES AND SALES OF INVESTMENTS |
The cost of purchases and proceeds from sales of investments for the year ended December 31, 2013 were as follows:
|
| | | | | | | | |
Investment Division | | Purchases | | Sales |
Alger Small Cap Growth Portfolio | | $ | 355,798 |
| | $ | 90,304 |
|
American Century Investments VP Income & Growth Fund | | 543 |
| | 5,187 |
|
American Century Investments VP International Fund | | 9,646 |
| | 44,041 |
|
American Century Investments VP Ultra Fund | | 73,259 |
| | 62,147 |
|
American Century Investments VP Value Fund | | 88,060 |
| | 108,809 |
|
American Century Investments VP Vista Fund | | 25,896 |
| | 15,214 |
|
American Funds IS Global Small Capitalization Fund | | 42,039 |
| | 38,682 |
|
American Funds IS Growth Fund | | 992,128 |
| | 2,285,574 |
|
American Funds IS International Fund | | 341,396 |
| | 428,746 |
|
American Funds IS New World Fund | | 676,372 |
| | 76,707 |
|
Columbia Variable Portfolio - Small Cap Value Fund | | 59,457 |
| | 76,478 |
|
Davis Financial Portfolio | | 11,116 |
| | 16,628 |
|
Davis Value Portfolio | | 68,486 |
| | 103,281 |
|
Dreyfus IP Technology Growth Portfolio | | 13,854 |
| | 36,083 |
|
Dreyfus Stock Index Fund | | 13,066,587 |
| | 2,565,795 |
|
Dreyfus VIF Appreciation Portfolio | | 15,210 |
| | 16,027 |
|
Dreyfus VIF International Equity Portfolio | | 89,332 |
| | 14,691 |
|
DWS Global Small Cap Growth VIP | | 41,128 |
| | 47,989 |
|
DWS High Income VIP | | 23,296 |
| | 887 |
|
DWS Large Cap Value VIP | | 115,633 |
| | 175,039 |
|
DWS Small Cap Index VIP | | 1,917,307 |
| | 180,087 |
|
DWS Small Mid Cap Value VIP | | 983,954 |
| | 1,097,679 |
|
|
| | | | | | | | |
Investment Division | | Purchases | | Sales |
Federated High Income Bond Fund II | | $ | 3,199 |
| | $ | 21,601 |
|
Federated Kaufmann Fund II | | 9,539 |
| | 22,272 |
|
Fidelity VIP Contrafund Portfolio | | 387,255 |
| | 1,492,606 |
|
Fidelity VIP Growth Portfolio | | 398,687 |
| | 551,368 |
|
Fidelity VIP Investment Grade Bond Portfolio | | 338,968 |
| | 323,155 |
|
Fidelity VIP Mid Cap Portfolio | | 236,877 |
| | 1,188,481 |
|
Great-West Aggressive Profile I Fund | | 167,066 |
| | 183,896 |
|
Great-West Ariel Midcap Value Fund | | 1,015,429 |
| | 101,054 |
|
Great-West Ariel Small-Cap Value Fund | | 13,473 |
| | 1,086,271 |
|
Great-West Bond Index Fund | | 1,900,171 |
| | 58,347 |
|
Great-West Conservative Profile I Fund | | 182,658 |
| | 185,152 |
|
Great-West Invesco ADR Fund | | 17,047 |
| | 233,888 |
|
Great-West Lifetime 2015 Fund II | | 91 |
| | 1,619 |
|
Great-West Lifetime 2025 Fund II | | 33,141 |
| | 4,608 |
|
Great-West Lifetime 2045 Fund II | | 762 |
| | 450 |
|
Great-West Loomis Sayles Bond Fund | | 505,909 |
| | 2,179,960 |
|
Great-West Loomis Sayles Small-Cap Value Fund | | 514,630 |
| | 891,886 |
|
Great-West MFS International Value Fund | | 2,545,413 |
| | 388,156 |
|
Great-West Moderate Profile I Fund | | 118,163 |
| | 114,811 |
|
Great-West Moderately Aggressive Profile I Fund | | 157,342 |
| | 132,564 |
|
Great-West Moderately Conservative Porfile I Fund | | 149,997 |
| | 91,650 |
|
Great-West Money Market Fund | | 6,848,348 |
| | 7,113,645 |
|
Great-West Mulit-Manager Large Cap Growth Fund | | 49,041 |
| | 15,501 |
|
Great-West Short Duration Bond Fund | | 462,240 |
| | 1,515,818 |
|
Great-West Small-Cap Growth Fund | | 24,426 |
| | 4,205 |
|
Great-West T. Rowe Price Equity/Income Fund | | 1,517,664 |
| | 308,394 |
|
Great-West T. Rowe Price Midcap Growth Fund | | 1,329,447 |
| | 2,724,110 |
|
Great-West Templeton Global Bond Fund | | 858,018 |
| | 108,983 |
|
Great-West U. S. Government Mortgage Sercurities Fund | | 492,100 |
| | 478,133 |
|
Invesco V.I. Core Equity Fund | | 23,556 |
| | 114,106 |
|
Invesco V.I. Dividend Growth Fund | | 16,392 |
| | 7,942 |
|
Invesco V.I. Global Health Care Fund | | 25,521 |
| | 122,624 |
|
Invesco V.I. Global Real Estate Fund | | 878,044 |
| | 179,751 |
|
Invesco V.I. International Growth Fund | | 1,799,832 |
| | 170,846 |
|
Invesco V.I. Mid Cap Core Equity Fund | | 121,228 |
| | 78,361 |
|
Invesco V.I. Technology Fund | | 16,537 |
| | 38,426 |
|
Janus Aspen Balanced Portfolio | | 272,133 |
| | 112,608 |
|
Janus Aspen Flexible Bond Portfolio | | 726,714 |
| | 1,603,231 |
|
Janus Aspen Forty Portfolio | | 624,029 |
| | 1,427,775 |
|
Janus Aspen Global Technology Portfolio | | 11,583 |
| | 22,169 |
|
Janus Aspen Overseas Portfolio | | 165,906 |
| | 2,712,251 |
|
Janus Aspen Worldwide Portfolio | | 380,545 |
| | 395,782 |
|
Neuberger Berman AMT Guardian Portfolio | | 68,291 |
| | 1,770,319 |
|
Neuberger Berman AMT Large Cap Value Portfolio | | 320 |
| | 1,526,968 |
|
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio | | 105,753 |
| | 845,551 |
|
|
| | | | | | | | |
Investment Division | | Purchases | | Sales |
Neuberger Berman AMT Mid Cap Portfolio | | $ | 9,171 |
| | $ | 67,716 |
|
Neuberger Berman AMT Small Cap Growth Portfolio | | 6,813 |
| | 17,486 |
|
Neuberger Berman AMT Socially Responsive Portfolio | | 1,638 |
| | 21,960 |
|
Pimco VIT High Yield Portfolio | | 193,611 |
| | 198,631 |
|
Pimco VIT Low Duration Portfolio | | 1,910,135 |
| | 4,697,346 |
|
Pimco VIT Real Return Portfolio | | 726,673 |
| | 554,611 |
|
Pimco VIT Total Return Portfolio | | 1,486,291 |
| | 879,546 |
|
Putnam VT Equity Income Fund | | 56,187 |
| | 54,293 |
|
Putnam VT High Yield Fund | | 57,434 |
| | 13,913 |
|
Putnam VT International Growth Fund | | 7,267 |
| | 5,016 |
|
Royce Capital Fund - Micro-Cap Portfolio | | 72,385 |
| | 376,332 |
|
Royce Capital Fund - Small-Cap Portfolio | | 142,367 |
| | 206,126 |
|
Van Eck VIP Emerging Markets Fund | | 9,334 |
| | 737 |
|
Van Eck VIP Global Hard Assets Fund | | 663,615 |
| | 231,044 |
|
| |
3. | EXPENSES AND RELATED PARTY TRANSACTIONS |
Cost of Insurance
The Company deducts from each participant’s account an amount to pay for the insurance provided on each life. This charge varies based on individual characteristics of the policy holder and is recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Charges Incurred for Partial Surrenders
The Company deducts from each participant’s account a maximum administrative fee of $25 for all partial withdrawals after the first made during the same policy year. This charge is recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Charges Incurred for Change of Death Benefit Option Fee
The Company deducts from each participant’s account a maximum fee of $100 for each change of death benefit option. This charge is recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Transfer Fees
The Company deducts from each participant’s account a fee of $10 for each transfer between Investment Divisions in excess of 12 transfers in any calendar year. This charge is recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Service Charge
The Company deducts from each participant’s account an amount equal to a maximum of $15 per month. This charge compensates the Company for certain administrative costs and is recorded as Contract maintenance charges on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Expense Charges Applied to Premium
The Company deducts a maximum charge of 10% from each premium payment received. A maximum of 6.5% of this charge will be deducted as sales load to compensate the Company in part for sales and promotional expenses in connection with selling the Policies. A maximum of 3.5% of this charge will be used to cover premium taxes and certain federal income tax obligations resulting from the receipt of premiums. This charge is netted with Purchase payments received on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Supplemental Benefit Charges
The Company deducts from each participant’s account an amount to pay for certain riders selected by the policy holder. This charge varies based on individual characteristics of the policy holder when the rider is added to the policy and is recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.
Related Party Transactions
Great-West Funds, Inc., funds of which are underlying certain Investment Divisions, is a registered investment company affiliated with the Company. Great-West Capital Management, LLC (GWCM), a wholly owned subsidiary of the Company, serves as investment adviser to Great-West Funds, Inc. Fees are assessed against the average daily net assets of the portfolios of Great-West Funds, Inc. to compensate GWCM for investment advisory services.
4. FINANCIAL HIGHLIGHTS
For each Investment Division, the accumulation units outstanding, net assets, investment income ratio, the range of lowest to highest expense ratio (excluding expenses of the underlying funds), total return and accumulation unit fair values for each year or period ended December 31 are included on the following pages. As the unit fair value for the Investment Divisions of the Series Account are presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some unit values shown on the Statement of Assets and Liabilities which are calculated on an aggregated basis, may not be within the ranges presented.
The Expense Ratios represent the annualized contract expenses of the respective Investment Divisions of the Series Account, consisting of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded.
The Total Return amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These returns do not include any expenses assessed through the redemption of units. Investment Divisions with a date notation indicate the effective date that the investment option was available in the Series Account. The total returns are calculated for each period indicated or from the effective date through the end of the reporting period and are not annualized for periods less than one year. As the total returns for the Investment Divisions of the Series Account are presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented.
The Investment Income Ratio represents the dividends, excluding distributions of capital gains, received by the Investment Division from the underlying mutual fund divided by average net assets during the period. It is not annualized for periods less than one year. The ratio excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the Investment Division is affected by the timing of the declaration of dividends by the underlying fund in which the Investment Division invests.
Effective October 2012, all bands have been merged into one band for reporting purposes. The Series Account was moved to a new recordkeeping system which allows mortality and expense risk charges to be tracked at the plan level. As a result, it is no longer necessary to use multiple expense bands to capture the range of mortality and expense risks being charged to the Series Account.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
ALGER SMALL CAP GROWTH PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/12/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 4 | | $ | 122.93 |
| to | $ | 122.93 |
| | 446 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 34.23 | % | to | 34.23 | % |
2012 | | 1 | | $ | 91.58 |
| to | $ | 91.58 |
| | 135 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 12.09 | % | to | 12.09 | % |
2011 | | 3 | | $ | 15.80 |
| to | $ | 15.87 |
| | 43 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | (3.54 | )% | to | (3.41 | )% |
2010 | | 0 | * | $ | 16.38 |
| to | $ | 16.43 |
| | 8 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 24.75 | % | to | 25.04 | % |
AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND | | | | | | | | | | | | | | | | | | |
2013 | | 2 | | $ | 16.74 |
| to | $ | 16.74 |
| | 25 | | 2.20 | % | | 0.00 | % | to | 0.00 | % | | 35.77 | % | to | 35.77 | % |
2012 | | 2 | | $ | 12.33 |
| to | $ | 12.33 |
| | 23 | | 1.19 | % | | 0.00 | % | to | 0.25 | % | | 14.29 | % | to | 14.29 | % |
2011 | | 2 | | $ | 11.00 |
| to | $ | 11.00 |
| | 24 | | 1.54 | % | | 0.25 | % | to | 0.25 | % | | 2.90 | % | to | 2.90 | % |
2010 | | 3 | | $ | 11.34 |
| to | $ | 10.69 |
| | 27 | | 1.50 | % | | 0.25 | % | to | 0.40 | % | | 13.63 | % | to | 13.84 | % |
2009 | | 3 | | $ | 9.98 |
| to | $ | 9.39 |
| | 28 | | 4.94 | % | | 0.25 | % | to | 0.40 | % | | 17.69 | % | to | 17.82 | % |
AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND | | | | | | | | | | | | | | | | | | |
2013 | | 45 | | $ | 12.24 |
| to | $ | 12.24 |
| | 556 | | 1.73 | % | | 0.00 | % | to | 0.00 | % | | 22.40 | % | to | 22.40 | % |
2012 | | 49 | | $ | 10.00 |
| to | $ | 10.00 |
| | 493 | | 0.45 | % | | 0.00 | % | to | 0.25 | % | | 18.91 | % | to | 18.91 | % |
2011 | | 35 | | $ | 12.40 |
| to | $ | 12.40 |
| | 432 | | 1.34 | % | | 0.25 | % | to | 0.25 | % | | (12.24 | )% | to | (12.24 | )% |
2010 | | 30 | | $ | 13.17 |
| to | $ | 14.13 |
| | 422 | | 2.05 | % | | 0.25 | % | to | 0.40 | % | | 12.85 | % | to | 12.95 | % |
2009 | | 27 | | $ | 11.67 |
| to | $ | 12.51 |
| | 343 | | 2.03 | % | | 0.25 | % | to | 0.40 | % | | 33.22 | % | to | 33.51 | % |
AMERICAN CENTURY INVESTMENTS VP ULTRA FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/19/2002) | | | | | | | | | | | | | | | | | | |
2013 | | 2 | | $ | 18.87 |
| to | $ | 18.87 |
| | 36 | | 0.28 | % | | 0.00 | % | to | 0.00 | % | | 37.14 | % | to | 37.14 | % |
2012 | | 1 | | $ | 13.76 |
| to | $ | 13.76 |
| | 12 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 13.97 | % | to | 13.97 | % |
AMERICAN CENTURY INVESTMENTS VP VALUE FUND | | | | | | | | | | | | | | | | | | |
2013 | | 23 | | $ | 30.81 |
| to | $ | 30.81 |
| | 719 | | 1.66 | % | | 0.00 | % | to | 0.00 | % | | 31.72 | % | to | 31.72 | % |
2012 | | 25 | | $ | 23.39 |
| to | $ | 23.39 |
| | 578 | | 1.10 | % | | 0.00 | % | to | 0.40 | % | | 13.81 | % | to | 13.92 | % |
2011 | | 37 | | $ | 19.21 |
| to | $ | 11.79 |
| | 452 | | 2.05 | % | | 0.25 | % | to | 0.40 | % | | 0.58 | % | to | 0.77 | % |
2010 | | 38 | | $ | 19.10 |
| to | $ | 11.70 |
| | 455 | | 2.25 | % | | 0.25 | % | to | 0.40 | % | | 13.02 | % | to | 13.15 | % |
2009 | | 37 | | $ | 16.90 |
| to | $ | 10.34 |
| | 388 | | 4.88 | % | | 0.25 | % | to | 0.40 | % | | 19.35 | % | to | 19.54 | % |
| | | | | | | | | | | | | | | | | (Continued) | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
AMERICAN CENTURY INVESTMENTS VP VISTA FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 7 | | $ | 18.87 |
| to | $ | 18.87 |
| | 128 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 30.14 | % | to | 30.14 | % |
2012 | | 6 | | $ | 14.50 |
| to | $ | 14.50 |
| | 88 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | 15.22 | % | to | 15.22 | % |
2011 | | 7 | | $ | 12.21 |
| to | $ | 12.21 |
| | 82 | | 0.00 | % | | 0.40 | % | to | 0.40 | % | | (8.26 | )% | to | (8.26 | )% |
2010 | | 73 | | $ | 13.31 |
| to | $ | 13.42 |
| | 976 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 23.35 | % | to | 23.57 | % |
2009 | | 74 | | $ | 10.79 |
| to | $ | 10.86 |
| | 800 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 22.06 | % | to | 22.16 | % |
AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 9 | | $ | 12.18 |
| to | $ | 12.18 |
| | 114 | | 0.84 | % | | 0.00 | % | to | 0.00 | % | | 28.35 | % | to | 28.35 | % |
2012 | | 9 | | $ | 9.49 |
| to | $ | 9.49 |
| | 88 | | 0.68 | % | | 0.00 | % | to | 0.40 | % | | 16.68 | % | to | 16.98 | % |
2011 | | 8 | | $ | 7.92 |
| to | $ | 13.34 |
| | 67 | | 1.32 | % | | 0.25 | % | to | 0.40 | % | | (19.43 | )% | to | (19.35 | )% |
2010 | | 3 | | $ | 9.83 |
| to | $ | 16.54 |
| | 29 | | 1.96 | % | | 0.25 | % | to | 0.40 | % | | 21.96 | % | to | 22.07 | % |
2009 | | 1 | | $ | 8.06 |
| to | $ | 13.55 |
| | 8 | | 0.42 | % | | 0.25 | % | to | 0.40 | % | | 60.56 | % | to | 35.50 | % |
AMERICAN FUNDS IS GROWTH FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 155 | | $ | 15.04 |
| to | $ | 15.04 |
| | 2,332 | | 0.79 | % | | 0.00 | % | to | 0.00 | % | | 30.10 | % | to | 30.10 | % |
2012 | | 251 | | $ | 11.56 |
| to | $ | 11.56 |
| | 2,908 | | 0.47 | % | | 0.00 | % | to | 0.40 | % | | 16.78 | % | to | 16.89 | % |
2011 | | 125 | | $ | 9.09 |
| to | $ | 14.74 |
| | 1,747 | | 0.76 | % | | 0.25 | % | to | 0.40 | % | | (4.62 | )% | to | (4.47 | )% |
2010 | | 73 | | $ | 9.53 |
| to | $ | 15.43 |
| | 967 | | 0.73 | % | | 0.25 | % | to | 0.40 | % | | 18.24 | % | to | 18.33 | % |
2009 | | 75 | | $ | 8.06 |
| to | $ | 13.04 |
| | 835 | | 0.65 | % | | 0.25 | % | to | 0.40 | % | | 38.73 | % | to | 30.40 | % |
AMERICAN FUNDS IS INTERNATIONAL FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 164 | | $ | 11.36 |
| to | $ | 11.36 |
| | 1,860 | | 1.40 | % | | 0.00 | % | to | 0.00 | % | | 21.63 | % | to | 21.63 | % |
2012 | | 174 | | $ | 9.34 |
| to | $ | 9.34 |
| | 1,626 | | 1.48 | % | | 0.00 | % | to | 0.40 | % | | 16.38 | % | to | 16.47 | % |
2011 | | 18 | | $ | 7.80 |
| to | $ | 11.90 |
| | 146 | | 1.65 | % | | 0.25 | % | to | 0.40 | % | | (14.38 | )% | to | (14.20 | )% |
2010 | | 20 | | $ | 9.11 |
| to | $ | 13.87 |
| | 182 | | 2.11 | % | | 0.25 | % | to | 0.40 | % | | 6.80 | % | to | 6.94 | % |
2009 | | 18 | | $ | 8.53 |
| to | $ | 12.97 |
| | 158 | | 2.25 | % | | 0.25 | % | to | 0.40 | % | | 42.64 | % | to | 29.70 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
AMERICAN FUNDS IS NEW WORLD FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 52 | | $ | 18.78 |
| to | $ | 18.78 |
| | 983 | | 1.51 | % | | 0.00 | % | to | 0.00 | % | | 11.39 | % | to | 11.39 | % |
2012 | | 18 | | $ | 16.86 |
| to | $ | 16.86 |
| | 307 | | 0.66 | % | | 0.00 | % | to | 0.40 | % | | 16.40 | % | to | 16.57 | % |
2011 | | 3 | | $ | 14.16 |
| to | $ | 14.21 |
| | 41 | | 0.87 | % | | 0.25 | % | to | 0.40 | % | | (14.29 | )% | to | (14.19 | )% |
2010 | | 13 | | $ | 16.52 |
| to | $ | 16.56 |
| | 216 | | 1.49 | % | | 0.25 | % | to | 0.40 | % | | 17.41 | % | to | 17.61 | % |
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/12/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 12 | | $ | 22.35 |
| to | $ | 22.35 |
| | 271 | | 1.03 | % | | 0.00 | % | to | 0.00 | % | | 34.23 | % | to | 34.23 | % |
2012 | | 13 | | $ | 16.65 |
| to | $ | 16.65 |
| | 223 | | 0.24 | % | | 0.00 | % | to | 0.40 | % | | 10.15 | % | to | 10.25 | % |
2011 | | 0 | * | $ | 14.79 |
| to | $ | 14.85 |
| | 6 | | 1.44 | % | | 0.25 | % | to | 0.40 | % | | (6.33 | )% | to | (6.19 | )% |
2010 | | 1 | | $ | 15.79 |
| to | $ | 15.83 |
| | 23 | | 0.42 | % | | 0.25 | % | to | 0.40 | % | | 26.22 | % | to | 26.44 | % |
DAVIS FINANCIAL PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 2 | | $ | 15.34 |
| to | $ | 15.34 |
| | 32 | | 0.61 | % | | 0.00 | % | to | 0.00 | % | | 31.22 | % | to | 31.22 | % |
2012 | | 3 | | $ | 11.69 |
| to | $ | 11.69 |
| | 30 | | 1.05 | % | | 0.00 | % | to | 0.25 | % | | 17.25 | % | to | 17.25 | % |
2011 | | 5 | | $ | 9.67 |
| to | $ | 9.67 |
| | 44 | | 0.86 | % | | 0.25 | % | to | 0.25 | % | | (8.25 | )% | to | (8.25 | )% |
2010 | | 7 | | $ | 10.45 |
| to | $ | 10.54 |
| | 69 | | 0.97 | % | | 0.25 | % | to | 0.40 | % | | 10.70 | % | to | 10.83 | % |
2009 | | 2 | | $ | 9.44 |
| to | $ | 9.51 |
| | 22 | | 1.27 | % | | 0.25 | % | to | 0.40 | % | | 40.69 | % | to | 40.89 | % |
DAVIS VALUE PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 17 | | $ | 17.07 |
| to | $ | 17.07 |
| | 294 | | 0.87 | % | | 0.00 | % | to | 0.00 | % | | 33.46 | % | to | 33.46 | % |
2012 | | 21 | | $ | 12.79 |
| to | $ | 12.79 |
| | 272 | | 1.02 | % | | 0.00 | % | to | 0.40 | % | | 11.94 | % | to | 12.10 | % |
2011 | | 15 | | $ | 11.01 |
| to | $ | 11.12 |
| | 171 | | 0.63 | % | | 0.25 | % | to | 0.40 | % | | (4.59 | )% | to | (4.47 | )% |
2010 | | 19 | | $ | 11.54 |
| to | $ | 11.64 |
| | 219 | | 1.66 | % | | 0.25 | % | to | 0.40 | % | | 12.37 | % | to | 12.46 | % |
2009 | | 14 | | $ | 10.27 |
| to | $ | 10.35 |
| | 143 | | 1.27 | % | | 0.25 | % | to | 0.40 | % | | 30.66 | % | to | 30.85 | % |
DREYFUS IP TECHNOLOGY GROWTH PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 23.61 |
| to | $ | 23.61 |
| | 29 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 32.86 | % | to | 32.86 | % |
2012 | | 2 | | $ | 17.77 |
| to | $ | 17.77 |
| | 42 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 16.27 | % | to | 16.27 | % |
2011 | | 6 | | $ | 15.12 |
| to | $ | 15.12 |
| | 433 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | (7.97 | )% | to | (7.97 | )% |
2010 | | 27 | | $ | 16.29 |
| to | $ | 16.43 |
| | 433 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 29.39 | % | to | 29.57 | % |
2009 | | 8 | | $ | 12.59 |
| to | $ | 12.68 |
| | 106 | | 0.44 | % | | 0.25 | % | to | 0.40 | % | | 56.98 | % | to | 57.32 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
DREYFUS STOCK INDEX FUND | | | | | | | | | | | | | | | | | | |
2013 | | 1,125 | | $ | 15.87 |
| to | $ | 15.87 |
| | 17,859 | | 1.90 | % | | 0.00 | % | to | 0.00 | % | | 32.03 | % | to | 32.03 | % |
2012 | | 322 | | $ | 12.02 |
| to | $ | 12.02 |
| | 3,870 | | 1.12 | % | | 0.00 | % | to | 0.40 | % | | 15.21 | % | to | 15.26 | % |
2011 | | 370 | | $ | 11.35 |
| to | $ | 11.69 |
| | 4,295 | | 1.83 | % | | 0.25 | % | to | 0.40 | % | | 1.43 | % | to | 1.65 | % |
2010 | | 459 | | $ | 11.19 |
| to | $ | 11.50 |
| | 5,261 | | 1.81 | % | | 0.25 | % | to | 0.40 | % | | 14.42 | % | to | 14.54 | % |
2009 | | 523 | | $ | 9.78 |
| to | $ | 10.04 |
| | 5,223 | | 2.06 | % | | 0.25 | % | to | 0.40 | % | | 25.87 | % | to | 25.97 | % |
DREYFUS VIF APPRECIATION PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 10 | | $ | 77.26 |
| to | $ | 77.26 |
| | 756 | | 1.95 | % | | 0.00 | % | to | 0.00 | % | | 21.10 | % | to | 21.10 | % |
2012 | | 10 | | $ | 63.80 |
| to | $ | 63.80 |
| | 638 | | 2.07 | % | | 0.00 | % | to | 0.25 | % | | 10.04 | % | to | 10.04 | % |
2011 | | 42 | | $ | 13.98 |
| to | $ | 13.98 |
| | 586 | | 1.67 | % | | 0.25 | % | to | 0.25 | % | | 8.79 | % | to | 8.79 | % |
2010 | | 45 | | $ | 13.04 |
| to | $ | 12.85 |
| | 580 | | 2.10 | % | | 0.25 | % | to | 0.40 | % | | 14.89 | % | to | 15.04 | % |
2009 | | 45 | | $ | 11.35 |
| to | $ | 11.17 |
| | 506 | | 2.46 | % | | 0.25 | % | to | 0.40 | % | | 22.04 | % | to | 22.21 | % |
DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 6 | | $ | 20.11 |
| to | $ | 20.11 |
| | 126 | | 0.99 | % | | 0.00 | % | to | 0.00 | % | | 17.74 | % | to | 17.74 | % |
2012 | | 2 | | $ | 17.08 |
| to | $ | 17.08 |
| | 39 | | 0.30 | % | | 0.00 | % | to | 0.40 | % | | 21.11 | % | to | 21.31 | % |
2011 | | 8 | | $ | 11.14 |
| to | $ | 11.25 |
| | 88 | | 2.14 | % | | 0.25 | % | to | 0.40 | % | | (14.96 | )% | to | (14.90 | )% |
2010 | | 6 | | $ | 13.10 |
| to | $ | 13.22 |
| | 81 | | 1.92 | % | | 0.25 | % | to | 0.40 | % | | 9.53 | % | to | 9.80 | % |
2009 | | 11 | | $ | 11.96 |
| to | $ | 12.04 |
| | 137 | | 3.61 | % | | 0.25 | % | to | 0.40 | % | | 24.84 | % | to | 24.90 | % |
DWS GLOBAL SMALL CAP GROWTH VIP | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 4 | | $ | 21.15 |
| to | $ | 21.15 |
| | 80 | | 0.61 | % | | 0.00 | % | to | 0.00 | % | | 35.93 | % | to | 35.93 | % |
2012 | | 5 | | $ | 15.56 |
| to | $ | 15.56 |
| | 71 | | 0.37 | % | | 0.00 | % | to | 0.40 | % | | 14.50 | % | to | 14.63 | % |
2011 | | 16 | | $ | 13.13 |
| to | $ | 13.26 |
| | 216 | | 1.43 | % | | 0.25 | % | to | 0.40 | % | | (10.25 | )% | to | (10.16 | )% |
2010 | | 35 | | $ | 14.63 |
| to | $ | 14.76 |
| | 514 | | 0.38 | % | | 0.25 | % | to | 0.40 | % | | 26.12 | % | to | 26.37 | % |
2009 | | 45 | | $ | 11.60 |
| to | $ | 11.68 |
| | 523 | | 1.66 | % | | 0.25 | % | to | 0.40 | % | | 47.58 | % | to | 47.85 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
DWS HIGH INCOME VIP | | | | | | | | | | | | | | | | | | |
(Effective date 04/25/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 5 | | $ | 15.61 |
| to | $ | 15.61 |
| | 80 | | 6.73 | % | | 0.00 | % | to | 0.00 | % | | 7.88 | % | to | 7.88 | % |
2012 | | 4 | | $ | 14.47 |
| to | $ | 14.47 |
| | 57 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | 14.41 | % | to | 14.41 | % |
2011 | | 0 | * | $ | 12.04 |
| to | $ | 12.04 |
| | 5 | | 8.64 | % | | 0.40 | % | to | 0.40 | % | | 3.53 | % | to | 3.53 | % |
2010 | | 5 | | $ | 11.63 |
| to | $ | 11.70 |
| | 53 | | 4.86 | % | | 0.25 | % | to | 0.40 | % | | 13.57 | % | to | 13.70 | % |
2009 | | 0 | * | $ | 10.24 |
| to | $ | 10.29 |
| | 5 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 39.32 | % | to | 39.62 | % |
DWS LARGE CAP VALUE VIP | | | | | | | | | | | | | | | | | | |
(Effective date 05/02/2005) | | | | | | | | | | | | | | | | | | |
2013 | | 11 | | $ | 13.32 |
| to | $ | 13.32 |
| | 146 | | 1.75 | % | | 0.00 | % | to | 0.00 | % | | 30.97 | % | to | 30.97 | % |
2012 | | 17 | | $ | 10.17 |
| to | $ | 10.17 |
| | 172 | | 0.67 | % | | 0.00 | % | to | 0.40 | % | | 2.72 | % | to | 3.92 | % |
2011 | | 47 | | $ | 9.41 |
| to | $ | 9.50 |
| | 447 | | 1.57 | % | | 0.25 | % | to | 0.40 | % | | — | % | to | 0.11 | % |
2010 | | 56 | | $ | 9.41 |
| to | $ | 9.49 |
| | 530 | | 0.36 | % | | 0.25 | % | to | 0.40 | % | | 12.02 | % | to | 12.17 | % |
2009 | | 43 | | $ | 8.40 |
| to | $ | 8.46 |
| | 365 | | 4.07 | % | | 0.25 | % | to | 0.40 | % | | 24.81 | % | to | 24.96 | % |
DWS SMALL CAP INDEX VIP | | | | | | | | | | | | | | | | | | |
(Effective date 04/25/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 140 | | $ | 17.69 |
| to | $ | 17.69 |
| | 2,481 | | 1.62 | % | | 0.00 | % | to | 0.00 | % | | 38.64 | % | to | 38.64 | % |
2012 | | 19 | | $ | 12.76 |
| to | $ | 12.76 |
| | 248 | | 0.28 | % | | 0.00 | % | to | 0.40 | % | | 15.17 | % | to | 15.41 | % |
2011 | | 22 | | $ | 9.17 |
| to | $ | 9.23 |
| | 201 | | 0.41 | % | | 0.25 | % | to | 0.40 | % | | (4.78 | )% | to | (4.75 | )% |
2010 | | 12 | | $ | 9.63 |
| to | $ | 9.69 |
| | 114 | | 0.97 | % | | 0.25 | % | to | 0.40 | % | | 25.88 | % | to | 26.17 | % |
2009 | | 9 | | $ | 7.65 |
| to | $ | 7.68 |
| | 66 | | 0.96 | % | | 0.25 | % | to | 0.40 | % | | 26.03 | % | to | 26.32 | % |
DWS SMALL MID CAP VALUE VIP | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 92 | | $ | 19.79 |
| to | $ | 19.79 |
| | 1,817 | | 1.07 | % | | 0.00 | % | to | 0.00 | % | | 35.18 | % | to | 35.18 | % |
2012 | | 100 | | $ | 14.64 |
| to | $ | 14.64 |
| | 1,463 | | 0.64 | % | | 0.00 | % | to | 0.40 | % | | 13.09 | % | to | 13.29 | % |
2011 | | 109 | | $ | 10.72 |
| to | $ | 10.81 |
| | 1,179 | | 1.02 | % | | 0.25 | % | to | 0.40 | % | | (6.38 | )% | to | (6.33 | )% |
2010 | | 84 | | $ | 11.45 |
| to | $ | 11.54 |
| | 966 | | 1.26 | % | | 0.25 | % | to | 0.40 | % | | 22.59 | % | to | 22.77 | % |
2009 | | 83 | | $ | 9.34 |
| to | $ | 9.40 |
| | 779 | | 1.60 | % | | 0.25 | % | to | 0.40 | % | | 29.18 | % | to | 29.48 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
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FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
FEDERATED HIGH INCOME BOND FUND II | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 24.88 |
| to | $ | 24.88 |
| | 27 | | 8.99 | % | | 0.00 | % | to | 0.00 | % | | 7.01 | % | to | 7.01 | % |
2012 | | 2 | | $ | 23.25 |
| to | $ | 23.25 |
| | 46 | | 4.15 | % | | 0.00 | % | to | 0.25 | % | | 14.00 | % | to | 14.00 | % |
2011 | | 3 | | $ | 15.80 |
| to | $ | 15.80 |
| | 41 | | 9.16 | % | | 0.25 | % | to | 0.25 | % | | 4.91 | % | to | 4.91 | % |
2010 | | 3 | | $ | 18.87 |
| to | $ | 15.06 |
| | 45 | | 8.12 | % | | 0.25 | % | to | 0.40 | % | | 14.29 | % | to | 14.44 | % |
2009 | | 3 | | $ | 16.51 |
| to | $ | 13.16 |
| | 39 | | 10.35 | % | | 0.25 | % | to | 0.40 | % | | 52.17 | % | to | 52.49 | % |
FEDERATED KAUFMANN FUND II | | | | | | | | | | | | | | | | | | |
(Effective date 03/08/2010) | | | | | | | | | | | | | | | | | | |
2013 | | 2 | | $ | 16.53 |
| to | $ | 16.53 |
| | 29 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 40.08 | % | to | 40.08 | % |
2012 | | 3 | | $ | 11.80 |
| to | $ | 11.80 |
| | 33 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 16.73 | % | to | 16.73 | % |
2011 | | 3 | | $ | 10.01 |
| to | $ | 10.01 |
| | 31 | | 1.05 | % | | 0.25 | % | to | 0.25 | % | | (13.48 | )% | to | (13.48 | )% |
2010 | | 3 | | $ | 11.56 |
| to | $ | 11.57 |
| | 40 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 15.60 | % | to | 15.70 | % |
FIDELITY VIP CONTRAFUND PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 126 | | $ | 23.90 |
| to | $ | 23.90 |
| | 3,022 | | 0.84 | % | | 0.00 | % | to | 0.00 | % | | 30.96 | % | to | 30.96 | % |
2012 | | 186 | | $ | 18.25 |
| to | $ | 18.25 |
| | 3,392 | | 0.74 | % | | 0.00 | % | to | 0.40 | % | | 15.68 | % | to | 15.83 | % |
2011 | | 113 | | $ | 16.61 |
| to | $ | 13.35 |
| | 1,733 | | 0.71 | % | | 0.25 | % | to | 0.40 | % | | (3.15 | )% | to | (2.98 | )% |
2010 | | 130 | | $ | 17.15 |
| to | $ | 13.76 |
| | 2,143 | | 0.88 | % | | 0.25 | % | to | 0.40 | % | | 16.43 | % | to | 16.61 | % |
2009 | | 167 | | $ | 14.73 |
| to | $ | 11.80 |
| | 2,370 | | 1.13 | % | | 0.25 | % | to | 0.40 | % | | 34.89 | % | to | 35.17 | % |
FIDELITY VIP GROWTH PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 69 | | $ | 14.48 |
| to | $ | 14.48 |
| | 996 | | 0.04 | % | | 0.00 | % | to | 0.00 | % | | 36.09 | % | to | 36.09 | % |
2012 | | 81 | | $ | 10.64 |
| to | $ | 10.64 |
| | 859 | | 0.17 | % | | 0.00 | % | to | 0.25 | % | | 14.62 | % | to | 14.62 | % |
2011 | | 89 | | $ | 11.80 |
| to | $ | 11.80 |
| | 1,044 | | 0.14 | % | | 0.25 | % | to | 0.25 | % | | (0.25 | )% | to | (0.25 | )% |
2010 | | 80 | | $ | 8.94 |
| to | $ | 11.83 |
| | 951 | | 0.03 | % | | 0.25 | % | to | 0.40 | % | | 23.31 | % | to | 23.62 | % |
2009 | | 65 | | $ | 7.25 |
| to | $ | 9.57 |
| | 621 | | 0.19 | % | | 0.25 | % | to | 0.40 | % | | 27.42 | % | to | 27.60 | % |
FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 31 | | $ | 19.08 |
| to | $ | 19.08 |
| | 588 | | 1.89 | % | | 0.00 | % | to | 0.00 | % | | (2.10 | )% | to | (2.10 | )% |
2012 | | 31 | | $ | 19.49 |
| to | $ | 19.49 |
| | 613 | | 1.27 | % | | 0.00 | % | to | 0.25 | % | | 5.31 | % | to | 5.31 | % |
2011 | | 44 | | $ | 13.91 |
| to | $ | 13.91 |
| | 613 | | 3.15 | % | | 0.25 | % | to | 0.25 | % | | 6.75 | % | to | 6.75 | % |
2010 | | 51 | | $ | 16.56 |
| to | $ | 13.03 |
| | 666 | | 3.49 | % | | 0.25 | % | to | 0.40 | % | | 6.77 | % | to | 7.24 | % |
2009 | | 46 | | $ | 15.51 |
| to | $ | 12.15 |
| | 562 | | 15.07 | % | | 0.25 | % | to | 0.40 | % | | 15.32 | % | to | 15.17 | % |
| | | | | | | | | | | | | | | | | (Continued) |
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COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
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FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
FIDELITY VIP MID CAP PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 23 | | $ | 39.16 |
| to | $ | 39.16 |
| | 895 | | 0.27 | % | | 0.00 | % | to | 0.00 | % | | 35.88 | % | to | 35.88 | % |
2012 | | 58 | | $ | 28.82 |
| to | $ | 28.82 |
| | 1,678 | | 0.17 | % | | 0.00 | % | to | 0.40 | % | | 13.73 | % | to | 13.79 | % |
2011 | | 197 | | $ | 17.59 |
| to | $ | 14.73 |
| | 3,104 | | 0.02 | % | | 0.25 | % | to | 0.40 | % | | (11.21 | )% | to | (11.05 | )% |
2010 | | 220 | | $ | 19.81 |
| to | $ | 16.56 |
| | 3,969 | | 0.12 | % | | 0.25 | % | to | 0.40 | % | | 28.05 | % | to | 28.27 | % |
2009 | | 220 | | $ | 15.47 |
| to | $ | 12.91 |
| | 3,083 | | 0.47 | % | | 0.25 | % | to | 0.40 | % | | 39.12 | % | to | 39.42 | % |
GREAT-WEST AGGRESSIVE PROFILE I FUND | | | | | | | | | | | | | | | | | | |
2013 | | 23 | | $ | 19.64 |
| to | $ | 19.64 |
| | 453 | | 1.81 | % | | 0.00 | % | to | 0.00 | % | | 28.79 | % | to | 28.79 | % |
2012 | | 26 | | $ | 15.25 |
| to | $ | 15.25 |
| | 402 | | 0.34 | % | | 0.00 | % | to | 0.40 | % | | 15.48 | % | to | 15.63 | % |
2011 | | 70 | | $ | 14.39 |
| to | $ | 11.81 |
| | 889 | | 0.96 | % | | 0.25 | % | to | 0.40 | % | | (4.77 | )% | to | (4.68 | )% |
2010 | | 62 | | $ | 15.11 |
| to | $ | 12.39 |
| | 877 | | 0.72 | % | | 0.25 | % | to | 0.40 | % | | 15.08 | % | to | 15.26 | % |
2009 | | 48 | | $ | 13.13 |
| to | $ | 10.75 |
| | 619 | | 0.75 | % | | 0.25 | % | to | 0.40 | % | | 32.49 | % | to | 32.72 | % |
GREAT-WEST ARIEL MIDCAP VALUE FUND | | | | | | | | | | | | | | | | | | |
2013 | | 33 | | $ | 39.73 |
| to | $ | 39.73 |
| | 1,302 | | 4.32 | % | | 0.00 | % | to | 0.00 | % | | 47.53 | % | to | 47.53 | % |
2012 | | 10 | | $ | 26.93 |
| to | $ | 26.93 |
| | 277 | | 0.62 | % | | 0.00 | % | to | 0.25 | % | | 18.66 | % | to | 18.66 | % |
2011 | | 20 | | $ | 12.20 |
| to | $ | 12.20 |
| | 250 | | 0.41 | % | | 0.25 | % | to | 0.25 | % | | (7.08 | )% | to | (7.08 | )% |
2010 | | 21 | | $ | 23.82 |
| to | $ | 13.13 |
| | 281 | | 0.10 | % | | 0.25 | % | to | 0.40 | % | | 19.04 | % | to | 19.26 | % |
2009 | | 28 | | $ | 20.01 |
| to | $ | 11.01 |
| | 313 | | 0.17 | % | | 0.25 | % | to | 0.40 | % | | 62.68 | % | to | 62.87 | % |
GREAT-WEST BOND INDEX FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 137 | | $ | 12.82 |
| to | $ | 12.82 |
| | 1,757 | | 1.93 | % | | 0.00 | % | to | 0.00 | % | | (2.38 | )% | to | (2.38 | )% |
GREAT-WEST CONSERVATIVE PROFILE I FUND | | | | | | | | | | | | | | | | | | |
2013 | | 22 | | $ | 20.42 |
| to | $ | 20.42 |
| | 446 | | 2.22 | % | | 0.00 | % | to | 0.00 | % | | 7.53 | % | to | 7.53 | % |
2012 | | 23 | | $ | 18.99 |
| to | $ | 18.99 |
| | 441 | | 1.43 | % | | 0.00 | % | to | 0.40 | % | | 8.46 | % | to | 8.62 | % |
2011 | | 31 | | $ | 16.98 |
| to | $ | 13.35 |
| | 475 | | 2.13 | % | | 0.25 | % | to | 0.40 | % | | 0.71 | % | to | 0.75 | % |
2010 | | 27 | | $ | 16.86 |
| to | $ | 13.25 |
| | 405 | | 2.29 | % | | 0.25 | % | to | 0.40 | % | | 8.29 | % | to | 8.52 | % |
2009 | | 17 | | $ | 15.57 |
| to | $ | 12.21 |
| | 255 | | 3.19 | % | | 0.25 | % | to | 0.40 | % | | 19.86 | % | to | 20.06 | % |
GREAT-WEST LIFETIME 2025 FUND II | | | | | | | | | | | | | | | | | | |
(Effective date 09/29/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 7 | | $ | 15.11 |
| to | $ | 15.11 |
| | 110 | | 2.84 | % | | 0.00 | % | to | 0.00 | % | | 14.56 | % | to | 14.56 | % |
2012 | | 6 | | $ | 13.19 |
| to | $ | 13.19 |
| | 75 | | 0.94 | % | | 0.00 | % | to | 0.40 | % | | 13.09 | % | to | 13.22 | % |
2011 | | 4 | | $ | 11.56 |
| to | $ | 11.56 |
| | 49 | | 5.28 | % | | 0.40 | % | to | 0.40 | % | | (1.37 | )% | to | (1.37 | )% |
2010 | | 1 | | $ | 11.72 |
| to | $ | 11.75 |
| | 15 | | 0.98 | % | | 0.25 | % | to | 0.40 | % | | 12.69 | % | to | 12.98 | % |
| | | | | | | | | | | | | | | | | (Continued) |
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COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
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FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
GREAT-WEST LIFETIME 2045 FUND II | | | | | | | | | | | | | | | | | | |
(Effective date 09/29/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 0 | * | $ | 16.38 |
| to | $ | 16.38 |
| | 3 | | 2.55 | % | | 0.00 | % | to | 0.00 | % | | 22.60 | % | to | 22.60 | % |
2012 | | 0 | * | $ | 13.36 |
| to | $ | 13.36 |
| | 2 | | 0.86 | % | | 0.00 | % | to | 0.40 | % | | 15.45 | % | to | 15.45 | % |
2011 | | 0 | * | $ | 11.45 |
| to | $ | 11.45 |
| | 2 | | 1.21 | % | | 0.40 | % | to | 0.40 | % | | (4.50 | )% | to | (4.50 | )% |
2010 | | 1 | | $ | 11.99 |
| to | $ | 12.01 |
| | 14 | | 1.26 | % | | 0.25 | % | to | 0.40 | % | | 14.63 | % | to | 14.71 | % |
GREAT-WEST LOOMIS SAYLES BOND FUND | | | | | | | | | | | | | | | | | | |
2013 | | 71 | | $ | 34.28 |
| to | $ | 34.28 |
| | 2,420 | | 3.46 | % | | 0.00 | % | to | 0.00 | % | | 8.04 | % | to | 8.04 | % |
2012 | | 126 | | $ | 31.73 |
| to | $ | 31.73 |
| | 3,995 | | 3.16 | % | | 0.00 | % | to | 0.40 | % | | 15.14 | % | to | 15.21 | % |
2011 | | 137 | | $ | 26.92 |
| to | $ | 15.73 |
| | 2,571 | | 5.82 | % | | 0.25 | % | to | 0.40 | % | | 3.98 | % | to | 4.17 | % |
2010 | | 147 | | $ | 25.89 |
| to | $ | 15.10 |
| | 2,597 | | 7.31 | % | | 0.25 | % | to | 0.40 | % | | 12.32 | % | to | 12.52 | % |
2009 | | 113 | | $ | 23.05 |
| to | $ | 13.42 |
| | 1,784 | | 5.11 | % | | 0.25 | % | to | 0.40 | % | | 37.94 | % | to | 38.07 | % |
GREAT-WEST LOOMIS SAYLES SMALL-CAP VALUE FUND | | | | | | | | | | | | | | | | | | |
2013 | | 18 | | $ | 29.97 |
| to | $ | 29.97 |
| | 537 | | 0.63 | % | | 0.00 | % | to | 0.00 | % | | 34.88 | % | to | 34.88 | % |
2012 | | 36 | | $ | 22.22 |
| to | $ | 22.22 |
| | 810 | | 0.45 | % | | 0.00 | % | to | 0.40 | % | | 15.04 | % | to | 15.22 | % |
2011 | | 62 | | $ | 15.55 |
| to | $ | 13.43 |
| | 827 | | 0.17 | % | | 0.25 | % | to | 0.40 | % | | (2.45 | )% | to | (2.33 | )% |
2010 | | 60 | | $ | 15.94 |
| to | $ | 13.75 |
| | 840 | | 0.46 | % | | 0.25 | % | to | 0.40 | % | | 23.47 | % | to | 23.65 | % |
2009 | | 72 | | $ | 12.91 |
| to | $ | 11.12 |
| | 826 | | 0.38 | % | | 0.25 | % | to | 0.40 | % | | 27.44 | % | to | 27.52 | % |
GREAT-WEST MFS INTERNATIONAL VALUE FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/25/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 359 | | $ | 9.75 |
| to | $ | 9.75 |
| | 3,500 | | 2.61 | % | | 0.00 | % | to | 0.00 | % | | 28.12 | % | to | 28.12 | % |
2012 | | 100 | | $ | 7.61 |
| to | $ | 7.61 |
| | 765 | | 0.89 | % | | 0.00 | % | to | 0.40 | % | | 15.75 | % | to | 15.96 | % |
2011 | | 24 | | $ | 6.37 |
| to | $ | 6.42 |
| | 157 | | 1.60 | % | | 0.25 | % | to | 0.40 | % | | (2.30 | )% | to | (2.13 | )% |
2010 | | 4 | | $ | 6.52 |
| to | $ | 6.56 |
| | 27 | | 2.71 | % | | 0.25 | % | to | 0.40 | % | | 8.67 | % | to | 8.97 | % |
2009 | | 2 | | $ | 6.00 |
| to | $ | 6.02 |
| | 9 | | 1.06 | % | | 0.25 | % | to | 0.40 | % | | 31.29 | % | to | 31.44 | % |
GREAT-WEST MODERATE PROFILE I FUND | | | | | | | | | | | | | | | | | | |
2013 | | 11 | | $ | 20.52 |
| to | $ | 20.52 |
| | 235 | | 3.45 | % | | 0.00 | % | to | 0.00 | % | | 16.19 | % | to | 16.19 | % |
2012 | | 12 | | $ | 17.66 |
| to | $ | 17.66 |
| | 213 | | 0.86 | % | | 0.00 | % | to | 0.40 | % | | 11.51 | % | to | 11.59 | % |
2011 | | 46 | | $ | 16.57 |
| to | $ | 13.28 |
| | 663 | | 1.38 | % | | 0.25 | % | to | 0.40 | % | | (1.66 | )% | to | (1.48 | )% |
2010 | | 48 | | $ | 16.85 |
| to | $ | 13.48 |
| | 799 | | 1.42 | % | | 0.25 | % | to | 0.40 | % | | 11.07 | % | to | 11.22 | % |
2009 | | 36 | | $ | 15.17 |
| to | $ | 12.12 |
| | 542 | | 1.62 | % | | 0.25 | % | to | 0.40 | % | | 23.94 | % | to | 24.18 | % |
| | | | | | | | | | | | | | | | | (Continued) |
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COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
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FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND | | | | | | | | | | | | | | | | | | |
2013 | | 12 | | $ | 20.17 |
| to | $ | 20.17 |
| | 237 | | 1.75 | % | | 0.00 | % | to | 0.00 | % | | 20.42 | % | to | 20.42 | % |
2012 | | 11 | | $ | 16.75 |
| to | $ | 16.75 |
| | 186 | | 0.55 | % | | 0.00 | % | to | 0.40 | % | | 13.07 | % | to | 13.21 | % |
2011 | | 50 | | $ | 15.91 |
| to | $ | 12.95 |
| | 672 | | 1.42 | % | | 0.25 | % | to | 0.40 | % | | (2.57 | )% | to | (2.41 | )% |
2010 | | 37 | | $ | 16.33 |
| to | $ | 13.27 |
| | 575 | | 1.21 | % | | 0.25 | % | to | 0.40 | % | | 12.70 | % | to | 12.84 | % |
2009 | | 33 | | $ | 14.49 |
| to | $ | 11.76 |
| | 447 | | 1.24 | % | | 0.25 | % | to | 0.40 | % | | 28.12 | % | to | 28.24 | % |
GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND | | | | | | | | | | | | | | | | | | |
2013 | | 15 | | $ | 20.21 |
| to | $ | 20.21 |
| | 295 | | 2.56 | % | | 0.00 | % | to | 0.00 | % | | 11.84 | % | to | 11.84 | % |
2012 | | 12 | | $ | 18.07 |
| to | $ | 18.07 |
| | 225 | | 0.98 | % | | 0.00 | % | to | 0.40 | % | | 10.00 | % | to | 10.13 | % |
2011 | | 57 | | $ | 16.50 |
| to | $ | 13.48 |
| | 795 | | 1.92 | % | | 0.25 | % | to | 0.40 | % | | (0.48 | )% | to | (0.37 | )% |
2010 | | 43 | | $ | 16.58 |
| to | $ | 13.53 |
| | 675 | | 1.80 | % | | 0.25 | % | to | 0.40 | % | | 9.58 | % | to | 9.82 | % |
2009 | | 25 | | $ | 15.13 |
| to | $ | 12.32 |
| | 371 | | 2.45 | % | | 0.25 | % | to | 0.40 | % | | 21.62 | % | to | 21.74 | % |
GREAT-WEST MONEY MARKET FUND | | | | | | | | | | | | | | | | | | |
2013 | | 727 | | $ | 13.01 |
| to | $ | 13.01 |
| | 9,459 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 0.00 | % | to | 0.00 | % |
2012 | | 747 | | $ | 13.01 |
| to | $ | 13.01 |
| | 9,725 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | (0.32 | )% | to | (0.18 | )% |
2011 | | 793 | | $ | 12.56 |
| to | $ | 11.27 |
| | 9,287 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | (0.40 | )% | to | (0.27 | )% |
2010 | | 678 | | $ | 12.61 |
| to | $ | 11.30 |
| | 8,012 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | (0.39 | )% | to | (0.26 | )% |
2009 | | 633 | | $ | 12.66 |
| to | $ | 11.33 |
| | 7,534 | | 0.01 | % | | 0.25 | % | to | 0.40 | % | | (0.39 | )% | to | (0.18 | )% |
GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 6 | | $ | 20.08 |
| to | $ | 20.08 |
| | 113 | | 1.78 | % | | 0.00 | % | to | 0.00 | % | | 28.88 | % | to | 28.88 | % |
2012 | | 5 | | $ | 15.58 |
| to | $ | 15.58 |
| | 83 | | 0.16 | % | | 0.00 | % | to | 0.40 | % | | 19.65 | % | to | 19.65 | % |
2011 | | 5 | | $ | 12.84 |
| to | $ | 12.84 |
| | 68 | | 0.02 | % | | 0.40 | % | to | 0.40 | % | | (9.83 | )% | to | (9.83 | )% |
2010 | | 4 | | $ | 14.24 |
| to | $ | 14.28 |
| | 51 | | 0.08 | % | | 0.25 | % | to | 0.40 | % | | 8.12 | % | to | 8.35 | % |
GREAT-WEST SHORT DURATION BOND FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/25/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 413 | | $ | 13.31 |
| to | $ | 13.31 |
| | 5,492 | | 1.86 | % | | 0.00 | % | to | 0.00 | % | | 1.37 | % | to | 1.37 | % |
2012 | | 502 | | $ | 13.13 |
| to | $ | 13.13 |
| | 6,591 | | 1.26 | % | | 0.00 | % | to | 0.25 | % | | 4.47 | % | to | 4.47 | % |
2011 | | 503 | | $ | 12.31 |
| to | $ | 12.40 |
| | 6,226 | | 2.72 | % | | 0.25 | % | to | 0.40 | % | | 2.50 | % | to | 2.65 | % |
2010 | | 205 | | $ | 12.01 |
| to | $ | 12.08 |
| | 2,468 | | 3.69 | % | | 0.25 | % | to | 0.40 | % | | 6.76 | % | to | 6.90 | % |
2009 | | 190 | | $ | 11.25 |
| to | $ | 11.30 |
| | 2,139 | | 4.32 | % | | 0.25 | % | to | 0.40 | % | | 9.54 | % | to | 9.82 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
GREAT-WEST SMALL-CAP GROWTH FUND | | | | | | | | | | | | | | | | | | |
2013 | | 5 | | $ | 12.41 |
| to | $ | 12.41 |
| | 60 | | 9.69 | % | | 0.00 | % | to | 0.00 | % | | 44.81 | % | to | 44.81 | % |
2012 | | 4 | | $ | 8.57 |
| to | $ | 8.57 |
| | 37 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 14.77 | % | to | 14.77 | % |
2011 | | 5 | | $ | 11.47 |
| to | $ | 11.47 |
| | 62 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | (0.78 | )% | to | (0.78 | )% |
2010 | | 109 | | $ | 10.91 |
| to | $ | 11.56 |
| | 1,256 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 23.28 | % | to | 23.37 | % |
2009 | | 118 | | $ | 8.85 |
| to | $ | 9.37 |
| | 1,101 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 31.50 | % | to | 31.79 | % |
GREAT-WEST T. ROWE PRICE EQUITY/INCOME FUND | | | | | | | | | | | | | | | | | | |
2013 | | 110 | | $ | 21.42 |
| to | $ | 21.42 |
| | 2,358 | | 2.19 | % | | 0.00 | % | to | 0.00 | % | | 30.05 | % | to | 30.05 | % |
2012 | | 50 | | $ | 16.47 |
| to | $ | 16.47 |
| | 828 | | 1.23 | % | | 0.00 | % | to | 0.25 | % | | 16.34 | % | to | 16.34 | % |
2011 | | 61 | | $ | 13.52 |
| to | $ | 11.53 |
| | 710 | | 1.93 | % | | 0.25 | % | to | 0.40 | % | | (1.24 | )% | to | (1.11 | )% |
2010 | | 49 | | $ | 13.69 |
| to | $ | 11.66 |
| | 595 | | 1.80 | % | | 0.25 | % | to | 0.40 | % | | 14.56 | % | to | 14.76 | % |
2009 | | 40 | | $ | 11.95 |
| to | $ | 10.16 |
| | 432 | | 1.73 | % | | 0.25 | % | to | 0.40 | % | | 24.74 | % | to | 24.97 | % |
GREAT-WEST T. ROWE PRICE MIDCAP GROWTH FUND | | | | | | | | | | | | | | | | | | |
2013 | | 119 | | $ | 27.37 |
| to | $ | 27.37 |
| | 3,248 | | 0.06 | % | | 0.00 | % | to | 0.00 | % | | 36.37 | % | to | 36.37 | % |
2012 | | 201 | | $ | 20.07 |
| to | $ | 20.07 |
| | 4,028 | | 0.41 | % | | 0.00 | % | to | 0.40 | % | | 13.18 | % | to | 13.24 | % |
2011 | | 146 | | $ | 16.97 |
| to | $ | 15.34 |
| | 2,270 | | 1.65 | % | | 0.25 | % | to | 0.40 | % | | (2.13 | )% | to | (1.92 | )% |
2010 | | 17 | | $ | 17.34 |
| to | $ | 15.64 |
| | 290 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 27.03 | % | to | 27.26 | % |
2009 | | 15 | | $ | 13.65 |
| to | $ | 12.29 |
| | 200 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 44.29 | % | to | 44.42 | % |
GREAT-WEST TEMPLETON GLOBAL BOND FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 236 | | $ | 14.14 |
| to | $ | 14.14 |
| | 3,336 | | 1.54 | % | | 0.00 | % | to | 0.00 | % | | 0.57 | % | to | 0.57 | % |
2012 | | 188 | | $ | 14.06 |
| to | $ | 14.06 |
| | 2,642 | | 3.11 | % | | 0.00 | % | to | 0.40 | % | | 13.97 | % | to | 14.11 | % |
2011 | | 14 | | $ | 12.07 |
| to | $ | 12.38 |
| | 173 | | 5.85 | % | | 0.25 | % | to | 0.40 | % | | (2.03 | )% | to | (1.90 | )% |
2010 | | 8 | | $ | 11.16 |
| to | $ | 11.41 |
| | 88 | | 1.83 | % | | 0.25 | % | to | 0.40 | % | | 14.34 | % | to | 14.10 | % |
GREAT-WEST U.S. GOVERNMENT MORTGAGE SECURITIES FUND | | | | | | | | | | | | | | | | | | |
2013 | | 193 | | $ | 20.04 |
| to | $ | 20.04 |
| | 3,871 | | 2.23 | % | | 0.00 | % | to | 0.00 | % | | (2.05 | )% | to | (2.05 | )% |
2012 | | 197 | | $ | 20.46 |
| to | $ | 20.46 |
| | 4,030 | | 1.72 | % | | 0.00 | % | to | 0.25 | % | | 2.94 | % | to | 2.94 | % |
2011 | | 244 | | $ | 18.96 |
| to | $ | 14.07 |
| | 3,434 | | 3.36 | % | | 0.25 | % | to | 0.40 | % | | 5.27 | % | to | 5.47 | % |
2010 | | 250 | | $ | 18.01 |
| to | $ | 13.34 |
| | 3,391 | | 3.68 | % | | 0.25 | % | to | 0.40 | % | | 5.14 | % | to | 5.29 | % |
2009 | | 239 | | $ | 17.13 |
| to | $ | 12.67 |
| | 3,140 | | 4.20 | % | | 0.25 | % | to | 0.40 | % | | 5.61 | % | to | 5.76 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
INVESCO V.I. CORE EQUITY FUND | | | | | | | | | | | | | | | | | | |
2013 | | 45 | | $ | 18.53 |
| to | $ | 18.53 |
| | 837 | | 1.40 | % | | 0.00 | % | to | 0.00 | % | | 29.22 | % | to | 29.22 | % |
2012 | | 51 | | $ | 14.34 |
| to | $ | 14.34 |
| | 730 | | 0.57 | % | | 0.00 | % | to | 0.25 | % | | 13.32 | % | to | 13.32 | % |
2011 | | 52 | | $ | 12.63 |
| to | $ | 12.63 |
| | 654 | | 1.15 | % | | 0.25 | % | to | 0.25 | % | | (0.32 | )% | to | (0.32 | )% |
2010 | | 130 | | $ | 13.01 |
| to | $ | 12.67 |
| | 1,642 | | 0.97 | % | | 0.25 | % | to | 0.40 | % | | 9.42 | % | to | 9.32 | % |
2009 | | 124 | | $ | 11.89 |
| to | $ | 11.59 |
| | 1,437 | | 1.89 | % | | 0.25 | % | to | 0.40 | % | | 27.44 | % | to | 27.92 | % |
INVESCO V.I. DIVERSIFIED DIVIDEND FUND | | | | | | | | | | | | | | | | | | |
(Effective date 06/15/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 9.60 |
| to | $ | 9.60 |
| | 13 | | 3.26 | % | | 0.00 | % | to | 0.00 | % | | 30.97 | % | to | 30.97 | % |
2012 | | 0 | * | $ | 7.33 |
| to | $ | 7.33 |
| | 3 | | 0.25 | % | | 0.00 | % | to | 0.25 | % | | 18.10 | % | to | 18.10 | % |
2011 | | 1 | | $ | 5.31 |
| to | $ | 5.31 |
| | 6 | | 0.19 | % | | 0.25 | % | to | 0.25 | % | | (2.39 | )% | to | (2.39 | )% |
2010 | | 1 | | $ | 6.09 |
| to | $ | 5.44 |
| | 7 | | 0.06 | % | | 0.25 | % | to | 0.40 | % | | 9.93 | % | to | 10.12 | % |
2009 | | 1 | | $ | 5.54 |
| to | $ | 4.94 |
| | 7 | | 5.73 | % | | 0.25 | % | to | 0.40 | % | | 26.77 | % | to | 26.99 | % |
INVESCO V.I. GLOBAL HEALTH CARE FUND | | | | | | | | | | | | | | | | | | |
2013 | | 3 | | $ | 24.06 |
| to | $ | 24.06 |
| | 74 | | 0.76 | % | | 0.00 | % | to | 0.00 | % | | 40.54 | % | to | 40.54 | % |
2012 | | 8 | | $ | 17.12 |
| to | $ | 17.12 |
| | 136 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 19.99 | % | to | 19.99 | % |
2011 | | 13 | | $ | 12.75 |
| to | $ | 12.75 |
| | 160 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | 3.66 | % | to | 3.66 | % |
2010 | | 16 | | $ | 13.15 |
| to | $ | 12.30 |
| | 201 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 4.86 | % | to | 5.04 | % |
2009 | | 12 | | $ | 12.54 |
| to | $ | 11.71 |
| | 153 | | 0.36 | % | | 0.25 | % | to | 0.40 | % | | 27.18 | % | to | 27.28 | % |
INVESCO V.I. GLOBAL REAL ESTATE FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/25/2007) | | | | | | | | | | | | | | | | | | |
2013 | | 38 | | $ | 30.21 |
| to | $ | 30.21 |
| | 1,146 | | 3.94 | % | | 0.00 | % | to | 0.00 | % | | 2.72 | % | to | 2.72 | % |
2012 | | 16 | | $ | 29.41 |
| to | $ | 29.41 |
| | 478 | | 0.33 | % | | 0.00 | % | to | 0.40 | % | | 27.18 | % | to | 27.18 | % |
2011 | | 8 | | $ | 6.88 |
| to | $ | 6.93 |
| | 58 | | 3.11 | % | | 0.25 | % | to | 0.40 | % | | (6.90 | )% | to | (6.73 | )% |
2010 | | 12 | | $ | 7.39 |
| to | $ | 7.43 |
| | 90 | | 5.39 | % | | 0.25 | % | to | 0.40 | % | | 16.93 | % | to | 17.19 | % |
2009 | | 5 | | $ | 6.32 |
| to | $ | 6.34 |
| | 29 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 31.12 | % | to | 31.26 | % |
INVESCO V.I. INTERNATIONAL GROWTH FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 200 | | $ | 14.94 |
| to | $ | 14.94 |
| | 2,994 | | 1.34 | % | | 0.00 | % | to | 0.00 | % | | 19.04 | % | to | 19.04 | % |
2012 | | 79 | | $ | 12.55 |
| to | $ | 12.55 |
| | 989 | | 0.55 | % | | 0.00 | % | to | 0.40 | % | | 14.40 | % | to | 14.58 | % |
2011 | | 68 | | $ | 10.62 |
| to | $ | 10.71 |
| | 726 | | 1.53 | % | | 0.25 | % | to | 0.40 | % | | (7.17 | )% | to | (7.03 | )% |
2010 | | 80 | | $ | 11.44 |
| to | $ | 11.52 |
| | 916 | | 2.31 | % | | 0.25 | % | to | 0.40 | % | | 12.49 | % | to | 12.61 | % |
2009 | | 103 | | $ | 10.17 |
| to | $ | 10.23 |
| | 1,053 | | 1.61 | % | | 0.25 | % | to | 0.40 | % | | 34.70 | % | to | 34.96 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
INVESCO V.I. MID CAP CORE EQUITY FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 17 | | $ | 19.45 |
| to | $ | 19.45 |
| | 322 | | 0.78 | % | | 0.00 | % | to | 0.00 | % | | 28.81 | % | to | 28.81 | % |
2012 | | 16 | | $ | 15.10 |
| to | $ | 15.10 |
| | 240 | | 0.03 | % | | 0.00 | % | to | 0.40 | % | | 10.36 | % | to | 10.40 | % |
2011 | | 14 | | $ | 13.46 |
| to | $ | 13.52 |
| | 184 | | 0.14 | % | | 0.25 | % | to | 0.40 | % | | (6.79 | )% | to | (6.63 | )% |
2010 | | 1 | | $ | 14.44 |
| to | $ | 14.48 |
| | 11 | | 0.54 | % | | 0.25 | % | to | 0.40 | % | | 13.70 | % | to | 13.84 | % |
INVESCO V.I. TECHNOLOGY FUND | | | | | | | | | | | | | | | | | | |
2013 | | 4 | | $ | 15.54 |
| to | $ | 15.54 |
| | 66 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 25.12 | % | to | 25.12 | % |
2012 | | 6 | | $ | 12.42 |
| to | $ | 12.42 |
| | 77 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 11.84 | % | to | 11.84 | % |
2011 | | 5 | | $ | 12.19 |
| to | $ | 12.19 |
| | 64 | | 0.18 | % | | 0.25 | % | to | 0.25 | % | | (5.36 | )% | to | (5.36 | )% |
2010 | | 5 | | $ | 11.35 |
| to | $ | 12.88 |
| | 59 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 20.74 | % | to | 21.05 | % |
2009 | | 3 | | $ | 9.40 |
| to | $ | 10.64 |
| | 35 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 56.93 | % | to | 56.93 | % |
JANUS ASPEN BALANCED PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 45 | | $ | 22.71 |
| to | $ | 22.71 |
| | 1,030 | | 2.30 | % | | 0.00 | % | to | 0.00 | % | | 20.16 | % | to | 20.16 | % |
2012 | | 41 | | $ | 18.90 |
| to | $ | 18.90 |
| | 773 | | 1.88 | % | | 0.00 | % | to | 0.40 | % | | 12.99 | % | to | 13.08 | % |
2011 | | 22 | | $ | 18.54 |
| to | $ | 15.23 |
| | 350 | | 2.57 | % | | 0.25 | % | to | 0.40 | % | | 1.26 | % | to | 1.40 | % |
2010 | | 28 | | $ | 18.31 |
| to | $ | 15.02 |
| | 431 | | 2.45 | % | | 0.25 | % | to | 0.40 | % | | 7.96 | % | to | 8.14 | % |
2009 | | 40 | | $ | 16.96 |
| to | $ | 13.89 |
| | 587 | | 2.80 | % | | 0.25 | % | to | 0.40 | % | | 25.35 | % | to | 25.59 | % |
JANUS ASPEN FLEXIBLE BOND PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 209 | | $ | 23.83 |
| to | $ | 23.83 |
| | 4,989 | | 4.17 | % | | 0.00 | % | to | 0.00 | % | | (0.13 | )% | to | (0.13 | )% |
2012 | | 259 | | $ | 23.86 |
| to | $ | 23.86 |
| | 6,178 | | 2.18 | % | | 0.00 | % | to | 0.40 | % | | 7.80 | % | to | 7.92 | % |
2011 | | 311 | | $ | 21.50 |
| to | $ | 15.46 |
| | 5,561 | | 7.45 | % | | 0.25 | % | to | 0.40 | % | | 6.33 | % | to | 6.47 | % |
2010 | | 310 | | $ | 20.22 |
| to | $ | 14.52 |
| | 5,173 | | 6.45 | % | | 0.25 | % | to | 0.40 | % | | 7.55 | % | to | 7.72 | % |
2009 | | 289 | | $ | 18.80 |
| to | $ | 13.48 |
| | 4,390 | | 4.45 | % | | 0.25 | % | to | 0.40 | % | | 12.78 | % | to | 12.90 | % |
JANUS ASPEN FORTY PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 30 | | $ | 27.47 |
| to | $ | 27.47 |
| | 814 | | 0.65 | % | | 0.00 | % | to | 0.00 | % | | 31.18 | % | to | 31.18 | % |
2012 | | 67 | | $ | 20.94 |
| to | $ | 20.94 |
| | 1,408 | | 0.49 | % | | 0.00 | % | to | 0.40 | % | | 23.72 | % | to | 23.79 | % |
2011 | | 119 | | $ | 16.22 |
| to | $ | 13.70 |
| | 1,777 | | 0.29 | % | | 0.25 | % | to | 0.40 | % | | (7.05 | )% | to | (6.93 | )% |
2010 | | 283 | | $ | 17.45 |
| to | $ | 14.72 |
| | 4,439 | | 0.36 | % | | 0.25 | % | to | 0.40 | % | | 6.27 | % | to | 6.51 | % |
2009 | | 274 | | $ | 16.42 |
| to | $ | 13.82 |
| | 4,012 | | 0.04 | % | | 0.25 | % | to | 0.40 | % | | 45.83 | % | to | 45.93 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 3 | | $ | 21.84 |
| to | $ | 21.84 |
| | 59 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 35.82 | % | to | 35.82 | % |
2012 | | 3 | | $ | 16.08 |
| to | $ | 16.08 |
| | 54 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | 19.26 | % | to | 19.37 | % |
2011 | | 6 | | $ | 10.59 |
| to | $ | 14.93 |
| | 73 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | (9.02 | )% | to | (8.91 | )% |
2010 | | 6 | | $ | 11.64 |
| to | $ | 16.39 |
| | 71 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 24.36 | % | to | 24.54 | % |
2009 | | 3 | | $ | 9.36 |
| to | $ | 13.16 |
| | 29 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 56.52 | % | to | 31.60 | % |
JANUS ASPEN OVERSEAS PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 7 | | $ | 29.42 |
| to | $ | 29.42 |
| | 209 | | 2.70 | % | | 0.00 | % | to | 0.00 | % | | 14.56 | % | to | 14.56 | % |
2012 | | 103 | | $ | 25.68 |
| to | $ | 25.68 |
| | 2,648 | | 0.40 | % | | 0.00 | % | to | 0.40 | % | | 12.22 | % | to | 12.38 | % |
2011 | | 260 | | $ | 10.68 |
| to | $ | 10.77 |
| | 2,800 | | 0.47 | % | | 0.25 | % | to | 0.40 | % | | (32.41 | )% | to | (32.35 | )% |
2010 | | 288 | | $ | 15.80 |
| to | $ | 15.92 |
| | 4,575 | | 0.74 | % | | 0.25 | % | to | 0.40 | % | | 24.80 | % | to | 25.06 | % |
2009 | | 216 | | $ | 12.66 |
| to | $ | 12.73 |
| | 2,741 | | 0.57 | % | | 0.25 | % | to | 0.40 | % | | 78.81 | % | to | 79.04 | % |
JANUS ASPEN WORLDWIDE PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 31 | | $ | 10.20 |
| to | $ | 10.20 |
| | 314 | | 1.07 | % | | 0.00 | % | to | 0.00 | % | | 28.46 | % | to | 28.46 | % |
2012 | | 32 | | $ | 7.94 |
| to | $ | 7.94 |
| | 254 | | 0.41 | % | | 0.00 | % | to | 0.25 | % | | 18.46 | % | to | 18.46 | % |
2011 | | 39 | | $ | 10.43 |
| to | $ | 10.43 |
| | 406 | | 0.60 | % | | 0.25 | % | to | 0.25 | % | | (14.01 | )% | to | (14.01 | )% |
2010 | | 42 | | $ | 10.43 |
| to | $ | 12.13 |
| | 513 | | 0.60 | % | | 0.25 | % | to | 0.40 | % | | 15.38 | % | to | 15.63 | % |
2009 | | 34 | | $ | 9.04 |
| to | $ | 10.49 |
| | 353 | | 1.43 | % | | 0.25 | % | to | 0.40 | % | | 37.18 | % | to | 37.30 | % |
NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 5 | | $ | 21.72 |
| to | $ | 21.72 |
| | 105 | | 0.55 | % | | 0.00 | % | to | 0.00 | % | | 38.87 | % | to | 38.87 | % |
2012 | | 110 | | $ | 15.64 |
| to | $ | 15.64 |
| | 1,723 | | 0.16 | % | | 0.00 | % | to | 0.25 | % | | 11.86 | % | to | 11.86 | % |
2011 | | 129 | | $ | 12.33 |
| to | $ | 12.33 |
| | 1,589 | | 0.44 | % | | 0.25 | % | to | 0.25 | % | | (3.14 | )% | to | (3.14 | )% |
2010 | | 168 | | $ | 15.92 |
| to | $ | 12.73 |
| | 2,136 | | 0.42 | % | | 0.25 | % | to | 0.40 | % | | 18.54 | % | to | 18.64 | % |
2009 | | 177 | | $ | 13.43 |
| to | $ | 10.73 |
| | 1,900 | | 1.16 | % | | 0.25 | % | to | 0.40 | % | | 29.13 | % | to | 29.43 | % |
NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 20.12 |
| to | $ | 20.12 |
| | 29 | | 0.30 | % | | 0.00 | % | to | 0.00 | % | | 31.07 | % | to | 31.07 | % |
2012 | | 97 | | $ | 15.35 |
| to | $ | 15.35 |
| | 1,483 | | 0.24 | % | | 0.00 | % | to | 0.25 | % | | 15.51 | % | to | 15.51 | % |
2011 | | 121 | | $ | 10.87 |
| to | $ | 10.87 |
| | 1,318 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | (11.55 | )% | to | (11.55 | )% |
2010 | | 124 | | $ | 15.53 |
| to | $ | 12.29 |
| | 1,528 | | 0.67 | % | | 0.25 | % | to | 0.40 | % | | 16.07 | % | to | 15.40 | % |
2009 | | 154 | | $ | 13.38 |
| to | $ | 10.65 |
| | 1,637 | | 3.33 | % | | 0.25 | % | to | 0.40 | % | | 54.33 | % | to | 55.70 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 38 | | $ | 18.44 |
| to | $ | 18.44 |
| | 698 | | 1.22 | % | | 0.00 | % | to | 0.00 | % | | 37.00 | % | to | 37.00 | % |
2012 | | 92 | | $ | 13.46 |
| to | $ | 13.46 |
| | 1,237 | | 0.35 | % | | 0.00 | % | to | 0.40 | % | | 14.75 | % | to | 14.85 | % |
2011 | | 78 | | $ | 9.72 |
| to | $ | 9.80 |
| | 761 | | 0.61 | % | | 0.25 | % | to | 0.40 | % | | (6.90 | )% | to | (6.76 | )% |
2010 | | 84 | | $ | 10.44 |
| to | $ | 10.51 |
| | 883 | | 0.75 | % | | 0.25 | % | to | 0.40 | % | | 25.63 | % | to | 25.87 | % |
2009 | | 85 | | $ | 8.31 |
| to | $ | 8.35 |
| | 712 | | 1.86 | % | | 0.25 | % | to | 0.40 | % | | 46.05 | % | to | 46.23 | % |
NEUBERGER BERMAN AMT MID CAP PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 17 | | $ | 16.90 |
| to | $ | 16.90 |
| | 283 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 32.55 | % | to | 32.55 | % |
2012 | | 21 | | $ | 12.75 |
| to | $ | 12.75 |
| | 263 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 12.27 | % | to | 12.27 | % |
2011 | | 19 | | $ | 15.40 |
| to | $ | 15.40 |
| | 293 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | 0.26 | % | to | 0.26 | % |
2010 | | 20 | | $ | 16.04 |
| to | $ | 15.36 |
| | 306 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 28.53 | % | to | 28.75 | % |
2009 | | 15 | | $ | 12.48 |
| to | $ | 11.93 |
| | 179 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 31.09 | % | to | 31.24 | % |
NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 3 | | $ | 16.71 |
| to | $ | 16.71 |
| | 42 | | 0.00 | % | | 0.00 | % | to | 0.00 | % | | 45.81 | % | to | 45.81 | % |
2012 | | 3 | | $ | 11.46 |
| to | $ | 11.46 |
| | 37 | | 0.00 | % | | 0.00 | % | to | 0.25 | % | | 9.08 | % | to | 9.08 | % |
2011 | | 5 | | $ | 9.52 |
| to | $ | 9.52 |
| | 45 | | 0.00 | % | | 0.25 | % | to | 0.25 | % | | (1.35 | )% | to | (1.35 | )% |
2010 | | 19 | | $ | 10.36 |
| to | $ | 9.65 |
| | 199 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 19.08 | % | to | 19.28 | % |
2009 | | 31 | | $ | 8.70 |
| to | $ | 8.09 |
| | 270 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 22.36 | % | to | 22.58 | % |
NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 23.29 |
| to | $ | 23.29 |
| | 18 | | 0.58 | % | | 0.00 | % | to | 0.00 | % | | 37.57 | % | to | 37.57 | % |
2012 | | 2 | | $ | 16.93 |
| to | $ | 16.93 |
| | 32 | | 0.04 | % | | 0.00 | % | to | 0.25 | % | | 10.05 | % | to | 10.05 | % |
2011 | | 2 | | $ | 12.32 |
| to | $ | 12.32 |
| | 29 | | 0.34 | % | | 0.25 | % | to | 0.25 | % | | (3.30 | )% | to | (3.30 | )% |
2010 | | 2 | | $ | 16.73 |
| to | $ | 12.74 |
| | 27 | | 0.03 | % | | 0.25 | % | to | 0.40 | % | | 22.30 | % | to | 22.50 | % |
2009 | | 3 | | $ | 13.68 |
| to | $ | 10.40 |
| | 29 | | 2.05 | % | | 0.25 | % | to | 0.40 | % | | 30.91 | % | to | 31.15 | % |
PIMCO VIT HIGH YIELD PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 23 | | $ | 19.76 |
| to | $ | 19.76 |
| | 450 | | 5.45 | % | | 0.00 | % | to | 0.00 | % | | 5.72 | % | to | 5.72 | % |
2012 | | 24 | | $ | 18.69 |
| to | $ | 18.69 |
| | 455 | | 2.77 | % | | 0.00 | % | to | 0.40 | % | | 13.51 | % | to | 13.69 | % |
2011 | | 13 | | $ | 15.83 |
| to | $ | 14.70 |
| | 206 | | 6.95 | % | | 0.25 | % | to | 0.40 | % | | 2.93 | % | to | 3.09 | % |
2010 | | 14 | | $ | 15.38 |
| to | $ | 14.26 |
| | 211 | | 7.22 | % | | 0.25 | % | to | 0.40 | % | | 14.01 | % | to | 14.17 | % |
2009 | | 7 | | $ | 13.49 |
| to | $ | 12.49 |
| | 90 | | 8.41 | % | | 0.25 | % | to | 0.40 | % | | 39.65 | % | to | 39.87 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
PIMCO VIT LOW DURATION PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 295 | | $ | 14.54 |
| to | $ | 14.54 |
| | 4,290 | | 1.46 | % | | 0.00 | % | to | 0.00 | % | | (0.14 | )% | to | (0.14 | )% |
2012 | | 491 | | $ | 14.56 |
| to | $ | 14.56 |
| | 7,144 | | 1.01 | % | | 0.00 | % | to | 0.40 | % | | 5.36 | % | to | 5.52 | % |
2011 | | 218 | | $ | 13.34 |
| to | $ | 13.33 |
| | 2,905 | | 1.68 | % | | 0.25 | % | to | 0.40 | % | | 0.76 | % | to | 0.83 | % |
2010 | | 194 | | $ | 13.24 |
| to | $ | 13.22 |
| | 2,569 | | 1.62 | % | | 0.25 | % | to | 0.40 | % | | 4.83 | % | to | 5.00 | % |
2009 | | 208 | | $ | 12.63 |
| to | $ | 12.59 |
| | 2,621 | | 3.56 | % | | 0.25 | % | to | 0.40 | % | | 12.87 | % | to | 13.02 | % |
PIMCO VIT REAL RETURN PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 74 | | $ | 16.13 |
| to | $ | 16.13 |
| | 1,196 | | 1.70 | % | | 0.00 | % | to | 0.00 | % | | (9.23 | )% | to | (9.23 | )% |
2012 | | 66 | | $ | 17.77 |
| to | $ | 17.77 |
| | 1,181 | | 0.71 | % | | 0.00 | % | to | 0.40 | % | | 8.25 | % | to | 8.33 | % |
2011 | | 114 | | $ | 15.85 |
| to | $ | 14.78 |
| | 1,689 | | 2.10 | % | | 0.25 | % | to | 0.40 | % | | 11.23 | % | to | 11.38 | % |
2010 | | 108 | | $ | 14.25 |
| to | $ | 13.27 |
| | 1,460 | | 1.45 | % | | 0.25 | % | to | 0.40 | % | | 7.71 | % | to | 7.89 | % |
2009 | | 124 | | $ | 13.23 |
| to | $ | 12.30 |
| | 1,571 | | 2.96 | % | | 0.25 | % | to | 0.40 | % | | 17.81 | % | to | 18.04 | % |
PIMCO VIT TOTAL RETURN PORTFOLIO | | | | | | | | | | | | | | | | | | |
2013 | | 484 | | $ | 17.41 |
| to | $ | 17.41 |
| | 8,425 | | 2.21 | % | | 0.00 | % | to | 0.00 | % | | (1.97 | )% | to | (1.97 | )% |
2012 | | 465 | | $ | 17.76 |
| to | $ | 17.76 |
| | 8,250 | | 1.42 | % | | 0.00 | % | to | 0.40 | % | | 9.02 | % | to | 9.16 | % |
2011 | | 290 | | $ | 15.70 |
| to | $ | 15.21 |
| | 4,427 | | 2.63 | % | | 0.25 | % | to | 0.40 | % | | 3.15 | % | to | 3.33 | % |
2010 | | 278 | | $ | 15.22 |
| to | $ | 14.72 |
| | 4,101 | | 2.41 | % | | 0.25 | % | to | 0.40 | % | | 7.71 | % | to | 7.84 | % |
2009 | | 278 | | $ | 14.13 |
| to | $ | 13.65 |
| | 3,805 | | 4.60 | % | | 0.25 | % | to | 0.40 | % | | 13.59 | % | to | 13.75 | % |
PUTNAM VT EQUITY INCOME FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 9 | | $ | 24.06 |
| to | $ | 24.06 |
| | 225 | | 2.02 | % | | 0.00 | % | to | 0.00 | % | | 32.71 | % | to | 32.71 | % |
2012 | | 9 | | $ | 18.13 |
| to | $ | 18.13 |
| | 169 | | 1.32 | % | | 0.00 | % | to | 0.40 | % | | 18.24 | % | to | 18.32 | % |
2011 | | 7 | | $ | 14.99 |
| to | $ | 15.05 |
| | 99 | | 2.31 | % | | 0.25 | % | to | 0.40 | % | | 1.63 | % | to | 1.83 | % |
2010 | | 9 | | $ | 14.75 |
| to | $ | 14.78 |
| | 132 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 12.42 | % | to | 12.48 | % |
PUTNAM VT HIGH YIELD FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 6 | | $ | 19.48 |
| to | $ | 19.48 |
| | 118 | | 7.01 | % | | 0.00 | % | to | 0.00 | % | | 8.10 | % | to | 8.10 | % |
2012 | | 4 | | $ | 18.02 |
| to | $ | 18.02 |
| | 74 | | 2.79 | % | | 0.00 | % | to | 0.40 | % | | 15.68 | % | to | 15.69 | % |
2011 | | 0 | * | $ | 15.32 |
| to | $ | 15.32 |
| | 5 | | 0.00 | % | | 0.40 | % | to | 0.40 | % | | 1.39 | % | to | 1.39 | % |
| | | | | | | | | | | | | | | | | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
PUTNAM VT INTERNATIONAL GROWTH FUND | | | | | | | | | | | | | | | | | | |
(Effective date 04/24/2009) | | | | | | | | | | | | | | | | | | |
2013 | | 2 | | $ | 20.08 |
| to | $ | 20.08 |
| | 31 | | 1.30 | % | | 0.00 | % | to | 0.00 | % | | 22.74 | % | to | 22.74 | % |
2012 | | 1 | | $ | 16.36 |
| to | $ | 16.36 |
| | 23 | | 0.95 | % | | 0.00 | % | to | 0.25 | % | | 19.39 | % | to | 19.39 | % |
2011 | | 2 | | $ | 13.41 |
| to | $ | 13.41 |
| | 27 | | 1.86 | % | | 0.25 | % | to | 0.25 | % | | (17.83 | )% | to | (17.83 | )% |
2010 | | 1 | | $ | 16.28 |
| to | $ | 16.32 |
| | 21 | | 1.70 | % | | 0.25 | % | to | 0.40 | % | | 12.04 | % | to | 12.16 | % |
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 16 | | $ | 14.01 |
| to | $ | 14.01 |
| | 226 | | 0.33 | % | | 0.00 | % | to | 0.00 | % | | 20.67 | % | to | 20.67 | % |
2012 | | 42 | | $ | 11.61 |
| to | $ | 11.61 |
| | 492 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | 6.55 | % | to | 6.59 | % |
2011 | | 65 | | $ | 10.56 |
| to | $ | 10.65 |
| | 689 | | 2.41 | % | | 0.25 | % | to | 0.40 | % | | (12.66 | )% | to | (12.49 | )% |
2010 | | 72 | | $ | 12.09 |
| to | $ | 12.17 |
| | 870 | | 2.16 | % | | 0.25 | % | to | 0.40 | % | | 29.44 | % | to | 29.61 | % |
2009 | | 32 | | $ | 9.34 |
| to | $ | 9.39 |
| | 304 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 56.97 | % | to | 57.29 | % |
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO | | | | | | | | | | | | | | | | | | |
(Effective date 05/01/2006) | | | | | | | | | | | | | | | | | | |
2013 | | 60 | | $ | 17.28 |
| to | $ | 17.28 |
| | 1,042 | | 0.93 | % | | 0.00 | % | to | 0.00 | % | | 34.47 | % | to | 34.47 | % |
2012 | | 69 | | $ | 12.85 |
| to | $ | 12.85 |
| | 882 | | 0.01 | % | | 0.00 | % | to | 0.40 | % | | 11.61 | % | to | 11.79 | % |
2011 | | 80 | | $ | 11.20 |
| to | $ | 11.29 |
| | 899 | | 0.28 | % | | 0.25 | % | to | 0.40 | % | | (3.86 | )% | to | (3.83 | )% |
2010 | | 97 | | $ | 11.65 |
| to | $ | 11.74 |
| | 1,143 | | 0.09 | % | | 0.25 | % | to | 0.40 | % | | 19.73 | % | to | 20.04 | % |
2009 | | 130 | | $ | 9.73 |
| to | $ | 9.78 |
| | 1,266 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 34.39 | % | to | 34.71 | % |
VAN ECK VIP EMERGING MARKETS FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 1 | | $ | 41.04 |
| to | $ | 41.04 |
| | 33 | | 1.18 | % | | 0.00 | % | to | 0.00 | % | | 12.04 | % | to | 12.04 | % |
2012 | | 1 | | $ | 36.63 |
| to | $ | 36.63 |
| | 22 | | 0.00 | % | | 0.00 | % | to | 0.40 | % | | 27.07 | % | to | 27.07 | % |
2011 | | 2 | | $ | 7.63 |
| to | $ | 7.63 |
| | 13 | | 0.95 | % | | 0.40 | % | to | 0.40 | % | | (26.07 | )% | to | (26.07 | )% |
2010 | | 1 | | $ | 10.32 |
| to | $ | 19.42 |
| | 11 | | 0.00 | % | | 0.25 | % | to | 0.40 | % | | 26.32 | % | to | 26.51 | % |
| | | | | | | | | | | | | | | | | (Continued) | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
COLI VUL-2 SERIES ACCOUNT OF | | | | | | | | | | | | | | | | | | |
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS | | At December 31 | | For the year or period ended December 31 |
| | Units | | | | | | Net Assets | | Investment | | Expense Ratio | | | | |
INVESTMENT DIVISIONS | | (000s) | | Unit Fair Value | | (000s) | | Income Ratio | | lowest to highest | | Total Return |
| | | | (a) | | (b) | | | | | | | | | | (a) | | (b) |
VAN ECK VIP GLOBAL HARD ASSETS FUND | | | | | | | | | | | | | | | | | | |
(Effective date 05/05/2008) | | | | | | | | | | | | | | | | | | |
2013 | | 9 | | $ | 73.61 |
| to | $ | 73.61 |
| | 641 | | 0.64 | % | | 0.00 | % | to | 0.00 | % | | 10.56 | % | to | 10.56 | % |
2012 | | 3 | | $ | 66.58 |
| to | $ | 66.58 |
| | 173 | | 0.35 | % | | 0.00 | % | to | 0.40 | % | | 2.55 | % | to | 2.67 | % |
2011 | | 30 | | $ | 8.11 |
| to | $ | 13.51 |
| | 335 | | 0.81 | % | | 0.25 | % | to | 0.40 | % | | (16.74 | )% | to | (16.66 | )% |
2010 | | 20 | | $ | 9.74 |
| to | $ | 16.21 |
| | 203 | | 0.07 | % | | 0.25 | % | to | 0.40 | % | | 28.67 | % | to | 28.86 | % |
2009 | | 5 | | $ | 7.57 |
| to | $ | 12.58 |
| | 37 | | 0.23 | % | | 0.25 | % | to | 0.40 | % | | 57.05 | % | to | 25.80 | % |
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* The Investment Division has units and/or assets that round to less than $1,000 or 1,000 units. | | | | | | | | | | | | | | | | | | |
(a) The amounts in these columns are associated with the highest Expense Ratio. | | | | | | | | | | | | | | | | | | |
(b) The amounts in these columns are associated with the lowest Expense Ratio. | | | | | | | | | | | | | | | | | (Concluded) | |