485BPOS 1 d535358d485bpos.htm EXECUTIVE BENEFIT VUL II OF GWLA 485BPOS Executive Benefit VUL II of GWLA 485BPOS

As filed with the Securities and Exchange Commission on April 25, 2018

Registration Nos. 333-70963; 811-09201

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-6

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.              (    )
Post-Effective Amendment No. 35      (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 28                (X)

COLI VUL-2 SERIES ACCOUNT

(Exact Name of Registrant)

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

(Name of Depositor)

8515 E. Orchard Road

Greenwood Village, Colorado 80111

(Address of Depositor’s Principal Executive Office)

(303) 737-3000

(Depositor’s Telephone Number)

Robert L. Reynolds

President & Chief Executive Officer

Great-West Life & Annuity Insurance Company

8515 E. Orchard Road

Greenwood Village, Colorado 80111

(Name and Address of Agent for Service)

Copy to:

Ann B. Furman, Esq.

Carlton Fields Jorden Burt, P.A.

1025 Thomas Jefferson Street, N.W., Suite 400 West

Washington, D.C. 20007-5208

Approximate date of proposed public offering: Continuous

It is proposed that this filing will become effective (check appropriate box)

 

 

                

    immediately upon filing pursuant to paragraph (b) of Rule 485
 

        x        

    on May 1, 2018, pursuant to paragraph (b) of Rule 485
 

 

    60 days after filing, pursuant to paragraph (a)(1) of Rule 485
 

 

    on (date), pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

 

 

                 

    this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: flexible premium variable universal life insurance policies.

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:
• choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change;
• choose the amount and timing of Premium payments, within certain limits;
• allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment objectives change; and
• 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, 2018
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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. The Policy gives the Company the right to impose limits on the amount each Owner can invest in the Fixed Account and such limits are subject to change at the sole discretion of the Company.
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 (30 days for replacement policies), and depending on state law, receive (i) your Policy Value (less surrenders, withdrawals and distributions), or (ii) the greater of your Premiums, less any withdrawals, or your Policy Value. 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 Government 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 –
1. a fixed benefit equal to the Total Face Amount of your Policy; or
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.
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After the first Policy Year, you may change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect -
1. the Premiums you pay;
2. the investment performance of the Divisions you select;
3. the value of the Fixed Account;
4. any Policy loans or partial withdrawals;
5. your Loan Account balance; and
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 in “Charges and Deductions” below.
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 –
1. term life insurance; and
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.
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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 Policy 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” below. Certain limitations apply to Transfers into and out of the Fixed Account. See “Fixed Account Transfers” below.
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.
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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 1⁄2.
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.
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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: 6.0%
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.
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.
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Periodic Charges Other Than Fund Operating Expenses
Charge When Charge is Deducted Amount Deducted
Cost of Insurance (per $1000 Net Amount at Risk)1    
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 Charge2 Monthly Guaranteed: 0.90% (of average daily net assets) annually
Current: 0.28% for Policy Years 1-20, and 0.10% thereafter
Service Charge Monthly Maximum: $10/month
Current: $7.50/month
1 The Cost of Insurance Charge will vary based on individual characteristics. The cost of insurance shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance charge by contacting our Service Center at 888-353-2654.
2 The mortality and expense risk charge is accrued daily and deducted on the first day of each Policy month by cancelling accumulation units pro-rata against Sub-Accounts.
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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 in “Charges and Deductions” below. The benefits provided under each rider are summarized in “Other Provisions and Benefits” below.
Change of Insured Rider3* 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 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 Expenses4
(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 0.27% 2.61%
THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
3. The Change of Insured Rider will vary based on individual characteristics. The charge shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance by contacting our Service Center at 888-353-2654.
4. Expenses are shown as a percentage of a Fund’s average net assets as of December 31, 2016. 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.
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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
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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.
Such payments and fees create an incentive for us to offer portfolios (or classes of shares of portfolios) for which such payments and fees are available to us. We consider such payments and fees, among other things, when deciding to include a portfolio (or class or share of a portfolio) as an investment option under the Policy. Other available investment portfolios (or other available classes of shares of the portfolios) may have lower fees and better overall investment performance than the portfolios (or classes of shares of the portfolios) offered under the Policy.
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 a 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 (now known as the Great-West International Value Fund) (Investor Class Shares).
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Effective May 1, 2014, the Division investing in the Columbia Variable Portfolio – Small Cap Value Fund (Class 1 Shares) was closed to new Owners, however, Owners with amounts transferred in to aforementioned Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of such Division.
Effective May 1, 2016, the Divisions investing in the following Funds were closed to new Owners: Alger Small Cap Growth Portfolio (Class I-2 Shares); Davis Value Portfolio; Deutsche Alternative Asset Allocation VIP (Class A Shares); Invesco V.I. Mid Cap Core Equity Fund (Series I Shares); Janus Aspen Overseas Portfolio (now known as Janus Henderson Overseas Portfolio) (Institutional Shares); and Royce Capital Fund Small-Cap Portfolio (Service Class Shares). Owners with amounts invested in these Funds as of May 1, 2016 may continue to allocate Premium payments and Transfer amounts into and out of these Divisions.
Effective May 1, 2017, the Divisions investing in the following Funds were closed to new Owners: Deutsche Small Mid Cap Value VIP (Class A Shares); Goldman Sachs VIT Mid Cap Value Fund (Institutional Shares); Lord Abbett Series Fund Developing Growth Portfolio (Class VC Shares); and Royce Capital Fund Micro-Cap Portfolio (Service Class Shares). Owners with amounts invested in these Funds as of May 1, 2017 may continue to allocate Premium payments and Transfer amounts into and out of these Divisions.
Effective May 1, 2018, the Division investing in the Deutsche Global Small Cap VIP (Class A Shares) is closed to new Owners, however, Owners with amounts transferred in to aforementioned Division as of May 1, 2018, may continue to allocate Premium payments and Transfer amounts into and out of such Division.
Fund Investment Objectives. The investment objectives of the Funds are briefly described below:
AIM Variable Insurance Funds (Invesco Variable Insurance Funds) - advised by Invesco Advisers, Inc.
Invesco V.I. Global Health Care Fund (Series I Shares)* - seeks long-term growth of capital.
Invesco V.I. Global Real Estate Fund (Series I Shares) - seeks total return through growth of capital and current income. Invesco Asset Management Ltd is the sub-adviser to this Fund.
Invesco V.I. International Growth Fund (Series I Shares) - seeks long-term growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares)* - seeks long-term growth of capital.
Alger Portfolios – advised by Fred Alger Management, Inc.
Alger Small Cap Growth Portfolio (Class I-2 Shares)* - seeks long-term capital appreciation.
American Century Variable Portfolios, Inc. – advised by American Century Investment Management, Inc.
American Century Investments® VP Capital Appreciation Fund (Class I Shares) - seeks capital growth.
American Century Investments® VP Mid Cap Value Fund (Class I Shares) - seeks long-term capital growth; income is a secondary consideration.
American Century Investments® VP Value Fund (Class I Shares) - seeks long-term capital growth; income is a secondary consideration.
American Century Variable Portfolios II, Inc. – advised by American Century Investment Management, Inc.
American Century Investments® VP Inflation Protection Fund (Class II Shares) - seeks long-term total return using a strategy that seeks to protect against U.S. inflation.
American Funds Insurance Series® - advised by Capital Research and Management Company
American Funds Insurance Series® Global Small Capitalization Fund (Class 2 Shares) - seeks long-term growth of capital.
American Funds Insurance Series® Growth Fund (Class 2 Shares) - seeks growth of capital.
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American Funds Insurance Series® Growth-Income Fund (Class 2 Shares) - seeks long-term growth of capital while providing current income.
American Funds Insurance Series® International Fund (Class 2 Shares) - seeks to provide investors with long-term growth of capital.
American Funds Insurance Series® New World Fund® (Class 2 Shares) - seeks long-term capital appreciation.
Blackrock Variable Series Funds, Inc. - advised by BlackRock Advisors, LLC
BlackRock Global Allocation V.I. Fund (Class I Shares) - seeks high total investment return.
Columbia Funds Variable Insurance Trust - advised by Columbia Management Investment Advisers, LLC
Columbia Variable Portfolio - Small Cap Value (Class 1 Shares)* - seeks long-term capital appreciation.
Davis Variable Account Fund, Inc. - advised by Davis Selected Advisors, L.P.
Davis Financial Portfolio - seeks long-term growth of capital. Davis Selected Advisers-NY, Inc. is the sub-adviser to this Fund.
Davis Value Portfolio* - seeks long-term growth of capital. Davis Selected Advisers-NY, Inc. is the sub-adviser to this Fund.
Delaware VIP® Trust – advised by Delaware Management Company
Delaware VIP® International Value Equity Series (Standard Class Shares) - seeks long-term growth without undue risk to principal.
Delaware VIP® Small Cap Value Series (Service Class Shares) - seeks capital appreciation.
Deutsche Investments VIT Funds – advised by Deutsche Investment Management Americas, Inc.
Deutsche Small Cap Index VIP (Class A Shares) - seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small U.S. companies. Northern Trust Investments, Inc. is the sub-adviser to this Fund.
Deutsche Variable Series I – advised by Deutsche Investment Management Americas, Inc.
Deutsche Core Equity VIP (Class A Shares) - seeks long-term growth of capital, current income and growth of income.
Deutsche Global Small Cap VIP (Class A Shares)* - seeks above-average capital appreciation over the long term.
Deutsche Variable Series II – advised by Deutsche Investment Management Americas, Inc.
Deutsche High Income VIP (Class A Shares) - seeks a high level of current income.
Deutsche Small Mid Cap Value VIP (Class A Shares)* - seeks long-term capital appreciation.
Dreyfus Stock Index Fund, Inc. (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) - seeks to match the total return of the Standard & Poor's® 500 Composite Stock Price Index (S&P 500® Index). Mellon Capital Management Corporation is the sub-adviser to this Fund.
Dreyfus Variable Investment Fund – advised by The Dreyfus Corporation
Dreyfus VIF International Equity Portfolio (Initial Shares) - seeks capital growth. The Boston Company Asset Management, LLC is the sub-adviser to this Fund.
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Eaton Vance Variable Trust – advised by Eaton Vance Management
Eaton Vance VT Floating-Rate Income Fund (Initial Class Shares) - seeks to provide a high level of current income.
Federated Insurance Series – advised by Federated Investment Management Company
Federated High Income Bond Fund II (Primary Class Shares) - seeks high current income.
Fidelity Variable Insurance Products Fund II – advised by Fidelity Management & Research Company
Fidelity® Variable Insurance Products Contrafund® Portfolio (Service Class 2 Shares) - seeks long-term capital appreciation. FMR Co., Inc. (FMRC) is the sub-adviser to this Fund.
Fidelity Variable Insurance Products Fund III – advised by Fidelity Management & Research Company
Fidelity® Variable Insurance Products Mid Cap Portfolio (Service Class 2 Shares) - seeks long-term growth of capital. FMR Co., Inc. (FMRC) is the sub-adviser to this Fund.
Goldman Sachs Variable Insurance Trust – advised by Goldman Sachs Asset Management, L.P.
Goldman Sachs VIT Mid Cap Value Fund (Institutional Shares)* - seeks long-term capital appreciation.
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio (Service Shares) - seeks long-term growth of capital.
Great-West Funds, Inc. – advised by Great-West Capital Management, LLC
Great-West Ariel Mid Cap Value Fund (Investor Class Shares) - seeks long-term capital appreciation. Ariel Investments, LLC is the sub-adviser to this Fund.
Great-West Bond Index Fund (Investor Class Shares) - seeks investment results that track the total return of the debt securities that comprise the Bloomberg Barclays U.S. Aggregate Bond Index.
Great-West Core Bond Fund (Investor Class Shares) - 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. Federated Investment Management Company and Wellington Management Company LLP are the sub-advisers to this Fund.
Great-West Emerging Markets Equity Fund (Investor Class Shares) - seeks long-term capital appreciation. Lazard Asset Management LLC and UBS Asset Management (Americas) Inc. are the sub-advisers to this Fund.
Great-West Government Money Market Fund (Investor Class Shares) - seeks as high a level of current income as is consistent with the preservation of capital and liquidity. Investment in the Great-West Government 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 Inflation-Protected Securities Fund (Investor Class Shares) - seeks real return consistent with the preservation of capital. Goldman Sachs Asset Management, L.P. is the sub-adviser to this Fund.
Great-West International Index Fund (Investor Class Shares) - 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. Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West International Value Fund (formerly Great-West MFS International Value Fund) (Investor Class Shares) - seeks long-term capital growth. LSV Asset Management and Massachusetts Financial Services Company are the sub-advisers to this Fund.
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Great-West Invesco Small Cap Value Fund (Investor Class Shares) - seeks long-term growth of capital. Invesco Advisers, Inc. is the sub-adviser to this Fund.
Great-West Large Cap Growth Fund (formerly Great-West Multi-Manager Large Cap Growth Fund) (Investor Class Shares) - seeks long-term growth of capital. Amundi Pioneer Asset Management, Inc. and J.P. Morgan Investment Management Inc. are the sub-advisers to this Fund.
Great-West Loomis Sayles Bond Fund (Investor Class Shares) - 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 (Investor Class Shares) - seeks long-term capital growth. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West Mid Cap Value Fund (formerly Great-West Goldman Sachs Mid Cap Value Fund) (Investor Class Shares) - seeks long-term growth of capital. Goldman Sachs Asset Management, L.P. is the sub-adviser to this Fund.
Great-West Real Estate Index Fund (Investor Class Shares) - 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 (“REITs”). Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West S&P Mid Cap 400® Index Fund (Investor Class Shares) - seeks investment results, before fees and expenses, which track the total return of the common stocks that comprise the Standard & Poor's (“S&P”) MidCap 400® Index. Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West S&P Small Cap 600® Index Fund (Investor Class Shares) - seeks investment results that track the total return of the common stocks that comprise the Standard & Poor's (“S&P”) SmallCap 600® Index. ) Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West Short Duration Bond Fund (Investor Class Shares) - seeks maximum total return that is consistent with preservation of capital and liquidity.
Great-West Small Cap Growth Fund (formerly Great-West Multi-Manager Small Cap Growth Fund) (Investor Class Shares) - seeks long-term capital appreciation. Lord, Abbett & Co. LLC and Peregrine Capital Management, LLC are the sub-advisers to the Fund.
Great-West T. Rowe Price Equity Income Fund (Investor Class Shares) - 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 (Investor Class Shares) - seeks long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund (Investor Class Shares) - seeks current income with capital appreciation and growth of income. Franklin Advisers, Inc. is the sub-adviser to the Fund.
Great-West U.S. Government Securities Fund (formerly Great-West U.S. Government Mortgage Securities Fund) (Investor Class Shares) - seeks the highest level of return consistent with preservation of capital and substantial credit protection.
Great-West Lifetime Funds
Great-West Lifetime 2015 Fund (Investor Class Shares) - seeks income and secondarily, capital growth.
Great-West Lifetime 2020 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2020, it seeks income and secondarily capital growth.
Great-West Lifetime 2025 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2025, it seeks income and secondarily capital growth.
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Great-West Lifetime 2030 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2030, it seeks income and secondarily capital growth.
Great-West Lifetime 2035 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2035, it seeks income and secondarily capital growth.
Great-West Lifetime 2040 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2040, it seeks income and secondarily capital growth.
Great-West Lifetime 2045 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2045, it seeks income and secondarily capital growth.
Great-West Lifetime 2050 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2050, it seeks income and secondarily capital growth.
Great-West Lifetime 2055 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2055, it seeks income and secondarily capital growth.
Great-West Profile Funds
Each of the following Profile Funds seeks to provide an asset allocation program designed to meet certain investment goals based on an investor’s risk tolerance, investment horizon and personal objectives.
Great-West Aggressive Profile Fund (formerly Great-West Aggressive Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds that emphasize equity investments.
Great-West Conservative Profile Fund (formerly Great-West Conservative Profile II Fund) (Investor Class Shares) - seeks capital preservation primarily through investments in underlying funds that emphasize fixed income investments.
Great-West Moderate Profile Fund (formerly Great-West Moderate Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Aggressive Profile Fund (formerly Great-West Moderately Aggressive Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds that emphasize equity investments and, to a lesser degree, in underlying funds that emphasize fixed income investments.
Great-West Moderately Conservative Profile Fund (formerly Great-West Moderately Conservative Profile II Fund) (Investor Class Shares) - seeks income and capital appreciation primarily through investments in underlying funds that emphasize fixed income investments and, to a lesser degree, in underlying funds that emphasize equity investments.
Janus Aspen Series – advised by Janus Capital Management, LLC
Janus Henderson Balanced Portfolio (formerly Janus Aspen Balanced Portfolio) (Institutional Shares) - seeks long-term capital growth, consistent with preservation of capital and balanced by current income.
Janus Henderson Enterprise Portfolio (formerly Janus Aspen Enterprise Portfolio) (Institutional Shares) - seeks long-term growth of capital.
Janus Henderson Flexible Bond Portfolio (formerly Janus Aspen Flexible Bond Portfolio) (Institutional Shares) - seeks to obtain maximum total return, consistent with preservation of capital.
Janus Henderson Forty Portfolio (formerly Janus Aspen Forty Portfolio) (Institutional Shares) - seeks long-term growth of capital.
Janus Henderson Global Technology Portfolio (formerly Janus Aspen Global Technology Portfolio) (Institutional Shares) - seeks long-term growth of capital.
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Janus Henderson Overseas Portfolio (formerly Janus Aspen Overseas Portfolio) (Institutional Shares)* - seeks long-term growth of capital.
JPMorgan Insurance Trust – advised by J.P. Morgan Investment Management Inc.
JPMorgan Insurance Trust Small Cap Core Portfolio (Class 1 Shares) - seeks capital growth over the long term.
JPMorgan Insurance Trust U.S. Equity Portfolio (Class 1 Shares) - seeks high total return.
Legg Mason Partners Variable Equity Trust – advised by Legg Mason Partners Fund Advisor, LLC
ClearBridge Variable Mid Cap Portfolio (Class I Shares) - seeks long-term growth of capital. ClearBridge Investments, LLC is the sub-adviser to this Fund.
ClearBridge Variable Small Cap Growth Portfolio (Class I Shares) - seeks long-term growth of capital. ClearBridge Investments, LLC is the sub-adviser to this Fund.
Lord Abbett Series Fund, Inc. – advised by Lord, Abbett & Co. LLC
Lord Abbett Series Fund Developing Growth Portfolio (Class VC Shares)* - seeks long-term growth of capital.
Lord Abbett Series Fund Total Return Portfolio (Class VC Shares) - seeks income and capital appreciation to produce a high total return.
MFS® Variable Insurance Trust – advised by Massachusetts Financial Services Company
MFS® Growth Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Mid Cap Growth Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Research Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Total Return Bond Series (Initial Class Shares) - seeks total return with an emphasis on current income, but also considering capital appreciation.
MFS® VIT Value Series (Initial Class Shares) - seeks capital appreciation.
MFS® Variable Insurance Trust III – advised by Massachusetts Financial Services Company
MFS® VIT III Blended Research® Small Cap Equity Portfolio (Initial Class Shares) - seeks capital appreciation.
MFS® VIT III Global Real Estate Portfolio (Initial Class Shares) - seeks total return.
MFS® VIT III Mid Cap Value Portfolio (Initial Class Shares) - seeks capital appreciation.
Neuberger Berman Advisers Management Trust – advised by Neuberger Berman Investment Advisers LLC
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) - seeks growth of capital.
Neuberger Berman AMT Sustainable Equity Portfolio (formerly Neuberger Berman AMT Socially Responsive Portfolio) (Class I Shares) - seeks long-term growth of capital by investing primarily in securities of companies that meet the fund's financial criteria and social policy.
Oppenheimer Variable Account Funds – advised by OFI Global Asset Management, Inc.
Oppenheimer Main Street Small Cap Fund/VA® (Non-Service Shares) - seeks capital appreciation. OppenheimerFunds, Inc. is the sub-adviser to this Fund.
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PIMCO Variable Insurance Trust – advised by Pacific Investment Management Company, LLC
PIMCO VIT CommodityRealReturn® Strategy Portfolio (Administrative Class Shares) - seeks maximum real return, consistent with prudent investment management.
PIMCO VIT Global Bond Portfolio (Unhedged) (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT High Yield Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Low Duration Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Class Shares) - seeks maximum real return, consistent with preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
Pioneer Variable Contracts Trust – advised by Amundi Pioneer Asset Management, Inc.
Pioneer Real Estate Shares VCT Portfolio (Class I Shares) - seeks long-term growth of capital; current income is a secondary objective. AEW Capital Management, L.P. is the sub-adviser to the Fund.
Putnam Variable Trust – advised by Putnam Investment Management, LLC
Putnam VT Equity Income Fund (Class IA Shares) - seeks capital growth and current income. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT Global Asset Allocation Fund (Class IA Shares) - seeks long-term return consistent with preservation of capital. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Global Equity Fund (Class IA Shares) - seeks capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Growth Opportunities Fund (Class IA Shares) - seeks capital appreciation. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT High Yield Fund (Class IA Shares) - seeks high current income. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT Income Fund (Class IB Shares) - seeks high current income consistent with what the manager believes to be prudent risk. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT International Growth Fund Class (Class IA Shares) - seeks long-term capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT International Value Fund (Class IA Shares) - seeks capital growth; current income is a secondary objective. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Research Fund (Class IA Shares) - seeks capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Small Cap Value Fund (Class IA Shares) - seeks capital appreciation. Putnam Investments Limited is the sub-adviser to this Fund.
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Putnam VT Sustainable Future Fund (formerly Putnam VT Multi-Cap Value Fund) (Class IA Shares) - seeks capital appreciation and, as a secondary objective, current income. Putnam Investments Limited is the sub-adviser to this Fund.
Royce Capital Fund – advised by Royce & Associates, LP
Royce Micro-Cap Portfolio (Service Class Shares)* - seeks long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares)* - seeks long-term growth of capital.
T. Rowe Price Equity Series, Inc. – advised by T. Rowe Price Associates, Inc.
T. Rowe Price Blue Chip Growth Portfolio (Portfolio-II Class Shares) - seeks to provide long-term capital growth; income is a secondary objective.
VanEck VIP Trust – advised by Van Eck Associates Corporation
VanEck VIP Emerging Markets Fund (Initial Class Shares)* - seeks long-term capital appreciation by investing primarily in equity securities in emerging markets around the world.
VanEck VIP Global Hard Assets Fund (Initial Class Shares) - seeks long-term capital appreciation by investing primarily in hard asset securities; income is a secondary consideration.
Victory Variable Insurance Funds – advised by Victory Capital Management, Inc.
Victory RS Small Cap Growth Equity VIP Series (Class I Shares) - seeks long-term capital growth.
* The Sub-Account investing in this Portfolio is closed to new Owners.
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.
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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 Policy gives the Company the right to impose limits on the amount each Owner can invest in the Fixed Account and such limits are subject to change at the sole discretion of the Company.
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:
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.
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.
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.
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.
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.
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.
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.
9. In an employer-financed insurance purchase arrangement, the procedures described below in “Market Timing and Excessive Trading”, 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 in this prospectus 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:
Policy Year Percentage of Account Value
Returned
Year 1 7%
Year 2 6%
Year 3 5%
Year 4 4%
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Policy Year Percentage of Account Value
Returned
Year 5 3%
Year 6 2%
Year 7 1%
Year 8 0%
As described under the heading “Term Life Insurance Rider” below, we may offer a term life insurance rider that may have the effect of reducing the sales charge and the return of expense 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 0.28% 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 risk 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:
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;
2. is the service charge;
3. is the monthly cost of any additional benefits provided by riders which are a part of your Policy;
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 risk charge.
The net amount at risk equals:
• the death benefit divided by 1.00327374; less
• your Account Value on the first day of a Policy Month prior to assessing the monthly deduction.
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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 $10 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 $10-5 per Policy Month. The service charge will be deducted proportionally from the Divisions. The current service charge is $7.50 per Policy Month.
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 Government 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” above.
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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:
• transfer ownership to a new Owner;
• name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured;
• change or revoke a contingent owner;
• change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable);
• exercise all other rights in the Policy;
• increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and
• 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 below.
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” below.
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 Government Money Market
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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. If the Company has imposed a limit on the amount that can be allocated to the Fixed Account, then your Transfer will be rejected if it would cause the value of the Fixed Account to exceed such limit. 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:
• 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;
• Close the applicable Fund to all new monies, including contributions and Transfers in;
• Restrict all Owners to one purchase in the applicable Fund per 90 day period; or
• 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
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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. Great-West selects the investment options offered though the Contract based on several criteria, including but not limited to asset class coverage, brand recognition, the reputation and tenure of the adviser or sub-adviser, expenses, performance, marketing, availability, investment conditions, and the qualifications of each investment company. Another factor we consider is whether the investment option or an affiliate of the investment option will compensate Great-West for providing certain administrative, marketing, or support services that would otherwise be provided by the investment option, its investment adviser, or its distributor. For more information on such compensation, see “Charges and Deductions” in this prospectus. When we develop and offer a variable annuity product in cooperation with a fund family or a distributor, Great-West will generally include investment options based on recommendations made by the fund family or the distributor, whose selection criteria may differ from our own. We have selected investment options of the Great-West Funds at least in part because they are managed by our directly owned subsidiary.
Great-West does not control the investment options and cannot guarantee that any of the investment options will always be available for allocation of Contributions or Transfers. We retain the right to make changes in the Series Account and in its investments, including the right to establish new sub-accounts or to eliminate existing sub-accounts. Great-West periodically reviews each investment option and reserves the right to discontinue the offering of any investment option if we determine the investment option no longer meets one or more of the criteria, or if the investment option has not attracted significant allocations. If an investment option is discontinued, we may substitute shares of another investment option or shares of another investment company for the discontinued investment option’s shares.
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Any share substitution will comply with the requirements of the 1940 Act. If you are contributing to a sub-account corresponding to an investment option that is being discontinued, you will be given notice prior to the investment option’s elimination. Before a sub-account is eliminated, we will notify you and request that you reallocate the amounts invested in the sub-account to be eliminated.
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” section 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 –
• 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;
• is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy;
• is necessary to reflect a change in the operation of the Series Account or the Divisions; or
• 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.
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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:
• that portion of net Premium received and allocated to the Division, plus
• that portion of net Premium received and allocated to the Fixed Account, less
• the service charges due on the Policy Date, less
• the monthly risk charge due on the Policy Date, less
• the monthly mortality and expense risk charge due on the Policy Date, less
• 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:
• the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division’s net investment factor, plus
• that portion of net Premium received and allocated to the Division during the current Valuation Period, plus
• 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
• any amounts Transferred by you to the Division from another Division during the current Valuation Period, less
• any amounts Transferred by you from the Division to another Division during the current Valuation Period, less
• that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less
• that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less
• that portion of fees due in connection with a partial withdrawal charged to the Division, less
• the pro-rata portion of the mortality and expense risk charge accrued and charged to the Division, less
• 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
• 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
• 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
• 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:
• the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus
• 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
• 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:
• 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
• 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.
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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:
• Premiums, less Expense Charges, allocated to the Fixed Account; plus •Sub-Account Value transferred to the Fixed Account; plus
• Interest credited to the Fixed Account; minus
• Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus
• The portion of any accrued policy fees and charges allocated to the Fixed Account; minus
• Loans from the Fixed Account; minus
• 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 North Dakota) or two years within the date of reinstatement (one year if your Policy is issued in 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 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.
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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” below.
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 above.
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:
• the Policy Date of the Policy to which this rider is attached; or
• 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:
• the date the Policy is surrendered or terminated;
• the expiration of the grace period of the Policy; or
• 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
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(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.
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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 the period required by your state), you may cancel your Policy. If you purchased your Policy as a replacement of an existing policy, the free look period is extended to 30 days from the date you received it. If you decide to cancel your Policy within the free look period, you must return the Policy to our Corporate Headquarters or an agent of Great-West. Policies returned during the free look period will be void from the start.
In states that require us to return Account Value if you cancel your Policy, net Premium will be allocated to the Divisions you select on your application. In those states, we will refund your Policy Value (less surrenders, withdrawals and distributions) as of the date we received your cancellation request. This amount may be higher or lower than your Premium payments depending on the investment performance, which means you bear the investment risk until we receive your Policy and notice of cancellation.
In states that require us to return Premium if you cancel your Policy, net Premium will first be allocated to the Great-West Government Money Market Division and remain there until the next Valuation Date following the end of the free look period. In those states, we will return the greater of Account Value (less any surrenders, withdrawals and distributions already received) or the amount of Premium received as of the date we received your cancellation request.
At the end of the free look period, the Sub-Account value held in the Great-West Government Money Market Division will be allocated to the Division(s) you selected. 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 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.
In your Policy, the free look period is also referred to as the right to examine.
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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,” above.
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:
• the amount of the selected death benefit option, less
• the value of any Policy Debt on the date of the Insured’s death, less
• any accrued and unpaid Policy charges.
The Death Benefit payable on the Insured’s death will be paid in a lump sum unless the Owner elects to receive all or a portion of the Death Benefit Proceeds under a settlement option that the Company is then offering.
  
The Company will pay interest on the Death Benefit Proceeds from the date of death. The Company will pay interest on the Death Benefit Proceeds at a rate established by the Company for funds left on deposit. Additional interest shall accrue at a rate of 10% annually beginning with the date that is 31 calendar days from the latest of (i), (ii), and (iii) to the date the claim is paid, where:
(i) The date that due proof of death is received by the Company;
(ii) The date the Company receives sufficient information to determine our liability, the extent of the liability, and the appropriate payee legally entitled to the Proceeds; and
(iii) The date that legal impediments to the payment of Death Benefit Proceeds that depend on the action of parties other than the Company are resolved and sufficient evidence of the same is provided to the Company.
 
Legal impediments to payment include, but are not limited to (a) the establishment of guardianships and conservatorships; (b) the appointment and qualification of trustees, executors and administrators; and (c) the submission of information required to satisfy state and federal reporting requirements.
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,” below. Your Policy must qualify under the cash value accumulation test (“CVAT”).
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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 –
• the Policy’s Total Face Amount on the date of the Insured’s death less any partial withdrawals; or, if greater,
• 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 –
• 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,
• 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:
• 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.
• 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.
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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:
• first, to the most recent increase;
• second, to the next most recent increases, in reverse chronological order; and
• 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,” below.
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,” below.
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.
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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 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.
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Reinstatement. Before the Insured’s death, we will reinstate your Policy, provided that the Policy has not been surrendered, and provided further that:
• you make your reinstatement Request within three years from the date of termination;
• you submit satisfactory Evidence of Insurability to us;
• you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period;
• you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and
• 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:
• the Account Value at the time of termination; plus
• net Premiums attributable to Premiums paid to reinstate the Policy; less
• the monthly expense charge; less
• the monthly cost of insurance charge applicable on the date of reinstatement; less
• 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:
• the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted;
• the SEC, by order, permits postponement for the protection of Owners; or
• 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.
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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:
• the exchange of a Policy for a life insurance, endowment or annuity contract;
• a change in the death benefit option;
• a Policy loan;
• a partial surrender;
• a complete surrender;
• a change in the ownership of a Policy;
• a change of the named Insured; or
• 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.
Exchanges. Section 1035 of the Code provides that no gain or loss will be recognized on the exchange of one life insurance contract for another. Generally, a life insurance contract issued in an exchange for another life insurance contract is treated for purposes of qualification under section 7702 of the Code as a new issue as of the date of the exchange. A contract’s status as a MEC cannot be changed as a result of an exchange. A MEC includes any life insurance contract that is received in exchange for a MEC.
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.
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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:
• 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.
• 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.
• 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:
1. is made when the taxpayer is age 59 1⁄2 or older;
2. is attributable to the taxpayer becoming disabled; or
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.
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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. 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.
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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 discuss 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 Tax Cuts and Jobs Act of 2017, we are generally required to capitalize and amortize certain Policy acquisition expenses over a fifteen 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
• We do not make any guarantees about the Policy’s tax status.
• We believe the Policy will be treated as a life insurance contract under federal tax laws.
• 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.
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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.
The law firm of Carlton Fields Jorden Burt, P.A., 1025 Thomas Jefferson St., N.W., Suite 400 West, Washington, D.C. 20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
Cyber Security Risks
Because our variable life insurance contract business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is vulnerable to disruptions from utility outages and susceptible to operational and information security risks resulting from information system failures (e.g., hardware and software malfunctions) and cyber-attacks. These risks include, among other things, the theft, misuse, corruption, and destruction of data maintained online or digitally, denial of service on our website and other operational disruption, and unauthorized release of confidential Owner information. Such system failures and cyber-attacks affecting us, the Funds, intermediaries and other affiliated or third-party service providers may adversely affect us and your Policy value. For instance, system failures and cyber-attacks may interfere with our processing of Policy transactions, including the processing of Transfer Requests from our website or with the portfolios, impact our ability to calculate Unit Values, cause the release and possible destruction of confidential owner or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines, litigation, and financial losses and/or cause reputational damage. Cyber security risks may also impact the issuers of securities in which the Funds invest, which may cause the Funds underlying your Policy to lose value. There can be no assurance that we or the Funds or our service providers will avoid losses affecting your Policy due to cyber-attacks or information security breaches in the future.
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.
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 the 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. Such financial statements have so been included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of Great-West Life & Annuity Insurance Company and Subsidiaries included in the 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 have so been included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
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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.
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.
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MEC – Modified Endowment Contract. For more information regarding MECs, see “Modified Endowment Contracts” above.
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.
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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 inquiries 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
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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:
• choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change;
• choose the amount and timing of Premium payments, within certain limits;
• allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment objectives change; and
• 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, 2018
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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. The Policy gives the Company the right to impose limits on the amount each Owner can invest in the Fixed Account and such limits are subject to change at the sole discretion of the Company.
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 provided 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 Government 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 –
1. a fixed benefit equal to the Total Face Amount of your Policy; or
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.
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After the first Policy Year, you may change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect -
1. the Premiums you pay;
2. the investment performance of the Divisions you select;
3. the value of the Fixed Account;
4. any Policy loans or partial withdrawals;
5. your Loan Account balance; and
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 in “Charges and Deductions” below.
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 –
1. term life insurance; and
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.
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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 Policy 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” below.
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.
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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 1⁄2.
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.
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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.
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Periodic Charges Other Than Fund Operating Expenses
Charge When Charge is Deducted Amount Deducted
Cost of Insurance (per $1000 Net Amount at Risk)1    
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 Charge2 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+
1 The Cost of Insurance Charge will vary based on individual characteristics. The cost of insurance shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance charge by contacting our Service Center at 888-353-2654.
2 The mortality and expense risk charge is accrued daily and deducted on the first day of each Policy month by cancelling accumulation units pro-rata against Sub-Accounts.
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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 in “Charges and Deductions” below. The benefits provided under each rider are summarized in “Other Provisions and Benefits” below.
Change of Insured Rider3* 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 Expenses4
(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 0.27% 2.61%
THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
3. The Change of Insured Rider will vary based on individual characteristics. The charge shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance by contacting our Service Center at 888-353-2654.
4 Expenses are shown as a percentage of a Fund’s average net assets as of December 31, 2016. 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.
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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
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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.
Such payments and fees create an incentive for us to offer portfolios (or classes of shares of portfolios) for which such payments and fees are available to us. We consider such payments and fees, among other things, when deciding to include a portfolio (or class or share of a portfolio) as an investment option under the Policy. Other available investment portfolios (or other available classes of shares of the portfolios) may have lower fees and better overall investment performance than the portfolios (or classes of shares of the portfolios) offered under the Policy.
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 a 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.
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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) (Series I Shares); and Neuberger Berman AMT Guardian Portfolio (Class 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 (now known as the Invesco V.I. Technology Fund) (Series I Shares); Fidelity Variable Insurance Products Growth Portfolio (Service Class 2 Shares); Janus Aspen Worldwide Growth Portfolio (formerly the Janus Aspen Global Research Portfolio, now known as the Janus Henderson Global Research Portfolio) (Institutional Shares); Great-West Small Cap Growth Fund (formerly the Maxim Small-Cap Growth Portfolio, which was formerly the Maxim Trusco Small-Cap Growth Portfolio, which was formerly the Maxim MFS® Small-Cap Growth Portfolio, now known as the Great-West S&P Small Cap 600® Index Fund) (Investor Class Shares); and Neuberger Berman AMT Mid-Cap Growth Portfolio (Class 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, 2007, the Division investing in the AIM V.I. Global Health Care Fund (now known as the Invesco V.I. Global Health Care Fund) (Series I Shares) was closed to new Owners. 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 Federated High Income Bond Fund II (Primary Class Shares) was closed to new Owners. 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: Deutsche Large Cap Value VIP (now know as the Deutsche CROCI® U.S. VIP) (Class A Shares); Fidelity Variable Investment Portfolio Investment Grade Bond Portfolio (Service Class 2 Shares); Neuberger Berman AMT Partners Portfolio (now known as the Neuberger Berman AMT Large Cap Value Portfolio) (Class I Shares); and VanEck VIP Emerging Markets Fund (Initial Class Shares). However, Owners with amounts transferred in the aforementioned Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
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 (now known as the Putnam VT International Growth Fund); and Putnam VT MidCap Value Fund (formerly known as the Putnam VT Multi-Cap Value Fund; now known as the Putnam VT Sustainable Future Fund).
Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund (now known as the Great-West International Value Fund) (Investor Class Shares).
Effective May 1, 2014, the Division investing in the Columbia Variable Portfolio – Small Cap Value Fund (Class 1 Shares) was closed to new Owners, however, Owners with amounts transferred in to aforementioned Division as of May 1, 2014, may continue to allocate Premium payments and Transfer amounts into and out of such Division.
Effective March 8, 2016, the Great-West Small Cap Growth Fund (Initial Class Shares) merged into the Great-West S&P Small Cap 600® Index Fund (Initial Class Shares).
Effective May 1, 2016, the Divisions investing in the following Funds were closed to new Owners: Alger Small Cap Growth Portfolio (Class I-2 Shares); Davis Value Portfolio; Invesco V.I. Mid Cap Core Equity Fund (Series I Shares); Janus Aspen Overseas Portfolio (now known as Janus Henderson Overseas Portfolio) (Institutional Shares); and Royce Capital Fund Small-Cap Portfolio (Service Class Shares). Owners with amounts invested in these Funds as of May 1, 2016 may continue to allocate Premium payments and Transfer amounts into and out of these Divisions.
Effective May 1, 2017, the Divisions investing in the following Funds were closed to new Owners: Deutsche Small Mid Cap Value VIP (Class A Shares); Goldman Sachs VIT Mid Cap Value Fund (Institutional Shares); Lord Abbett Series Fund Developing Growth Portfolio (Class VC Shares); and Royce Capital Fund Micro-Cap Portfolio (Service Class Shares). Owners with amounts invested in these Funds as of May 1, 2017 may continue to allocate Premium payments and Transfer amounts into and out of these Divisions.
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Effective May 1, 2018, the Division investing in the following Fund was closed to new Owners: Deutsche Global Small Cap VIP (Class A Shares). Owners with amounts invested in these Funds as of May 1, 2018 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:
AIM Variable Insurance Funds (Invesco Variable Insurance Funds) - advised by Invesco Advisers, Inc.
Invesco V.I. Core Equity Fund (Series I Shares)* - seeks long-term growth of capital.
Invesco V.I. Global Health Care Fund (Series I Shares)* - seeks long-term growth of capital.
Invesco V.I. Global Real Estate Fund (Series I Shares) - seeks total return through growth of capital and current income. Invesco Asset Management Ltd is the sub-adviser to this Fund.
Invesco V.I. International Growth Fund (Series I Shares) - seeks long-term growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares)* - seeks long-term growth of capital.
Invesco V.I. Technology Fund (Series I Shares)* - seeks long-term growth of capital.
Alger Portfolios – advised by Fred Alger Management, Inc.
Alger Small Cap Growth Portfolio (Class I-2 Shares)* - seeks long-term capital appreciation.
American Century Variable Portfolios, Inc. – advised by American Century Investment Management, Inc.
American Century Investments® VP Capital Appreciation Fund (Class I Shares) - seeks capital growth.
American Century Investments® VP Income & Growth Fund (Class I Shares)* - seeks capital growth; income is a secondary objective.
American Century Investments® VP International Fund (Class I Shares)* - seeks capital growth.
American Century Investments® VP Mid Cap Value Fund (Class I Shares) - seeks long-term capital growth; income is a secondary consideration.
American Century Investments® VP Value Fund (Class I Shares) - seeks long-term capital growth; income is a secondary consideration.
American Century Variable Portfolios II, Inc. – advised by American Century Investment Management, Inc.
American Century Investments® VP Inflation Protection Fund (Class II Shares) - seeks long-term total return using a strategy that seeks to protect against U.S. inflation.
American Funds Insurance Series® - advised by Capital Research and Management Company
American Funds Insurance Series® Global Small Capitalization Fund (Class 2 Shares) - seeks long-term growth of capital.
American Funds Insurance Series® Growth Fund (Class 2 Shares) - seeks growth of capital.
American Funds Insurance Series® Growth-Income Fund (Class 2 Shares) - seeks long-term growth of capital while providing current income.
American Funds Insurance Series® International Fund (Class 2 Shares) - seeks to provide investors with long-term growth of capital.
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American Funds Insurance Series® New World Fund® (Class 2 Shares) - seeks long-term capital appreciation.
Blackrock Variable Series Funds, Inc. - advised by BlackRock Advisors, LLC
BlackRock Global Allocation V.I. Fund (Class I Shares) - seeks high total investment return.
Columbia Funds Variable Insurance Trust - advised by Columbia Management Investment Advisers, LLC
Columbia Variable Portfolio - Small Cap Value (Class 1 Shares)* - seeks long-term capital appreciation.
Davis Variable Account Fund, Inc. - advised by Davis Selected Advisors, L.P.
Davis Financial Portfolio - seeks long-term growth of capital. Davis Selected Advisers-NY, Inc. is the sub-adviser to this Fund.
Davis Value Portfolio* - seeks long-term growth of capital. Davis Selected Advisers-NY, Inc. is the sub-adviser to this Fund.
Delaware VIP® Trust – advised by Delaware Management Company
Delaware VIP® International Value Equity Series (Standard Class Shares) - seeks long-term growth without undue risk to principal.
Delaware VIP® Small Cap Value Series (Service Class Shares) - seeks capital appreciation.
Deutsche Investments VIT Funds – advised by Deutsche Investment Management Americas, Inc.
Deutsche Small Cap Index VIP (Class A Shares) - seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small U.S. companies. Northern Trust Investments, Inc. is the sub-adviser to this Fund.
Deutsche Variable Series I – advised by Deutsche Investment Management Americas, Inc.
Deutsche Core Equity VIP (Class A Shares) - seeks long-term growth of capital, current income and growth of income.
Deutsche Global Small Cap VIP (Class A Shares)* - seeks above-average capital appreciation over the long term.
Deutsche Variable Series II – advised by Deutsche Investment Management Americas, Inc.
Deutsche CROCI® U.S. VIP (Class A Shares)* - seeks a high rate of total return.
Deutsche High Income VIP (Class A Shares) - seeks a high level of current income.
Deutsche Small Mid Cap Value VIP (Class A Shares)* - seeks long-term capital appreciation.
Dreyfus Stock Index Fund, Inc. (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) - seeks to match the total return of the Standard & Poor's® 500 Composite Stock Price Index (S&P 500® Index). Mellon Capital Management Corporation is the sub-adviser to this Fund.
Dreyfus Variable Investment Fund – advised by The Dreyfus Corporation
Dreyfus VIF International Equity Portfolio (Initial Shares) - seeks capital growth. The Boston Company Asset Management, LLC is the sub-adviser to this Fund.
Eaton Vance Variable Trust – advised by Eaton Vance Management
Eaton Vance VT Floating-Rate Income Fund (Initial Class Shares) - seeks to provide a high level of current income.
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Federated Insurance Series – advised by Federated Investment Management Company
Federated High Income Bond Fund II (Primary Class Shares)* - seeks high current income.
Federated Kaufmann Fund II (Primary Class Shares) - seeks capital appreciation. Federated Global Investment Management Corp. is the sub-adviser to this Fund.
Fidelity Variable Insurance Products Fund – advised by Fidelity Management & Research Company
Fidelity® Variable Insurance Products Growth Portfolio (Service Class 2 Shares)* - seeks to achieve capital appreciation. FMR Co., Inc. (FMRC) is the sub-adviser to this Fund.
Fidelity Variable Insurance Products Fund II – advised by Fidelity Management & Research Company
Fidelity® Variable Insurance Products Contrafund® Portfolio (Service Class 2 Shares) - seeks long-term capital appreciation. FMR Co., Inc. (FMRC) is the sub-adviser to this Fund.
Fidelity® Variable Insurance Products Investment Grade Bond Portfolio (Service Class 2 Shares)* - seeks as high a level of current income as is consistent with the preservation of capital. Fidelity Investments Money Management, Inc. (FIMM) is the sub-adviser to this Fund.
Fidelity Variable Insurance Products Fund III – advised by Fidelity Management & Research Company
Fidelity® Variable Insurance Products Mid Cap Portfolio (Service Class 2 Shares) - seeks long-term growth of capital. FMR Co., Inc. (FMRC) is the sub-adviser to this Fund.
Goldman Sachs Variable Insurance Trust – advised by Goldman Sachs Asset Management, L.P.
Goldman Sachs VIT Mid Cap Value Fund (Institutional Shares)* - seeks long-term capital appreciation.
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio (Service Shares) - seeks long-term growth of capital.
Great-West Funds, Inc. – advised by Great-West Capital Management, LLC
Great-West Ariel Mid Cap Value Fund (Investor Class Shares) - seeks long-term capital appreciation. Ariel Investments, LLC is the sub-adviser to this Fund.
Great-West Bond Index Fund (Investor Class Shares) - seeks investment results that track the total return of the debt securities that comprise the Bloomberg Barclays U.S. Aggregate Bond Index.
Great-West Core Bond Fund (Investor Class Shares) - 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. Federated Investment Management Company and Wellington Management Company LLP are the sub-advisers to this Fund.
Great-West Emerging Markets Equity Fund (Investor Class Shares) - seeks long-term capital appreciation. Lazard Asset Management LLC and UBS Asset Management (Americas) Inc. are the sub-advisers to this Fund.
Great-West Government Money Market Fund (Investor Class Shares) - seeks as high a level of current income as is consistent with the preservation of capital and liquidity. Investment in the Great-West Government 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 Inflation-Protected Securities Fund (Investor Class Shares) - seeks real return consistent with the preservation of capital. Goldman Sachs Asset Management, L.P. is the sub-adviser to this Fund.
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Great-West International Index Fund (Investor Class Shares) - 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. Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West International Value Fund (formerly Great-West MFS International Value Fund) (Investor Class Shares) - seeks long-term capital growth. LSV Asset Management and Massachusetts Financial Services Company are the sub-advisers to this Fund.
Great-West Invesco Small Cap Value Fund (Investor Class Shares) - seeks long-term growth of capital. Invesco Advisers, Inc. is the sub-adviser to this Fund.
Great-West Large Cap Growth Fund (formerly Great-West Multi-Manager Large Cap Growth Fund) (Investor Class Shares) - seeks long-term growth of capital. Amundi Pioneer Asset Management, Inc. and J.P. Morgan Investment Management Inc. are the sub-advisers to this Fund.
Great-West Loomis Sayles Bond Fund (Investor Class Shares) - 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 (Investor Class Shares) - seeks long-term capital growth. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West Mid Cap Value Fund (formerly Great-West Goldman Sachs Mid Cap Value Fund) (Investor Class Shares) - seeks long-term growth of capital. Goldman Sachs Asset Management, L.P. is the sub-adviser to this Fund.
Great-West Real Estate Index Fund (Investor Class Shares) - 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 (“REITs”). Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West S&P Mid Cap 400® Index Fund (Investor Class Shares) - seeks investment results, before fees and expenses, which track the total return of the common stocks that comprise the Standard & Poor's (“S&P”) MidCap 400® Index. Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West S&P Small Cap 600® Index Fund (Investor Class Shares)* - seeks investment results that track the total return of the common stocks that comprise the Standard & Poor's (“S&P”) SmallCap 600® Index. ) Irish Life Investment Managers Ltd. is the sub-adviser to this Fund.
Great-West Short Duration Bond Fund (Investor Class Shares) - seeks maximum total return that is consistent with preservation of capital and liquidity.
Great-West Small Cap Growth Fund (formerly Great-West Multi-Manager Small Cap Growth Fund) (Investor Class Shares) - seeks long-term capital appreciation. Lord, Abbett & Co. LLC and Peregrine Capital Management, LLC are the sub-advisers to the Fund.
Great-West T. Rowe Price Equity Income Fund (Investor Class Shares) - 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 (Investor Class Shares) - seeks long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund (Investor Class Shares) - seeks current income with capital appreciation and growth of income. Franklin Advisers, Inc. is the sub-adviser to the Fund.
Great-West U.S. Government Securities Fund (formerly Great-West U.S. Government Mortgage Securities Fund) (Investor Class Shares) - seeks the highest level of return consistent with preservation of capital and substantial credit protection.
Great-West Lifetime Funds
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Great-West Lifetime 2015 Fund (Investor Class Shares) - seeks income and secondarily, capital growth.
Great-West Lifetime 2020 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2020, it seeks income and secondarily capital growth.
Great-West Lifetime 2025 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2025, it seeks income and secondarily capital growth.
Great-West Lifetime 2030 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2030, it seeks income and secondarily capital growth.
Great-West Lifetime 2035 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2035, it seeks income and secondarily capital growth.
Great-West Lifetime 2040 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2040, it seeks income and secondarily capital growth.
Great-West Lifetime 2045 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2045, it seeks income and secondarily capital growth.
Great-West Lifetime 2050 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2050, it seeks income and secondarily capital growth.
Great-West Lifetime 2055 Fund (Investor Class Shares) - seeks capital appreciation and income consistent with its current asset allocation; after 2055, it seeks income and secondarily capital growth.
Great-West Profile Funds
Each of the following Profile Funds seeks to provide an asset allocation program designed to meet certain investment goals based on an investor’s risk tolerance, investment horizon and personal objectives.
Great-West Aggressive Profile Fund (formerly Great-West Aggressive Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds that emphasize equity investments.
Great-West Conservative Profile Fund (formerly Great-West Conservative Profile II Fund) (Investor Class Shares) - seeks capital preservation primarily through investments in underlying funds that emphasize fixed income investments.
Great-West Moderate Profile Fund (formerly Great-West Moderate Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Aggressive Profile Fund (formerly Great-West Moderately Aggressive Profile II Fund) (Investor Class Shares) - seeks long-term capital appreciation primarily through investments in underlying funds that emphasize equity investments and, to a lesser degree, in underlying funds that emphasize fixed income investments.
Great-West Moderately Conservative Profile Fund (formerly Great-West Moderately Conservative Profile II Fund) (Investor Class Shares) - seeks income and capital appreciation primarily through investments in underlying funds that emphasize fixed income investments and, to a lesser degree, in underlying funds that emphasize equity investments.
Janus Aspen Series – advised by Janus Capital Management, LLC
Janus Henderson Balanced Portfolio (formerly Janus Aspen Balanced Portfolio) (Institutional Shares) - seeks long-term capital growth, consistent with preservation of capital and balanced by current income.
Janus Henderson Enterprise Portfolio (formerly Janus Aspen Enterprise Portfolio) (Institutional Shares) - seeks long-term growth of capital.
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Janus Henderson Flexible Bond Portfolio (formerly Janus Aspen Flexible Bond Portfolio) (Institutional Shares) - seeks to obtain maximum total return, consistent with preservation of capital.
Janus Henderson Forty Portfolio (formerly Janus Aspen Forty Portfolio) (Institutional Shares) - seeks long-term growth of capital.
Janus Henderson Global Research Portfolio (formerly Janus Aspen Global Research Portfolio ) (Institutional Shares)* - seeks long-term growth of capital.
Janus Henderson Global Technology Portfolio (formerly Janus Aspen Global Technology Portfolio) (Institutional Shares) - seeks long-term growth of capital.
Janus Henderson Overseas Portfolio (formerly Janus Aspen Overseas Portfolio) (Institutional Shares)* - seeks long-term growth of capital.
JPMorgan Insurance Trust – advised by J.P. Morgan Investment Management Inc.
JPMorgan Insurance Trust Small Cap Core Portfolio (Class 1 Shares) - seeks capital growth over the long term.
JPMorgan Insurance Trust U.S. Equity Portfolio (Class 1 Shares) - seeks high total return.
Legg Mason Partners Variable Equity Trust – advised by Legg Mason Partners Fund Advisor, LLC
ClearBridge Variable Mid Cap Portfolio (Class I Shares) - seeks long-term growth of capital. ClearBridge Investments, LLC is the sub-adviser to this Fund.
ClearBridge Variable Small Cap Growth Portfolio (Class I Shares) - seeks long-term growth of capital. ClearBridge Investments, LLC is the sub-adviser to this Fund.
Lord Abbett Series Fund, Inc. – advised by Lord, Abbett & Co. LLC
Lord Abbett Series Fund Developing Growth Portfolio (Class VC Shares)* - seeks long-term growth of capital.
Lord Abbett Series Fund Total Return Portfolio (Class VC Shares) - seeks income and capital appreciation to produce a high total return.
MFS® Variable Insurance Trust – advised by Massachusetts Financial Services Company
MFS® Growth Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Mid Cap Growth Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Research Series (Initial Class Shares) - seeks capital appreciation.
MFS® VIT Total Return Bond Series (Initial Class Shares) - seeks total return with an emphasis on current income, but also considering capital appreciation.
MFS® VIT Value Series (Initial Class Shares) - seeks capital appreciation.
MFS® Variable Insurance Trust III – advised by Massachusetts Financial Services Company
MFS® VIT III Blended Research® Small Cap Equity Portfolio (Initial Class Shares) - seeks capital appreciation.
MFS® VIT III Global Real Estate Portfolio (Initial Class Shares) - seeks total return.
MFS® VIT III Mid Cap Value Portfolio (Initial Class Shares) - seeks capital appreciation.
Neuberger Berman Advisers Management Trust – advised by Neuberger Berman Investment Advisers LLC
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Neuberger Berman AMT Guardian Portfolio (Class I Shares)* - seeks long-term growth of capital; current income is a secondary goal.
Neuberger Berman AMT Large Cap Value Portfolio (Class I Shares)* - seeks long-term growth of capital.
Neuberger Berman AMT Mid-Cap Growth Portfolio (Class I Shares)* - seeks growth of capital.
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) - seeks growth of capital.
Neuberger Berman AMT Sustainable Equity Portfolio (formerly Neuberger Berman AMT Socially Responsive Portfolio) (Class I Shares) - seeks long-term growth of capital by investing primarily in securities of companies that meet the fund's financial criteria and social policy.
Oppenheimer Variable Account Funds – advised by OFI Global Asset Management, Inc.
Oppenheimer Main Street Small Cap Fund/VA® (Non-Service Shares) - seeks capital appreciation. OppenheimerFunds, Inc. is the sub-adviser to this Fund.
PIMCO Variable Insurance Trust – advised by Pacific Investment Management Company, LLC
PIMCO VIT CommodityRealReturn® Strategy Portfolio (Administrative Class Shares) - seeks maximum real return, consistent with prudent investment management.
PIMCO VIT Global Bond Portfolio (Unhedged) (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT High Yield Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Low Duration Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Class Shares) - seeks maximum real return, consistent with preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative Class Shares) - seeks maximum total return, consistent with preservation of capital and prudent investment management.
Pioneer Variable Contracts Trust – advised by Amundi Pioneer Asset Management, Inc.
Pioneer Real Estate Shares VCT Portfolio (Class I Shares) - seeks long-term growth of capital; current income is a secondary objective. AEW Capital Management, L.P. is the sub-adviser to the Fund.
Putnam Variable Trust – advised by Putnam Investment Management, LLC
Putnam VT Equity Income Fund (Class IA Shares) - seeks capital growth and current income. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT Global Asset Allocation Fund (Class IA Shares) - seeks long-term return consistent with preservation of capital. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Global Equity Fund (Class IA Shares) - seeks capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Growth Opportunities Fund (Class IA Shares) - seeks capital appreciation. Putnam Investments Limited is the sub-adviser to this Fund.
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Putnam VT High Yield Fund (Class IA Shares) - seeks high current income. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT Income Fund (Class IB Shares) - seeks high current income consistent with what the manager believes to be prudent risk. Putnam Investments Limited is the sub-adviser to this Fund.
Putnam VT International Growth Fund Class (Class IA Shares) - seeks long-term capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT International Value Fund (Class IA Shares) - seeks capital growth; current income is a secondary objective. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Research Fund (Class IA Shares) - seeks capital appreciation. The Putnam Advisory Company, LLC and Putnam Investments Limited are the sub-advisers to this Fund.
Putnam VT Sustainable Future Fund (formerly Putnam VT Multi-Cap Value Fund) (Class IA Shares) - seeks capital appreciation and, as a secondary objective, current income. Putnam Investments Limited is the sub-adviser to this Fund.
Royce Capital Fund – advised by Royce & Associates, LP
Royce Micro-Cap Portfolio (Service Class Shares)* - seeks long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares)* - seeks long-term growth of capital.
T. Rowe Price Equity Series, Inc. – advised by T. Rowe Price Associates, Inc.
T. Rowe Price Blue Chip Growth Portfolio (Portfolio-II Class Shares) - seeks to provide long-term capital growth; income is a secondary objective.
VanEck VIP Trust – advised by Van Eck Associates Corporation
VanEck VIP Emerging Markets Fund (Initial Class Shares)* - seeks long-term capital appreciation by investing primarily in equity securities in emerging markets around the world.
VanEck VIP Global Hard Assets Fund (Initial Class Shares) - seeks long-term capital appreciation by investing primarily in hard asset securities; income is a secondary consideration.
Victory Portfolios – advised by Victory Capital Management, Inc.
Victory RS Small Cap Growth Equity VIP Series (Class I Shares) - seeks long-term capital growth.
* The Sub-Account investing in this Portfolio is closed to new Owners.
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
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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 Policy gives the Company the right to impose limits on the amount each Owner can invest in the Fixed Account and such limits are subject to change at the sole discretion of the Company.
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.
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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:
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.
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.
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.
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.
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.
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.
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.
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.
9. In an employer-financed insurance purchase arrangement, the procedures described in the “Market Timing & Excessive Trading” section below, 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 below 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.
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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:
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” below, 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 risk 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.
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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:
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;
2. is the service charge;
3. is the monthly cost of any additional benefits provided by riders which are a part of your Policy;
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 risk charge.
The net amount at risk equals:
• the death benefit divided by 1.00327374; less
• 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 Government 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.
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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” above.
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:
• transfer ownership to a new Owner;
• name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured;
• change or revoke a contingent owner;
• change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable);
• exercise all other rights in the Policy;
• increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and
• 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.
You may change your allocation percentages at any time by Request.
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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 Government 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. If the Company has imposed a limit on the amount that can be allocated to the Fixed Account, then your Transfer will be rejected if it would cause the value of the Fixed Account to exceed such limit. 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:
• 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;
• Close the applicable Fund to all new monies, including contributions and Transfers in;
• Restrict all Owners to one purchase in the applicable Fund per 90 day period; or
• 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
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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. Great-West selects the investment options offered though the Contract based on several criteria, including but not limited to asset class coverage, brand recognition, the reputation and tenure of the adviser or sub-adviser, expenses, performance, marketing, availability, investment conditions, and the qualifications of each investment company. Another factor we consider is whether the investment option or an affiliate of the investment option
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will compensate Great-West for providing certain administrative, marketing, or support services that would otherwise be provided by the investment option, its investment adviser, or its distributor. For more information on such compensation, see “Charges and Deductions” in this prospectus. When we develop and offer a variable annuity product in cooperation with a fund family or a distributor, Great-West will generally include investment options based on recommendations made by the fund family or the distributor, whose selection criteria may differ from our own. We have selected investment options of the Great-West Funds at least in part because they are managed by our directly owned subsidiary.
Great-West does not control the investment options and cannot guarantee that any of the investment options will always be available for allocation of Contributions or Transfers. We retain the right to make changes in the Series Account and in its investments, including the right to establish new sub-accounts or to eliminate existing sub-accounts. Great-West periodically reviews each investment option and reserves the right to discontinue the offering of any investment option if we determine the investment option no longer meets one or more of the criteria, or if the investment option has not attracted significant allocations. If an investment option is discontinued, we may substitute shares of another investment option or shares of another investment company for the discontinued investment option’s shares. Any share substitution will comply with the requirements of the 1940 Act. If you are contributing to a sub-account corresponding to an investment option that is being discontinued, you will be given notice prior to the investment option’s elimination. Before a sub-account is eliminated, we will notify you and request that you reallocate the amounts invested in the sub-account to be eliminated.
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 –
• 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;
• is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy;
• is necessary to reflect a change in the operation of the Series Account or the Divisions; or
• 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.
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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:
• that portion of net Premium received and allocated to the Division, plus
• that portion of net Premium received and allocated to the Fixed Account, less
• the service charges due on the Policy Date, less
• the monthly risk charge due on the Policy Date, less
• 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:
• the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division’s net investment factor, plus
• that portion of net Premium received and allocated to the Division during the current Valuation Period, plus
• 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
• any amounts Transferred by you to the Division from another Division during the current Valuation Period, less
• any amounts Transferred by you from the Division to another Division during the current Valuation Period, less
• that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less
• that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less
• that portion of fees due in connection with a partial withdrawal charged to the Division, less
• the mortality and expense risk charge for each day in the Valuation Period, less
• 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
• 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
• 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
• 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:
• the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus
• 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
• 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
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2. is the net result of:
• 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
• 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:
• Premiums, less expense charges, allocated to the Fixed Account; plus
• Sub-Account Value transferred to the Fixed Account; plus
• Interest credited to the Fixed Account; minus
• Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus
• The portion of any accrued policy fees and charges allocated to the Fixed Account; minus
• Loans from the Fixed Account; minus
• 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
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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” below.
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 above.
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:
• the Policy Date of the Policy to which this rider is attached; or
• 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.
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You may terminate this rider by Request. This rider also will terminate on the earliest of the following dates:
• the date the Policy is surrendered or terminated;
• the expiration of the grace period of the Policy; or
• 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.
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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 Government 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 Government 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.
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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 Government 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,” above.
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:
• the amount of the selected death benefit option, less
• the value of any Policy Debt on the date of the Insured’s death, less
• 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,” below. 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 –
• 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 –
• 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,
• 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:
• 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.
• 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:
• first, to the most recent increase;
• second, to the next most recent increases, in reverse chronological order; and
• finally, to the initial Total Face Amount.
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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,” below.
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,” below.
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 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.
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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:
• you make your reinstatement Request within three years from the date of termination;
• you submit satisfactory Evidence of Insurability to us;
• you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period;
• you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and
• 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:
• the Account Value at the time of termination; plus
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• net Premiums attributable to Premiums paid to reinstate the Policy; less
• the monthly expense charge; less
• the monthly cost of insurance charge applicable on the date of reinstatement; less
• 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:
• the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted;
• the SEC, by order, permits postponement for the protection of Owners; or
• 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.
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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:
• the exchange of a Policy for a life insurance, endowment or annuity contract;
• a change in the death benefit option;
• a Policy loan;
• a partial surrender;
• a complete surrender;
• a change in the ownership of a Policy;
• a change of the named Insured; or
• 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.
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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:
• 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.
• 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.
• 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:
1. is made when the taxpayer is age 59 1⁄2 or older;
2. is attributable to the taxpayer becoming disabled; or
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. 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.
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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.
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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 discuss 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 Tax Cuts and Jobs Act of 2017, we are generally required to capitalize and amortize certain Policy acquisition expenses over a fifteen 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
• We do not make any guarantees about the Policy’s tax status.
• We believe the Policy will be treated as a life insurance contract under federal tax laws.
• 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.
The law firm of Carlton Fields Jorden Burt, P.A., 1025 Thomas Jefferson St., N.W., Suite 400 West, Washington, D.C. 20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
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Cyber Security Risks
Because our variable life insurance contract business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is vulnerable to disruptions from utility outages and susceptible to operational and information security risks resulting from information system failures (e.g., hardware and software malfunctions) and cyber-attacks. These risks include, among other things, the theft, misuse, corruption, and destruction of data maintained online or digitally, denial of service on our website and other operational disruption, and unauthorized release of confidential Owner information. Such system failures and cyber-attacks affecting us, the Funds, intermediaries and other affiliated or third-party service providers may adversely affect us and your Policy value. For instance, system failures and cyber-attacks may interfere with our processing of Policy transactions, including the processing of Transfer Requests from our website or with the Funds, impact our ability to calculate Unit Values, cause the release and possible destruction of confidential owner or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines, litigation, and financial losses and/or cause reputational damage. Cyber security risks may also impact the issuers of securities in which the Funds invest, which may cause the Funds underlying your Policy to lose value. There can be no assurance that we or the Funds or our service providers will avoid losses affecting your Policy due to cyber-attacks or information security breaches in the future.
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.
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 the 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. Such financial statements have so been included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of Great-West Life & Annuity Insurance Company and Subsidiaries included in the 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 have so been included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
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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.
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MEC – Modified Endowment Contract. For more information regarding MECs, see “Modified Endowment Contracts” above.
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.
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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.
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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, 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” in this 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
Charge When Charge is Deducted Amount Deducted
Cost of Insurance (per $1000 Net Amount at Risk)1    
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 Charge2 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+
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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 in “Charges and Deductions” below. The benefits provided under each rider are summarized in “Other Provisions and Benefits” 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: $0.08 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 in this prospectus.
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 in the “Term Life Insurance Rider” section of this 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.”
B-2

 

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 inquiries 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 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
B-3

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 Additional Information should be read in conjunction with the prospectus, dated May 1, 2018, 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, 2018
i

 

 

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
Deloitte & Touche LLP, 1601 Wewatta Street, Suite 400, Denver, Colorado 80202, serves as the Company’s and the Series Account’s 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 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 have so been 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 offeringin 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
1

 

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.
2

 

Great-West Life & Annuity Insurance

Company (a wholly-owned subsidiary of

GWL&A Financial Inc.)

Consolidated Balance Sheets as of December 31, 2017 and 2016 and

Related Statements of Income, Comprehensive Income (Loss),

Stockholder’s Equity and Cash Flows for Each of the Three Years in the

Period Ended December 31, 2017 and Report of Independent

Registered Public Accounting Firm

Index to Consolidated Financial Statements, Notes, and Schedules

 

     Page
Number

Report of Independent Registered Public Accounting Firm

   2

Financial Statements at December 31, 2017, and 2016 and for the Years Ended December 31, 2017, 2016, and 2015

   

Consolidated Balance Sheets

    3

Consolidated Statements of Income

    5

Consolidated Statements of Comprehensive Income (Loss)

    6

Consolidated Statements of Stockholder’s Equity

    7

Consolidated Statements of Cash Flows

    8

Notes to the Consolidated Financial Statements

    10

Note 1 - Organization and Significant Accounting Policies

    10

Note 2 - Acquisition

    19

Note 3 - Application of Recent Accounting Pronouncements

    19

Note 4 - Related Party Transactions

    21

Note 5 - Summary of Investments

    23

Note 6 - Derivative Financial Instruments

    28

Note 7 - Summary of Offsetting Assets and Liabilities

    31

Note 8 - Fair Value Measurements

    33

Note 9 - Minimum Guarantees

    39

Note 10 - Reinsurance

    40

Note 11 - Deferred Acquisition Costs and Value of Business Acquired

    42

Note 12 - Goodwill and Other Intangible Assets

    42

Note 13 - Commercial Paper

    43

Note 14 - Stockholder’s Equity and Dividend Restrictions

    43

Note 15 - Other Comprehensive Income

    44

Note 16 - General Insurance Expense

    45

Note 17 - Employee Benefit Plans

    45

Note 18 - Income Taxes

    52

Note 19 - Segment Information

    55

Note 20 - Share-based Compensation

    58

Note 21 - Commitments and Contingencies

    60

Note 22 - Subsequent Events

    62

 

1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Great-West Life & Annuity Insurance Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Great-West Life & Annuity Insurance Company and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income (loss), stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2017 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Denver, Colorado

February 28, 2018

We have served as the Company’s auditor since 1981.

 

2

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Balance Sheets

December 31, 2017, and 2016

(In Thousands, Except Share Amounts)

 

     December 31,  
     2017      2016  

Assets

      

Investments:

      

Fixed maturities, available-for-sale, at fair value (amortized cost of $22,762,962 and $21,672,727)

    $ 23,593,139       $ 22,153,703   

Fixed maturities, held-for-trading, at fair value (amortized cost of $20,512 and $519,495)

      21,059         514,738   

Mortgage loans on real estate (net of valuation allowances of $773 and $2,882)

      4,005,187         3,558,826   

Policy loans

      4,104,094         4,019,648   

Short-term investments (amortized cost of $350,266 and $303,988)

      350,266         303,988   

Limited partnership and other corporation interests

      45,540         34,895   

Other investments

      17,997         15,052   
  

 

 

     

 

 

  

Total investments

      32,137,282         30,600,850   

Other assets:

      

Cash and cash equivalents

      17,211         18,321   

Reinsurance recoverable

      589,080         598,864   

Deferred acquisition costs (“DAC”) and value of business acquired (“VOBA”)

      518,510         486,690   

Investment income due and accrued

      299,362         287,681   

Due from parent and affiliates

      114,133         81,995   

Goodwill

      137,683         137,683   

Other intangible assets

      17,085         20,087   

Other assets

      954,250         1,021,210   

Assets of discontinued operations

      16,095         17,652   

Separate account assets

      27,660,571         27,037,765   
  

 

 

     

 

 

  

Total assets

     $             62,461,262        $             60,308,798   
  

 

 

     

 

 

  

 

See notes to consolidated financial statements.    (Continued)

 

3

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Balance Sheets

December 31, 2017, and 2016

(In Thousands, Except Share Amounts)

 

     December 31,  
     2017      2016  

Liabilities and stockholder’s equity

      

Policy benefit liabilities:

      

Future policy benefits

    $ 30,048,927       $ 28,872,899   

Policy and contract claims

      389,029         372,259   

Policyholders’ funds

      280,578         285,554   

Provision for policyholders’ dividends

      41,972         49,521   

Undistributed earnings on participating business

      14,636         15,573   
  

 

 

     

 

 

  

Total policy benefit liabilities

      30,775,142         29,595,806   

General liabilities:

      

Due to parent and affiliates

      553,901         537,990   

Commercial paper

      99,886         99,049   

Deferred income tax liabilities, net

      93,203         191,911   

Other liabilities

      812,875         816,304   

Liabilities of discontinued operations

      16,095         17,652   

Separate account liabilities

      27,660,571         27,037,765   
  

 

 

     

 

 

  

Total liabilities

      60,011,673         58,296,477   
  

 

 

     

 

 

  

Commitments and contingencies (See Note 21)

      

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 authorized; 7,320,176 and 7,292,708 shares issued and outstanding

      7,320         7,293   

Additional paid-in capital

      949,520         863,031   

Accumulated other comprehensive income

      440,957         235,875   

Retained earnings

      1,051,792         906,122   
  

 

 

     

 

 

  

Total stockholder’s equity

      2,449,589         2,012,321   
  

 

 

     

 

 

  

Total liabilities and stockholder’s equity

     $             62,461,262        $             60,308,798   
  

 

 

     

 

 

  

 

See notes to consolidated financial statements.

    (Concluded)

 

4

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Statements of Income

Years Ended December 31, 2017, 2016, and 2015

(In Thousands, Except Share Amounts)

 

     Year Ended December 31,  
     2017     2016     2015  

Revenues:

       

Premium income

    $ 439,731      $ 465,349      $ 445,550   

Fee income

      1,060,122        956,817        944,526   

Other revenue

      9,611        12,261        13,563   

Net investment income

      1,220,053        1,276,559        1,254,430   

Realized investment gains (losses), net:

       

Total other-than-temporary (losses)

      (4,152)       (4,963)       (1,044)  

Other-than-temporary (losses) transferred to other comprehensive income

      —        —        (78)  

Other realized investment gains, net

      50,555        97,845        84,832   
  

 

 

    

 

 

    

 

 

  

Total realized investment gains, net

      46,403        92,882        83,710   
  

 

 

    

 

 

    

 

 

  

Total revenues

                  2,775,920                    2,803,868                    2,741,779   
  

 

 

    

 

 

    

 

 

  

Benefits and expenses:

       

Life and other policy benefits

      651,597        709,333        636,855   

Decrease in future policy benefits

      (84,251)       (124,576)       (41,636)  

Interest paid or credited to contractholders

      633,611        608,803        583,319   

Provision for policyholders’ share of losses on participating business

      (1,669)       (1,024)       (1,267)  

Dividends to policyholders

      41,846        48,487        57,356   
  

 

 

    

 

 

    

 

 

  

Total benefits

      1,241,134        1,241,023        1,234,627   

General insurance expenses

      1,197,613        1,181,227        1,078,996   

Amortization of DAC and VOBA

      19,728        31,309        100,589   

Interest expense

      30,943        33,705        38,588   
  

 

 

    

 

 

    

 

 

  

Total benefits and expenses

      2,489,418        2,487,264        2,452,800   
  

 

 

    

 

 

    

 

 

  

Income before income taxes

      286,502        316,604        288,979   

Income tax (benefit) expense

      (82,614)       85,512        98,524   
  

 

 

    

 

 

    

 

 

  

Net income

    $ 369,116      $ 231,092      $ 190,455   
  

 

 

    

 

 

    

 

 

  

See notes to consolidated financial statements.

 

5

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, 2017, 2016, and 2015

(In Thousands, Except Share Amounts)

 

     Year Ended December 31,  
     2017      2016      2015  

Net income

    $ 369,116       $ 231,092       $ 190,455   
  

 

 

     

 

 

     

 

 

  

Components of other comprehensive income (loss)

         

Unrealized holding gains (losses), net, arising on available-for-sale fixed maturity investments

      377,605         20,295         (643,880)  

Unrealized holding (losses) gains, net, arising on cash flow hedges

      (73,726)        44,776         31,061   

Reclassification adjustment for (gains), net, realized in net income

      (34,208)        (74,271)        (52,597)  
  

 

 

     

 

 

     

 

 

  

Net unrealized gains (losses) related to investments

      269,671         (9,200)        (665,416)  
  

 

 

     

 

 

     

 

 

  

Future policy benefits, DAC and VOBA adjustments

      (88,648)        10,983         65,245   

Employee benefit plan adjustment

      14,265         1,966         31,586   
  

 

 

     

 

 

     

 

 

  

Other, net

      (74,383)        12,949         96,831   
  

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) before income taxes

      195,288         3,749         (568,585)  

Income tax expense (benefit) related to items of other comprehensive income

      68,351         1,312         (199,005)  
  

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) (1)

      126,937         2,437         (369,580)  
  

 

 

     

 

 

     

 

 

  

Total comprehensive income (loss)

    $         496,053       $         233,529       $         (179,125)  
  

 

 

     

 

 

     

 

 

  

(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 $(1,362), $(6,520), and $(6,596) for the years ended December 31, 2017, 2016, and 2015, respectively.

See notes to consolidated financial statements.

 

6

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Statements of Stockholder’s Equity

Years Ended December 31, 2017, 2016, and 2015

(In Thousands, Except Share Amounts)

 

    

 

Common

stock

     

 

Additional

paid-in
capital

      Accumulated
other
comprehensive
income (loss)		     

 

Retained

earnings

     

 

Total

  

Balances, January 1, 2015

     $ 7,032        $ 777,664        $ 603,018        $ 749,799        $ 2,137,513   

Net income

      —         —         —         190,455         190,455   

Other comprehensive loss, net of income taxes

      —         —         (369,580)        —         (369,580)  

Dividends

      —         —         —         (139,533)        (139,533)  

Common stock issuance

      201         60,602         —         —         60,803   

Share-based compensation

      —         1,655         —         —         1,655   

Income tax benefit on share-based compensation

      —         953         —         —         953   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2015

      7,233         840,874         233,438         800,721         1,882,266   

Net income

      —         —         —         231,092         231,092   

Other comprehensive income, net of income taxes

      —         —         2,437         —         2,437   

Dividends

      —         —         —         (125,691)        (125,691)  

Common stock issuance

      60         19,690         —         —         19,750   

Share-based compensation

      —         2,190         —         —         2,190   

Income tax benefit on share-based compensation

      —         277         —         —         277   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2016

      7,293         863,031         235,875         906,122         2,012,321   

Net income

      —         —         —         369,116         369,116   

Other comprehensive income, net of income taxes

      —         —         126,937         —         126,937   

Impact of rate changes on deferred income taxes

      —         —         78,145         (78,145)        —   

Dividends

      —         —         —         (145,301)        (145,301)  

Capital contribution (1)

      —         76,429         —         —         76,429   

Common stock issuance

      27         8,488         —         —         8,515   

Share-based compensation

      —         1,572         —         —         1,572   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2017

     $     7,320        $     949,520        $ 440,957        $     1,051,792        $     2,449,589   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(1) In May 2017, the Company received a capital contribution from its parent, GWL&A Financial, in the amount of $76,429. No additional shares of the Company were issued in relation to this contribution.

See notes to consolidated financial statements.

 

7

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Statements of Cash Flows

Years Ended December 31, 2017, 2016, and 2015

(In Thousands, Except Share Amounts)

 

     Year ended December 31,  
     2017      2016      2015  

Cash flows from operating activities:

         

Net income

     $ 369,116        $ 231,092        $ 190,455   

Adjustments to reconcile net income to net cash provided by operating activities:

         

Losses allocated to participating policyholders

      (1,669)        (1,024)        (1,267)  

(Accretion of discounts) amortization of premiums on investments, net

      (3,943)        2,209         (12,213)  

Net realized gains on investments

      (47,035)        (75,472)        (73,331)  

Net proceeds (purchases) of trading securities

      491,154         107,770         (277,510)  

Interest credited to contractholders

      631,051         606,790         577,548   

Depreciation and amortization

      69,781         74,987         139,735   

Deferral of acquisition costs

      (107,353)        (93,621)        (64,709)  

Deferred income taxes

      (167,059)        53,481         21,682   

Contingent consideration

      —         (209)        (17,600)  

Amortization of low-income housing partnerships

      517         372         4,563   

Other, net

      (5,052)        (1,366)        (3,072)  

Changes in assets and liabilities:

         

Policy benefit liabilities

      (320,518)        (231,952)        (273,507)  

Reinsurance recoverable

      11,341         10,340         8,738   

Investment income due and accrued

      (11,764)        (4,392)        (4,385)  

Other, net

      32,406         (23,188)        10,213   
  

 

 

     

 

 

     

 

 

  

Net cash provided by operating activities

      940,973         655,817         225,340   
  

 

 

     

 

 

     

 

 

  

Cash flows from investing activities:

         

Proceeds from sales, maturities, and redemptions of investments:

         

Fixed maturities, available-for-sale

      5,366,470         6,229,209         5,470,124   

Mortgage loans on real estate

      426,421         389,663         594,497   

Limited partnership interests, other corporation interests, and other investments

      20,916         10,742         6,833   

Purchases of investments:

         

Fixed maturities, available-for-sale

      (6,442,306)        (7,840,166)        (6,468,699)  

Mortgage loans on real estate

      (854,459)        (694,127)        (448,924)  

Limited partnership interests, other corporation interests, and other investments

      (22,255)        (5,766)        (1,527)  

Net change in short-term investments

      (53,097)        (39,677)        (2,238)  

Policy loans, net

      (10,553)        5,527         98,143   

Purchases of furniture, equipment, and software

      (40,997)        (44,644)        (78,778)  
  

 

 

     

 

 

     

 

 

  

Net cash used in investing activities

      (1,609,860)        (1,989,239)        (830,569)  
  

 

 

     

 

 

     

 

 

  

 

See notes to consolidated financial statements.    (Continued)

 

8

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Consolidated Statements of Cash Flows

Years Ended December 31, 2017, 2016, and 2015

(In Thousands, Except Share Amounts)

 

     Year ended December 31,  
     2017      2016      2015  

Cash flows from financing activities:

         

Contract deposits

     $ 3,000,182        $ 3,546,320        $ 2,527,039   

Contract withdrawals

      (2,240,275)        (2,098,286)        (1,782,571)  

Change in due to/from parent and affiliates

      (16,227)        (21,719)        (22,359)  

Dividends paid

      (145,301)        (125,691)        (139,533)  

Capital contribution

      76,429         —         —   

Proceeds from issuance of common stock

      8,515         19,750         60,803   

Payments for and interest paid on financing element derivatives, net

      (3,233)        (6,744)        (9,383)  

Payment of contingent consideration

      —         (14,400)        —   

Net commercial paper borrowings

      837         5,678         (5,218)  

Change in book overdrafts

      (12,332)        12,713         (1,651)  

Employee taxes paid for withheld shares

      (818)        (517)        (1,264)  

Income tax benefit of stock option exercises

      —         277         953   
  

 

 

     

 

 

     

 

 

  

Net cash provided by financing activities

      667,777         1,317,381         626,816   
  

 

 

     

 

 

     

 

 

  
        

Net (decrease) increase in cash and cash equivalents

      (1,110)        (16,041)        21,587   

Cash and cash equivalents, beginning of year

      18,321         34,362         12,775   
  

 

 

     

 

 

     

 

 

  

Cash and cash equivalents, end of year

     $ 17,211        $ 18,321        $ 34,362   
        

Supplemental disclosures of cash flow information:

         

Net cash paid during the year for:

         

Income taxes

     $ (22,668)       $ (1,543)       $ (4,093)  

Interest

      (26,630)        (31,254)        (37,288)  

Non-cash investing and financing transactions during the years:

         

Share-based compensation expense

     $ (1,572)       $ (2,190)       $ (1,655)  

Fair value of assets acquired in settlement of fixed maturity investments

      9,659         —         —   

 

See notes to consolidated financial statements.    (Concluded)

 

9

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. LLC (“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 and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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 and VOBA, valuation of policy benefit liabilities, valuation of employee benefits plan obligation, the valuation of deferred tax assets or liabilities, net, and valuation of contingent consideration. Actual results could differ from those estimates.

Summary of Significant Accounting Policies

Investments

Investments are reported as follows:

 

1. The Company classifies the majority of its fixed maturity investments as available-for-sale which 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”). 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. Also included in AOCI is net unrealized gain or loss resulting from foreign currency translations of fixed maturity investments denominated in foreign currencies.

Premiums and discounts are recognized as a component of net investment income using the effective interest method. Realized gains and losses are included in net realized investment gains (losses), declines in value determined to be other-than-temporary are included in total other-than-temporary losses, and realized gains and losses from foreign currency translations are recorded in net investment income.

The Company also classifies certain fixed maturity investments 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.

The Company recognizes the acquisition of its public fixed maturity investments on a trade date basis and its private

 

10

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

placement investments on a funding date basis.

 

2. Mortgage loans on real estate consist primarily of domestic commercial collateralized loans and are carried at their unpaid principal balances adjusted for any unamortized premiums or discounts, origination fees, provision allowances, and foreign currency translations. 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 effective 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 adequacy of 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 primarily 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.

Loan balances are considered past due when payment has not been received based on contractually agreed upon terms. The accrual of interest is discontinued when concerns exist regarding the realization of loan principal or interest. The Company resumes interest accrual on loans when a loan returns to current status or 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”). The Company would be determined to be a primary beneficiary, and thus consolidate the VIE when the Company has both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company would also consolidate a VIE when it has, directly or indirectly, more than 50% of the outstanding voting shares (or more than 50% of the kick-out rights through voting interests for investments in limited partnerships). When the Company becomes involved with an entity and

 

11

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

when the nature of the Company’s involvement with the entity changes, in order to determine if the Company must consolidate the entity, it evaluates:

 

  •   The structure and purpose of the entity;
  •   The risks and rewards created by and shared through the entity;
  •   The entity’s participants’ ability to direct the activities, receive its benefits, and absorb its losses; and
  •   If the Company has more than 50% of the outstanding voting rights or can unilaterally exercise substantive kick-out rights.

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 investment intent and with initial maturities of one year or less, and are generally carried at fair value which is approximated from amortized cost. They also include highly liquid money market securities that are traded in an active market and are carried at fair value.

 

6. The Company participates in a securities lending program in which the Company lends fixed maturity 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 enhancement on its investment portfolio. The borrower can return and the Company can request the loaned securities be returned 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 on loan are included within fixed maturities and short-term investments in the accompanying consolidated balance sheets. 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 reinvested in short-term repurchase agreements which are also collateralized by U.S. Government or U.S. Government Agency securities. Reinvested cash collateral is recognized within collateral under securities lending agreements in the accompanying consolidated balance sheets. Non-cash collateral is not recognized as the Company does not have effective control.

 

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;
  •   Whether 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.

 

12

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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.

Derivative financial instruments

The Company enters into derivative transactions which include the use of interest rate swaps, interest rate swaptions, cross-currency swaps, foreign currency forwards, U.S. government treasury futures, Eurodollar futures, 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. Although some derivatives are executed under a master netting arrangement, the Company does not offset in the consolidated balance sheets the fair value of those derivative instruments and the related cash collateral or net derivative receivables and payables executed with the same counterparty under the same master netting arrangement. 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. Changes in fair value resulting from foreign currency translations are recorded in either AOCI or net investment income, consistent with where they are recorded on the underlying hedged asset or liability. Changes in the fair value, including changes resulting from foreign currency translations, 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. Realized foreign currency transactional gains and losses, regardless of hedge accounting treatment, are recorded in net investment income. 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.

The Company uses forward settling to be announced (“TBA”) securities to gain exposure to the investment risk and return of agency mortgage-backed securities (pass-throughs). These transactions are utilized to enhance the return of the Company’s investment portfolio and are accounted for as derivative instruments not qualifying for hedge accounting. The Company purchases agency mortgage-backed TBAs yet does not always take physical delivery of a security but rather may roll the security into the next month. The Company generally takes physical delivery of a security before year end. Changes in fair value on open TBA transactions are recorded in net investment income while realized investment gains or losses are recorded once the Company cash settles or accepts physical delivery of a security.

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.

 

13

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 lifetime withdrawal benefit (“GLWB”) 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 (d) convert floating rate assets or debt obligations to fixed rate assets or debt obligations 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.

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.

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 at the measurement date. Financial assets and liabilities utilizing Level 1 inputs include certain money market funds.

 

  •   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 due to their short term nature and high credit quality of the issuers.
  •   Derivative instruments - trading activity, swap curves, credit spreads, currency volatility, net present value of cash flows, and news sources.
  •   Separate account assets and liabilities - various index data and news sources, amortized cost (which approximates fair value), trading activity, swap curves, credit spreads, recovery rates, restructuring, 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.

 

14

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

  •   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.
  •   GLWB - internal models utilizing long-term equity and interest rate implied volatility, mortality, and policyholder behavior assumptions, such as benefit utilization and partial withdrawals.

The fair value of certain investments in the separate accounts, limited partnerships, and common collective trusts are estimated using net asset value per unit as a practical expedient and are excluded from the fair value hierarchy tables in Notes 8 and 17. These net asset values are based on the fair value of the underlying investments less liabilities.

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.

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.

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.

Cash and cash equivalents

Cash and cash equivalents include amounts in demand deposit accounts as well as highly liquid investments that are readily convertible into cash and are not subject to significant risks from fluctuations in interest rates. In evaluating for classification as cash equivalents, the Company requires that individual securities have original maturities of 90 days or less.

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 amounts of $518 and $12,850, are included in other liabilities at December 31, 2017 and 2016, respectively.

 

15

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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 up to five years. Capitalized internal use software development costs, net of accumulated amortization, in the amounts of $103,487 and $98,074, are included in other assets at December 31, 2017 and 2016, respectively. The Company capitalized $34,164, $30,420, and $47,895 of internal use software development costs during the years ended December 31, 2017, 2016, and 2015, respectively.

DAC and VOBA

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. A success factor is derived from actual contracts issued by the Company from requests for proposals or applications received and applied to the deferrable costs. The recoverability of such costs is dependent upon the future profitability of the related business. Recoverability testing is performed for current issue year products to determine if gross revenues are sufficient to cover DAC and expenses. At least annually, loss recognition testing is performed on aggregated blocks of business to adjust the DAC balance.

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.

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 these amounts are made when the Company revises its estimates of current or future gross profits on an annual basis. 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 and non-competition intangible asset 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 straight-line over their estimated useful lives, which initially ranged from two to 18 years (weighted average 15 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,

 

16

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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 Investments, LLC (“Putnam”) sponsored mutual funds (“Putnam Funds”), open-end management investment companies, which are related parties of the Company, and shares of other non-affiliated mutual funds and government and corporate bonds.

Future policy benefits liabilities

Life insurance and annuity future benefits liabilities with life contingencies in the amounts of $17,293,006 and $16,530,160 at December 31, 2017 and 2016, 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 liabilities without life contingencies in the amounts of $12,704,401 and $12,291,378 at December 31, 2017 and 2016, 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.

Minimum guarantees

The Company calculates additional liabilities for certain variable annuity guaranteed death benefits. The additional reserve for such products recognizes the portion of contract assessments received to compensate the Company for death benefits. Reserves for annuity guaranteed minimum death benefits (“GMDB”) are determined by estimating the present value of expected benefits in excess of the projected account balance. Expected experience is based on a range of inputs and scenarios. The assumptions of investment performance and volatility are consistent with the historical experience of the appropriate underlying equity index, such as the Standard & Poor’s (“S&P”) 500 Index.

The Company also offers GLWB through a variable annuity or a contingent deferred annuity. The GLWB is deemed to be an embedded derivative. The GLWB is recorded at fair value within future policy benefits on the consolidated balance sheets. Changes in fair value of GLWB are recorded in net investment income in the consolidated statements of income.

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 also assumes risk by participating in yearly renewable term and coinsurance agreements.

For each of its reinsurance agreements, the 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 (assumed from) other insurance companies, are carried as a reinsurance recoverable (payable) in the accompanying consolidated balance sheets. Premiums, fee income, and policyholder benefits are reported net of reinsurance ceded (assumed) in the accompanying consolidated statements of income. 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.

The Company strives to cede risks to highly rated, well-capitalized reinsurers. The Company monitors and evaluates the financial condition of reinsurers to minimize exposure to credit risk.

 

17

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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 $6,946,953 and $6,844,640 at December 31, 2017 and 2016, respectively. Participating business comprised approximately 10% and 10% of the Company’s individual life insurance in-force at December 31, 2017 and 2016, respectively, and 19%, 18%, and 20% of individual life insurance premium income for the years ended December 31, 2017, 2016, and 2015, 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.

Revenue recognition

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 in fee income. Fees from assets under management, assets under administration, shareholder servicing, mortality and expense risk charges, administration and recordkeeping services, and investment advisory services are recognized when earned in fee income.

Net investment income

Interest income from fixed maturities, mortgage loans on real estate, and policy loans is recognized when earned.

Realized investment gains (losses)

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.

Benefits and expenses

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.

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.

 

18

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

2.  Acquisition

Putnam Retirement Business

On January 1, 2015, the Company acquired the retirement business of Putnam, an affiliate of the Company. The transaction was accounted for as a combination between entities under common control. As such, the assets and liabilities acquired from Putnam were recorded at historical cost as of January 1, 2015. In exchange for cash paid in the amount of $4,114, the Company acquired $11,501 of other assets, assumed $7,717 of other liabilities, and recognized a dividend of $330.

3.  Application of Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The new guidance is effective for the fiscal years beginning after December 15, 2016, including interim periods, a retrospective or a prospective transition approach depending upon the type of change. The new guidance changed several aspects of the accounting for share-based payment award transactions, including: (i) income tax consequences when awards vest or are settled; (ii) classification of awards as either equity or liabilities due to statutory tax withholding requirements; and (iii) classification on the statement of cash flows. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income. The new guidance is effective for the fiscal years beginning after December 15, 2018, including interim periods. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. The new guidance gives companies the option to reclassify from accumulated OCI to retained earnings stranded tax effects resulting from the new federal corporate income tax rate. The Company elected to early adopt this standard and to reclassified stranded tax effects of $78,145 in accumulated OCI to retained earnings on enactment date.

Future adoption of new accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted. The guidance may be applied retrospectively for all periods presented or retrospectively with a cumulative-effect adjustment at the date of adoption. The new guidance will supersede nearly all existing revenue recognition guidance under U.S. GAAP; however, it will not impact the accounting for insurance and investment contracts within the scope of financial services insurance, leases, financial instruments and guarantees. The core principle of the model requires that an entity recognizes revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The update also requires increased disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts.

The Company’s implementation efforts were primarily focused on customer contracts with fee income earned from assets under management, assets under administration, shareholder servicing, administration and recordkeeping services, and investment advisory services as well as the evaluation of certain incremental costs to obtain a customer contract. The Company anticipates that the adoption of this update will not impact current revenue recognition policies; however, it will impact the accounting for certain contract costs and contract fulfillment costs, which are currently expensed as incurred. Under the new standard, these costs will be deferred and recognized as expenses over the expected customer life. This change will not have a material impact to the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted for the instrument-specific credit risk provision. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments by requiring equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income, eliminating certain disclosure requirements related to financial instruments measured at amortized cost and adding disclosures related to the measurement categories of financial assets and financial liabilities, requiring entities to present separately in other comprehensive income the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (i.e. “own credit”) when the entity has elected the fair value option for financial instruments, and

 

19

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Company anticipates the primary impact to be the requirement for equity investments such as limited partnership interests, that are currently accounted for under the cost method, to be measured at fair value with changes in the fair value recognized in net income. The adoption of this standard will not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual period. This update requires organizations to recognize lease assets and lease liabilities on the balance sheet with lease terms of more than 12 months and also disclose certain qualitative and quantitative information about leasing arrangements. The Company’s implementation efforts are primarily focused on the review of its existing lease contracts and performing a completeness assessment over the lease population. The Company continues to evaluate the impact of this update on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses: Measurement of Credit Losses on Financial Instruments, effective for fiscal years and interim periods within those beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. This update amends guidance on the impairment of financial instruments by adding an impairment model that is based on expected losses rather than incurred losses and is intended to result in more timely recognition of losses. The standard also simplifies the accounting by decreasing the number of credit impairment models that an entity can use to account for debt instruments. The Company continues to evaluate the impact of this update on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. Early adoption is permitted. This ASU addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company continues to evaluate the impact of this update on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. Early adoption is permitted. This update requires organizations to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The adoption of this standard will not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, effective for annual or any interim goodwill impairment tests after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The update eliminates Step 2 from the goodwill impairment test and will require management to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Any amount by which the carrying amount exceeds the reporting unit’s fair value (not to exceed the goodwill allocated to that reporting unit) is recognized as an impairment charge. The adoption of this standard will not have a material impact on the consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual period. This update requires organizations to disaggregate the service cost component from the other components of net benefit costs in the income statement and present it with other current compensation costs for the related employees while providing guidance for capitalization eligibility for service costs. The adoption of this standard will not have a material impact on the consolidated financial statements.

 

20

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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 amounts related to reinsurance ceded to and assumed from related parties:

 

     December 31,  
     2017      2016  

  Reinsurance recoverable

     $ 515,417        $ 522,950   

  Future policy benefits

              1,513,311                 1,608,884   

Included in the consolidated statements of income are the following related party amounts:

 

     Year Ended December 31,  
     2017      2016      2015  
Premium income, net of related party premiums ceded of
$20,033, $17,774, and $15,731		     $ 61,368        $ 66,928        $ 68,722   
Life and other policy benefits, net of reinsurance recoveries of
$10,313, $8,862, and $6,494		              179,748                 189,125                 193,215   

Decrease in future policy benefits

      (70,654)        (88,639)        (52,842)  

In the normal course of business the Company enters into agreements with related parties whereby it provides and/or receives recordkeeping services, investment advisory services, and tax-related services, as well as corporate support services which include general and administrative services, information technology services, and marketing services.    The following table presents revenue, expenses incurred and expense reimbursement from related parties for services provided and/or received pursuant to these service agreements. These amounts, in accordance with the terms of the contracts, are based upon market price, estimated costs incurred or resources expended as determined by number of policies, number of participants, certificates in-force, administered assets, or other similar drivers.

 

          Year Ended December 31,     

Financial
statement line

Description    Related party    2017      2016      2015     

Receives corporate support services

    The Canada Life Assurance Company (“CLAC”)(1), Great-West Life (1), Great West Global (3), and Putnam (2)    $ 22,400      $ 18,763      $ 12,609      General insurance expense

Provides shareholder services

    Putnam (2)      16,598        15,852        5,531      Fee income
Receives reimbursement from tax sharing indemnification related to state and local tax liabilities    Putnam (2)      9,611        12,261        13,563      Other revenue
Provides advisory, trustee, recordkeeping and administrative services    Great-West Funds and Collective Income Trusts (4)      150,441        140,455        138,936      Fee income

(1) An indirect wholly-owned subsidiary of Lifeco

(2) A wholly-owned subsidiary of Lifeco U.S.

(3) An indirect wholly-owned subsidiary of Lifeco U.S.

(4) Great-West Capital Management, LLC, a subsidiary of the Company, serves as a Registered Investment Advisor to Great-West Funds, an open-end management investment company, which is an affiliate of GWL&A and to Great-West Trust Company, LLC, an affiliated trust company. Great-West Trust Company, LLC, serves as trustee to several collective investment trusts. The Company provides Great-West Funds, Inc. recordkeeping and administrative services to shareholders and account owners.

 

21

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The following table summarizes amounts due from parent and affiliates:

 

                    December 31,  
  Related party    Indebtedness      Due date        2017          2016  

  GWL&A Financial

    On account      On demand      $ 52,646          $ 45,190    

  Lifeco U.S.

    On account      On demand       41,966           34,992    

  CLAC

    On account      On demand       19,503           —    

  Other related party receivables

    On account      On demand       18           1,813    
           

 

 

      

 

 

  

Total

              $             114,133          $             81,995    
           

 

 

      

 

 

  

The following table summarizes amounts due to parent and affiliates:

 

                    December 31,  
  Related party    Indebtedness      Due date        2017              2016  

  GWL&A Financial (1)

    Surplus note      November 2034      $ 194,532            $ 194,502    

  GWL&A Financial (2)

    Surplus note      May 2046       333,400             333,400    

  GWL&A Financial (3)

    Surplus note      December 2027       12,000             —    

  GWL&A Financial

    Note interest      May 2018       3,409             3,190    

  Other related party payables

    On account      On demand       10,560             6,898    
           

 

 

        

 

 

  

Total

              $             553,901            $             537,990    
           

 

 

        

 

 

  

(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 $194,532 and $194,502 at December 31, 2017, and 2016, respectively. The surplus note bears interest at the rate of 6.675% per annum, payable in arrears each May and November. The note matures on November 15, 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 an interest rate of 2.588% plus the then-current three-month London Interbank Offering Rate (“LIBOR”). The surplus note became 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.

(3) A note payable to GWL&A Financial was issued as a surplus note on December 29, 2017, with a face amount and carrying amount of $12,000. The surplus note bears an interest rate of 3.5% per annum. The note matures on December 29, 2027.

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 2.5 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 $25,773, $29,185 and $37,059 for the years ended December 31, 2017, 2016, and 2015, respectively. Included in other liabilities on the consolidated balance sheets is $3,409 and $3,190 of interest payable attributable to these related party debt obligations for the years ended December 31, 2017, and 2016, respectively.

GWL&A Financial has a letter of credit for the benefit of GWSC for capital support in the amount of $70 million and which renews annually until the Company terminates it under the provisions specified in the agreement. Additionally, GWL&A Financial terminated a letter of credit on December 21, 2017 in the amount of $1,141 million which was for the benefit of the Company as collateral under the GWSC and CLAC reinsurance agreement for policy liabilities. This letter of credit was replaced with an excess of loss reinsurance agreement with a third party reinsurer. At December 31, 2017 and 2016, there were no outstanding amounts related to the letters of credit.

Included within reinsurance recoverable in the consolidated balance sheets are $503,258 and $511,575 of funds withheld assets as of December 31, 2017, and 2016, respectively. This reinsurance agreement is related to term life insurance policies assumed by GWSC from CLAC. CLAC pays the Company, on a quarterly basis, interest on the funds withheld balance at a rate of

 

22

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

4.55% per annum. The interest income, in the amount of $21,813, $22,045, and $22,165, is included in net investment income for the years ended December 31, 2017, 2016, and 2015, respectively.

The Company’s separate accounts invest in shares of Great-West Funds and Putnam Funds, which are related parties 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, 2017, 2016, and 2015, these purchases totaled $292,774, $183,365, and $146,547, respectively. As these 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 $335,311 and $302,898 at December 31, 2017, and 2016, respectively, to eliminate these amounts in its consolidated balance sheets at those dates.

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:

 

    December 31, 2017  
    Amortized     Gross unrealized     Gross unrealized     Estimated fair value     OTTI (gain) loss  

 Fixed maturities:

   cost     gains     losses     and carrying value       included in AOCI (1)    

 U.S. government direct obligations and U.S. agencies

    $ 1,837,748        $ 41,777        $ 7,883        $ 1,871,642        $ —   

 Obligations of U.S. states and their subdivisions

     1,872,120         220,507         1,655         2,090,972         —   

 Corporate debt securities (2)

     15,234,473         581,991                 110,377                 15,706,087         (1,018)  

 Asset-backed securities

     1,622,806                 105,301         10,131         1,717,976         (56,735)  

 Residential mortgage-backed securities

     63,187         2,446         649         64,984         (140)  

 Commercial mortgage-backed securities

     1,352,906         17,692         12,989         1,357,609                         —   

 Collateralized debt obligations

     779,722         4,227         80         783,869         —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 Total fixed maturities

    $ 22,762,962        $ 973,941        $ 143,764        $ 23,593,139        $ (57,893)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(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 with 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 $89,267 and estimated fair value of $87,348.

 

23

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

     December 31, 2016  
     Amortized      Gross unrealized      Gross unrealized      Estimated fair value      OTTI (gain) loss  

 Fixed maturities:

    cost      gains      losses      and carrying value      included in AOCI (1)  

U.S. government direct obligations and U.S. agencies

     $ 3,022,279         $ 47,791         $ 34,958         $ 3,035,112         $ —   

Obligations of U.S. states and their subdivisions

      1,890,568          214,411          6,317          2,098,662                          —   

 Corporate debt securities (2)

      13,811,597                      477,316                      309,164                      13,979,749          (1,488)  

 Asset-backed securities

      1,226,493          104,274          18,388          1,312,379          (72,464)  

 Residential mortgage-backed securities

      138,292          3,867          1,167          140,992          23   

 Commercial mortgage-backed securities

      1,222,257          23,207          20,182          1,225,282          —   

 Collateralized debt obligations

      361,241          339          53          361,527          —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 Total fixed maturities

     $ 21,672,727         $ 871,205         $ 390,229         $ 22,153,703         $ (73,929)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(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 with 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 $135,187 and estimated fair value of $113,239.

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, 2017  
     Amortized cost          Estimated fair value    

 Maturing in one year or less

     $ 721,952         $ 735,235    

 Maturing after one year through five years

      3,775,332          3,895,328    

 Maturing after five years through ten years

      7,894,918          8,085,972    

 Maturing after ten years

      5,064,983          5,455,996    

 Mortgage-backed and asset-backed securities

      5,305,777          5,420,608    
  

 

 

     

 

 

  

 Total fixed maturities

     $             22,762,962         $             23,593,139    
  

 

 

     

 

 

  

Mortgage-backed (commercial and residential) and asset-backed securities include those issued by the 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,  
     2017      2016      2015  

 Proceeds from sales

     $         3,933,887         $         4,541,303         $         4,187,547    

 Gross realized gains from sales

      64,885          84,305          47,965    

 Gross realized losses from sales

      30,991          16,858          6,476    

 

24

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

Mortgage loans on real estate - The following table summarizes the recorded investment of the mortgage loan portfolio by risk assessment category as of December 31, 2017, and 2016, respectively.

 

     December 31, 2017      December 31, 2016  

 Performing

     $ 4,005,960         $ 3,560,243    

 Non-performing

      —          1,465    
  

 

 

     

 

 

  

 Total

     $             4,005,960         $             3,561,708    
  

 

 

     

 

 

  

The following table summarizes activity in the mortgage provision allowance:

 

     Year Ended December 31,  
     2017      2016      2015  
     Commercial
mortgages		      Commercial
mortgages		      Commercial
mortgages		  

 Beginning balance

     $ 2,882        $ 2,890        $ 2,890    

 Provision increases

      157         536         —    

 Charge-off

      (663)        —         —    

 Recovery

      (30)        —         —    

 Provision decreases

      (1,573)        (544)        —    
  

 

 

     

 

 

     

 

 

  

 Ending balance

     $ 773        $ 2,882        $ 2,890    
  

 

 

     

 

 

     

 

 

  

 Allowance ending balance by basis of impairment method:

         

Individually evaluated for impairment

     $ —        $ 536        $ —    

Collectively evaluated for impairment

      773         2,346         2,890    
        

 Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:

     $             4,005,960        $             3,561,708        $         3,250,594    

Individually evaluated for impairment

      2,942         1,465         14,031    

Collectively evaluated for impairment

      4,003,018         3,560,243         3,236,563    

Limited partnership and other corporation interests - At December 31, 2017, and 2016, the Company had $45,540 and $34,895, respectively, invested in limited partnership and other corporation interests. Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds that primarily make private equity investments across diverse industries and geographical focuses. The Company has determined its interest in each limited partnership to be considered a VIE. Consolidation is not required as the Company is not deemed to be the primary beneficiary of the VIEs.

The carrying value and maximum exposure to loss in relation to the activities of the VIEs was $45,540 and $32,444 at December 31, 2017 and 2016, respectively.

Securities lending - The Company had no securities on loan under the program, and therefore no cash or securities held as collateral, at December 31, 2017, and 2016.

 

25

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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, by class of investment:

 

    December 31, 2017  
    Less than twelve months     Twelve months or longer     Total  
    Estimated     Unrealized     Estimated     Unrealized     Estimated     Unrealized  

Fixed maturities:

   fair value     loss and OTTI     fair value     loss and OTTI     fair value     loss and OTTI  
U.S. government direct obligations and U.S. agencies    $ 755,861        $ 4,159        $ 230,447        $ 3,724        $ 986,308        $ 7,883    
Obligations of U.S. states and their subdivisions     24,908         180         37,012         1,475         61,920         1,655    
Corporate debt securities     2,229,585                     19,568                     2,036,323         90,809         4,265,908         110,377    
Asset-backed securities     544,778         3,011         245,341         7,120         790,119         10,131    
Residential mortgage-backed securities     4,405         23         11,416         626         15,821         649    
Commercial mortgage-backed securities     342,820         2,451         295,164         10,538         637,984         12,989    
Collateralized debt obligations     7,277         80         —         —         7,277         80    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Total fixed maturities    $ 3,909,634        $ 29,472        $ 2,855,703        $             114,292        $ 6,765,337        $             143,764    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Total number of securities in an unrealized loss position       368           293           661    
   

 

 

      

 

 

      

 

 

  

 

    December 31, 2016  
    Less than twelve months     Twelve months or longer     Total  
    Estimated     Unrealized     Estimated     Unrealized     Estimated     Unrealized  

Fixed maturities:

   fair value     loss and OTTI     fair value     loss and OTTI     fair value     loss and OTTI  
U.S. government direct obligations and U.S. agencies    $ 2,006,588        $ 34,752        $ 10,526        $ 206        $ 2,017,114        $ 34,958    
Obligations of U.S. states and their subdivisions     216,154         5,922         10,498         395         226,652         6,317    
Corporate debt securities     4,119,630                     170,453         860,153                     138,711         4,979,783                     309,164    
Asset-backed securities     316,065         6,971         230,331         11,417         546,396         18,388    
Residential mortgage-backed securities     16,962         102         14,297         1,065         31,259         1,167    
Commercial mortgage-backed securities     592,508         17,535         26,068         2,647         618,576         20,182    
Collateralized debt obligations     160,612         53         —         —         160,612         53    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Total fixed maturities    $ 7,428,519        $ 235,788        $             1,151,873        $ 154,441        $ 8,580,392        $ 390,229    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Total number of securities in an unrealized loss position       610           128           738    
   

 

 

      

 

 

      

 

 

  

Fixed maturity investments - Total unrealized losses and OTTI decreased by $246,465, or 63%, from December 31, 2016, to December 31, 2017. The majority, or $206,316, of the decrease was in the less than twelve months category. The overall decrease in unrealized losses was across several asset classes and reflects lower interest rates at December 31, 2017, compared to December 31, 2016, resulting in generally higher valuations of these fixed maturity securities.

Total unrealized losses greater than twelve months decreased by $40,149 from December 31, 2016, to December 31, 2017. Corporate debt securities account for 80%, or $90,809, of the unrealized losses and OTTI greater than twelve months at December 31, 2017. Non-investment grade corporate debt securities account for $6,244 of the unrealized losses and OTTI greater than twelve months. Management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.

 

26

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

Asset-backed and commercial mortgage-backed securities account for 15% of the unrealized losses and OTTI greater than twelve months at December 31, 2017. 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.

Other-than-temporary impairment recognition - 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,  
     2017      2016      2015  

Beginning balance

     $ 83,665        $ 102,343        $ 119,532   

Initial impairments - credit loss on securities not previously impaired

      —         —         759   

Reductions:

         

Due to sales, maturities, or payoffs during the period

      —         (1,785)        (559)  

Due to increases in cash flows expected to be collected that are recognized over the remaining life of the security

      (21,434)        (16,893)        (17,389)  
  

 

 

     

 

 

     

 

 

  

Ending balance

     $     62,231        $     83,665        $     102,343   
  

 

 

     

 

 

     

 

 

  

Net Investment Income

The following table summarizes net investment income:

 

                                                                 
     Year Ended December 31,  
     2017      2016      2015  

Investment income:

         

Fixed maturity and short-term investments

     $ 890,593        $ 819,047        $ 796,133   

Mortgage loans on real estate

      163,361         142,478         150,284   

Policy loans

      199,383         199,737         206,081   

Limited partnership and other corporation interests

      1,812         1,759         10,462   

Net interest on funds withheld balances under reinsurance agreements, related party

      21,813         22,045         22,165   

Derivative instruments (1)

      (48,684)        100,007         78,655   

Other

      11,176         10,468         9,228   
  

 

 

     

 

 

     

 

 

  
     1,239,454         1,295,541         1,273,008   

Investment expenses

      (19,401)        (18,982)        (18,578)  
  

 

 

     

 

 

     

 

 

  

Net investment income

     $     1,220,053        $     1,276,559        $     1,254,430   
  

 

 

     

 

 

     

 

 

  

(1) Includes gains (losses) on the hedged asset for fair value hedges.

Realized Investment Gains (Losses)

The following table summarizes realized investment gains (losses):

 

                                                                 
     Year Ended December 31,  
     2017      2016      2015  

Realized investment gains (losses):

         

Fixed maturity and short-term investments

     $ 13,443        $ 87,108        $ 46,027   

Derivative instruments

      8,969         (5,318)        5,840   

Mortgage loans on real estate

      13,583         10,972         31,841   

Limited partnership and other corporation interests

      10,383         —         —   

Other

      25         120         2   
  

 

 

     

 

 

     

 

 

  

Realized investment gains (losses)

     $     46,403        $     92,882        $     83,710   
  

 

 

     

 

 

     

 

 

  

 

27

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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.

6. Derivative Financial Instruments

Derivative transactions are generally entered into pursuant to International Swaps and Derivatives Association (“ISDA”) Master Agreements or Master Securities Forward Transaction Agreements (“MSFTA”) 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.

The ISDA 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 MSFTA contain provisions which do not stipulate a threshold for default and only apply to debt obligations between the Company and the specific counterparty. The aggregate fair value, inclusive of accrued income and expense, of derivative instruments with credit-risk-related contingent features that were in a net liability position was $93,761 and $38,324 as of December 31, 2017, and 2016, respectively. The Company had pledged collateral related to these derivatives of $42,750 and zero as of December 31, 2017, and 2016, respectively, in the normal course of business. If the credit-risk-related contingent features were triggered on December 31, 2017, the fair value of assets that could be required to settle the derivatives in a net liability position was $51,011.

At December 31, 2017, and 2016, the Company had pledged $52,330 and zero of unrestricted cash collateral to counterparties in the normal course of business, while other counterparties had pledged $5,490 and $103,214 of unrestricted cash collateral to the Company to satisfy collateral netting agreements, respectively.

At December 31, 2017, the Company estimated $15,415 of net derivative gains related to cash flow hedges included in AOCI will be reclassified into net income within the next twelve months. Gains and losses included in AOCI are reclassified into net income when the hedged item affects earnings.

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 security investments and debt obligations 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 and are primarily structured to hedge interest rate risk inherent in the assumptions used to price certain liabilities.

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 the Chicago Mercantile Exchange (“CME”) while others are bilateral contracts between the Company and a counterparty.

In 2017, the CME amended its rulebook to classify variation margin transfers as settlement payments instead of collateral. The Company adjusts the fair value by the variation margin payments on derivatives cleared through the CME.

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.

 

28

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

Foreign currency contracts

Cross-currency swaps and foreign currency forwards 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. The Company uses foreign currency forwards to reduce the risk of foreign currency exchange rate changes on proceeds received on sales of foreign denominated debt instruments; however, hedge accounting is not elected.

Equity contracts

The Company uses futures on equity indices to offset changes in guaranteed lifetime withdrawal benefit liabilities; however, hedge accounting is not elected.

Other forward 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. The Company had no open TBA contracts at either December 31, 2017, or 2016.

The following tables summarize the notional amount and fair value of derivative financial instruments, excluding embedded derivatives:

 

    December 31, 2017  
           Net derivatives       Asset derivatives       Liability derivatives   
     Notional amount      Fair value     Fair value (1)     Fair value (1)  

Hedge designation/derivative type:

        

Derivatives designated as hedges:

        

Cash flow hedges:

        

Interest rate swaps

    $ 388,800        $ 7,476       $ 7,476        $ —    

Cross-currency swaps

     800,060         (31,358)       19,958         51,316    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total cash flow hedges

     1,188,860         (23,882)       27,434         51,316    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Total derivatives designated as hedges

     1,188,860         (23,882)       27,434         51,316    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Derivatives not designated as hedges:

        

Interest rate swaps

     519,100         1,902        3,530         1,628    

Futures on equity indices

     22,074         —        —         —    

Interest rate futures

     60,700         —        —         —    

Interest rate swaptions

     164,522         75        75         —    

Cross-currency swaps

     612,733         (21,279)       20,320         41,599    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivatives not designated as hedges

     1,379,129         (19,302)       23,925         43,227    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative financial instruments

    $ 2,567,989        $ (43,184)      $ 51,359        $ 94,543    
 

 

 

    

 

 

    

 

 

    

 

 

  

(1) The estimated fair value excludes accrued income and expense. 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.

 

29

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

    December 31, 2016  
           Net derivatives       Asset derivatives       Liability derivatives   
     Notional amount      Fair value     Fair value (1)     Fair value (1)  

Hedge designation/derivative type:

        

Derivatives designated as hedges:

        

Cash flow hedges:

        

Interest rate swaps

    $ 419,800        $ 33,390       $ 33,390        $ —    

Cross-currency swaps

     614,208         45,347        53,641         8,294    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total cash flow hedges

     1,034,008         78,737        87,031         8,294    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Total derivatives designated as hedges

     1,034,008         78,737        87,031         8,294    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Derivatives not designated as hedges:

        

Interest rate swaps

     468,100         (4,358)       8,982         13,340    

Futures on equity indices

     34,422         —        —         —    

Interest rate futures

     81,500         —        —         —    

Interest rate swaptions

     165,534         354        354         —    

Cross-currency swaps

     612,733         33,371        50,018         16,647    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivatives not designated as hedges

     1,362,289         29,367        59,354         29,987    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative financial instruments

    $ 2,396,297        $ 108,104       $ 146,385        $ 38,281    
 

 

 

    

 

 

    

 

 

    

 

 

  

(1) The estimated fair value excludes accrued income and expense. 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 average notional outstanding during the year ended December 31, 2017, was $905,977, $1,323,398, $108,438, $162,896, and $2,231,196 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively. The average notional outstanding during the year ended December 31, 2016, was $784,900, $1,141,967, $145,658, $156,632, and $2,230,167 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively.

The following tables present the effect of derivative instruments in the consolidated statements of income and comprehensive income reported by cash flow hedges and derivatives not designated as hedges, excluding embedded derivatives:

 

    Gain (loss) recognized
in OCI on derivatives
(Effective portion)		     Gain (loss) reclassified from OCI
  into net income (Effective portion)  		  
          Year Ended December 31,           Year Ended December 31,  
    2017     2016     2015     2017     2016     2015  

Cash flow hedges:

            

Interest rate swaps

    $ 486      $ 810        $ 2,228        $ 5,920       $ 5,437       $ 6,779   (A)  

Interest rate swaps

     —        —         —         59        —        3,634   (B)  

Interest rate swaps

     (5,590)       21,228         —         (2,954)       (2,657)       —   (C)  

Cross-currency swaps

     (68,622)       22,738         28,833         1,473        8,469        2,101   (A)  

Interest rate futures

     —        —         —         —        —        (134)  (A)  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total cash flow hedges

    $ (73,726)      $ 44,776        $ 31,061        $ 4,498       $ 11,249       $ 12,380   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(A) Net investment income.

(B) Represents realized gains (losses) on closed positions recorded in realized investment gains (losses), net.

(C) Interest expense.

 

30

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,  
    2017     2016     2015  

 Derivatives not designated as hedging instruments:

      

Futures on equity indices

    $ (559)  (A)     $ 817   (A)     $ (284)  (A)  

Futures on equity indices

     (5,829)  (B)      (7,930)  (B)      (527)  (B)  

Interest rate swaps

     3,280   (A)      (4,541)  (A)      (1,094)  (A)  

Interest rate futures

     75   (A)      (57)  (A)      (65)  (A)  

Interest rate futures

     (307)  (B)      (164)  (B)      1   (B)  

Interest rate swaptions

     (83)  (A)      302   (A)      2,868   (A)  

Interest rate swaptions

     (280)  (B)      (313)  (B)      (3,115)  (B)  

Currency forwards

     —   (A)      111   (A)      —   (A)  

Other forward contracts

     15,326   (B)      4,690   (B)      5,074   (B)  

Cross-currency swaps

     (56,018)  (A)      85,746   (A)      69,819   (A)  

Cross-currency swaps

     —   (B)      (1,601)  (B)      —   (B)  
 

 

 

    

 

 

    

 

 

  

Total derivatives not designated as hedging instruments

    $ (44,395)      $ 77,060       $ 72,677   
 

 

 

    

 

 

    

 

 

  

(A) Net investment income.

(B) Represents realized gains (losses) on closed positions recorded in realized investment gains (losses), net.

Embedded derivative - GLWB

The Company offers GLWB through a variable annuity or a contingent deferred annuity. The GLWB is deemed to be an embedded derivative. The GLWB is recorded at fair value within future policy benefits on the consolidated balance sheets. Changes in fair value of GLWB are recorded in net investment income in the consolidated statements of income.

The estimated fair value of the GLWB was $11,095 and $5,712 at December 31, 2017, and 2016, respectively. The changes in fair value of the GLWB were $5,383 and $(5,545) for the years ended December 31, 2017, and 2016, respectively.

7.  Summary of Offsetting Assets and Liabilities

The Company enters into derivative transactions and short-term reverse repurchase agreements with several approved counterparties. The Company’s derivative transactions are generally governed by MSFTA or 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 MSFTA and ISDA Master Agreements generally include 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. Short-term reverse repurchase agreements also include collateral provisions with the counterparty. 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, 2017  
          Gross fair value not offset
in balance sheets		        

Financial instruments (assets):                              

   Gross fair value of
 recognized assets(1) 		     Financial
 instruments 		      Cash collateral      Net
 fair value 		  

 Derivative instruments (2)

    $ 52,738        $ (47,827)      $ (4,911)      $ —    

 Short-term reverse repurchase agreements (3)

     23,200         (23,200)       —        —    
 

 

 

    

 

 

    

 

 

    

 

 

  

 Total financial instruments (assets)

     75,938         (71,027)       (4,911)       —    
 

 

 

    

 

 

    

 

 

    

 

 

  

 

31

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

    December 31, 2017  
          Gross fair value not offset
in balance sheets		        

Financial instruments (liabilities):                              

   Gross fair value of
 recognized liabilities (1) 		     Financial
 instruments 		      Cash collateral      Net
 fair value 		  

Derivative instruments (4)

     93,761         (47,827)       (42,750)       3,184    

(1) The gross fair value of derivative instruments and short-term reverse repurchase agreement is 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. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

(3) The estimated fair value of short-term reverse repurchase agreement assets is reported in short-term investments in the consolidated balance sheets. The collateral is held by an independent third-party custodian under a tri-party agreement.

(4) The estimated fair value of derivative instrument liabilities is reported in other liabilities in the consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

 

    December 31, 2016  
          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)

    $ 119,862        $ (26,254)      $ 92,756        $ 852    

Derivative instruments (liabilities) (3)

     26,254         (26,254)       —         —    

(1) The gross fair value of derivative instruments and short-term reverse repurchase agreement is 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. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

(3) The estimated fair value of derivative instrument liabilities is reported in other liabilities in the consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

 

32

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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:

 

    Assets and liabilities measured at
fair value on a recurring basis		  
    December 31, 2017  
    Quoted prices
in active
markets
for
 identical assets 
(Level 1)		     Significant
other
 observable 
inputs
(Level 2)		     Significant
 unobservable 
inputs
(Level 3)		     Total  

Assets

        

Fixed maturities available-for-sale:

        

U.S. government direct obligations and U.S. agencies

    $ —         $ 1,871,642        $ —         $ 1,871,642    

Obligations of U.S. states and their subdivisions

     —          2,090,972         —          2,090,972    

Corporate debt securities

     —          15,696,349         9,738         15,706,087    

Asset-backed securities

     —          1,717,976         —          1,717,976    

Residential mortgage-backed securities

     —          64,984         —          64,984    

Commercial mortgage-backed securities

     —          1,357,609         —          1,357,609    

Collateralized debt obligations

     —          783,869         —          783,869    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed maturities available-for-sale

     —          23,583,401         9,738         23,593,139    
 

 

 

    

 

 

    

 

 

    

 

 

  

Fixed maturities held-for-trading:

        

U.S. government direct obligations and U.S. agencies

     —          16,836         —          16,836    

Corporate debt securities

     —          3,156         —          3,156    

Commercial mortgage-backed securities

     —          1,067         —          1,067    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed maturities held-for-trading

     —          21,059         —          21,059    
 

 

 

    

 

 

    

 

 

    

 

 

  

Short-term investments

     288,302         61,964         —          350,266    

Collateral under derivative counterparty collateral agreements

     57,820         —          —          57,820    

Derivative instruments designated as hedges:

        

Interest rate swaps

     —          7,476         —          7,476    

Cross-currency swaps

     —          19,958         —          19,958    

Derivative instruments not designated as hedges:

        

Interest rate swaps

     —          3,530         —          3,530    

Interest rate swaptions

     —          75         —          75    

Cross-currency swaps

     —          20,320         —          20,320    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative instruments

     —          51,359         —          51,359    

Separate account assets (1)

     16,523,630         10,736,532         —          27,660,571    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 16,869,752        $ 34,454,315        $ 9,738        $ 51,734,214    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Liabilities

        

Collateral under derivative counterparty collateral agreements

     5,490         —          —          5,490    

Derivative instruments designated as hedges:

        

Cross-currency swaps

     —          51,316         —          51,316    

Derivative instruments not designated as hedges:

        

Interest rate swaps

     —          1,628         —          1,628    

Cross-currency swaps

     —          41,599         —          41,599    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative instruments

     —          94,543         —          94,543    
 

 

 

    

 

 

    

 

 

    

 

 

  

Embedded derivatives - GLWB

     —          —          11,095         11,095    

Separate account liabilities (2)

     8         409,266         —          409,274    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

    $ 5,498        $ 503,809        $ 11,095        $ 520,402    
 

 

 

    

 

 

    

 

 

    

 

 

  

(1) Included in the total fair value amount are $400 million of investments as of December 31, 2017 for which the fair value is estimated using net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy in connection with the adoption of ASU 2015-07.

(2) Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

 

33

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, 2016  
    Quoted prices
in active
markets
for
 identical assets 
(Level 1)		     Significant
other
 observable 
inputs
(Level 2)		     Significant
 unobservable 
inputs
(Level 3)		     Total  

Assets

        

Fixed maturities available-for-sale:

        

U.S. government direct obligations and U.S. agencies

    $ —        $ 3,035,112        $ —        $ 3,035,112    

Obligations of U.S. states and their subdivisions

     —         2,098,662         —         2,098,662    

Corporate debt securities

     —         13,968,110         11,639         13,979,749    

Asset-backed securities

     —         1,312,379         —         1,312,379    

Residential mortgage-backed securities

     —         140,992         —         140,992    

Commercial mortgage-backed securities

     —         1,225,282         —         1,225,282    

Collateralized debt obligations

     —         361,527         —         361,527    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed maturities available-for-sale

     —         22,142,064         11,639         22,153,703    
 

 

 

    

 

 

    

 

 

    

 

 

  

Fixed maturities held-for-trading:

        

U.S. government direct obligations and U.S. agencies

     —         458,067         —         458,067    

Corporate debt securities

     —         55,591         —         55,591    

Commercial mortgage-backed securities

     —         1,080         —         1,080    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed maturities held-for-trading

     —         514,738         —         514,738    
 

 

 

    

 

 

    

 

 

    

 

 

  

Short-term investments

     267,851         36,137         —         303,988    

Collateral under derivative counterparty collateral agreements

     103,214         —         —         103,214    

Derivative instruments designated as hedges:

        

Interest rate swaps

     —         33,390         —         33,390    

Cross-currency swaps

     —         53,641         —         53,641    

Derivative instruments not designated as hedges:

        

Interest rate swaps

     —         8,982         —         8,982    

Interest rate swaptions

     —         354         —         354    

Cross-currency swaps

     —         50,018         —         50,018    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative instruments

     —         146,385         —         146,385    
 

 

 

    

 

 

    

 

 

    

 

 

  

Separate account assets (1)

     15,407,992         11,199,924         —         27,037,765    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 15,779,057        $ 34,039,248        $ 11,639        $ 50,259,793    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Liabilities

        

Collateral under derivative counterparty collateral agreements

     103,214         —         —         103,214    

Derivative instruments designated as hedges:

        

Cross-currency swaps

     —         8,294         —         8,294    

Derivative instruments not designated as hedges:

        

Interest rate swaps

     —         13,340         —         13,340    

Cross-currency swaps

     —         16,647         —         16,647    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total derivative instruments

     —         38,281         —         38,281    
 

 

 

    

 

 

    

 

 

    

 

 

  

Embedded derivatives - GLWB

     —         —         5,712         5,712    

Separate account liabilities (2)

     55         336,468         —         336,523    
 

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

    $ 103,269        $ 374,749        $ 5,712        $ 483,730    
 

 

 

    

 

 

    

 

 

    

 

 

  

(1) Included in the total fair value amount are $430 million of investments as of December 31, 2016 for which the fair value is estimated using net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy in connection with the adoption of ASU 2015-07.

(2) Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

 

34

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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 generally based upon evaluated prices from independent pricing services. In cases where these prices are not readily available, fair values are estimated by the Company. To determine estimated fair value for these instruments, the Company generally utilizes discounted cash flow models with market observable pricing inputs such as spreads, average life, and credit quality. Fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty.

Short-term investments

The amortized cost of short-term investments 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.

Embedded derivatives - GLWB

Significant unobservable inputs are used in the fair value measurements of GLWB include long-term equity and interest rate implied volatility, mortality, and policyholder behavior assumptions, such as benefit utilization and partial withdrawals.

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.

 

35

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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, 2017  
     Assets      Liabilities  
    

Fixed maturities

available-for-sale

         
     Corporate debt securities      Embedded derivatives
- GLWB		  

 Balances, January 1, 2017

     $                         11,639        $                         5,712   

 Realized and unrealized gains (losses) included in:

      

Net income

      —         5,383   

Other comprehensive income (loss)

      169         —   

 Settlements

      (1,703)        —   

 Transfers out of Level 3 (1)

      (367)       $ —   
  

 

 

     

 

 

  

 Balances, December 31, 2017

     $ 9,738        $ 11,095   
  

 

 

     

 

 

  

 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, 2017

     $ —        $ 5,383   
  

 

 

     

 

 

  

(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, 2016  
     Assets      Liabilities  
    

Fixed maturities

available-for-sale

         
     Corporate debt securities      Embedded derivatives
- GLWB		  

 Balances, January 1, 2016

     $                         4,538        $                         11,257   

 Realized and unrealized gains (losses) included in:

      

Net income

      —         (5,545)  

Other comprehensive income (loss)

      273         —   

 Settlements

      (1,478)        —   

 Transfers into Level 3 (1)

      11,236         —   

 Transfers out of Level 3 (2)

      (2,930)        —   
  

 

 

     

 

 

  

 Balances, December 31, 2016

     $ 11,639        $ 5,712   
  

 

 

     

 

 

  

 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, 2016

     $ —        $ (5,545)  
  

 

 

     

 

 

  

(1) Transfers into Level 3 are due primarily to decreased observability of inputs in valuation methodologies.

(2) 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.

 

36

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, 2015  
     Assets      Liabilities  
     Fixed maturities available-for-sale      Total      Embedded
derivatives -
GLWB		  
     Corporate
debt securities		      Asset-backed
securities		        

 January 1, 2015

     $                     5,842        $                     36        $                     5,878        $ —   

 Realized and unrealized gains (losses) included in:

            

Net income

      —         —         —         11,257   

Other comprehensive income (loss)

      (178)        —         (178)        —   

 Settlements

      (1,126)        —         (1,126)        —   

 Transfers out of Level 3 (1)

      —         (36)        (36)        —   
  

 

 

     

 

 

     

 

 

     

 

 

  

 Balances, December 31, 2015

     $ 4,538        $ —        $ 4,538        $                     11,257   
  

 

 

     

 

 

     

 

 

     

 

 

  

 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, 2015

     $ —        $ —        $ —        $ 11,257   
  

 

 

     

 

 

     

 

 

     

 

 

  

(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.

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:

 

    

Valuation

Technique

 

   

Unobservable Input

 

    Range
         December 31,
2017		   December 31,
2016
  

 

   

 

   

 

 Embedded derivatives - GLWB

    Risk neutral
stochastic
valuation
methodology		    Equity volatility    15% - 30%   15% - 30%
      Swap curve    1.69% - 2.54%   0.75% - 3.00%
      Mortality rate    Based on the
Annuity 2000
Mortality Table		   Based on the
Annuity 2000
Mortality Table
      Lapse rate    1% - 15%   1% - 15%

Generally, the following will cause an increase (decrease) in GLWB embedded derivative fair value liabilities:

  •   An increase (decrease) in equity volatility;
  •   A decrease (increase) in interest rates;
  •   A decrease (increase) in mortality;
  •   A decrease (increase) in lapses.

The Company notes the following interrelationships:

  •   Low equity returns will potentially result in higher in-the-moneyness. This may result in lower lapses increasing the projected number of inforce policies and may also increase the fair value of the GLWB reserve.

 

37

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

Fair value of financial instruments

The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments and investments not carried at fair value on a recurring basis:

 

     December 31, 2017      December 31, 2016  
     Carrying
amount		      Estimated
fair value		      Carrying
amount		      Estimated
fair value		  

 Assets

            

 Mortgage loans on real estate

     $ 4,005,187         $ 4,066,800         $ 3,558,826         $ 3,574,240    

 Policy loans

      4,104,094          4,104,094          4,019,648          4,019,648    

 Limited partnership interests

      43,281          45,009          29,345          29,822    

 Other investments

      11,507          41,588          14,382          44,687    
           

 Liabilities

            

 Annuity contract benefits without life contingencies

     $       12,704,401         $       12,647,309         $       12,291,378         $       12,129,631    

 Policyholders’ funds

      280,578          280,578          285,554          285,554    

 Commercial paper

      99,886          99,886          99,049          99,049    

 Notes payable

      543,338          581,097          531,092          495,004    

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 is classified as Level 2.

Policy loans

Policy loans are funds provided to policyholders 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 their carrying value. The estimated fair value is classified as Level 2.

Limited partnership interests

Limited partnership interests, accounted for using the cost method, represent the Company’s minority ownership interests in pooled investment funds. These funds employ varying investment strategies that primarily make private equity investments across diverse industries and geographical focuses. The net asset value, 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, is used as a practical expedient to estimate fair value. 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.

Other investments

Other investments primarily include real estate held for investment. The estimated fair value for real estate is based on the unadjusted appraised value which includes factors such as comparable property sales, property income analysis, and capitalization rates. The estimated fair value is classified as Level 3.

 

38

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 is 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 is 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 is classified as Level 2.

Notes payable

Notes payable is recorded in due to parent and affiliates in the consolidated balance sheets. 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 is classified as Level 2.

9. Minimum Guarantees

The Company calculates additional liabilities for GMDB and GLWB. The following assumptions and methodology were used to determine GMDB additional reserves at December 31, 2017, and 2016 .

 

Area

   

Assumptions/Basis for Assumptions

Data Used    Based on 1,050 investment performance scenarios
Mean Investment Performance    Equity: 7% - 13%
Fixed, Bond, Money Market Fund: level 0% - 10%
Volatility   

Equity: 10% - 35%

Fixed, Bond, Money Market Fund: 0% - 9%

Mortality    Based on the 1994 VA MGDB Mortality Table
Lapse Rates    Lapse Rates vary by duration and surrender charge
Discount Rates    5%

The assumptions and techniques for valuing the GLWB reserve is disclosed within Note 8 and are identical to those used for valuing the GLWB embedded derivative.

The separate account liabilities subject to the requirements for additional liabilities for GMDB and GLWB, net amount at risk, net of reinsurance, and the weighted average attained age of contract owners for GMDB and GLWB at December 31, 2017, and 2016, were as follows:

 

    GMDB     GLWB     Total  

 December 31, 2017

      

 Separate account liability

    $                     64,953       $                     620,698       $                     685,651   

 Net amount at risk, net of reinsurance

    $ 17,705       $ 1,480       $ 19,185   

 Weighted average attained age

     70        69        N/A   
     

 December 31, 2016

      

 Separate account liability

    $ 55,607       $ 413,569       $ 469,176   

 Net amount at risk, net of reinsurance

    $ 25,891       $ 2,941       $ 28,832   

 Weighted average attained age

     71        58        N/A   

 

39

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The paid and incurred amounts for GMDB and GLWB for the years ended December 31, 2017, 2016, and 2015 were as follows:

 

    GMDB     GLWB     Total  

 Additional liability balance:

      

 Balances, January 1, 2015

    $                     5,566       $ —       $ 5,566   

Incurred guaranteed benefits

     821        4,813        5,634   

Paid guaranteed benefits

     (920)       —        (920)  
 

 

 

    

 

 

    

 

 

  

 Balances, December 31, 2015

     5,467        4,813        10,280   

Incurred guaranteed benefits

     132        (2,740)       (2,608)  

Paid guaranteed benefits

     (503)       —        (503)  
 

 

 

    

 

 

    

 

 

  

 Balances, December 31, 2016

     5,096        2,073        7,169   

Incurred guaranteed benefits

     (294)       3,807        3,513   

Paid guaranteed benefits

     (819)       —        (819)  
 

 

 

    

 

 

    

 

 

  

 Balances, December 31, 2017

    $ 3,983       $                     5,880       $                     9,863   
 

 

 

    

 

 

    

 

 

  

The aggregate fair value of equity securities supporting separate accounts with GMDB and GLWB were as follows:

 

     December 31, 2017     December 31, 2016  

 Equity securities - GMDB

     $                     64,975       $                     55,605   

 Equity securities - GLWB

      622,005        412,977   
  

 

 

    

 

 

  

Total

     $ 686,980       $ 468,582   

10. 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, 2017, and 2016, the reinsurance recoverables had carrying values in the amounts of $589,080 and $598,864, respectively. Included in these amounts are $515,417 and $522,950 at December 31, 2017, and 2016, respectively, associated with reinsurance agreements with related parties. At December 31, 2017, and 2016, 87% and 87%, 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.

 

40

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The following tables summarize life insurance in-force and total premium income at and for the year ended December 31, 2017:

 

     Life insurance in-force  
     Individual      Group      Total  

 Written and earned direct

     $ 56,059,075         $ 41,895,505         $ 97,954,580    

 Reinsurance ceded

      (10,881,048)         (1,114,637)         (11,995,685)   

 Reinsurance assumed

      53,532,666          —          53,532,666    
  

 

 

     

 

 

     

 

 

  

 Net

     $             98,710,693         $             40,780,868         $             139,491,561    
  

 

 

     

 

 

     

 

 

  

 Percentage of amount assumed to net

      54%        —%        38%  
     Premium income  
         Life insurance      Annuities      Total  

 Written and earned direct

     $ 373,896         $ 2,184         $ 376,080    

 Reinsurance ceded

      (55,945)         (88)         (56,033)   

 Reinsurance assumed

      119,684          —          119,684    
  

 

 

     

 

 

     

 

 

  

 Net

     $             437,635         $             2,096         $             439,731    
  

 

 

     

 

 

     

 

 

  

The following tables summarizes life insurance in-force and total premium income at and for the year ended December 31, 2016:

 

     Life insurance in-force  
     Individual      Group      Total  

 Written and earned direct

     $ 54,618,888         $ 41,809,635         $ 96,428,523    

 Reinsurance ceded

      (10,568,467)         (833,090)         (11,401,557)   

 Reinsurance assumed

      56,165,011          —          56,165,011    
  

 

 

     

 

 

     

 

 

  

 Net

     $             100,215,432         $             40,976,545         $             141,191,977    
  

 

 

     

 

 

     

 

 

  

 Percentage of amount assumed to net

      56%        —%        40%  
     Premium income  
     Life insurance      Annuities      Total  

 Written and earned direct

     $ 392,654         $ 1,998         $ 394,652    

 Reinsurance ceded

      (52,397)         (81)         (52,478)   

 Reinsurance assumed

      123,175          —          123,175    
  

 

 

     

 

 

     

 

 

  

 Net

     $             463,432         $             1,917         $             465,349    
  

 

 

     

 

 

     

 

 

  

 

The following table summarizes total premium income for the year ended December 31, 2015:

 

 

     Premium income  
     Life insurance      Annuities      Total  

 Written and earned direct

     $ 368,442         $ 503         $ 368,945    

 Reinsurance ceded

      (48,107)         (86)         (48,193)   

 Reinsurance assumed

      124,798          —          124,798    
  

 

 

     

 

 

     

 

 

  

 Net

     $             445,133         $             417         $             445,550    
  

 

 

     

 

 

     

 

 

  

Reinsurance recoveries for life and other policy benefits were $33,737, $39,520, and $23,179 for the years ended December 31, 2017, 2016, and 2015, respectively.

 

41

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

11. Deferred Acquisition Costs and Value of Business Acquired

The following table summarizes activity in DAC and VOBA:

 

     DAC      VOBA      Total  

 Balances, January 1, 2015

     $ 353,408        $ 25,286        $ 378,694   

 Capitalized additions

      63,093         —         63,093   

 Amortization and writedowns

      (96,095)        (4,493)        (100,588)  

  Unrealized investment (gains) losses

      73,012         (68)        72,944   
  

 

 

     

 

 

     

 

 

  

 Balances, December 31, 2015

      393,418         20,725         414,143   

 Capitalized additions

      93,222         —         93,222   

 Amortization and writedowns

      (29,317)        (1,992)        (31,309)  

 Unrealized investment (gains) losses

      10,522         112         10,634   
  

 

 

     

 

 

     

 

 

  

 Balances, December 31, 2016

      467,845         18,845         486,690   

 Capitalized additions

      105,814         —         105,814   

 Amortization and writedowns

      (20,862)        1,134         (19,728)  

 Unrealized investment (gains) losses

      (54,358)        92         (54,266)  
  

 

 

     

 

 

     

 

 

  

 Balances, December 31, 2017

     $                 498,439        $                 20,071        $                 518,510   
  

 

 

     

 

 

     

 

 

  

The estimated future amortization of VOBA for the years ended December 31, 2018 through December 31, 2022, is approximately $3,800 per annum.

12. Goodwill and Other Intangible Assets

The balance of goodwill, all of which is within the Empower Retirement segment, at December 31, 2017, and 2016 was $137,683.

The following tables summarize other intangible assets, all of which are within the Empower Retirement segment:

 

     December 31, 2017  
     Gross carrying      Accumulated         
     amount      amortization          Net book value      

 Customer relationships

     $ 47,580        $ (30,495)       $ 17,085   

 Non-competition

      362         (362)        —   
  

 

 

     

 

 

     

 

 

  

 Total

     $                 47,942        $                 (30,857)       $                 17,085   
  

 

 

     

 

 

     

 

 

  

 

     December 31, 2016  
     Gross carrying      Accumulated         
     amount      amortization          Net book value      

 Customer relationships

     $ 47,580        $ (27,517)       $ 20,063   

 Non-competition

      1,325         (1,301)        24   
  

 

 

     

 

 

     

 

 

  

 Total

     $                 48,905        $                 (28,818)       $                 20,087   
  

 

 

     

 

 

     

 

 

  

Amortization expense for other intangible assets included in general insurance expenses was $3,002, $3,732, and $4,096 for the years ended December 31, 2017, 2016, and 2015, respectively. Except for goodwill, the Company has no intangible assets with indefinite lives.

The estimated future amortization of other intangible assets using current assumptions, which are subject to change, for the years ended December 31, 2018 through December 31, 2022, is approximately $1,800 per annum.

 

42

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

13. 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,  
     2017      2016  

 Face value

     $ 99,886        $ 99,049   

 Carrying value

     $             99,886        $             99,049   

 Effective interest rate

      1.4%-1.7%        0.7%-0.8%  

 Maturity range (days)

      19 - 67        10 - 30  

14. Stockholder’s Equity and Dividend Restrictions

At December 31, 2017, and 2016, 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, 7,320,176 and 7,292,708 of which were issued and outstanding at December 31, 2017, and 2016, respectively.

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,  
     2017      2016      2015           2017      2016  
  

 

 

        

 

 

  

 Net income

     $         170,018      $         100,657      $         187,232      

Capital and surplus

     $         1,129,510      $         1,053,333   

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, 2017.

Dividends are paid as determined by the Board of Directors, subject to restrictions as discussed below. During the years ended December 31, 2017, 2016, and 2015, the Company paid dividends in the amounts of $145,301, $125,691, and $139,533, respectively, to its parent company, GWL&A Financial.

As an insurance company domiciled in the State of Colorado, the Company is required to maintain a minimum of $2,000 of capital and surplus. In addition, the maximum amount of dividends which 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, 2017, were $1,129,510 and $169,483 , respectively. Based on the as filed amounts, the Company may pay an amount up to $112,951 of dividends during the year ended December 31, 2018, without the prior approval of the Colorado Insurance Commissioner. Prior to any payments of dividends, the Company seeks approval from the Colorado Insurance Commissioner.

 

43

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

15. Other Comprehensive Income

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

 

     Year Ended December 31, 2017  
     Unrealized
holding gains
(losses)
arising on
fixed maturities,
available-for-
sale (1)		      Unrealized
holding gains
(losses)
arising on
cash flow
hedged (2)		      Future policy
benefits, DAC
and VOBA
adjustments		      Employee
benefit plan
adjustment (3)		      Total  

Balances, January 1, 2015

     $ 784,183        $ 33,141        $ (108,194)        $ (106,112)       $ 603,018   

OCI before reclassifications

      (643,880)        31,061         65,245         19,730         (527,844)  

Deferred income tax benefit (expense)

      225,358         (10,871)        (22,836)        (6,905)        184,746   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

AOCI before reclassification, net of tax

      (418,522)        20,190         42,409         12,825         (343,098)  

Amounts reclassified from AOCI

      (40,217)        (12,380)        —         11,856         (40,741)  

Deferred income tax benefit (expense)

      14,076         4,333         —         (4,150)        14,259   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Amounts reclassified from AOCI, net of tax

      (26,141)        (8,047)        —         7,706         (26,482)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2015

      339,520         45,284         (65,785)        (85,581)        233,438   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

OCI before reclassifications

      20,295         44,776         10,983         (7,315)        68,739   

Deferred income tax benefit (expense)

      (7,103)        (15,672)        (3,844)        2,560         (24,059)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

AOCI before reclassification, net of tax

      13,192         29,104         7,139         (4,755)        44,680   

Amounts reclassified from AOCI

      (63,022)        (11,249)        —         9,281         (64,990)  

Deferred income tax benefit (expense)

      22,058         3,937         —         (3,248)        22,747   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Amounts reclassified from AOCI, net of tax

      (40,964)        (7,312)        —         6,033         (42,243)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2016

      311,748         67,076         (58,646)        (84,303)        235,875   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

OCI before reclassifications

      377,605         (73,726)        (88,648)        7,283         222,514   

Deferred income tax benefit (expense)

      (132,162)        25,804         31,027         (2,549)        (77,880)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

AOCI before reclassification, net of tax

      245,443         (47,922)        (57,621)        4,734         144,634   

Amounts reclassified from AOCI

      (29,710)        (4,498)        —         6,982         (27,226)  

Deferred income tax benefit (expense)

      10,399         1,574         —         (2,444)        9,529   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Amounts reclassified from AOCI, net of tax

      (19,311)        (2,924)        —         4,538         (17,697)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Impact of tax reform

      7,007         87,299         —         (16,161)        78,145   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Balances, December 31, 2017

     $         544,887        $         103,529        $         (116,267)       $         (91,192)       $         440,957   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(1) Reclassifications affect Other realized investment gains(losses), net on the consolidated statements of income.

(2) Reclassifications affect net investment income on the consolidated statements of income, except for $2,954 and $2,657 (before tax) which affected interest expense for the years ended December 31, 2017 and 2016, respectively.

(3) The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 17 for additional details).

 

44

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

16. General Insurance Expenses

The following table summarizes the significant components of general insurance expenses:

 

     Year Ended December 31,  
     2017      2016      2015  

Compensation

     $ 646,595        $ 625,364        $ 564,008   

Commissions

      241,357         222,028         206,360   

Other

      309,661         333,835         308,628   
  

 

 

     

 

 

     

 

 

  

Total general insurance expenses

     $             1,197,613        $             1,181,227        $             1,078,996   
  

 

 

     

 

 

     

 

 

  

17. 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 continues to account for the corresponding plan obligations on its balance sheet and statements of income.

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 employees covered by these plans. The Company is the owner and beneficiary of the insurance contracts.

A December 31 measurement date is used for the employee benefit plans.

 

45

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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,    
     2017      2016      2017      2016      2017      2016      2017      2016  

Change in projected benefit obligation:

                        

Benefit obligation, January 1

     $ 592,290        $ 560,817        $ 19,031        $ 16,637        $ 44,501        $ 43,858        $ 655,822        $ 621,312   

Service cost

      3,506         (1,403)        1,457         1,246         (16)        294         4,947         137   

Interest cost

      24,205         25,263         758         713         1,620         1,775         26,583         27,751   

Actuarial (gain) loss

      40,840         24,928         (1,216)        1,408         (1,872)        1,911         37,752         28,247   

Regular benefits paid

      (19,737)        (17,315)        (701)        (973)        (3,336)        (3,337)        (23,774)        (21,625)  

Curtailments

      (17,244)        —          —          —          —          —          (17,244)        —    

Amendment

      1,852         —          —          —          24         —          1,876         —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Benefit obligation, December 31

     $ 625,712        $ 592,290        $ 19,329        $ 19,031        $ 40,921        $ 44,501        $ 685,962        $ 655,822   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Accumulated benefit obligation

     $     625,712        $     575,024        $     19,329        $     19,031        $     40,921        $     43,098        $     685,962        $     637,153   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

During 2017, the Company approved an amendment to the Defined Benefit Pension Plan freezing all benefit accruals for pension-eligible participants as of December 31, 2017. The Company also approved an amendment to provide pension-eligible employees with full credit for their anniversary year of services that began in 2017, even if the participants had not completed 1,000 hours of service as of December 31, 2017. The impact of the Plan freeze was reflected on September 25, 2017, and in accordance with ASC 715 Compensation - Retirement Benefits, resulted in a curtailment gain in the amount of $17,244. Additionally, as a result of the amendment to provide an additional year of service credit, prior service cost in the amount of $1,852 was recorded in other comprehensive income as of December 31, 2017. Under a curtailment due to a plan freeze, any unrecognized prior service cost included in other comprehensive income associated with the employees affected by the pension plan freeze must be fully recognized in benefit cost in determining the net gain or loss to be recognized for the curtailment. Additionally, the curtailment gain recognized in the income statement is offset by accelerating, in an equal amount, the recognition of any actuarial gain or loss in other comprehensive income. $15,392 of actuarial loss was recognized from other comprehensive income to offset the net curtailment gain. As a result, the net impact to the income statement was zero.

 

     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,  
     2017      2016      2017      2016      2017      2016      2017      2016  

Change in plan assets:

                        

Value of plan assets, January 1

    $ 453,087       $ 427,131       $ —        $ —        $ —        $ —        $ 453,087       $ 427,131   

Actual return on plan assets

      50,292         43,271         —          —          —          —          50,292         43,271   

Employer contributions

      —          —          701         973         3,337         3,337         4,038         4,310   

Benefits paid

      (19,737)        (17,315)        (701)        (973)        (3,337)        (3,337)        (23,775)        (21,625)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Value of plan assets,

December 31

     $ 483,642        $ 453,087        $ —         $ —         $ —         $ —         $ 483,642        $ 453,087   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     Defined Benefit
Pension Plan		      Post-Retirement
Medical Plan		      Supplemental Executive
Retirement Plan		      Total  
     December 31,      December 31,      December 31,      December 31,  
     2017      2016      2017      2016      2017      2016      2017      2016  

Under funded status at

December 31

     $     (142,070)       $     (139,203)       $     (19,329)       $     (19,031)       $     (40,921)       $     (44,501)       $     (202,320)       $     (202,735)  

 

46

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,  
     2017      2016      2017      2016      2017      2016      2017      2016  

Amounts recognized in

consolidated balance sheets:

                        

Other liabilities

    $     (142,070)      $     (139,203)      $     (19,329)      $     (19,031)      $     (40,921)      $     (44,501)      $     (202,320)      $     (202,735)  

Accumulated other

comprehensive income (loss)

      (121,645)        (133,055)        6,276         5,715         (66)        (2,360)        (115,435)        (129,700)  

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, 2017:

 

         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)

      $ (121,645)        $ (96,098)        $ 6,105         $ 4,823         $ 1,157         $ 914         $ (114,383)        $ (90,361)  

Net prior service (cost) credit

      —          —          171         135         (1,223)        (966)        (1,052)        (831)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     $     (121,645)        $     (96,098)        $     6,276         $     4,958         $     (66)        $     (52)        $     (115,435)        $     (91,192)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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, 2018:

 

         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)

      $ (2,336 )      $ (1,845 )      $ 276         $ 218         $ 45        $ 36        $ (2,015 )      $ (1,591 ) 

Prior service (cost) credit

      —        —        20         16         (324 )      (256 )      (304 )      (240 ) 
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  
     $     (2,336)       $     (1,845)       $     296         $     234         $     (279)       $     (220)       $     (2,319)       $     (1,831)  
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

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    		  

2018

     $ 20,286        $ 795        $ 2,515   

2019

      21,396         855         2,520   

2020

      22,737         873         2,480   

2021

      24,688         940         2,446   

2022

      26,676         1,003         10,180   

2023 through 2027

      158,881         6,579         13,065   

 

47

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,  
     2017      2016      2015  

Components of net periodic cost:

         

Service cost

      $ 3,506         $ (1,403)        $ 12,851   

Interest cost

      24,205         25,263         23,987   

Expected return on plan assets

      (20,626)        (22,339)        (28,345)  

Amortization of unrecognized prior service cost

      —         —         13   

Amortization of loss from earlier periods

      7,190         10,260        12,398   
  

 

 

     

 

 

     

 

 

  

Net periodic cost

      $             14,275         $             11,781         $             20,904   
  

 

 

     

 

 

     

 

 

  

 

                                                                 
     Post-Retirement Medical Plan  
     Year Ended December 31,  
     2017      2016      2015  

Components of net periodic benefit:

         

Service cost

      $ 1,457         $ 1,246         $ 1,042   

Interest cost

      758         713         560   

Amortization of unrecognized prior service benefit

      (453)        (1,102)        (1,640)  

Amortization of gain from earlier periods

      (202)        (317)        (511)  
  

 

 

     

 

 

     

 

 

  

Net periodic benefit

      $             1,560         $             540         $             (549)  
  

 

 

     

 

 

     

 

 

  

 

                                                                 
     Supplemental Executive Retirement Plan  
     Year Ended December 31,  
     2017      2016      2015  

Components of net periodic cost:

         

Service cost

      $ (16)        $ 294         $ 282   

Interest cost

      1,620         1,775         2,122   

Amortization of unrecognized prior service cost

      501        501         933   

Amortization of loss from earlier periods

      (54)        (61)        663   
  

 

 

     

 

 

     

 

 

  

Net periodic cost

      $             2,051         $             2,509         $             4,000   
  

 

 

     

 

 

     

 

 

  

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,  
                 2017                             2016              

Discount rate

      3.71%       4.20%  

Rate of compensation increase

      4.47%       4.47%  

 

48

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

                                           
         Post-Retirement Medical Plan       
     December 31,  
     2017      2016  

Discount rate

      3.63%        4.05%  

Initial health care cost trend

      6.50%        6.75%  

Ultimate health care cost trend

      5.00%        5.00%  

Year ultimate trend is reached

      2024         2024   
         Supplemental Executive    
Retirement Plan		  
     December 31,  
     2017      2016  

Discount rate

      3.43%        3.80%  

Rate of compensation increase

      4.00%        4.00%  

During 2017, the Company adopted the Society of Actuaries Mortality Improvement Scale (MP-2017).

During 2016, the Company adopted the Society of Actuaries Mortality Improvement Scale (MP-2016).

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,  
     2017      2016  

Discount rate

      4.20%        4.55%  

Expected return on plan assets

      5.25%        6.00%  

Rate of compensation increase

      4.47%        4.47%  
         Post-Retirement Medical Plan       
     Year Ended December 31,  
     2017      2016  

Discount rate

      4.05%        4.31%  

Initial health care cost trend

      6.75%        7.00%  

Ultimate health care cost trend

      5.00%        5.00%  

Year ultimate trend is reached

      2024          2024    
         Supplemental Executive    
Retirement Plan		  
     Year Ended December 31,  
     2017      2016  

Discount rate

      3.80%        4.22%  

Rate of compensation increase

      4.00%        4.00%  

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.

 

49

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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:

 

         One percentage    
point increase		         One percentage    
point decrease		  

Increase (decrease) on total service and interest cost on components

      $ 371         $ (309)  

Increase (decrease) on post-retirement benefit obligation

      2,524         (2,157)  
The following table presents how the Company’s Defined Benefit Pension Plan assets are invested:  
     December 31,  
             2017                     2016          

Equity securities

      47%       45%  

Debt securities

      45%       39%  

Other

      8%       16%  
  

 

 

    

 

 

  

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 approach utilized to determine such fair value:

 

     Defined benefit plan assets measured at fair value on a recurring basis  
     December 31, 2017  
     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: (1)

            

Equity index funds

      $ —          $ —          $ —          $ 32,596    

Midcap index funds

      —          —          —          31,717    

World equity index funds

      —          —          —          60,216    

U.S. equity market funds

      —          —          —          46,400    

International equity funds

      —          —          —          15,382    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common collective trust funds

      —          —          —          186,311    

Fixed maturity investments:

            

U.S. government direct obligations and agencies

      —          4,608          —          4,608    

Obligations of U.S. states and their municipalities

      —          18,775          —          18,775    

Corporate debt securities

      —          183,462          1,108          184,570    

Asset-backed securities

      —          10,569          —          10,569    

Commercial mortgage-backed securities

      —          2,475          —          2,475    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed maturity investments

      —          219,889          1,108          220,997    

Equity investments:

            

Fixed income mutual funds

      27,516          —          —          27,516    

Equity mutual funds

      15,609          —          —          15,609    

Preferred stock

      704          —          —          704    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total equity investments

      43,829          —          —          43,829    

Limited partnership investments (1)

      —          —          —          7,465    

Money market funds

      29,576          —          —          29,576    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total defined benefit plan assets

     $                 73,405         $                 219,889         $                 1,108         $                 488,178    
  

 

 

     

 

 

     

 

 

     

 

 

  

(1) Fair values of Common collective trust funds and Limited partnership investments are estimated using net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy in connection with the adoption of ASU 2015-07.

 

50

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, 2016  
    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: (1)

        

Equity index funds

     $ —         $ —         $ —         $ 34,578   

Midcap index funds

     —         —         —         35,330   

World equity index funds

     —         —         —         44,235   

U.S. equity market funds

     —         —         —         45,614   

International equity funds

     —         —         —         11,143   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total common collective trust funds

     —         —         —         170,900   

Fixed maturity investments:

        

U.S. government direct obligations and agencies

     —         5,672         —         5,672   

Obligations of U.S. states and their municipalities

     —         18,670         —         18,670   

Corporate debt securities

     —         141,102         1,316         142,418   

Asset-backed securities

     —         7,828         —         7,828   

Commercial mortgage-backed securities

     —         2,884         —         2,884   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed maturity investments

     —         176,156         1,316         177,472   

Equity investments:

        

Fixed income mutual funds

     21,321         —         —         21,321   

Equity mutual funds

     11,106         —         —         11,106   

Preferred stock

     640         —         —         640   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total equity investments

     33,067         —         —         33,067   

Limited partnership investments (1)

     —         —         —         7,022   

Money market funds

     62,883         —         —         62,883   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total defined benefit plan assets

     $     95,950         $     176,156         $       1,316         $       451,344   
 

 

 

    

 

 

    

 

 

    

 

 

  

(1) Fair values of Common collective trust funds and Limited partnership investments are estimated using net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy in connection with the adoption of ASU 2015-07.

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:

 

         Recurring Level 3 financial assets      
     Corporate debt securities  
     Year Ended December 31,  
     2017      2016  

Balance, January 1

      $ 1,316          $ —   

Unrealized gains relating to instruments still held at reporting period

      19          54   

Settlements

      (227)         (213)  

Transfers into Level 3 (1)

      —          1,475   
  

 

 

     

 

 

  

Balance, December 31

      $       1,108          $       1,316   
  

 

 

     

 

 

  

(1) Transfers into Level 3 are due primarily to decreased observability of inputs in valuation methodologies.

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

 

51

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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.

The following table presents the target allocation of invested Defined Benefit Pension Plan assets at December 31, 2018:

 

      December 31, 2018   

Equity securities

      30%  

Debt securities

      52%  

Other

      18%  
  

 

 

  

Total

            100%  
  

 

 

  

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, 2018. The Company expects to make payments of approximately $795 with respect to its Post-Retirement Medical Plan and $2,515 with respect to its Supplemental Executive Retirement Plan during the year ended December 31, 2018.

Other employee benefit plans

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 $27,284 and $21,758 at December 31, 2017, and December 31, 2016, respectively.

The Company sponsors a qualified defined contribution benefit plan covering all employees. Under this plan, employees may contribute a percentage of their annual compensation to the plan up to certain maximums, as defined by the plan and by the Internal Revenue Service (“IRS”). Currently, the Company matches a percentage of employee contributions in cash. The Company recognized $14,937, $12,364, and $13,016 in expense related to this plan for the years ended December  31, 2017, 2016, and 2015, respectively.

18. Income Taxes

The provision for income taxes is comprised of the following:

 

             Year Ended December 31,          
     2017      2016      2015  

Current

      $ 84,445         $ 32,031        $ 76,842   

Deferred

      (167,059)        53,481         21,682   
  

 

 

     

 

 

     

 

 

  

Total income tax provision

      $         (82,614)        $         85,512       $         98,524   
  

 

 

     

 

 

     

 

 

  

 

52

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective federal income tax rate:

 

    

                Year Ended December 31,                 

  
    

        2017        

   

        2016        

            2015          

Statutory federal income tax rate

    35.0%    35.0%      35.0%  

Income tax effect of:

         

Federal tax rate change resulting from tax reform

    (61.4)%    —%      —%  

Investment income not subject to federal tax

    (4.3)%    (3.0)%      (3.0)%  

Tax credits

    (0.3)%    (6.9)%      (0.2)%  

State income taxes, net of federal benefit

    2.3%    2.3%      3.2%  

Other, net

    (0.1)%    (0.4)%      (0.9)%  
  

 

   

 

   

 

 

  

Effective federal income tax rate

    (28.8)%    27.0%      34.1%  
  

 

   

 

   

 

 

  

On December 22, 2017, H.R. 1, the Tax Reconciliation Act (the “Act”), was enacted. The legislation, which is generally effective for tax years beginning on January 1, 2018, represents significant U.S. tax reform and revises the Internal Revenue Code by, among other items, lowering the federal corporate income tax rate from 35% to 21% and modifying how the U.S. taxes multinational entities.

The decrease in the federal corporate income tax rate caused the Company to revalue its deferred tax balances at the new 21% rate, resulting in the recognition of a $175,842 deferred tax benefit and a 61.4% decrease to the Company’s 2017 overall effective income tax rate. The impact of tax reform recognized in Accumulated Other Comprehensive Income was $78,145. This balance was transferred to Retained Earnings on the Balance Sheet.

A reconciliation of unrecognized tax benefits is as follows:

 

    

                Year Ended December 31,                 

  
    

        2017        

   

        2016        

            2015          

Balance, beginning of year

      $17,268     $23,093       $ 26,890   

Additions to tax positions in the current year

    13,461     —       1,383   

Additions to tax positions in the prior year

    —     1,902       50   

Reductions to tax positions from statutes expiring

    —     (7,727)      (5,230)  
  

 

   

 

   

 

 

  

Balance, end of year

      $30,729     $17,268       $ 23,093   
  

 

   

 

   

 

 

  

There were no tax benefits included in the unrecognized tax benefits of $30,729 at December 31, 2017, that would impact the annual effective tax rate. The Company anticipates a decrease in its unrecognized tax benefits of $8,000 to $10,000 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 an increase of $553 and decreases of $153, and $193 in interest and penalties related to the uncertain tax positions during the years ended December 31, 2017, 2016, and 2015, respectively. The Company had approximately $1,417 and $864 accrued for the payment of interest and penalties at December 31, 2017, and 2016, 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 2013 and prior. Tax years 2014 through 2016 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.

 

53

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

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:

 

     December 31,  
     2017      2016  
            Deferred             Deferred      Deferred      Deferred  
            tax asset                    tax liability                    tax asset                   tax liability        

Policyholder reserves

      $ —       $ 146,294       $ —       $ 278,632   

Deferred acquisition costs

      —         20,405         —         28,071   

Investment assets

      —         185,940         —         233,583   

Policyholder dividends

      5,244         —         8,583         —   

Net operating loss carryforward

      32,662         —         96,693         —   

Pension plan accrued benefit liability

      51,289         —         83,562         —   

Goodwill

      —         23,287         —         35,306   

Experience rated refunds

      9,988         —         6,654         —   

Tax credits

      169,692         —         168,597         —   

Other

      13,848         —         19,592         —   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total deferred taxes

      $     282,723         $     375,926         $     383,681         $     575,592   
  

 

 

     

 

 

     

 

 

     

 

 

  

The deferred tax amounts presented above with respect to investments, future policy benefits, and deferred acquisition costs include $141,458 and $172,405 related to amounts recognized through other comprehensive income at December 31, 2017, and 2016, 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.

As of December 31, 2017, the subsidiaries had net operating loss carry forwards expiring as follows:

 

 Year

              Amount            

 2023

      65,209   

 2028

      2,215   
  

 

 

  

Total

      $       67,424   
  

 

 

  

During the years ended December 31, 2017, 2016, and 2015, the Company generated $120, $215, and $3,295 of Guaranteed Federal Low Income Housing tax credit carryforwards, respectively. As of December 31, 2017, the total credit carryforward for Low Income Housing is $142,089. These credits will begin to expire in 2030.

The Company generated $3,474 of foreign tax credit during the year ended December 31, 2017. During the years ended December 31, 2010 through December 31, 2016, the Company generated credit carryforwards of $23,984. The Company determined in 2016 to amend its prior year previously filed federal income tax returns in order to elect to claim foreign tax credits in lieu of foreign tax expense. These credits will begin to expire in 2020.

Included in due from parent and affiliates at December 31, 2017, and 2016 is $41,694 and $35,093, respectively, of income taxes receivable primarily 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, 2017, and 2016 is $5,845 and $7,819, respectively, of income taxes receivable in other assets primarily related to the separate state income tax returns filed by certain subsidiaries.

 

54

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

19. Segment Information

The Chief Operating Decision Maker (“CODM”) of the Company is also the Chief Executive Officer (“CEO”) of the Company and Lifeco U.S. The CODM reviews the financial information for the purposes of assessing performance and allocating resources based upon the results of Lifeco U.S. and other U.S. affiliates prepared in accordance with International Financial Reporting Standards. The CODM, in his capacity as CEO of the Company, reviews the Company’s financial information only in connection with the quarterly and annual reports that are filed with the Securities and Exchange Commission (“SEC”). Consequently, the Company does not provide its discrete financial information to the CODM to be regularly reviewed to make decisions about resources to be allocated or to assess performance. For purposes of SEC reporting requirements, the Company has chosen to present its financial information in three segments, notwithstanding the above. The three segments are: Individual Markets, Empower Retirement, and Other.

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.

Empower Retirement

The Empower Retirement reporting and operating segment provides various retirement plan products and investment options as well as comprehensive administrative and recordkeeping 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, the impact of tax reform 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.

 

55

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The following tables summarize segment financial information:

 

    

Year Ended December 31, 2017

  
    

      Individual      

     

Empower

                
    

Markets

     

    Retirement    

     

Other

     

Total

  

Revenue:

            

Premium income

     $ 357,244        $ 2,172        $ 80,315        $ 439,731   

Fee income

      110,128         943,038         6,956         1,060,122   

Other revenue

      —         9,611         —         9,611   

Net investment income

      738,002         434,677         47,374         1,220,053   

Realized investments gains (losses), net

      32,652         13,752         (1)        46,403   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenues

      1,238,026         1,403,250         134,644         2,775,920   
  

 

 

     

 

 

     

 

 

     

 

 

  

Benefits and expenses:

            

Policyholder benefits

      953,371         206,544         81,219         1,241,134   

Operating expenses

      169,234         998,431         80,619         1,248,284   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total benefits and expenses

      1,122,605         1,204,975         161,838         2,489,418   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income (loss) before income taxes

      115,421         198,275         (27,194)        286,502   

Income tax expense (benefit)

      38,605         64,252         (185,471)        (82,614)  
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income

     $ 76,816        $ 134,023        $ 158,277        $ 369,116   
  

 

 

     

 

 

     

 

 

     

 

 

  
     December 31, 2017  
           Individual            Empower                
     Markets          Retirement          Other      Total  

Assets:

            

Investments

     $ 17,791,097        $ 12,472,906        $ 1,873,279        $ 32,137,282   

Other assets

      1,465,544         1,027,458         154,312         2,647,314   

Separate account assets

      8,494,248         19,166,323         —         27,660,571   
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets of continuing operations

     $ 27,750,889        $ 32,666,687        $       2,027,591         62,445,167   
  

 

 

     

 

 

     

 

 

     

Assets of discontinued operations

               16,095   
           

 

 

  

Total assets

              $     62,461,262   
           

 

 

  

 

56

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

     Year Ended December 31, 2016  
             Individual        
Markets		      Empower
    Retirement    		              Other                      Total          

Revenue:

            

Premium income

     $ 379,127       $ 1,853       $ 84,369       $ 465,349   

Fee income

      99,514        851,620        5,683        956,817   

Other revenue

      —        12,261        —        12,261   

Net investment income

      798,557        428,327        49,675        1,276,559   

Realized investments gains (losses), net

      40,899        51,209        774        92,882   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenues

      1,318,097        1,345,270        140,501        2,803,868   
  

 

 

     

 

 

     

 

 

     

 

 

  

Benefits and expenses:

            

Policyholder benefits

      969,182        206,143        65,698        1,241,023   

Operating expenses

      175,016        1,002,129        69,096        1,246,241   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total benefits and expenses

      1,144,198        1,208,272        134,794        2,487,264   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income before income taxes

      173,899        136,998        5,707        316,604   

Income tax expense

      58,601        25,144        1,767        85,512   
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income

     $ 115,298       $ 111,854       $ 3,940       $ 231,092   
  

 

 

     

 

 

     

 

 

     

 

 

  
     December 31, 2016  
     Individual
Markets		      Empower
Retirement		      Other      Total  

Assets:

            

Investments

     $ 16,770,772       $ 12,195,748       $ 1,634,330       $ 30,600,850   

Other assets

      1,453,717        1,057,148        141,666        2,652,531   

Separate account assets

      7,521,475        19,516,290        —        27,037,765   
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets of continuing operations

     $         25,745,964       $         32,769,186       $         1,775,996        60,291,146   
  

 

 

     

 

 

     

 

 

     

Assets of discontinued operations

               17,652   
           

 

 

  

Total assets

              $         60,308,798   
           

 

 

  

 

57

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

     Year Ended December 31, 2015  
     Individual
        Markets        		      Empower
    Retirement    		              Other                     Total          

Revenue:

           

Premium income

     $ 360,783        $ 533       $             84,234       $ 445,550   

Fee income

      87,471         853,076         3,979        944,526   

Other revenue

      —         13,563         —        13,563   

Net investment income

      801,935         398,639         53,856        1,254,430   

Realized investments gains (losses), net

      28,864         54,752         94        83,710   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total revenues

      1,279,053         1,320,563         142,163        2,741,779   
  

 

 

     

 

 

     

 

 

    

 

 

  

Benefits and expenses:

           

Policyholder benefits

      931,631         201,791         101,205        1,234,627   

Operating expenses

      159,719         992,564         65,890        1,218,173   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total benefits and expenses

      1,091,350         1,194,355         167,095        2,452,800   
  

 

 

     

 

 

     

 

 

    

 

 

  

Income (loss) before income taxes

      187,703         126,208         (24,932 )      288,979   

Income tax expense (benefit)

      64,360         43,058         (8,894 )      98,524   
  

 

 

     

 

 

     

 

 

    

 

 

  

Net income (loss)

     $             123,343        $             83,150        $ (16,038 )     $             190,455   
  

 

 

     

 

 

     

 

 

    

 

 

  

20. 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 Human Resources Committee. At its discretion the Human Resources 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 20 trading days prior to the date following the last day of the three-year performance period. The performance share units generally vest in their entirety at the end of the three years 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.

 

58

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

Compensation Expense Related to Share-Based Compensation

The compensation expense related to share-based compensation was as follows:

 

     Year Ended December 31,  
     2017     2016     2015  

Lifeco Stock Plan

     $ 1,460       $ 2,190       $ 1,655   

Performance Share Unit Plan

      7,207        5,318        2,320   
  

 

 

    

 

 

    

 

 

  

Total compensation expense

     $ 8,667       $ 7,508       $ 3,975   
  

 

 

    

 

 

    

 

 

  

Income tax benefits

     $                 2,832       $                 2,458       $                 1,143   
  

 

 

    

 

 

    

 

 

  

The following table presents the total unrecognized compensation expense related to share-based compensation at December 31, 2017, and the expected weighted average period over which these expenses will be recognized:

 

    

    Expense    

   

    Weighted average        

period (years)

Lifeco Stock Plan

    $            1,673     1.6 

Performance Share Unit Plan

    5,179     1.3 

Equity Award Activity

During the year ended December 31, 2017, Lifeco granted 434,300 stock options to employees of the Company. These stock options vest over five - year periods ending in 2022. Compensation expense of $1,195 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)        		       Intrinsic
        value (1)         		  

Outstanding, January 1, 2017

     4,062,001      $ 23.25      

Granted

     434,300        29.26      

Exercised

     (655,384)       24.58      

Cancelled and expired

     (393,942)       28.35      
 

 

 

        

Outstanding, December 31, 2017

     3,446,975        24.88       6.3     $ 11,012  

Vested and expected to vest, December 31, 2017

     3,446,975      $ 24.88       6.3     $ 11,012  

Exercisable, December 31, 2017

     2,190,591      $ 23.22       5.3     $ 10,327  

(1) The aggregate intrinsic value is calculated as the difference between the market price of Lifeco common shares on December 31, 2017, and the exercise price of the option (only if the result is positive) multiplied by the number of options.

 

59

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

The following table presents additional information regarding stock options under the Lifeco plan:

 

    Year Ended December 31,  
                2017                             2016                             2015              

Weighted average fair value of options granted

    $ 2.75       $ 2.74       $ 3.33   

Intrinsic value of options exercised (1)

     2,869        2,102        4,234   

Fair value of options vested

     2,203        1,605        1,670   

(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 the years ended December 31, 2017, 2016, and 2015 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,  
                2017                

            2016             

               2015              

Dividend yield

     3.98%     3.99%     3.66%  

Expected volatility

     13.99%     19.03%     19.10%  

Risk free interest rate

     1.25%     0.80%     0.90%  

Expected duration (years)

     6.0     6.0     6.0  

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, January 1, 2017

      598,911   

Granted

      290,895   

Forfeited

      (77,957)  

Exercised

      (130,339)  
  

 

 

  

Outstanding, December 31, 2017

      681,510   
  

 

 

  
  

Vested and expected to vest, December 31, 2017

      681,510   

The cash payment in settlement of the Performance Share Unit Plan units was $3,398 and $3,988 for the years ended December 31, 2017, and 2016, respectively.

21.  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)

     $ —          $ —          $ —          $ 540,400        $ 540,400   

Related party long-term debt - interest (2)

      26,796         53,591         53,591         468,942         602,920   

Investment purchase obligations (3)

      312,152         1,090         —           —           313,242   

Operating leases (4)

      15,467         23,703         7,000         13         46,183   

Other liabilities (5)

      39,499         33,261         40,487         19,644         132,891   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

     $       393,914       $       111,645        $       101,078        $       1,028,999        $       1,635,636   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

60

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 three 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 a variable interest rate plus the then-current three-month London Interbank Offering Rate (“LIBOR”). The third long-term surplus note bears interest at a fixed rate through maturity. The interest payments shown in this table are calculated based upon the contractual rates in effect on December 31, 2017 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, 2017, and 2016, were as follows:

 

         December 31, 2017             December 31, 2016      

Due in less than one year

     $ 312,152       $ 438,458   

Due within one to three years

      1,090        —   
  

 

 

    

 

 

  

Total

     $ 313,242       $ 438,458   
  

 

 

    

 

 

  

Included in the total unfunded commitments at December 31, 2017, and 2016, is $114,726 and $93,440, respectively, related to cost basis limited partnership interests, 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 $13,433, $12,575, and $12,050 for the years ended December 31, 2017, 2016, and 2015, respectively and is recorded in general insurance expense. The Company’s total future operating lease obligation will be reduced by minimum reimbursement of $5,938 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.
  · 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, of $1,100,000, 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, 2016. The Company was in compliance with all covenants at December 31, 2017, and 2016. At December 31, 2017, and 2016 there were no outstanding amounts related to the current and prior credit facilities.

 

61

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Share Amounts)

 

GWL&A Financial has a letter of credit for the benefit of GWSC for capital support in the amount of $70 million and which renews annually until the Company terminates it under the provisions specified in the agreement. Additionally, GWL&A Financial terminated a letter of credit on December 21, 2017 in the amount of $1,141 million which was for the benefit of the Company as collateral under the GWSC and CLAC reinsurance agreement for policy liabilities. This letter of credit was replaced with an excess of loss reinsurance agreement with a third party reinsurer. At December 31, 2017, and 2016, there were no outstanding amounts related to the letters of credit.

In addition, the Company has other letters of credit with a total amount of $9,095, renewable annually for an indefinite period of time. At December 31, 2017, and 2016, there were no outstanding amounts related to those letters of credit.

Contingencies

From time to time, the Company may be threatened with, or named as a defendant in, lawsuits, arbitrations, and administrative claims. Any such claims that are decided against the Company could harm the Company’s business. The Company is also subject to periodic regulatory audits and inspections which could result in fines or other disciplinary actions. Unfavorable outcomes in such matters may result in a material impact on the Company’s financial position, results of operations, or cash flows.

The Company is defending lawsuits relating to the costs and features of certain retirement or fund products. Management believes the claims are without merit and will defend these actions. Based on the information known, these actions will not have a material adverse effect on the consolidated financial position of the Company.

The Company is involved in other various legal proceedings that arise in the ordinary course of its business. In the opinion of management, after consultation with counsel, the likelihood of loss from the resolution of these proceedings is remote and/or the estimated loss is not expected to have a material effect on the Company’s consolidated financial position, results of its operations, or cash flows.

22. Subsequent Events

On February 1, 2018, the Company’s Board of Directors declared dividends of $24,001, payable on March 30, 2018, to its sole shareholder, GWL&A Financial.

 

62

COLI VUL-2 Series Account

of Great-West Life & Annuity

Insurance Company

Annual Statement for the Year Ended

December 31, 2017 and Report of Independent

Registered Public Accounting Firm

COLI VUL-2 SERIES ACCOUNT OF

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 2017

 

 

   

INVESTMENT DIVISIONS

  
            ALGER SMALL    
CAP GROWTH
PORTFOLIO		       AMERICAN
CENTURY
INVESTMENTS
VP CAPITAL
  APPRECIATION  
FUND		       AMERICAN
CENTURY
INVESTMENTS
VP INCOME &
  GROWTH FUND  		       AMERICAN
CENTURY
  INVESTMENTS  
VP INFLATION
PROTECTION
FUND		       AMERICAN
CENTURY
INVESTMENTS
VP
  INTERNATIONAL  
FUND		         AMERICAN
CENTURY
INVESTMENTS
  VP VALUE FUND  

ASSETS:

                        

Investments at fair value (1)

   $     427,700     $     89,077     $     4,602     $     581,506     $     54,821     $       781,624    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       427,700         89,077         4,602         581,506         54,821         781,624    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     427,700     $     89,077     $     4,602     $     581,506     $     54,821     $       781,624    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     427,700     $     89,077     $     4,602     $     581,506     $     54,821     $       781,624    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       2,620         6,376         189         55,787         3,794         17,815    

UNIT VALUE (ACCUMULATION)

   $     163.24     $     13.97     $     24.35     $     10.42     $     14.45     $       43.87    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     415,229     $     89,547     $     3,873     $     580,429     $     45,158     $       666,324    

        Shares of investments:

       17,710         5,927         430         56,955         4,501         69,726    

 

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, 2017

 

 

   

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		       CLEARBRIDGE
VARIABLE MID
  CAP PORTFOLIO  		           CLEARBRIDGE
VARIABLE
SMALL CAP
GROWTH
PORTFOLIO  

ASSETS:

                        

Investments at fair value (1)

   $     3,847     $     2,269,293     $     1,789,792     $     1,823,016     $     14,207     $       49,487    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

           7,500                  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       3,847         2,276,793         1,789,792         1,823,016         14,207         49,487    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

           7,050                  

Redemptions payable

           450                  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         7,500         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     3,847     $     2,269,293     $     1,789,792     $     1,823,016     $     14,207     $       49,487    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     3,847     $     2,269,293     $     1,789,792     $     1,823,016     $     14,207     $       49,487    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       240         92,613         123,950         79,857         1,133         3,514    

UNIT VALUE (ACCUMULATION)

   $     16.03     $     24.50     $     14.44     $     22.83     $     12.54     $       14.08    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     3,505     $     2,039,817     $     1,522,539     $     1,588,094     $     13,762     $       43,607    

        Shares of investments:

       156         29,338         82,746         72,717         702         1,908    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        COLUMBIA
VARIABLE
PORTFOLIO -
SMALL CAP
  VALUE FUND  		       DAVIS
FINANCIAL
  PORTFOLIO  		         DAVIS VALUE  
PORTFOLIO		       DELAWARE VIP
SMALL CAP
  VALUE SERIES  		       DEUTSCHE
  CROCI® U.S. VIP  		         DEUTSCHE
  GLOBAL SMALL  
CAP VIP

ASSETS:

                        

Investments at fair value (1)

   $     67,998     $     40,871     $     116,006     $     52,370     $     309,401     $       137,457    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                   7,500          
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       67,998         40,871         116,006         59,870         309,401         137,457    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                   7,050          

Redemptions payable

                   450          
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         7,500         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     67,998     $     40,871     $     116,006     $     52,370     $     309,401     $       137,457    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     67,998     $     40,871     $     116,006     $     52,370     $     309,401     $       137,457    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       2,063         1,668         4,598         3,663         19,181         5,496    

UNIT VALUE (ACCUMULATION)

   $     32.96     $     24.50     $     25.23     $     14.30     $     16.13     $       25.01    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     63,662     $     39,325     $     107,930     $     47,590     $     270,161     $       132,189    

        Shares of investments:

       3,350         2,637         11,384         1,232         18,594         10,656    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
          DEUTSCHE HIGH  
INCOME VIP		       DEUTSCHE
  SMALL CAP  
INDEX VIP		       DEUTSCHE
  SMALL MID CAP  
VALUE VIP		       DREYFUS STOCK
  INDEX FUND, INC  		       DREYFUS VIF
  INTERNATIONAL  
EQUITY
PORTFOLIO		           FEDERATED  
KAUFMANN
FUND II

ASSETS:

                        

Investments at fair value (1)

   $     54,724     $     6,558,692     $     1,694,938     $     25,791,977     $     13,069     $       136,238    

Investment income due and accrued

                   102,724          

Receivable for investments sold

           1,174                     2,313    

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       54,724         6,559,866         1,694,938         25,894,701         13,069         138,551    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

           1,174                     2,313    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         1,174         0         0         0         2,313    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     54,724     $     6,558,692     $     1,694,938     $     25,894,701     $     13,069     $       136,238    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     54,724     $     6,558,692     $     1,694,938     $     25,894,701     $     13,069     $       136,238    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       2,979         268,072         64,035         1,047,696         547         5,309    

UNIT VALUE (ACCUMULATION)

   $     18.37     $     24.47     $     26.47     $     24.72     $     23.89     $       25.66    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     53,675     $     5,814,141     $     1,503,114     $     19,102,232     $     10,910     $       123,821    

        Shares of investments:

       8,604         358,594         94,795         482,273         616         7,111    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        FIDELITY VIP
  CONTRAFUND  
PORTFOLIO		         FIDELITY VIP  
GROWTH
PORTFOLIO		           
    
FIDELITY VIP
INVESTMENT
  GRADE BOND  
PORTFOLIO		         FIDELITY VIP  
MID CAP
PORTFOLIO		       GOLDMAN
  SACHS VIT MID  
CAP VALUE
FUND		         GREAT-WEST
AGGRESSIVE
  PROFILE FUND  

ASSETS:

                        

Investments at fair value (1)

   $     2,871,987     $     790,607     $     496,134     $     952,385     $     20,908     $       665,718    

Investment income due and accrued

                        

Receivable for investments sold

       2,718                      

Purchase payments receivable

                           220    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       2,874,705         790,607         496,134         952,385         20,908         665,938    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                           220    

Redemptions payable

       2,718                      
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       2,718         0         0         0         0         220    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     2,871,987     $     790,607     $     496,134     $     952,385     $     20,908     $       665,718    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     2,871,987     $     790,607     $     496,134     $     952,385     $     20,908     $       665,718    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       81,809         33,949         22,849         17,284         1,365         59,019    

UNIT VALUE (ACCUMULATION)

   $     35.11     $     23.29     $     21.71     $     55.10     $     15.32     $       11.28    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     2,579,859     $     656,334     $     492,163     $     822,858     $     21,019     $       657,210    

        Shares of investments:

       77,517         10,851         39,723         25,202         1,236         92,333    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
  ARIEL MID CAP  
VALUE FUND		         GREAT-WEST  
BOND INDEX
FUND		       GREAT-WEST
  CONSERVATIVE  
PROFILE FUND		         GREAT-WEST  
CORE BOND
FUND		       GREAT-WEST
GOLDMAN
  SACHS MID CAP  
VALUE FUND		             
    
GREAT-WEST
GOVERNMENT
  MONEY MARKET  
FUND

ASSETS:

                        

Investments at fair value (1)

   $     398,480     $     2,070,084     $     95,811     $     2,375,540     $     50,188     $       10,836,110    

Investment income due and accrued

                           623    

Receivable for investments sold

       2,155                      

Purchase payments receivable

                           1,521,260    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       400,635         2,070,084         95,811         2,375,540         50,188         12,357,993    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                           1,521,260    

Redemptions payable

       2,155                      
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       2,155         0         0         0         0         1,521,260    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     398,480     $     2,070,084     $     95,811     $     2,375,540     $     50,188     $       10,836,733    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     398,480     $     2,070,084     $     95,811     $     2,375,540     $     50,188     $       10,836,733    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       7,621         144,971         9,191         163,087         3,799         829,436    

UNIT VALUE (ACCUMULATION)

   $     52.29     $     14.28     $     10.42     $     14.57     $     13.21     $       13.07    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     379,010     $     2,073,279     $     95,709     $     2,405,854     $     50,841     $       10,836,110    

        Shares of investments:

       230,335         149,897         11,698         221,392         3,888         10,836,110    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
    
    
GREAT-WEST
  INTERNATIONAL  
INDEX FUND		       GREAT-WEST
  LIFETIME 2015  
FUND		       GREAT-WEST
  LIFETIME 2020  
FUND		       GREAT-WEST
  LIFETIME 2025  
FUND		       GREAT-WEST
  LIFETIME 2030  
FUND		         GREAT-WEST
  LIFETIME 2035  
FUND

ASSETS:

                        

Investments at fair value (1)

   $     49,381     $     723,613     $     69,132     $     1,805,857     $     819,623     $       551,907    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       49,381         723,613         69,132         1,805,857         819,623         551,907    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     49,381     $     723,613     $     69,132     $     1,805,857     $     819,623     $       551,907    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     49,381     $     723,613     $     69,132     $     1,805,857     $     819,623     $       551,907    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       3,815         62,437         5,865         150,592         66,488         44,007    

UNIT VALUE (ACCUMULATION)

   $     12.94     $     11.59     $     11.79     $     11.99     $     12.33     $       12.54    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     42,873     $     706,413     $     67,499     $     1,719,558     $     783,758     $       518,737    

        Shares of investments:

       4,071         51,247         6,217         119,752         70,596         36,167    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
  LIFETIME 2040  
FUND		       GREAT-WEST
  LIFETIME 2045  
FUND		       GREAT-WEST
  LIFETIME 2050  
FUND		       GREAT-WEST
  LIFETIME 2055  
FUND		       GREAT-WEST
  LOOMIS SAYLES  
BOND FUND		         GREAT-WEST
  LOOMIS SAYLES  
SMALL CAP
VALUE FUND

ASSETS:

                        

Investments at fair value (1)

   $     476,581     $     336,780     $     195,732     $     143,256     $     573,196     $       831,155    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       476,581         336,780         195,732         143,256         573,196         831,155    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     476,581     $     336,780     $     195,732     $     143,256     $     573,196     $       831,155    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     476,581     $     336,780     $     195,732     $     143,256     $     573,196     $       831,155    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       37,233         26,310         15,148         11,165         14,613         19,843    

UNIT VALUE (ACCUMULATION)

   $     12.80     $     12.80     $     12.92     $     12.83     $     39.23     $       41.89    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     459,093     $     311,333     $     176,749     $     127,441     $     542,436     $       761,455    

        Shares of investments:

       40,803         21,897         16,123         7,807         42,712         29,780    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST MFS
  INTERNATIONAL  
VALUE FUND		       GREAT-WEST
MODERATE
  PROFILE FUND  		       GREAT-WEST
MODERATELY
AGGRESSIVE
  PROFILE FUND  		       GREAT-WEST
MODERATELY
  CONSERVATIVE  
PROFILE FUND		           
GREAT-WEST
MULTI-
MANAGER
LARGE CAP
  GROWTH FUND   		         GREAT-WEST
  REAL ESTATE  
INDEX FUND

ASSETS:

                        

Investments at fair value (1)

   $     4,235,009     $     66,742     $     19,655     $     53,928     $     223,566     $       62,811    

Investment income due and accrued

                        

Receivable for investments sold

       906                      

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       4,235,915         66,742         19,655         53,928         223,566         62,811    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

       906                      
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       906         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     4,235,009     $     66,742     $     19,655     $     53,928     $     223,566     $       62,811    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     4,235,009     $     66,742     $     19,655     $     53,928     $     223,566     $       62,811    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       307,686         6,181         1,795         5,085         7,094         4,779    

UNIT VALUE (ACCUMULATION)

   $     13.76     $     10.80     $     10.95     $     10.61     $     31.51     $       13.14    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     3,605,234     $     67,001     $     19,532     $     53,649     $     198,964     $       63,197    

        Shares of investments:

       297,402         9,118         2,340         6,059         21,642         5,378    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
GREAT-WEST
  S&P MID CAP  
400® INDEX
FUND		       GREAT-WEST
  S&P SMALL CAP  
600® INDEX
FUND		       GREAT-WEST
SHORT
  DURATION BOND  
FUND		       GREAT-WEST T.
ROWE PRICE
  EQUITY INCOME  
FUND		       GREAT-WEST T.
  ROWE PRICE MID  
CAP GROWTH
FUND		         GREAT-WEST
TEMPLETON
  GLOBAL BOND  
FUND

ASSETS:

                        

Investments at fair value (1)

   $     1,140,631     $     141,874     $     9,588,374     $     1,755,157     $     3,121,151     $       5,014,169    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       1,140,631         141,874         9,588,374         1,755,157         3,121,151         5,014,169    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     1,140,631     $     141,874     $     9,588,374     $     1,755,157     $     3,121,151     $       5,014,169    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     1,140,631     $     141,874     $     9,588,374     $     1,755,157     $     3,121,151     $       5,014,169    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       65,314         9,476         684,282         59,385         71,854         352,056    

UNIT VALUE (ACCUMULATION)

   $     17.46     $     14.97     $     14.01     $     29.56     $     43.44     $       12.70    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     1,061,251     $     123,328     $     9,615,167     $     1,560,283     $     2,761,655     $       5,466,454    

        Shares of investments:

       67,854         10,494         929,106         83,065         119,722         601,219    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
GREAT-WEST
U.S.
  GOVERNMENT  
SECURITIES
FUND		       INVESCO V.I.
  CORE EQUITY  
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)

   $     3,567,175     $     159,994     $     88,372     $     1,713,216     $     3,431,746     $       179,809    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

               489              
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       3,567,175         159,994         88,861         1,713,216         3,431,746         179,809    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

               489              

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         489         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     3,567,175     $     159,994     $     88,372     $     1,713,216     $     3,431,746     $       179,809    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     3,567,175     $     159,994     $     88,372     $     1,713,216     $     3,431,746     $       179,809    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       161,852         6,789         2,901         43,532         191,438         7,075    

UNIT VALUE (ACCUMULATION)

   $     22.04     $     23.57     $     30.46     $     39.36     $     17.93     $       25.41    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     3,654,252     $     161,658     $     86,735     $     1,603,831     $     2,977,289     $       164,504    

        Shares of investments:

       298,508         4,357         3,342         98,517         86,030         12,478    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        INVESCO V.I.
  TECHNOLOGY  
FUND		       JANUS
  HENDERSON VIT  
BALANCED
PORTFOLIO		       JANUS
  HENDERSON VIT  
FLEXIBLE BOND
PORTFOLIO		       JANUS
  HENDERSON VIT  
FORTY
PORTFOLIO		           
JANUS
  HENDERSON VIT  
GLOBAL
RESEARCH
PORTFOLIO		         JANUS
  HENDERSON VIT  
GLOBAL
TECHNOLOGY
PORTFOLIO

ASSETS:

                        

Investments at fair value (1)

   $     169,423     $     2,293,664     $     1,597,452     $     1,731,815     $     799,875     $       333,933    

Investment income due and accrued

                        

Receivable for investments sold

                   1,511,860         379      

Purchase payments receivable

       315                      
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       169,738         2,293,664         1,597,452         3,243,675         800,254         333,933    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

       315                      

Redemptions payable

                   1,511,860         379      
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       315         0         0         1,511,860         379         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     169,423     $     2,293,664     $     1,597,452     $     1,731,815     $     799,875     $       333,933    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     169,423     $     2,293,664     $     1,597,452     $     1,731,815     $     799,875     $       333,933    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       6,852         74,672         60,045         38,791         57,625         8,029    

UNIT VALUE (ACCUMULATION)

   $     24.73     $     30.72     $     26.60     $     44.64     $     13.88     $       41.59    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     141,961     $     2,070,159     $     1,614,334     $     1,446,605     $     669,754     $       271,500    

        Shares of investments:

       7,376         65,032         136,651         43,557         15,623         98    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        JANUS
  HENDERSON VIT  
OVERSEAS
PORTFOLIO		           
  LORD ABBETT  
SERIES
DEVELOPING
GROWTH
PORTFOLIO		       MFS VIT TOTAL
  RETURN
BOND SERIES		         MFS VIT VALUE  
SERIES		       NEUBERGER
  BERMAN AMT  
GUARDIAN
PORTFOLIO		         NEUBERGER
  BERMAN AMT  
LARGE CAP
VALUE
PORTFOLIO

ASSETS:

                        

Investments at fair value (1)

   $     59,094     $     27,219     $     866,108     $     337,190     $     138,268     $       12,404    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       59,094         27,219         866,108         337,190         138,268         12,404    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     59,094     $     27,219     $     866,108     $     337,190     $     138,268     $       12,404    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     59,094     $     27,219     $     866,108     $     337,190     $     138,268     $       12,404    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       2,033         2,453         84,563         25,805         4,507         440    

UNIT VALUE (ACCUMULATION)

   $     29.07     $     11.10     $     10.24     $     13.07     $     30.68     $       28.19    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     57,317     $     23,421     $     888,822     $     313,818     $     153,797     $       9,160    

        Shares of investments:

       1,848         966         65,515         16,118         8,561         742    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        NEUBERGER
  BERMAN AMT  
MID CAP
GROWTH
PORTFOLIO
CLASS I		       NEUBERGER
  BERMAN AMT  
MID CAP
INTRINSIC
VALUE
PORTFOLIO		       NEUBERGER
  BERMAN AMT  
SOCIALLY
RESPONSIVE
PORTFOLIO		         OPPENHEIMER  
MAIN STREET
SMALL CAP
FUND/VA		         PIMCO VIT HIGH  
YIELD
PORTFOLIO		           PIMCO VIT LOW  
DURATION
PORTFOLIO

ASSETS:

                        

Investments at fair value (1)

   $     139,161     $     1,461,552     $     76,736     $     664,303     $     252,608     $       5,738,521    

Investment income due and accrued

                       1,045         5,576    

Receivable for investments sold

               780              

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       139,161         1,461,552         77,516         664,303         253,653         5,744,097    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

               780              
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         780         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     139,161     $     1,461,552     $     76,736     $     664,303     $     253,653     $       5,744,097    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     139,161     $     1,461,552     $     76,736     $     664,303     $     253,653     $       5,744,097    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       5,777         56,003         2,304         52,702         10,537         379,844    

UNIT VALUE (ACCUMULATION)

   $     24.09     $     26.10     $     33.31     $     12.60     $     24.07     $       15.12    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     114,515     $     1,306,433     $     75,291     $     632,343     $     245,976     $       5,844,867    

        Shares of investments:

       5,008         74,645         2,996         25,758         32,098         560,402    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
    
    
PIMCO VIT REAL
RETURN
PORTFOLIO		       PIMCO VIT
TOTAL RETURN
PORTFOLIO		       PIONEER REAL
ESTATE SHARES
VCT PORTFOLIO		       PUTNAM VT
EQUITY INCOME
FUND		       PUTNAM VT
HIGH YIELD
FUND		         PUTNAM VT
INCOME FUND

ASSETS:

                        

Investments at fair value (1)

   $     1,140,282     $     3,666,979     $     34,559     $     453,438     $     830,851     $       21,786    

Investment income due and accrued

       259         5,809                  

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       1,140,541         3,672,788         34,559         453,438         830,851         21,786    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     1,140,541     $     3,672,788     $     34,559     $     453,438     $     830,851     $       21,786    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     1,140,541     $     3,672,788     $     34,559     $     453,438     $     830,851     $       21,786    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       64,633         186,940         3,223         12,650         35,572         2,053    

UNIT VALUE (ACCUMULATION)

   $     17.65     $     19.65     $     10.72     $     35.84     $     23.36     $       10.61    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     1,142,202     $     3,711,745     $     35,917     $     379,054     $     816,139     $       21,548    

        Shares of investments:

       91,810         335,190         2,244         16,831         126,847         1,979    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        PUTNAM VT
  INTERNATIONAL  
GROWTH FUND		       PUTNAM VT
MULTI-CAP
  VALUE FUND  		       PUTNAM VT
SMALL CAP
  VALUE FUND  		       ROYCE CAPITAL
FUND - MICRO-
  CAP  PORTFOLIO  		       ROYCE CAPITAL
FUND - SMALL-
  CAP  PORTFOLIO  		           T. ROWE PRICE  
BLUE CHIP
GROWTH
PORTFOLIO II

ASSETS:

                        

Investments at fair value (1)

   $     10,690     $     114,508     $     92,545     $     1,767     $     1,094,493     $       1,025,030    

Investment income due and accrued

                        

Receivable for investments sold

                        

Purchase payments receivable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total assets

       10,690         114,508         92,545         1,767         1,094,493         1,025,030    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

LIABILITIES:

                        

Payable for investments purchased

                        

Redemptions payable

                        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total liabilities

       0         0         0         0         0         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS

   $     10,690     $     114,508     $     92,545     $     1,767     $     1,094,493     $       1,025,030    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

                        

Accumulation units

   $     10,690     $     114,508     $     92,545     $     1,767     $     1,094,493     $       1,025,030    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       441         3,215         7,151         120         55,194         72,145    

UNIT VALUE (ACCUMULATION)

   $     24.24     $     35.62     $     12.94     $     14.73     $     19.83     $       14.21    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     9,233     $     108,329     $     90,337     $     1,648     $     1,263,324     $       884,418    

        Shares of investments:

       455         6,196         5,640         173         128,011         33,953    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        VAN ECK VIP
EMERGING
  MARKETS FUND  		           
    
    
VAN ECK VIP
  GLOBAL HARD  
ASSETS FUND

ASSETS:

        

Investments at fair value (1)

   $     58,247     $     920,836    

Investment income due and accrued

        

Receivable for investments sold

        

Purchase payments receivable

        
   

 

 

 

    

 

 

 

Total assets

       58,247         920,836    
   

 

 

 

    

 

 

 

LIABILITIES:

        

Payable for investments purchased

        

Redemptions payable

        
   

 

 

 

    

 

 

 

Total liabilities

       0         0    
   

 

 

 

    

 

 

 

NET ASSETS

   $     58,247     $     920,836    
   

 

 

 

    

 

 

 

NET ASSETS REPRESENTED BY:

        

Accumulation units

   $     58,247     $     920,836    
   

 

 

 

    

 

 

 

ACCUMULATION UNITS OUTSTANDING

       1,096         16,448    

UNIT VALUE (ACCUMULATION)

   $     53.15     $     55.98    
   

 

 

 

    

 

 

 

(1)   Cost of investments:

   $     46,744     $     828,171    

        Shares of investments:

       3,727         38,805    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
          ALGER SMALL  
CAP GROWTH
PORTFOLIO		       AMERICAN
CENTURY
  INVESTMENTS  
VP CAPITAL
APPRECIATION
FUND		       AMERICAN
CENTURY
  INVESTMENTS  
VP INCOME &
GROWTH FUND		       AMERICAN
CENTURY
  INVESTMENTS  
VP INFLATION
PROTECTION
FUND		       AMERICAN
CENTURY
INVESTMENTS
VP
  INTERNATIONAL  
FUND		         AMERICAN
CENTURY
INVESTMENTS
  VP VALUE FUND  

INVESTMENT INCOME:

                        

Dividends

   $     $     $     139     $     13,883     $     503       $     11,402    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET INVESTMENT INCOME (LOSS)

       0         0         139         13,883         503           11,402    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (34,100 )        (1,378 )        1,632         (208 )        292           6,559    

Realized gain distributions

           6,463         166              
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Net realized gain (loss) on investments

       (34,100 )        5,085         1,798         (208 )        292           6,559    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       129,998         5,141         (815 )        5,289         13,688           42,147    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Net realized and unrealized gain (loss) on investments

       95,898         10,226         983         5,081         13,980           48,706    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     95,898     $     10,226     $     1,122     $     18,964     $     14,483       $     60,108    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

 

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, 2017

 

 

   

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		         CLEARBRIDGE
VARIABLE MID
  CAP PORTFOLIO  		               
  CLEARBRIDGE  
VARIABLE
SMALL CAP
GROWTH
PORTFOLIO		  
                                                (1)           (2)  

INVESTMENT INCOME:

                        

Dividends

   $     7     $       10,636     $       20,794     $       15,713     $       59     $    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       7         10,636         20,794         15,713         59         0    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (6,966 )        58,343         15,059         (5,140 )        9         130    

Realized gain distributions

           197,978         18,762             778         983    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       (6,966 )        256,321         33,821         (5,140 )        787         1,113    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       9,079         285,213         395,485         401,117         445         5,880    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       2,113         541,534         429,306         395,977         1,232         6,993    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     2,120     $       552,170     $       450,100     $       411,690     $       1,291     $       6,993    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

(1)  For the period March 24, 2017 to December 31, 2017.

 

    
 

(2)  For the period January 26, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
COLUMBIA
VARIABLE
PORTFOLIO -
SMALL CAP
  VALUE FUND  		         DAVIS
FINANCIAL
PORTFOLIO		           DAVIS VALUE  
PORTFOLIO		           DELAWARE VIP  
SMALL CAP
VALUE SERIES		           DEUTSCHE CORE  
EQUITY VIP		           DEUTSCHE
  CROCI® U.S. VIP  		  
                                                (1)              

INVESTMENT INCOME:

                        

Dividends

   $     614     $       276     $       832     $       176     $       253        $       3,955     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       614         276         832         176         253            3,955     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       9,172         (154 )        (66,022 )        93         1,062            (19,795)    

Realized gain distributions

       7,628         3,407         9,252         939         1,444         
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       16,800         3,253         (56,770 )        1,032         2,506            (19,795)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       (6,315 )        2,047         85,508         3,151         (994)           73,502     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       10,485         5,300         28,738         4,183         1,512            53,707     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     11,099     $       5,576     $       29,570     $       4,359     $       1,765        $       57,662     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

 

(1)  For the period January 1, 2017 to August 11, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        DEUTSCHE
  GLOBAL SMALL  
CAP VIP		         DEUTSCHE HIGH  
INCOME VIP		       DEUTSCHE
  SMALL CAP  
INDEX VIP		       DEUTSCHE
  SMALL MID CAP  
VALUE VIP		       DREYFUS STOCK
  INDEX FUND, INC  		             
DREYFUS VIF
  INTERNATIONAL  
EQUITY
PORTFOLIO

INVESTMENT INCOME:

                        

Dividends

   $     $     3,475     $     33,285     $     11,871     $     403,469       $     944    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET INVESTMENT INCOME (LOSS)

       0         3,475         33,285         11,871         403,469           944    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (3,213 )        (1,025 )        57,471         35,319         361,814           7,326    

Realized gain distributions

       10,941             128,886         35,259         534,636        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Net realized gain (loss) on investments

       7,728         (1,025 )        186,357         70,578         896,450           7,326    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       15,307         1,356         501,219         78,095         3,293,963           7,172    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

Net realized and unrealized gain (loss) on investments

       23,035         331         687,576         148,673         4,190,413           14,498    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     23,035     $     3,806     $     720,861     $     160,544     $     4,593,882       $     15,442    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

 

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        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		  
        (1)                                                      

INVESTMENT INCOME:

                        

Dividends

   $     1,965     $       $       20,819     $       938     $       12,048       $       4,296     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       1,965         0         20,819         938         12,048           4,296     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       1,088         539         87,535         28,971         1,219           (6,040)    

Realized gain distributions

           7,984         140,707         75,884         3,696           38,842     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       1,088         8,523         228,242         104,855         4,915           32,802     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       (1,296 )        12,046         248,663         195,072         8,340           129,091     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       (208 )        20,569         476,905         299,927         13,255           161,893     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     1,757     $       20,569     $       497,724     $       300,865     $       25,303       $       166,189     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

(1)  For the period January 1, 2017 to August 4, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
    
GOLDMAN
  SACHS VIT MID  
CAP VALUE
FUND		         GREAT-WEST
AGGRESSIVE
  PROFILE FUND  		           GREAT-WEST  
AGGRESSIVE
PROFILE I FUND		           GREAT-WEST  
ARIEL MID CAP
VALUE FUND		           GREAT-WEST  
BOND INDEX
FUND		           GREAT-WEST
  CONSERVATIVE  
PROFILE FUND		  
                  (1)         (2)                               (3)  

INVESTMENT INCOME:

                        

Dividends

   $     149     $       13,942     $       $       11,262     $       21,153        $       1,657    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       149         13,942         0         11,262         21,153            1,657    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       352         4,324         15,528         9,535         (686)           423    

Realized gain distributions

       1,120         39,458             28,821             1,802    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       1,472         43,782         15,528         38,356         (686)           2,225    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       26         8,508         36,780         20,577         40,210            102    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       1,498         52,290         52,308         58,933         39,524            2,327    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     1,647     $       66,232     $       52,308     $       70,195     $       60,677        $       3,984    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

(1)  For the period July 11, 2017 to December 31, 2017.

 

    
 

(2)  For the period January 1, 2017 to July 11, 2017.

 

    
 

(3)  For the period May 12, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
  CONSERVATIVE  
PROFILE I FUND		           GREAT-WEST  
CORE BOND
FUND		             
    
GREAT-WEST
GOLDMAN
  SACHS MID  CAP  
VALUE FUND		         GREAT-WEST
GOVERNMENT
  MONEY MARKET  
FUND		         GREAT-WEST
  INTERNATIONAL  
INDEX FUND		         GREAT-WEST
  LIFETIME 2015  
FUND		  
        (1)                                                    

INVESTMENT INCOME:

                        

Dividends

   $     $       46,068     $       3,897     $       46,298     $       942       $       8,454    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INVESTMENT INCOME (LOSS)

       0         46,068         3,897         46,298         942           8,454    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (664 )        (1,536 )        21             1,522           603    

Realized gain distributions

               1,944             325           18,496    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized gain (loss) on investments

       (664 )        (1,536 )        1,965         0         1,847           19,099    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       7,529         46,125         (630 )            6,383           15,349    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized and unrealized gain (loss) on investments

       6,865         44,589         1,335         0         8,230           34,448    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     6,865     $       90,657     $       5,232     $       46,298     $       9,172       $       42,902    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  
 

(1) For the period January 1, 2017 to July 11, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
  LIFETIME 2020  
FUND		         GREAT-WEST
  LIFETIME 2025  
FUND		         GREAT-WEST
  LIFETIME 2030  
FUND		             
    
    
GREAT-WEST
   LIFETIME 2035  
FUND		         GREAT-WEST
  LIFETIME 2040  
FUND		           GREAT-WEST
  LIFETIME 2045  
FUND		  
        (1)                                                      

INVESTMENT INCOME:

                        

Dividends

   $     1,951     $       27,016     $       23,076     $       8,546     $       19,447       $       5,140    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       1,951         27,016         23,076         8,546         19,447           5,140    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       792         2,570         325         2,201         8,548           5,008    

Realized gain distributions

       460         65,428         6,869         23,513         11,181           14,294    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       1,252         67,998         7,194         25,714         19,729           19,302    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       1,633         79,203         37,018         30,524         15,456           21,325    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       2,885         147,201         44,212         56,238         35,185           40,627    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     4,836     $       174,217     $       67,288     $       64,784     $       54,632       $       45,767    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

(1) For the period January 30, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
          GREAT-WEST  
LIFETIME 2050
FUND		         GREAT-WEST
  LIFETIME 2055  
FUND		             
    
  GREAT-WEST  
LOOMIS
   SAYLES BOND
FUND		         GREAT-WEST
  LOOMIS SAYLES  
SMALL CAP
VALUE FUND		         GREAT-WEST MFS
  INTERNATIONAL  
VALUE FUND		           GREAT-WEST
MODERATE
  PROFILE FUND  		  
        (1)                                                   (2)  

INVESTMENT INCOME:

                        

Dividends

   $     6,057     $       2,181     $       10,038     $       604     $       40,453       $       2,440     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INVESTMENT INCOME (LOSS)

       6,057         2,181         10,038         604         40,453           2,440     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       82         251         (19,203 )        2,776         69,129           3,285     

Realized gain distributions

       1,887         5,217             54,169         119,386           4,925     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized gain (loss) on investments

       1,969         5,468         (19,203 )        56,945         188,515           8,210     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       18,983         14,247         47,567         19,957         687,336           (259)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

Net realized and unrealized gain (loss) on investments

       20,952         19,715         28,364         76,902         875,851           7,951     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     27,009     $       21,896     $       38,402     $       77,506     $       916,304       $       10,391     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

      

 

 

  
 

(1) For the period January 30, 2017 to December 31, 2017.

 

    
 

(2) For the period July 11, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
MODERATE
  PROFILE I FUND  		         GREAT-WEST
  MODERATELY  
AGGRESSIVE
PROFILE FUND		         GREAT-WEST
MODERATELY
AGGRESSIVE
  PROFILE I FUND  		             
    
GREAT-WEST
MODERATELY
  CONSERVATIVE  
PROFILE FUND		         GREAT-WEST
MODERATELY
  CONSERVATIVE  
PROFILE I FUND		         GREAT-WEST
  MULTI-MANAGER  
LARGE CAP
GROWTH FUND		  
        (1)         (2)         (3)         (2)         (3)            

INVESTMENT INCOME:

                        

Dividends

   $     $       610     $       $       895     $       $       1,517    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INVESTMENT INCOME (LOSS)

       0         610         0         895         0            1,517    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       2,384         1,730         1,176         498         2,726            365    

Realized gain distributions

           1,598             1,333             12,782    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized gain (loss) on investments

       2,384         3,328         1,176         1,831         2,726            13,147    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       12,673         123         4,423         279         (374)           34,888    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized and unrealized gain (loss) on investments

       15,057         3,451         5,599         2,110         2,352            48,035    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     15,057     $       4,061     $       5,599     $       3,005     $       2,352        $       49,552    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  
 

(1)  For the period January 1, 2017 to July 31, 2017.

 

    
 

(2)  For the period July 11, 2017 to December 31, 2017.

 

    
 

(3)  For the period January 1, 2017 to July 11, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        GREAT-WEST
  REAL ESTATE  
INDEX FUND		           GREAT-WEST  
S&P MID  CAP
400® INDEX
FUND		         GREAT-WEST
  S&P SMALL CAP  
600® INDEX
FUND		         GREAT-WEST
SHORT
  DURATION BOND  
FUND		         GREAT-WEST T.
ROWE PRICE
  EQUITY INCOME  
FUND		             
    
GREAT-WEST T.
  ROWE PRICE MID   
CAP GROWTH
FUND		  
        (1)                                                    

INVESTMENT INCOME:

                        

Dividends

   $     455     $       6,073     $       2,185     $       92,435     $       14,624       $       10,024  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INVESTMENT INCOME (LOSS)

       455         6,073         2,185         92,435         14,624           10,024  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       45         4,654         5,136         738         4,544           101,692  

Realized gain distributions

       2,043         53,614         10,888             75,451           158,358  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized gain (loss) on investments

       2,088         58,268         16,024         738         79,995           260,050  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       (386 )        71,457         (2,304 )        52,048         156,687           371,206  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized and unrealized gain (loss) on investments

       1,702         129,725         13,720         52,786         236,682           631,256  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     2,157     $       135,798     $       15,905     $       145,221     $       251,306       $       641,280  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  
 

(1)  For the period January 30, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
            
    
GREAT-WEST
TEMPLETON
  GLOBAL BOND   
FUND		         GREAT-WEST U.S.  
GOVERNMENT
SECURITIES
FUND		       INVESCO V.I.
  CORE EQUITY  
FUND		       INVESCO V.I.
  GLOBAL HEALTH  
CARE FUND		       INVESCO V.I.
  GLOBAL REAL  
ESTATE FUND		       INVESCO V.I.
  INTERNATIONAL  
GROWTH FUND

INVESTMENT INCOME:

                        

Dividends

   $     83,713     $     49,214     $     1,606     $     427     $     51,523       $     45,965    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS)

       83,713         49,214         1,606         427         51,523           45,965    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (38,396 )        (16,297 )        (1,985 )        (22,718 )        2,578           56,213    

Realized gain distributions

       6,858             8,045         5,927         26,149        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized gain (loss) on investments

       (31,538 )        (16,297 )        6,060         (16,791 )        28,727           56,213    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       31,251         48,751         12,791         33,271         114,799           538,854    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized and unrealized gain (loss) on investments

       (287 )        32,454         18,851         16,480         143,526           595,067    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     83,426     $     81,668     $     20,457     $     16,907     $     195,049       $     641,032    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
          INVESCO V.I. MID  
CAP CORE
EQUITY FUND		       INVESCO V.I.
  TECHNOLOGY  
FUND		       JANUS
  HENDERSON VIT  
BALANCED
PORTFOLIO		       JANUS
  HENDERSON VIT  
FLEXIBLE BOND
PORTFOLIO		       JANUS
  HENDERSON VIT  
FORTY
PORTFOLIO		           
JANUS
  HENDERSON VIT  
GLOBAL
RESEARCH
PORTFOLIO

INVESTMENT INCOME:

                        

Dividends

   $     916     $     $     29,410     $     63,017     $     $     6,453    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS)

       916         0         29,410         63,017         0           6,453    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       20,322         5,615         56,145         (24,694 )        315,837           16,944    

Realized gain distributions

       3,549         10,238         3,336             167,305        
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized gain (loss) on investments

       23,871         15,853         59,481         (24,694 )        483,142           16,944    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       13,686         37,969         212,693         43,380         361,454           152,187    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized and unrealized gain (loss) on investments

       37,557         53,822         272,174         18,686         844,596           169,131    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     38,473     $     53,822     $     301,584     $     81,703     $     844,596       $     175,584    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        JANUS
  HENDERSON VIT  
GLOBAL
TECHNOLOGY
PORTFOLIO		         JANUS
  HENDERSON VIT  
OVERSEAS
PORTFOLIO		             
JPMORGAN
INSURANCE
  TRUST INTREPID  
MID CAP
PORTFOLIO		           LORD ABBETT  
SERIES
DEVELOPING
GROWTH
PORTFOLIO		           MFS VIT TOTAL  
RETURN BOND
SERIES		           MFS VIT VALUE  
SERIES		  
                            (1)                   (2)            

INVESTMENT INCOME:

                        

Dividends

   $     1,293     $       897     $       $       $       28,728        $       5,996    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INVESTMENT INCOME (LOSS)

       1,293         897         0         0         28,728            5,996    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       28,200         (2,864 )        (11 )        1,953         (89)           1,266    

Realized gain distributions

       16,546                         12,270    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized gain (loss) on investments

       44,746         (2,864 )        (11 )        1,953         (89)           13,536    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       46,427         16,575         19         4,139         (22,714)           28,621    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized and unrealized gain (loss) on investments

       91,173         13,711         8         6,092         (22,803)           42,157    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     92,466     $       14,608     $       8     $       6,092     $       5,925        $       48,153    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  
 

(1) For the period January 1, 2017 to April 18, 2017.

 

    
 

(2) For the period August 4, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        NEUBERGER
  BERMAN AMT  
GUARDIAN
PORTFOLIO		       NEUBERGER
  BERMAN AMT  
LARGE CAP
VALUE
PORTFOLIO		       NEUBERGER
  BERMAN AMT  
MID CAP
GROWTH
PORTFOLIO
CLASS I		       NEUBERGER
  BERMAN AMT  
MID CAP
INTRINSIC
VALUE
PORTFOLIO		       NEUBERGER
  BERMAN AMT  
SOCIALLY
RESPONSIVE
PORTFOLIO		       OPPENHEIMER
  MAIN STREET  
SMALL CAP
FUND/VA

INVESTMENT INCOME:

                        

Dividends

   $     427     $     75     $     $     11,322     $     37       $     6,687    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS)

       427         75         0         11,322         37           6,687    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (24,510 )        1,248         (10,617 )        54,068         696           13,064    

Realized gain distributions

       15,595         349         2,530             265           41,049    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized gain (loss) on investments

       (8,915 )        1,597         (8,087 )        54,068         961           54,113    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       39,757         (12 )        51,094         74,208         1,113           10,148    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized and unrealized gain (loss) on investments

       30,842         1,585         43,007         128,276         2,074           64,261    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     31,269     $     1,660     $     43,007     $     139,598     $     2,111       $     70,948    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
          PIMCO VIT HIGH  
YIELD
PORTFOLIO		         PIMCO VIT LOW  
DURATION
PORTFOLIO		           
  PIMCO VIT REAL  
RETURN
PORTFOLIO		       PIMCO VIT
  TOTAL RETURN  
PORTFOLIO		       PIONEER REAL
  ESTATE SHARES  
VCT PORTFOLIO		       PUTNAM VT
  EQUITY INCOME  
FUND

INVESTMENT INCOME:

                        

Dividends

   $     14,053     $     73,349     $     17,982     $     71,999     $     627        $     7,186    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS)

       14,053         73,349         17,982         71,999         627            7,186    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       (10,106 )        (6,706 )        (4,001 )        (8,136 )        (15)           12,733    

Realized gain distributions

                       1,596            11,220    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized gain (loss) on investments

       (10,106 )        (6,706 )        (4,001 )        (8,136 )        1,581            23,953    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       16,526         5,835         14,384         105,918         (1,383)           41,528    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized and unrealized gain (loss) on investments

       6,420         (871 )        10,383         97,782         198            65,481    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     20,473     $     72,478     $     28,365     $     169,781     $     825        $     72,667    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        PUTNAM VT
  HIGH YIELD  
FUND		         PUTNAM VT
  INCOME FUND  		             
PUTNAM VT
  INTERNATIONAL  
GROWTH FUND		         PUTNAM VT
MULTI-CAP
  VALUE FUND  		         PUTNAM VT
SMALL CAP
  VALUE FUND  		         ROYCE CAPITAL
FUND - MICRO-
  CAP PORTFOLIO  		  
                  (1)                             (2)            

INVESTMENT INCOME:

                        

Dividends

   $     44,876     $       $       72     $       776     $       741        $       9     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INVESTMENT INCOME (LOSS)

       44,876         0         72         776         741            9     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                        

Net realized gain (loss) on sale of fund shares

       164         (1 )        1,015         (142 )        (71)           358     

Realized gain distributions

                   3,352         3,196            182     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized gain (loss) on investments

       164         (1 )        1,015         3,210         3,125            540     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Change in net unrealized appreciation (depreciation) on investments

       7,982         238         1,388         5,814         2,208            (1,014)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

Net realized and unrealized gain (loss) on investments

       8,146         237         2,403         9,024         5,333            (474)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     53,022     $       237     $       2,475     $       9,800     $       6,074        $       (465)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

  
 

(1) For the period July 24, 2017 to December 31, 2017.

 

    
 

(2) For the period January 30, 2017 to December 31, 2017.

 

    

 

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, 2017

 

 

   

INVESTMENT DIVISIONS

  
        ROYCE CAPITAL
FUND - SMALL-
  CAP PORTFOLIO  		           
  T. ROWE PRICE  
BLUE CHIP
GROWTH
PORTFOLIO II		         VAN ECK VIP  
EMERGING
MARKETS FUND		       VAN ECK VIP
  GLOBAL HARD  
ASSETS FUND

INVESTMENT INCOME:

                

Dividends

   $     8,469     $     $     194       $  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS)

       8,469         0         194           0     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

                

Net realized gain (loss) on sale of fund shares

       (38,331 )        4,150         63           (16,788)    

Realized gain distributions

           12,072          
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized gain (loss) on investments

       (38,331 )        16,222         63           (16,788)    
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Change in net unrealized appreciation (depreciation) on investments

       81,946         140,416         19,367           28,786     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net realized and unrealized gain (loss) on investments

       43,615         156,638         19,430           11,998     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $     52,084     $     156,638     $     19,624       $     11,998     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            ALGER SMALL CAP GROWTH PORTFOLIO               
        AMERICAN CENTURY INVESTMENTS VP             
CAPITAL APPRECIATION FUND		               AMERICAN CENTURY INVESTMENTS VP        
INCOME & GROWTH FUND
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     $     $     $     $     139     $     231  

Net realized gain (loss) on investments

       (34,100 )        20,002         5,085         10,486         1,798         2,545  

Change in net unrealized appreciation (depreciation) on investments

       129,998         4,156         5,141         (6,777 )        (815 )        (1,625 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       95,898         24,158         10,226         3,709         1,122         1,151  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

           1,500             5,024          

Transfers for contract benefits and terminations

       (20,170 )        (8,317 )        (987 )        (4,155 )        (3,799 )        (7,043 ) 

Net transfers

       13,357         (5,310 )        (39,012 )        (5,565 )         

Contract maintenance charges

       (113 )        (107 )        (80 )        (57 )        (13 )        (20 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (6,926 )        (12,234 )        (40,079 )        (4,753 )        (3,812 )        (7,063 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       88,972         11,924         (29,853 )        (1,044 )        (2,690 )        (5,912 ) 

NET ASSETS:

                        

Beginning of period

       338,728         326,804         118,930         119,974         7,292         13,204  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     427,700     $     338,728     $     89,077     $     118,930     $     4,602     $     7,292  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       344         440         6,442         1,124         1         1  

Units redeemed

       (395 )        (507 )        (10,434 )        (1,553 )        (173 )        (383 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (51 )        (67 )        (3,992 )        (429 )        (172 )        (382 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            
    
      AMERICAN CENTURY INVESTMENTS VP       
INFLATION PROTECTION FUND		             AMERICAN CENTURY INVESTMENTS VP      
INTERNATIONAL FUND		             AMERICAN CENTURY INVESTMENTS      
VP VALUE FUND
        2017       2016       2017       2016       2017       2016
                (1)                                

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     13,883     $     1,547     $     503     $     474     $     11,402     $     7,565  

Net realized gain (loss) on investments

       (208 )        (15 )        292         (244 )        6,559         4,005  

Change in net unrealized appreciation (depreciation) on investments

       5,289         (4,212 )        13,688         (2,668 )        42,147         77,511  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       18,964         (2,680 )        14,483         (2,438 )        60,108         89,081  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       1                     49,793         650  

Transfers for contract benefits and terminations

       (5,591 )        (549 )        (1,002 )        (899 )        (31,527 )        (16,918 ) 

Net transfers

       134,952         436,700         (8,873 )        5,683         192,981         329,860  

Contract maintenance charges

       (263 )        (28 )        (22 )        (21 )        (383 )        (260 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       129,099         436,123         (9,897 )        4,763         210,864         313,332  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       148,063         433,443         4,586         2,325         270,972         402,413  

NET ASSETS:

                        

Beginning of period

       433,443         0         50,235         47,910         510,652         108,239  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     581,506     $     433,443     $     54,821     $     50,235     $     781,624     $     510,652  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       13,938         43,190         10         717         6,240         12,759  

Units redeemed

       (1,260 )        (81 )        (778 )        (266 )        (1,082 )        (3,334 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       12,678         43,109         (768 )        451         5,158         9,425  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period September 7, 2016 to December 31, 2016.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
              AMERICAN FUNDS IS GLOBAL SMALL      
CAPITALIZATION FUND		             AMERICAN FUNDS IS GROWTH FUND                 
      AMERICAN FUNDS IS INTERNATIONAL      
FUND
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     7     $     104     $     10,636     $     15,832     $     20,794     $     20,346  

Net realized gain (loss) on investments

       (6,966 )        2,937         256,321         236,623         33,821         116,744  

Change in net unrealized appreciation (depreciation) on investments

       9,079         (4,097 )        285,213         (45,495 )        395,485         (90,081 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       2,120         (1,056 )        552,170         206,960         450,100         47,009  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

           1,250         76,669         80,278         35,181         33,272  

Transfers for contract benefits and terminations

       (16,221 )        (4,902 )        (32,731 )        (472,196 )        (31,767 )        (29,559 ) 

Net transfers

       (23,971 )        (31,156 )        (342,575 )        97,575         (137,660 )        54,247  

Contract maintenance charges

       (6 )        (24 )        (857 )        (999 )        (691 )        (680 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (40,198 )        (34,832 )        (299,494 )        (295,342 )        (134,937 )        57,280  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (38,078 )        (35,888 )        252,676         (88,382 )        315,163         104,289  

NET ASSETS:

                        

Beginning of period

       41,925         77,813         2,016,617         2,104,999         1,474,629         1,370,340  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     3,847     $     41,925     $     2,269,293     $     2,016,617     $     1,789,792     $     1,474,629  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       243         673         20,356         19,174         7,666         8,929  

Units redeemed

       (3,297 )        (3,621 )        (33,328 )        (34,258 )        (18,667 )        (3,814 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (3,054 )        (2,948 )        (12,972 )        (15,084 )        (11,001 )        5,115  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
              AMERICAN FUNDS IS NEW WORLD FUND             CLEARBRIDGE
      VARIABLE MID CAP      
PORTFOLIO		       CLEARBRIDGE
      VARIABLE SMALL      
CAP GROWTH
PORTFOLIO		             COLUMBIA VARIABLE PORTFOLIO - SMALL      
CAP VALUE FUND
        2017       2016       2017       2017       2017       2016
                        (1)       (2)                

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     15,713     $     10,036     $     59     $     $     614     $     928  

Net realized gain (loss) on investments

       (5,140 )        (5,504 )        787         1,113         16,800         (13,551 ) 

Change in net unrealized appreciation (depreciation) on investments

       401,117         60,966         445         5,880         (6,315 )        40,070  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       411,690         65,498         1,291         6,993         11,099         27,447  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       49,203         10,625             1,561         2,501         11,125  

Transfers for contract benefits and terminations

       (23,852 )        (17,157 )        (218 )        (501 )        (1,467 )        (59,133 ) 

Net transfers

       50,402         67,608         13,149         41,474         (63,714 )        (66,173 ) 

Contract maintenance charges

       (559 )        (422 )        (15 )        (40 )        (19 )        (52 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       75,194         60,654         12,916         42,494         (62,699 )        (114,233 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       486,884         126,152         14,207         49,487         (51,600 )        (86,786 ) 

NET ASSETS:

                        

Beginning of period

       1,336,132         1,209,980         0         0         119,598         206,384  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,823,016     $     1,336,132     $     14,207     $     49,487     $     67,998     $     119,598  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       14,098         5,976         1,155         4,005         599         2,267  

Units redeemed

       (10,003 )        (2,429 )        (22 )        (491 )        (2,684 )        (7,643 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       4,095         3,547         1,133         3,514         (2,085 )        (5,376 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1)  For the period March 24, 2017 to December 31, 2017.

 

        
 

(2)  For the period January 26, 2017 to December 31, 2017.

 

        

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
              DAVIS FINANCIAL PORTFOLIO               DAVIS VALUE PORTFOLIO             

  DELAWARE VIP SMALL CAP VALUE SERIES  

        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     276     $     55     $     832     $     4,051     $     176     $     56  

Net realized gain (loss) on investments

       3,253         (4 )        (56,770 )        39,509         1,032         704  

Change in net unrealized appreciation (depreciation) on investments

       2,047         730         85,508         (5,024 )        3,151         1,629  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       5,576         781         29,570         38,536         4,359         2,389  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       847         37             7,776         10,000         7,500  

Transfers for contract benefits and terminations

       (373 )        (133 )        (3,463 )        (10,840 )        (1,098 )        (561 ) 

Net transfers

       28,967         (2,186 )        (248,097 )        (45,488 )        25,217      

Contract maintenance charges

       (58 )        (5 )        (35 )        (172 )        (79 )        (46 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       29,383         (2,287 )        (251,595 )        (48,724 )        34,040         6,893  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       34,959         (1,506 )        (222,025 )        (10,188 )        38,399         9,282  

NET ASSETS:

                        

Beginning of period

       5,912         7,418         338,031         348,219         13,971         4,689  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     40,871     $     5,912     $     116,006     $     338,031     $     52,370     $     13,971  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       1,549         37         15         1,264         2,664         668  

Units redeemed

       (174 )        (164 )        (11,847 )        (3,770 )        (93 )        (56 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       1,375         (127 )        (11,832 )        (2,506 )        2,571         612  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        DEUTSCHE CORE EQUITY VIP         

               DEUTSCHE CROCI®  U.S. VIP                       DEUTSCHE GLOBAL SMALL CAP VIP         
        2017       2016       2017       2016       2017       2016
        (1)                                        

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     253     $     181     $     3,955     $     3,150     $     $     225  

Net realized gain (loss) on investments

       2,506         1,124         (19,795 )        4,967         7,728         3,936  

Change in net unrealized appreciation (depreciation) on investments

       (994 )        1,000         73,502         (10,883 )        15,307         (2,967 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       1,765         2,305         57,662         (2,766 )        23,035         1,194  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       6,648         10,980         740         939         4,636         5,864  

Transfers for contract benefits and terminations

       (22,506 )        (983 )        (3,983 )        (4,116 )        (2,106 )        (1,241 ) 

Net transfers

       314             (56,163 )        113,408         3,185         47,795  

Contract maintenance charges

       (34 )        (49 )        (138 )        (169 )        (61 )        (33 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (15,578 )        9,948         (59,544 )        110,062         5,654         52,385  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (13,813 )        12,253         (1,882 )        107,296         28,689         53,579  

NET ASSETS:

                        

Beginning of period

       13,813         1,560         311,283         203,987         108,768         55,189  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     0     $     13,813     $     309,401     $     311,283     $     137,457     $     108,768  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       365         711         1,693         11,995         714         3,088  

Units redeemed

       (1,102 )        (66 )        (6,226 )        (3,139 )        (438 )        (558 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (737 )        645         (4,533 )        8,856         276         2,530  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1)  For the period January 1, 2017 to August 11, 2017.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

      DEUTSCHE HIGH INCOME VIP      

          DEUTSCHE SMALL CAP INDEX VIP               DEUTSCHE SMALL MID CAP VALUE VIP    
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     3,475     $     1,753     $     33,285     $     29,135     $     11,871     $     9,983  

Net realized gain (loss) on investments

       (1,025 )        (76 )        186,357         226,216         70,578         246,026  

Change in net unrealized appreciation (depreciation) on investments

       1,356         2,645         501,219         290,860         78,095         (3,584 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       3,806         4,322         720,861         546,211         160,544         252,425  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       16,892         14,392         45,980         22,503         34,836         47,248  

Transfers for contract benefits and terminations

       (1,803 )        (1,503 )        (81,712 )        (171,783 )        (25,541 )        (131,179 ) 

Net transfers

       (10,055 )        6,304         2,787,680         20,493         (18,413 )        (289,914 ) 

Contract maintenance charges

       (51 )        (57 )        (3,326 )        (1,700 )        (364 )        (513 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       4,983         19,136         2,748,622         (130,487 )        (9,482 )        (374,358 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       8,789         23,458         3,469,483         415,724         151,062         (121,933 ) 

NET ASSETS:

                        

Beginning of period

       45,935         22,477         3,089,209         2,673,485         1,543,876         1,665,809  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     54,724     $     45,935     $     6,558,692     $     3,089,209     $     1,694,938     $     1,543,876  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       993         1,307         140,009         11,852         6,924         7,442  

Units redeemed

       (702 )        (104 )        (16,293 )        (18,694 )        (7,355 )        (24,280 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       291         1,203         123,716         (6,842 )        (431 )        (16,838 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                DREYFUS STOCK INDEX FUND, INC                    

        DREYFUS VIF INTERNATIONAL EQUITY         
PORTFOLIO

               FEDERATED HIGH INCOME BOND FUND II         
        2017       2016       2017       2016       2017       2016
                                        (1)        

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     403,469     $     411,883     $     944     $     912     $     1,965     $     1,663  

Net realized gain (loss) on investments

       896,450         1,265,692         7,326         (1,044 )        1,088         75  

Change in net unrealized appreciation (depreciation) on investments

       3,293,963         619,387         7,172         (5,592 )        (1,296 )        1,990  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       4,593,882         2,296,962         15,442         (5,724 )        1,757         3,728  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       586,555         389,278         2,946         3,131          

Transfers for contract benefits and terminations

       (407,482 )        (1,328,291 )        (1,079 )        (4,195 )        (289 )        (394 ) 

Net transfers

       (95,506 )        50,963         (88,873 )        (10,631 )        (30,101 )     

Contract maintenance charges

       (9,539 )        (9,485 )        (87 )        (151 )        (30 )        (43 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       74,028         (897,535 )        (87,093 )        (11,846 )        (30,420 )        (437 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       4,667,910         1,399,427         (71,651 )        (17,570 )        (28,663 )        3,291  

NET ASSETS:

                        

Beginning of period

       21,226,791         19,827,364         84,720         102,290         28,663         25,372  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     25,894,701     $     21,226,791     $     13,069     $     84,720     $     0     $     28,663  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       60,578         73,482         233         518         2         3  

Units redeemed

       (56,695 )        (118,803 )        (4,204 )        (1,153 )        (1,005 )        (19 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       3,883         (45,321 )        (3,971 )        (635 )        (1,003 )        (16 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1)  For the period January 1, 2017 to August 4, 2017.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        FEDERATED KAUFMANN FUND II         

               FIDELITY VIP CONTRAFUND PORTFOLIO                        FIDELITY VIP GROWTH PORTFOLIO         
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     $     $     20,819     $     14,028     $     938     $  

Net realized gain (loss) on investments

       8,523         3,871         228,242         238,148         104,855         70,318  

Change in net unrealized appreciation (depreciation) on investments

       12,046         600         248,663         (76,197 )        195,072         (66,568 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       20,569         4,471         497,724         175,979         300,865         3,750  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

               57,519         59,381          

Transfers for contract benefits and terminations

       (1,156 )        (1,202 )        (47,711 )        (49,971 )        (39,426 )        (11,652 ) 

Net transfers

       52,099         23,471         29,212         (115,827 )        (422,435 )        77,276  

Contract maintenance charges

       (105 )        (84 )        (1,149 )        (1,063 )        (526 )        (533 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       50,838         22,185         37,871         (107,480 )        (462,387 )        65,091  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       71,407         26,656         535,595         68,499         (161,522 )        68,841  

NET ASSETS:

                        

Beginning of period

       64,831         38,175         2,336,392         2,267,893         952,129         883,288  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     136,238     $     64,831     $     2,871,987     $     2,336,392     $     790,607     $     952,129  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       5,193         1,373         14,778         7,581         4,997         8,835  

Units redeemed

       (3,126 )        (110 )        (13,888 )        (11,280 )        (26,168 )        (5,130 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       2,067         1,263         890         (3,699 )        (21,171 )        3,705  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        FIDELITY VIP INVESTMENT GRADE BOND         
PORTFOLIO

               FIDELITY VIP MID CAP PORTFOLIO                        GOLDMAN SACHS VIT MID CAP VALUE         
FUND
        2017       2016       2017       2016       2017       2016
                                                (1)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     12,048     $     17,699     $     4,296     $     2,883     $     149     $     132  

Net realized gain (loss) on investments

       4,915         (2,015 )        32,802         55,699         1,472         6  

Change in net unrealized appreciation (depreciation) on investments

       8,340         18,496         129,091         44,243         26         (137 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       25,303         34,180         166,189         102,825         1,647         1  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

               86,713         125,154         100      

Transfers for contract benefits and terminations

       (45,446 )        (17,804 )        (23,930 )        (47,695 )        (414 )     

Net transfers

       (276,758 )        133,338         (240,902 )        (118,274 )        9,391         10,203  

Contract maintenance charges

       (450 )        (480 )        (358 )        (486 )        (20 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (322,654 )        115,054         (178,477 )        (41,301 )        9,057         10,203  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (297,351 )        149,234         (12,288 )        61,524         10,704         10,204  

NET ASSETS:

                        

Beginning of period

       793,485         644,251         964,673         903,149         10,204         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     496,134     $     793,485     $     952,385     $     964,673     $     20,908     $     10,204  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       4,963         10,490         2,411         4,157         1,375         744  

Units redeemed

       (20,116 )        (4,724 )        (6,229 )        (5,166 )        (750 )        (4 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (15,153 )        5,766         (3,818 )        (1,009 )        625         740  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period December 6, 2016 to December 31, 2016.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

GREAT-WEST
AGGRESSIVE
        PROFILE FUND         

               GREAT-WEST AGGRESSIVE PROFILE  I FUND                       GREAT-WEST ARIEL MID CAP  VALUE FUND        
        2017       2017       2016       2017       2016
        (1)       (2)                        

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     13,942     $     $     9,253     $     11,262     $     8,333  

Net realized gain (loss) on investments

       43,782         15,528         18,103         38,356         (8,073 ) 

Change in net unrealized appreciation (depreciation) on investments

       8,508         36,780         11,461         20,577         73,565  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       66,232         52,308         38,817         70,195         73,825  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       4,600         248,324         255,261          

Transfers for contract benefits and terminations

       (5,704 )        (33,458 )        (24,962 )        (36,495 )        (9,103 ) 

Net transfers

       600,854         (779,393 )        (48,736 )        (230,541 )        (111,065 ) 

Contract maintenance charges

       (264 )        (360 )        (513 )        (689 )        (789 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       599,486         (564,887 )        181,050         (267,725 )        (120,957 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       665,718         (512,579 )        219,867         (197,530 )        (47,132 ) 

NET ASSETS:

                    

Beginning of period

       0         512,579         292,712         596,010         643,142  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     665,718     $     0     $     512,579     $     398,480     $     596,010  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       73,871         15,852         13,435         1,584         340  

Units redeemed

       (14,852 )        (37,800 )        (5,369 )        (7,072 )        (3,223 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       59,019         (21,948 )        8,066         (5,488 )        (2,883 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period July 11, 2017 to December 31, 2017.

 

    
 

(2) For the period January 1, 2017 to July 11, 2017.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST BOND INDEX FUND                    

GREAT-WEST
        CONSERVATIVE         
PROFILE FUND

               GREAT-WEST CONSERVATIVE PROFILE  I        
FUND
        2017       2016       2017       2017       2016
                        (1)       (2)        

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     21,153     $     18,602     $     1,657     $     $     6,506  

Net realized gain (loss) on investments

       (686 )        2,700         2,225         (664 )        (7,472 ) 

Change in net unrealized appreciation (depreciation) on investments

       40,210         10,013         102         7,529         23,408  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       60,677         31,315         3,984         6,865         22,442  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       11,488         15,442         1,307         38,005         53,503  

Transfers for contract benefits and terminations

       (25,975 )        (88,476 )        (15,446 )        (205,955 )        (54,732 ) 

Net transfers

       62,083         190,981         105,997         (207,541 )        34,138  

Contract maintenance charges

       (837 )        (870 )        (31 )        (85 )        (318 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       46,759         117,077         91,827         (375,576 )        32,591  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       107,436         148,392         95,811         (368,711 )        55,033  

NET ASSETS:

                    

Beginning of period

       1,962,648         1,814,256         0         368,711         313,678  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     2,070,084     $     1,962,648     $     95,811     $     0     $     368,711  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       7,861         16,229         14,609         2,035         9,241  

Units redeemed

       (4,538 )        (8,064 )        (5,418 )        (18,426 )        (7,650 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       3,323         8,165         9,191         (16,391 )        1,591  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period May 12, 2017 to December 31, 2017.

 

    
 

(2) For the period January 1, 2017 to July 11, 2017.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST CORE BOND FUND                    

        GREAT-WEST GOLDMAN  SACHS MID CAP        
VALUE FUND

               GREAT-WEST GOVERNMENT MONEY         
MARKET FUND
        2017       2016       2017       2016       2017       2016
                                (1)                

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     46,068     $     23,685     $     3,897     $     11     $     46,298     $     42  

Net realized gain (loss) on investments

       (1,536 )        34         1,965         6          

Change in net unrealized appreciation (depreciation) on investments

       46,125         (76,264 )        (630 )        (23 )         
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       90,657         (52,545 )        5,232         (6 )        46,298         42  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       5,893         5,961         25,157             5,214,202         4,096,795  

Transfers for contract benefits and terminations

       (25,469 )        (8,278 )        (1,932 )            (1,893,911 )        (953,395 ) 

Net transfers

       (44,295 )        2,397,682         21,068         703         (5,717,936 )        (730,518 ) 

Contract maintenance charges

       (106 )        (43 )        (34 )            (14,927 )        (16,460 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (63,977 )        2,395,322         44,259         703         (2,412,572 )        2,396,422  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       26,680         2,342,777         49,491         697         (2,366,274 )        2,396,464  

NET ASSETS:

                        

Beginning of period

       2,348,860         6,083         697         0         13,203,007         10,806,543  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     2,375,540     $     2,348,860     $     50,188     $     697     $     10,836,733     $     13,203,007  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       1,163         167,816         3,904         62         700,013         623,302  

Units redeemed

       (5,618 )        (728 )        (167 )            (885,225 )        (439,137 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (4,455 )        167,088         3,737         62         (185,212 )        184,165  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period December 23, 2016 to December 31, 2016.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST INTERNATIONAL INDEX  FUND                       GREAT-WEST LIFETIME 2015 FUND                    

GREAT-WEST
        LIFETIME  2015        
FUND II

   GREAT-WEST
        LIFETIME 2020        
FUND
        2017       2016       2017       2016       2016       2017
                                (1)       (2)       (3)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     942     $     68     $     8,454     $     3,799     $     242     $     1,951  

Net realized gain (loss) on investments

       1,847         (1,385 )        19,099         2,068         (7,400 )        1,252  

Change in net unrealized appreciation (depreciation) on investments

       6,383         2,125         15,349         1,851         11,976         1,633  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       9,172         808         42,902         7,718         4,818         4,836  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       4,180         12,411         486,821         64,337         24,180         35,199  

Transfers for contract benefits and terminations

       (7,847 )        (24,153 )        (32,730 )        (4,881 )        (2,078 )        (2,812 ) 

Net transfers

       39,811             (1 )        159,890         (166,449 )        31,941  

Contract maintenance charges

       (28 )        (39 )        (322 )        (121 )        (60 )        (32 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       36,116         (11,781 )        453,768         219,225         (144,407 )        64,296  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       45,288         (10,973 )        496,670         226,943         (139,589 )        69,132  

NET ASSETS:

                        

Beginning of period

       4,093         15,066         226,943         0         139,589         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     49,381     $     4,093     $     723,613     $     226,943     $     0     $     69,132  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       4,515         1,270         43,732         22,913         1,614         8,344  

Units redeemed

       (1,094 )        (2,336 )        (3,055 )        (1,153 )        (11,014 )        (2,479 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       3,421         (1,066 )        40,677         21,760         (9,400 )        5,865  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period April 25, 2016 to December 31, 2016.

 

        
 

(2) For the period January 1, 2016 to April 25, 2016.

 

        
 

(3) For the period January 30, 2017 to December 31, 2017.

 

        

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST LIFETIME 2025 FUND                    

GREAT-WEST
        LIFETIME  2025        
FUND II

               GREAT-WEST LIFETIME 2030 FUND         
        2017       2016       2016       2017       2016
                (1)       (2)               (3)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     27,016     $     14,523     $     712     $     23,076     $     1,101  

Net realized gain (loss) on investments

       67,998         10,645         (19,719 )        7,194         111  

Change in net unrealized appreciation (depreciation) on investments

       79,203         7,096         35,392         37,018         (1,153 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       174,217         32,264         16,385         67,288         59  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       565,322         306,428         111,919         401,266         1  

Transfers for contract benefits and terminations

       (42,485 )        (16,505 )        (5,956 )        (31,133 )     

Net transfers

       208,685         579,703         (548,645 )        289,485         93,264  

Contract maintenance charges

       (1,210 )        (562 )        (273 )        (607 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       730,312         869,064         (442,955 )        659,011         93,265  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       904,529         901,328         (426,570 )        726,299         93,324  

NET ASSETS:

                    

Beginning of period

       901,328         0         426,570         93,324         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,805,857     $     901,328     $     0     $     819,623     $     93,324  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       69,756         87,767         6,996         60,717         8,795  

Units redeemed

       (4,955 )        (1,976 )        (33,957 )        (3,024 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       64,801         85,791         (26,961 )        57,693         8,795  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period April 25, 2016 to December 31, 2016.

 

    
 

(2) For the period January 1, 2016 to April 25, 2016.

 

    
 

(3) For the period December 23, 2016 to December 31, 2016.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST LIFETIME 2035 FUND                    

GREAT-WEST
        LIFETIME  2035        
FUND II

               GREAT-WEST LIFETIME 2040 FUND         
        2017       2016       2016       2017       2016
                (1)       (2)               (3)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     8,546     $     3,786     $     128     $     19,447     $     1,300  

Net realized gain (loss) on investments

       25,714         3,978         (5,908 )        19,729         371  

Change in net unrealized appreciation (depreciation) on investments

       30,524         2,646         10,224         15,456         2,032  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       64,784         10,410         4,444         54,632         3,703  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       194,219         81,723         30,050         96,965      

Transfers for contract benefits and terminations

       (13,842 )        (4,454 )        (1,583 )        (12,194 )        (884 ) 

Net transfers

       58,459         161,183         (146,406 )        250,022         84,745  

Contract maintenance charges

       (423 )        (152 )        (70 )        (350 )        (58 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       238,413         238,300         (118,009 )        334,443         83,803  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       303,197         248,710         (113,565 )        389,075         87,506  

NET ASSETS:

                    

Beginning of period

       248,710         0         113,565         87,506         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     551,907     $     248,710     $     0     $     476,581     $     87,506  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       23,116         24,054         1,778         43,847         8,379  

Units redeemed

       (2,582 )        (581 )        (8,526 )        (14,785 )        (208 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       20,534         23,473         (6,748 )        29,062         8,171  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period April 25, 2016 to December 31, 2016.

 

    
 

(2) For the period January 1, 2016 to April 25, 2016.

 

    
 

(3) For the period July 8, 2016 to December 31, 2016.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST LIFETIME 2045 FUND                    

GREAT-WEST
        LIFETIME  2045        
FUND II

   GREAT-WEST
        LIFETIME 2050        
FUND		               GREAT-WEST LIFETIME 2055 FUND         
        2017       2016       2016       2017       2017       2016
                (1)       (2)       (3)               (1)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     5,140     $     2,098     $     53     $     6,057     $     2,181     $     919  

Net realized gain (loss) on investments

       19,302         2,077         (8,889 )        1,969         5,468         711  

Change in net unrealized appreciation (depreciation) on investments

       21,325         4,122         11,510         18,983         14,247         1,568  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       45,767         8,297         2,674         27,009         21,896         3,198  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       25,726         22,281         2,896         6,916         21,123         18,992  

Transfers for contract benefits and terminations

       (6,341 )        (3,292 )        (896 )        (2,328 )        (2,533 )        (1,511 ) 

Net transfers

       134,161         110,695         (82,660 )        164,200         47,218         35,071  

Contract maintenance charges

       (386 )        (128 )        (39 )        (65 )        (118 )        (80 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       153,160         129,556         (80,699 )        168,723         65,690         52,472  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       198,927         137,853         (78,025 )        195,732         87,586         55,670  

NET ASSETS:

                        

Beginning of period

       137,853         0         78,025         0         55,670         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     336,780     $     137,853     $     0     $     195,732     $     143,256     $     55,670  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       19,037         13,454         181         15,416         6,297         5,408  

Units redeemed

       (5,696 )        (485 )        (4,780 )        (268 )        (374 )        (166 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       13,341         12,969         (4,599 )        15,148         5,923         5,242  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period April 25, 2016 to December 31, 2016.

 

        
 

(2) For the period January 1, 2016 to April 25, 2016.

 

        
 

(3) For the period January 30, 2017 to December 31, 2017.

 

        

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

GREAT-WEST
        LIFETIME  2055        
FUND II

               GREAT-WEST LOOMIS SAYLES BOND  FUND               GREAT-WEST LOOMIS SAYLES SMALL  CAP        
VALUE FUND
        2016       2017       2016       2017       2016
        (1)                                

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     26     $     10,038     $     16,584     $     604     $     516  

Net realized gain (loss) on investments

       (3,577 )        (19,203 )        (15,066 )        56,945         14,011  

Change in net unrealized appreciation (depreciation) on investments

       4,639         47,567         71,389         19,957         149,474  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       1,088         38,402         72,907         77,506         164,001  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

           122,177         36,904         14,593         7,168  

Transfers for contract benefits and terminations

       (129 )        (277,759 )        (65,763 )        (11,510 )        (9,684 ) 

Net transfers

       (35,071 )        (98,868 )        107,330         16,197         48,803  

Contract maintenance charges

       (40 )        (394 )        (544 )        (299 )        (257 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (35,240 )        (254,844 )        77,927         18,981         46,030  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (34,152 )        (216,442 )        150,834         96,487         210,031  

NET ASSETS:

                    

Beginning of period

       34,152         789,638         638,804         734,668         524,637  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     0     $     573,196     $     789,638     $     831,155     $     734,668  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       1         4,000         6,524         3,903         5,390  

Units redeemed

       (2,041 )        (10,780 )        (4,407 )        (3,307 )        (3,437 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (2,040 )        (6,780 )        2,117         596         1,953  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period January 1, 2016 to April 25, 2016.

 

    
     
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST MFS INTERNATIONAL  VALUE        
FUND		           

GREAT-WEST
MODERATE
         PROFILE FUND        

           GREAT-WEST MODERATE PROFILE I  FUND               GREAT-WEST
        MODERATELY        
AGGRESSIVE
PROFILE FUND
        2017       2016       2017       2017       2016       2017
                        (1)       (2)               (1)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     40,453     $     22,665     $     2,440     $     $     4,182     $     610  

Net realized gain (loss) on investments

       188,515         95,332         8,210         2,384         (6,954 )        3,328  

Change in net unrealized appreciation (depreciation) on investments

       687,336         96,554         (259 )        12,673         24,930         123  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       916,304         214,551         10,391         15,057         22,158         4,061  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       65,526         13,625         19,910         16,265         52,999         2,780  

Transfers for contract benefits and terminations

       (52,415 )        (191,077 )        (2,582 )        (34,777 )        (24,309 )        (611 ) 

Net transfers

       (260,122 )        (1,496,120 )        39,121         (266,977 )        (24,996 )        13,457  

Contract maintenance charges

       (1,324 )        (2,174 )        (98 )        (132 )        (286 )        (32 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (248,335 )        (1,675,746 )        56,351         (285,621 )        3,408         15,594  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       667,969         (1,461,195 )        66,742         (270,564 )        25,566         19,655  

NET ASSETS:

                        

Beginning of period

       3,567,040         5,028,235         0         270,564         244,998         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     4,235,009     $     3,567,040     $     66,742     $     0     $     270,564     $     19,655  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       32,477         36,972         25,727         3,000         4,865         9,098  

Units redeemed

       (52,533 )        (189,141 )        (19,546 )        (14,564 )        (4,630 )        (7,303 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (20,056 )        (152,169 )        6,181         (11,564 )        235         1,795  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period July 11, 2017 to December 31, 2017.

 

        
 

(2) For the period January 1, 2017 to July 31, 2017.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST MODERATELY AGGRESSIVE         
PROFILE I FUND		           

GREAT-WEST
MODERATELY
         CONSERVATIVE        
PROFILE FUND

       GREAT-WEST MODERATELY
         CONSERVATIVE PROFILE I FUND        
        2017       2016       2017       2017       2016
        (1)               (2)       (1)        

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     $     1,308     $     895     $     $     479  

Net realized gain (loss) on investments

       1,176         2,788         1,831         2,726         (1,268 ) 

Change in net unrealized appreciation (depreciation) on investments

       4,423         1,317         279         (374 )        2,723  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       5,599         5,413         3,005         2,352         1,934  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       4,209         6,535         4,163         9,902         17,995  

Transfers for contract benefits and terminations

       (969 )        (1,451 )        (903 )        (1,364 )        (1,795 ) 

Net transfers

       (75,032 )        5,877         47,687         (40,999 )        (9,211 ) 

Contract maintenance charges

       (38 )        (68 )        (24 )        (28 )        (47 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (71,830 )        10,893         50,923         (32,489 )        6,942  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (66,231 )        16,306         53,928         (30,137 )        8,876  

NET ASSETS:

                    

Beginning of period

       66,231         49,925         0         30,137         21,261  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     0     $     66,231     $     53,928     $     0     $     30,137  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       712         735         7,730         1,890         1,130  

Units redeemed

       (3,551 )        (231 )        (2,645 )        (3,220 )        (805 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (2,839 )        504         5,085         (1,330 )        325  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period January 1, 2017 to July 11, 2017.

 

    
 

(2) For the period July 11, 2017 to December 31, 2017.

 

    
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        GREAT-WEST MULTI-MANAGER  LARGE CAP        
GROWTH FUND

               GREAT-WEST REAL         
ESTATE INDEX
FUND		               GREAT-WEST S&P MID CAP  400® INDEX        
FUND
        2017       2016       2017       2017       2016
                        (1)                

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     1,517     $     251     $     455     $     6,073     $     2,020  

Net realized gain (loss) on investments

       13,147         7,695         2,088         58,268         11,393  

Change in net unrealized appreciation (depreciation) on investments

       34,888         (5,497 )        (386 )        71,457         52,318  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       49,552         2,449         2,157         135,798         65,731  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       21,829         28,722         13,533         33,473         374  

Transfers for contract benefits and terminations

       (6,200 )        (6,491 )        (1,387 )        (15,753 )        (3,627 ) 

Net transfers

           (1,936 )        48,531         567,485         57,889  

Contract maintenance charges

       (85 )        (82 )        (23 )        (590 )        (232 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       15,544         20,213         60,654         584,615         54,404  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       65,096         22,662         62,811         720,413         120,135  

NET ASSETS:

                    

Beginning of period

       158,470         135,808         0         420,218         300,083  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     223,566     $     158,470     $     62,811     $     1,140,631     $     420,218  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       797         1,410         5,071         43,847         9,801  

Units redeemed

       (242 )        (532 )        (292 )        (6,360 )        (5,813 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       555         878         4,779         37,487         3,988  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period January 30, 2017 to December 31, 2017.

 

    
     
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                GREAT-WEST S&P SMALL CAP  600® INDEX        
FUND		               GREAT-WEST SHORT DURATION BOND         
FUND		           

GREAT-WEST
SMALL CAP
        GROWTH FUND        

        2017       2016       2017       2016       2016
                (1)                       (2)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     2,185     $     1,148     $     92,435     $     99,815     $  

Net realized gain (loss) on investments

       16,024         6,487         738         11,343         (91,183 ) 

Change in net unrealized appreciation (depreciation) on investments

       (2,304 )        20,850         52,048         (14,257 )        81,858  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       15,905         28,485         145,221         96,901         (9,325 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

               333,886         55,514      

Transfers for contract benefits and terminations

       (21,874 )        (989 )        (104,636 )        (206,483 )        (297 ) 

Net transfers

       19,126         101,524         1,978,489         1,189,021         (90,017 ) 

Contract maintenance charges

       (191 )        (112 )        (2,224 )        (2,423 )        (35 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (2,939 )        100,423         2,205,515         1,035,629         (90,349 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       12,966         128,908         2,350,736         1,132,530         (99,674 ) 

NET ASSETS:

                    

Beginning of period

       128,908         0         7,237,638         6,105,108         99,674  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     141,874     $     128,908     $     9,588,374     $     7,237,638     $     0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       1,951         10,017         172,554         92,365         1,214  

Units redeemed

       (2,184 )        (308 )        (14,922 )        (17,517 )        (9,962 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (233 )        9,709         157,632         74,848         (8,748 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period March 10, 2016 to December 31, 2016.

 

    
 

(2) For the period January 1, 2016 to March 10, 2016.

 

    
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        GREAT-WEST T. ROWE  PRICE EQUITY        
INCOME FUND

               GREAT-WEST T. ROWE PRICE  MID CAP        
GROWTH FUND		               GREAT-WEST TEMPLETON GLOBAL  BOND        
FUND
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     14,624     $     10,894     $     10,024     $     1,623     $     83,713     $     55,424  

Net realized gain (loss) on investments

       79,995         (46,526 )        260,050         212,323         (31,538 )        (56,477 ) 

Change in net unrealized appreciation (depreciation) on investments

       156,687         316,316         371,206         (48,306 )        31,251         125,756  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       251,306         280,684         641,280         165,640         83,426         124,703  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       13,271         38,086         293,618         305,379         364,555         86,357  

Transfers for contract benefits and terminations

       (21,920 )        (181,835 )        (742,652 )        (416,591 )        (82,332 )        (210,290 ) 

Net transfers

       (20,493 )        (533,812 )        (78,063 )        286,151         402,191         78,648  

Contract maintenance charges

       (366 )        (545 )        (1,680 )        (1,597 )        (1,561 )        (1,759 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (29,508 )        (678,106 )        (528,777 )        173,342         682,853         (47,044 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       221,798         (397,422 )        112,503         338,982         766,279         77,659  

NET ASSETS:

                        

Beginning of period

       1,533,359         1,930,781         3,008,648         2,669,666         4,247,890         4,170,231  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,755,157     $     1,533,359     $     3,121,151     $     3,008,648     $     5,014,169     $     4,247,890  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       4,421         6,005         20,526         25,850         68,439         19,877  

Units redeemed

       (5,333 )        (35,868 )        (34,858 )        (20,867 )        (20,458 )        (23,198 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (912 )        (29,863 )        (14,332 )        4,983         47,981         (3,321 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        GREAT-WEST U.S.  GOVERNMENT        
SECURITIES FUND

               INVESCO V.I. CORE EQUITY FUND                        INVESCO V.I. DIVERSIFIED DIVIDEND FUND         
        2017       2016       2017       2016       2017       2016
                                        (1)        

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     49,214     $     71,232     $     1,606     $     1,094     $     $  

Net realized gain (loss) on investments

       (16,297 )        2,127         6,060         9,159          

Change in net unrealized appreciation (depreciation) on investments

       48,751         (13,864 )        12,791         4,106          
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       81,668         59,495         20,457         14,359         0         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       1                      

Transfers for contract benefits and terminations

       (155,168 )        (57,376 )        (26,511 )        (6,929 )        (4 )     

Net transfers

       (198,539 )        (216,801 )        19,145         12,183          

Contract maintenance charges

       (1,615 )        (1,862 )        (212 )        (184 )         
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (355,321 )        (276,039 )        (7,578 )        5,070         (4 )        0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (273,653 )        (216,544 )        12,879         19,429         (4 )        0  

NET ASSETS:

                        

Beginning of period

       3,840,828         4,057,372         147,115         127,686         4         4  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     3,567,175     $     3,840,828     $     159,994     $     147,115     $     0     $     4  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       2,798         24,995         1,249         812          

Units redeemed

       (19,072 )        (37,341 )        (1,525 )        (509 )         
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (16,274 )        (12,346 )        (276 )        303         0         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

      (1)  For the period January 1, 2017 to January 2, 2017.      
         
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        INVESCO V.I. GLOBAL HEALTH CARE FUND         

               INVESCO V.I. GLOBAL REAL ESTATE FUND                        INVESCO V.I. INTERNATIONAL GROWTH         
FUND
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     427     $     $     51,523     $     22,907     $     45,965     $     40,699  

Net realized gain (loss) on investments

       (16,791 )        8,958         28,727         31,409         56,213         31,119  

Change in net unrealized appreciation (depreciation) on investments

       33,271         (21,444 )        114,799         (23,473 )        538,854         (87,176 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       16,907         (12,486 )        195,049         30,843         641,032         (15,358 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

               23,697         28,426         73,103         61,284  

Transfers for contract benefits and terminations

       (1,499 )        (2,016 )        (22,497 )        (22,465 )        (43,586 )        (247,969 ) 

Net transfers

       (38,991 )        11,621         23,768         55,103         (17,034 )        109,684  

Contract maintenance charges

       (154 )        (164 )        (450 )        (464 )        (1,100 )        (1,179 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (40,644 )        9,441         24,518         60,600         11,383         (78,180 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (23,737 )        (3,045 )        219,567         91,443         652,415         (93,538 ) 

NET ASSETS:

                        

Beginning of period

       112,109         115,154         1,493,649         1,402,206         2,779,331         2,872,869  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     88,372     $     112,109     $     1,713,216     $     1,493,649     $     3,431,746     $     2,779,331  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       1,799         1,379         1,887         3,638         23,130         27,707  

Units redeemed

       (3,161 )        (993 )        (1,260 )        (1,832 )        (22,397 )        (33,235 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (1,362 )        386         627         1,806         733         (5,528 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        INVESCO V.I. MID CAP CORE EQUITY  FUND        

               INVESCO V.I. TECHNOLOGY FUND                        JANUS HENDERSON VIT BALANCED PORTFOLIO         
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     916     $     291     $     $     $     29,410     $     25,161  

Net realized gain (loss) on investments

       23,871         (2,481 )        15,853         (330 )        59,481         (18,524 ) 

Change in net unrealized appreciation (depreciation) on investments

       13,686         49,532         37,969         288         212,693         35,273  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       38,473         47,342         53,822         (42 )        301,584         41,910  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       1                     300,167         309,254  

Transfers for contract benefits and terminations

       (10,418 )        (16,050 )        (2,358 )        (3,084 )        (54,076 )        (47,549 ) 

Net transfers

       (260,470 )        57,694         (53,234 )        4,160         564,049         (28,976 ) 

Contract maintenance charges

       (112 )        (124 )        (242 )        (246 )        (1,112 )        (1,149 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (270,999 )        41,520         (55,834 )        830         809,028         231,580  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (232,526 )        88,862         (2,012 )        788         1,110,612         273,490  

NET ASSETS:

                        

Beginning of period

       412,335         323,473         171,435         170,647         1,183,052         909,562  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     179,809     $     412,335     $     169,423     $     171,435     $     2,293,664     $     1,183,052  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       4,042         9,086         2,031         2,868         51,874         34,772  

Units redeemed

       (15,611 )        (7,033 )        (4,548 )        (2,754 )        (22,815 )        (25,842 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (11,569 )        2,053         (2,517 )        114         29,059         8,930  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        JANUS HENDERSON VIT FLEXIBLE BOND         
PORTFOLIO

               JANUS HENDERSON VIT FORTY PORTFOLIO                        JANUS HENDERSON VIT GLOBAL RESEARCH         
PORTFOLIO
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     63,017     $     101,034     $     $     $     6,453     $     6,495  

Net realized gain (loss) on investments

       (24,694 )        (11,020 )        483,142         77,565         16,944         (4,025 ) 

Change in net unrealized appreciation (depreciation) on investments

       43,380         106,465         361,454         (51,400 )        152,187         14,921  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       81,703         196,479         844,596         26,165         175,584         17,391  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       102,679         663         69,458         93,974          

Transfers for contract benefits and terminations

       (57,760 )        (50,213 )        (69,366 )        (40,177 )        (13,747 )        (8,746 ) 

Net transfers

       (516,983 )        (2,881,416 )        (2,340,257 )        1,297,471         23,740         56,324  

Contract maintenance charges

       (1,127 )        (1,475 )        (3,535 )        (1,649 )        (395 )        (391 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (473,191 )        (2,932,441 )        (2,343,700 )        1,349,619         9,598         47,187  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (391,488 )        (2,735,962 )        (1,499,104 )        1,375,784         185,182         64,578  

NET ASSETS:

                        

Beginning of period

       1,988,940         4,724,902         3,230,919         1,855,135         614,693         550,115  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,597,452     $     1,988,940     $     1,731,815     $     3,230,919     $     799,875     $     614,693  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       32,349         14,272         9,308         68,670         19,147         10,414  

Units redeemed

       (49,770 )        (125,369 )        (64,826 )        (29,700 )        (17,775 )        (5,544 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (17,421 )        (111,097 )        (55,518 )        38,970         1,372         4,870  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        JANUS HENDERSON VIT GLOBAL         
TECHNOLOGY PORTFOLIO

               JANUS HENDERSON VIT OVERSEAS         
PORTFOLIO		               JPMORGAN INSURANCE TRUST INTREPID
         MID CAP PORTFOLIO
        2017       2016       2017       2016       2017       2016
                                        (1)       (2)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     1,293     $     156     $     897     $     2,585     $     $  

Net realized gain (loss) on investments

       44,746         3,206         (2,864 )        (5,055 )        (11 )     

Change in net unrealized appreciation (depreciation) on investments

       46,427         6,665         16,575         (3,187 )        19         (19 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       92,466         10,027         14,608         (5,657 )        8         (19 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       71,609         250         1             19      

Transfers for contract benefits and terminations

       (8,615 )        (1,837 )        (7,250 )        (3,371 )        (13 )     

Net transfers

       64,782         32,210         (4,309 )        (11,342 )        (1,905 )        1,912  

Contract maintenance charges

       (291 )        (18 )        (5 )        (11 )        (2 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       127,485         30,605         (11,563 )        (14,724 )        (1,901 )        1,912  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       219,951         40,632         3,045         (20,381 )        (1,893 )        1,893  

NET ASSETS:

                        

Beginning of period

       113,982         73,350         56,049         76,430         1,893         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     333,933     $     113,982     $     59,094     $     56,049     $     0     $     1,893  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       6,129         1,131         5         121         353         185  

Units redeemed

       (2,076 )        (77 )        (500 )        (818 )        (538 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       4,053         1,054         (495 )        (697 )        (185 )        185  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period January 1, 2017 to April 18, 2017.

 

        
 

(2) For the period December 23, 2016 to December 31, 2016.

 

        
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                LORD ABBETT SERIES DEVELOPING GROWTH         
PORTFOLIO		           

MFS VIT TOTAL
        RETURN BOND         
SERIES

               MFS VIT VALUE SERIES        
        2017       2016       2017       2017       2016
                (1)       (2)               (3)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     $     $     28,728     $     5,996     $     3,390  

Net realized gain (loss) on investments

       1,953         (3 )        (89 )        13,536         13,114  

Change in net unrealized appreciation (depreciation) on investments

       4,139         (341 )        (22,714 )        28,621         (5,249 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       6,092         (344 )        5,925         48,153         11,255  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

               1         4,051      

Transfers for contract benefits and terminations

       (630 )        (23 )        (2,830 )        (3,846 )        (1,026 ) 

Net transfers

       1,261         20,888         863,158         118,888         160,068  

Contract maintenance charges

       (23 )        (2 )        (146 )        (250 )        (103 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       608         20,863         860,183         118,843         158,939  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       6,700         20,519         866,108         166,996         170,194  

NET ASSETS:

                    

Beginning of period

       20,519         0         0         170,194         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     27,219     $     20,519     $     866,108     $     337,190     $     170,194  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       2,560         2,413         84,925         12,644         15,449  

Units redeemed

       (2,509 )        (11 )        (362 )        (2,163 )        (125 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       51         2,402         84,563         10,481         15,324  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period September 7, 2016 to December 31, 2016.

 

    
 

(2) For the period August 4, 2017 to December 31, 2017.

 

    
 

(3) For the period March 8, 2016 to December 31, 2016.

 

    

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        NEUBERGER BERMAN AMT GUARDIAN         
PORTFOLIO

               NEUBERGER BERMAN AMT LARGE CAP         
VALUE PORTFOLIO		               NEUBERGER BERMAN AMT MID CAP         
GROWTH PORTFOLIO CLASS I
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     427     $     789     $     75     $     107     $     $  

Net realized gain (loss) on investments

       (8,915 )        23,049         1,597         2,142         (8,087 )        7,428  

Change in net unrealized appreciation (depreciation) on investments

       39,757         (11,819 )        (12 )        1,327         51,094         2,420  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       31,269         12,019         1,660         3,576         43,007         9,848  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

               1              

Transfers for contract benefits and terminations

       (21,098 )        (1,751 )        (3,647 )        (6,118 )        (23,078 )        (2,936 ) 

Net transfers

       (20,779 )        (13,877 )                (117,980 )        (13,280 ) 

Contract maintenance charges

       (169 )        (181 )        (26 )        (31 )        (275 )        (321 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (42,046 )        (15,809 )        (3,672 )        (6,149 )        (141,333 )        (16,537 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (10,777 )        (3,790 )        (2,012 )        (2,573 )        (98,326 )        (6,689 ) 

NET ASSETS:

                        

Beginning of period

       149,045         152,835         14,416         16,989         237,487         244,176  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     138,268     $     149,045     $     12,404     $     14,416     $     139,161     $     237,487  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       207         40         1         2         291         95  

Units redeemed

       (1,792 )        (741 )        (141 )        (293 )        (6,867 )        (1,001 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (1,585 )        (701 )        (140 )        (291 )        (6,576 )        (906 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                NEUBERGER BERMAN        
AMT MID CAP GROWTH
PORTFOLIO CLASS S		               NEUBERGER BERMAN AMT MID CAP        
INTRINSIC VALUE PORTFOLIO		               NEUBERGER BERMAN AMT SOCIALLY        
RESPONSIVE PORTFOLIO
        2016       2017       2016       2017       2016
        (1)                               (2)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     $     11,322     $     4,431     $     37     $  

Net realized gain (loss) on investments

       1,830         54,068         78,008         961         24  

Change in net unrealized appreciation (depreciation) on investments

       500         74,208         16,611         1,113         332  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       2,330         139,598         99,050         2,111         356  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

           24,278         30,207          

Transfers for contract benefits and terminations

       (249 )        (14,389 )        (11,766 )        (94 )        (8 ) 

Net transfers

       (15,878 )        600,138         (93,334 )        67,452         6,929  

Contract maintenance charges

       (26 )        (245 )        (200 )        (9 )        (1 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (16,153 )        609,782         (75,093 )        67,349         6,920  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (13,823 )        749,380         23,957         69,460         7,276  

NET ASSETS:

                    

Beginning of period

       13,823         712,172         688,215         7,276         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     0     $     1,461,552     $     712,172     $     76,736     $     7,276  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       1,903         31,044         1,882         2,249         283  

Units redeemed

       (3,341 )        (6,897 )        (5,787 )        (204 )        (24 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (1,438 )        24,147         (3,905 )        2,045         259  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period January 1, 2016 to August 30, 2016.

 

    
 

(2) For the period November 8, 2016 to December 31, 2016.

 

    
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
            

        OPPENHEIMER MAIN STREET SMALL CAP         
FUND/VA

               PIMCO VIT HIGH YIELD PORTFOLIO                        PIMCO VIT LOW DURATION PORTFOLIO         
        2017       2016       2017       2016       2017       2016

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     6,687     $     15     $     14,053     $     25,197     $     73,349     $     46,081  

Net realized gain (loss) on investments

       54,113         301         (10,106 )        (6,061 )        (6,706 )        (5,609 ) 

Change in net unrealized appreciation (depreciation) on investments

       10,148         21,812         16,526         37,689         5,835         (1,055 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       70,948         22,128         20,473         56,825         72,478         39,417  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       245,892         243,912             7,650             537  

Transfers for contract benefits and terminations

       (21,782 )        (14,525 )        (43,797 )        (47,214 )        (98,403 )        (60,113 ) 

Net transfers

       116,586             (206,065 )        (9,426 )        909,592         2,483,662  

Contract maintenance charges

       (445 )        (283 )        (288 )        (374 )        (2,022 )        (1,340 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       340,251         229,104         (250,150 )        (49,364 )        809,167         2,422,746  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       411,199         251,232         (229,677 )        7,461         881,645         2,462,163  

NET ASSETS:

                        

Beginning of period

       253,104         1,872         483,330         475,869         4,862,452         2,400,289  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     664,303     $     253,104     $     253,653     $     483,330     $     5,744,097     $     4,862,452  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       45,795         24,214         1,473         1,089         63,603         170,898  

Units redeemed

       (16,017 )        (1,490 )        (12,341 )        (3,381 )        (9,635 )        (8,148 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       29,778         22,724         (10,868 )        (2,292 )        53,968         162,750  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                PIMCO VIT REAL RETURN PORTFOLIO                        PIMCO VIT TOTAL RETURN PORTFOLIO                    

        PIONEER REAL ESTATE SHARES VCT         
PORTFOLIO

        2017       2016       2017       2016       2017       2016
                                                (1)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     17,982     $     23,674     $     71,999     $     120,343     $     627     $     26  

Net realized gain (loss) on investments

       (4,001 )        (49,457 )        (8,136 )        (199,974 )        1,581      

Change in net unrealized appreciation (depreciation) on investments

       14,384         86,989         105,918         324,054         (1,383 )        25  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       28,365         61,206         169,781         244,423         825         51  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       7,125         9,263         20,973         20,375         11,201      

Transfers for contract benefits and terminations

       (11,346 )        (91,980 )        (63,868 )        (369,272 )        (1,069 )     

Net transfers

       497,444         (473,404 )        90,490         (2,865,843 )        21,163         2,419  

Contract maintenance charges

       (287 )        (591 )        (809 )        (1,026 )        (31 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       492,936         (556,712 )        46,786         (3,215,766 )        31,264         2,419  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       521,301         (495,506 )        216,567         (2,971,343 )        32,089         2,470  

NET ASSETS:

                        

Beginning of period

       619,240         1,114,746         3,456,221         6,427,564         2,470         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,140,541     $     619,240     $     3,672,788     $     3,456,221     $     34,559     $     2,470  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       35,060         6,056         8,414         11,356         3,094         238  

Units redeemed

       (6,801 )        (38,562 )        (6,037 )        (179,210 )        (109 )     
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       28,259         (32,506 )        2,377         (167,854 )        2,985         238  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period December 23, 2016 to December 31, 2016.

 

        
         
         

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                PUTNAM VT EQUITY INCOME FUND                        PUTNAM VT HIGH YIELD FUND                    

PUTNAM VT
        INCOME FUND         

        2017       2016       2017       2016       2017
                                        (1)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     7,186     $     5,955     $     44,876     $     35,369     $  

Net realized gain (loss) on investments

       23,953         19,760         164         (10,605 )        (1 ) 

Change in net unrealized appreciation (depreciation) on investments

       41,528         16,335         7,982         58,495         238  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       72,667         42,050         53,022         83,259         237  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

       47,891         57,265         53,143         48,015         22,986  

Transfers for contract benefits and terminations

       (15,570 )        (8,097 )        (11,055 )        (83,920 )        (1,429 ) 

Net transfers

       15,569         (33,537 )        112,966         56,676      

Contract maintenance charges

       (300 )        (299 )        (407 )        (367 )        (8 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       47,590         15,332         154,647         20,404         21,549  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       120,257         57,382         207,669         103,663         21,786  

NET ASSETS:

                    

Beginning of period

       333,181         275,799         623,182         519,519         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     453,438     $     333,181     $     830,851     $     623,182     $     21,786  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       3,624         3,206         11,307         5,952         2,192  

Units redeemed

       (2,041 )        (2,578 )        (4,342 )        (4,928 )        (139 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       1,583         628         6,965         1,024         2,053  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period July 24, 2017 to December 31, 2017.

 

    
     
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                PUTNAM VT INTERNATIONAL GROWTH         
FUND		               PUTNAM VT MULTI-CAP VALUE  FUND                   

        PUTNAM VT SMALL         
CAP VALUE FUND

        2017       2016       2017       2016       2017
                (1)                       (2)

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $     72     $     $     776     $     330     $     741  

Net realized gain (loss) on investments

       1,015         1         3,210         3,991         3,125  

Change in net unrealized appreciation (depreciation) on investments

       1,388         69         5,814         2,083         2,208  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       2,475         70         9,800         6,404         6,074  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

           1         34,135         34,524         3,645  

Transfers for contract benefits and terminations

       (252 )            (2,388 )        (1,823 )        (1,180 ) 

Net transfers

       1,673         6,733                 84,039  

Contract maintenance charges

       (10 )            (68 )        (66 )        (33 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       1,411         6,734         31,679         32,635         86,471  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       3,886         6,804         41,479         39,039         92,545  

NET ASSETS:

                    

Beginning of period

       6,804         0         73,029         33,990         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     10,690     $     6,804     $     114,508     $     73,029     $     92,545  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

       391         386         1,020         1,142         8,138  

Units redeemed

       (330 )        (6 )        (79 )        (67 )        (987 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       61         380         941         1,075         7,151  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period December 6, 2016 to December 31, 2016.

 

    
 

(2) For the period January 30, 2017 to December 31, 2017.

 

    
     

 

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, 2017 AND 2016

 

 

    INVESTMENT DIVISIONS  
                ROYCE CAPITAL FUND—MICRO-CAP         
PORTFOLIO		               ROYCE CAPITAL FUND—SMALL-CAP         
PORTFOLIO		           

        T. ROWE PRICE BLUE CHIP GROWTH         
PORTFOLIO II

        2017       2016       2017       2016       2017       2016
                                                (1)

INCREASE (DECREASE) IN NET ASSETS:

                        

OPERATIONS:

                        

Net investment income (loss)

   $     9     $     123     $     8,469     $     16,909     $     $  

Net realized gain (loss) on investments

       540         (9,319 )        (38,331 )        176,240         16,222         44  

Change in net unrealized appreciation (depreciation) on investments

       (1,014 )        13,909         81,946         (1,121 )        140,416         196  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from operations

       (465 )        4,713         52,084         192,028         156,638         240  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CONTRACT TRANSACTIONS:

                        

Purchase payments received

       1             27,900         11,750         791      

Transfers for contract benefits and terminations

       (11,466 )        (2,856 )        (17,162 )        (26,681 )        (10,615 )        (197 ) 

Net transfers

       (12,010 )        (24,310 )        (91,835 )        595         811,943         66,554  

Contract maintenance charges

       (6 )        (26 )        (243 )        (292 )        (311 )        (13 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Increase (decrease) in net assets resulting from contract transactions

       (23,481 )        (27,192 )        (81,340 )        (14,628 )        801,808         66,344  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Total increase (decrease) in net assets

       (23,946 )        (22,479 )        (29,256 )        177,400         958,446         66,584  

NET ASSETS:

                        

Beginning of period

       25,713         48,192         1,123,749         946,349         66,584         0  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

End of period

   $     1,767     $     25,713     $     1,094,493     $     1,123,749     $     1,025,030     $     66,584  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

CHANGES IN UNITS OUTSTANDING:

                        

Units issued

       1         248         2,246         1,583         68,696         10,806  

Units redeemed

       (1,711 )        (2,512 )        (6,612 )        (2,480 )        (2,916 )        (4,441 ) 
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

Net increase (decrease)

       (1,710 )        (2,264 )        (4,366 )        (897 )        65,780         6,365  
   

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 

(1) For the period September 14, 2016 to December 31, 2016.

 

         
         

 

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, 2017 AND 2016

 

 

   

INVESTMENT DIVISIONS

  
                 VAN ECK VIP EMERGING MARKETS FUND                    

        VAN ECK VIP GLOBAL HARD ASSETS FUND         

         2017        2016        2017        2016

INCREASE (DECREASE) IN NET ASSETS:

                    

OPERATIONS:

                    

Net investment income (loss)

   $      194       $      189       $      $      3,231    

Net realized gain (loss) on investments

        63          (930 )         (16,788 )         (116,145 ) 

Change in net unrealized appreciation (depreciation) on investments

        19,367          1,418          28,786            385,479  
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

Increase (decrease) in net assets resulting from operations

        19,624          677          11,998          272,565  
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

CONTRACT TRANSACTIONS:

                    

Purchase payments received

        2,500          6,124          5,923          262  

Transfers for contract benefits and terminations

        (1,214 )         (1,324 )         (10,493 )         (10,238 ) 

Net transfers

             (9,475 )         162,101          (229,374 ) 

Contract maintenance charges

        (8 )         (17 )         (231 )         (237 ) 
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

Increase (decrease) in net assets resulting from contract transactions

        1,278          (4,692 )         157,300          (239,587 ) 
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

Total increase (decrease) in net assets

        20,902          (4,015 )         169,298          32,978  

NET ASSETS:

                    

Beginning of period

        37,345          41,360          751,538          718,560  
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

End of period

   $      58,247     $      37,345     $      920,836     $      751,538  
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

CHANGES IN UNITS OUTSTANDING:

                    

Units issued

        65          177          4,581          600  

Units redeemed

        (30 )         (293 )         (1,329 )         (5,536 ) 
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

Net increase (decrease)

        35          (116 )         3,252          (4,936 ) 
    

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

 

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, 2017

 

 

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. It 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 (U.S. GAAP) 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. The Series Account is an investment company and, therefore, applies specialized accounting guidance in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 “Financial Services – Investment Companies” (ASC Topic 946). The following is a summary of the significant accounting policies of the Series Account.

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 observability 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. Classification is based on the lowest level of input significant to the fair value measurement. The three levels are defined as follows:

Level 1 – Unadjusted quoted prices for identical securities in active markets.

Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. These may include quoted prices for similar assets in active markets.

Level 3 – Unobservable inputs to the extent observable inputs are not available 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, 2017, 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.

Fund of Funds Structure Risk

Since the Series Account invests directly in underlying funds, all risks associated with the eligible underlying funds apply to the Series Account. To the extent the Series Account invests more of its assets in one underlying fund than another, the Series Account will have greater exposure to the risks of the underlying fund.

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.

 

2. PURCHASES AND SALES OF INVESTMENTS

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2017 were as follows:

 

Investment Division

         Purchases                      Sales          

Alger Small Cap Growth Portfolio

   $ 47,306          $ 54,232      

American Century Investments VP Capital Appreciation Fund

     90,293            123,909      

American Century Investments VP Income & Growth Fund

     305            3,812      

American Century Investments VP Inflation Protection Fund

     154,038            11,056      

American Century Investments VP International Fund

     503            9,897      

American Century Investments VP Value Fund

     260,844            38,578      

American Funds IS Global Small Capitalization Fund

     3,527            43,718      

American Funds IS Growth Fund

     610,877            701,757      

Investment Division

         Purchases                      Sales          

American Funds IS International Fund

   $ 122,144          $ 217,525      

American Funds IS New World Fund

     280,567            189,660      

Clearbridge Variable Mid Cap Portfolio

     13,986            233      

Clearbridge Variable Small Cap Growth Portfolio

     49,098            5,621      

Columbia Variable Portfolio - Small Cap Value Fund

     25,175            79,632      

Davis Financial Portfolio

     36,813            3,747      

Davis Value Portfolio

     10,084            251,595      

Delaware VIP Small Cap Value Series

     35,732            577      

Deutsche Core Equity VIP

     8,260            22,141      

Deutsche CROCI® U.S. VIP

     28,225            83,814      

Deutsche Global Small Cap Growth VIP

     25,726            9,131      

Deutsche High Income VIP

     19,619            11,161      

Deutsche Small Cap Index VIP

     3,240,040            329,247      

Deutsche Small Mid Cap Value VIP

     210,002            172,354      

Dreyfus Stock Index Fund, Inc.

     2,110,789            1,098,656      

Dreyfus VIF International Equity Portfolio

     5,530            91,679      

Federated High Income Bond Fund II

     1,965            30,420      

Federated Kaufmann Fund II

     128,657            69,835      

Fidelity VIP Contrafund Portfolio

     603,278            403,881      

Fidelity VIP Growth Portfolio

     172,659            558,224      

Fidelity VIP Investment Grade Bond Portfolio

     119,371            426,281      

Fidelity VIP Mid Cap Portfolio

     142,138            277,477      

Goldman Sachs VIT Mid Cap Value Fund

     21,021            10,695      

Great-West Aggressive Profile Fund

     811,644            158,758      

Great-West Aggressive Profile I Fund

     373,166            938,053      

Great-West Ariel Mid Cap Value Fund

     111,953            339,595      

Great-West Bond Index Fund

     121,892            53,980      

Great-West Conservative Profile Fund

     150,574            55,288      

Great-West Conservative Profile I Fund

     29,719            405,295      

Great-West Core Bond Fund

     56,487            74,396      

Great-West Goldman Sachs Mid Cap Value Fund

     50,660            560      

Great-West Government Money Market Fund

     8,285,716            10,651,990      

Great-West International Index Fund

     49,726            12,343      

Great-West Lifetime 2015 Fund

     489,594            8,876      

Great-West Lifetime 2025 Fund

     91,772            25,065      

Great-West Lifetime 2025 Fund

     853,159            30,403      

Great-West Lifetime 2030 Fund

     692,526            3,570      

Great-West Lifetime 2035 Fund

     291,707            21,235      

Great-West Lifetime 2040 Fund

     522,037            156,966      

Great-West Lifetime 2045 Fund

     233,824            61,230      

Great-West Lifetime 2050 Fund

     177,752            1,085      

Great-West Lifetime 2055 Fund

     75,242            2,154      

Great-West Loomis Sayles Bond Fund

     150,909            395,715      

Great-West Loomis Sayles Small Cap Value Fund

     199,192            125,438      

Great-West MFS International Value Fund

     557,091            645,587      

Great-West Moderate Profile Fund

     267,867            204,151      

Great-West Moderate Profile I Fund

     69,423            355,044      

Great-West Moderately Aggressive Profile Fund

     95,047            77,245      

Great-West Moderately Aggressive Profile I Fund

     16,559            88,389      

Great-West Moderately Conservative Profile Fund

     80,260            27,109      

Great-West Moderately Conservative Profile I Fund

     43,095            75,584      

Investment Division

         Purchases                      Sales          

Great-West Multi-Manager Large Cap Growth Fund

   $ 33,823          $ 3,980      

Great-West Real Estate Index Fund

     65,652            2,500      

Great-West S&P Mid Cap 400® Index Fund

     737,146            92,844      

Great-West S&P Small Cap 600® Index Fund

     39,101            28,967      

Great-West Short Duration Bond Fund

     2,472,147            174,197      

Great-West T. Rowe Price Equity Income Fund

     201,916            141,349      

Great-West T. Rowe Price Mid Cap Growth Fund

     927,611            1,288,006      

Great-West Templeton Global Bond Fund

     1,032,241            258,817      

Great-West U. S. Government Securities Fund

     100,312            406,419      

Invesco V.I. Core Equity Fund

     35,989            33,916      

Invesco V.I. Diversified Dividend Fund

     -                4      

Invesco V.I. Global Health Care Fund

     57,851            92,141      

Invesco V.I. Global Real Estate Fund

     141,174            38,984      

Invesco V.I. International Growth Fund

     397,127            339,779      

Invesco V.I. Mid Cap Core Equity Fund

     97,776            364,310      

Invesco V.I. Technology Fund

     55,999            101,595      

Janus Henderson VIT Balanced Portfolio

     1,459,684            617,910      

Janus Henderson VIT Flexible Bond Portfolio

     894,203            1,304,377      

Janus Henderson VIT Forty Portfolio

     510,052            2,686,447      

Janus Henderson VIT Global Research Portfolio

     236,457            220,406      

Janus Henderson VIT Global Technology Portfolio

     216,020            70,696      

Janus Henderson VIT Overseas Portfolio

     897            11,563      

JPMorgan Insurance Trust Intrepid Mid Cap Portfolio

     3,861            5,743      

Lord Abbett Series Developing Growth Portfolio

     24,191            23,583      

MFS VIT Total Return Bond Series

     891,886            2,975      

MFS VIT Value Series

     161,232            24,123      

Neuberger Berman AMT Guardian Portfolio

     21,432            47,456      

Neuberger Berman AMT Large Cap Value Portfolio

     424            3,672      

Neuberger Berman AMT Mid Cap Growth Portfolio Class I

     8,381            147,184      

Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio

     779,811            158,707      

Neuberger Berman AMT Socially Responsive Portfolio

     73,866            6,215      

Oppenheimer Main Street Small Cap Fund/VA

     560,229            172,242      

PIMCO VIT High Yield Portfolio

     46,926            283,023      

PIMCO VIT Low Duration Portfolio

     1,013,680            131,164      

PIMCO VIT Real Return Portfolio

     623,388            112,470      

PIMCO VIT Total Return Portfolio

     232,050            113,265      

Pioneer Real Estate Shares VCT Portfolio

     33,915            428      

Putnam VT Equity Income Fund

     127,552            61,556      

Putnam VT High Yield Fund

     289,619            90,096      

Putnam VT Income Fund

     22,986            1,437      

Putnam VT International Growth Fund

     8,337            6,854      

Putnam VT Multi-Cap Value Fund

     37,300            1,493      

Putnam VT Small Cap Value Fund

     101,511            11,103      

Royce Capital Fund - Micro-Cap Portfolio

     192            23,482      

Royce Capital Fund - Small-Cap Portfolio

     46,057            118,928      

T. Rowe Price Blue Chip Growth Portfolio

     844,947            31,067      

Van Eck VIP Emerging Markets Fund

     2,544            1,072      

Van Eck VIP Global Hard Assets Fund

     224,838            67,538      

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 $10 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.

Deductions for Assumption of Mortality and Expense Risks

The Company deducts an amount, computed and accrued daily, from each participant’s account equal to an annual rate that will not exceed 0.90% annually. Currently, the charge is 0.28% for Policy Years 1 through 20 and 0.10% thereafter. These charges compensate the Company for its assumption of certain mortality, death benefit and expense risks. These charges are recorded as Transfers for contract benefits and terminations on the Statement of Changes in Net Assets of the applicable Investment Divisions.

If the above charges prove insufficient to cover actual costs and assumed risks, the loss will be borne by the Company; conversely, if the amounts deducted prove more than sufficient, the excess will be a profit to the Company.

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 12-month period indicated or from the effective date through the end of the reporting period and are not annualized for periods less than one year. When a new Investment Division is added to the Series Account, the calculation of the total return begins on the day it is added even though it may not have had operations for all or some of the same period. Unit values and returns for bands or Investment Divisons that had no operations activity during the reporting period are not shown. 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.

 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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 ALGER SMALL CAP GROWTH PORTFOLIO

                 

(Effective date 05/12/2009)

                 

2017

      3        $            163.24         $              428       0.00 %        0.00 %          28.73  %    

2016

      3        $            126.82         $              339       0.00 %        0.00 %          6.24  %    

2015

      3        $            119.36         $              327       0.00 %        0.00 %          (3.32) %    

2014

      3        $            123.46         $              404       0.00 %        0.00 %          0.43  %    

2013

      4        $            122.93         $              446       0.00 %        0.00 %          34.23  %    

 AMERICAN CENTURY INVESTMENTS VP CAPITAL APPRECIATION FUND

                 

(Effective date 04/24/2014)

                 

2017

      6        $              13.97         $                89       0.00 %        0.00 %          21.79  %    

2016

      10        $              11.47         $              119       0.00 %        0.00 %          3.23  %    

2015

      11        $              11.11         $              120       0.00 %        0.00 %          1.93  %    

2014

      10        $              10.90         $              114       0.00 %        0.00 %          9.00  %    

 AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND

                 

2017

      0    *      $              24.35         $                  5       2.26 %        0.00 %          20.49  %    

2016

      0    *      $              20.20         $                  7       2.33 %        0.00 %          13.49  %    

2015

      1        $              17.77         $                13       2.01 %        0.00 %          (5.63) %    

2014

      1        $              18.84         $                22       2.01 %        0.00 %          12.54  %    

2013

      2        $              16.74         $                25       2.20 %        0.00 %          35.77  %    

 AMERICAN CENTURY INVESTMENTS VP INFLATION PROTECTION FUND

                 

(Effective date 05/01/2015)

                 

2017

      56        $              10.42         $              582       2.73 %        0.00 %          3.67  %    

2016

      43        $              10.05         $              433       0.72 %        0.00 %          4.39  %    

 AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND

                 

2017

      4        $              14.45         $                55       0.94 %        0.00 %          31.20  %    

2016

      5        $              11.01         $                50       0.98 %        0.00 %          (5.49) %    

2015

      4        $              11.65         $                48       0.77 %        0.00 %          0.75  %    

2014

      48        $              11.57         $              555       1.63 %        0.00 %          (5.47) %    

2013

      45        $              12.24         $              556       1.73 %        0.00 %          22.40  %    

 AMERICAN CENTURY INVESTMENTS VP VALUE FUND

                 

2017

      18        $              43.87         $              782       1.74 %        0.00 %          8.75  %    

2016

      13        $              40.35         $              511       1.74 %        0.00 %          20.48  %    

2015

      3        $              33.49         $              108       1.64 %        0.00 %          (3.88) %    

2014

      23        $              34.84         $              817       1.54 %        0.00 %          13.08  %    

2013

      23        $              30.81         $              719       1.66 %        0.00 %          31.72  %    

 AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND

                 

(Effective date 05/05/2008)

                 

2017

      0    *      $              16.03         $                  4       0.15 %        0.00 %          25.90  %    

2016

      3        $              12.73         $                42       0.21 %        0.00 %          2.09  %    

2015

      6        $              12.47         $                78       0.00 %        0.00 %          0.27  %    

2014

      12        $              12.43         $              144       0.13 %        0.00 %          2.05  %    

2013

      9        $              12.18         $              114       0.84 %        0.00 %          28.35  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 AMERICAN FUNDS IS GROWTH FUND

                 

(Effective date 05/05/2008)

                 

2017

      93        $            24.50         $            2,269       0.48 %        0.00 %          28.29  %    

2016

      106        $            19.10         $            2,017       0.71 %        0.00 %          9.49  %    

2015

      121        $            17.44         $            2,105       0.62 %        0.00 %          6.85  %    

2014

      121        $            16.32         $            1,975       0.73 %        0.00 %          8.51  %    

2013

      155        $            15.04         $            2,332       0.79 %        0.00 %          30.10  %    

 AMERICAN FUNDS IS INTERNATIONAL FUND

                 

(Effective date 05/05/2008)

                 

2017

      124        $            14.44         $            1,790       1.26 %        0.00 %          32.15  %    

2016

      135        $            10.93         $            1,475       1.47 %        0.00 %          3.53  %    

2015

      130        $            10.55         $            1,370       1.48 %        0.00 %          (4.53) %    

2014

      155        $            11.05         $            1,715       1.39 %        0.00 %          (2.73) %    

2013

      164        $            11.36         $            1,860       1.40 %        0.00 %          21.63  %    

 AMERICAN FUNDS IS NEW WORLD FUND

                 

(Effective date 04/24/2009)

                 

2017

      80        $            22.83         $            1,823       0.95 %        0.00 %          29.45  %    

2016

      76        $            17.64         $            1,336       0.81 %        0.00 %          5.26  %    

2015

      72        $            16.76         $            1,210       0.64 %        0.00 %          (3.14) %    

2014

      56        $            17.30         $               967       1.01 %        0.00 %          (7.88) %    

2013

      52        $            18.78         $               983       1.51 %        0.00 %          11.39  %    

 CLEARBRIDGE VARIABLE MID CAP PORTFOLIO

                 

(Effective date 04/29/2016)

                 

2017

      1        $            12.54         $                 14       0.43 %        0.00 %          12.80  %    

 CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO

                 

(Effective date 04/29/2016)

                 

2017

      4        $            14.08         $                 49       0.00 %        0.00 %          24.27  %    

 COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND

                 

(Effective date 05/12/2009)

                 

2017

      2        $            32.96         $                 68       0.63 %        0.00 %          14.31  %    

2016

      4        $            28.83         $               120       0.72 %        0.00 %          33.05  %    

2015

      10        $            21.67         $               206       0.86 %        0.00 %          (6.12) %    

2014

      11        $            23.08         $               248       0.63 %        0.00 %          3.27  %    

2013

      12        $            22.35         $               271       1.03 %        0.00 %          34.23  %    

 DAVIS FINANCIAL PORTFOLIO

                 

(Effective date 05/02/2005)

                 

2017

      2        $            24.50         $                 41       1.05 %        0.00 %          21.42  %    

2016

      0    *      $            20.18         $                   6       0.85 %        0.00 %          14.25  %    

2015

      0    *      $            17.66         $                   7       0.74 %        0.00 %          2.00  %    

2014

      1        $            17.30         $                 11       1.08 %        0.00 %          12.78  %    

2013

      2        $            15.34         $                 32       0.61 %        0.00 %          31.22  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 DAVIS VALUE PORTFOLIO

                 

(Effective date 05/02/2005)

                 

2017

      5        $            25.23         $               116       0.62 %        0.00 %          22.63  %    

2016

      16        $            20.57         $               338       1.21 %        0.00 %          11.88  %    

2015

      19        $            18.39         $               348       0.77 %        0.00 %          1.60  %    

2014

      20        $            18.10         $               371       0.94 %        0.00 %          6.03  %    

2013

      17        $            17.07         $               294       0.87 %        0.00 %          33.46  %    

 DELAWARE VIP SMALL CAP VALUE SERIES

                 

(Effective date 05/01/2014)

                 

2017

      4        $            14.30         $                 52       0.53 %        0.00 %          11.76  %    

2016

      1        $            12.79         $                 14       0.73 %        0.00 %          31.07  %    

2015

      0    *      $              9.77         $                   5       0.00 %        0.00 %          (6.46) %    

 DEUTSCHE CROCI® U.S. VIP

                 

(Effective date 05/02/2005)

                 

2017

      19        $            16.13         $               309       1.41 %        0.00 %          22.88  %    

2016

      24        $            13.13         $               311       1.10 %        0.00 %          (4.38) %    

2015

      15        $            13.73         $               204       1.26 %        0.00 %          (6.87) %    

2014

      6        $            14.74         $                 96       0.26 %        0.00 %          10.66  %    

2013

      11        $            13.32         $               146       1.75 %        0.00 %          30.97  %    

 DEUTSCHE GLOBAL SMALL CAP VIP

                 

(Effective date 05/02/2005)

                 

2017

      5        $            25.01         $               137       0.00 %        0.00 %          20.02  %    

2016

      5        $            20.84         $               109       0.39 %        0.00 %          1.57  %    

2015

      3        $            20.52         $                 55       0.94 %        0.00 %          1.16  %    

2014

      2        $            20.28         $                 47       0.82 %        0.00 %          (4.11) %    

2013

      4        $            21.15         $                 80       0.61 %        0.00 %          35.93  %    

 DEUTSCHE HIGH INCOME VIP

                 

(Effective date 04/25/2007)

                 

2017

      3        $            18.37         $                 55       6.64 %        0.00 %          7.50  %    

2016

      3        $            17.09         $                 46       5.09 %        0.00 %          12.87  %    

2015

      1        $            15.14         $                 22       4.92 %        0.00 %          (4.44) %    

2014

      6        $            15.84         $                 93       6.21 %        0.00 %          1.47  %    

2013

      5        $            15.61         $                 80       6.73 %        0.00 %          7.88  %    

 DEUTSCHE SMALL CAP INDEX VIP

                 

(Effective date 04/25/2007)

                 

2017

      268        $            24.47         $            6,559       0.72 %        0.00 %          14.33  %    

2016

      144        $            21.40         $            3,089       1.07 %        0.00 %          21.03  %    

2015

      151        $            17.68         $            2,673       0.98 %        0.00 %          (4.60) %    

2014

      147        $            18.53         $            2,730       0.89 %        0.00 %          4.75  %    

2013

      140        $            17.69         $            2,481       1.62 %        0.00 %          38.64  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)          Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 DEUTSCHE SMALL MID CAP VALUE VIP

                  

(Effective date 05/01/2006)

                  

2017

      64         $            26.47         $            1,695       0.73 %        0.00 %          10.52  %    

2016

      64         $            23.95         $            1,544       0.60 %        0.00 %          16.89  %    

2015

      81         $            20.49         $            1,666       0.29 %        0.00 %          (1.91) %    

2014

      80         $            20.89         $            1,678       0.78 %        0.00 %          5.56  %    

2013

      92         $            19.79         $            1,817       1.07 %        0.00 %          35.18  %    

 DREYFUS STOCK INDEX FUND, INC

                  

2017

      1,048         $            24.72         $          25,895       1.72 %        0.00 %          21.54  %    

2016

      1,044         $            20.34         $          21,227       2.02 %        0.00 %          11.71  %    

2015

      1,089         $            18.20         $          19,827       1.84 %        0.00 %          1.11  %    

2014

      1,089         $            18.01         $          19,606       1.76 %        0.00 %          13.48  %    

2013

      1,125         $            15.87         $          17,859       1.90 %        0.00 %          32.03  %    

 DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO

                  

2017

      1         $            23.89         $                 13       1.67 %        0.00 %          27.33  %    

2016

      5         $            18.75         $                 85       0.94 %        0.00 %          (5.54) %    

2015

      5         $            19.85         $               102       3.27 %        0.00 %          1.37  %    

2014

      5         $            19.58         $                 97       2.37 %        0.00 %          (2.64) %    

2013

      6         $            20.11         $               126       0.99 %        0.00 %          17.74  %    

 FEDERATED KAUFMANN FUND II

                  

(Effective date 03/08/2010)

                  

2017

      5         $            25.66         $               136       0.00 %        0.00 %          28.33  %    

2016

      3         $            20.00         $                 65       0.00 %        0.00 %          3.66  %    

2015

      2         $            19.29         $                 38       0.00 %        0.00 %          6.37  %    

2014

      1         $            18.14         $                 22       0.00 %        0.00 %          9.74  %    

2013

      2         $            16.53         $                 29       0.00 %        0.00 %          40.08  %    

 FIDELITY VIP CONTRAFUND PORTFOLIO

                  

2017

      82         $            35.11         $            2,872       0.81 %        0.00 %          21.59  %    

2016

      81         $            28.87         $            2,336       0.62 %        0.00 %          7.73  %    

2015

      85         $            26.80         $            2,268       0.73 %        0.00 %          0.42  %    

2014

      113         $            26.69         $            3,018       0.75 %        0.00 %          11.67  %    

2013

      126         $            23.90         $            3,022       0.84 %        0.00 %          30.96  %    

 FIDELITY VIP GROWTH PORTFOLIO

                  

2017

      34         $            23.29         $               791       0.10 %        0.00 %          34.82  %    

2016

      55         $            17.27         $               952       0.00 %        0.00 %          0.55  %    

2015

      51         $            17.18         $               883       0.03 %        0.00 %          6.90  %    

2014

      81         $            16.07         $            1,306       0.00 %        0.00 %          10.98  %    

2013

      69         $            14.48         $               996       0.04 %        0.00 %          36.09  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO

                 

2017

      23        $            21.71         $            496       1.93 %        0.00 %          3.99  %    

2016

      38        $            20.88         $            793       2.27 %        0.00 %          4.48  %    

2015

      32        $            19.99         $            644       2.05 %        0.00 %          (0.85) %    

2014

      40        $            20.16         $            810       2.04 %        0.00 %          5.66  %    

2013

      31        $            19.08         $            588       1.89 %        0.00 %          (2.10) %    

 FIDELITY VIP MID CAP PORTFOLIO

                 

2017

      17        $            55.10         $            952       0.50 %        0.00 %          20.54  %    

2016

      21        $            45.71         $            965       0.33 %        0.00 %          11.92  %    

2015

      22        $            40.85         $            903       0.25 %        0.00 %          (1.63) %    

2014

      20        $            41.52         $            851       0.02 %        0.00 %          6.03  %    

2013

      23        $            39.16         $            895       0.27 %        0.00 %          35.88  %    

 GOLDMAN SACHS VIT MID CAP VALUE FUND

                 

(Effective date 05/01/2013)

                 

2017

      1        $            15.32         $              21       0.97 %        0.00 %          11.07  %    

2016

      1        $            13.79         $              10       1.28 %        0.00 %          13.53  %    

 GREAT-WEST AGGRESSIVE PROFILE FUND

                 

(Effective date 04/28/2017)

                 

2017

      59        $            11.28         $            666       2.00 %        0.00 %          12.80  %    

 GREAT-WEST ARIEL MID CAP VALUE FUND

                 

2017

      8        $            52.29         $            398       2.07 %        0.00 %          15.01  %    

2016

      13        $            45.47         $            596       1.42 %        0.00 %          13.05  %    

2015

      16        $            40.22         $            643       1.06 %        0.00 %          (6.10) %    

2014

      25        $            42.83         $         1,067       1.67 %        0.00 %          7.80  %    

2013

      33        $            39.73         $         1,302       4.32 %        0.00 %          47.53  %    

 GREAT-WEST BOND INDEX FUND

                 

(Effective date 04/24/2009)

                 

2017

      145        $            14.28         $         2,070       1.04 %        0.00 %          3.05  %    

2016

      142        $            13.86         $         1,963       0.96 %        0.00 %          1.94  %    

2015

      133        $            13.59         $         1,814       1.61 %        0.00 %          0.24  %    

2014

      140        $            13.56         $         1,892       2.13 %        0.00 %          5.77  %    

2013

      137        $            12.82         $         1,757       1.93 %        0.00 %          (2.38) %    

 GREAT-WEST CONSERVATIVE PROFILE FUND

                 

(Effective date 04/28/2017)

                 

2017

      9        $            10.42         $              96       1.81 %        0.00 %          4.24  %    

 GREAT-WEST CORE BOND FUND

                 

(Effective date 04/24/2009)

                 

2017

      163        $            14.57         $         2,376       1.95 %        0.00 %          3.89  %    

2016

      168        $            14.02         $         2,349       3.06 %        0.00 %          4.70  %    

2015

      0    *      $            13.40         $                6       3.65 %        0.00 %          (1.17) %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 GREAT-WEST GOLDMAN SACHS MID CAP VALUE FUND

                 

(Effective date 05/01/2015)

                 

2017

      4        $            13.21         $                 50       13.64 %        0.00 %          16.99  %    

2016

      0    *      $            11.24         $                   1       1.56 %        0.00 %          20.29  %    

 GREAT-WEST GOVERNMENT MONEY MARKET FUND

                 

2017

      829        $            13.07         $          10,837       0.38 %        0.00 %          0.41  %    

2016

      1,015        $            13.01         $          13,203       0.00 %        0.00 %          0.00  %    

2015

      830        $            13.01         $          10,807       0.00 %        0.00 %          0.00  %    

2014

      749        $            13.01         $            9,740       0.00 %        0.00 %          0.00  %    

2013

      727        $            13.01         $            9,459       0.00 %        0.00 %          0.00  %    

 GREAT-WEST INTERNATIONAL INDEX FUND

                 

(Effective date 05/01/2013)

                 

2017

      4        $            12.94         $                 49       2.03 %        0.00 %          24.62  %    

2016

      0    *      $            10.39         $                   4       0.34 %        0.00 %          0.66  %    

2015

      1        $            10.32         $                 15       1.22 %        0.00 %          (1.08) %    

2014

      1        $            10.43         $                   8       1.59 %        0.00 %          (6.21) %    

 GREAT-WEST LIFETIME 2015 FUND

                 

(Effective date 04/21/2016)

                 

2017

      62        $            11.59         $               724       1.90 %        0.00 %          11.12  %    

2016

      22        $            10.43         $               227       2.01 %        0.00 %          4.29  %    

 GREAT-WEST LIFETIME 2020 FUND

                 

(Effective date 04/29/2016)

                 

2017

      6        $            11.79         $                 69       4.04 %        0.00 %          12.44  %    

 GREAT-WEST LIFETIME 2025 FUND

                 

(Effective date 04/21/2016)

                 

2017

      151        $            11.99         $            1,806       2.00 %        0.00 %          14.14  %    

2016

      86        $            10.51         $               901       2.20 %        0.00 %          5.06  %    

 GREAT-WEST LIFETIME 2030 FUND

                 

(Effective date 04/29/2016)

                 

2017

      66        $            12.33         $               820       4.73 %        0.00 %          16.17  %    

2016

      9        $            10.61         $                 93       1.18 %        0.00 %          6.11  %    

 GREAT-WEST LIFETIME 2035 FUND

                 

(Effective date 04/21/2016)

                 

2017

      44        $            12.54         $               552       2.16 %        0.00 %          18.36  %    

2016

      23        $            10.60         $               249       2.11 %        0.00 %          5.96  %    

 GREAT-WEST LIFETIME 2040 FUND

                 

(Effective date 04/29/2016)

                 

2017

      37        $            12.80         $               477       5.96 %        0.00 %          19.53  %    

2016

      8        $            10.71         $                 88       2.39 %        0.00 %          7.09  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)          Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 GREAT-WEST LIFETIME 2045 FUND

                  

(Effective date 04/21/2016)

                  

2017

      26         $            12.80         $               337       2.03 %        0.00 %          20.43  %    

2016

      13         $            10.63         $               138       1.82 %        0.00 %          6.29  %    

 GREAT-WEST LIFETIME 2050 FUND

                  

(Effective date 04/29/2016)

                  

2017

      15         $            12.92         $               196       3.54 %        0.00 %          20.59  %    

 GREAT-WEST LIFETIME 2055 FUND

                  

(Effective date 04/21/2016)

                  

2017

      11         $            12.83         $               143       1.82 %        0.00 %          20.80  %    

2016

      5         $            10.62         $                 56       1.71 %        0.00 %          6.21  %    

 GREAT-WEST LOOMIS SAYLES BOND FUND

                  

2017

      15         $            39.23         $               573       1.66 %        0.00 %          6.27  %    

2016

      21         $            36.91         $               790       2.33 %        0.00 %          11.38  %    

2015

      19         $            33.14         $               639       1.34 %        0.00 %          (6.55) %    

2014

      69         $            35.46         $            2,444       3.89 %        0.00 %          3.44  %    

2013

      71         $            34.28         $            2,420       3.46 %        0.00 %          8.04  %    

 GREAT-WEST LOOMIS SAYLES SMALL CAP VALUE FUND

                  

2017

      20         $            41.89         $               831       0.08 %        0.00 %          9.74  %    

2016

      19         $            38.17         $               735       0.08 %        0.00 %          25.83  %    

2015

      17         $            30.34         $               525       0.23 %        0.00 %          (3.47) %    

2014

      20         $            31.42         $               629       0.94 %        0.00 %          4.84  %    

2013

      18         $            29.97         $               537       0.63 %        0.00 %          34.88  %    

 GREAT-WEST MFS INTERNATIONAL VALUE FUND

                  

(Effective date 04/25/2007)

                  

2017

      308         $            13.76         $            4,235       1.03 %        0.00 %          26.46  %    

2016

      328         $            10.88         $            3,567       0.57 %        0.00 %          3.88  %    

2015

      480         $            10.48         $            5,028       0.87 %        0.00 %          6.45  %    

2014

      379         $              9.84         $            3,727       0.93 %        0.00 %          0.92  %    

2013

      359         $              9.75         $            3,500       2.61 %        0.00 %          28.12  %    

 GREAT-WEST MODERATE PROFILE FUND

                  

(Effective date 04/28/2017)

                  

2017

      6         $            10.80         $                 67       1.51 %        0.00 %          7.96  %    

 GREAT-WEST MODERATELY AGGRESSIVE PROFILE FUND

                  

(Effective date 04/28/2017)

                  

2017

      2         $            10.95         $                 20       1.15 %        0.00 %          9.49  %    

 GREAT-WEST MODERATELY CONSERVATIVE PROFILE FUND

                  

(Effective date 04/28/2017)

                  

2017

      5         $            10.61         $                 54       1.43 %        0.00 %          6.06  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND

                 

(Effective date 04/24/2009)

                 

2017

      7        $            31.51         $               224       0.78 %        0.00 %          30.05  %    

2016

      7        $            24.23         $               158       0.17 %        0.00 %          1.01  %    

2015

      6        $            23.99         $               136       0.21 %        0.00 %          6.41  %    

2014

      4        $            22.55         $                 90       0.66 %        0.00 %          12.30  %    

2013

      6        $            20.08         $               113       1.78 %        0.00 %          28.88  %    

 GREAT-WEST REAL ESTATE INDEX FUND

                 

(Effective date 05/01/2013)

                 

2017

      5        $            13.14         $                 63       0.84 %        0.00 %          3.10  %    

 GREAT-WEST S&P MID CAP 400® INDEX FUND

                 

(Effective date 05/01/2013)

                 

2017

      65        $            17.46         $            1,141       0.66 %        0.00 %          15.65  %    

2016

      28        $            15.10         $               420       0.61 %        0.00 %          19.96  %    

2015

      24        $            12.59         $               300       1.65 %        0.00 %          (2.77) %    

2014

      0    *      $            12.92         $                   2       1.39 %        0.00 %          9.19  %    

 GREAT-WEST S&P SMALL CAP 600® INDEX FUND

                 

(Effective date 02/29/2016)

                 

2017

      9        $            14.97         $               142       1.51 %        0.00 %          12.75  %    

2016

      10        $            13.28         $               129       1.00 %        0.00 %          32.77  %    

 GREAT-WEST SHORT DURATION BOND FUND

                 

(Effective date 04/25/2007)

                 

2017

      684        $            14.01         $            9,588       1.15 %        0.00 %          1.96  %    

2016

      527        $            13.74         $            7,238       1.52 %        0.00 %          1.70  %    

2015

      452        $            13.51         $            6,105       1.19 %        0.00 %          0.54  %    

2014

      428        $            13.44         $            5,752       1.52 %        0.00 %          0.98  %    

2013

      413        $            13.31         $            5,492       1.86 %        0.00 %          1.37  %    

 GREAT-WEST T. ROWE PRICE EQUITY INCOME FUND

                 

2017

      59        $            29.56         $            1,755       0.88 %        0.00 %          16.22  %    

2016

      60        $            25.43         $            1,533       0.66 %        0.00 %          18.75  %    

2015

      90        $            21.42         $            1,931       1.21 %        0.00 %          (6.89) %    

2014

      106        $            23.00         $            2,448       1.91 %        0.00 %          7.38  %    

2013

      110        $            21.42         $            2,358       2.19 %        0.00 %          30.05  %    

 GREAT-WEST T. ROWE PRICE MID CAP GROWTH FUND

                 

2017

      72        $            43.44         $            3,121       0.34 %        0.00 %          24.43  %    

2016

      86        $            34.91         $            3,009       0.06 %        0.00 %          6.18  %    

2015

      81         $            32.88         $            2,670       0.02 %        0.00 %          6.52  %    

2014

      94        $            30.87         $            2,906       0.73 %        0.00 %          12.79  %    

2013

      119        $            27.37         $            3,248       0.06 %        0.00 %          36.37  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)          Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 GREAT-WEST TEMPLETON GLOBAL BOND FUND

                  

(Effective date 05/05/2008)

                  

2017

      352         $            14.24         $            5,014       1.77 %        0.00 %          1.95  %    

2016

      304         $            13.97         $            4,248       1.33 %        0.00 %          2.98  %    

2015

      307         $            13.57         $            4,170       4.13 %        0.00 %          (4.19) %    

2014

      256         $            14.16         $            3,628       4.86 %        0.00 %          0.14  %    

2013

      236         $            14.14         $            3,336       1.54 %        0.00 %          0.57  %    

 GREAT-WEST U.S. GOVERNMENT SECURITIES FUND

                  

2017

      162         $            22.04         $            3,567       1.35 %        0.00 %          2.22  %    

2016

      178         $            21.56         $            3,841       1.71 %        0.00 %          1.22  %    

2015

      190         $            21.30         $            4,057       2.04 %        0.00 %          0.79  %    

2014

      192         $            21.13         $            4,062       2.47 %        0.00 %          5.44  %    

2013

      193         $            20.04         $            3,871       2.23 %        0.00 %          (2.05) %    

 INVESCO V.I. CORE EQUITY FUND

                  

2017

      7         $            23.57         $               160       0.95 %        0.00 %          13.17  %    

2016

      7         $            20.82         $               147       0.76 %        0.00 %          10.26  %    

2015

      7         $            18.88         $               128       0.33 %        0.00 %          (5.77) %    

2014

      44         $            20.04         $               883       0.85 %        0.00 %          8.15  %    

2013

      45         $            18.53         $               837       1.40 %        0.00 %          29.22  %    

 INVESCO V.I. GLOBAL HEALTH CARE FUND

                  

2017

      3         $            30.46         $                 88       0.37 %        0.00 %          15.83  %    

2016

      4         $            26.30         $               112       0.00 %        0.00 %          (11.46) %    

2015

      4         $            29.70         $               115       0.00 %        0.00 %          3.16  %    

2014

      13         $            28.79         $               361       0.00 %        0.00 %          19.66  %    

2013

      3         $            24.06         $                 74       0.76 %        0.00 %          40.54  %    

 INVESCO V.I. GLOBAL REAL ESTATE FUND

                  

(Effective date 04/25/2007)

                  

2017

      44         $            39.36         $            1,713       3.23 %        0.00 %          13.05  %    

2016

      43         $            34.81         $            1,494       1.60 %        0.00 %          2.04  %    

2015

      41         $            34.12         $            1,402       3.73 %        0.00 %          (1.48) %    

2014

      36         $            34.63         $            1,242       1.61 %        0.00 %          14.63  %    

2013

      38         $            30.21         $            1,146       3.94 %        0.00 %          2.72  %    

 INVESCO V.I. INTERNATIONAL GROWTH FUND

                  

(Effective date 05/01/2006)

                  

2017

      191         $            17.93         $            3,432       1.46 %        0.00 %          23.00  %    

2016

      191         $            14.57         $            2,779       1.43 %        0.00 %          (0.45) %    

2015

      196         $            14.64         $            2,873       1.61 %        0.00 %          (2.34) %    

2014

      164         $            14.99         $            2,456       1.50 %        0.00 %          0.33  %    

2013

      200         $            14.94         $            2,994       1.34 %        0.00 %          19.04  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)          Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 INVESCO V.I. MID CAP CORE EQUITY FUND

                  

(Effective date 04/24/2009)

                  

2017

      7         $            25.41         $               180       0.36 %        0.00 %          14.92  %    

2016

      19         $            22.12         $               412       0.07 %        0.00 %          13.43  %    

2015

      17         $            19.50         $               323       0.36 %        0.00 %          (4.03) %    

2014

      17         $            20.32         $               346       0.04 %        0.00 %          4.47  %    

2013

      17         $            19.45         $               322       0.78 %        0.00 %          28.81  %    

 INVESCO V.I. TECHNOLOGY FUND

                  

2017

      7         $            24.73         $               169       0.00 %        0.00 %          35.13  %    

2016

      9         $            18.30         $               171       0.00 %        0.00 %          (0.75) %    

2015

      9         $            18.44         $               171       0.00 %        0.00 %          6.81  %    

2014

      28         $            17.26         $               485       0.00 %        0.00 %          11.07  %    

2013

      4         $            15.54         $                 66       0.00 %        0.00 %          25.12  %    

 JANUS HENDERSON VIT BALANCED PORTFOLIO

                  

2017

      75         $            30.72         $            2,294       1.69 %        0.00 %          18.43  %    

2016

      46         $            25.94         $            1,183       2.26 %        0.00 %          4.61  %    

2015

      37         $            24.80         $               910       1.67 %        0.00 %          0.62  %    

2014

      48         $            24.64         $            1,177       1.69 %        0.00 %          8.50  %    

2013

      45         $            22.71         $            1,030       2.30 %        0.00 %          20.16  %    

 JANUS HENDERSON VIT FLEXIBLE BOND PORTFOLIO

                  

2017

      60         $            26.60         $            1,597       3.13 %        0.00 %          3.62  %    

2016

      77         $            25.68         $            1,989       2.55 %        0.00 %          2.47  %    

2015

      189         $            25.06         $            4,725       2.16 %        0.00 %          0.22  %    

2014

      233         $            25.00         $            5,830       3.61 %        0.00 %          4.91  %    

2013

      209         $            23.83         $            4,989       4.17 %        0.00 %          (0.13) %    

 JANUS HENDERSON VIT FORTY PORTFOLIO

                  

2017

      39         $            44.64         $            1,732       0.00 %        0.00 %          30.31  %    

2016

      94         $            34.26         $            3,231       0.00 %        0.00 %          2.20  %    

2015

      55         $            33.52         $            1,855       0.68 %        0.00 %          12.22  %    

2014

      27         $            29.87         $               801       0.17 %        0.00 %          8.74  %    

2013

      30         $            27.47         $               814       0.65 %        0.00 %          31.18  %    

 JANUS HENDERSON VIT GLOBAL RESEARCH PORTFOLIO

                  

2017

      58         $            13.88         $               800       0.85 %        0.00 %          27.03  %    

2016

      56         $            10.93         $               615       1.10 %        0.00 %          2.06  %    

2015

      51         $            10.71         $               550       0.50 %        0.00 %          (2.29) %  

2014

      75         $            10.96         $               826       1.21 %        0.00 %          7.45  %    

2013

      31         $            10.20         $               314       1.07 %        0.00 %          28.46  %  

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 JANUS HENDERSON VIT GLOBAL TECHNOLOGY PORTFOLIO

                 

(Effective date 05/05/2008)

                 

2017

      8        $            41.59         $            334       0.47 %        0.00 %          45.09  %    

2016

      4        $            28.67         $            114       0.19 %        0.00 %          14.21  %    

2015

      3        $            25.10         $              73       0.80 %        0.00 %          4.85  %    

2014

      3        $            23.93         $              71       0.00 %        0.00 %          9.57  %    

2013

      3        $            21.84         $              59       0.00 %        0.00 %          35.82  %    

 JANUS HENDERSON VIT OVERSEAS PORTFOLIO

                 

(Effective date 05/01/2006)

                 

2017

      2        $            29.07         $              59       1.64 %        0.00 %          31.12  %    

2016

      3        $            22.17         $              56       4.48 %        0.00 %          (6.45) %    

2015

      3        $            23.70         $              76       0.42 %        0.00 %          (8.59) %    

2014

      7        $            25.93         $            188       5.82 %        0.00 %          (11.86) %    

2013

      7        $            29.42         $            209       2.70 %        0.00 %          14.56  %    

 LORD ABBETT SERIES DEVELOPING GROWTH PORTFOLIO

                 

(Effective date 05/01/2015)

                 

2017

      2        $            11.10         $              27       0.00 %        0.00 %          29.92  %    

2016

      2        $              8.54         $              21       0.00 %        0.00 %          (2.61) %    

 MFS VIT TOTAL RETURN BOND SERIES

                 

(Effective date 04/28/2017)

                 

2017

      85        $            10.24         $            866       3.32 %        0.00 %          2.42  %    

 MFS VIT VALUE SERIES

                 

(Effective date 05/01/2015)

                 

2017

      26        $            13.07         $            337       2.02 %        0.00 %          17.66  %    

2016

      15        $            11.11         $            170       3.25 %        0.00 %          14.08  %    

 NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO

                 

2017

      5        $            30.68         $            138       0.31 %        0.00 %          25.41  %    

2016

      6        $            24.47         $            149       0.55 %        0.00 %          8.73  %    

2015

      7        $            22.50         $            153       0.73 %        0.00 %          (4.97) %    

2014

      5        $            23.68         $            128       0.46 %        0.00 %          9.02  %    

2013

      5        $            21.72         $            105       0.55 %        0.00 %          38.87  %    

 NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO

                 

2017

      0    *      $            28.19         $              12       0.56 %        0.00 %          13.36  %    

2016

      1        $            24.86         $              14       0.70 %        0.00 %          27.37  %    

2015

      1        $            19.51         $              17       0.70 %        0.00 %          (11.80) %    

2014

      1        $            22.11         $              26       0.71 %        0.00 %          9.89  %    

2013

      1        $            20.12         $              29       0.30 %        0.00 %          31.07  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 NEUBERGER BERMAN AMT MID CAP GROWTH PORTFOLIO CLASS I

                 

2017

      6        $            24.09         $               139       0.00 %        0.00 %          25.29  %    

2016

      12        $            19.23         $               237       0.00 %        0.00 %          4.39  %    

2015

      13        $            18.42         $               244       0.00 %        0.00 %          1.28  %    

2014

      12        $            18.18         $               210       0.00 %        0.00 %          7.57  %    

2013

      17        $            16.90         $               283       0.00 %        0.00 %          32.55  %    

 NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO

                 

(Effective date 05/01/2006)

                 

2017

      56        $            26.10         $            1,462       1.18 %        0.00 %          16.74  %    

2016

      32        $            22.36         $               712       0.67 %        0.00 %          16.17  %    

2015

      36        $            19.24         $               688       0.75 %        0.00 %          (8.34) %    

2014

      40        $            21.00         $               837       1.12 %        0.00 %          13.88  %    

2013

      38        $            18.44         $               698       1.22 %        0.00 %          37.00  %    

 NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO

                 

(Effective date 08/20/2001)

                 

2017

      2        $            33.31         $                 77       0.32 %        0.00 %          18.43  %    

2016

      0    *      $            28.09         $                   7       0.00 %        0.00 %          9.86  %    

 OPPENHEIMER MAIN STREET SMALL CAP FUND/VA

                 

(Effective date 05/01/2015)

                 

2017

      53        $            12.60         $               664       1.25 %        0.00 %          14.16  %    

2016

      23        $            11.04         $               253       0.01 %        0.00 %          18.05  %    

2015

      0    *      $              9.36         $                   2       0.00 %        0.00 %          (6.46) %    

 PIMCO VIT HIGH YIELD PORTFOLIO

                 

2017

      11        $            24.07         $               254       4.87 %        0.00 %          6.60  %    

2016

      21        $            22.58         $               483       5.22 %        0.00 %          12.44  %    

2015

      24        $            20.08         $               476       5.27 %        0.00 %          (1.64) %    

2014

      21        $            20.42         $               432       5.29 %        0.00 %          3.34  %    

2013

      23        $            19.76         $               450       5.45 %        0.00 %          5.72  %    

 PIMCO VIT LOW DURATION PORTFOLIO

                 

2017

      380        $            15.12         $            5,744       1.33 %        0.00 %          1.35  %    

2016

      326        $            14.92         $            4,862       1.44 %        0.00 %          1.41  %    

2015

      163        $            14.71         $            2,400       3.35 %        0.00 %          0.31  %    

2014

      186        $            14.67         $            2,735       1.12 %        0.00 %          0.89  %    

2013

      295        $            14.54         $            4,290       1.46 %        0.00 %          (0.14) %    

 PIMCO VIT REAL RETURN PORTFOLIO

                 

2017

      65        $            17.65         $            1,141       2.57 %        0.00 %          3.66  %    

2016

      36        $            17.02         $               619       2.27 %        0.00 %          5.19  %    

2015

      69        $            16.18         $            1,115       4.66 %        0.00 %          (2.71) %    

2014

      53        $            16.63         $               880       1.44 %        0.00 %          3.10  %    

2013

      74        $            16.13         $            1,196       1.70 %        0.00 %          (9.23) %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 PIMCO VIT TOTAL RETURN PORTFOLIO

                 

2017

      187        $            19.65         $            3,673       2.02 %        0.00 %          4.91  %    

2016

      185        $            18.73         $            3,456       2.14 %        0.00 %          2.68  %    

2015

      352        $            18.24         $            6,428       4.80 %        0.00 %          0.45  %    

2014

      461        $            18.16         $            8,372       2.21 %        0.00 %          4.31  %    

2013

      484        $            17.41         $            8,425       2.21 %        0.00 %          (1.97) %    

 PIONEER REAL ESTATE SHARES VCT PORTFOLIO

                 

(Effective date 04/29/2016)

                 

2017

      3        $            10.72         $                 35       2.71 %        0.00 %          3.50  %    

2016

      0    *      $            10.38         $                   2       1.07 %        0.00 %          3.61  %    

 PUTNAM VT EQUITY INCOME FUND

                 

(Effective date 04/24/2009)

                 

2017

      13        $            35.84         $               453       1.74 %        0.00 %          19.06  %    

2016

      11        $            30.11         $               333       1.91 %        0.00 %          13.96  %    

2015

      10        $            26.42         $               276       1.69 %        0.00 %          (2.79) %    

2014

      9        $            27.18         $               235       1.80 %        0.00 %          12.97  %    

2013

      9        $            24.06         $               225       2.02 %        0.00 %          32.71  %    

 PUTNAM VT HIGH YIELD FUND

                 

(Effective date 04/24/2009)

                 

2017

      36        $            23.36         $               831       5.72 %        0.00 %          7.22  %    

2016

      29        $            21.78         $               623       6.12 %        0.00 %          15.66  %    

2015

      28        $            18.83         $               520       2.01 %        0.00 %          (5.14) %    

2014

      5        $            19.86         $                 93       6.17 %        0.00 %          1.95  %    

2013

      6        $            19.48         $               118       7.01 %        0.00 %          8.10  %    

 PUTNAM VT INCOME FUND

                 

(Effective date 10/31/2014)

                 

2017

      2        $            10.61         $                 22       0.00 %        0.00 %          5.59  %    

 PUTNAM VT INTERNATIONAL GROWTH FUND

                 

(Effective date 04/24/2009)

                 

2017

      0    *      $            24.24         $                 11       0.83 %        0.00 %          35.37  %    

2016

      0    *      $            17.91         $                   7       0.00 %        0.00 %          (6.47) %    

 PUTNAM VT MULTI-CAP VALUE FUND

                 

(Effective date 04/24/2009)

                 

2017

      3        $            35.62         $               115       0.87 %        0.00 %          10.94  %    

2016

      2        $            32.11         $                 73       0.69 %        0.00 %          13.23  %    

2015

      1        $            28.35         $                 34       0.00 %        0.00 %          (4.06) %    

 PUTNAM VT SMALL CAP VALUE FUND

                 

(Effective date 05/01/2015)

                 

2017

      7        $            12.94         $                 93       0.88 %        0.00 %          8.15  %    

 

(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 

  

 INVESTMENT DIVISIONS

     Units (000s)         Unit Fair Value          Net Assets (000s)      

Investment
   Income Ratio   

       Expense Ratio             Total Return      

 ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO

                 

(Effective date 05/01/2006)

                 

2017

      0    *      $            14.73         $                2       0.16 %        0.00 %          5.01  %    

2016

      2        $            14.05         $              26       0.39 %        0.00 %          19.37  %    

2015

      4        $            11.77         $              48       0.00 %        0.00 %          (12.61) %    

2014

      13        $            13.47         $            179       0.00 %        0.00 %          (3.85) %    

2013

      16        $            14.01         $            226       0.33 %        0.00 %          20.67  %    

 ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO

                 

(Effective date 05/01/2006)

                 

2017

      55        $            19.83         $         1,094       0.82 %        0.00 %          5.10  %    

2016

      60        $            18.87         $         1,124       1.70 %        0.00 %          20.54  %    

2015

      60        $            15.65         $            946       0.38 %        0.00 %          (11.97) %    

2014

      59        $            17.78         $         1,053       0.00 %        0.00 %          2.89  %    

2013

      60        $            17.28         $         1,042       0.93 %        0.00 %          34.47  %    

 T. ROWE PRICE BLUE CHIP GROWTH PORTFOLIO II

                 

(Effective date 05/01/2015)

                 

2017

      72        $            14.21         $         1,025       0.00 %        0.00 %          35.83  %    

2016

      6        $            10.46         $              67       0.00 %        0.00 %          0.53  %    

 VAN ECK VIP EMERGING MARKETS FUND

                 

(Effective date 05/05/2008)

                 

2017

      1        $            53.15         $              58       0.40 %        0.00 %          51.03  %    

2016

      1        $            35.20         $              37       0.44 %        0.00 %          0.10  %    

2015

      1        $            35.14         $              41       0.51 %        0.00 %          (13.99) %    

2014

      1        $            40.87         $              41       0.44 %        0.00 %          (0.41) %    

2013

      1        $            41.04         $              33       1.18 %        0.00 %          12.04  %    

 VAN ECK VIP GLOBAL HARD ASSETS FUND

                 

(Effective date 05/05/2008)

                 

2017

      16        $            55.98         $            921       0.00 %        0.00 %          (1.70) %    

2016

      13        $            56.95         $            752       0.43 %        0.00 %          43.71  %    

2015

      18        $            39.63         $            719       0.03 %        0.00 %          (33.45) %    

2014

      10        $            59.54         $            623       0.09 %        0.00 %          (19.11) %    

2013

      9        $            73.61         $            641       0.64 %        0.00 %          10.56  %    

(Concluded)

* The Investment Division has units and/or assets that round to less than $1,000 or 1,000 units.

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

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the investment divisions listed in Appendix A of the COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company (the “Series Account”) as of December 31, 2017, the related statements of operations and changes in net assets for the periods indicated in Appendix A, and the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the investment divisions constituting the Series Account as of December 31, 2017, the results of their operations, and the changes in their net assets for each of the periods indicated in Appendix A, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Series Account’s management. Our responsibility is to express an opinion on the Series Account’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Series Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Series Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with mutual fund companies; when replies were not received from mutual fund companies, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Denver, Colorado

April 9, 2018

We have served as the auditor of one or more Great-West investment company separate accounts since 1981.

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

Investment division      

Statement of

assets and

liabilities

 

  

Statement of

operations

  

Statements of changes in

net assets

       
ALGER SMALL CAP GROWTH PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN CENTURY INVESTMENTS VP CAPITAL APPRECIATION FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN CENTURY INVESTMENTS VP INCOME & GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN CENTURY INVESTMENTS VP INFLATION PROTECTION FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period September 7, 2016 to December 31, 2016
       
AMERICAN CENTURY INVESTMENTS VP INTERNATIONAL FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN CENTURY INVESTMENTS VP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN FUNDS IS GLOBAL SMALL CAPITALIZATION FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN FUNDS IS GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN FUNDS IS INTERNATIONAL FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
AMERICAN FUNDS IS NEW WORLD FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
CLEARBRIDGE VARIABLE MID CAP PORTFOLIO   December 31, 2017   For the period March 24, 2017 to December 31, 2017   For the period March 24, 2017 to December 31, 2017
       
CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO   December 31, 2017   For the period January 26, 2017 to December 31, 2017   For the period January 26, 2017 to December 31, 2017
       
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DAVIS FINANCIAL PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DAVIS VALUE PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
DELAWARE VIP SMALL CAP VALUE SERIES   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DEUTSCHE CORE EQUITY VIP   N/A   For the period January 1, 2017 to August 11, 2017   For the period January 1, 2017 to August 11, 2017 and the year ended December 31, 2016
       
DEUTSCHE CROCI® U.S. VIP   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DEUTSCHE GLOBAL SMALL CAP VIP   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DEUTSCHE HIGH INCOME VIP   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DEUTSCHE SMALL CAP INDEX VIP   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DEUTSCHE SMALL MID CAP VALUE VIP   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DREYFUS STOCK INDEX FUND, INC   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
DREYFUS VIF INTERNATIONAL EQUITY PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
FEDERATED HIGH INCOME BOND FUND II   N/A   For the period January 1, 2017 to August 4, 2017   For the period January 1, 2017 to August 4, 2017 and the year ended December 31, 2016
       
FEDERATED KAUFMANN FUND II   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
FIDELITY VIP CONTRAFUND PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
FIDELITY VIP GROWTH PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
FIDELITY VIP INVESTMENT GRADE BOND PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
FIDELITY VIP MID CAP PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GOLDMAN SACHS VIT MID CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period December 6, 2016 to December 31, 2016
       
GREAT-WEST AGGRESSIVE PROFILE FUND   December 31, 2017   For the period July 11, 2017 to December 31, 2017   For the period July 11, 2017 to December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
GREAT-WEST AGGRESSIVE PROFILE I FUND   N/A   For the period January 1, 2017 to July 11, 2017.   For the period January 1, 2017 to July 11, 2017 and the year ended December 31, 2016
       
GREAT-WEST ARIEL MID CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST BOND INDEX FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST CONSERVATIVE PROFILE FUND   December 31, 2017   For the period May 12, 2017 to December 31, 2017   For the period May 12, 2017 to December 31, 2017
       
GREAT-WEST CONSERVATIVE PROFILE I FUND   N/A   For the period January 1, 2017 to July 11, 2017   For the period January 1, 2017 to July 11, 2017 and the year ended December 31, 2016
       
GREAT-WEST CORE BOND FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST GOLDMAN SACHS MID CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period December 23, 2016 to December 31, 2016
       
GREAT-WEST GOVERNMENT MONEY MARKET FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST INTERNATIONAL INDEX FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST LIFETIME 2015 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period April 25, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2015 FUND II   N/A   N/A   For the period January 1, 2016 to April 25, 2016
       
GREAT-WEST LIFETIME 2020 FUND   December 31, 2017   For the period January 30, 2017 to December 31, 2017   For the period January 30, 2017 to December 31, 2017
       
GREAT-WEST LIFETIME 2025 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period April 25, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2025 FUND II   N/A   N/A   For the period January 1, 2016 to April 25, 2016
       
GREAT-WEST LIFETIME 2030 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period December 23, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2035 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period April 25, 2016 to December 31, 2016

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
GREAT-WEST LIFETIME 2035 FUND II   N/A   N/A   For the period January 1, 2016 to April 25, 2016
       
GREAT-WEST LIFETIME 2040 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period July 8, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2045 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period April 25, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2045 FUND II   N/A   N/A   For the period January 1, 2016 to April 25, 2016
       
GREAT-WEST LIFETIME 2050 FUND   December 31, 2017   For the period January 30, 2017 to December 31, 2017   For the period January 30, 2017 to December 31, 2017
       
GREAT-WEST LIFETIME 2055 FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period April 25, 2016 to December 31, 2016
       
GREAT-WEST LIFETIME 2055 FUND II   N/A   N/A   For the period January 1, 2016 to April 25, 2016
       
GREAT-WEST LOOMIS SAYLES BOND FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST LOOMIS SAYLES SMALL CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST MFS INTERNATIONAL VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST MODERATE PROFILE FUND   December 31, 2017   For the period July 11, 2017 to December 31, 2017   For the period July 11, 2017 to December 31, 2017
       
GREAT-WEST MODERATE PROFILE I FUND   N/A   For the period January 1, 2017 to July 31, 2017   For the period January 1, 2017 to July 31, 2017 and the year ended December 31, 2016
       
GREAT-WEST MODERATELY AGGRESSIVE PROFILE FUND   December 31, 2017   For the period July 11, 2017 to December 31, 2017   For the period July 11, 2017 to December 31, 2017
       
GREAT-WEST MODERATELY AGGRESSIVE PROFILE I FUND   N/A   For the period January 1, 2017 to July 11, 2017   For the period January 1, 2017 to July 11, 2017 and the year ended December 31, 2016
       
GREAT-WEST MODERATELY CONSERVATIVE PROFILE FUND   December 31, 2017   For the period July 11, 2017 to December 31, 2017   For the period July 11, 2017 to December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
GREAT-WEST MODERATELY CONSERVATIVE PROFILE I FUND   N/A   For the period January 1, 2017 to July 11, 2017   For the period January 1, 2017 to July 11, 2017 and the year ended December 31, 2016
       
GREAT-WEST MULTI-MANAGER LARGE CAP GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST REAL ESTATE INDEX FUND   December 31, 2017   For the period January 30, 2017 to December 31, 2017   For the period January 30, 2017 to December 31, 2017
       
GREAT-WEST S&P MID CAP 400® INDEX FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST S&P SMALL CAP 600® INDEX FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period March 10, 2016 to December 31, 2016
       
GREAT-WEST SHORT DURATION BOND FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST SMALL CAP GROWTH FUND   N/A   N/A   For the period January 1, 2016 to March 10, 2016
       
GREAT-WEST T. ROWE PRICE EQUITY INCOME FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST T. ROWE PRICE MID CAP GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST TEMPLETON GLOBAL BOND FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
GREAT-WEST U.S. GOVERNMENT SECURITIES FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
INVESCO V.I. CORE EQUITY FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
INVESCO V.I. DIVERSIFIED DIVIDEND FUND   N/A   N/A   For the period January 1, 2017 to January 2, 2017 and the year ended December 31, 2016
       
INVESCO V.I. GLOBAL HEALTH CARE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
INVESCO V.I. GLOBAL REAL ESTATE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
INVESCO V.I. INTERNATIONAL GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
INVESCO V.I. MID CAP CORE EQUITY FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
INVESCO V.I. TECHNOLOGY FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT BALANCED PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT FLEXIBLE BOND PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT FORTY PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT GLOBAL RESEARCH PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT GLOBAL TECHNOLOGY PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JANUS HENDERSON VIT OVERSEAS PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
JPMORGAN INSURANCE TRUST INTREPID MID CAP PORTFOLIO   N/A   For the period January 1, 2017 to April 18, 2017   For the period January 1, 2017 to April 18, 2017 and the period December 23, 2016 to December 31, 2016
       
LORD ABBETT SERIES DEVELOPING GROWTH PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period September 7, 2016 to December 31, 2016
       
MFS VIT TOTAL RETURN BOND SERIES   December 31, 2017   For the period August 4, 2017 to December 31, 2017   For the period August 4, 2017 to December 31, 2017
       
MFS VIT VALUE SERIES   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period March 8, 2016 to December 31, 2016
       
NEUBERGER BERMAN AMT GUARDIAN PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
NEUBERGER BERMAN AMT LARGE CAP VALUE PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
NEUBERGER BERMAN AMT MID CAP GROWTH PORTFOLIO CLASS I   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
NEUBERGER BERMAN AMT MID CAP GROWTH PORTFOLIO CLASS S   N/A   N/A   For the period January 1, 2016 to August 30, 2016
       
NEUBERGER BERMAN AMT MID CAP INTRINSIC VALUE PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
NEUBERGER BERMAN AMT SOCIALLY RESPONSIVE PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period November 8, 2016 to December 31, 2016
       
OPPENHEIMER MAIN STREET SMALL CAP FUND/VA   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PIMCO VIT HIGH YIELD PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PIMCO VIT LOW DURATION PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PIMCO VIT REAL RETURN PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PIMCO VIT TOTAL RETURN PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PIONEER REAL ESTATE SHARES VCT PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period December 23, 2016 to December 31, 2016
       
PUTNAM VT EQUITY INCOME FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PUTNAM VT HIGH YIELD FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PUTNAM VT INCOME FUND   December 31, 2017   For the period July 24, 2017 to December 31, 2017   For the period July 24, 2017 to December 31, 2017
       
PUTNAM VT INTERNATIONAL GROWTH FUND   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period December 6, 2016 to December 31, 2016
       
PUTNAM VT MULTI-CAP VALUE FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
PUTNAM VT SMALL CAP VALUE FUND   December 31, 2017   For the period January 30, 2017 to December 31, 2017   For the period January 30, 2017 to December 31, 2017
       
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017
       
T. ROWE PRICE BLUE CHIP GROWTH PORTFOLIO II   December 31, 2017   For the year ended December 31, 2017   For the year ended December 31, 2017 and the period September 14, 2016 to December 31, 2016
       
VAN ECK VIP EMERGING MARKETS FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017

COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company

Appendix A

 

 

       
VAN ECK VIP GLOBAL HARD ASSETS FUND   December 31, 2017   For the year ended December 31, 2017   For each of the two years in the period ended December 31, 2017

PART C
OTHER INFORMATION
Item 26. Exhibits
(a) Board of Directors Resolution. Resolution authorizing establishment of Registrant is incorporated by reference to initial Registrant’s Registration Statement on Form S-6 filed on January 22, 1999 (File No. 333-70963).
(b) Custodian Agreements. None.
(c) Underwriting Contracts. Copy of underwriting contract between Great-West Life & Annuity Insurance Company (“Great-West”) and GWFS Equities, Inc. (formerly Benefits Corp Equities, Inc.) is incorporated by reference to Registrant’s Post- Effective Amendment No. 9 on Form N-6 filed on April 29, 2003 (File No. 333-70963).
(d) Policies.
  (1) Specimen Policy Form 355-CSO is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963).
  (2) Specimen Term Life Insurance Rider (Form J355rider-CSO for policies issued after January 1, 2009) is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963).
  (3) Specimen Policy Free-Look Endorsement is incorporated by reference to Registrant’s Post- Effective Amendment No. 1 on Form S-6 filed on April 27, 2000 (File No. 333-70963).
  (4) Specimen Policy Return of Expense Charge Endorsement is incorporated by reference to Registrant’s Post-Effective Amendment No. 4 on Form S-6 filed on April 25, 2001 (File No. 333- 70963).
  (5) Change of Insured Rider is incorporated by reference to Registrant’s Post-Effective Amendment No. 10 on Form N-6 filed on April 30, 2004 (File Nos. 333-70963 and 811-09201).
  (6) Specimen Fixed Account Endorsement Form 379 is incorporated by reference to Registrant’s Post- Effective Amendment No. 19 to Registration Statement on Form N-6 as filed on December 17, 2008 (File No. 333-70963).
  (7) Specimen Policy Form J355rev2 is incorporated by reference to Registrant’s Post-Effective Amendment No. 25 to Registration Statement on Form N-6 as filed on April 27, 2012 (File Nos. 333-70963 and 811-09201).
  (8) Specimen Policy Endorsement (Form ICC 12-J801) is incorporated by reference to Registrant’s Post- Effective Amendment No. 26 to Registration Statement filed on Form N-6 as filed on September 27, 2012 (File No. 333-70963).
  (9) Specimen Policy Form J355rev3 is incorporated by reference to Registrant’s Post-Effective Amendment No. 28 to Registration Statement on Form N-6 as filed on February 28, 2014 (File No. 333-70963).
  (10) Specimen Policy Form ICC14-J355X incorporated by reference to Registrant’s Post-Effective Amendment No. 29 to Registration Statement on Form N-6 as filed on December 19, 2014 (File No. 333-70963).
(e) Applications. Specimen Application is incorporated by reference to Registrant’s Pre-Effective Amendment No. 1 on Form S-6 filed on June 23, 1999 (File No. 333-70963).
(f) Depositor’s Certificate of Incorporation and By-Laws.
  (1) Depositor’s Certificate of Incorporation are incorporated by reference to Registrant’s Post-Effective Amendment No. 32 on Form N-6 as filed on April 29, 2015 (File Nos. 333-70963 and 811-09201).
  (2) By-Laws of Great-West are incorporated by reference to Registrant’s Post-Effective Amendment No. 32 on Form N-6 as filed on April 29, 2015 (File Nos. 333-70963 and 811-09201).
(g) Reinsurance Contracts.
C-1

 

  (1) Automatic YRT Reinsurance Agreement Effective October 1, 2008 between Great-West and The Canada Life Assurance Company (redacted), Amendment 1 to the Automatic YRT Reinsurance Agreement Effective October 1, 2008 dated August 1, 2010 (redacted) and Amendment 2 to the Automatic YRT Reinsurance Agreement Effective October 1, 2008 dated August 1, 2010 (redacted) are incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West Life & Annuity Insurance Company of New York(“Great-West of New York”) on Form N-6 on April 26, 2011 (File No. 333-146241).
  (2) Automatic/Facultative YRT Guaranteed Issue and Fully Underwritten Reinsurance Agreement between Great-West and RGA Reinsurance Company effective May 1, 2010 (redacted) is incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333-146241).
  (3) Automatic Yearly Renewable Term Reinsurance Agreement between Great-West and SCOR Global Life U.S. Re Insurance Company effective May 1, 2010 (redacted) is incorporated by reference to Post- Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333-146241).
  (4) Automatic Yearly Renewable Term Reinsurance Agreement between Great-West and Hannover Life Reassurance Company of America effective May 1, 2010 (redacted) is incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL- 4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333- 146241).
(h) Participation Agreements.
  (1) Participation Agreement among Great-West, AIM Variable Insurance Funds, Inc., and AIM Distributors, Inc., dated March 30, 2005, is incorporated by reference to Registrant’s Post- Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963).
  (2) First Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc. and Great-West dated April 30, 2004, is incorporated by reference to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241).
  (3) Second Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc. and Great-West dated April 30, 2004, is incorporated by reference to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241).
  (4) Third Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc. and Great-West dated April 30, 2004, is incorporated by reference to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241).
  (5) Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated September 14, 1999, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (6) First Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc. and Fund Distributors, dated April 20, 2000, is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (7) Second Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc. and Fund Distributors, dated May 1, 2002, is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (8) Third Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated April 26, 2005, is incorporated by reference to Registrant’s Post-Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963).
C-2

 

  (9) Fourth Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated September 17, 2007 is incorporated by reference to the Initial Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on September 21, 2007 (File No. 333-146241).
  (10) Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), American Funds Insurance Series and Capital Research and Management Company dated January 28, 2008 is incorporated by reference to Registrant’s Post-Effective No. 16 on Form N-6 filed on April 21, 2008 (File No. 333-70963).
  (11) Fund Participation Agreement among Great-West, Davis Variable Account Fund, Inc., Davis Selected Advisers, L.P. and Davis Distributors, LLC, dated December 16, 2004, is incorporated by reference to Registrant’s Post-Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963).
  (12) First Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Davis Variable Account Fund, Inc., Davis Selected Advisers, L.P., and Davis Distributors, LLC, dated July 2, 2007 is incorporated by reference to the Initial Registration Statement filed by COLI VUL-4 Series Account of First Great-West on Form N-6 filed on September 21, 2007 (File No. 333-146241).
  (13) Fund Participation Agreement between Great-West and Dreyfus Stock Index Fund Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.), dated December 31, 1998, is incorporated by reference to Registrant’s Post- Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (14) Amendment to Fund Participation Agreement between Great-West and Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.), dated March 15, 1999, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (15) Amendment to Fund Participation Agreement among Great-West, Dreyfus Growth and Value Funds, Inc., Dreyfus Life & Annuity Index Fund, Inc., and Dreyfus Variable Investment Fund, dated January 1, 2002, is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (16) Second Amendment to Fund Participation Agreement among Great-West, Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.) and Dreyfus Variable Investment Fund is incorporated by reference to Registrant’s Post-Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963).
  (17) Third Amendment to Fund Participation Agreement among Great-West, Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.) and Dreyfus Variable Investment Fund, dated December 1, 2004, is incorporated by reference to Registrant’s Post- Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (18) Fourth Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great- West of New York), Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.) and Dreyfus Variable Investment Fund, dated July 31, 2007 is incorporated by reference to Initial Registration Statement filed by COLI VUL-4 Series Account of First Great-West on Form N-6 filed on September 21, 2007 (File No. 333-146241).
  (19) Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated February 1, 1994, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (20) First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated November 1, 2000, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
C-3

 

  (21) Second Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated May 1, 2001, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333- 70963).
  (22) Participation Agreement among Great-West, Variable Insurance Products Fund II and Fidelity Distributors Corporation, dated May 1, 1999, is incorporated by reference to Registrant’s Post- Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (23) First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund II and Fidelity Distributors Corporation, dated November 1, 2000, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (24) Participation Agreement among Great-West, Variable Insurance Products Fund III and Fidelity Distributors Corporation, dated November 1, 2000, is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (25) First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund III and Fidelity Distributors Corporation, dated May 1, 2001, is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (26) Amended and Restated Fund Participation Agreement among Great-West, Variable Insurance Products Funds, and Fidelity Distributors Corporation dated October 26, 2006 is incorporated by reference to Registrant’s Post-Effective Amendment No. 14 to the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963).
  (27) Amendment to Fund Participation Agreement among Great-West, Variable Insurance Products Funds, and Fidelity Distributors Corporation dated May 16, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333).
  (28) Second Amendment to Amended and Restated Participation Agreement among Great-West, Variable Insurance Products I, Variable Insurance Products II, Variable Insurance Products III, Variable Insurance Products IV, Variable Insurance Products V and Fidelity Distributors Corporation dated August 29, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333).
  (29) Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated June 1, 1998, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (30) Letter Agreement Supplement to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated April 27, 1998, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333- 70963).
  (31) Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated December 1, 1998, is incorporated by reference to Registrant’s Post- Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (32) Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated October 4, 1999, is incorporated by reference to Registrant’s Post- Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (33) Third Amendment to Fund Participation Agreement between Great-West, Janus Aspen Series and Janus Capital Corporation, dated September 14, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great- West on Form N-6 filed on November 1, 2007 (File No. 333-145333).
C-4

 

  (34) Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series, and Janus Capital Corporation dated January 31, 2007 is incorporated by reference to Registrant’s Post- Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963).
  (35) Agreement between Great-West and Maxim Series Fund, Inc. (now known as Great-West Funds, Inc.) is incorporated by reference to Registrant’s Post-Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963).
  (36) Amendment to Agreement between Great-West, First Great-West (now known as Great-West of New York), and Maxim Series Fund, Inc. (now known as Great-West Funds, Inc.) dated November 1, 2007, is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333).
  (37) Fund Participation Agreement among Great-West, Neuberger Berman Advisers Management Trust, Advisers Managers Trust, and Neuberger Berman Management Incorporated, dated January 1, 1999, is incorporated by reference to Registrant’s Post-Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963).
  (38) Amendment to Fund Participation Agreement among Great-West, Neuberger Berman Advisers Management Trust, Advisers Managers Trust, and Neuberger Berman Management Incorporated, dated October 24, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241).
  (39) Fund Participation Agreement among Great-West, PIMCO Variable Insurance Trust, Pacific Investment Management Company LLC and PIMCO Advisors Distributors LLC, dated March 1, 2004 is incorporated by reference to Registrant’s Post-Effective Amendment No. 10 on Form N-6 filed on May 3, 2004 (File No. 333-70963).
  (40) First Amendment to Participation Agreement among Great-West, PIMCO Variable Trust, Pacific Investment Management Company, LLC, Allianz Global Investors Distributors, LLC and First- Great-West dated August 31, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333).
  (41) Fund Participation Agreement among Great-West, Scudder Variable Series I, Scudder Variable Series II, Scudder Investment VIT Funds, Deutsche Investment Management Americas, Inc., Deutsche Asset Management, Inc. and Scudder Distributors, dated March 31, 2005, is incorporated by reference to Registrant’s Post-Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963).
  (42) First Amendment to Fund Participation Agreement among Great-West, DWS Variable Series I (formerly Scudder Variable Series I), DWS Variable Series II (formerly Scudder Variable Series II), DWS Investments VIT Funds (formerly Scudder Investments VIT Funds), Deutsche Investment Management Americas Inc., DWS Scudder Distributors, Inc. (formerly Scudder Distributors, Inc.) and First Great-West (now known as Great-West of New York) dated April 11, 2007 is incorporated by reference to the Initial Registration Statement of COLI VUL-4 Series Account of Great-West of New York filed on September 21, 2007 (File No. 333-146241).
  (43) Second Amendment to Fund Participation Agreement among Great-West, DWS Variable Series I (formerly Scudder Variable Series I), DWS Variable Series II (formerly Scudder Variable Series II), DWS Investments VIT Funds (formerly Scudder Investments VIT Funds), Deutsche Investment Management Americas Inc., DWS Scudder Distributors, Inc. (formerly Scudder Distributors, Inc.) and First Great-West (now known as Great-West of New York) dated July 1, 2007 is incorporated by reference to the Initial Registration Statement of COLI VUL-4 Series Account of Great-West of New York filed on September 21, 2007 (File No. 333-146241).
C-5

 

  (44) Fund Participation Agreement among Great-West, Royce Capital Fund, and Royce & Associates, LLC dated September 30, 2005 is incorporated by reference to Registrant’s Post-Effective Amendment No. 14 to the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963).
  (45) Participation Agreement among Van Eck Worldwide Insurance Trust, Van Eck Securities Corporation, Van Eck Associates Corporation, Great-West and First Great-West dated October 11, 2007 is incorporated by reference to Registrant’s Post-Effective Amendment No. 16 on Form N-6, as filed on April 21, 2008 (File No. 333-70963).
  (46) Participation Agreement among Putnam Variable Trust, Putnam Management Limited Partnership, Great-West and First Great-West (now known as Great-West of New York) dated April 30, 2008 is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963).
  (47) Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Columbia Funds Variable Insurance Trust, Columbia Management Advisors, LLC and Columbia Management Distributors, Inc. dated April 30, 2009 is incorporated by reference to Registrant’s Post-Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333- 70963).
  (48) Amendment to Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Royce Capital Fund, and Royce and Associates, LLC dated May 1, 2009 is incorporated by reference to Registrant’s Post-Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333-70963).
  (49) Second Amendment to the Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), The Alger American Fund, Fred Alger Management, Inc., and Fred Alger & Company, Inc. dated November 2, 2009 is incorporated by reference to Registrant’s Post-Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333- 70963).
  (50) Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Federated Insurance Series and Federated Securities Corp. dated March 3, 2012 is incorporated by reference to Registrant’s Post-Effective Amendment No. 25 to Registration Statement on Form N-6 as filed on April 27, 2012 (File No. 333-70963).
  (51) First Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), GWFS Equities, Inc., Federated Insurance Series and Federated Securities Corp. dated March 3, 2012 is incorporated by reference to Registrant’s Post- Effective Amendment No. 25 to Registration Statement on Form N-6 as filed on April 27, 2012 (File Nos. 333-70963 and 811-09201).
  (52) Participation Agreement among Great-West, Great-West of New York, Goldman Sachs Variable Insurance Trust, and Goldman, Sachs & Co. dated April 25, 2013 is incorporated by reference to Registrant’s Post-Effective Amendment No. 27 to Registration Statement on Form N-6 as filed on April 26, 2013 (File No. 333-70963).
  (53) Participation Agreement with Delaware Group Premium Fund (now known as Delaware VIP Trust) is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, filed by Variable Annuity-1 Series Account of Great-West on April 24, 2001 (File No. 333-52956); Amendments to Participation Agreement with Delaware VIP Trust are incorporated by reference to Post-Effective Amendment No. 10 to Variable Annuity-1 Series Account of Great-West’s Registration Statement on Form N-4, filed May 29, 2003 (File No. 333- 52956); Post-Effective Amendment No. 16 on Form N-4 filed on April 29, 2005 (File No. 333- 52956); and Pre-Effective Amendment No. 1 to the Registration Statement filed by Variable Annuity-2 Series Account on Form N-4, filed December 30, 2011 (File No. 333-176926).
  (54) Amendment to Fund Participation Agreement between Great-West Life & Annuity Insurance Company, Delaware VIP Trust, Delaware Management Company and Delaware Distributors, L.P. dated May 7, 2014 is incorporated by reference to Registrant’s Post-Effective Amendment No. 30 to Registration Statement on Form N-6 as filed on October 22, 2014 (File No. 333-70963).
C-6

 

(i) Administrative Contracts. None.
(j) Other Material Contracts. Form of Rule 22c-2 Shareholder Information Agreement is incorporated by reference to Post Effective Amendment No. 14 to the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963).
(k) Legal Opinion. An opinion and consent of counsel regarding the legality of the securities being registered is incorporated by reference to Registrant’s Pre-Effective Amendment No. 1 to Form S-6 filed on June 23, 1999 (File No. 333-70963).
(l) Actuarial Opinion. None.
(m) Calculation of Hypothetical Illustration Value is incorporated by reference to Registrant’s Post Effective Amendment No. 9 to Form N-6 filed on April 29, 2003 (File No. 333-70963).
(n) Other Opinions.
  (1) Legal Consent of Carlton Fields Jorden Burt, P.A. is filed herewith.
  (2) Written consent of Deloitte & Touche LLP is filed herewith.
(o) Omitted Financial Statements. None
(p) Initial Capital Agreements. None.
(q) Redeemability Exemption. None.
(r) Powers of Attorney for Directors Bernbach, Coutu, P. Desmarais, Jr., Doer, Fleming, Généreux, Louvel, Mahon, Nickerson, Orr, Royer, Ryan, Jr., Selitto, Tretiak, and Walsh are filed herewith.
Item 27. Directors and Officers of the Depositor
Name Principal Business Address Positions and Offices with Depositor
R.J. Orr (4) Chairman of the Board
R.L. Reynolds (2) Director, President, and Chief Executive Officer
J.L. Bernbach 32 East 57th Street, 10th Floor
New York, NY 10022 		Director
M.R. Coutu Brookfield Asset Management Inc.
335 8th Avenue SW, Suite 1700
Calgary, AB T2P 1C9 		Director
A.R. Desmarais (4) Director
P.G. Desmarais, Jr. (4) Director
G.A. Doer (1) Director
G.J. Fleming (2) Director
C. Généreux (4) Director
A. Louvel 930 Fifth Avenue, Apt. 17D
New York, NY 10021 		Director
P.A. Mahon (1) Director
J.E.A. Nickerson H.B. Nickerson & Sons Limited
P.O. Box 130
North Sydney, Nova Scotia, Canada B2A
3M2 		Director
R. Royer (4) Director
T.T. Ryan, Jr. JP Morgan Chase
270 Park Avenue, Floor 47
New York, NY 10017 		Director
J.J. Selitto 437 West Chestnut Hill Avenue
Philadelphia, PA 19118 		Director
G.D. Tretiak (4) Director
C-7

 

Name Principal Business Address Positions and Offices with Depositor
B.E. Walsh Saguenay Capital, LLC
The Centre at Purchase
Two Manhattanville Road, Suite 403
Purchase, NY 10577 		Director
E.F. Murphy, III (2) President, Empower Retirement
R.K. Shaw (2) President, Individual Markets
S.C. Sipple (2) President, Great-West Investments
A.S. Bolotin (2) Executive Vice President & Chief Financial Officer
E.P. Friesen (2) Chief Investment Officer, General Account
J.W. Knight (3) Senior Vice President & Chief Technology Officer
C.M. Moritz (2) Senior Vice President and Chief Financial Officer, Empower Retirement
S.M. Sanchez (2) Chief Human Resources Officer
K.I. Schindler (3) Chief Compliance Officer
R.G. Schultz (3) General Counsel, Chief Legal Officer, and Secretary
R.H. Linton, Jr. (2) Executive Vice President, Empower Retirement Operations
R.G. Capone (2) Senior Vice President, GWI Sales
J.E. Brown (2) Senior Vice President, Separate Accounts
J.M. Gearin (2) Senior Vice President, Empower Retirement Operations
S.E. Jenks (2) Senior Vice President, Marketing
R.J. Laeyendecker (2) Senior Vice President, Executive Benefits Markets
W.J. McDermott (2) Senior Vice President, Large, Mega, NFP Market
D.G. McLeod (2) Senior Vice President, Product Management
D.A. Morrison (2) Senior Vice President, Government Markets
B.J. Schwartz (2) Senior Vice President, Commercial Mortgage Investments
C.G. Step (2) Senior Vice President, Empower Retirement Products
C. E. Waddell (2) Senior Vice President, Retirement Solutions
(1)    100 Osborne Street North, Winnipeg, Manitoba, Canada R3C 3A5.
(2)    8515 East Orchard Road, Greenwood Village, Colorado 80111.
(3)    8525 East Orchard Road, Greenwood Village, Colorado 80111.
(4)    Power Financial Corporation, 751 Victoria Square, Montreal, Quebec, Canada H2Y 2J3.
Item 28. Persons Controlled by or Under Common Control with the Depositor or Registrant as of December 31, 2017
The Registrant is a separate account of Great-West Life & Annuity Insurance Company, a stock life insurance company incorporated under the laws of the State of Colorado (“Depositor”). The Depositor is an indirect subsidiary of Power Corporation of Canada. An organizational chart for Power Corporation of Canada is set forth below.
C-8

 

Organizational Chart – December 31, 2017
I. OWNERSHIP OF POWER CORPORATION OF CANADA
The following sets out the ownership, based on votes attached to the outstanding voting shares, of Power Corporation of Canada:
The Desmarais Family Residuary Trust
  99.999% - Pansolo Holding Inc.
        59.19% - Power Corporation of Canada
          The total voting rights of Power Corporation of Canada (PCC) controlled directly and indirectly by the Desmarais Family Residuary Trust are as follows. There are issued and outstanding as of December 31, 2017 415,443,579 Subordinate Voting Shares (SVS) of PCC carrying one vote per share and 48,854,772 Participating Preferred Shares (PPS) carrying 10 votes per share; hence the total voting rights are 903,991,299.
           
          Pansolo Holding Inc. owns directly and indirectly 48,363,392 SVS and 48,668,392 PPS, entitling Pansolo Holding Inc. to an aggregate percentage of voting rights of 535,047,312 or 59.19% of the total voting rights attached to the shares of PCC.
II. OWNERSHIP BY POWER CORPORATION OF CANADA
Power Corporation of Canada has a voting interest in the following entities:
A. Great-West Life & Annuity Insurance Company Group of Companies (U.S. insurance)
   
Power Corporation of Canada
  100.0% - 171263 Canada Inc.
    65.536% - Power Financial Corporation
      67.662% - Great-West Lifeco Inc. (direct and indirect 71.678%)
        100.0% - Great-West Financial (Canada) Inc.
          100.0% - Great-West Financial (Nova Scotia) Co.
            100.0% - Great-West Lifeco U.S. LLC
              100.0% - Great-West Services Singapore I Private Limited
                100.0% - Great-West Services Singapore II Private Limited
                  99.0% - Great West Global Business Services India Private Limited (1% owned by Great-West Services Singapore I Private Limited)
                1.0% - Great West Global Business Services India Private Limited (99% owned by Great-West Services Singapore II Private Limited)
              100.0% - GWL&A Financial Inc.
                60.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. (40% owned by Great-West Life & Annuity Insurance Capital, LP)
                  40.0% - Great-West Life & Annuity Insurance Capital, LLC (60% owned by GWL&A Financial Inc.)
                60.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. II (40% owned by Great-West Life & Annuity Insurance Capital, LP II)
                  40.0% - Great-West Life & Annuity Insurance Capital, LLC II (60% owned by GWL&A Financial Inc.)
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                60.0% - Great-West Life & Annuity Insurance Capital, LLC (40% owned by Great-West Life & Annuity Insurance Capital (Nova Scotia) Co.)
                60.0% - Great-West Life & Annuity Insurance Capital, LLC II (40% owned by Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. II)
                100.0% - Great-West Life & Annuity Insurance Company (Fed ID # 84-0467907 - NAIC # 68322, CO)
                  100.0% - Great-West Life & Annuity Insurance Company of New York (Fed ID # 13-2690792 - NAIC # 79359, NY)
                  100.0% - Advised Assets Group, LLC
                  100.0% - GWFS Equities, Inc.
                  100.0% - Great-West Life & Annuity Insurance Company of South Carolina
                  100.0% - Emjay Corporation
                  100.0% - FASCore, LLC
                  100.0% - Great-West Capital Management, LLC
                  100.0% - Great-West Trust Company, LLC
                  100.0% - Lottery Receivable Company One LLC
                  100.0% - LR Company II, L.L.C.
                  100.0% - Singer Collateral Trust IV
                  100.0% - Singer Collateral Trust V
                  100.0% - Great-West Financial Retirement Plan Services, LLC
                  100.0% - Empower Securities, LLC
B. Putnam Investments Group of Companies (Mutual Funds)
   
Power Corporation of Canada
  100.0% - 171263 Canada Inc.
    65.536% - Power Financial Corporation
      67.662% - Great-West Lifeco Inc.
        100.0% - Great-West Financial (Canada) Inc.
          100.0% - Great-West Financial (Nova Scotia) Co.
            100% - Great-West Lifeco U.S. LLC
              99.0% - Great-West Lifeco U.S. Holdings, L.P. (1% owned by Great-West Lifeco U.S. Holdings, LLC)
              100.0% - Great-West Lifeco U.S. Holdings, LLC
                1% - Great-West Lifeco U.S. Holdings, L.P. (99% owned by Great-West Lifeco U.S. LLC)
              100.00% - Putnam Investments, LLC
                100.0% - Putnam Acquisition Financing, Inc.
                  100.0% - Putnam Acquisition Financing LLC
                    100.0% - Putnam Holdings, LLC
                    100.0% - Putnam U.S. Holdings I, LLC
                      100.0% - Putnam Investment Management, LLC
                      100.0% - Putnam Fiduciary Trust Company
                      100.0% - Putnam Investor Services, Inc.
                      100.0% - Putnam Retail Management GP, Inc.
                          1.0% - Putnam Retail Management Limited Partnership (99% owned by Putnam U.S. Holdings I, LLC))
                      99.0% - Putnam Retail Management Limited Partnership (1% owned by Putnam Retail Management GP, Inc.)
                      100.0% - PanAgora Holdings, Inc.
                        80.00% - PanAgora Asset Management, Inc. (20.00% owned by Nippon Life Insurance Company)
                      100.0% - Putnam Investment Holdings, L.L.C.
C-10

 

                          100.0% - Savings Investments, LLC
                          100.0% - Putnam Capital, LLC
                      100.0% - The Putnam Advisory Company, LLC
                        100.0% - Putnam Advisory Holdings LLC
                          100.0% - Putnam Investments Canada ULC
                        100.0% - Putnam Investments (Ireland) Limited
                        100.0% - Putnam Investments Australia Pty
                        100.0% - Putnam Investments Securities Co., Ltd.
                        100.0% - Putnam International Distributors, Ltd.
                          100.0% - Putnam Investments Argentina S.A.
                        100.0% - Putnam Investments Limited
                      100.0% - Putnam Advisory Holdings II, LLC
C. The Great-West Life Assurance Company Group of Companies (Canadian insurance)
   
Power Corporation of Canada
  100.0% - 171263 Canada Inc.
    65.536% - Power Financial Corporation
      67.662% - Great-West Lifeco Inc.
          100.0% - 2142540 Ontario Inc.
              1.0% - Great-West Lifeco Finance (Delaware) LP (99.0% owned by Great-West Lifeco Inc.)
              40.0% - Great-West Lifeco Finance (Delaware) LLC (60.0% owned by The Great-West Life Assurance Company)
              100.0% - Great-West Lifeco Finance 2017 I, LLC
              100.0% - Great-West Lifeco Finance 2017 II, LLC
          100.0% - 2023308 Ontario Inc.
              1.0% - Great-West Life & Annuity Insurance Capital, LP (99.0% owned by Great-West Lifeco Inc.)
                    40.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. (60.0% owned by GWL&A Financial Inc.)
                          40.0% - Great-West Life & Annuity Insurance Capital, LLC (60.0% owned by GWL&A Financial Inc.)
              1.0% - Great-West Life & Annuity Insurance Capital, LP II (99.0% owned by Great-West Lifeco Inc.)
                    40.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. II (60.0% owned by GWL&A Financial Inc.)
                          40.0% - Great-West Life & Annuity Insurance Capital, LLC II (60.0% owned by GWL&A Financial Inc.)
          100.0% - 2171866 Ontario Inc
            1.0% - Great-West Lifeco Finance (Delaware) LP II (99.0% owned by Great-West Lifeco Inc.)
              100.0% - Great-West Lifeco Finance (Delaware) LLC II
        100.0% - 6109756 Canada Inc.
        100.0% - 6922023 Canada Inc.
        100.0% - 8563993 Canada Inc.
        100.0% - 9855297 Canada Inc.
        100.0% - The Great-West Life Assurance Company (NAIC #80705, MI)
          29.4% - GWL THL Private Equity I Inc. (11.8% owned by The Canada Life Assurance Company, 58.8% owned by The Canada Life Insurance Company of Canada)
            100.0% - GWL THL Private Equity II Inc.
C-11

 

            100.0% - Great-West Investors Holdco Inc.
            100.0% - Great-West Investors LLC
              100.0% - Great-West Investors LP Inc.
                99.0% - Great-West Investors LP (1.0% owned by Great-West Investors GP Inc.)
                  100.0% - T.H. Lee Interests
                100.0% - Great-West Investors GP Inc.
                  1.0% - Great-West Investors LP (99.0% owned by Great-West Investors LP Inc.)
                  100.0% - T.H. Lee Interests
        100.0% - GWL Realty Advisors Inc.
            100.0% - GWL Realty Advisors U.S., Inc.
              100.0% EverWest Property Management, LLC
              100.0% EverWest Real Estate Investors, LLC
            100.0% - RA Real Estate Inc.
              0.1% - RMA Real Estate LP (69.9% owned by The Great-West Life Assurance Company, 30.0% owned by London Life Insurance Company)
                100% - RMA Properties Ltd.
                100% - RMA Properties (Riverside) Ltd.
                100% - S-8025 Holdings Ltd.
        100.0% - Vertica Resident Services Inc.
        100.0% - 2278372 Ontario Inc.
    100.0% - GLC Asset Management Group Ltd.
    100.0% - 200 Graham Ltd.
    100.0% - 801611 Ontario Limited
    100.0% - 1213763 Ontario Inc.
        99.99% - Riverside II Limited Partnership (0.01% owned by 2024071 Ontario Limited)
    70.0% - Kings Cross Shopping Centre Ltd. (30% owned by London Life Insurance Company)
    100.0% - 681348 Alberta Ltd.
    50.0% - 3352200 Canada Inc.
    100.0% - 1420731 Ontario Limited
    60.0% - Great-West Lifeco Finance (Delaware) LLC (40.0% owned by Great-West Lifeco Finance (Delaware) LP)
    100.0% - 1455250 Ontario Limited
    100.0% - CGWLL Inc.
    100.0% - 2020917 Alberta Ltd.
    65.0% - The Walmer Road Limited Partnership (35.0% owned by London Life Insurance Company)
    50.0% - Laurier House Apartments Limited (50.0% owned by London Life Insurance Company)
    50.0% - Marine Promenade Properties Inc. (50.0% owned by London Life Insurance Company)
    100.0% - 2024071 Ontario Limited
        100.0% - 431687 Ontario Limited
          0.01% - Riverside II Limited Partnership (99.99% owned by 1213763 Ontario Inc.)
    100.0% - High Park Bayview Inc.
        0.001% - High Park Bayview Limited Partnership
    75.0% - High Park Bayview Limited Partnership (25.0% owned by London Life Insurance Company)
    5.6% - MAM Holdings Inc. (94.4% owned by The Canada Life Insurance Company of Canada)
        100% - Mountain Asset Management LLC
    100.0% - 647679 B.C. Ltd.
    70.0% - TGS North American Real Estate Investment Trust (30% owned by London Life Insurance Company)
        100.0% - TGS Trust
    70.0% - RMA Realty Holdings Corporation Ltd. (30.0% owned by London Life Insurance Company)
C-12

 

        100.0% - 1995709 Alberta Ltd.
        100.0% - RMA (U.S.) Realty LLC (Delaware) (special shares held by 1995709 Alberta Ltd.
          100.0% - RMA American Realty Corp.
            1% - RMA American Realty Limited Partnership [(99% owned by RMA (U.S.) Realty LLC (Delaware)]
          99.0% - RMA American Realty Limited Partnership (1% owned by RMA American Realty Corp.)
        69.9% - RMA Real Estate LP (30.0% owned by London Life Insurance Company; 0.1% owned by RA Real Estate Inc.)
          100.0% - RMA Properties Ltd.
          100.0% - S-8025 Holdings Ltd.
          100.0% - RMA Properties (Riverside) Ltd.
    70.0% - KS Village (Millstream) Inc. (30.0% owned by London Life Insurance Company)
    70.0% - 0726861 B.C. Ltd. (30.0% owned by London Life Insurance Company)
    70.0% - Trop Beau Developments Limited (30.0% owned by London Life Insurance Company)
    70.0% - Kelowna Central Park Properties Ltd. (30.0% owned by London Life Insurance Company)
    70.0% - Kelowna Central Park Phase II Properties Ltd. (30.0% owned by London Life Insurance Company)
    40.0% - PVS Preferred Vision Services Inc.
    12.5% - Vaudreuil Shopping Centres Limited (75.0% owned by London Life Insurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
    70.0% - Saskatoon West Shopping Centres Limited (30.0% owned by London Life Insurance Company)
    12.5% - 2331777 Ontario Ltd. (75.0% owned by London Life Insurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
    12.5% - 2344701 Ontario Ltd. (75.0% owned by London Life Insurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
    12.5% - 2356720 Ontario Ltd. (75.0% owned by London Life Insurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
    12.5% - 0977221 B.C. Ltd. (75.0% owned by London Life Insurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
    100.0% - 7419521 Manitoba Ltd.
        0.001% - 7420928 Manitoba limited Partnership (24.99% owned each by The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company and The Canada Life Insurance Company of Canada)
          100.0% - 7419539 Manitoba Ltd.
    100.0% - London Insurance Group Inc.
      100.0% - Trivest Insurance Network Limited
      100.0% - London Life Insurance Company (Fed ID # 52-1548741 – NAIC # 83550, MI)
          100.0% - 1542775 Alberta Ltd.
          100.0% - 0813212 B.C. Ltd.
          30.0% - Kings Cross Shopping Centre Ltd. (70% owned by The Great-West Life Assurance Company)
          30.0% - 0726861 B.C. Ltd. (70% owned by The Great-West Life Assurance Company)
          30.0% - TGS North American Real Estate Investment Trust (70% owned by The Great-West Life Assurance Company)
              100.0% - TGS Trust
          30.0% - RMA Realty Holdings Corporation Ltd. (70% owned by The Great-West Life Assurance Company)
              100.0% - 1995709 Alberta Ltd.
              100.0% - RMA (U.S.) Realty LLC (Delaware) (special shares held by 1995709 Alberta Ltd.)
                100.0% - RMA American Realty Corp
                  1.0% - RMA American Realty Limited Partnership [(99% owned by RMA (U.S.) Realty LLC (Delaware)]
                99.0% - RMA American Realty Limited Partnership (1% owned by RMA American Realty Corp.)
          30.0% - RMA Real Estate LP (69.9% owned by The Great-West Life Assurance Company; 0.1% owned by RA Real Estate Inc.)
            100.0% - RMA Properties Ltd.
            100.0% - S-8025 Holdings Ltd.
            100.0% - RMA Properties (Riverside) Ltd.
          100.0% - 1319399 Ontario Inc.
C-13

 

          24.99% - 7420928 Manitoba limited Partnership (24.99% limited partner interest each held by The Great-West Life Assurance Company, The Canada Life Assurance Company and The Canada Life Insurance Company of Canada; 7419521 Manitoba Ltd. holds 0.001% interest)
          50.0% - Laurier House Apartments Limited (50.0% owned by The Great-West Life Assurance Company)
          50.0% - Marine Promenade Properties Inc. (50.0% owned by The Great-West Life Assurance Company)
          30.0% - Kelowna Central Park Properties Ltd. (70.0% owned by The Great-West Life Assurance Company)
          30.0% - Kelowna Central Park Phase II Properties Ltd. (70.0% owned by The Great-West Life Assurance Company)
          30.0% - Trop Beau Developments Limited (70.0% owned by The Great-West Life Assurance Company)
          100.0% - 4298098 Canada Inc.
          100.0% - GWLC Holdings Inc.
            100% - GLC Reinsurance Corporation
          100.0% - 389288 B.C. Ltd.
          100.0% - Quadrus Investment Services Ltd.
          35.0% - The Walmer Road Limited Partnership (65.0% owned by The Great-West Life Assurance Company)
          88.0% - Neighborhood Dental Services Ltd.
          100.0% - Quadrus Distribution Services Ltd.
          100.0% - Toronto College Park Ltd.
          25.0% - High Park Bayview Limited Partnership (75.0% owned by The Great-West Life Assurance Company)
          30.0% - KS Village (Millstream) Inc. (70.0% owned by The Great-West Life Assurance Company)
          100.0% - London Life Financial Corporation
            89.4% - London Reinsurance Group, Inc. (10.6% owned by London Life Insurance Company)
              100.0% - London Life and Casualty Reinsurance Corporation
                100.0% - Trabaja Reinsurance Company Ltd.
                100.0% - London Life and Casualty (Barbados) Corporation
              100.0% - LRG (US), Inc.
                100.0% - London Life International Reinsurance Corporation
                100.0% - London Life Reinsurance Company (Fed ID # 23-2044256 – NAIC # 76694, PA)
          75.0% - Vaudreuil Shopping Centres Limited (12.5% owned by The Great-West Life Assurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
          10.6% - London Reinsurance Group Inc. (89.4% owned by London Life Financial Corporation)
          30.0% - Saskatoon West Shopping Centres Limited (70.0% owned by The Great-West Life Assurance Company)
          75.0% - 2331777 Ontario Ltd. (12.5% owned by The Great-West Life Assurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
          75.0% - 2344701 Ontario Ltd. (12.5% owned by The Great-West Life Assurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
          75.0% - 2356720 Ontario Ltd. (12.5% owned by The Great-West Life Assurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
          75.0% - 0977221 B.C. Ltd. (12.5% owned by The Great-West Life Assurance Company, 12.5% owned by The Canada Life Insurance Company of Canada)
          100.0% - Financial Horizons Group Inc.
            100.0% - Financial Horizons Incorporated
              100.0% - 9099-1696 Quebec Inc.
              100.0% - Continuum Financial Centres Inc.
              100.0% - Excel Private Wealth Inc.
              100.0% - H & H Associates Financial Services Inc.
              100.0% - Odyssey Financial Group Inc./Groupe Odyssee Inc.
              100.0% - Scott Batson Financial & Insurance Services Ltd.
              100.0% - Stonehouse Financial Advisory Services Inc.
              100.0% - Henderson GP ULC
                0.01% - Henderson Structured Settlements LP (99.9% held by Financial Horizons Incorporated)
              99.9% - Henderson Structures Settlements LP (0.01% held by Henderson GP ULC)
C-14

 

    100.0% - Canada Life Financial Corporation
            100.0% - The Canada Life Assurance Company (Fed ID # 38-0397420, NAIC # 80659, MI)
          24.99% - 7420928 Manitoba Limited Partnership (24.99% limited partner interest held by The Great-West Life Assurance Company, London Life Insurance Company and the Canada Life Insurance Company of Canada; 7419521 Manitoba Ltd. holds 0.001% interest)
          100.0% - Canada Life Capital Corporation, Inc.
            100.0% - Canada Life Annuity Reinsurance (Barbados) Corporation
              100.0% - Canada Life Annuity Reinsurance (Barbados) Corporation
              100.0% - Canada Life Group Holdings Limited
              100.0% - Canada Life International Services Limited
              100.0% - Canada Life International Limited
                100.0% - CLI Institutional Limited
              100.0% - The Canada Life Group (U.K.) Limited
                80.0% - Canada Life International Assurance (Ireland) Designated Activity Company (20.0% owned by CL Abbey Limited)
                100.0% - Canada Life Irish Holding Company, Limited
                  100.0% - Canada Life Group Services Limited
                  100.0% - Canada Life Europe Investment Limited
                    100.0% - Canada Life Europe Management Services, Limited
                      21.33% - Canada Life Assurance Europe Limited (78.67% owned by Canada Life Europe Investment Limited)
                    78.67% - Canada Life Assurance Europe Limited (21.33% owned by Canada Life Europe Management Services Limited)
                100.0% - London Life and General Reinsurance dac
                100.0% - Canada Life International Re dac
                  100.0% - Canada Life Reinsurance International Ltd.
                  100.0% - Canada Life Reinsurance Ltd.
                100.0% -CL Abbey Limited
                  20.0% - Canada Life International Assurance (Ireland) Designated Activity Company (80.0% owned by The Canada Life Group (U.K.) Limited)
                100.0% - Irish Life Investment Managers Limited
                  100.0% - Summit Asset Managers Limited
                    7.0% - Irish Association of Investment Managers CLG
                100.0% - Setanta Asset Management Limited
                100.0% - Canada Life Pension Managers & Trustees Limited
                100.0% - Canada Life Asset Management Limited
                100.0% - Canada Life European Real Estate Limited
                  100.0% - Hotel Operations (Walsall) Limited
                  100.0% - Hotel Operations (Cardiff) Limited
                100.0% - Canada Life Trustee Services (U.K.) Limited
                100.0% - CLFIS (U.K.) Limited
                100.0% - Canada Life Limited
                  26.0% - ETC Hobley Drive Management Company Limited
                  100.0% - Synergy Sunrise (Wellington Row) Limited
                  100.0% - Chesterhill Investments Limited
                  76.0% - Radial Park Management Limited
                  100.0% - CL Blue Limited
                  100.0% - Canada Life (U.K.) Limited
C-15

 

                    100.0% - Albany Life Assurance Company Limited
                    100.0% - Canada Life Management (U.K.) Limited
                    100.0% - Canada Life Services (U.K.) Limited
                    100.0% - Canada Life Fund Managers (U.K.) Limited
                    100.0% - Canada Life Group Services (U.K.) Limited
                    100.0% - Canada Life Holdings (U.K.) Limited
                  100.0% - Canada Life Irish Operations Limited
                    100.0% - Canada Life Ireland Holdings Limited.
                  100.0% - Irish Life Group Limited
                    100.0% - Irish Life Health dac
                    100.0% - Irish Progressive Services International Ltd
                    100.0% - Irish Life Group Services Limited
                    100.0% - Irish Life Financial Services Ltd.
                    10.0% - Glohealth Financial Services Limited
                    49.0% - Affinity First Limited (51.0% interest unknown)
                    100.0% - Vestone Ltd.
                          100.0% - Cornmarket Group Financial Services Limited
                          100.0% - Cornmarket Insurance Services Limited
                            25.0% EIS Financial Services Limited (75.0% interest unknown)
                          100.0% - Cornmarket Retail Trading Ltd.
                          100.0% - Penpro Limited
                    100.0% - Irish Life Associate Holdings Unlimited Company
                        100.0% - Irish Life Irish Holdings Unlimited Company
                    100.0% - Irish Life Assurance plc.
                        100.0% - Cathair Ce Ltd.
                        100.0% - Ilona Financial Group, Inc.
                        100.0% - Irish Life Trustee Services Limited
                        100.0% - Office Park De Mont-St-Guibert A S.A.
                        100.0% - Office Park De Mont-St-Guibert B S.A.
                        100.0% - Office Park De Mont-St-Guibert C S.A.
                        100.0% - (2,3&4) Basement Company Limited
                        66.66% - City Gate Park Administration Limited
                        51.0% - SJRQ Riverside IV Management Company Ltd.
                        50.0% - Hollins Clough Management Company Ltd.
                        50.0% - Dakline Company Ltd.
                        20.0% - Choralli Limited
                        14.0% - Baggot Court Management Limited
                        5.5% - Padamul Ltd.
                        18.2143% - Tour Esplanade (Paris) LP
        100.0% - 4073649 Canada, Inc. (1 common share owned by 587443 Ontario, Inc.)
          100.0% - CL Luxembourg Capital Management S.á.r.l.
        100.0% - 8478163 Canada Limited
          100.0% - Canada Life Capital Bermuda Limited
        100.0% - 9983813 Canada Inc.
          100.0% - Canada Life Capital Bermuda III Limited
        100.0% - Canada Life Capital Bermuda II Limited
      100.0% - The Canada Life Insurance Company of Canada
C-16

 

        24.99% - 7420928 Manitoba limited Partnership (24.99% limited partner interest held by The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company; 7419521 Manitoba Ltd. holds 0.001% interest)
        100.0% - 6855572 Manitoba Ltd.
        94.4% - MAM Holdings Inc. (5.6% owned by The Great-West Life Assurance Company)
          100.0% - Mountain Asset Management LLC
        12.5% - 2331777 Ontario Ltd. (75% owned by London Life Insurance Company, 12.5% owned by The Great-West Life Assurance Company)
        12.5% - 2344701 Ontario Ltd. (75% owned by London Life Insurance Company, 12.5% owned by The Great-West Life Assurance Company)
        12.5% - Vaudreuil Shopping Centres Limited (75% owned by London Life Insurance Company, 12.5% owned by The Great-West Life Assurance Company)
        12.5% - 2356720 Ontario Ltd. (75% owned by London Life Insurance Company, 12.5% owned by The Great-West Life Assurance Company)
        12.5% - 0977221 B.C. Ltd. (75% owned by London Life Insurance Company, 12.5% owned by The Great-West Life Assurance Company)
        58.8% - GWL THL Private Equity I Inc. (11.8% The Canada Life Assurance Company, 29.4% The Great-West Life Assurance Company)
          100.0% - GWL THL Private Equity II Inc.
          100.0% - Great-West Investors Holdco Inc.
            100.0% - Great-West Investors LLC
              100.0% - Great-West Investors LP Inc.
                99.0% - Great-West Investors LP (1.0% owned by Great-West Investors GP Inc.)
                  100.0% - T.H. Lee Interests
                100.0% - Great-West Investors GP Inc.
                  1.0% - Great-West Investors LP (99.0% Great-West Investors LP Inc.)
                      100.0% - T.H. Lee Interests
      100.0% - CL Capital Management (Canada), Inc.
      100.0% - 587443 Ontario Inc.
      100.0% - Canada Life Mortgage Services Ltd.
      11.8% - GWL THL Private Equity I Inc. (29.4% owned by The Great-West Life Assurance Company, 58.8% owned by The Canada Life Insurance Company of Canada)
        100.0% - GWL THL Private Equity II Inc.
        100.0% - Great-West Investors Holdco Inc.
            100.0% - Great-West Investors LLC
              100.0% - Great-West Investors LP Inc.
                99.0% - Great-West Investors LP (1.0% owned by Great-West Investors GP Inc.)
                  100% - T.H. Lee Interests
                100.0% - Great-West Investors GP Inc.
                  1.0% - Great-West Investors LP (99.0% Great-West Investors LP Inc.)
                    100.0% - T.H. Lee Interests
      100.0% - Canada Life Capital Trust
D. IGM Financial Inc. Group of Companies (Canadian mutual funds)
   
Power Corporation of Canada
  100.0% - 171263 Canada Inc.
    65.536% - Power Financial Corporation
      61.468% - IGM Financial Inc.
        100.0% - Investors Group Inc.
            100.0% - Investors Group Financial Services Inc.
            100.0% - I.G. International Management Limited
              100.0% - I.G. Investment Management (Hong Kong) Limited
            100.0% - Investors Group Trust Co. Ltd.
C-17

 

              100.0% - 391102 B.C. Ltd.
            100.0% - I.G. Insurance Services Inc.
            100.0% - Investors Syndicate Limited
            100.0% - Investors Group Securities Inc.
            100.0% - 6460675 Manitoba Ltd.
            100.0% - I.G. Investment Management, Ltd.
              100.0% - Investors Group Corporate Class Inc.
              100.0% - Investors Syndicate Property Corp.
              100.0% - 0965311 B.C. Ltd.
              100.0% - 0992480 B.C. Ltd.
              100.0% - 1081605 B.C. Ltd.
              100.0% - I.G. Investment Corp.
        100.0% - Mackenzie Inc.
          100.0% - Mackenzie Financial Corporation
            100.0% - Mackenzie Investments Charitable Foundation
            14.28% - Strategic Charitable Giving Foundation
            100.0% - Mackenzie Cundill Investment Management (Bermuda) Ltd.
            100.0% - Mackenzie Financial Capital Corporation
            100.0% - Multi-Class Investment Corp.
            100.0% - MMLP GP Inc.
            100.0% - Mackenzie Investments Corporation
            100.0% - Mackenzie U.S. Fund Management Inc.
            100.0% - MGELS Fund Management (Canada) Ltd.
            13.9% - China Asset Management Co., Ltd.
        96.94% - Investment Planning Counsel Inc. (and 3.06% owned by Management of IPC)
            100.0% - IPC Investment Corporation
            100.0% - IPC Estate Services Inc.
            100.0% - IPC Securities Corporation
            100.0% - IPC Portfolio Services Inc.
                100.0% - Counsel Portfolio Services Inc.
                  100.0% - Counsel Portfolio Corporation
        18.5% - Portag3 Ventures LP
        48.0% - Springboard LP
          77.4% - WealthSimple Financial Corp.
            29.3% - Springboard II LP
        19.1% - Personal Capital Corporation
E. Pargesa Holding SA Group of Companies (European investments)
   
Power Corporation of Canada
  100.0% - 171263 Canada Inc.
    65.536% - Power Financial Corporation
      100.0% - Power Financial Europe B.V.
        50.0% - Parjointco N.V.
          75.4% - Pargesa Holding SA (55.5% capital)
            100.0% - Pargesa Netherlands B.V.
              100.0% - SFPG
C-18

 

              51.8% (taking into account the treasury shares - Groupe Bruxelles Lambert (50.0% in capital)
                Capital
                10.9% - Pernod Ricard (7.5% in capital)
                16.9% - Umicore
                19.8% - Ontex
                5.7% - adidas
                0.4% - LTI One
                88.9% - FINPAR II
                    0.1% - Groupe Bruxelles Lambert
                    0.1% - Ontex
                1.2% - Sagerpar
                100.0% - Belgian Securities B.V.
                    Capital
                      67.5% - Imerys (53.8% in capital)
                  100.0% - Brussels Securities
                    Capital
                        99.6% - LTI One
                            0.1% - Groupe Bruxelles Lambert
                          100.0% - LTI Two
                            0.1% - Groupe Bruxelles Lambert
                            0.1% - Umicore
                        100.0% - URDAC
                            0.1% - Groupe Bruxelles Lambert
                        100.0% - FINPAR
                            0.1% - Groupe Bruxelles Lambert
                        98.8% - Sagerpar
                            3.0% - Groupe Bruxelles Lambert
                        10.0% - GBL Participations SA
                    100.0% - GBL Energy S.á.r.l.
                        Capital
                        1.8% - adidas
                        6.5% - Burberry
                        1.2% - Total SA (0.6% in capital)
                100.0% - GBL Finance & Treasury
                    7.6% FINPAR II
                90.0% - GBL Participations SA
                100.0% - GBL Verwaltung SA
                    Capital
                        100.0% - GBL Investments Limited
                        100.0% - GBL R
                        67.4% - Serena S.á.r.l
                              Capital
                              16.6% - SGS
                              100.0% - Eliott Capital
                                Capital
                                9.4% - LafargeHolcim
                        100.0% - Sienna Capital S.á.r.l
C-19

 

                              Capital
                              10.9% - Sagard FCPR
                              0.3% - Sagard II A FPCI
                              75.0% - Sagard II B FPCI
                              26.9% - Sagard 3 Millésime 1 FPCI
                              29.6% - Kartesia Credit Opportunities III SCA, SICAV-SIF
                              17.4% - Kartesia Credit Opportunities IV SCS
                              22.2% - Kartesia Management SA
                              50.0% - Ergon Capital Partners SA
                              42.4% - Ergon Capital Partners II SA
                              89.9% - Ergon Capital Partners III SA
                              15.1% - Mérieux Participations SAS
                              37.7% - Mérieux Participations 2 SAS
                              78.4% - PrimeStone Capital Fund ICAV
                              1.6% - PrimeStone Capital Special Limited Partner SCSp
                              9.8% - BDT Capital Partners Fund II (INT),L.P.
                              48.6% - Backed 1 LP
                              9.6% - Backed 1 Founder LP
                              100.0% - Sienna Capital International
                        100.0% - GBL Finance S.á.r.l
                              32.6% - Serena S.á.r.l
                        100.0% - Miles Capital S.á.r.l
                              21.2% - Parques Reunidos
                        100.0% - Oliver Capital S.á.r.l
                              4.3% - GEA
                    3.5% - FINPAR II
F. Square Victoria Communications Group Inc. Group of Companies (Canadian communications)
   
Power Corporation of Canada
  100.0% - Square Victoria Communications Group Inc.
    100.0% - Gesca Ltée
      100.0% - La Presse, ltée
        100.0% - 10206911 Canada Inc.
        100.0% - Nuglif inc.
        100.0% - 10206938 Canada Inc
      100.0% - 9214470 Canada Inc.
    100.0% - Square Victoria Digital Properties inc.
      100.0% - Les Éditions Gesca Ltée
      100.0% - Les Éditions Plus Ltée
      100.0% - 10206920 Canada Inc.
      50.0% - Workopolis
    100.0% - Square Victoria C.P. Holding Inc.
      33.3% - Canadian Press Enterprises Inc.
        100.0% - Pagemasters North America Inc.
C-20

 

G. Power Corporation (International) Limited Group of Companies (Asian investments)
   
Power Corporation of Canada
  100.0% - Power Corporation (International) Limited
    99.9% - Power Pacific Corporation Limited
      0.1% - Power Pacific Equities Limited
    99.9% - Power Pacific Equities Limited
  100.0% - Power Communications Inc.
    0.1% - Power Pacific Corporation Limited
  13.9% - China Asset Management Limited
H. Other PCC Companies
   
Power Corporation of Canada
  100.0% - 152245 Canada Inc.
  100.0% - 3540529 Canada Inc.
  100.0% - Square Victoria Real Estate Inc./ Square Victoria Immobilier Inc.
  100.0% - 3121011 Canada Inc.
  100.0% - 171263 Canada Inc.
  100.0% - Victoria Square Ventures Inc.
      14.88% - Bellus Health Inc.
      25.0% (voting) - 9314-0093 Québec Inc. (formerly Club de Hockey Les Remparts de Québec Inc.)
      100.0% - Power Energy Corporation
          100.0% - Potentia Renewables Inc.
            100.0% - Minnesota Solar, LLC
            75.0% - Paintearth Wind Project LP
            75.0% - Stirling Wind Project LP
            75.0% - Wheatland Wind Project LP
            100.0% - Emerald Solar Energy, SRL
            100.0% - Power Renewable Energy Corporation
              100.0% - Sequoia Energy Inc.
              100.0% - Sequoia Energy US Inc.
            100.0% - Potentia Solar Holdings II Limited Partnership.
              100.0% - Potentia Solar Holdings Limited Partnership.
              100.0% - Schooltop Solar LP
              85.0% - Reliant First Nations LP
              100.0% - PSI Solar Finance 1 LP
              100.0% MOM Solar LP
              100.0% - Potentia Solar 5 LP
              100.0% - Potentia Solar 6 LP
              100.0% - Potentia Solar 9 LP
              100.0% - Potentia Solar 10 LP
              100.0% - Potentia Solar 14 LP
          100.0% - Power Energy Eagle Creek Inc.
            60.0% - Power Energy Eagle Creek LLP
              54.8% - Eagle Creek Renewable Energy, LLC
          55.67% - Lumenpulse Group Inc.
C-21

 

            100.0% - Lumenpulse Finance Corp.
            100.0% - Lumenpulse Lignting Corp.
            100.0% - Fluxwerx Illumination Inc.
            100.0% - Exenia s.r.l.
            100.0% - Lumenpulse UK Limited
              100.0% - Lumenpulse Aplhaled Limited
          43.8% - The Lion Electric Company
  100.0% - Power Communications Inc.
      100.0% - Brazeau River Resources Investments Inc.
  100.0% - PCC Industrial (1993) Corporation
  100.0% - Power Corporation International
  100.0% - 9808655 Canada Inc.
    100.0% - 9958363 Canada Inc.
    100.0% - Sagard Holdings Participation US LP
        25.0% - Sagard Holdings ULC
  100.0% - Sagard Holdings Participation Inc.
    75.0% - Sagard Holdings ULC
        100.0% - Sagard Capital Partners GP, Inc.
        100.0% - Sagard Capital Partners, L.P.
          100.0% - 1069759 B.C. Unlimited Liability Company
              91.6% - IntegraMed America, Inc.
          21.6% - GP Strategies Corp.
        42.58% - Peak Achievement Athletics Inc. (50% voting)
          100.0% - 10094439 Canada Inc.
          100.0% - 10094455 Canada Inc.
            100.0% - Bauer Hockey Ltd.
              100.0% - Bauer Innovations Canada Ltd.
              100.0% - Bauer Hockey AB
              100.0% - Bauer Hockey GmbH
              100.0% - Performance Sports Group Hong Kong Ltd.
              100.0% - Jacmal BV
              100.0% - Bauer CR spol s.r.o.
            100.0% - BCE Acquisitions US, Inc.
              100.0% - Bauer Innovations US, LLC
              100.0% - Easton Diamond Sports, LLC
              100.0% - Bauer Hockey LLC
              100.0% - Cascade Maverik Lacrosse, LLC
              100.0% - Bauer Hockey Retail, LLC
  100.0% - Power Corporation of Canada Inc.
    100.0% - 4190297 Canada Inc.
    100% - Sagard Capital Partners Management Corp.
  100.0% - Sagard S.A.S.
  100.0% - Marquette Communications (1997) Corporation
  100.0% - 4507037 Canada Inc.
  100.0% - 4524781 Canada Inc.
  100.0% - 4524799 Canada Inc.
  100.0% - 4524802 Canada Inc.
C-22

 

I. Other PFC Companies
   
Power Financial Corporation
  100.0% - 4400003 Canada Inc.
  100.0% - 3411893 Canada Inc.
  100.0% - 3439453 Canada Inc.
  100.0% - Power Financial Capital Corporation
  100.0% - 7973594 Canada Inc.
  100.0% - 7973683 Canada Inc.
  100.0% - 7974019 Canada Inc.
  14.0% - Springboard L.P.
    78.9 % - WealthSimple Financial Corp. (77.4% equity)
      100.0% - Wealthsimple Inc.
      100.0% - Canadian ShareOwner Investments Inc.
      100.0% - CSA Computing Inc.
      100.0% - Wealthsimple US, Ltd.
      100.0% - Wealthsimple UK Ltd.
      100.0% - Wealthsimple Technologies Inc.
  29.3% - Springboard II LP
    63.0% - Koho Financial Inc.
  100.0% - PFC Ventures Inc.
    100.0% - Portag3 Ventures GP Inc.
      100.0% - 9194649 Canada Inc.
    62.9% - Portag3 Ventures L.P.
      100.0% - Portag3 International Investments Inc.
      38.0% - Springboard L.P.
      6.37% - Collage Inc.
      6.73% - Dialogue Technologies Inc.
      12.02% - Springboard II LP
      68.06% - Diagram Ventures LP
        19.80% - Collage Inc.
        19.41% - Dialogue Technologies Inc.
    100.0% - Portag3 Ventures Participation ULC
  50.1% - Diagram Ventures GP Inc. (9629262 Canada Inc.)
C-23

 

Item 29. Indemnification
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Provisions exist under the Colorado Business Corporation Act and the Bylaws of Great-West whereby Great-West may indemnify a director, officer or controlling person of Great-West against liabilities arising under the Securities Act of 1933. The following excerpts contain the substance of these provisions:
Colorado Business Corporation Act
Article 109 – INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this article:
(1) “Corporation” includes any domestic or foreign entity that is a predecessor of a corporation by reason of a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.
(2) “Director” means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation’s request as a director, an officer, an agent, an associate, an employee, a fiduciary, a manager, a member, a partner, a promoter, or a trustee of, or to hold any similar position with, another domestic or foreign entity or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the corporation’s request if the director’s duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. “Director” includes, unless the context requires otherwise, the estate or personal representative of a deceased director.
(3) “Expenses” includes counsel fees.
(4) “Liability” means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses.
(5) “Official capacity” means, when used with respect to a director, the office of director in a corporation and, when used with respect to a person other than a director as contemplated in section 7-109-107, the office in a corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the corporation. “Official capacity” does not include service for any other domestic or foreign corporation or other person or employee benefit plan.
(6) “Party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.
(7) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if:
  (a) The person’s conduct was in good faith; and
C-24

 

  (b) The person reasonably believed:
    (I) In the case of conduct in an official capacity with the corporation, that such conduct was in the corporation’s best interests; and
    (II) In all other cases, that such conduct was at least not opposed to the corporation’s best interests; and
  (c) In the case of any criminal proceeding, the person had no reasonable cause to believe the person’s conduct was unlawful.
(2) A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of subparagraph (II) of paragraph (b) of subsection (1) of this section. A director’s conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of paragraph (a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
  (a) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or
  (b) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that the director derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by the person in connection with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
  (a) The director furnishes to the corporation a written affirmation of the director’s good-faith belief that the director has met the standard of conduct described in section 7-109-102;
  (b) The director furnishes to the corporation a written undertaking, executed personally or on the director’s behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and
  (c) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this section shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this section shall be made in the manner specified in section 7-109-106.
C-25

 

Section 7-109-105. Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in the articles of incorporation, a director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the following manner:
  (a) If it determines that the director is entitled to mandatory indemnification under section 7-109-103, the court shall order indemnification, in which case the court shall also order the corporation to pay the director’s reasonable expenses incurred to obtain court-ordered indemnification.
  (b) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in section 7-109-102(1) or was adjudged liable in the circumstances described in section 7-109-102(4), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in section 7-109-102(4) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification.
Section 7-109-106. Determination and Authorization of Indemnification of Directors.
(1) A corporation may not indemnify a director under section 7-109-102 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in section 7-109-102. A corporation shall not advance expenses to a director under section 7-109-104 unless authorized in the specific case after the written affirmation and undertaking required by section 7-109-104(1)(a) and (1)(b) are received and the determination required by section 7-109-104(1)(c) has been made.
(2) The determinations required by subsection (1) of this section shall be made:
  (a) By the board of directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or
  (b) If a quorum cannot be obtained, by a majority vote of a committee of the board of directors designated by the board of directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of subsection (2) of this section, and a committee cannot be established under paragraph (b) of subsection (2) of this section, or, even if a quorum is obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by subsection (1) of this section shall be made:
  (a) By independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in paragraph (a) or (b) of subsection (2) of this section or, if a quorum of the full board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board of directors; or
  (b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees, Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of incorporation:
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  (a) An officer is entitled to mandatory indemnification under section 7-109-103, and is entitled to apply for court-ordered indemnification under section 7-109-105, in each case to the same extent as a director;
  (b) A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director; and
  (c) A corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign entity or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have power to indemnify the person against the same liability under section 7-109-102, 7-109-103, or 7-109-107. Any such insurance may be procured from any insurance company designated by the board of directors, whether such insurance company is formed under the law of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity or any other interest through stock ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision treating a corporation’s indemnification of, or advance of expenses to, directors that is contained in its articles of incorporation or bylaws, in a resolution of its shareholders or board of directors, or in a contract, except an insurance policy, or otherwise, is valid only to the extent the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the articles of incorporation limit indemnification or advance of expenses, indemnification and advance of expenses are valid only to the extent not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation’s power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the corporation, the corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders’ meeting. If the next shareholder action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.
Bylaws of Great-West
Article IV. Indemnification
SECTION 1. In this Article, the following terms shall have the following meanings:
  (a) “expenses” means reasonable expenses incurred in a proceeding, including expenses of investigation and preparation, expenses in connection with an appearance as a witness, and fees and disbursement of counsel, accountants or other experts;
  (b) “liability” means an obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty or fine;
  (c) “party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding;
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  (d) “proceeding” means any threatened, pending or completed action, suit, or proceeding whether civil, criminal, administrative or investigative, and whether formal or informal.
SECTION 2. Subject to applicable law, if any person who is or was a director, officer or employee of the corporation is made a party to a proceeding because the person is or was a director, officer or employee of the corporation, the corporation shall indemnify the person, or the estate or personal representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if, with respect to the matter(s) giving rise to the proceeding:
  (a) the person conducted himself or herself in good faith; and
  (b) the person reasonably believed that his or her conduct was in the corporation’s best interests; and
  (c) in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and
  (d) if the person is or was an employee of the corporation, the person acted in the ordinary course of the person’s employment with the corporation.
SECTION 3. Subject to applicable law, if any person who is or was serving as a director, officer, trustee or employee of another company or entity at the request of the corporation is made a party to a proceeding because the person is or was serving as a director, officer, trustee or employee of the other company or entity, the corporation shall indemnify the person, or the estate or personal representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if:
  (a) the person is or was appointed to serve at the request of the corporation as a director, officer, trustee or employee of the other company or entity in accordance with Indemnification Procedures approved by the Board of Directors of the corporation; and
  (b) with respect to the matter(s) giving rise to the proceeding:
    (i) the person conducted himself or herself in good faith; and
    (ii) the person reasonably believed that his or her conduct was at least not opposed to the corporation’s best interests (in the case of a trustee of one of the corporation’s staff benefits plans, this means that the person’s conduct was for a purpose the person reasonably believed to be in the interests of the plan participants); and
    (iii) in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and
    (iv) if the person is or was an employee of the other company or entity, the person acted in the ordinary course of the person’s employment with the other company or entity.
Item 30. Principal Underwriter
  (a) GWFS Equities, Inc. (“GWFS”) is the distributor of securities of the Registrant. Including the Registrant, GWFS serves as distributor or principal underwriter for Great-West Funds, Inc., an open-end management investment company, Variable Annuity-1 Series Account of Great-West Life & Annuity Insurance Company (“GWL&A”), Variable Annuity-1 Series Account of Great-West Life & Annuity Insurance Company of New York (“GWL&A NY”), Variable Annuity-2 Series Account of GWL&A, Variable Annuity-2 Series Account of GWL&A NY, Variable Annuity-8 Series Account of GWL&A, Variable Annuity-8 Series Account of GWL&ANY, COLI VUL-2 Series Account of GWL&A, COLI VUL-2 Series Account of GWL&A NY, COLI VUL-4 Series Account of GWL&A, FutureFunds Series Account of GWL&A, Maxim Series Account of GWL&A, Prestige Variable Life Account of GWL&A, and Trillium Variable Annuity Account of GWL&A.
  (b) Directors and Officers of GWFS:
    
Name Principal Business Address Positions and Offices with Underwriter
E.F. Murphy, III 8515 East Orchard Road
Greenwood Village, CO 80111 		Chairman, President, and Chief Executive Officer
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Name Principal Business Address Positions and Offices with Underwriter
R.K. Shaw 8515 East Orchard Road
Greenwood Village, CO 80111 		Director and Executive Vice President
S.E. Jenks 8515 East Orchard Road
Greenwood Village, CO 80111 		Director and Executive Vice President
C.E. Waddell 8515 East Orchard Road
Greenwood Village, CO 80111 		Director and Senior Vice President
R.H. Linton, Jr. 8515 East Orchard Road
Greenwood Village, CO 80111 		Executive Vice President
R.J. Laeyendecker 8515 East Orchard Road
Greenwood Village, CO 80111 		Senior Vice President
W.J. McDermott 8515 East Orchard Road
Greenwood Village, CO 80111 		Senior Vice President
D.A. Morrison 8515 East Orchard Road
Greenwood Village, CO 80111 		Senior Vice President
J.M. Smolen 8515 East Orchard Road
Greenwood Village, CO 80111 		Senior Vice President
S.M. Gile 8515 East Orchard Road
Greenwood Village, CO 80111 		Vice President
R.L. Logsdon 8515 East Orchard Road
Greenwood Village, CO 80111 		Vice President, Counsel, and Secretary
R.M. Mattie 8515 East Orchard Road
Greenwood Village, CO 80111 		FIN OP Principal, Vice President and Treasurer
K.I. Schindler 8515 East Orchard Road
Greenwood Village, CO 80111 		Chief Compliance Officer
M.J. Kavanagh 8515 East Orchard Road
Greenwood Village, CO 80111 		Assistant Vice President, Counsel and Associate Chief Compliance Officer
T.L. Luiz 8515 East Orchard Road
Greenwood Village, CO 80111 		Compliance Officer
B.R. Hudson 8515 East Orchard Road
Greenwood Village, CO 80111 		Senior Counsel and Assistant Secretary
    
  (c) Commissions and other compensation received by Principal Underwriter, directly or indirectly, from the Registrant during Registrant’s last fiscal year:
    
Name of Principal
Underwriter 		Net Underwriting
Discounts and
Commissions 		Compensation
on Redemption 		Brokerage
Commissions 		Compensation
GWFS -0- -0- -0- -0-
Item 31. Location of Accounts and Records
All accounts, books, or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder are maintained by the Registrant through the Depositor, 8515 East Orchard Road, Greenwood Village, Colorado 80111.
Item 32. Management Services
Not Applicable.
Item 33. Fee Representation.
The Depositor represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Depositor.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Greenwood Village, and State of Colorado, on this 25th day of April, 2018.
COLI VUL-2 SERIES ACCOUNT
(Registrant)
By: /s/ Robert L. Reynolds
  Robert L. Reynolds
President and Chief Executive Officer of Great-West Life & Annuity Insurance Company
    
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Depositor)
By: /s/ Robert L. Reynolds
  Robert L. Reynolds
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature   Title   Date
/s/ R. Jeffrey Orr   Chairman of the Board   April 25, 2018
R. Jeffrey Orr*  
/s/ Robert L. Reynolds   Director, President and Chief Executive Officer   April 25, 2018
Robert L. Reynolds  
/s/ Andra S. Bolotin   Executive Vice President & Chief Financial Officer   April 25, 2018
Andra S. Bolotin  
/s/ John L. Bernbach   Director   April 25, 2018
John L. Bernbach*  
/s/ Marcel R. Coutu   Director   April 25, 2018
Marcel R. Coutu*        
    Director    
André R. Desmarais        
/s/ Paul G. Desmarais, Jr.   Director   April 25, 2018
Paul G. Desmarais, Jr.*        
/s/ Gary A. Doer   Director   April 25, 2018
Gary A. Doer*        
/s/ Gregory J. Fleming   Director   April 25, 2018
Gregory J. Fleming*        
/s/ Claude Généreux   Director   April 25, 2018
Claude Généreux*        
/s/ Alain Louvel   Director   April 25, 2018
Alain Louvel*        

 

Signature   Title   Date
/s/ Paul A. Mahon   Director   April 25, 2018
Paul A. Mahon*        
/s/ Jerry E.A. Nickerson   Director   April 25, 2018
Jerry E.A. Nickerson*        
/s/ Raymond Royer   Director   April 25, 2018
Raymond Royer*        
/s/ T. Timothy Ryan, Jr.   Director   April 25, 2018
T. Timothy Ryan, Jr.*        
/s/ Jerome J. Selitto   Director   April 25, 2018
Jerome J. Selitto*        
/s/ Gregory D. Tretiak   Director   April 25, 2018
Gregory D. Tretiak*        
/s/ Brian E. Walsh   Director   April 25, 2018
Brian E. Walsh*        
         
*By: /s/ Ryan L. Logsdon   *Attorney-in-fact pursuant to Power of Attorney   April 25, 2018
  Ryan L. Logsdon