Pre-Effective Amendment to Registration Statement for a Separate Account (Unit Investment Trust) — Form N-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-4/A Pre-Effective Amendment to Registration Statement 317± 1.31M
for a Separate Account (Unit Investment Trust)
5: COVER ¶ Comment-Response or Cover Letter to the SEC 1 1K
3: EX-99.(10) Miscellaneous Exhibit 1 6K
2: EX-99.(9) Miscellaneous Exhibit 2± 8K
4: EX-99.(99) Miscellaneous Exhibit 14 21K
‘N-4/A’ — Pre-Effective Amendment to Registration Statement for a Separate Account (Unit Investment Trust)
Document Table of Contents
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 2014
FILE NO. 333-193535
FILE NO. 811-22726
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRE-EFFECTIVE AMENDMENT NO. 2 /X/
POST-EFFECTIVE AMENDMENT NO. / /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 14
FORETHOUGHT LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
(Exact Name of Registrant)
FORETHOUGHT LIFE INSURANCE COMPANY
(Name of Depositor)
300 NORTH MERIDIAN STREET, SUITE 1800 INDIANAPOLIS, IN 46204
(Address of Depositor's Principal Offices)
860-325-1538
(Depositor's Telephone Number, Including Area Code)
SARAH M. PATTERSON
FORETHOUGHT LIFE INSURANCE COMPANY
82 HOPMEADOW STREET, SUITE 200, SIMSBURY, CT 06089
(Name and Address of Agent for Service)
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
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The Registrant hereby amends this registration statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
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PART A
FORERETIREMENT II VARIABLE ANNUITY
FORETHOUGHT LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A (EST. 06/05/12)
300 N. MERIDIAN ST
SUITE 1800
INDIANAPOLIS, IN 46204
1-866-645-2449
WWW.FORETHOUGHT.COM
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This prospectus describes information you should know before you purchase
ForeRetirement II Variable Annuity. The prospectus describes a contract between
each Owner and joint Owner ("you") and Forethought Life Insurance Company ("us,"
"we" or "our"). This is an individual, deferred, flexible-premium variable
annuity. You may own this annuity on a single or joint basis. This variable
annuity allows you to allocate your Premium Payment among the following
portfolio companies:
X AIM Variable Insurance Funds (Invesco Variable Insurance Funds)
X American Century Variable Portfolios, Inc.
X American Funds Insurance Series(R)
X BlackRock Variable Series Funds, Inc.
X Forethought Variable Insurance Trust
X Franklin Templeton Variable Insurance Products Trust
X Goldman Sachs Variable Insurance Trust
X Hartford Series Funds, Inc.
X Lord Abbett Series Fund, Inc.
X MFS(R) Variable Insurance Trust
X MFS(R) Variable Insurance Trust II
X PIMCO Equity Series VIT
X PIMCO Variable Insurance Trust
X Putnam Variable Trust
You may also allocate all or any portion of your Premium Payment(s) to the Fixed
Account. The Fixed Account is not available for every Contract share class.
This prospectus refers to the following Contract share classes:
X B Share
X C Share
X L Share
The Contract share class will be selected on your application and identified in
your Contract. Not every Contract share class or optional rider may be available
from your Financial Intermediary or in your state. Other available Contract
share classes offered through select Financial Intermediaries are not described
in this Prospectus and may be subject to different charges.
Please read this prospectus carefully before investing and keep it for your
records and for future reference. You can also contact us to get a Statement of
Additional Information free of charge. The Statement of Additional Information
contains more information about this Contract and, like this prospectus, is
filed with the Securities and Exchange Commission ("SEC" or "Commission"). We
have included the Table of Contents for the Statement of Additional Information
at the end of this prospectus. Although we file this prospectus and the
Statement of Additional Information with the SEC, the SEC doesn't approve or
disapprove these securities or determine if the information in this prospectus
is truthful or complete. Anyone who represents that the SEC does these things
may be guilty of a criminal offense. This prospectus and the Statement of
Additional Information can also be obtained from us or the SEC's website
(www.sec.gov).
This variable annuity may not be suitable for everyone. This variable annuity
may not be appropriate for people who do not have a long investment time horizon
and is not appropriate for people who intend to engage in market timing. You
will get NO ADDITIONAL TAX ADVANTAGE from this variable annuity if you are
investing through a tax-advantaged retirement plan (such as a 401(k) plan or
Individual Retirement Account ("IRA")). This prospectus is not intended to
provide tax, accounting or legal advice.
We are not an investment adviser nor are we registered as such with the SEC or
any state securities regulatory authority. We are not acting in any fiduciary
capacity with respect to your investment. This information does not constitute
personalized investment advice or financial planning advice.
[Enlarge/Download Table]
NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT FDIC BANK IMAGE]
FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE
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PROSPECTUS DATED: MAY 1, 2014
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 2014
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CONTENTS
[Download Table]
PAGE
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1. INTRODUCTION 3
2. FEE SUMMARY 4
3. MANAGEMENT OF THE CONTRACT 8
The Company 8
The General Account 8
The Separate Account 8
The Funds 8
Fixed Account 10
4. INFORMATION ON YOUR ACCOUNT 10
a. Purchasing a Contract 10
b. Charges and Fees 18
c. Surrenders and Partial Withdrawals 22
d. Annuity Payouts 23
5. DEATH BENEFITS 25
a. Standard Death Benefit 25
b. Return of Premium 26
c. Legacy Lock II 28
d. Maximum Daily Value 32
e. How is the Death Benefit paid? 34
f. Who will receive the Death Benefit? 35
6. OPTIONAL WITHDRAWAL BENEFITS 36
a. Daily Step Up Withdrawal Benefit 36
7. ADDITIONAL INFORMATION 44
a. Glossary 44
b. State Variations 47
c. Legal Proceedings 47
d. How Contracts Are Sold 47
e. Delay of Payment and Transfers 49
8. FEDERAL TAX CONSIDERATIONS/INFORMATION REGARDING IRAS 49
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 60
APPENDIX A - EXAMPLES APP A-1
APPENDIX B - ACCUMULATION UNIT VALUES APP B-1
APPENDIX C - FUND DATA APP C-1
APPENDIX D - OPTIONAL RIDER INVESTMENT RESTRICTIONS APP D-1
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1. INTRODUCTION
HOW TO BUY THIS VARIABLE ANNUITY
X Choose a Contract class
[Enlarge/Download Table]
MINIMUM INITIAL MORTALITY &
PREMIUM PAYMENT EXPENSE RISK
NON- AND
QUALIFIED QUALIFIED ADMINISTRATIVE
CONTRACT CONTRACT SALES RELATED CHARGES CHARGES
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7 year Contingent Deferred Sales Charge; Premium Based
B SHARE $5,000 $10,000 Charge 0.65%
C SHARE $5,000 $10,000 None 1.65%
4 year Contingent Deferred Sales Charge; Premium Based
L SHARE $5,000 $10,000 Charge 1.10%
This table does not show Fund expenses, Premium taxes, Annual Maintenance Fee,
Fund Facilitation Fee, Premium Based Charge, Contingent Deferred Sales Charges
and optional rider fees. Each Contract share class has its own Minimum Contract
Value requirements.
X Choose investment options
[Download Table]
- Sub-Accounts - Funds representing a range of investment strategies,
objectives and asset classes.
- Fixed Account (B and L share class only) - A fixed interest account.
Subject to limitations, you may move your investment among each of these
options.
X Choose an optional feature
[Download Table]
Guaranteed Lifetime Daily Step Up Withdrawal Benefit*
Withdrawal Benefit
Guaranteed Minimum Return of Premium
Death Benefits Maximum Daily Value*
Legacy Lock II*
* Investment restrictions apply.
Optional features may not be available through your Financial Intermediary or in
all states.
X Complete our application or order request and submit it to your Financial
Intermediary for approval.
X Pay the applicable minimum initial Premium Payment.
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2. FEE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING, AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR
SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED.
OWNER TRANSACTION EXPENSES
[Enlarge/Download Table]
SURRENDER CHARGE
B SHARE C SHARE L SHARE
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CONTINGENT DEFERRED SALES CHARGE (CDSC) (1) None
Year 1 8.5% 8%
2 7.5% 7%
3 6.5% 6%
4 5.5% 5%
5 4.5% 0%
6 3.5%
7 2.5%
8+ 0%
(1) Each Premium Payment has its own CDSC schedule. The CDSC is a percentage of
Remaining Gross Premiums. Please see Section 4(b) and Examples 1-5 in
Appendix A for more information on how CDSC is calculated.
OWNER PERIODIC EXPENSES
THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY PERIODICALLY AND
ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE
ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
[Download Table]
B SHARE C SHARE L SHARE
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ANNUAL MAINTENANCE FEE (2) $50 $50 $50
PREMIUM BASED CHARGE (3) 0.50% None 0.50%
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage
of average daily
Contract Value excluding Fixed Account
investments) (4)
Mortality and Expense Risk Charge 0.45% 1.45% 0.90%
Administrative Charge 0.20% 0.20% 0.20%
Maximum Fund Facilitation Fee (5) 0.50% 0.50% 0.50%
MAXIMUM TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.15% 2.15% 1.60%
MAXIMUM OPTIONAL CHARGES (6)
Legacy Lock II (7) 1.50% 1.50% 1.50%
Return of Premium (8) 0.75% 0.75% 0.75%
Maximum Daily Value (9) 1.50% 1.50% 1.50%
Daily Step Up Withdrawal Benefit (10)
Single Life Option 2.50% 2.50% 2.50%
Joint/Spousal Option 2.50% 2.50% 2.50%
(2) Fee waived if Contract Value is $50,000 or more on your Contract
Anniversary.
(3) For B and L share Contracts, an annual Premium Based Charge is assessed
against each Premium Payment. The Premium Based Charge is a percentage of
Remaining Gross Premium. Remaining Gross Premium is equal to Premium
Payments adjusted by Partial Withdrawals. The Premium Based Charge is
assessed on each Quarterly Contract Anniversary. We calculate your Premium
Based Charge based on Remaining Gross Premiums on each Quarterly Contract
Anniversary as adjusted since the last Premium Based Charge was taken,
however, the charge presented above is the annualized charge. Please see
section 4.b. Premium Based Charge for more information. The Premium Based
Charge will be assessed only with respect to Contract Value invested in
Sub-Accounts and not investments in the Fixed Account. Please see Section
4.b. Charges and Fees and Premium Based Charge Examples 1-2 in Appendix A.
(4) Charges are expressed as annual fees but are assessed on a daily basis.
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(5) Fee is applied daily to amounts invested in the following Sub-Accounts:
American Funds Insurance Series(R) - Managed Risk Asset Allocation Fund,
BlackRock High Yield V.I. Fund, BlackRock U.S. Government Bond V.I. Fund,
Hartford Capital Appreciation HLS Fund, Hartford Index HLS Fund, Hartford
Total Return Bond HLS Fund, Invesco V.I. Money Market Fund, PIMCO Total
Return Portfolio, Forethought Variable Insurance Trust Franklin Dividend
and Income Managed Risk PortFolio, Forethought Variable Insurance Trust
Growth Managed Risk Portfolio, Forethought Variable Insurance Trust Select
Advisor Managed Risk Portfolio. Current fees range from 0.05% to 0.15% and
can be found in Section 4.b Charges and Fees.
(6) You may only elect one of the following optional Death Benefits: Legacy
Lock II, Maximum Daily Value, or Return of Premium. All optional charges
presented are the annualized charges, however, they will be deducted on
each Quarterly Contract Anniversary.
(7) Rider charge is based on the greater of (a) Enhanced Return of Premium or
(b) Return of Premium Death Benefit and is assessed on each Quarterly
Contract Anniversary. If you elect Legacy Lock II and concurrently elect
the Daily Step Up Withdrawal Benefit, the current rider charge for Legacy
Lock II is 0.85%. If you elect Legacy Lock II without electing the Daily
Step Up Withdrawal Benefit, the current rider charge is based on the age of
the oldest Contract Owner or Annuitant at the rider inception date. The
current rider charges are 1.15% for ages 0-60 and 1.25% for ages 61-65.
(8) Rider charge is based on Premium Payments adjusted for Partial Withdrawals
and is assessed on each Quarterly Contract Anniversary. The current rider
charge is 0.15%.
(9) Rider charge is based on the Maximum Daily Value Death Benefit and is
assessed on each Quarterly Contract Anniversary. The current rider charge
is 0.45%.
(10) Rider charge is based on Withdrawal Base and is assessed on each Quarterly
Contract Anniversary. The Withdrawal Base is initially equal to Premium
Payments. It will fluctuate based on subsequent Premium Payments, Step Ups,
Deferral Bonuses or Partial Withdrawals. The current rider charge is 1.25%.
THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING
EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME
THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND
EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
[Enlarge/Download Table]
MINIMUM MAXIMUM
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TOTAL ANNUAL FUND OPERATING EXPENSES 0.58 % 2.84 %
(expenses that are deducted from Sub-Account assets,
including management fees, distribution charges
and/or service fees (12b-1) fees, and other expenses.
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EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THIS
VARIABLE ANNUITY WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITIES. LET'S
SAY, HYPOTHETICALLY, THAT YOUR ANNUAL INVESTMENT RETURN IS 5% AND THAT YOUR FEES
AND EXPENSES TODAY WERE AS HIGH AS POSSIBLE INCLUDING THE ELECTION OF THE
HIGHEST POSSIBLE OPTIONAL CHARGES (I.E., LEGACY LOCK II AND THE DAILY STEP UP
WITHDRAWAL BENEFIT AND INVESTMENT IN SUB-ACCOUNTS THAT ARE SUBJECT TO THE FUND
FACILITATION FEE). THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT
YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR
EVERY $10,000 INVESTED (EXCLUDING AMOUNTS ALLOCATED TO THE FIXED ACCOUNT, IF
APPLICABLE), HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS
POSED:
B-SHARE
(1) If you Surrender your Contract at the end of the applicable time period:
[Download Table]
1 year $1,755
3 years $3,368
5 years $4,968
10 years $8,919
(2) If you annuitize at the end of the applicable time period:
[Download Table]
1 year $859
3 years $2,671
5 years $4,470
10 years $8,869
(3) If you do not Surrender your Contract:
[Download Table]
1 year $909
3 years $2,721
5 years $4,520
10 years $8,919
C-SHARE
(1) If you Surrender your Contract at the end of the applicable time period:
[Download Table]
1 year $961
3 years $2,858
5 years $4,714
10 years $9,139
(2) If you annuitize at the end of the applicable time period:
[Download Table]
1 year $911
3 years $2,808
5 years $4,664
10 years $9,089
(3) If you do not Surrender your Contract:
[Download Table]
1 year $961
3 years $2,858
5 years $4,714
10 years $9,139
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L-SHARE
(1) If you Surrender your Contract at the end of the applicable time period:
[Download Table]
1 year $1,751
3 years $3,444
5 years $4,711
10 years $9,200
(2) If you annuitize at the end of the applicable time period:
[Download Table]
1 year $905
3 years $2,797
5 years $4,661
10 years $9,150
(3) If you do not Surrender your Contract:
[Download Table]
1 year $955
3 years $2,847
5 years $4,711
10 years $9,200
CONDENSED FINANCIAL INFORMATION
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When Premium Payments are credited to your Funds, they are converted into
Accumulation Units by dividing the amount of your Premium Payments minus any
Premium taxes (if applicable), by the Accumulation Unit Value for that Valuation
Day. All classes of Accumulation Unit Values may be obtained, free of charge, by
contacting us. See Appendix B - Accumulation Unit Values for additional
information. You can find financial statements for us and the Separate Account
in the Statement of Additional Information.
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3. MANAGEMENT OF THE CONTRACT
THE COMPANY
We are a life insurance company engaged in the business of writing life
insurance and individual variable, fixed and fixed indexed annuities.
Forethought Life Insurance Company is authorized to do business in 49 states of
the United States, the District of Columbia and Puerto Rico. Forethought Life
Insurance Company was incorporated under the laws of Indiana on July 10, 1986.
We have offices located in Indianapolis and Batesville, Indiana, Houston, Texas,
Simsbury, Connecticut and Berwyn, Pennsylvania. Forethought Life Insurance
Company is ultimately controlled by Global Atlantic Financial Group Limited.
THE GENERAL ACCOUNT
The Fixed Account and the DCA Plus Fixed Account are part of our General
Account. Please see Section 4.a for a description of the DCA Plus Fixed Account.
Any amounts that we are obligated to pay under the Fixed Account and any other
payment obligation we undertake under the Contract, including Death Benefits and
optional withdrawal benefits, are subject to our financial strength and
claims-paying ability and our long-term ability to make such payments. We invest
the assets of the General Account according to the laws governing the
investments of insurance company general accounts. The General Account is not a
bank account and is not insured by the Federal Deposit Insurance Corporation
(FDIC) or any other government agency. We receive a benefit from all amounts
held in our General Account. Amounts in our General Account are available to our
general creditors. We issue other types of insurance policies and pay our
obligations under these products from our assets in the General Account.
THE SEPARATE ACCOUNT
We set aside and invest the assets of some of our annuity contracts, including
these Contracts, in a Separate Account. The Separate Account is registered as
unit investment trusts under the 1940 Act. This registration does not involve
supervision by the SEC of the management or the investment practices of a
Separate Account or us. The Separate Account meets the definition of "Separate
Account" under federal securities law. The Separate Account referenced in this
prospectus holds only assets for variable annuity contracts. The Separate
Account:
- hold assets for your benefit and the benefit of other Owners, and the
persons entitled to the payouts described in the Contract;
- is not subject to the liabilities arising out of any other business we may
conduct;
- is not affected by the rate of return of our General Account;
- may be subject to liabilities of other variable annuity contracts offered by
this Separate Account which are not described in this prospectus; and
- is credited with income and gains, and takes losses, whether or not
realized, from the assets they hold without regard to our other income,
gains or loss.
We do not guarantee the investment results of the Separate Account.
THE FUNDS
At the time you purchase your Contract, you may allocate your Premium Payment to
Sub-Accounts. These are subdivisions of our Separate Account, described above.
The Sub-Accounts then purchase shares of mutual funds set up exclusively for
variable annuity or variable life insurance products. These are not the same
mutual funds that you buy through your investment professional even though they
may have similar investment strategies and the same portfolio managers. Each
Fund has varying degrees of investment risk. Funds are also subject to separate
fees and expenses such as management fees, distribution charges and operating
expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest
substantially all of their assets in other funds and will therefore bear a
pro-rata share of fees and expenses incurred by both funds. This will reduce
your investment return. Election of any optional riders will limit your
investment options. Please contact us to obtain a copy of the prospectuses for
each Fund (or for any feeder funds). Read these prospectuses carefully before
investing. We do not guarantee the investment results of any Fund. Certain Funds
may not be available in all states and in all Contract classes. Please see
Appendix C for additional information.
MIXED AND SHARED FUNDING - Fund shares may be sold to our insurance company
affiliates or other unaffiliated insurance companies to serve as an underlying
investment for variable annuity contracts and variable life insurance policies,
pursuant to a practice known as mixed and shared funding. As a result, there is
a possibility that a material conflict may arise between the interests of
Owners, and other Owner's investing in these Funds. If a material conflict
arises, we will consider what action may be appropriate, including removing the
Fund from the Separate Account or replacing the Fund with another underlying
Fund.
VOTING RIGHTS - We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Funds' shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted;
- send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract;
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- arrange for the handling and tallying of proxies received from Owners;
- vote all Fund shares attributable to your Contract according to instructions
received from you, and
- vote all Fund shares for which no voting instructions are received in the
same proportion as shares for which instructions have been received; which
could result in the vote of a small number of Owners determining the outcome
of a matter subject to a shareholder vote.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any shareholder meeting at which Fund shares held for your Contract
may be voted. As a result of proportional voting, a small number of Owners could
determine the outcome of a proposition subject to shareholder vote.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS - Subject to any applicable law,
we may make certain changes to the Funds offered under your Contract. We may, at
our discretion, establish new Funds. New Funds may be made available to existing
Owners as we deem appropriate. We may also close one or more Funds to additional
Premium Payments or transfers from existing Funds. We may liquidate one or more
Sub-Accounts if the board of directors of any Fund determines that such actions
are prudent. Unless otherwise directed, investment instructions will be
automatically updated to reflect the Fund surviving after any merger,
substitution or liquidation.
We may eliminate the shares of any of the Funds from the Contract for any reason
and we may substitute shares of another registered investment company for the
shares of any Fund already purchased or to be purchased in the future by the
Separate Account. To the extent required by the 1940 Act, substitutions of
shares attributable to your interest in a Fund will not be made until we have
the approval of the SEC, and we have notified you of the change.
In the event of any substitution or change, we may, by appropriate endorsement,
make any changes in the Contract necessary or appropriate to reflect the
substitution or change. If we decide that it is in the best interest of the
Owners, the Separate Account may be operated as a management company under the
1940 Act or any other form permitted by law, may be de-registered under the 1940
Act in the event such registration is no longer required, or may be combined
with one or more other Separate Accounts.
FEES AND PAYMENTS WE RECEIVE FROM FUNDS AND RELATED PARTIES- We may receive
substantial fees and payments with respect to the Funds that are offered through
your Contract (sometimes referred to as revenue sharing payments). We consider
these fees and payments, among a number of facts, when deciding to include a
Fund that we offer through the Contract. All of the Funds that are offered
through your Contract make payments to us or an affiliate. We receive these
payments and fees under agreements between us and a Fund's principal
underwriter, transfer agent, investment adviser and/or other entities related to
the Funds in amounts up to 0.50% of assets invested in a Fund. These fees and
payments may include asset-based sales compensation and service fees under
distribution charges and/or servicing plans adopted by Funds pursuant to Rule
12b-1 under the Investment Company Act of 1940. These fees and payments may also
include administrative service fees and additional payments, expense
reimbursements and other compensation. We expect to make a profit on the amount
of the fees and payments that exceed our own expenses, including our expenses of
payment compensation to broker-dealers, financial institutions and other persons
for selling the Contracts.
The availability of these types of arrangements creates an incentive for us to
seek and offer Funds (and classes of shares of such Funds) that pay us revenue
sharing. Other Funds (or available classes of shares) may have lower fees and
better overall investment performance. As of December 31, 2013, we have entered
into arrangements to receive Administrative Service and/or 12b-1 fees from each
of the following Fund complexes (or affiliated entities): American Century
Investment Services, Inc., American Funds Distributors, Inc., BlackRock
Advisors, LLC, Forethought Investment Advisors, LLC, Franklin Templeton
Services, LLC, Hartford Fund Management Company, LLC, Huntington Asset Advisors,
Invesco Advisers Inc., Lord Abbett Series Fund, Inc., MFS Fund Distributors,
Inc., Pacific Investment Management Company, LLC, Putnam Retail Management
Limited Partnership, Valmark Advisers, Inc.
Not all Fund complexes pay the same amount of fees and compensation to us and
not all Funds pay according to the same formula. Because of this, the amount of
fees and payments received by us varies by Fund and we may receive greater or
less fees and payments depending on the Funds you select. Revenue Sharing and
Rule 12b-1 fees did not exceed 0.50% and 0.35%, respectively and 0.50% in total
in 2013 and are not expected to exceed 0.50% and 0.40%, respectively, and 0.50%
in total of the annual percentage of the average daily net assets (for instance,
assuming that you invested an average balance of $10,000 in a Fund that pays us
maximum fees, we would collect a total of $50 from that Fund.) For the fiscal
year ended December 31, 2013, revenue sharing payments and 12b-1 fees did not
collectively exceed approximately $333.000. These fees do not take into account
indirect benefits we received by offering FVIT Funds as investment options.
We are affiliated with Forethought Variable Insurance Trust based on our
affiliation with its investment adviser Forethought Investment Advisors, LLC. In
addition to investment advisory fees, we receive fees to provide, among other
things, administrative, processing, accounting and shareholder services for the
Forethought Funds.
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FIXED ACCOUNT
INTERESTS IN THE FIXED ACCOUNT ARE NOT REGISTERED UNDER THE 1933 ACT AND THE
FIXED ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT.
ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY OF ITS INTERESTS ARE SUBJECT TO
THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF
THE SEC HAS NOT REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCOUNT. THE
FOLLOWING DISCLOSURE ABOUT THE FIXED ACCOUNT IS SUBJECT TO CERTAIN GENERALLY
APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND
COMPLETENESS OF DISCLOSURES. THE FIXED ACCOUNT IS NOT OFFERED IN ALL CONTRACT
SHARE CLASSES AND IS NOT AVAILABLE IN ALL STATES OR IF YOU HAVE ELECTED THE
DAILY STEP UP WITHDRAWAL BENEFIT, MAXIMUM DAILY VALUE OR LEGACY LOCK II.
We guarantee that we will credit interest to amounts you allocate to the Fixed
Account at a minimum rate that meets your State's minimum non-forfeiture
requirements. Non-forfeiture rates vary from state-to-state. We may credit a
rate higher than the minimum rate. We reserve the right to declare different
rates of interest depending on when amounts are allocated or transferred to the
Fixed Account. This means that amounts at any designated time may be credited
with a different rate of interest than the rate previously credited to such
amounts and to amounts allocated or transferred at any other designated time. We
will periodically publish the Fixed Account interest rates currently in effect.
There is no specific formula for determining interest rates and, except as
specifically stated above, no assurances are offered as to future rates in
excess of non-forfeiture rates. Some of the factors that we may consider in
determining whether to credit interest are: general economic trends, rates of
return currently available for the types of investments and durations that match
our liabilities and anticipated yields on our investments, regulatory and tax
requirements, and competitive factors. Fixed Account interest rates may vary by
State.
We will account for any deductions, Surrenders or transfers from the Fixed
Account on a first-in, first-out basis (i.e., oldest investments will be
liquidated first).
ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCOUNT IN EXCESS OF
THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION.
YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCOUNT MAY NOT EXCEED
THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. WHILE WE DO NOT CHARGE
A SEPARATE FEE FOR INVESTING IN THE FIXED ACCOUNT, OUR EXPENSES ASSOCIATED WITH
OFFERING THIS FEATURE ARE FACTORED INTO THE FIXED ACCOUNT CREDITED RATES.
We may restrict your ability to allocate Contract Value or Premium Payments to
the Fixed Account (or your ability to transfer Fixed Account assets to one or
more Sub-Account) at any time at our discretion. We may close the Fixed Account
to new Premium Payments or transfers of existing Contract Value.
Except as otherwise provided, during each Contract Year, you may make transfers
out of the Fixed Account to Sub-Accounts, subject to the transfer restrictions
discussed below. All transfer allocations must be in whole numbers (e.g., 1%).
Each Contract Year you may transfer the greater of:
- 30% of the Contract Value in the Fixed Account as of the last Contract
Anniversary. When we calculate the 30%, we add Premium Payments allocated to
the Fixed Account, and transfers from Sub-Accounts made after that date, but
before the next Contract Anniversary. These restrictions also apply to
systematic transfers. The 30% does not include Contract Value in any DCA
Plus Fixed Account; or
- an amount equal to your largest previous transfer from the Fixed Account in
any one Contract Year.
We apply these restrictions to all transfers from the Fixed Account, including
all systematic transfers and Dollar Cost Averaging Programs, except for
transfers under our DCA Plus Fixed Account.
If your interest rate renews at a rate more than 1% lower than your prior
interest rate, you may transfer any amount up to 100% of the amount to be
invested at the renewal rate. You must make this transfer request within sixty
days of being notified of the renewal rate.
We may defer Surrenders and Partial Withdrawals (including transfers to
Sub-Accounts) from the Fixed Account for up to six months from the date of your
request. In certain states, we may not defer payments of Death Benefit proceeds
from the Fixed Account (see State Variations section for details).
You must wait six months after your most recent transfer from the Fixed Account
before moving Sub-Account Values back to the Fixed Account. If you make
systematic transfers from the Fixed Account under a Dollar Cost Averaging
Program or DCA Plus Fixed Account, you must wait six months after your last
systematic transfer before moving Contract Value back to the Fixed Account.
As a result of these limitations, it may take a significant amount of time
(i.e., several years) to move Contract Value in the Fixed Account to
Sub-Accounts; therefore this may not provide an effective short term defensive
strategy.
4. INFORMATION ON YOUR ACCOUNT
A. PURCHASING A CONTRACT
WHO CAN BUY THIS CONTRACT?
The Contract is an individual tax-deferred variable annuity Contract. It is
designed for retirement planning purposes and may be purchased by any
individual, group or trust, including individual retirement annuities adopted
according to Section 408 of the Code.
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In addition, individuals and trusts can also purchase Contracts that are not
part of a tax qualified retirement plan. These are known as non-qualified
Contracts.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
Plan receives tax-deferred treatment under the Code.
We do not accept any incoming 403(b) exchanges, transfers or applications for
403(b) individual annuity contracts or additional investments into any
individual annuity contract funded through a 403(b) plan.
We do not accept any retirement plans qualified under Sections 401(a) and 403(a)
of the Code or employee pension plans established for employees by a state, a
political subdivision of a state, or an agency of either a state or a political
subdivision of a state, or certain eligible deferred compensation plans as
defined in Section 457 of the Code.
HOW DO YOU PURCHASE A CONTRACT?
You may only purchase a Contract through a Financial Intermediary. An investment
professional will work with you to complete and submit an application or an
order request form. Part of this process will include an assessment as to
whether this variable annuity may be suitable for you. Prior to recommending the
purchase or exchange of a deferred variable annuity, your investment
professional will make reasonable efforts to obtain certain information about
you and your investment needs. This recommendation will be independently
reviewed by a principal within your Financial Intermediary. Your initial Premium
Payment will not be invested in any Account during this period.
To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account. When
you open an account, your Financial Intermediary will ask for your name,
address, date of birth and other information that will allow us to identify you.
They may also ask to see your driver's license or other identifying documents.
The minimum initial Premium Payment required to buy this Contract varies based
on the type of investment, Contract share class and whether you enroll in a
systematic investment Program such as the InvestEase(R) Program. Financial
Intermediaries may impose requirements regarding the form of payment they will
accept. Premium Payments not actually received by us within the time period
provided below will result in the rejection of your application or order
request.
Premium Payments sent to us must be made in U.S. dollars and checks must be
drawn on U.S. banks. We do not accept cash, third party checks or double
endorsed checks. We reserve the right to limit the number of checks processed at
one time. If your check does not clear, your purchase will be cancelled and you
could be liable for any losses or fees incurred. A check must clear our account
through our Annuity Service Center to be considered to be In Good Order.
Anyone who wishes to purchase a Contract with Premium Payments of $1 million or
more must receive our approval before the purchase. We reserve the right to
impose special conditions on anyone requesting this approval. In order to
request prior approval, you must submit a completed enhanced due diligence form
prior to the submission of your application:
- if you are seeking to purchase a Contract with an initial Premium Payment of
$1 million or more; and
- if total Premium Payments, aggregated by social security number or taxpayer
identification number, equal $1 million or more.
In addition to this restriction on initial Premium Payments, we may also
restrict or require approval of subsequent Premium Payments if (1) the
subsequent Premium Payment would result in your total Premium Payments equaling
or exceeding $1 million, (2) the subsequent Premium Payment would result in your
total Premium Payments exceeding 150% of your initial premium or (3) any time
after the first Contract Year if you have elected any optional riders. We do not
currently enforce the right to approve subsequent Premium Payments, except where
a subsequent Premium Payment would result in your total Premium Payments
equaling or exceeding $1 million. In the future, we may expand the circumstances
under which we restrict or require prior approval of subsequent Premium
Payments. There are a variety of factors that could influence our decision to
prohibit or restrict subsequent Premium Payments, for example, we could do so in
the event of a market disturbance. Any action we take with respect to subsequent
Premium Payment restriction or approval will be done following giving notice to
you and on a non-discriminatory basis.
You and your Annuitant must not be older than age 80 on the date that your
Contract is issued. You must be of minimum legal age in the state where the
Contract is being purchased or a guardian must act on your behalf. Optional
riders are subject to additional maximum issue age restrictions.
We urge you to discuss with your investment professional which share class is
suitable for your needs. Share class availability and/or mortality and expense
risk charge arrangements may vary based on the Financial Intermediary selling
this variable annuity to you. Charges affect your overall rate of return on your
Contract Value. In determining whether to invest in a share class that imposes a
CDSC, you might consider whether higher mortality and expense risk and Premium
Based Charges, if applicable, outweigh the benefits of CDSC that reduce, or are
eliminated, over time. Finally, in determining whether to invest in a share
class offered through a Financial Intermediary, you might consider how the fee
charged by your Financial Intermediary bears in relation to the costs associated
with investing in other share classes that impose higher fees.
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It is important that you notify us if you change your address. If your mail is
returned to us, we are likely to suspend future mailings until an updated
address is obtained. This may include suspending mailings of a Systematic
Withdrawal Program and other payments. In addition, we may rely on a third
party, including the US Postal Service, to update your current address. Failure
to give us a current address may result in payments due and payable on your
annuity contract being considered abandoned property under state law, and
remitted to the applicable state.
Every state has unclaimed property laws which generally deem the Contract to be
abandoned after a period of inactivity of three to five years from the
Contract's maturity date or date the Death Benefit is due and payable. For
example, if the payment of a Death Benefit has been triggered, but, if after a
thorough search, we are still unable to locate the Beneficiary, or if the
Beneficiary does not come forward to claim the Death Benefit in a timely manner,
the Death Benefit will be paid to the abandoned property division or unclaimed
property office of the state in which you or the Beneficiary last resided, as
shown in records, or to our state of domicile. This "escheatment" is revocable,
however, and the state is obligated to pay the Beneficiary if he or she presents
the proper documentation to the state. To prevent such escheatment, it is
important that you update your Beneficiary designations, including full names
and complete addresses, if and as they change.
CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT?
Yes. If for any reason you are not satisfied with your Contract, simply return
it within ten days after you receive it with a written request for cancellation
that indicates your tax-withholding instructions. In some states, you may be
allowed more time to cancel your Contract. We may require additional
information, including a signature guarantee, before we can cancel your
Contract.
Unless otherwise required by state law, we will pay you your Contract Value
(refunding applicable expenses) as of the Valuation Day we receive your properly
completed request to cancel (In Good Order) and will refund any sales or
Contract charges incurred during the period you owned the Contract. The Contract
Value may be more or less than your Premium Payments depending upon the
investment performance of your Contract. This means that you bear the risk of
any decline in your Contract Value until we receive your notice of cancellation
at our Annuity Service Center. In certain states, however, we are required to
return your Premium Payment without deduction for any fees, charges or market
fluctuations.
HOW ARE PREMIUM PAYMENTS APPLIED TO YOUR CONTRACT?
Your initial Premium Payment will usually be invested within two Valuation Days
of our receipt at our Annuity Service Center of both a properly completed
application or order request and the Premium Payment, both being In Good Order.
If we receive a subsequent Premium Payment before the end of a Valuation Day, it
will be invested on the same Valuation Day. If we receive your subsequent
Premium Payment after the end of a Valuation Day, it will be invested on the
next Valuation Day. If we receive a subsequent Premium Payment on a
Non-Valuation Day, the amount will be invested on the next Valuation Day. Unless
we receive new instructions, we will invest all Premium Payments based on your
last instructions on record. We will send you a confirmation when we invest your
Premium Payment. Our approval is required for any Premium Payment if the
aggregate of all Premium Payments received from You under this Contract exceeds
150% of the initial Premium. The election of any optional riders may also limit
your ability to make additional Premium Payments, as described in the sections
of this prospectus explaining those riders. A limitation on additional Premium
Payments means that you would not be able to increase your benefits under the
Contract or optional riders (such as Lifetime Annual Payments or Death Benefits)
by making additional deposits into the Contract.
If the request or other information accompanying the Premium Payment is
incomplete or not In Good Order when received, we will hold the money in a
non-interest bearing account for up to five Valuation Days (from the Valuation
Day that we actually receive your initial Premium Payment at our Annuity Service
Center) while we try to obtain complete information. If we cannot obtain the
information within five Valuation Days, we will either return the Premium
Payment and explain why it could not be processed or keep the Premium Payment if
you authorize us to keep it until you provide the necessary information.
Generally, we will receive your application or order request (whether for an
initial purchase or a subsequent investment) after your Financial Intermediary
has completed a suitability review. We will then consider if your investment is
In Good Order. While the suitability and good order process is underway, Premium
Payments will not be applied to your Contract. You will not earn any interest on
Premium Payments even if they have been sent to us or deposited into our bank
account. We are not responsible for gains or lost investment opportunities
incurred during this review period or if your Financial Intermediary asks us to
reverse a transaction based on their review of your investment professional's
recommendations. We, and the firm that sold this Contract to you, may directly
or indirectly earn income on your Premium Payments. For more information,
contact your investment professional.
CAN WE AGGREGATE CONTRACTS?
For purposes of our approval of any Premium Payment, we may aggregate all
Premium Payments received from you under all contracts issued by us or by our
affiliates.
HOW IS CONTRACT VALUE CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE?
The Contract Value is the sum of the value of the Fixed Account, if applicable,
and all Funds, and does not include any Withdrawal Base associated with an
optional benefit. There are two things that affect the value of your
Sub-Accounts: (1) the number of
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Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is
determined by multiplying the number of Accumulation Units by the Accumulation
Unit Value. On any Valuation Day the investment performance of the Sub-Accounts
will fluctuate with the performance of the Funds.
When Premium Payments are credited to Sub-Accounts within your Account, they are
converted into Accumulation Units by dividing the amount of your Premium
Payments, minus any Premium taxes (if applicable), by the Accumulation Unit
Value for that day. The more Premium Payments you make to your Account, the more
Accumulation Units you will own. You decrease the number of Accumulation Units
you have by requesting Partial Withdrawals or full Surrenders, settling a Death
Benefit claim or by annuitizing your Contract or as a result of the application
of certain Contract charges.
To determine the current Accumulation Unit Value, we take the prior Valuation
Day's Accumulation Unit Value and multiply it by the Net Investment Factor for
the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- the net asset value per share plus applicable distributions per share of
each Fund at the end of the current Valuation Day; divided by
- the net asset value per share of each Fund at the end of the prior Valuation
Day; reduced by
- Contract charges including the deductions for the mortality and expense risk
charge and any other periodic expenses and administrative charges, divided
by the number of days in the year multiplied by the number of days in the
Valuation Period.
We will send you a statement at least annually.
WHAT OTHER WAYS CAN YOU INVEST?
You may enroll in the following features (sometimes called a "Program") for no
additional fee. Not all Programs are available with all Contract share classes.
INVESTEASE
This electronic Funds transfer feature allows you to have money automatically
transferred from your checking or savings account and deposited into your
Contract on a monthly or quarterly basis. It can be changed or discontinued at
any time. The minimum amount for each transfer is $50. You can elect to have
transfers made into any available Fund, or the Fixed Account. You cannot use
this Program to invest in the DCA Plus Fixed Account.
STATIC ASSET ALLOCATION MODELS
This systematic program allows you to select an asset allocation model based on
several potential factors including your risk tolerance, time horizon,
investment objectives, or your preference to invest in certain Funds or Fund
complexes. Based on these factors, you can select one of several asset
allocation models, with each specifying percentage allocations among various
Funds available under your Contract. Some asset allocation models are based on
generally accepted investment theories that take into account the historic
returns of different asset classes (e.g., equities, bonds or cash) over
different time periods. Other asset allocation models focus on certain potential
investment strategies that could possibly be achieved by investing in particular
Funds or Fund complexes and are not based on such investment theories. Static
asset allocation models offered from time to time are reflected in your
application and marketing materials. If a model(s) is no longer available for
new assets, we will continue to rebalance existing assets in the model(s) at the
specified frequency. You may obtain a copy of the current models by contacting
your Financial Intermediary.
You may invest in an asset allocation model through the Dollar Cost Averaging
Program when the Fixed Account or a DCA Plus Fixed Account is the source of the
assets to be invested in the asset allocation model you have chosen. You can
also participate in these asset allocation models while enrolled in the
InvestEase or Systematic Withdrawal Program.
You can switch asset allocation models up to twelve times per year. Your ability
to elect or switch into and between asset allocation models may be restricted
based on Fund abusive trading restrictions.
Your investments in an asset allocation model will be rebalanced at least
quarterly to reflect the model's original percentages and you may cancel your
model at any time subject to investment restrictions for maintaining certain
optional riders.
We have no discretionary authority or control over your investment decisions.
These asset allocation models are based on then available Funds and do not
include the Fixed Account. We make available educational information and
materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case
studies) that can help you select an asset allocation model, but we do not
recommend asset allocation models or otherwise provide advice as to what asset
allocation model may be appropriate for you.
While we will not alter allocation percentages used in any asset allocation
model, allocation weightings could be affected by mergers, liquidations, fund
substitutions or closures. Availability of these models is subject to Fund
company restrictions. Please refer to "What Restrictions Are There on your
Ability to Make a Sub-Account Transfer?" below for more information.
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You will not be provided with information regarding periodic updates to the
Funds and allocation percentages in the asset allocation models, and we will not
reallocate your Contract Value based on those updates. Information on updated
asset allocation models may be obtained by contacting your investment
professional. If you wish to update your asset allocation model, you may do so
by terminating your existing model and re-enrolling into a new one. Investment
alternatives other than these asset allocation models are available that may
enable you to invest your Contract Value with similar risk and return
characteristics. The models available to you may be restricted based on your
election of certain optional riders. When considering an asset allocation model
for your individual situation, you should consider your other assets, income and
investments in addition to this annuity.
Asset allocation does not guarantee that your Contract Value will increase nor
will it protect against a decline if market prices fall. If you choose to
participate in an asset allocation program, you are responsible for determining
which asset allocation model is best for you. Tools used to assess your risk
tolerance may not be accurate and could be useless if your circumstances change
over time. Although each asset allocation model is intended to maximize returns
given various levels of risk tolerance, an asset allocation model may not
perform as intended. Market, asset class or allocation option performance may
differ in the future from historical performance and from the assumptions upon
which the asset allocation model is based, which could cause an asset allocation
model to be ineffective or less effective in reducing volatility. An asset
allocation model may perform better or worse than any single Fund, allocation
option or any other combination of Funds or allocation options. In addition, the
timing of your investment and automatic rebalancing may affect performance.
Rebalancing and periodic updating of asset allocation models can cause their
component Funds to incur transactional expenses to raise cash for money flowing
out of Funds or to buy securities with money flowing into the Funds. Moreover,
large outflows of money from the Funds may increase the expenses attributable to
the assets remaining in the Funds. These expenses can adversely affect the
performance of the relevant Funds and of the asset allocation models. In
addition, these inflows and outflows may cause a Fund to hold a large portion of
its assets in cash, which could detract from the achievement of the Fund's
investment objective, particularly in periods of rising market prices. For
additional information regarding the risks of investing in a particular Fund,
see that Fund's prospectus.
Additional considerations apply for qualified Contracts with respect to static
asset allocation model Programs. Neither we, nor any third party service
provider, nor any of their respective affiliates, is acting as a fiduciary under
The Employment Retirement Income Security Act of 1974, as amended (ERISA) or the
Code, in providing any information or other communication contemplated by any
Program, including, without limitation, any asset allocation models. That
information and communications are not intended, and may not serve as a primary
basis for your investment decisions with respect to your participation in a
Program. Before choosing to participate in a Program, you must determine that
you are capable of exercising control and management of the assets of the plan
and of making an independent and informed decision concerning your participation
in the Program. Also, you are solely responsible for determining whether and to
what extent the Program is appropriate for you and the assets contained in the
qualified Contract. Qualified Contracts are subject to additional rules
regarding participation in these Programs. It is your responsibility to ensure
compliance of any recommendation in connection with any asset allocation model
with governing plan documents.
ASSET REBALANCING
In asset rebalancing, you select a portfolio of Funds, and we will rebalance
your assets at the specified frequency to reflect the original allocation
percentages you selected (choice of frequency may be limited when certain
optional riders are elected). You can also combine this Program with others such
as the Systematic Withdrawal Program, InvestEase(R) and DCA Programs (subject to
restrictions). You may designate only one set of asset allocation instructions
at a time.
DOLLAR COST AVERAGING PROGRAMS
Dollar Cost Averaging is a program that allows you to systematically make
transfers into Funds over a period of time. Since the transfer into Funds occurs
at regularly scheduled intervals, regardless of price fluctuations, you may
ultimately have an average cost per share that is lower. We offer three Dollar
Cost Averaging Programs:
- DCA Plus
- Fixed Amount DCA
- Earnings/Interest DCA
DCA PLUS - This program allows you to earn a fixed rate of interest on
investments and is different from the Fixed Account. We determine, at our
discretion, the interest rates to be credited. These interest rates may vary
depending on the Contract share class you purchased and the date the request for
the Program is received. Please consult your investment professional to
determine the interest rate for your Program. DCA Plus may not be available for
all Contract share classes.
You may elect either the "12-Month Transfer Program" or the "6-Month Transfer
Program".
- Under the 12-Month Transfer Program, new Premium Payments will be credited
with an interest rate that will not change for twelve months. You must
transfer these investments into available Funds (and not the Fixed Account)
during this twelve month period. Unless otherwise depleted, all then
remaining Program investments are transferred to the designated destination
Funds or other instructions will be sought from you. Transfers out will
occur monthly.
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- Under the 6-Month Transfer Program, new Premium Payments will be credited
with an interest rate that will not change for six months. You must transfer
these investments into available Funds (and not the Fixed Account) during
this six month period. Unless otherwise depleted, all then remaining Program
investments are transferred to the designated destination Funds or other
instructions will be sought from you. Transfers out will occur monthly.
- Each time you make a subsequent Premium Payment, you can invest in a
different rate lock program. Any subsequent investments made are considered
a separate rate lock Program investment. You can invest in up to five
different rate lock Programs at one time.
- You must invest at least $5,000 in each rate lock program ($2,000 for IRAs).
We will pre-authorize Program investment transfers subject to restrictions.
- Pre-authorized transfers will begin within fifteen days of receipt of the
Program payment provided we receive complete enrollment instructions In Good
Order.
- If a DCA Plus Fixed Account payment is received without enrollment
instructions and a DCA Plus Fixed Account is active on the Contract, we will
set up the new Program to mirror the existing one. If a DCA Plus Fixed
Account payment is received without enrollment instructions and a DCA Plus
Fixed Account is not active on the Contract, but if the future investment
allocation and a static asset allocation model is active on the Contract, we
will set up the new Program to move Funds to the static asset allocation
model. Otherwise, we will contact your investment professional to obtain
complete instructions. If we do not receive In Good Order enrollment
instructions we will refund the payment for further instruction.
- If your Program payment is less than the required minimum to commence the
Program, we will invest into the destination Funds indicated on the Program
instructions accompanying the payment. If Program instructions were not
provided and a DCA Plus Fixed Account is active on the Contract, we will
apply the payment to the destination Funds of the current DCA Plus Fixed
Account. Otherwise, we will contact your investment professional to obtain
further investment instructions.
- The interest credited under the DCA Plus Fixed Account is not earned on the
full amount of your Premium Payment for the entire length of the Program.
Program transfers to Sub-Accounts decrease the amount of your Premium
Payment remaining in the Program.
- You may elect to terminate your involvement in this Program at any time.
Upon cancellation, all the amounts remaining in the Program will be
immediately transferred to the Funds you designated.
FIXED AMOUNT DCA - This feature allows you to regularly transfer (monthly or
quarterly) a fixed amount from the Fixed Account (if available based on the
Contract and/ or rider selected) or any Fund(s) into different Fund(s). This
program begins fifteen days following our receipt of the Program payment you
instruct us otherwise. You must make at least three transfers in order to remain
in this Program.
EARNINGS/INTEREST DCA - This feature allows you to regularly transfer (monthly
or quarterly) the earnings (i.e., any gains over the previous month's or
quarter's value) from your investment in the Fixed Account (if available based
on the form of Contract selected) or any Fund(s) into other Fund(s). This
program begins two business days following our receipt of your instructions to
enroll in the feature plus the frequency selected unless you instruct us
otherwise. You must make at least three transfers in order to remain in this
Program.
SYSTEMATIC WITHDRAWAL PROGRAM
This systematic withdrawal feature allows you to make Partial Withdrawals. You
can designate the Funds to be withdrawn from and also choose the frequency of
Partial Withdrawals (monthly, quarterly, semiannual, or annually). If you select
a monthly frequency, you must receive payment through electronic transfer. The
minimum amount of each Partial Withdrawal is $100. Amounts taken under this
Program will count towards the Free Withdrawal Amount (FWA) and may be subject
to a CDSC. For more information on the FWA, please see Section 4.b and the
Glossary in Section 8. Amounts received prior to age 59 1/2, may have adverse
tax consequences, including a 10% federal income tax penalty on the taxable
portion of the withdrawal payment. You may be able to satisfy Code Section
72(t)/(q) requirements by enrolling in this Program. Please see the Federal Tax
Considerations section and consult your tax adviser for information about the
tax consequences associated with your Contract. Your level of participation in
this Program may result in your exceeding permissible withdrawal limits under
certain optional riders.
OTHER PROGRAM CONSIDERATIONS
- You may terminate your enrollment in any Program at any time.
- We may discontinue, modify or amend any of these Programs at any time. Your
enrollment authorizes us to automatically and unilaterally amend your
enrollment instructions if:
- any Fund is merged or substituted into another Fund - then your
allocations will be directed to the surviving Fund; or
- any Fund is liquidated - then your allocations to that Fund will be
directed to any available money market Fund following prior
notifications prior to reallocation.
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You may always provide us with updated instructions following any of these
events.
- Continuous or periodic investment neither insures a profit nor protects
against a loss in declining markets. Because these Programs involve
continuous investing regardless of fluctuating price levels, you should
carefully consider your ability to continue investing through periods of
fluctuating prices.
- All optional Lifetime Withdrawal and Death Benefit riders have different
withdrawal limitations. Breaking these limits can have a significant adverse
effect on your rights and future benefits. Participation in a systematic
withdrawal program may cause you to break these limits.
- These Programs may be modified, terminated or adversely impacted by the
imposition of Fund trading policies.
CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
Yes. During those phases of your Contract when transfers are permissible, you
may make transfers between Funds according to the following policies and
procedures, as they may be amended from time to time.
WHAT IS A SUB-ACCOUNT TRANSFER?
A Sub-Account transfer is a transaction requested by you that involves
reallocating part or all of your Contract Value among the Funds available in
your Contract. Your transfer request will be processed at the net asset value of
each Fund share as of the end of the Valuation Day that it is received In Good
Order. Otherwise, your request will be processed on the following Valuation Day.
We will send you a confirmation when we process your transfer. You are
responsible for verifying transfer confirmations and promptly advising us of any
errors within thirty days of receiving the confirmation.
WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER?
Many Owners request Sub-Account transfers. Some request transfers (purchases)
into a particular Sub-Account, and others request transfers out of (redemptions)
a particular Sub-Account. In addition, some Owners allocate new Premium Payments
to Sub-Accounts, and others request Partial Withdrawals. We combine all the
daily requests to transfer out of a Sub-Account along with all full Surrenders
from that Sub-Account and determine how many shares of that Fund we would need
to sell to satisfy all Owners' "transfer-out" requests. At the same time, we
also combine all the daily requests to transfer into a particular Sub-Account or
new Premium Payments allocated to that Sub-Account and determine how many shares
of that Fund we would need to buy to satisfy all Owners' "transfer-in" requests.
We may take advantage of our size and available technology to combine sales of a
particular Fund for any of the other products offered by us or our affiliates.
We also combine transfer-out requests and transfer-in requests. We then "net"
these trades by offsetting purchases against redemptions. Netting trades has no
impact on the net asset value of the Fund shares that you purchase or sell. This
means that we sometimes reallocate shares of a Fund rather than buy new shares
or sell shares of the Fund.
For example, if we combine all transfer-out requests of a stock Fund with all
other transfer-out requests of that Fund from all our other products, we may
have to sell $1 million dollars of that Fund on any particular day. However, if
other Owners and the owners of other products offered by us, want to transfer-in
an amount equal to $300,000 of that same Fund, then we would send a sell order
to the Fund for $700,000 (a $1 million sell order minus the purchase order of
$300,000) rather than making two or more transactions.
WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER?
FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We count all
Sub-Account transfer activity that occurs on any one Valuation Day as one
Sub-Account transfer, however, you cannot transfer the same Contract Value more
than once a Valuation Day.
EXAMPLES
[Download Table]
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE?
--------------------------------------------------------------------------------
Transfer $10,000 from a money market Sub-Account to a growth Yes
Sub-Account
Transfer $10,000 from a money market Sub-Account to any number Yes
of other Sub-Accounts (dividing the $10,000 among the other
Sub-Accounts however you chose)
Transfer $10,000 from any number of different Sub-Accounts to Yes
any number of other Sub-Accounts
Transfer $10,000 from a money market Sub-Account to a growth No
Sub-Account and then, before the end of that same Valuation
Day, transfer the same $10,000 from the growth Sub-Account to
an international Sub-Account
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF TWELVE SUB-ACCOUNT TRANSFERS EACH
CONTRACT YEAR (the transfer rule) by internet or telephone. Once you have
reached the maximum number of Sub-Account transfers, you may only submit any
additional Sub-Account transfer requests and any trade cancellation requests in
writing through U.S. Mail or overnight delivery service. In other words,
Internet or telephone transfer requests will not be honored. We may, but are not
obligated to, notify you when you are in jeopardy of
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approaching these limits. For example, we may send you a letter after your tenth
Sub-Account transfer to remind you about the transfer rule. After your twelfth
transfer request, our computer system will not allow you to do another
Sub-Account transfer by telephone or via the internet. You will then be
instructed to send your Sub-Account transfer request by U.S. Mail or overnight
delivery service.
We reserve the right to aggregate your Contracts (whether currently existing or
those recently Surrendered) for the purposes of enforcing these restrictions.
The transfer rule does not apply to Sub-Account transfers that occur
automatically as part of a company-sponsored Program, such as a Contract
exchange program that may be offered by us from time to time. Reallocations made
based on a Fund merger or liquidation also do not count toward this limit.
Restrictions may vary based on state law.
We make no assurances that the transfer rule is or will be effective in
detecting or preventing market timing.
THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT
TRANSFERS. You should not purchase this Contract if you want to make frequent
Sub-Account transfers for any reason. In particular, don't purchase this
Contract if you plan to engage in "market timing," which includes frequent
transfer activity into and out of the same Fund, or frequent Sub-Account
transfers in order to exploit any inefficiencies in the pricing of a Fund. Even
if you do not engage in market timing, certain restrictions may be imposed.
Generally, you are subject to Fund trading policies, if any. We are obligated to
provide, at the Fund's request, tax identification numbers and other shareholder
identifying information contained in our records to assist Funds in identifying
any pattern or frequency of Sub-Account transfers that may violate their trading
policy. In certain instances, we have agreed to serve as a Fund's agent to help
monitor compliance with that Fund's trading policy.
We are obligated to follow each Fund's instructions regarding enforcement of
their trading policy. Penalties for violating these policies may include, among
other things, temporarily or permanently limiting or banning you from making
Sub-Account transfers into a Fund or other funds within that fund complex. We
are not authorized to grant an exception to a Fund's trading policy. Please
refer to each Fund's prospectus for more information. Transactions that cannot
be processed because of Fund trading policies will be considered not In Good
Order.
In certain circumstances, Fund trading policies do not apply or may be limited.
For instance:
- Certain types of Financial Intermediaries may not be required to provide us
with shareholder information.
- Excepted funds, such as money market funds and any Fund that affirmatively
permits short-term trading of its securities may opt not to adopt this type
of policy. This type of policy may not apply to any Financial Intermediary
that a Fund treats as a single investor.
- A Fund can decide to exempt categories of Contract holders whose Contracts
are subject to inconsistent trading restrictions or none at all.
- Non-shareholder initiated purchases or redemptions may not always be
monitored. These include Sub-Account transfers that are executed: (i)
automatically pursuant to a company-sponsored contractual or systematic
program such as transfers of assets as a result of Dollar Cost Averaging
programs, asset allocation programs, automatic rebalancing programs, Annuity
Payouts, or systematic withdrawal programs; (ii) as a result of the payment
of a Death Benefit; (iii) as a result of any deduction of charges or fees
under a Contract; or (iv) as a result of payments such as scheduled
contributions, scheduled Partial Withdrawals or full Surrenders, retirement
plan salary reduction contributions, or planned Premium Payments.
POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able
to detect or prevent all abusive trading or market timing activities. For
instance:
- Since we net all the purchases and redemptions for a particular Fund for
this and many of our other products, transfers by any specific market timer
could be inadvertently overlooked.
- Certain forms of variable annuities and types of Funds may be attractive to
market timers. We cannot provide assurances that we will be capable of
addressing possible abuses in a timely manner.
- These policies apply only to individuals and entities that own this Contract
or have the right to make transfers (regardless of whether requests are made
by you or anyone else acting on your behalf). However, the Funds that make
up the Sub-Accounts of this Contract are also available for use with many
different variable life insurance policies, variable annuity products and
funding agreements, and are offered directly to certain qualified retirement
plans. Some of these products and plans may have less restrictive transfer
rules or no transfer restrictions at all.
- In some cases, we are unable to count the number of Sub-Account transfers
requested by group annuity participants co-investing in the same Funds
(participants) or enforce the transfer rule because we do not keep
participants' account records for a Contract. In
18
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those cases, the participant account records and participant Sub-Account
transfer information are kept by such owners or its third party service
provider. These owners and third party service providers may provide us with
limited information or no information at all regarding participant Sub-Account
transfers.
HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS?
We are not responsible for losses or lost investment opportunities associated
with the effectuation of these policies. Frequent Sub-Account transfers may
result in the dilution of the value of the outstanding securities issued by a
Fund as a result of increased transaction costs and lost investment
opportunities typically associated with maintaining greater cash positions. This
can adversely impact Fund performance and, as a result, the performance of your
Contract Value. This may also lower the Death Benefit paid to your Beneficiary
or lower Annuity Payouts for your Payee as well as reduce the value of other
optional benefits available under your Contract.
Separate Account investors could be prevented from purchasing Fund shares if we
reach an impasse on the execution of a Fund's trading instructions. In other
words, a Fund complex could refuse to allow new purchases of shares by all our
variable product investors if the Fund and we cannot reach a mutually acceptable
agreement on how to treat an investor who, in a Fund's opinion, has violated the
Fund's trading policy.
In some cases, we do not have the tax identification number or other identifying
information requested by a Fund in our records. In those cases, we rely on the
Owner to provide the information. If the Owner does not provide the information,
we may be directed by the Fund to restrict the Owner from further purchases of
Fund shares. In those cases, all participants under a plan funded by the
Contract will also be precluded from further purchases of Fund shares.
MAIL, TELEPHONE AND INTERNET TRANSFERS
You may make transfers through the mail or through your Financial Intermediary.
You may also make transfers by calling us or through our website. Transfer
instructions received by telephone before the end of any Valuation Day will be
carried out at the end of that day. Otherwise, the instructions will be carried
out at the end of the next Valuation Day.
Transfer instructions you send electronically are considered to be received by
us at the time and date stated on the electronic acknowledgement we return to
you. If the time and date indicated on the acknowledgement is before the end of
any Valuation Day, the instructions will be carried out at the end of that
Valuation Day. Otherwise, the instructions will be carried out at the end of the
next Valuation Day. If you do not receive an electronic acknowledgement, you
should contact us as soon as possible.
We will send you a confirmation when we process your transfer. You are
responsible for verifying transfer confirmations and promptly reporting any
inaccuracy or discrepancy to us and your investment professional. Any verbal
communication should be re-confirmed in writing.
Telephone or Internet transfer requests may currently only be cancelled by
calling us before the end of the Valuation Day you made the transfer request.
We, our agents or our affiliates are NOT responsible for losses resulting from
telephone or electronic requests that we believe are genuine. We will use
reasonable procedures to confirm that instructions received by telephone or
through our website are genuine, including a requirement that Owners provide
certain identification information, including a personal identification number.
We record all telephone transfer instructions. WE MAY SUSPEND, MODIFY, OR
TERMINATE TELEPHONE OR ELECTRONIC TRANSFER PRIVILEGES AT ANY TIME, FOR ANY
REASON.
POWER OF ATTORNEY
You may authorize another person to conduct financial and other transactions on
your behalf by submitting a completed power of attorney form that meets the
power of attorney requirements of your resident state law. Once we have the
completed form on file at our Annuity Service Center, we will accept transaction
requests, including transfer instructions, subject to our transfer restrictions,
from your designated third party until we receive new instructions in writing
(and In Good Order) from you.
B. CHARGES AND FEES
In addition to the following charges, there are optional riders that if elected,
assess an additional charge. Please see sections 5 and 6 for more information.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a daily charge for assuming mortality and expense risks under the
Contract. This charge is deducted from your Sub-Account Value.
The mortality and expense risk charge is broken into charges for mortality risks
and for an expense risk:
- Mortality risk - There are two types of mortality risks that we assume,
those made while your Premium Payments are accumulating and those made once
Annuity Payouts have begun.
19
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During the accumulation phase of your Contract, we are required to cover any
difference between the Death Benefit paid and the Surrender Value. These
differences may occur in periods of declining value or in periods when any CDSCs
would have been applicable. The risk that we bear during this period is that
actual mortality rates, in aggregate, may exceed expected mortality rates.
Once Annuity Payouts have begun, we may be required to make Annuity Payouts as
long as the Annuitant is living, regardless of how long the Annuitant lives. The
risk that we bear during this period is that the actual mortality rates, in
aggregate, may be lower than the expected mortality rates.
- Expense risk - We also bear an expense risk that the sales charges (if
applicable), Premium Based Charge (if applicable) and the Annual Maintenance
Fee collected before the Annuity Commencement Date may not be enough to
cover the actual cost of selling, distributing and administering the
Contract.
Annuity Payouts will NOT be affected by (a) the actual mortality experience of
our Annuitants, or (b) our actual expenses if they are greater than the
deductions stated in the Contract. Because we cannot be certain how long our
Annuitants will live, we charge this percentage fee based on the mortality
tables currently in use. The mortality and expense risk charge enables us to
keep our commitments and to pay you as planned. If the mortality and expense
risk charge under a Contract is insufficient to cover our actual costs, we will
bear the loss. If the mortality and expense risk charge exceeds these costs, we
keep the excess as profit. We may use these profits, as well as revenue sharing
and Rule 12b-1 fees received from certain Funds, for any proper corporate
purpose including, among other things, payment of sales expenses, including the
fees paid to distributors. We expect to make a profit from the mortality and
expense risk charge.
ANNUAL MAINTENANCE FEE
The Annual Maintenance Fee is a flat fee that is deducted from your Contract
Value to reimburse us for expenses relating to the administrative maintenance of
the Contract and your Account. The annual charge is deducted on a Contract
Anniversary or when the Contract is fully Surrendered if the Contract Value at
either of those times is less than $50,000. The charge is deducted
proportionately from each Account in which you are invested.
We will waive the Annual Maintenance Fee if your Contract Value is $50,000 or
more on your Contract Anniversary or when you fully Surrender your Contract. In
addition, if you have multiple Contracts with a combined Contract Value of
$100,000 or greater, we may waive the Annual Maintenance Fee on all Contracts.
However, we may, but are not obligated to, limit the number of waivers to a
total of six Contracts. We also may waive the Annual Maintenance Fee under
certain other conditions.
ADMINISTRATIVE CHARGE
We apply a daily administrative charge against all Contract Values held in the
Separate Account during both the accumulation and annuity phases of the
Contract. This charge compensates us for administrative expenses that exceed
revenues from the Annual Maintenance Fee described above. There is not
necessarily a relationship between the amount of administrative charge imposed
on a given Contract and the amount of expenses that may be attributable to that
Contract; expenses may be more or less than the charge.
PREMIUM BASED CHARGE (B AND L SHARE CONTRACTS)
We apply a quarterly Premium Based Charge, if applicable, against all Premium
Payments based on Remaining Gross Premiums. The Premium Based Charge will be
prorated for the number of days since the last Premium Based Charge or, if there
has been no Premium Base Charge, then since the Contract issue date. The Premium
Based Charge will be assessed only with respect to Contract Value invested in
Sub-Accounts and not investments in the Fixed Account . The Premium Based Charge
is intended to compensate us for a portion of our acquisition expenses,
including promotion and distribution of the Contract. A Premium Based Charge
will be deducted upon:
1. each Quarterly Contract Anniversary; and/or
2. full Surrender.
The amount of Remaining Gross Premium used for calculating the Premium Based
Charge is determined on the date of each of the above transactions.
Please see Premium Based Charge Examples 1-2 in Appendix A.
If a Beneficiary elects to continue the Contract under any of the available
options described under the Standard Death Benefits section below, we will
continue to deduct the Premium Based Charge, based on the portion of Remaining
Gross Premium applicable for that Beneficiary. The Premium Based Charge is taken
proportionally out of the Sub-Accounts.
Please see Premium Based Charge Example 2 in Appendix A for an example of how
the Premium Based Charge and CDSC work together.
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FUND FACILITATION FEE
We apply a daily fund facilitation fee to the assets in certain Sub-Accounts at
the following annualized rates:
[Download Table]
FUND NAME RATE
--------------------------------------------------------------------------------
American Funds Insurance Series(R) - Managed Risk Asset Allocation
Fund 0.10%
BlackRock High Yield V.I. Fund 0.10%
BlackRock U.S. Government Bond V.I. Fund 0.10%
FVIT Franklin Dividend and Income Managed Risk Portfolio 0.05%
FVIT Growth Managed Risk Portfolio 0.05%
FVIT Select Advisor Managed Risk Portfolio 0.05%
Hartford Capital Appreciation HLS Fund 0.05%
Hartford Index HLS Fund 0.15%
Hartford Total Return Bond HLS Fund 0.05%
Invesco V.I. Money Market Fund 0.10%
PIMCO Total Return Portfolio 0.15%
The Fund Facilitation Fee allows us to offer these Funds to you, even though the
amounts paid to us by the Funds are not sufficient to allow us to meet our
expenses and revenue targets. While we reserve the right to increase the Fund
Facilitation Fee for any of these Sub-Accounts (subject to the maximum shown in
the Fee Summary), such a change will not be applied to existing Contract Owners.
PREMIUM TAXES
A deduction is also made for Premium taxes, if any, imposed on us by a state,
municipality, or other governmental entity. The tax, currently ranging from 0%
to 3.5% is assessed, when annuity payments begin or upon full Surrender. We will
pay Premium taxes at the time imposed under applicable law. We may deduct
Premium taxes at the time we pay such taxes to the applicable taxing
authorities, upon full Surrender, or when annuity payments commence.
SALES CHARGES
CONTINGENT DEFERRED SALES CHARGES (CDSC) (B AND L SHARE CONTRACTS)
Subject to the exclusions below, we may deduct a CDSC when you make full
Surrenders, Partial Withdrawals or withdraw Commuted Value of Annuity Payouts
under Annuity Payout Options Three, Five or Six. This charge is designed to
recover acquisition expenses that have not yet been recouped from revenue
generated by your Contract. Premium Payments will be taken out on a first-in,
first-out basis. This may impact whether subsequent Partial Withdrawals might be
subject to a CDSC. Please see Sections 4.c Surrenders, and 4.d Annuity Payouts,
for more information regarding when a CDSC may be applied.
We use the following general approach to calculating your CDSC:
Step 1. Remaining Gross Premium not subject to CDSC that have been
invested for longer than the applicable CDSC period can always
be taken out free of any CDSC. The applicable CDSC period
begins on the date we receive the Premium Payment. Please see
Section 2 Fee Summary for a description of CDSC periods
applicable to your share class.
Step 2. If the amount of money that you wish to take out is less than
your FWA (as described below), plus any amount from step 1,
then this sum will also be paid to you without the imposition
of a CDSC. No further steps will be applied.
Step 3. Assuming that steps 1 and 2 do not apply because the amount of
money that you wish to take out is more than your FWA and is
still subject to a CDSC, then we will deduct your FWA from the
amount of the money you wish to take out and then process your
request using steps 4-6.
Step 4. We will then multiply Remaining Gross Premiums still subject
to CDSC by a factor. The factor is equal to the amount of
money resulting from step 3 divided by the Contract Value
above the available FWA. If you take a Surrender during
declining market conditions, Remaining Gross Premiums will
have the effect of increasing the percentage of your Contract
Value that is subject to a CDSC.
Step 5. We will then take the amount of Remaining Gross Premium
resulting from step 4 and multiply it by the corresponding
CDSC percentage as shown in the Fee Summary using the
applicable CDSC schedule. Each Premium Payment has its own
CDSC schedule regardless of whether it has been invested in
the Sub-Accounts or the Fixed Account.
Step 6. We then deduct the CDSC calculated in step 5 from the amount
of money in step 3, plus FWA and pay the remaining balance to
you.
These same steps are generally used when a CDSC is charged upon Annuity Payouts
(as applicable under the Annuity Payout Options noted above).
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Please refer to CDSC Examples 1-5 in Appendix A for further information about
how these formulas will be applied.
THE FOLLOWING ARE NOT SUBJECT TO A CDSC:
- Free Withdrawal Amount - During a period when a CDSC may be applied, you may
fully Surrender up to the greater of:
- 5% of premium that would otherwise be subject to a CDSC, or
- earnings.
We compute the FWA as of the end of the Valuation Day when a Partial
Withdrawal, full Surrender or commutation request is received by us In Good
Order.
You may not carry over unused portions of your FWA from one year to another.
- Lifetime Annual Payments. See Glossary for a definition of Lifetime Annual
Payments.
- If you are a patient in a certified long-term care facility or other
eligible facility - CDSC will be waived for a Partial Withdrawal or full
Surrender if you or the joint Owner are confined for at least 90 calendar
days to a facility which: (i) provides skilled nursing care under the
supervision of a physician; and (ii) has 24 hour a day nursing services by
or under the supervision of a registered nurse; and (iii) keeps a daily
medical record of each patient.
For this waiver to apply, you must:
- have owned the Contract continuously since it was issued,
- provide written proof of your eligibility satisfactory to us, and
- request a Partial Withdrawal or the full Surrender within ninety-one
calendar days after the last day that you are an eligible patient in
a recognized facility or nursing home.
This waiver is not available if the Owner or the joint Owner is in a
facility or nursing home when you purchase the Contract. We will not waive
any CDSC applicable to any Premium Payments made while you are in an
eligible facility or nursing home. This waiver can be used any time after
the first 90 days in a certified long-term care facility or other eligible
facility up until 91 days after exiting such a facility. This waiver may
not be available in all states.
- Upon death of any Owner(s) - CDSC will be waived if any Owner(s) dies.
- Upon Annuitization - CDSC will be waived when you annuitize the Contract.
However, we will charge a CDSC if the Contract is fully Surrendered during
the CDSC period under an Annuity Payout Option which allows commutation.
- For RMDs - CDSC will be waived for any Owner age 70 1/2 or older with a
Contract held under an IRA who withdraws an amount equal to or less the RMD
for that Contract Year. All requests for RMDs must be in writing.
- For substantially equal periodic payments - CDSC will be waived if you take
Partial Withdrawals under the Systematic Withdrawal Program where you
receive a scheduled series of substantially equal periodic payments for the
greater of five years or to age 59 1/2.
- Upon cancellation during the Right to Cancel Period - CDSC will be waived if
you cancel your Contract during the Right to Cancel Period.
- Exchanges - As an accommodation, we may, at our discretion, time-credit CDSC
for the time that you held an annuity previously issued by us.
- Settlements - We may, at our discretion, waive or time-credit CDSCs in
connection with the settlement of disputes or if required by regulatory
authorities.
CHARGES AGAINST THE FUNDS
Annual fund operating expenses - The Separate Account purchases shares of the
Funds at net asset value. The net asset value of the Fund reflects investment
advisory fees, distribution charges, operating expenses and administrative
expenses already deducted from the assets of the Funds. These charges are
described in the Funds' prospectuses, in Section 2 Fee Summary and in Appendix
C.
REDUCED FEES AND CHARGES
We may offer, at our discretion, reduced fees and charges for certain Contracts
(including employer-sponsored savings plans) which may result in decreased costs
and expenses.
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C. SURRENDERS AND PARTIAL WITHDRAWALS
WHAT KINDS OF FULL SURRENDERS AND PARTIAL WITHDRAWALS ARE AVAILABLE?
BEFORE THE ANNUITY COMMENCEMENT DATE:
Full Surrenders/Contract Termination - When you fully Surrender or terminate
your Contract before the Annuity Commencement Date, the Surrender Value of the
Contract will be made in a lump sum payment. The Surrender Value is the Contract
Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional
benefit charges, if applicable, Premium Based Charges, if applicable, and the
Annual Maintenance Fee. The Surrender Value may be more or less than the amount
of the Premium Payments made to a Contract.
Partial Withdrawals - You may request a Partial Withdrawal of Contract Value at
any time before the Annuity Commencement Date. We will deduct any applicable
CDSC. You can request that we deduct this charge in either of two ways. One
option, a gross withdrawal, is to deduct the CDSC from the amount that you
request. The other option, a net of charges withdrawal, is to fully Surrender an
amount of Contract Value greater than what you requested, but after the
deduction of CDSC will result in payment to you of the amount you requested.
Because the net of charges withdrawal will Surrender a greater amount of
Contract Value, your CDSC may be greater under this method. Our default option
is a gross withdrawal. Please see CDSC Examples 1-5 in Appendix A.
Partial Withdrawals of Contract Value are taken proportionally out of the
Sub-Accounts and the Fixed Account unless you direct us otherwise.
There are several restrictions on Partial Withdrawals of Contract Value before
the Annuity Commencement Date:
- the Partial Withdrawal of Contract Value must be at least equal to
$500, and
- your Contract Value following the Partial Withdrawal must be equal to
or greater than the Minimum Contract Value set forth in your
Contract. The Minimum Contract Value refers to the minimum Contract
Value that you must maintain within this Contract. IF YOU FAIL TO
COMPLY, WE RESERVE THE RIGHT TO FULLY TERMINATE YOUR CONTRACT. The
Contract Minimum Value varies by Contract share class and may also
vary if you have elected certain optional riders. Currently the
Minimum Contract Value for Class B, C and L shares is $2,500. We may
increase this minimum from time to time, but in no event shall the
minimum exceed $10,000 and in many states, cannot be increased after
your Contract is issued (see State Variations section for details).
Please see "What effect do Partial Withdrawals or full Surrenders
have on your benefits" under Daily Step Up Withdrawal Benefit for a
description of the effect of Partial Withdrawals and the Minimum
Contract Value when you elect this rider.
Partial Withdrawals will reduce your standard Death Benefit on a
dollar-for-dollar basis. Please see the sections of this prospectus describing
optional Death Benefit riders for a description of how Partial Withdrawals
affect benefits under those riders.
Please consult with your investment professional to be sure that you fully
understand the ways a Partial Withdrawal will affect your Contract.
AFTER THE ANNUITY COMMENCEMENT DATE:
Full Surrenders/Contract Termination - You may fully Surrender or terminate your
Contract on or after the Annuity Commencement Date only if you selected Annuity
Payout Options Three, Five, or Six. IN THE EVENT YOU TERMINATE YOUR CONTRACT
AFTER ELECTING ANNUITY PAYOUT OPTION THREE OR FIVE YOU WILL FORFEIT THE LIFE
CONTINGENT PAYMENTS PAYABLE UNDER THESE OPTIONS. Upon Contract termination, we
pay you the Commuted Value, minus any applicable CDSCs and any applicable
Premium Tax.
Partial Withdrawals - Partial Withdrawals are permitted after the Annuity
Commencement Date if you select Annuity Payout Option Three, Five, or Six. Upon
Partial Withdrawal we will pay you the commuted value minus any applicable CDSC.
Not all Annuity Payout Options may be available if the Contract is issued to
qualify under Code Section 408.
WHAT IS THE COMMUTED VALUE?
You may choose to accelerate Annuity Payouts under certain Annuity Payout
Options to be received in one lump sum. This is referred to as commuting your
Annuity Payout.
The amount that you request to commute must be at least equal to $500. There
will be a waiting period of at least thirty days forpayment of any lump sum
commutation.
Commuted Value is determined on the day we receive your written request.
HOW DO YOU REQUEST A PARTIAL WITHDRAWAL OR FULL SURRENDER?
Requests for full Surrenders terminating your Contract must be in writing.
Requests for Partial Withdrawals can be made in writing or by telephone. We will
send your money within seven days of receiving complete instructions. However,
we may postpone payment whenever: (a) the New York Stock Exchange is closed, (b)
trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC
permits and orders postponement or (d) the SEC determines that an emergency
exists to restrict valuation. We may also
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postpone payment of Surrenders with respect to a money market Fund if the board
of directors of the underlying money market Fund suspends redemptions from the
Fund in connection with the Fund's plan of liquidation, in compliance with rules
of the SEC or an order of the SEC.
Written Requests - Complete a Surrender form or send us a letter, signed by you,
to our Annuity Service Center stating:
- the dollar amount that you want to receive, either before or after we
withhold taxes and deduct for any applicable charges,
- your tax withholding amount or percentage, if any, and
- your mailing address.
You may submit this form to our Annuity Service Center via fax.
Unless you specify otherwise, we will provide the dollar amount you want to
receive minus applicable taxes and charges as the default option.
If there are joint Owners, both must authorize these transactions. For a Partial
Withdrawal, specify the Sub-Accounts that you want your Surrender to come from
(this may be limited to pro-rata Surrenders if optional benefits are elected);
otherwise, the Surrender will be taken in proportion to the value in each
Sub-Account.
Telephone Requests - To request a Partial Withdrawal by telephone, we must have
received your completed telephone redemption program enrollment form. If there
are joint Owners, both must sign this form. By signing the form, you authorize
us to accept telephone instructions for Partial Withdrawals from either Owner.
Telephone authorization will remain in effect until we receive a written
cancellation notice from you or your joint Owner, we discontinue the program, or
you are no longer the Owner of the Contract. Please call us with any questions
regarding restrictions on telephone Surrenders.
Internet Requests - We do not currently offer Partial Withdrawal or full
Surrenders via the internet. If in the future we offer internet withdrawals, we
must receive your completed internet Partial Withdrawal program enrollment form
In Good Order at our Annuity Service Center. If there are joint Owners, both
must sign this form. By signing the form, you authorize us to accept internet
instructions for Partial Withdrawals from either Owner. Internet authorization
will remain in effect until we receive a written cancellation notice from you or
your joint Owner, we discontinue the program, or you are no longer the Owner of
the Contract. Please call us with any questions regarding restrictions on
internet withdrawals. We may modify the requirements for internet withdrawals at
any time.
We may record telephone calls and use other procedures to verify information and
confirm that instructions are genuine. We will not be liable for losses or
expenses arising from telephone instructions reasonably believed to be genuine.
WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME.
Telephone and internet withdrawal instructions received before the end of a
Valuation Day will be processed at the end of that Valuation Day. Otherwise,
your request will be processed at the end of the next Valuation Day.
Completing a power of attorney form for another person to act on your behalf may
prevent you from making Partial Withdrawals via telephone and internet.
WHAT SHOULD BE CONSIDERED ABOUT TAXES?
There are certain tax consequences associated with Partial Withdrawals and full
Surrenders. Taking these actions before age 59 1/2 may also affect the
continuing tax-qualified status of some Contracts and may result in a penalty
tax.
WE DO NOT MONITOR PARTIAL WITHDRAWAL OR FULL SURRENDER REQUESTS. CONSULT YOUR
PERSONAL TAX ADVISER TO DETERMINE WHETHER A FULL SURRENDER OR PARTIAL WITHDRAWAL
IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY.
If you own more than one Contract issued by us or our affiliates in the same
calendar year, then these Contracts may be treated as one Contract for the
purpose of determining the taxation of distributions prior to the Annuity
Commencement Date.
Please see Section 8 for more information.
D. ANNUITY PAYOUTS
Generally speaking, when you annuitize your Contract, you begin the process of
converting Accumulation Units into what is known as the payout phase. The payout
phase starts when you annuitize your Contract or with your Annuity Commencement
Date and ends when we make the last payment required under your Contract. Once
you annuitize your Contract, you may no longer make any Premium Payments. You
must commence taking Annuity Payouts no later than when you reach your Annuity
Commencement Date. Please check with your investment professional to select the
Annuity Payout Option that best meets your income needs. All Annuity Payout
Options are subject to availability in your state. Annuitizing your Contract may
result in the termination of optional riders; see the sections of this
prospectus dealing with the optional riders for detailed information.
Upon Annuitization, your Contract Value will be moved to the General Account.
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WHEN DO YOUR ANNUITY PAYOUTS BEGIN?
Contract Value (minus any applicable Premium Taxes) may only be annuitized on
the Annuity Commencement Date.
Your Annuity Commencement Date cannot be earlier than your first Contract
Anniversary. In no event, however, may the Annuity Commencement Date be later
than:
- The later of the oldest Owner's 90th birthday (or if the Owner is a
non-natural person, the Annuitant's 90th birthday) or 10 years from the
Contract Issue Date (subject to state variation);
- The Annuity Commencement Date stated in an extension request (subject to
your Financial Intermediary's rules for granting extension requests)
received by us not less than thirty days prior to a scheduled Annuity
Commencement Date.
Extending your Annuity Commencement Date may have tax consequences. You should
consult a qualified tax adviser before doing so.
We reserve the right, at our discretion, to refuse to extend your Annuity
Commencement Date regardless of whether we may have granted extensions in the
past to you or other similarly situated investors. Your Financial Intermediary
may ask us to prohibit Annuity Commencement Date extensions beyond when the
Annuitant turns age 95. Please ask your investment professional whether you are
affected by any such prohibition and make sure that you fully understand the
implications this might have in regard to your Death Benefits. We will not
extend the Annuity Commencement Date beyond the oldest Owner's 100th birthday.
If the Owner is a non-natural person, the Annuitant's 100th birthday.
Except as otherwise provided, the Annuity Calculation Date is when the amount of
your Annuity Payout is determined. This occurs within five Valuation Days before
your selected Annuity Commencement Date.
All Annuity Payouts, regardless of frequency, will occur on the same day of the
month as the Annuity Commencement Date. After the initial payout, if an Annuity
Payout date falls on a Non-Valuation Day, the Annuity Payout is computed on the
prior Valuation Day. If the Annuity Payout date does not occur in a given month
due to a leap year or months with only thirty days (i.e. the 31st), the Annuity
Payout will be computed on the last Valuation Day of the month.
WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE?
Your Contract contains the Annuity Payout Options described below. We may at
times offer other Annuity Payout Options. We may change these Annuity Payout
Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout
Option cannot be changed.
- OPTION 1 - LIFE ANNUITY WITH CASH REFUND
We will make Annuity Payouts as long as the Annuitant is living. When the
Annuitant dies, we will calculate the sum of all Annuity Payouts that were made.
If the sum of such Annuity Payments at the time of the Annuitant's death does
not equal or exceed the Contract Value (minus any applicable Premium Taxes) at
the time of annuitization, we will pay the Beneficiary the difference between
the sum of the Annuity Payouts and the Contract Value (minus any applicable
Premium Taxes) at annuitization.
- OPTION 2 - LIFE ANNUITY
We make Annuity Payouts as long as the Annuitant is living. When the Annuitant
dies, we stop making Annuity Payouts. A Payee would receive only one Annuity
Payout if the Annuitant dies after the first payout, two Annuity Payouts if the
Annuitant dies after the second payout, and so forth.
- OPTION 3 - LIFE ANNUITY WITH GUARANTEED PAYMENTS FOR 10 YEARS
We will make Annuity Payouts as long as the Annuitant is living, but we at least
guarantee to make Annuity Payouts for 10 years. If the Annuitant dies before 10
years have passed, then the Beneficiary may elect to continue Annuity Payouts
for the remainder of the guaranteed number of years or receive the Commuted
Value in one sum.
- OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY
We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are
living. When one Annuitant dies, we continue to make Annuity Payouts until that
second Annuitant dies.
- OPTION 5 - JOINT AND LAST SURVIVOR LIFE ANNUITY GUARANTEED PAYMENTS FOR 10
YEARS
We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant
are living, but we at least guarantee to make Annuity Payouts 10 years. If the
Annuitant and the Joint Annuitant both die before ten years have passed, then
the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed
number of years or receive the Commuted Value in one sum.
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- OPTION 6 - GUARANTEED PAYMENT PERIOD ANNUITY
We agree to make payments for a specified time. The minimum period that you can
select is 10 years. The maximum period that you can select is 30 years. If, at
the death of the Annuitant, Annuity Payouts have been made for less than the
time period selected, then the Beneficiary may elect to continue the remaining
Annuity Payouts or receive the Commuted Value in one sum.
YOU CANNOT TERMINATE YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE
SELECTED ANNUITY PAYOUT OPTIONS THREE, FIVE OR SIX. A CDSC, IF APPLICABLE, MAY
BE DEDUCTED.
For certain qualified Contracts, if you elect an Annuity Payout Option with a
Period Certain, the guaranteed number of years must be less than the life
expectancy of the Annuitant at the time the Annuity Payouts begin. We compute
life expectancy using the IRS mortality tables.
AUTOMATIC ANNUITY PAYOUTS
In most states, if you do not elect an Annuity Payout Option, quarterly Annuity
Payouts will automatically begin on the Annuity Commencement Date under Annuity
Payout Option Three. In other states, if you do not elect an Annuity Payout
Option, quarterly Annuity Payouts will automatically begin on the Annuity
Commencement Date under Annuity Payout Option One (see the State Variations
section for details).
HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Annuity Commencement Date and an Annuity Payout
Option, you must also decide how often you want the Payee to receive Annuity
Payouts. You may choose to receive Annuity Payouts:
- monthly (only available with direct deposit),
- quarterly,
- semi-annually, or
- annually.
Once you select a frequency, it cannot be changed. When selecting a frequency
other than monthly, the Payout Purchase Rate used to determine Annuity Payouts
will be adjusted by a factor. The factor accounts for the current value of
accelerated Payouts, and will result in a Payout that is less than the sum of
each monthly Payout that would have been paid during the same period of time. If
you do not make a selection, the Payee will receive quarterly Annuity Payouts.
You must select a frequency that results in an Annuity Payout of at least $100.
If the amount falls below $100, we have the right to change the frequency to
bring the Annuity Payout up to at least $100.
- FIXED DOLLAR AMOUNT ANNUITY PAYOUTS
You will receive equal fixed dollar amount Annuity Payouts throughout the
Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined
by multiplying the Contract Value, minus any applicable Premium taxes, by an
annuity rate set by us.
5. DEATH BENEFITS
A. STANDARD DEATH BENEFIT
WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED?
The Death Benefit is the amount we will pay if the Owner or joint Owner dies
before we begin to make Annuity Payouts. The Standard Death Benefit is equal to
your Contract Value calculated as of the Valuation Day when we receive a
certified death certificate or other legal document acceptable to us In Good
Order at our Annuity Service Center. The calculated Death Benefit will remain
invested according to the Owner's last instructions until we receive complete
written settlement instructions from the Beneficiary but in no event sooner than
the day following the day on which we receive due proof of death. This means the
Death Benefit amount will fluctuate with the performance of the Account. When
there is more than one Beneficiary, we will calculate the Accumulation Units for
each Sub-Account and the dollar amount for the Fixed Account for each
Beneficiary's portion of the proceeds. The Premium Based Charge is not assessed
when the Death Benefit is paid.
Please see the heading entitled "What kinds of Surrenders are available? -
Before the Annuity Commencement Date" in Section 4.c Surrenders. Taking Excess
Withdrawals may significantly negatively affect your Death Benefit. Please
consult with your investment professional before making Excess Withdrawals to be
sure that you fully understand the ways such a decision will affect your
Contract. If you have not elected an Optional Withdrawal Benefit, all Partial
Withdrawals are Excess Withdrawals and if you have elected an Optional
Withdrawal Benefit, any Partial Withdrawal prior to the Minimum Income age is
also an Excess Withdrawal.
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B. RETURN OF PREMIUM
OBJECTIVE
To provide a Death Benefit equal to the greater of Premium Payments adjusted for
Partial Withdrawals; or Contract Value that we will pay if the Owner or joint
Owner dies before we begin to make Annuity Payouts.
Please consider the following prior to electing this rider:
- Excess Withdrawals will reduce the benefit proportionally, as described
below.
- The Premium Based Charge is not assessed when the Death Benefit is paid.
WHEN CAN YOU BUY THE RIDER?
You may elect this rider at any time, provided you have not previously elected
any optional Death Benefit. Non-natural Owners cannot elect this rider after the
Contract issue date.
IF YOU ELECT THIS RIDER OTHER THAN AT CONTRACT ISSUANCE,RIDER BENEFITS WILL BE
CALCULATED FROM THE RIDER EFFECTIVE DATE, NOT THE CONTRACT ISSUE DATE. THE
STARTING VALUES FOR DETERMINING YOUR DEATH BENEFIT WILL BE YOUR CONTRACT VALUE
AS OF THE RIDER EFFECTIVE DATE PLUS SUBSEQUENT PREMIUM PAYMENTS RECEIVED AFTER
THE RIDER EFFECTIVE DATE, AND NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER
PRIOR VALUES.
This rider may not be available through all Financial Intermediaries and may be
subject to additional restrictions set by your Financial Intermediary or us. We
reserve the right to withdraw this rider for the sale of new Contracts at any
time without notice. The maximum age of any Owner or Annuitant when electing
this rider is 80.
DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS?
Yes. You may not elect this rider if you have already elected another optional
Death Benefit.
HOW IS THE CHARGE FOR THIS RIDER CALCULATED?
The fee for the rider is based on Premium Payments adjusted for Partial
Withdrawals and is assessed on each Quarterly Contract Anniversary. This charge
will automatically be deducted from your Contract Value on your Quarterly
Contract Anniversary. A pro-rated charge will be deducted in the event of a full
Surrender of this Contract, revocation of this rider; or election of this rider
other than on the Contract Anniversary. The charge for the rider will be
withdrawn from each Sub-Account in the same proportion that the value of each
Sub-Account bears to the total Contract Value, excluding the Fixed Account.
Except as otherwise provided below, we will continue to deduct this charge until
we begin to make Annuity Payouts.
The rider fee may be increased or decreased at each Contract Anniversary.
IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS?
Yes. This Death Benefit is equal to the higher of A or B:
A = Contract Value; or
B = Premium Payments adjusted for Partial Withdrawals.
The death benefit before the Annuity Commencement Date under this rider is
limited. The death benefit cannot exceed the Contract Value at the time we
receive due proof of death, plus $1 million.
The Premium Based Charge is not assessed when the Death Benefit is paid.
See the Return of Premium Example 1 in Appendix A.
DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT?
Yes.
CAN YOU TERMINATE THIS RIDER?
Yes. At anytime following the fifth anniversary of the rider effective date, the
Owner may elect to terminate this rider. You may also terminate this rider on or
after the first anniversary of the rider effective date if the rider charge at
that time is greater than the rider charge on the rider effective date. If this
rider is terminated, then a pro-rated rider charge will be assessed on the
termination date, and will not be assessed thereafter. The Death Benefit will be
reset to the Standard Death Benefit. No other optional Death Benefit may be
elected following the termination. Please also see "Other Information" at the
end of this section for other ways the rider may terminate.
A company-sponsored exchange of this rider will not be considered to be a
termination by you of the rider. This rider will also terminate upon election of
a Death Benefit option (described in Sections 5.f and 5.g) by the Beneficiary
(excluding Spousal Contract continuation).
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WHAT EFFECT DO PARTIAL WITHDRAWALS HAVE ON YOUR BENEFITS UNDER THE RIDER?
Partial Withdrawals reduce your Death Benefit in different ways depending on
whether they are Excess Withdrawals or not.
- PARTIAL WITHDRAWALS THAT ARE NOT EXCESS WITHDRAWALS will reduce your Death
Benefit on a dollar for dollar basis.
- EXCESS WITHDRAWALS WILL REDUCE YOUR DEATH BENEFIT ON A PROPORTIONATE BASIS.
IF YOUR CONTRACT VALUE IS LESS THAN YOUR DEATH BENEFIT, REDUCTIONS ON A
PROPORTIONATE BASIS WILL BE GREATER THAN IF DONE ON A DOLLAR-FOR-DOLLAR
BASIS.
If you elect another optional rider, Partial Withdrawals (including Lifetime
Annual Payments) may affect those other riders differently than they affect this
rider.
If you have not elected an Optional Withdrawal Benefit, all Partial Withdrawals
are Excess Withdrawals and if you have elected an Optional Withdrawal Benefit,
any Partial Withdrawal prior to the Minimum Income age is also an Excess
Withdrawal.
See Return of Premium Example 1 in Appendix A.
WHAT HAPPENS IF YOU CHANGE OWNERSHIP?
An ownership change will terminate this rider and the Death Benefit will be
reset to the Standard Death Benefit. A final pro-rated rider charge will be
assessed on the termination date, and then will no longer be assessed. If the
ownership change is a result of Spousal Contract continuation, the Contract
Value will be reset to equal the Death Benefit payable on the deceased Spouse's
death and the surviving Spouse who continues the Contract may choose to elect
any optional Death Benefit rider then available. Please see "Can your Spouse
continue your Death Benefit?" below for additional information.
Ownership changes may be taxable to you. We recommend that you consult with a
tax adviser before making any ownership changes.
CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT?
Generally, yes. This rider terminates upon the death of the Owner. The Spouse
may continue the Contract under the "Spouse Beneficiary" provision of the
Contract, whereby the Contract Owner's Spouse will become the Contract Owner if
the Spouse was named as Beneficiary. The Spouse may either choose to continue
the Contract or may elect to be paid a Death Benefit option, if eligible. If the
Spouse chooses to continue the Contract, we will increase the Contract Value to
the Death Benefit value as of the Valuation Day We receive due proof of death
according to the future contribution allocation then in effect. The surviving
Spouse becomes the new Owner on the effective Valuation Day of the Spousal
Contract continuation. This right may be exercised only once during the term of
the Contract. The surviving Spouse may re-elect this rider, subject to the
election rules that are then in place.
WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT?
If you elect to annuitize your Contract prior to reaching the Annuity
Commencement Date, you may only annuitize your Contract Value. If your Contract
reaches the Annuity Commencement Date, the Contract must be annuitized unless we
agree to extend the Annuity Commencement Date, at our discretion. In this
circumstance, the Contract may be annuitized under our standard annuitization
rules. This rider terminates once an Annuity Payout is elected and the Death
Benefit terminates.
ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST?
No. We reserve the right to impose investment restrictions in the future for new
sales only.
If you elect this rider in combination with an optional living benefit, then in
the event of a conflict between the investment restrictions above and those set
forth in such optional riders, the investment restrictions in such optional
riders shall prevail.
ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS?
Yes. We reserve the right to require our approval on all subsequent Premium
Payments received after the Contract Anniversary following the rider effective
date. We do not currently enforce the right to approve subsequent Premium
Payments, except where a subsequent Premium Payment would result in your total
Premium Payments equaling or exceeding $1 million. In the future, we may expand
the circumstances under which we require prior approval of subsequent Premium
Payments. There are a variety of factors that could influence our decision to
prohibit or restrict subsequent Premium Payments, for example, we could do so in
the event of a market disturbance. Any action we take with respect to subsequent
Premium Payment restriction or approval will be done on a non-discriminatory
basis. Following your Annuity Commencement Date, we will no longer accept
subsequent Premium Payments. A limitation on subsequent Premium Payments means
that you would not be able to increase your Death Benefits by making additional
deposits into the Contract.
OTHER INFORMATION
The rider may not be appropriate for all investors. Several factors, among
others, should be considered:
- IF YOU ARE ELECTING THIS RIDER AFTER YOUR CONTRACT HAS BEEN ISSUED, THE
STARTING VALUES FOR THE BENEFIT WILL BE THE CONTRACT VALUE ON THE RIDER
EFFECTIVE DATE AND NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER PRIOR
VALUES.
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- The benefits under the rider cannot be directly or indirectly assigned,
collateralized, pledged or securitized in any way. Any such actions will
invalidate the rider and allow us to terminate the rider.
- We may terminate this rider based upon the following conditions: Spousal
Contract continuation, ownership changes, and/or assignment. If we terminate
the rider, it cannot be re-elected by you.
- The selection of an Annuity Payout Option and the timing of the selection
may have an impact on the tax treatment of the benefits.
- Any Excess Withdrawal will trigger a proportionate reduction to your Death
Benefit.
- The fee for the rider may change at every Contract Anniversary. Please
carefully review the maximum fee disclosed in Section 2. Fee Summary.
- ANY PAYMENT OBLIGATION WE MAKE UNDER THE CONTRACT, INCLUDING DEATH BENEFITS
PAYMENTS, IS SUBJECT TO OUR FINANCIAL STRENGTH AND CLAIMS-PAYING ABILITY AND
OUR LONG-TERM ABILITY TO MAKE SUCH PAYMENTS.
C. LEGACY LOCK II
OBJECTIVE
To provide a Death Benefit equal to the greatest of: (a) Enhanced Return of
Premium (Premium Payments adjusted for certain Partial Withdrawals); (b) Base
Return of Premium (as defined in the glossary); or (c) Contract Value. We will
pay the Death Benefit if the Owner or joint Owner dies before we begin to make
Annuity Payouts.
Please consider the following prior to electing this rider:
- This rider has investment restrictions. Violation of the investment
restrictions may result in termination of this rider.
- Partial Withdrawals taken prior to reaching the Minimum Amount Rule that do
not exceed the Allowable Withdrawal will not reduce the value of the
Enhanced Return of Premium component of this Death Benefit.
- Partial Withdrawals that exceed the Allowable Withdrawal will reduce the
benefit proportionally, as described below.
- The Enhanced Return of Premium component of this Death Benefit reduces to
zero if your Contract Value falls below the Minimum Amount Rule.
- The Premium Based Charge is not assessed when the Death Benefit is paid.
WHEN CAN YOU BUY THE RIDER?
You can elect this rider at the time you purchase your Contract, provided you do
not elect any other optional Death Benefit at that time. If you are electing
this rider when you purchase your Contract, you may elect it with or without
Daily Step Up Withdrawal Benefit. You may also elect to add this rider after you
have purchased your Contract, provided you have not previously elected any other
optional Death Benefit or the Daily Step Up Withdrawal Benefit. Non-natural
Owners cannot elect this rider after the Contract issue date.
IF YOU ELECT THIS RIDER OTHER THAN AT CONTRACT ISSUANCE, RIDER BENEFITS WILL BE
CALCULATED FROM THE RIDER EFFECTIVE DATE, NOT THE CONTRACT ISSUE DATE. THE
STARTING VALUES FOR DETERMINING YOUR DEATH BENEFIT WILL BE YOUR CONTRACT VALUE
AS OF THE RIDER EFFECTIVE DATE, NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER
PRIOR VALUES.
This rider may not be available in all states or through all Financial
Intermediaries and may be subject to additional restrictions set by your
Financial Intermediary or us. We reserve the right to withdraw this rider at any
time without notice. If you elect this rider with the Daily Step Up Withdrawal
Benefit, the maximum age of any Owner or Annuitant is 70. If you elect this
rider without also electing the Daily Step Up Withdrawal Benefit, the maximum
issue age is 65.
DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS?
Yes. You may not elect this rider if you have already elected any other optional
Death Benefit. If you elect this rider and have not elected the Daily Step Up
Withdrawal Benefit at the same time, you will not be able to elect the Daily
Step Up Withdrawal Benefit at a later time.
HOW IS THE CHARGE FOR THIS RIDER CALCULATED?
The charge for this rider will vary based on whether or not you elect this rider
with the Daily Step Up Withdrawal Benefit. If you do not elect this rider with
the Daily Step Up Withdrawal Benefit, your rider fee will be based on the age of
the oldest Owner or Annuitant at the rider inception date. If you elect this
rider and concurrently elect the Daily Step Up Withdrawal Benefit, the rider fee
will not vary based on age.
The fee for the rider is based on the greater of (a) Enhanced Return of Premium
or (b) Base Return of Premium and is assessed on each Quarterly Contract
Anniversary. This charge will automatically be deducted from your Contract Value
on your Quarterly Contract Anniversary. A pro-rated charge will be deducted in
the event of a full Surrender of this Contract; revocation of this rider; or
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election of this rider other than on the Quarterly Contract Anniversary. The
charge for the rider will be withdrawn from each Sub-Account in the same
proportion that the value of each Sub-Account bears to the total Contract Value.
The rider fee may be increased or decreased on each Contract Anniversary.
IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS?
Yes. The Death Benefit is equal to the greatest of: (a) Enhanced Return of
Premium (Premium Payments adjusted for certain Partial Withdrawals), (b) Base
Return of Premium or (c) Contract Value.
The Premium Based Charge is not assessed when the Death Benefit is paid.
See the Legacy Lock II Examples 1-3 in Appendix A.
DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT?
Yes.
CAN YOU TERMINATE THIS RIDER?
Yes. At anytime on or after the first anniversary of the rider effective date,
the Owner may elect to terminate this rider if the rider charge on the date of
termination is greater than the rider charge on the rider issue date. If this
rider is terminated, then a pro-rated rider charge will be assessed on the
termination date, and will no longer be assessed thereafter. The Death Benefit
will be reset to the Standard Death Benefit. No other optional Death Benefit may
be elected following the termination. Please also see "Other Information" at the
end of this section for other ways the rider may terminate.
WHAT EFFECT DO PARTIAL WITHDRAWALS HAVE ON YOUR BENEFITS UNDER THE RIDER?
Partial Withdrawals reduce your Death Benefit in different ways depending on
whether or not they exceed the Allowable Withdrawal.
- The following are considered Allowable Withdrawals if you elected the Daily
Step Up Withdrawal Benefit: All Partial Withdrawals which, on a cumulative
basis with all other Partial Withdrawals in a given Contract Year, are equal
to or less than the greater of:
(a) Your Lifetime Annual Payment; or
(b) Your Required Minimum Distribution for either one of the calendar years
in which the Contract Year occurs.
The following are considered Allowable Withdrawals if you did not elect the
Daily Step Up Withdrawal Benefit: All Partial Withdrawals after you attain age
59 1/2 which, on a cumulative basis with all other Partial Withdrawals in a
given Contract Year, are equal to or less than the greater of:
(a) 5% of Premium Base; or
(b) Your Required Minimum Distribution for either one of the calendar years
in which the Contract Year occurs.
Partial Withdrawals prior to your attainment of age 59 1/2 are not Allowable
Withdrawals.
- PARTIAL WITHDRAWALS THAT DO NOT EXCEED THE ALLOWABLE WITHDRAWAL will not
reduce your Enhanced Return of Premium prior to reaching Minimum Amount
Rule, but will reduce your Base Return of Premium and Contract Value on a
dollar for dollar basis.
- PARTIAL WITHDRAWALS THAT EXCEED THE ALLOWABLE WITHDRAWAL WILL REDUCE YOUR
DEATH BENEFIT ON A PROPORTIONATE BASIS. IF YOUR CONTRACT VALUE IS LESS THAN
YOUR DEATH BENEFIT, REDUCTIONS ON A PROPORTIONATE BASIS WILL BE GREATER THAN
IF DONE ON A DOLLAR-FOR-DOLLAR BASIS.
See Legacy Lock II Examples 1-3 in Appendix A for an illustration of this
calculation.
DEATH BENEFIT STEP-UP AFTER FIRST PARTIAL WITHDRAWAL
The Enhanced Return of Premium component of Legacy Lock II is eligible for an
automatic one-time step-up to the Contract Value upon the first Partial
Withdrawal. The step-up will occur if the Contract Value prior to the Partial
Withdrawal is greater than the Enhanced Return of Premium value on the Valuation
Day prior to the first Partial Withdrawal.
ENHANCED RETURN OF PREMIUM COMPONENT OF LEGACY LOCK II
The Enhanced Return of Premium component equals 100% of Premium, adjusted by
some Partial Withdrawals as described above. Enhanced Return of Premium will be
increased by subsequent Premium and may be eligible for a one-time step-up.
IF YOU HAVE ELECTED THE DAILY STEP UP WITHDRAWAL BENEFIT: If your Contract Value
on any Contract Anniversary is ever reduced below the Minimum Amount Rule (equal
to the greater of the Minimum Contract Value described in section 4.c or one
Lifetime Annual Payment under any optional guaranteed lifetime withdrawal
benefit rider) as a result of investment performance, or deduction of fees
and/or charges or if on any Valuation Day a Partial Withdrawal is taken that
reduces your Contract Value below the Minimum Amount Rule, we will no longer
accept subsequent Premium Payments. In addition, THE ENHANCED RETURN OF PREMIUM
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COMPONENT OF YOUR DEATH BENEFIT WILL BE RESET TO EQUAL ZERO. THE DEATH BENEFIT
WILL THEN BE EQUAL TO THE GREATER OF: (A) CONTRACT VALUE OR (B) BASE RETURN OF
PREMIUM.
You may then either make a full Surrender and terminate your Contract and rider,
or you may continue your Contract. If you continue your Contract, you must
transfer your remaining Contract Value to approved Sub-Account(s) and/or
Program(s) within ten business days or we will exercise our reserved contractual
rights to reallocate these sums to the money market Sub-Account.
IF YOU HAVE NOT ELECTED THE DAILY STEP UP WITHDRAWAL BENEFIT: IF ON ANY
VALUATION DAY A PARTIAL WITHDRAWAL IS TAKEN THAT REDUCES YOUR CONTRACT VALUE
BELOW THE MINIMUM AMOUNT RULE, WE WILL TERMINATE YOUR CONTRACT AND ALL BENEFITS
THEREUNDER, INCLUDING DEATH BENEFITS.
WHAT HAPPENS IF YOU CHANGE OWNERSHIP?
An ownership change will terminate this rider and the Death Benefit will be
reset to the Standard Death Benefit. A final pro-rated rider charge will be
assessed on the termination date, and then will no longer be assessed. If the
ownership change is a result of Spousal Contract continuation, the Contract
Value will be reset to equal the Death Benefit payable on the deceased Spouse's
death and the surviving Spouse who continues the Contract may choose to elect
any optional Death Benefit rider then available. Please see "Can your Spouse
continue your Death Benefit?" below for additional information.
Ownership changes may be taxable to you. We recommend that you consult with a
tax adviser before making any ownership changes.
CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT?
Generally, yes. This rider terminates upon the death of the Owner. The Spouse
may continue the Contract under the "Spouse Beneficiary" provision of the
Contract, whereby the Contract Owner's Spouse will become the Contract Owner if
the Spouse was named as sole Beneficiary. The Spouse may either choose to
continue the Contract or may elect to be paid a Death Benefit option, if
eligible. If the Spouse chooses to continue the Contract, we will increase the
Contract Value to the Death Benefit value as of the Valuation Day We receive due
proof of death according to the future contribution allocation then in effect.
The surviving Spouse becomes the new Owner on the effective Valuation Day of the
Spousal Contract continuation. This right may be exercised only once during the
term of the Contract. The surviving Spouse may re-elect this rider, subject to
the election rules that are then in place.
WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT?
Except as otherwise provided, if you elect to annuitize your Contract prior to
reaching the Annuity Commencement Date, you may only annuitize your Contract
Value. If your Contract reaches the Annuity Commencement Date, the Contract must
be annuitized unless we agree to extend the Annuity Commencement Date, at our
discretion. In this circumstance, the Contract may be annuitized under our
standard annuitization rules. This rider terminates once an Annuity Payout
Option is elected and the Death Benefit terminates.
ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST?
Yes. You must invest your Contract Value (including future investments) within
an approved Sub-Account(s) and other investment program(s) approved and
designated by us that correspond with the rider version chosen. You must invest
in the approved Sub-Account(s) listed in Appendix D. This means you will be
limited in your choice of Sub-Account investments. This also means you will not
be able to allocate your Contract Value to all available Sub-Accounts. Current
investment restrictions are listed in Appendix D.
We may modify, add, delete, or substitute (to the extent permitted by applicable
law), investment programs, Sub-Accounts, portfolio rebalancing requirements, and
other investment requirements and restrictions that apply while the rider is in
effect. For instance, we might amend these restrictions if a Sub-Account (i)
merges into another fund, (ii) changes investment objectives, (iii) closes to
further investments and/or (iv) fails to meet acceptable risk parameters. These
changes will not be applied with respect to then existing investments. We will
give you advance notice of these changes. Please refer to "Other Program
considerations" under the section entitled "What other ways can you invest?" in
Section 4.a for more information regarding the potential impact of Fund mergers
and liquidations with respect to then existing investments within an asset
allocation model.
Except as provided below, failure to comply with any applicable investment
requirement or restriction will result in termination of the rider. If the rider
is terminated by us, for violation of applicable investment requirements or
restrictions, we will assess a pro-rated share of the rider charge and will no
longer assess a rider charge thereafter. In the event of a conflict between the
investment requirements and restrictions of this rider and those imposed by any
guaranteed minimum withdrawal benefit rider, the investment requirements and
restrictions of the guaranteed minimum withdrawal benefit rider shall prevail.
If the rider is terminated by us due to a failure to comply with these
investment restrictions, you will have one opportunity to reinstate the rider by
reallocating your Contract Value in accordance with then prevailing investment
restrictions. You will have a five day reinstatement period to do this. The
reinstatement period will begin upon termination of the rider.
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We may require that you comply with then prevailing investment restrictions upon
Spousal Contract continuation or permissible ownership changes. Investment in
any asset allocation model and certain Funds could mitigate losses but also
hamper potential gains. We are not responsible for lost investment opportunities
associated with the implementation and enforcement of these investment
requirements and restrictions. Investment restrictions may reduce the overall
volatility in investment performance. Such reduced volatility may reduce the
returns on investments and mitigate our guarantee obligations under the
Contract.
It may be presumed that investment in any of the approved Sub-Account(s) or
other investment program(s) could mitigate losses but also hamper potential
gains. The approved Sub-Account(s) or other investment program(s) provide very
different potential risk/reward characteristics. Other investment options that
are available if investment restrictions did not apply may offer the potential
for higher returns. We are not responsible for lost investment opportunities
associated with the implementation and enforcement of these investment
requirements and restrictions. These investment restrictions may limit your
Contract Value and benefits. Before you elect an optional benefit that is
subject to investment restrictions, you and your Financial Intermediary should
carefully consider whether the investment options available under the investment
restrictions meet your investment objectives and risk tolerance.
Investment restrictions may reduce the overall volatility in investment
performance. Such reduced volatility may reduce returns on investments and
mitigate our guarantee obligations under the Contract. Investment restrictions
do not guarantee reduced volatility.
ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS?
Yes. We require prior approval of subsequent Premium Payments after the first
Contract Anniversary after the rider effective date. We do not currently enforce
the right to approve subsequent Premium Payments, except where a subsequent
Premium Payment would result in your total Premium Payments equaling or
exceeding $1 million. In the future, we may expand the circumstances under which
we require prior approval of subsequent Premium Payments. There are a variety of
factors that could influence our decision to prohibit or restrict subsequent
Premium Payments, for example, we could do so in the event of a market
disturbance. Any action we take with respect to subsequent Premium Payment
restriction or approval will be done on a non-discriminatory basis. Following
your Annuity Commencement Date, we will no longer accept subsequent Premium
Payments. A limitation on subsequent Premium Payments means that you would not
be able to increase your Death Benefits by making additional deposits into the
Contract.
OTHER INFORMATION
The rider may not be appropriate for all investors. Several factors, among
others, should be considered:
- IF YOU ARE ELECTING THIS RIDER AFTER YOUR CONTRACT HAS BEEN ISSUED, THE
STARTING VALUES FOR THE BENEFIT WILL BE THE CONTRACT VALUE ON THE RIDER
EFFECTIVE DATE AND NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER PRIOR
VALUES.
- You will automatically receive a one-time step-up of the Enhanced Return of
Premium to the Contract Value, if greater, upon the first Partial
Withdrawals. We will not provide a notice prior to applying this step-up.
- IF YOU HAVE ELECTED THE DAILY STEP UP WITHDRAWAL BENEFIT: IF YOUR CONTRACT
VALUE IS REDUCED BELOW THE MINIMUM AMOUNT RULE (EQUAL TO THE GREATER OF THE
MINIMUM CONTRACT VALUE DESCRIBED IN SECTION 4.C OR ONE LIFETIME ANNUAL
PAYMENT), THE ENHANCED RETURN OF PREMIUM COMPONENT OF THE DEATH BENEFIT WILL
BE REDUCED TO ZERO. PLEASE SEE SECTION 4.C. SURRENDERS FOR MORE INFORMATION
REGARDING THE MINIMUM CONTRACT VALUE. THIS HAS THE EFFECT OF PROVIDING A
DEATH BENEFIT THAT WAS REDUCED BY ALL PRIOR PARTIAL WITHDRAWALS, INCLUDING
LIFETIME ANNUAL PAYMENTS. IN ADDITION, ANY STEP-UP APPLIED TO THE ENHANCED
RETURN OF PREMIUM COMPONENT OF THE DEATH BENEFIT WILL BE LOST.
- IF YOU HAVE NOT ELECTED THE DAILY STEP UP WITHDRAWAL BENEFIT:If your
Contract Value is reduced below the Minimum Amount Rule, we will terminate
your Contract and all benefits thereunder, including Death Benefits.
- The benefits under the rider cannot be directly or indirectly assigned,
collateralized, pledged or securitized in any way. Any such actions will
invalidate the rider and allow us to terminate the rider.
- We may terminate this rider based upon the following conditions: Spousal
Contract continuation, ownership changes, or assignment and/or violation of
investment restrictions. If we terminate the rider, it cannot be re-elected
by you.
- Any Partial Withdrawal that exceeds the Allowable Withdrawal will trigger a
proportionate reduction to your Death Benefit.
- Legacy Lock II is referred to as Enhanced Return of Premium Death Benefit
Rider II in your Contract.
- The selection of an Annuity Payout Option and the timing of the selection
may have an impact on the tax treatment of the benefit.
- The fee for the rider may change at every Contract Anniversary. Please
carefully review the maximum fee disclosed in Section 2. Fee Summary.
- You should consult with your investment professional for assistance in
determining whether these investment restrictions are suited for your
financial needs and risk tolerance.
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- ANY PAYMENT OBLIGATION WE MAKE UNDER THE CONTRACT, INCLUDING DEATH BENEFITS
PAYMENTS, IS SUBJECT TO OUR FINANCIAL STRENGTH AND CLAIMS-PAYING ABILITY AND
OUR LONG-TERM ABILITY TO MAKE SUCH PAYMENTS.
D. MAXIMUM DAILY VALUE
OBJECTIVE
To provide a Death Benefit equal to the greater of: (a) Maximum Daily Value or
(b) Contract Value that we will pay if the Owner or joint Owner, dies before we
begin to make Annuity Payouts.
Please consider the following prior to electing this rider:
- This rider has investment restrictions. Violation of the investment
restrictions may result in termination of this rider.
- Excess Withdrawals will reduce the benefit proportionally, as described
below.
- The Premium Based Charge is not assessed when the Death Benefit is paid.
WHEN CAN YOU BUY THE RIDER?
You may elect this rider at any time, provided you have not previously elected
any optional Death Benefit. Non-natural Owners cannot elect this rider after the
Contract issue date.
IF YOU ELECT THIS RIDER OTHER THAN AT CONTRACT ISSUANCE, RIDER BENEFITS WILL BE
CALCULATED FROM THE RIDER EFFECTIVE DATE, NOT THE CONTRACT ISSUE DATE. THE
STARTING VALUES FOR DETERMINING YOUR DEATH BENEFIT WILL BE YOUR CONTRACT VALUE
AS OF THE RIDER EFFECTIVE DATE, NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER
PRIOR VALUES.
This rider may not be available in all states or through all Financial
Intermediaries and may be subject to additional restrictions set by your
Financial Intermediary or by us. We reserve the right to withdraw this rider at
any time without notice. The maximum age on any Owner or Annuitant when electing
this rider is 75.
DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS?
Yes. You may not elect this rider if you have already elected another optional
Death Benefit.
HOW IS THE CHARGE FOR THIS RIDER CALCULATED?
The fee for the rider is based on the Maximum Daily Value and is assessed on
each Quarterly Contract Anniversary. This rider fee will be automatically
deducted from your Contract Value on your Quarterly Contract Anniversary prior
to all other financial transactions. A pro-rated charge will be deducted in the
event of a full Surrender of this Contract; revocation of this rider; or
election of this rider other than on the Contract Anniversary. The charge for
the rider will be withdrawn from each Sub-Account in the same proportion that
the value of each Sub-Account bears to the total Contract Value excluding the
Fixed Account. Except as otherwise provided below, we will continue to deduct
this charge until we begin to make Annuity Payouts.
The rider charge may increase or decrease on each Contract Anniversary.
IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS?
Yes. This Death Benefit is equal to the greater of A or B:
A = Contract Value;
B = Maximum Daily Value.
The death benefit before the Annuity Commencement Date under this rider is
limited. The death benefit cannot exceed the Contract Value at the time we
receive due proof of death, plus $1 million.
The Premium Based Charge is not assessed when the Death Benefit is paid.
See Maximum Daily Value Examples 1-3 in Appendix A.
DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT?
Yes
CAN YOU TERMINATE THIS RIDER?
Yes. At anytime on or after the first anniversary of the rider effective date,
the Owner may elect to terminate this rider if the rider charge on the date of
termination is greater than the rider charge on the rider issue date. If this
rider is terminated, then a pro-rated rider charge will be assessed on the
termination date, and will no longer be assessed thereafter. The Death Benefit
will be reset to the Standard Death Benefit. No other optional Death Benefit may
be elected following the termination. Please also see "Other Information" at the
end of this section for other ways the rider may terminate.
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WHAT EFFECT DO PARTIAL WITHDRAWALS HAVE ON YOUR BENEFITS UNDER THE RIDER?
Partial Withdrawals reduce your Death Benefit in different ways depending on
whether they are Excess Withdrawals or not.
- PARTIAL WITHDRAWALS THAT ARE NOT EXCESS WITHDRAWALS will reduce your Death
Benefit on a dollar for dollar basis.
- EXCESS WITHDRAWALS WILL REDUCE YOUR DEATH BENEFIT ON A PROPORTIONATE BASIS.
IF YOUR CONTRACT VALUE IS LESS THAN YOUR DEATH BENEFIT, REDUCTIONS ON A
PROPORTIONATE BASIS WILL BE GREATER THAN IF DONE ON A DOLLAR-FOR-DOLLAR
BASIS.
See Maximum Daily Value Example 2 in Appendix A for an illustration of this
calculation.
If you elect another optional rider, Partial Withdrawals (including Lifetime
Annual Payments) may affect those other riders differently than they affect this
rider.
If you have not elected an Optional Withdrawal Benefit, all Partial Withdrawals
are Excess Withdrawals and if you have elected an Optional Withdrawal Benefit,
any Partial Withdrawal prior to the Minimum Income age is also an Excess
Withdrawal.
WHAT HAPPENS IF YOU CHANGE OWNERSHIP?
An ownership change will terminate this rider and the Death Benefit will be
reset to the Standard Death Benefit. A final pro-rated rider charge will be
assessed on the termination date, and then will no longer be assessed. If the
ownership change is a result of Spousal Contract continuation, the Contract
Value will be reset to equal the Death Benefit payable on the deceased Spouse's
death and the surviving Spouse who continues the Contract may choose to elect
any optional Death Benefit rider then available. Please see "Can your Spouse
continue your Death Benefit?" below for additional information.
Ownership changes may be taxable to you. We recommend that you consult with a
tax adviser before making any ownership changes.
CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT?
Generally, yes. This rider terminates upon the death of the Owner. The Spouse
may continue the Contract under the "Spouse Beneficiary" provision of the
Contract, whereby the Contract Owner's Spouse will become the Contract Owner if
the Spouse was named as sole Beneficiary. The Spouse may either choose to
continue the Contract or may elect to be paid a Death Benefit option, if
eligible. If the Spouse chooses to continue the Contract, we will increase the
Contract Value to the Death Benefit value as of the Valuation Day We receive due
proof of death according to the future contribution allocation then in effect.
The surviving Spouse becomes the new Owner on the effective Valuation Day of the
Spousal Contract continuation. This right may be exercised only once during the
term of the Contract. The surviving Spouse may re-elect this rider, subject to
the election rules that are then in place.
WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT?
If you elect to annuitize your Contract prior to reaching the Annuity
Commencement Date, you may only annuitize your Contract Value. If your Contract
reaches the Annuity Commencement Date, the Contract must be annuitized unless we
agree to extend the Annuity Commencement Date, at our discretion. In this
circumstance, the Contract may be annuitized under our standard annuitization
rules. This rider terminates once an Annuity Payout Option is elected and the
Death Benefit terminates.
ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST?
Yes. You must invest your Contract Value (including future investments) within
an approved asset allocation model(s), Sub-Account(s), and other investment
program(s) approved and designated by us. This means you will be limited in your
choice of Sub-Account investments. This also means you will not be able to
allocate your Contract Value to all available Sub-Accounts. Current investment
restrictions are listed in Appendix D.
We may modify, add, delete, or substitute (to the extent permitted by applicable
law), the asset allocation models, investment programs, Sub-Accounts, portfolio
rebalancing requirements, and other investment requirements and restrictions
that apply while the rider is in effect. For instance, we might amend these
asset allocation models if a Sub-Account (i) is merged into another fund, (ii)
changes investment objectives, (iii) closes to further investments, and/or (iv)
fails to meet acceptable risk parameters. These reservations will not be applied
with respect to then existing investments. We will give you advance notice of
these changes. Please refer to "Other Program considerations" under the section
entitled "What other ways can you invest?" in Section 4.a for more information
regarding the potential impact of Fund mergers and liquidations with respect to
then existing investments within an asset allocation model.
Except as provided below, failure to comply with any applicable investment
requirement or restriction will result in termination of the rider. If the rider
is terminated by us for violation of applicable investment requirements or
restrictions, we will assess a pro-rated share of the rider charge and will no
longer assess a rider charge thereafter. If the rider is terminated by us due to
a failure to comply with these investment restrictions, you will have one
opportunity to reinstate the rider by reallocating your Contract Value in
accordance with then prevailing investment restrictions. You will have a five
day reinstatement period to do this. The reinstatement period will begin upon
termination of the rider.
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It may be presumed that investment in any of the approved asset allocation
model(s), Sub-Account(s), or other investment program(s) could mitigate losses
but also hamper potential gains. The approved asset allocation model(s),
Sub-Account(s), or other investment program(s) provide very different potential
risk/reward characteristics. Other investment options that are available if
investment restrictions did not apply may offer the potential for higher
returns. We are not responsible for lost investment opportunities associated
with the implementation and enforcement of these investment requirements and
restrictions. These investment restrictions may limit your Contract Value and
benefits. Before you elect an optional benefit that is subject to investment
restrictions, you and your Financial Intermediary should carefully consider
whether the investment options available under the investment restrictions meet
your investment objectives and risk tolerance.
Investment restrictions may reduce the overall volatility in investment
performance. Such reduced volatility may reduce returns on investments and
mitigate our guarantee obligations under the Contract. Investment restrictions
do not guarantee reduced volatility.
If you elect this rider in combination with an optional living benefit, then in
the event of a conflict between the investment restrictions above and those set
forth in such optional riders, the investment restrictions in such optional
riders shall prevail.
ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS?
Yes. We reserve the right to approve all subsequent Premium Payments received
after the first Contract Anniversary following the rider effective date. We do
not currently enforce the right to approve subsequent Premium Payments, except
where a subsequent Premium Payment would result in your total Premium Payments
equaling or exceeding $1 million. In the future, we may expand the circumstances
under which we require prior approval of subsequent Premium Payments. There are
a variety of factors that could influence our decision to prohibit or restrict
subsequent Premium Payments, for example, we could do so in the event of a
market disturbance. Any action we take with respect to subsequent Premium
Payment restriction or approval will be done on a non-discriminatory basis.
Following your Annuity Commencement Date, we will no longer accept subsequent
Premium Payments. A limitation on subsequent Premium Payments means that you
would not be able to increase your Death Benefits by making additional deposits
into the Contract.
OTHER INFORMATION
The rider may not be appropriate for all investors. Several factors, among
others, should be considered:
- IF YOU ARE ELECTING THIS RIDER AFTER YOUR CONTRACT HAS BEEN ISSUED, THE
STARTING VALUES FOR THE BENEFIT WILL BE THE CONTRACT VALUE ON THE RIDER
EFFECTIVE DATE AND NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER PRIOR
VALUES.
- The benefits under the rider cannot be directly or indirectly assigned,
collateralized, pledged or securitized in any way. Any such actions will
invalidate the rider and allow us to terminate the rider.
- We may terminate this rider based upon the following conditions: Spousal
Contract continuation, ownership changes, assignment and/or violation of the
investment restrictions. If we terminate the rider, it cannot be re-elected
by you.
- The selection of an Annuity Payout Option and the timing of the selection
may have an impact on the tax treatment of the benefit.
- Any Excess Withdrawal will trigger a proportionate reduction to your Death
Benefit.
- The fee for the rider may change at every Contract Anniversary. Please
carefully review the maximum fee disclosed in Section 2. Fee Summary.
- You should consult with your investment professional for assistance in
determining whether these investment restrictions are suited for your
financial needs and risk tolerance.
- ANY PAYMENT OBLIGATION WE MAKE UNDER THE CONTRACT, INCLUDING DEATH BENEFITS
PAYMENTS, IS SUBJECT TO OUR FINANCIAL STRENGTH AND CLAIMS-PAYING ABILITY AND
OUR LONG-TERM ABILITY TO MAKE SUCH PAYMENTS.
E. HOW IS THE DEATH BENEFIT PAID?
The Death Benefit may be taken in one lump sum or under any of the Annuity
Payout Options then being offered by us, unless the Owner has designated the
manner in which the Beneficiary will receive the Death Benefit. We will
calculate the Death Benefit as of the date we receive a certified death
certificate or other legal documents acceptable to us. The Death Benefit amount
remains invested according to the last instructions on file and is subject to
market fluctuation until complete settlement instructions are received from each
Beneficiary. On the date we receive complete instructions from the Beneficiary,
we will compute the Death Benefit amount to be paid out or applied to a selected
Annuity Payout Option. When there is more than one Beneficiary, we will
calculate the Death Benefit amount for each Beneficiary's portion of the
proceeds and then pay it out or apply it to a selected Annuity Payout Option
according to each Beneficiary's instructions. If we receive the complete
instructions on a Non-Valuation Day, computations will take place on the next
Valuation Day.
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The Beneficiary may elect to leave proceeds from the Death Benefit invested with
us for up to five years from the date of death of the Owner if death occurred
before the Annuity Commencement Date. Once we receive a certified death
certificate or other legal documents acceptable to us, the Beneficiary can: (a)
make Sub-Account transfers (subject to applicable restrictions) and (b) take
Partial Withdrawals without paying CDSCs, if any. We shall endeavor to fully
discharge the last instructions from the Owner wherever possible or practical.
The Beneficiary of a non-qualified Contract or IRA (prior to the required
distribution date) may also elect an Annuity Payout Option that allows the
Beneficiary to take the Death Benefit in a series of payments spread over a
period equal to the Beneficiary's remaining life expectancy. Distributions are
calculated based on IRS life expectancy tables. This option is subject to
different limitations and conditions depending on whether the Contract is
non-qualified or an IRA.
If the Owner dies before the Annuity Commencement Date, the Death Benefit must
be distributed within five years after death or be distributed under a
distribution option or Annuity Payout Option that satisfies the Alternatives to
the Required Distributions described below. Please see Section 8(C)(2)(f)
Federal Tax Considerations for more information.
If the Owner dies on or after the Annuity Commencement Date under an Annuity
Payout Option that permits the Beneficiary to elect to continue Annuity Payouts
or receive the Commuted Value, any remaining value must be distributed at least
as rapidly as under the payment method being used as of the Owner's death.
If the Owner is not an individual (e.g. a trust), then the original Annuitant
will be treated as the Owner in the situations described above.
F. WHO WILL RECEIVE THE DEATH BENEFIT?
The distribution of the Death Benefit applies only when death is before the
Annuity Commencement Date.
If death occurs on or after the Annuity Commencement Date, there may be no
payout at death unless the Owner has elected an Annuity Payout Option that
permits the Beneficiary to elect to continue Annuity Payouts, or receive any
remaining value such as a cash refund.
IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE:
[Enlarge/Download Table]
IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . .
Owner There is a surviving joint The Annuitant is living or Joint Owner receives the Death
Owner deceased Benefit.
Owner There is no surviving joint The Annuitant is living or Beneficiary receives the Death
Owner deceased Benefit.
Owner There is no surviving joint The Annuitant is living or Owner's estate receives the
Owner and the Beneficiary deceased Death Benefit.
predeceases the Owner
Annuitant The Owner is living The Owner becomes the Annuitant
and the Contract continues. The
Owner may name a new Annuitant.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE:
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IF THE DECEASED IS THE . . . AND . . . THEN THE . . .
Owner The Annuitant is living Beneficiary becomes the Owner.
Annuitant The Owner is living Owner receives the payout at death.
Annuitant The Annuitant is also the Owner Beneficiary receives the payout at
death.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT
RESULT IN A PAYOUT AT DEATH.
In the event that the Owner is a non-natural person, the death of the Annuitant
will be treated as the death of the Owner.
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6. OPTIONAL WITHDRAWAL BENEFITS
A. DAILY STEP UP WITHDRAWAL BENEFIT (DAILY 6 AND DAILY +4)
OBJECTIVE (DAILY 6 AND DAILY +4)
The objective of the rider is to provide longevity protection in the form of
Lifetime Annual Payments that may periodically increase based on the daily
performance of your Contract and/or Deferral Bonuses.
You have two options to elect from when purchasing this rider, Daily 6 and Daily
+4. These options differ as described in the chart and discussion below. The
election must be made at the time you purchase the rider and is irrevocable.
Before making this election, you should carefully consider and discuss with your
investment professional which option is right for you.
[Enlarge/Download Table]
DAILY 6 DAILY +4
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Daily 6 provides a Lifetime Annual Daily +4 provides a Lifetime Annual
Payment based off the greater of a 6% Payment based off both a 4% Deferral
Deferral Bonus OR market-based Step Up, Bonus AND a market based Step Up.
if greater.
DEFERRAL BONUS The Deferral Bonus for Daily 6 is 6% The Deferral Bonus for Daily +4 is 4%
during the Deferral Bonus Period. during the Deferral Bonus Period.
LIFETIME ANNUAL PAYMENTS Lifetime Annual Payment set on each Lifetime Annual Payment set on each
Valuation Day equal to the Lifetime Valuation Day equal to the Lifetime
Withdrawal Percentage multiplied by your Withdrawal Percentage multiplied by your
then current Withdrawal Base. then current Withdrawal Base.
ANNIVERSARY WITHDRAWAL BASE Your Anniversary Withdrawal Base is used Not Applicable.
to calculate if your Withdrawal Base will
reset. The reset will occur on each
Contract Anniversary and will equal the
Withdrawal Base.
HIGH WATER MARK Not Applicable. The High Water Mark is used to determine
if your Withdrawal Base will be reset.
The High Water mark reset is equal to the
greater of your prior High Water Mark,
adjusted for Premium Payments or Partial
Withdrawals or your Contract Value prior
to the deduction of any applicable rider
charge.
DEFERRAL BONUS BASE The Deferral Bonus Base may reset on each The Deferral Bonus Base will not reset on
Contract Anniversary during the Deferral the Contract Anniversary. The Deferral
Bonus Period. The Deferral Bonus Base Bonus Base will only be increased by
will be increased by subsequent Premium subsequent Premium Payments.
Payments and may be reset annually to
equal the Withdrawal Base.
PARTIAL WITHDRAWALS Partial Withdrawals reduce your Partial Withdrawals reduce your
Withdrawal Base and Anniversary Withdrawal Base and High Water Mark in
Withdrawal Base in different ways different ways depending on whether they
depending on whether they are Excess are Excess Withdrawals or not.
Withdrawals or not. - Partial Withdrawals that are not Excess
- Partial Withdrawals that are not Excess Withdrawals will not reduce the
Withdrawals will not reduce the Withdrawal Base or High Water Mark.
Withdrawal Base or Anniversary Withdrawal - Excess Withdrawals will reduce the
Base. Withdrawal Base and High Water Mark on a
- Excess Withdrawals will reduce the proportionate basis.
Withdrawal Base and Anniversary
Withdrawal Base on a proportionate basis.
STEP UP A Step Up is a potential increase to your A Step-Up is a potential increase to your
Withdrawal Base, based on market Withdrawal Base, based on market
performance. You will receive the greater performance. You will receive both the
of a Step Up or the Deferral Bonus. Step Up and the Deferral Bonus.
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[Enlarge/Download Table]
DAILY 6 DAILY +4
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SUBSEQUENT PREMIUM PAYMENTS Subsequent Premium Payments increase your Subsequent Premium Payments increase your
Withdrawal Base, Anniversary Withdrawal Withdrawal Base, High Water Mark,
Base, Deferral Bonus Base and Contract Deferral Bonus Base and Contract Value by
Value by the dollar amount of that the dollar amount of that Premium
Premium Payment. Payment.
Please consider the following prior to electing the rider:
- The rider has investment restrictions. Violation of the investment
restrictions may result in termination of the rider.
- Excess Withdrawals will reduce the rider's benefit, as described below.
HOW DOES THE RIDER HELP ACHIEVE THIS GOAL?
The rider provides an opportunity to receive withdrawals in the form of Lifetime
Annual Payments until the death of either the first Covered Life (Single Life
Option) or the Covered Life that is second to die (Joint/Spousal Option). This
rider also provides a Deferral Bonus. When electing this rider, you may choose
one of two options. Daily 6 provides a 6% annual Deferral Bonus OR market based
Step Ups, if greater. Daily +4 provides a 4% annual Deferral Bonus AND market
based Step Ups. A Step Up is the potential increase to your Withdrawal Base,
based on market performance.
WHEN CAN YOU BUY THE RIDER? (DAILY 6 AND DAILY +4)
You may elect this rider at any time, provided you have not PREVIOUSLY elected
any optional Withdrawal Benefit or Legacy Lock II. Non-natural Owners cannot
elect this rider after the Contract issue date.
IF YOU ELECT THIS RIDER OTHER THAN AT CONTRACT ISSUANCE, RIDER BENEFITS WILL BE
CALCULATED FROM THE RIDER EFFECTIVE DATE NOT THE CONTRACT ISSUE DATE. THE
STARTING VALUES FOR DETERMINING YOUR WITHDRAWAL BASE, ANNIVERSARY WITHDRAWAL
BASE (DAILY 6 ONLY), HIGH WATER MARK (DAILY +4 ONLY) AND DEFERRAL BONUS BASE
WILL BE YOUR CONTRACT VALUE AS OF THE RIDER EFFECTIVE DATE, NOT YOUR INITIAL
PREMIUM PAYMENT OR ANY OTHER PRIOR VALUES.
This rider may not be available in all states or through all Financial
Intermediaries and may be subject to additional restrictions set by your
Financial Intermediary or by us. We reserve the right to withdraw this rider at
any time without notice. The maximum age of any Owner or Annuitant when electing
this rider is 80.
If you elect this rider after the Contract issue date, and have not previously
elected an optional Death Benefit, you will have a one-time opportunity to add
Legacy Lock II concurrently.
DOES BUYING THE RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? (DAILY 6 AND
DAILY +4)
Yes, buying the rider precludes you from electing the Legacy Lock II rider at a
future date. You may only elect Legacy Lock II at the time you elect this rider.
HOW IS THE CHARGE FOR THE RIDER CALCULATED? (DAILY 6 AND DAILY +4)
The rider has a current charge and maximum rider charge and both are based on
your Withdrawal Base. We will deduct the rider charge on each Quarterly Contract
Anniversary on a pro-rated basis from each Sub-Account. The rider charge is the
same for both Daily 6 and Daily +4.
We may increase or decrease the rider charge on a prospective basis on each
Contract Anniversary up to the maximum described in the Fee Table. THE RIDER
CHARGE MAY INCREASE IRRESPECTIVE OF WHETHER YOU RECEIVE EITHER A STEP UP OR A
DEFERRAL BONUS. We will not increase the rider charge by more than 0.50% during
any Contract Year. We will provide advance notice of changes to your rider
charge. You may decline a rider charge increase in which event your Withdrawal
Percentage will be reduced by 1%. For example, if your Withdrawal Percentage
would be 5%, but you declined a rider fee increase at some point, your
Withdrawal Percentage will be 4%. This declination is irrevocable and no future
Daily Step Up Withdrawal Benefit rider fee changes will apply to you. The Rider
Charge may also increase if you elect this rider following Spousal Contract
continuation, but only if the Single Life option was elected and the rider
terminated upon the death of your Spouse.
If the rider is terminated, or if there is a full Surrender from your Contract,
then we will deduct a pro-rated share of the rider charge from your Contract
Value based on your Withdrawal Base immediately prior to such termination or
full Surrender.
DOES YOUR BENEFIT BASE CHANGE UNDER THE RIDER?
Yes, this rider provides an opportunity to take a maximum Withdrawal each year
in the form of a Lifetime Annual Payment. We calculate your Lifetime Annual
Payments by multiplying your Withdrawal Percentage by your Withdrawal Base.
Under each Daily 6 and Daily +4, the Withdrawal Base will fluctuate as described
below.
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- WITHDRAWAL BASE AND ANNIVERSARY WITHDRAWAL BASE - DAILY 6
Under Daily 6, we use the Withdrawal Base to calculate your Lifetime Annual
Payment. In Daily 6 you receive a 6% Deferral Bonus or a Step Up, whichever is
greater. A Step Up is the potential increase to your Withdrawal Base, based on
market performance.
Your initial Withdrawal Base and Anniversary Withdrawal Base are equal to your
initial Premium Payment (without deduction of sales charges, if any). Your
Withdrawal Base and Anniversary Withdrawal Base will fluctuate based on Step
Ups, Deferral Bonuses, sub- sequent Premium Payments, or Excess Partial
Withdrawals.
If you are electing this rider after your Contract has been issued, the
Withdrawal Base and Anniversary Withdrawal Base will be based on the Contract
Value on the date the rider is effective. This may be less than your initial
Premium Payment or Contract Value on any day prior to your rider effective date.
Your Withdrawal Base may be reset each Valuation Day following the effective
date of the rider until the Owner or the Covered Life is age 90. The reset is
equal to the greater of (A), (B) or (C) where:
A = Your Withdrawal Base as of the prior Valuation Day adjusted to include the
current Valuation Day Premium Payment and Partial Withdrawals.
B = Your Contract Value, prior to the deduction of any applicable Rider Charge.
C = Your Anniversary Withdrawal Base as of the prior Valuation Day adjusted to
include the current Valuation Day Premium Payment and Partial Withdrawals,
plus the Deferral Bonus, if applicable. The Deferral Bonus is only
applicable on the Contract Anniversary and during the Deferral Bonus Period.
Your Anniversary Withdrawal Base may be reset each Contract Anniversary to equal
the greater of the Withdrawal Base or the Anniversary Withdrawal Base as of the
prior Valuation Day adjusted to include the current Valuation Day Premium
Payment and Partial Withdrawals. The Anniversary Withdrawal Base includes any
applicable Deferral Bonus (the amount added to your Withdrawal Base during the
Deferral Bonus Period if a Step Up does not occur).
Please refer to Daily Step Up Withdrawal Benefit Examples 1-3 in Appendix A for
an illustration of ways that your Withdrawal Base may increase based on a Step
Up or Deferral Bonus.
Subsequent Premium Payments increase your Withdrawal Base, Anniversary
Withdrawal Base and Contract Value by the dollar amount of that Premium Payment.
Partial Withdrawals reduce your Withdrawal Base and Anniversary Withdrawal Base
in different ways depending on whether they are Excess Withdrawals or not.
- Partial Withdrawals that are not Excess Withdrawals will not reduce the
Withdrawal Base or Anniversary Withdrawal Base.
- Excess Withdrawals will reduce the Withdrawal Base and Anniversary
Withdrawal Base on a proportionate basis. If your Contract Value is less
than your Withdrawal Base, reductions on a proportionate basis will be
greater than if done on a dollar-for-dollar basis.
- WITHDRAWAL BASE AND HIGH WATER MARK - DAILY +4
Under Daily +4, we use the Withdrawal Base to calculate your Lifetime Annual
Payment. In Daily +4 you receive a 4% Deferral Bonus every year during the
Deferral Bonus Period IN ADDITION TO any Step Up. A Step Up is the potential
increase to your Withdrawal Base, based on market performance. In order to
calculate your Step Up, we use your High Water Mark. Your High Water Mark is
generally your highest Contract Value as described below.
We automatically reset your Contract's High Water Mark each day to equal the
greater of (i) your prior High Water Mark adjusted to include any additional
Premium Payments or Partial Withdrawals or (ii) the Contract Value prior to the
deduction of any applicable rider charge.
Your initial Withdrawal Base and High Water Mark are equal to your initial
Premium Payment (without deduction of sales charges, if any). Your Withdrawal
Base and High Water Mark may fluctuate based on Step Ups, Deferral Bonuses, or
sub-sequent Premium Payments, or Excess Partial Withdrawals.
If you are electing this rider after your Contract has been issued, the
Withdrawal Base and High Water Mark will be based on the Contract Value on the
date the rider is effective. This may be less than your initial Premium Payment
or Contract Value on any day prior to your rider effective date.
Your Withdrawal Base may be reset each Valuation Day following the effective
date of the rider until the Owner or the Covered Life is age 90. The reset is
equal to the sum of (A), (B) and (C) where:
A = Your Withdrawal Base as of the prior Valuation Day adjusted to include the
current Valuation Day Premium Payment and Partial Withdrawals.
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B = The Contract Value High Water Mark as of the current Valuation Day less
the Contract Value High Water Mark as of the prior Valuation Day adjusted to
include the current Valuation Day Premium Payment and Partial Withdrawals.
C = The Deferral Bonus, if applicable. The Deferral Bonus is only applicable
on the Contract Anniversary and during the Deferral Bonus Period.
Please refer to Daily Step Up Withdrawal Benefit Examples 4-6 in Appendix A for
an illustration of ways that your Withdrawal Base may increase based on a Step
Up or Deferral Bonus.
Subsequent Premium Payments increase your Withdrawal Base, High Water Mark and
Contract Value by the dollar amount of that Premium Payment.
Partial Withdrawals reduce your Withdrawal Base in different ways depending on
whether they are Excess Withdrawals or not.
- Partial Withdrawals that are not Excess Withdrawals will not reduce the
Withdrawal Base or High Water Mark.
- Excess Withdrawals will reduce the Withdrawal Base and High Water Mark on a
proportionate basis. If your Contract Value is less than your Withdrawal
Base, reductions on a proportionate basis will be greater than if done on a
dollar-for-dollar basis.
DAILY 6 AND DAILY +4
Your Withdrawal Base can never be less than $0 or more than $5 million. Any
transactions that would otherwise increase the Withdrawal Base outside these
limits will not be included for any benefits under the rider.
Please refer to this rider's section entitled "What happens if you change
ownership?" and "Can your Spouse continue your Lifetime Withdrawal Benefit?" for
a discussion regarding how your Withdrawal Base can be recalculated following a
Covered Life change. Please refer to the section entitled "How is the charge for
the rider calculated?" for more information regarding the decrease of your
Lifetime Withdrawal Percentage associated with declining rider charge increases.
Excess Withdrawals will reduce the Withdrawal Base and Deferral Bonus Base on a
proportionate basis. If your Contract Value is less than your Withdrawal Base,
reductions on a proportionate basis will be greater than if done on a
dollar-for-dollar basis.
Partial Withdrawals taken during any Contract Year that cumulatively exceed the
Free Withdrawal Amount, but do not exceed Lifetime Annual Payments will be free
of any applicable CDSC. Please refer to Daily Step Up Withdrawal Benefit
Examples 1-6 in Appendix A.
DEFERRAL BONUS BASE - DAILY 6
On each Contract Anniversary during the Deferral Bonus Period, we may apply a
Deferral Bonus to your Withdrawal Base. You will not receive a Deferral Bonus if
your Step Up (as of the date of your Contract Anniversary) is greater than or
equal to your Deferral Bonus Base multiplied by the Deferral Bonus. The Deferral
Bonus for Daily 6 is 6%. The Deferral Bonus will be calculated as a percentage
of the Deferral Bonus Base as of the Valuation Day adjusted to include the
current Valuation Day Premium Payment and Partial Withdrawals prior to each
Contract Anniversary during an effective Deferral Bonus Period.
If you elect this rider when the Contract is issued, your Deferral Bonus Base is
equal to your initial Premium Payment and any subsequent Premium Payments made
during your first Contract Year (without deduction of sales charges, if any). If
you are electing this rider after your Contract has been issued the Deferral
Bonus Base is equal to your Contract Value on the date the rider is effective.
Contract Value and Premium Payments prior to the election of the rider (as well
as those values that would have been used to set the Deferral Bonus Base had
this rider been elected upon Contract issuance), will be disregarded.
Thereafter, your Deferral Bonus Base will be reset on each Contract Anniversary
during the Deferral Bonus Period.
If, on your Contract Anniversary, you have a Step Up that is greater than your
Deferral Bonus, we will reset your Deferral Bonus Base to equal your Withdrawal
Base. If, on your Contract Anniversary, a Step Up does not occur or is less than
your Deferral Bonus, your Deferral Bonus Base is not reset.
THE DEFERRAL BONUS PERIOD WILL CEASE UPON THE EARLIER OF THE TENTH CONTRACT
ANNIVERSARY FOLLOWING THE RIDER EFFECTIVE DATE OR WHEN YOU TAKE ANY PARTIAL
WITHDRAWAL.
During the Deferral Bonus Period, subsequent Premium Payments will increase your
Deferral Bonus Base by the dollar amount of the Premium Payment.
Please refer to Daily Step Up Withdrawal Benefit Examples 4-6 in Appendix A for
an illustration of a Deferral Bonus being applied to increase a Withdrawal Base.
Your Deferral Bonus Base can never be less than $0 or more than $5 million. Any
activities that would otherwise increase the Deferral Bonus Base above these
limits will not be included for any benefits under the rider.
Please refer to the section entitled "What happens if you change ownership?" and
"Can your Spouse continue your Lifetime Withdrawal Benefit?" for a discussion
regarding how your Deferral Bonus Base can be recalculated following a Covered
Life change.
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DEFERRAL BONUS BASE - DAILY +4
The Deferral Bonus for Daily +4 is 4%. The Deferral Bonus will be calculated as
a percentage of the Deferral Bonus Base as of the Valuation Day adjusted to
include the current Valuation Day Premium Payment and Partial Withdrawals prior
to each Contract Anniversary during an effective Deferral Bonus Period.
If you elect this rider when the Contract is issued, your Deferral Bonus Base is
equal to your initial Premium Payment and any subsequent Premium Payments made
during your first Contract Year (without deduction of sales charges, if any).
The Deferral Bonus Base will not reset on the Contract Anniversary.
If you are electing this rider after your Contract has been issued the Deferral
Bonus Base is equal to your Contract Value on the date the rider is effective.
Contract Value and Premium Payments prior to the election of the rider (as well
as those values that would have been used to set the Deferral Bonus Base had
this rider been elected upon Contract issuance), will be disregarded.
THE DEFERRAL BONUS PERIOD WILL CEASE UPON THE EARLIER OF THE TENTH CONTRACT
ANNIVERSARY FOLLOWING THE RIDER EFFECTIVE DATE OR WHEN YOU TAKE ANY PARTIAL
WITHDRAWAL.
During the Deferral Bonus Period, subsequent Premium Payments will increase your
Deferral Bonus Base by the dollar amount of the Premium Payment. The Deferral
Bonus Base will not be increased by anything other than subsequent Premium
Payments.
Please refer to Daily Step Up Withdrawal Benefit Examples 4-6 in Appendix A for
an illustration of a Deferral Bonus being applied to increase a Withdrawal Base.
Your Deferral Bonus Base can never be less than $0 or more than $5 million. Any
activities that would otherwise increase the Deferral Bonus Base above these
limits will not be included for any benefits under the rider.
Please refer to the section entitled "What happens if you change ownership?" and
"Can your Spouse continue your Lifetime Withdrawal Benefit?" for a discussion
regarding how your Deferral Bonus Base can be recalculated following a Covered
Life change.
IS THE RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? (DAILY 6
AND DAILY +4)
YES. HOWEVER, WITHDRAWALS TAKEN PRIOR TO THE MINIMUM INCOME AGE (AGE 59 1/2) ARE
NOT GUARANTEED TO BE AVAILABLE THROUGHOUT YOUR LIFETIME. SUCH WITHDRAWALS WILL
REDUCE (AND MAY EVEN ELIMINATE) THE WITHDRAWAL BASE OTHERWISE AVAILABLE TO
ESTABLISH LIFETIME BENEFITS. ADDITIONALLY, IF YOUR CONTRACT VALUE FALLS BELOW
THE MINIMUM AMOUNT RULE BEFORE YOU ATTAIN AGE 59 1/2, YOUR LIFETIME ANNUAL
PAYMENTS WILL BE REDUCED TO ZERO.
Lifetime Annual Payments are calculated by multiplying your Withdrawal Base by
the applicable Withdrawal Percentage. The Lifetime Withdrawal Percentage varies
based on the age of the relevant Covered Life and whether or not you've taken
your first Partial Withdrawal.
Prior to your first Partial Withdrawal, your Lifetime Annual Payment is set on
each Valuation Day and is equal to your applicable Lifetime Withdrawal
Percentage multiplied by your then current Withdrawal Base. Thereafter, your
Lifetime Annual Payment may reset on any of the following events:
a) Contract Anniversary;
b) The Lifetime Withdrawal Percentage changes;
c) A subsequent Premium Payment;
d) An Excess Withdrawal; or
e) A change of Owner, because of Spousal Contract continuation.
The applicable Withdrawal Percentages are as follows:
[Download Table]
WITHDRAWAL PERCENTAGE
JOINT/SPOUSAL SINGLE
AGE OPTION OPTION
--------------------------------------------------------------------------------
59 1/2 - 64 3.5% 4.0%
65 - 84 4.5% 5.0%
85+ 5.5% 6.0%
- Except as provided below, the Lifetime Withdrawal Percentage will be based
on the age of the relevant Covered Life at the time of the first Partial
Withdrawal. If a Partial Withdrawal HAS NOT been taken, your new Lifetime
Withdrawal Percentage will be effective on the next birthday that brought
the relevant Covered Life into a new Lifetime Withdrawal Percentage age
band; or
- If a Partial Withdrawal HAS been taken, the Lifetime Withdrawal Percentage
will be locked at the time of the Partial Withdrawal. The Lifetime
Withdrawal Percentage may increase based on the current attained age of the
Covered Life provided there is a Step Up and a new age band is reached.
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IS THE RIDER DESIGNED TO PAY YOU DEATH BENEFITS? (DAILY 6 AND DAILY +4)
No.
DOES THE RIDER REPLACE THE STANDARD DEATH BENEFIT? (DAILY 6 AND DAILY +4)
No.
CAN YOU REVOKE THE RIDER? (DAILY 6 AND DAILY +4)
No. Please also see "Other Information" at the end of this section for other
ways the rider may terminate.
WHAT EFFECT DO PARTIAL WITHDRAWALS OR FULL SURRENDERS HAVE ON YOUR BENEFITS
UNDER THE RIDER? (DAILY 6 AND DAILY +4)
Please refer to "Does your benefit base change under the rider?" for the effect
of Partial Withdrawals. You may make a full Surrender of your entire Contract at
any time. However, you will receive your Contract Value with any applicable
charges (and Premium Tax) deducted and not your Withdrawal Base, Deferral Bonus
Base and any future Lifetime Annual Payments.
If your Contract Value on any Contract Anniversary is ever reduced below the
Minimum Amount Rule (equal to the greater of the Minimum Contract Value
described in section 4.c or one Lifetime Annual Payment) as a result of
investment performance or deduction of fees and/or charges, or if on any
Valuation Day a Partial Withdrawal is taken that reduces your Contract Value
below this Minimum Amount Rule, we will no longer accept subsequent Premium
Payments. You may then either make a full Surrender and terminate your Contract
and your rider, or you may continue the Contract provided the following:
- You must Transfer your remaining Contract Value to an approved
Sub-Account(s) and/or Programs within ten business days. Failure to do so
will be deemed as your acquiescence to our exercising reserved contractual
rights to reallocate these sums to the money market Sub-Account;
- Lifetime Annual Payments will continue;
- Step Ups and Deferral Bonuses, if applicable, will no longer apply;
- All other privileges under the rider will terminate and you will no longer
be charged a rider fee, Premium Based Charge or Annual Maintenance Fee; and
If any amount greater than a Lifetime Annual Payment is requested, the Contract
will be liquidated and the rider will terminate.
WHAT HAPPENS IF YOU CHANGE OWNERSHIP? (DAILY 6 AND DAILY +4)
An ownership change will terminate this rider. A final pro-rated rider charge
will be assessed on the termination date, and then will no longer be assessed.
If the ownership change is a result of Spousal Contract continuation and the
Joint/Spousal option was elected, the rider will not terminate. The rider will
terminate on Spousal Contract continuation if the Single Life Option was
elected. Please see "Can your Spouse continue your Lifetime Withdrawal Benefit?"
below for additional information.
Ownership changes may be taxable to you. We recommend that you consult with a
tax adviser before making any ownership changes.
CAN YOUR SPOUSE CONTINUE YOUR LIFETIME WITHDRAWAL BENEFIT? (DAILY 6 AND DAILY
+4)
- SINGLE LIFE OPTION:
This rider terminates upon the death of the Owner. The Spouse may continue the
Contract under the "Spouse Beneficiary" provision of the Contract, whereby the
Contract Owner's Spouse will become the Contract Owner if the Spouse was named
as Beneficiary. The Spouse may either choose to continue the Contract or may
elect to be paid a Death Benefit option, if eligible. If the Spouse chooses to
continue the Contract, we will increase the Contract Value to the Death Benefit
value as of the Valuation Day We receive due proof of death according to the
future contribution allocation then in effect. The surviving Spouse becomes the
new Owner on the effective Valuation Day of the Spousal Contract continuation.
This right may be exercised only once during the term of the Contract. The
surviving Spouse may re-elect this rider, subject to the election rules that are
then in place.
- JOINT/SPOUSAL OPTION:
The rider is designed to facilitate the continuation of your rights by your
Spouse through the inclusion of a Joint/Spousal Option. If a Covered Life dies
and the Contract and the rider are continued as described below, the rider will
continue with respect to all benefits at the then current rider charge. The
benefits will be reset as follows:
- The Withdrawal Base will be equal to the greater of Contract Value or the
Withdrawal Base on the Spousal Contract continuation date;
- The Deferral Bonus Base will be equal to the greater of Contract Value or
the Deferral Bonus Base on the Spousal Contract continuation date;
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- For Daily 6, only the Anniversary Withdrawal Base will be equal to the
greater of Contract Value or the Anniversary Withdrawal Base on the Spousal
Contract continuation date;
- For Daily +4 only, the High Water Mark will be equal to the greater of
Contract Value or the High Water Mark on the Spousal Contract continuation
date.
- The Deferral Bonus Period, if applicable, will not reset; the Deferral Bonus
Period will continue uninterrupted;
- The Lifetime Annual Payment will be recalculated; and
- The Lifetime Withdrawal Percentage will remain at the current percentage if
Partial Withdrawals have commenced; otherwise the Lifetime Withdrawal
Percentage will be based on the attained age of the remaining Covered Life
on the Spousal Contract continuation date.
The remaining Covered Life cannot name a new Owner on the Contract. Any new
Beneficiary that is added to the Contract will not be taken into consideration
as a Covered Life. The rider will terminate upon the death of the remaining
Covered Life.
WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? (DAILY 6 AND DAILY +4)
If you elect to annuitize your Contract prior to reaching the Annuity
Commencement Date, you may only annuitize your Contract Value, not your
Withdrawal Base. If your Contract reaches the Annuity Commencement Date, the
Contract must be annuitized unless we agree to extend the Annuity Commencement
Date, at our discretion. In this circumstance, the Contract may be annuitized
under our standard annuitization rules or, alternatively, under the rules
applicable when the Contract Value is below our Minimum Amount Rule then in
effect.
SINGLE LIFE OPTION:
At the Annuity Commencement Date, the Contract may be annuitized under our
standard Annuity Options or as Lifetime Annual Payments With a Cash Refund - an
annuity payable during the lifetime of the Covered Life. At the death of the
Covered Life, any remaining value will be paid to the Beneficiary. The remaining
value equals the Contract Value on the Annuity Commencement, less Premium Tax,
minus the sum of all Annuity Payments made.
JOINT/SPOUSAL OPTION:
At the Annuity Commencement Date, the Contract may be annuitized under our
standard Annuity Options or as Lifetime Annual Payments With a Cash Refund - an
annuity payable during the lifetime of the Covered Lives. At the death of the
second Covered Life, any remaining value will be paid to the Beneficiary. The
remaining value equals the Contract Value on the Annuity Commencement Date, less
Premium Tax, minus the sum of all Annuity Payments made.
ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? (DAILY 6 AND DAILY +4)
Yes. You must invest your Contract Value (including future investments) within
an approved asset allocation model(s), Sub-Account(s), and other investment
program(s) approved and designated by us that correspond with the rider version
chosen. This means you will be limited in your choice of Sub-Account
investments. This also means you will not be able to allocate your Contract
Value to all available Sub-Accounts. Current investment restrictions are listed
in Appendix D.
We may modify, add, delete, or substitute (to the extent permitted by applicable
law), the asset allocation models, investment programs, Sub-Accounts, portfolio
rebalancing requirements, and other investment requirements and restrictions
that apply while the rider is in effect. For instance, we might amend these
asset allocation models if a Sub-Account (i) merges into another fund, (ii)
changes investment objectives, (iii) closes to further investments and/or (iv)
fails to meet acceptable risk parameters. These changes will not be applied with
respect to then existing investments. We will give you advance notice of these
changes. Please refer to "Other Program considerations" under the section
entitled "What other ways can you invest?" in Section 4.a for more information
regarding the potential impact of Fund mergers and liquidations with respect to
then existing investments within an asset allocation model.
Except as provided below, failure to comply with any applicable investment
requirement or restriction will result in termination of the rider. If the rider
is terminated by us, for violation of applicable investment requirements or
restrictions, we will assess a pro-rated share of the rider charge and will no
longer assess a rider charge thereafter. Termination of the rider will not
terminate any concurrent guaranteed minimum death benefit rider. In the event of
a conflict between the investment requirements and restrictions of this rider
and those imposed by any guaranteed minimum death benefit rider, the investment
requirements and restrictions of this rider shall prevail.
If the rider is terminated by us due to a failure to comply with these
investment restrictions, you will have one opportunity to reinstate the rider by
reallocating your Contract Value in accordance with then prevailing investment
restrictions. You will have a five day reinstatement period to do this. The
reinstatement period will begin upon termination of the rider. Your right to
reinstate the rider will be terminated if during the reinstatement period you
make a subsequent Premium Payment, take a Partial Withdrawal, or make a Covered
Life change. Upon reinstatement, your Withdrawal Base will be reset at the lower
of the Withdrawal Base prior to the termination or Contract Value as of the date
of reinstatement. Your Lifetime Withdrawal Percentage will be reset to equal the
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Lifetime Withdrawal Percentage prior to termination unless during the
reinstatement period the relevant Covered Life qualifies for a new age band.
UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENTS WILL BE RESET TO EQUAL
THE LOWER OF THE CONTRACT VALUE AS OF THE VALUATION DAY OF THE REINSTATEMENT OR
THE PREMIUM PAYMENTS PRIOR TO THE TERMINATION. IF APPLICABLE, YOUR BENEFIT BASES
WILL BE RESET AT THE LOWER OF THE CONTRACT VALUE OR THE VALUES PRIOR TO THE
REVOCATION AS OF THE DATE OF THE REINSTATEMENT. WE WILL DEDUCT A PRO-RATED RIDER
CHARGE ON YOUR QUARTERLY CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR
THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST QUARTERLY CONTRACT
ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT
RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER.
We may require that you comply with then prevailing investment restrictions upon
Spousal Contract continuation or permissible Covered Life changes. Investment in
any asset allocation model and certain Funds could mitigate losses but also
hamper potential gains. We are not responsible for lost investment opportunities
associated with the implementation and enforcement of these investment
requirements and restrictions. Investment restrictions may reduce the overall
volatility in investment performance. Such reduced volatility may reduce the
returns on investments and mitigate our guarantee obligations under the
Contract.
It may be presumed that investment in any of the approved asset allocation
model(s), Sub-Account(s), or other investment program(s) could mitigate losses
but also hamper potential gains. The approved asset allocation model(s),
Sub-Account(s), or other investment program(s) provide very different potential
risk/reward characteristics. Other investment options that are available if
investment restrictions did not apply may offer the potential for higher
returns. We are not responsible for lost investment opportunities associated
with the implementation and enforcement of these investment requirements and
restrictions. These investment restrictions may limit your Contract Value and
benefits. Before you elect an optional benefit that is subject to investment
restrictions, you and your Financial Intermediary should carefully consider
whether the investment options available under the investment restrictions meet
your investment objectives and risk tolerance.
Investment restrictions may reduce the overall volatility in investment
performance. Such reduced volatility may reduce returns on investments and
mitigate our guarantee obligations under the Contract. Investment restrictions
do not guarantee reduced volatility.
ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? (DAILY 6
AND DAILY +4)
Yes. We require prior approval of subsequent Premium Payments after the first
Contract Anniversary after the rider effective date. We do not currently enforce
the right to approve subsequent Premium Payments, except where a subsequent
Premium Payment would result in your total Premium Payments equaling or
exceeding $1 million. In the future, we may expand the circumstances under which
we require prior approval of subsequent Premium Payments. There are a variety of
factors that could influence our decision to prohibit or restrict subsequent
Premium Payments, for example, we could do so in the event of a market
disturbance. Any action we take with respect to subsequent Premium Payment
restriction or approval will be done on a non-discriminatory basis. We will not
accept Premium Payments after the Annuity Commencement Date. A limitation on
subsequent Premium Payments means that you would not be able to increase your
Lifetime Annual Payments by making additional deposits into the Contract.
OTHER INFORMATION (DAILY 6 AND DAILY +4)
The rider may not be appropriate for all investors. Several factors, among
others, should be considered:
- IF YOU ARE ELECTING THIS RIDER AFTER YOUR CONTRACT HAS BEEN ISSUED, THE
STARTING VALUES FOR ALL BENEFITS WILL BE THE CONTRACT VALUE ON THE RIDER
EFFECTIVE DATE AND NOT YOUR INITIAL PREMIUM PAYMENT OR ANY OTHER PRIOR
VALUES.
- We reserve the right to impose a daily Withdrawal Base Cap for new sales
only. We do not currently enforce a daily Withdrawal Base Cap.
- If your Contract Value falls below the Minimum Amount Rule before you attain
age 59 1/2, your Lifetime Annual Payment will be reduced to zero.
- The benefits under the rider cannot be directly or indirectly assigned,
collateralized, pledged or securitized in any way. Any such actions will
invalidate the rider and allow us to terminate the rider.
- The Fixed Account is not available if you have elected the Daily Step Up
Withdrawal Benefit.
- Annuitizing your Contract, whether voluntary or not, will impact and
possibly eliminate this benefit.
- Even though the rider is designed to provide living benefits, you should not
assume that you will necessarily receive payments for life if you have
violated any of the terms of the rider or if you commence taking Partial
Withdrawals prior to your Minimum Income Age. Partial Withdrawals taken
prior to the Minimum Income Age are not guaranteed to be available
throughout your lifetime. Such Partial Withdrawals will reduce (and may even
eliminate) the Withdrawal Base otherwise available to establish lifetime
benefits.
- This rider may not be appropriate for you if you are interested in
maximizing the Contract's potential for long-term accumulation rather than
taking current withdrawals and ensuring a stream of income.
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- We may withdraw the rider for new Contract sales at any time.
- Any Excess Withdrawal will trigger a proportionate reduction in your
benefit.
- Transfers made pursuant to a Systematic Withdrawal Program may violate this
rider if made during the reinstatement period following a violation of
investment restrictions under this rider.
- When the Single Life Option is chosen, Spouses may find continuation of the
rider to be unavailable or unattractive after the death of the Owner.
Continuation of the benefits available in the optional rider is dependent
upon its availability at the time of death of the first Covered Life.
- Annuity Payout Options available subsequent to the Annuity Commencement Date
may not necessarily provide a stream of income for your lifetime and may be
less than Lifetime Annual Payments.
- The fee for the rider may change at every Contract Anniversary. Please
carefully review the maximum fee disclosed in Section 2. Fee Summary.
- WE DO NOT AUTOMATICALLY INCREASE PAYMENTS UNDER THE SYSTEMATIC WITHDRAWAL
PROGRAM IF YOUR LIFETIME ANNUAL PAYMENT INCREASES. IF YOU ARE ENROLLED IN
OUR SYSTEMATIC WITHDRAWAL PROGRAM TO MAKE LIFETIME ANNUAL PAYMENTS AND YOUR
ELIGIBLE LIFETIME ANNUAL PAYMENT INCREASES, YOU NEED TO REQUEST AN INCREASE
IN YOUR SYSTEMATIC WITHDRAWAL PROGRAM. WE WILL NOT INDIVIDUALLY NOTIFY YOU
OF THIS PRIVILEGE.
- We will share data regarding your Contract with our affiliates or designees
to help us manage our guarantee obligations under this rider.
- The purchase of the rider may not be appropriate for custodial owned
Contracts, Beneficiary or inherited IRAs or Contracts owned by certain types
of non-natural entities, including Charitable Trusts. Because these types of
owners and many non-natural entities may be required to make certain
periodic distributions and those amounts may be different than the
withdrawal limits permitted under the rider, you should discuss this with
your tax advisor or investment professional to determine the appropriateness
of this benefit. We are not responsible for violations to riders due to your
obligation to comply with RMD obligations.
- The Daily Step Up Withdrawal Benefit is referred to as Enhanced Guaranteed
Lifetime Withdrawal Benefit II Rider in your Contract.
- You should consult with your investment professional for assistance in
determining whether these investment restrictions are suited for your
financial needs and risk tolerance.
- ANY PAYMENT OBLIGATION WE MAKE UNDER THE CONTRACT, INCLUDING OPTIONAL
WITHDRAWAL BENEFIT PAYMENTS, IS SUBJECT TO OUR FINANCIAL STRENGTH AND
CLAIMS-PAYING ABILITY AND OUR LONG-TERM ABILITY TO MAKE SUCH PAYMENTS.
7. ADDITIONAL INFORMATION
A. GLOSSARY
Except as provided elsewhere in this prospectus, the following capitalized terms
shall have the meaning ascribed below:
ACCOUNT: Any of the Sub-Accounts or the Fixed Accounts.
ACCUMULATION UNITS: If you allocate your Premium Payment to any of the
Sub-Accounts, we will convert Premium Payments into Accumulation Units in the
selected Sub-Accounts. Accumulation Units are valued at the end of each
Valuation Day and are used to calculate Contract Value prior to Annuitization.
ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation
Day.
ALLOWABLE WITHDRAWALS: The annual amount available as a Partial Withdrawal under
the Legacy Lock II optional rider that will not reduce the Enhanced Return of
Premium component of that rider.
ANNIVERSARY WITHDRAWAL BASE: For the Daily Step Up Withdrawal Benefit, the value
on any Contract Anniversary during the Deferral Bonus Period used to determine
if a reset to the Withdrawal Base will occur.
ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or
upon full Surrender.
ANNUITANT: The person on whose life Annuity Payouts are based.
ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout.
ANNUITY COMMENCEMENT DATE: The first day of the first period for which a
distribution is received as an Annuity Payout under the Contract.
ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the
duration and frequency you select.
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ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity
Commencement Date, the death of the Owner or Annuitant.
ANNUITY SERVICE CENTER: Correspondence, service or transaction requests, and
inquiries to P.O. Box 758507 Topeka, Kansas, 66675-8507 or via fax 785-286-6104.
PLEASE NOTE: Premium payments must be sent to P.O. Box 758502, Topeka, Kansas,
66675-8502. The overnight mailing address is Mail zone 507, 5801 SW 6th Avenue,
Topeka, Kansas 66636, this should only be used for mail delivered via a courier.
BASE RETURN OF PREMIUM: Premium Payments adjusted for Partial Withdrawals. In
the case of an optional rider elected after the Contract is issued, Base Return
of Premium equals Contract Value on the rider effective date, plus subsequent
Premium Payments, adjusted for Partial Withdrawals.
BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of
the Contract upon the death of any Owner.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any Annuity Payout due and payable during
guaranteed Annuity Payouts. This amount is calculated using the applicable
discount rate determined by us for applicable fixed dollar amount Annuity
Payouts.
CONTINGENT DEFERRED SALES CHARGE (CDSC): The deferred sales charge, if
applicable, that may apply when you make a full Surrender or Partial Withdrawal.
CONTRACT: The individual Annuity Contract and any endorsements or riders.
CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If
the Contract Anniversary falls on a Non-Valuation Day, then the Contract
Anniversary will be the next Valuation Day.
CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in
this prospectus including any joint Owner(s). We do not capitalize "you" in the
prospectus.
CONTRACT VALUE: The total value of the Sub-Account and the Fixed Accounts on any
Valuation Day.
CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning
with the date the Contract was issued.
COVERED LIFE: The governing life or lives used for determining the lifetime
withdrawal feature under the Daily Step Up Withdrawal Benefit guaranteed
lifetime withdrawal benefit riders.
DEATH BENEFIT: Except as otherwise provided, the amount payable if the Owner or
joint Owner dies before the Annuity Commencement Date. Where applicable, your
Death Benefit includes the standard or an optional Death Benefit.
DEFERRAL BONUS: The amount added to your Withdrawal Base on each Contract
Anniversary while the Deferral Bonus Period is in effect, provided that a Step
Up does not occur on such Contract Anniversary.
DEFERRAL BONUS PERIOD: The Deferral Bonus Period commences on the date the Daily
Step Up Withdrawal Benefit has been added to your Contract and Deferral Bonus
Period ends when the first of the following events occur: (a) tenth Contract
Anniversary from the date the Daily Step Up Withdrawal Benefit has been added to
your Contract, or (b) the Valuation Day that you take your first Partial
Withdrawal (including your first Lifetime Annual Payment) Once the Deferral
Bonus Period ends, it cannot be re-started.
DOLLAR COST AVERAGING: A program that allows you to systematically make
transfers into Funds.
ELIGIBLE INVESTMENT: The amount we use to assign applicable CDSC and Premium
Based Charge amounts. Eligible Investments are the higher of (a) Premium
Payments less any withdrawals; or (b) your last Valuation Day's Contract Value.
ENHANCED RETURN OF PREMIUM: One of two components used to determine the Legacy
Lock II that provides a Death Benefit amount that will not be reduced by
Lifetime Annual Payments.
EXCESS WITHDRAWALS: The portion of any Partial Withdrawal which, on a cumulative
basis with all other Partial Withdrawals in a Contract Year, exceeds the
Lifetime Annual Payment. Any Partial Withdrawal taken prior to the Minimum
Income Age is considered an Excess Withdrawal. Any Partial Withdrawal taken from
a Contract that does not have a Lifetime Annual Payment associated with it is
considered an Excess Withdrawal. If the Daily Step Up Withdrawal Benefit has
been elected, any Partial Withdrawal taken to satisfy the Required Minimum
Distribution (RMD) requirements related to this Contract imposed by federal law
will not be considered an Excess Withdrawal.
FINANCIAL INTERMEDIARY: The investment professional through whom you purchase
your Contract.
FIXED ACCOUNT: Part of our General Account, where you may allocate all or a
portion of your Contract Value. In your Contract, the Fixed Account may be
called the Fixed Account. Not all classes of Contracts we offer contain a Fixed
Account. The Fixed Account includes the DCA Plus Fixed Account.
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FREE WITHDRAWAL AMOUNT (FWA): The amount you may Surrender each Contract Year
without incurring a CDSC.
FUND: A registered investment company or a series thereof in which assets of a
Sub-Account may be invested. We sometimes call the Funds you select
Sub-Accounts.
GENERAL ACCOUNT: The General Account includes our Company assets, including any
money you may have invested in the Fixed Account, if available.
GUARANTEED PAYOUT DURATION: The time period (sometimes referred to as a period
certain) specified in Annuity Payout Options Three, Five and Six.
HIGH WATER MARK: The value on any Valuation Day used to determine if a reset to
the Withdrawal Base will occur if you have elected Daily +4 under the Daily Step
Up Withdrawal Benefit.
IN GOOD ORDER: Certain transactions require your authorization and completion of
requisite forms. Such transactions will not be considered in good order unless
received by us in our Annuity Service Center or via telephone, facsimile or
through an internet transaction. Generally, our request for documentation will
be considered in good order when we receive all of the requisite information, on
the form required by us.
JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the
Annuitant dies after Annuitization. You may name a Joint Annuitant only if your
Annuity Payout Option provides for a survivor. The Joint Annuitant may not be
changed.
LIFETIME ANNUAL PAYMENT: The maximum guaranteed amount that can be withdrawn
each year under the Daily Step Up Withdrawal Benefit.
MAXIMUM DAILY VALUE: The highest attained Contract Value prior to the first to
occur of the date of death or the oldest Owner's 81st birthday, and adjusted for
any Premium Payments and any Partial Withdrawals.
MINIMUM AMOUNT RULE: The greater of Minimum Contract Value or one Lifetime
Annual Payment, if applicable.
MINIMUM CONTRACT VALUE: The minimum value your Contract can reach before we have
the right to liquidate it. The Minimum Contract Value for your Contract is set
forth in your Contract.
MINIMUM INCOME AGE: The Valuation Day when the Covered Life has an attained age
of 59 1/2
NET INVESTMENT FACTOR: This is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next, and is also used to calculate
your Annuity Payout amount.
1933 ACT: The Securities Act of 1933, as amended.
1934 ACT: The Securities Exchange Act of 1934, as amended.
1940 ACT: The Investment Company Act of 1940, as amended.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
PAYEE: The person or party you designate to receive Annuity Payouts.
PARTIAL WITHDRAWAL: Any withdrawal of a portion of Your Contract Value. May be
subject to charges, if applicable.
PREMIUM BASE: Premium adjusted for Partial Withdrawals in excess of Allowable
Withdrawals and subsequent Premium Payments when Legacy Lock II is elected
without the Daily Step Up Withdrawal Benefit.
PREMIUM OR PREMIUM PAYMENT: Money sent to us to be invested in your Sub-Accounts
and your Fixed Account.
QUARTERLY CONTRACT ANNIVERSARY: Each successive three-month anniversary of the
Issue Date of the Contract. If the Quarterly Contract Anniversary falls on a
Non-Valuation Day, then the Quarterly Contract Anniversary will be the next
Valuation Day.
REMAINING GROSS PREMIUM: Equals the Premium Payments adjusted by prior Partial
Withdrawals. During the CDSC period, Premium Payments will be adjusted for
Partial Withdrawals in excess of the FWA; after the CDSC period, Premium
Payments will be adjusted for all Partial Withdrawals.
REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2
and older generally must take a distribution from their tax-qualified retirement
account by December 31, each year. For employer sponsored qualified Contracts,
the individual must generally begin taking distributions at the age of 70 1/2 or
upon retirement, whichever comes later.
SPOUSE: A person related to a Owner by marriage pursuant to the Code.
STEP UP: A potential increase to your Withdrawal Base prior to the deduction of
rider charges based on market performance subject to the applicable Withdrawal
Base Cap, if any.
SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund.
There is a Sub-Account for each Fund. We sometimes call the Funds you select
your Sub-Account.
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SUB-ACCOUNT VALUE: The value of each Sub-Account on or before the Annuity
Calculation Date, which is determined on any day by multiplying the number of
Accumulation Units by the Accumulation Unit Value for each Sub-Account.
SURRENDER: A complete withdrawal from your Contract.
SURRENDER VALUE: The amount we pay you if you terminate your Contract before the
Annuity Commencement Date. The Surrender Value is equal to the Contract Value
minus any applicable charges and Premium Tax (subject to rounding).
TOTAL REMAINING GROSS PREMIUMS (TOTAL RGP): Cummulative Remaining Gross Premium.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values
of the Separate Account are determined as of the close of the New York Stock
Exchange. The New York Stock Exchange generally closes at 4:00 p.m. Eastern Time
but may close earlier on certain days and as conditions warrant.
VALUATION PERIOD: The time span between the close of trading on the New York
Stock Exchange from one Valuation Day to the next.
WE, US OR OUR: Forethought Life Insurance Company .
WITHDRAWAL BASE: The amount used to determine the Lifetime Annual Payment and
rider charge under the Daily Step Up Withdrawal Benefit.
WITHDRAWAL BASE CAP: The maximum percentage the Withdrawal Base may be increased
due to a Step Up or a Deferral Bonus under the Daily Step Up Withdrawal Benefit.
WITHDRAWAL PERCENTAGE: The percentage of your Withdrawal Base that you may
withdraw each Contract Year in the form of a Lifetime Annual Payment.
YOU: The Owner including any joint Owner(s). We do not capitalize "you" or
"your" in this prospectus.
B. STATE VARIATIONS
The following section describes modifications to this prospectus required by one
or more state insurance departments as of the date of this prospectus. Unless
otherwise noted, variations apply to all forms of Contracts we issue. References
to certain state's variations do not imply that we actually offer Contracts in
each such state. These variations are subject to change without notice and
additional variations may be imposed as specific states approve new riders.
ARIZONA, ARKANSAS, CALIFORNIA, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA,
FLORIDA, MONTANA, NORTH DAKOTA, SOUTH DAKOTA - The default annuitization option
is Annuity Payout Option 1 - Life Annuity with Cash Refund. The Minimum Contract
Value may be increased after the contract is issued. Death Benefits payable from
the Fixed Account may be delayed for up to six months.
CALIFORNIA - The Annuitant may not be changed at any time if the Owner is a
non-natural person, unless the non-natural person is a transferee of a natural
person. The Contract Maturity Date is based on the Owner's age (or Annuitant's
age for a non-natural Owner) in effect on the Issue Date of the Contract. The
CDSC will not be waived if you are a patient in a certified long-term care
facility or other eligible facility.
CONNECTICUT - The CDSC will not be waived if you are a patient in a certified
long-term care facility or other eligible facility on the Contract Issue Date.
SOUTH DAKOTA - The CDSC will not be waived if you are a patient in a certified
long-term care facility or other eligible facility.
C. LEGAL PROCEEDINGS
There continues to be significant federal and state regulatory activity relating
to financial services companies. We are subject to various legal proceedings and
claims incidental to or arising in the ordinary course of our business. In the
future, we may be subject to additional lawsuits, arbitration proceedings and/or
regulatory/legal proceedings. While it is not possible to predict with certainty
the ultimate outcome of any pending or future case, legal proceeding or
regulatory action, we do not expect the ultimate result of any of our known
legal proceedings or claims to result in a material adverse effect on the
Company or its Separate Account. Nonetheless, given the indeterminate amounts
sought in certain of these proceedings, and the inherent unpredictability of
litigation, an adverse outcome in certain matters could, from time to time, have
a material adverse effect on the Company's results of operations or cash flows.
D. HOW CONTRACTS ARE SOLD
We have entered into a distribution agreement with our affiliate Forethought
Distributors, LLC under which serves as the principal underwriter for the
Contracts, which are offered on a continuous basis. Forethought Distributors,
LLC is registered with the Securities and Exchange Commission under the 1934 Act
as a broker-dealer and is a member of the Financial Industry Regulatory
Authority (FINRA). The principal business address of Forethought Distributors,
LLC is 82 Hopmeadow Street, Suite 200, Simsbury, CT 06089. Forethought
Distributors, LLC has entered into selling agreements with affiliated and
unaffiliated broker-dealers, and
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financial institutions (Financial Intermediaries) for the sale of the Contracts.
We pay compensation to Forethought Distributors, LLC for sales of the Contracts
by Financial Intermediaries. Forethought Distributors, LLC in its role as
Principal Underwriter, did not retain any underwriting commissions for the
fiscal year ended December 31, 2013. Contracts will be sold by individuals who
have been appointed by us as insurance agents and who are investment
professionals of Financial Intermediaries.
We list below types of arrangements that help to incentivize sales people to
sell our suite of variable annuities. Not all arrangements necessarily affect
each variable annuity. These types of arrangements could be viewed as creating
conflicts of interest.
Financial Intermediaries receive commissions (described below under
Commissions). Certain selected Financial Intermediaries also receive additional
compensation (described below under Additional Payments). All or a portion of
the payments we make to Financial Intermediaries may be passed on to investment
professionals according to a Financial Intermediaries' internal compensation
practices.
Affiliated broker-dealers also employ individuals called wholesalers in the
sales process. Wholesalers typically receive commissions based on the type of
Contract or optional benefits sold. Commissions are based on a specified amount
of Premium Payments or Contract Value.
- COMMISSIONS
Up front commissions paid to Financial Intermediaries generally range from 0% to
up to 7.5% of each Premium Payment. Trail commissions (fees paid for customers
that maintain their Contracts generally for more than 1 year) range up to 1% of
your Contract Value. We pay different commissions based on the Contract
variation that you buy. We may pay a lower commission for sales to Owners over
age 80.
Commission arrangements vary from one Financial Intermediary to another. We are
not involved in determining your investment professional's compensation. Under
certain circumstances, your investment professional may be required to return
all or a portion of the commissions paid.
Check with your investment professional to verify whether your account is a
brokerage or an advisory account. Your interests may differ from ours and your
investment professional (or the Financial Intermediary with which they are
associated). Please ask questions to make sure you understand your rights and
any potential conflicts of interest. If you are an advisory client, your
investment professional (or the Financial Intermediary with which they are
associated) can be paid both by you and by us based on what you buy. Therefore,
profits, and your investment professional's (or their Financial Intermediary's)
compensation, may vary by product and over time. Contact an appropriate person
at your Financial Intermediary with whom you can discuss these differences.
- ADDITIONAL PAYMENTS
Subject to FINRA and Financial Intermediary rules, we (or our affiliates) also
pay the following types of fees to, among other things, encourage the sale of
this Contract. These additional payments could create an incentive for your
investment professional, and the Financial Intermediary with which they are
associated, to recommend products that pay them more than others, which may not
necessarily be to your benefit.
[Enlarge/Download Table]
ADDITIONAL
PAYMENT TYPE WHAT IT'S USED FOR
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Access Access to investment professionals and/or Financial Intermediaries such as one-on-one wholesaler
visits or attendance at national sales meetings or similar events.
Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and other gifts.
Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/participation; sponsorship
of Financial Intermediary sales contests and/or promotions in which participants (including
investment professionals) receive prizes such as travel Awards, merchandise and recognition; client
generation expenses.
Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities for certain
Allowances Funds.
Support Sales support through such things as providing hardware and software, operational and systems
integration, links to our website from a Financial Intermediary's websites; shareholder services
(including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or
expense allowances and reimbursements).
Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service
desk training, and/or client or prospect seminar sponsorships.
Visibility Inclusion of our products on a Financial Intermediary's preferred list; participation in, or
visibility at, national and regional conferences; and/or articles in Financial Intermediary
publications highlighting our products and services.
Volume Pay for the overall volume of their sales or the amount of money investing in our products.
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As of December 31, 2013, we have entered into ongoing contractual arrangements
to make Additional Payments to the following Financial Intermediaries for our
suite of variable annuities: AIG Advisor Group, Inc.; BBVA Compass Investment
Solutions, Inc.; Cambridge Investment Research, Inc.; Capital Financial
Services; Capital Investment Companies; CFD Investments; Commerce Brokerage
Services; Corecap Investments; Fifth Third Securities; First Bancorp; First
Tennessee Brokerage; Geneos Wealth Management Inc.; Girard Securities; Harvest
Capital LLC; HBW Securities, LLC; HD Vest Investment Services; Hines Securities
Inc.; The Huntington Investment Company; Independent Financial Group; Infinex
Investments, Inc.; ING Financial Partners; Investacorp; Janney Montgomery Scott
LLC; JJB Hilliard, WL Lyons LLC; Key Investment Services; Lincoln Financial
Advisors; LPL Financial LLC; Morgan Stanley Smith Barney LLC; New Era
Investments, LLC; NewBridge Financial Inc.; Parsonex Securities; People's
Securities, Inc.; Quest Securities; RBC Capital Markets, LLC; RBC Wealth
Management; Sammons Securities Inc.; Securities America; Sigma Financial Corp;
Summit Brokerage Services Inc.; SunTrust Bank; TFS Securities Inc.; Transamerica
Financial Advisors, Inc.; Triad Advisors; UBS Financial Services Insurance
Agency Inc.; United Capital Management of Kansas; US Bancorp Investments, Inc.;
VSR Financial Services, Inc.; VSR Group Inc.; WRP Investments.
Inclusion on this list does not imply that these sums necessarily constitute
"special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will
endeavor to update this listing annually and interim arrangements may not be
reflected. We assume no duty to notify any investor whether their investment
professional is or should be included in any such listing.
As of December 31, 2013, we have entered into arrangements to pay Marketing
Expense Allowances to the following Fund Companies (or affiliated parties) for
our suite of variable annuities: AIG Advisor Group, Inc.; BBVA Compass
Investment Solutions, Inc.; Cambridge Investment Research, Inc.; Capital
Investment Companies, CFD Investments; Corecap Investments; Geneos Wealth
Management Inc.; Harvest Capital, LLC; The Huntington Investment Company;
Independent Financial Group; ING Financial Partners; Investacorp; Janney
Montgomery Scott LLC; JJB Hilliard, WL Lyons LLC; Key Investment Services; LPL
Financial LLC; Morgan Stanley Smith Barney LLC; RBC Capital Markets, LLC;
Securities America; TFS Securities Inc.; Transamerica Financial Advisors, Inc.;
Triad Advisors; UBS Financial Services Insurance Agency Inc.; US Bancorp
Investments, Inc.; VSR Financial Services, Inc.
For the fiscal year ended December 31, 2013, Additional Payments did not in the
aggregate exceed approximately $762,893 (excluding corporate-sponsorship related
perquisites and Marketing Expense Allowances) or approximately 0.14% of average
total individual variable annuity assets. Marketing Expense Allowances for this
period did not exceed $245,854 or approximately 0.04% of the Premium Payments
invested in a particular Fund during this period. Financial Intermediaries that
received Additional Payments in 2013, but do not have an ongoing contractual
relationship, are listed in the Statement of Additional Information.
E. DELAY OF PAYMENT AND TRANSFERS
If, pursuant to SEC rules, the Invesco V.I. Money Market Fund suspends payment
of redemption proceeds in connection with a liquidation of such Fund, we will
delay payment of any transfer, Partial Withdrawal, full Surrender, or Death
Benefit from the Invesco V.I. Money Market Fund until the Fund is liquidated.
If you have submitted a check or draft, we have the right to defer payment of
Partial Withdrawals, full Surrenders, Death Benefit proceeds, or payments under
a settlement option until such check or draft has been honored. We also reserve
the right to defer payment of transfers, Partial Withdrawals, full Surrenders,
or death benefit proceeds from the Fixed Account for up to six months.
In addition, federal laws designed to counter terrorism and prevent money
laundering by criminals might require us to reject a Premium Payment and/or
"freeze" an Owner's account. If these laws apply in a particular situation, we
would not be able to pay any request for Partial Withdrawals, full Surrenders,
or Death Benefits, make transfers or continue making annuity payments absent
instructions from the appropriate federal regulator. We may also be required to
provide information about you and your Contract to government agencies or
departments.
8.FEDERAL TAX CONSIDERATIONS
A. INTRODUCTION
The following summary of tax rules does not provide or constitute any tax
advice. It provides only a general discussion of certain of the expected federal
income tax consequences with respect to amounts contributed to, invested in or
received from a Contract, based on our understanding of the existing provisions
of the Internal Revenue Code ("Code"), Treasury Regulations thereunder, and
public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue
Procedures or Notices) or by published court decisions. This summary discusses
only certain federal income tax consequences to United States Persons, and does
not discuss state, local or foreign tax consequences. The term United States
Persons means citizens or residents of the United States, domestic corporations,
domestic partnerships, trust or estates that are subject to United States
federal income tax, regardless of the source of their income. See "Annuity
Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity
purchases by non-U.S. Persons or residents.
This summary has been prepared by us after consultation with tax counsel, but no
opinion of tax counsel has been obtained. We do not make any guarantee or
representation regarding any tax status (e.g., federal, state, local or foreign)
of any Contract or any
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transaction involving a Contract. In addition, there is always a possibility
that the tax treatment of an annuity contract could change by legislation or
other means (such as regulations, rulings or judicial decisions). Moreover, it
is always possible that any such change in tax treatment could be made
retroactive (that is, made effective prior to the date of the change).
Accordingly, you should consult a qualified tax adviser for complete information
and advice before purchasing a Contract.
In addition, although this discussion addresses certain tax consequences if you
use the Contract in various arrangements, including Charitable Remainder Trusts,
tax-qualified retirement arrangements, deferred compensation plans, split-dollar
insurance arrangements, or other employee benefit arrangements, this discussion
is not exhaustive. The tax consequences of any such arrangement may vary
depending on the particular facts and circumstances of each individual
arrangement and whether the arrangement satisfies certain tax qualification or
classification requirements. In addition, the tax rules affecting such an
arrangement may have changed recently, e.g., by legislation or regulations that
affect compensatory or employee benefit arrangements. Therefore, if you are
contemplating the use of a Contract in any arrangement the value of which to you
depends in part on its tax consequences, you should consult a qualified tax
adviser regarding the tax treatment of the proposed arrangement and of any
Contract used in it.
The federal, as well as state and local, tax laws and regulations require the
Company to report certain transactions with respect to Your contract (such as an
exchange of or a distribution from the contract) to the Internal Revenue Service
and state and local tax authorities, and generally to provide You with a copy of
what was reported. This copy is not intended to supplant Your own records. It is
Your responsibility to ensure that what You report to the Internal Revenue
Service and other relevant taxing authorities on your income tax returns is
accurate based on Your books and records. You should review whatever is reported
to the taxing authorities by the Company against your own records, and in
consultation with your own tax advisor, and should notify the Company if You
find any discrepancies in case corrections have to be made.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL
TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED
HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A
QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A
CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW.
B. TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of the Company which is taxed as a life
insurance company under Subchapter L of Chapter 1 of the Code. The Company is
entitled to certain tax benefits related to the investment of company assets,
including assets of the Separate Account. These tax benefits, which may include
the foreign tax credit and the corporate dividends received deduction, are not
passed back to you since the Company is the owner of the assets from which the
tax benefits are derived.
C. TAXATION OF ANNUITIES - GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN
TAX-QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS AS OWNERS
Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other
than a natural person generally is not treated as an annuity contract under the
Code. Instead, such a non-natural Owner generally could be required to include
in gross income currently for each taxable year the excess of (a) the sum of the
Contract Value as of the close of the taxable year and all previous
distributions under the Contract over (b) the sum of net premiums paid for the
taxable year and any prior taxable year and the amount includable in gross
income for any prior taxable year with respect to the Contract under Section
72(u). However, Section 72(u) does not apply to:
- A contract the nominal owner of which is a non-natural person but the
beneficial owner of which is a natural person (e.g., where the non-natural
owner holds the contract as an agent for the natural person),
- A contract acquired by the estate of a decedent by reason of such decedent's
death,
- Certain contracts acquired with respect to tax-qualified retirement
arrangements,
- Certain contracts held in structured settlement arrangements that may
qualify under Code Section 130, or
- A single premium immediate annuity contract under Code Section 72(u)(4),
which provides for substantially equal periodic payments and an annuity
starting date that is no later than 1 year from the date of the contract's
purchase.
A non-natural Owner that is a tax-exempt entity for federal tax purposes (e.g.,
a tax-qualified retirement trust or a Charitable Remainder Trust) generally
would not be subject to federal income tax as a result of such current gross
income under Code Section 72(u). However, such a tax-exempt entity, or any
annuity contract that it holds, may need to satisfy certain tax requirements in
order to maintain its qualification for such favorable tax treatment. See, e.g.,
IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts.
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Pursuant to Code Section 72(s), if the Owner is a non-natural person, the
primary annuitant is treated as the "holder" in applying the required
distribution rules described below. These rules require that certain
distributions be made upon the death of a "holder." In addition, for a
non-natural owner, a change in the primary annuitant is treated as the death of
the "holder." However, the provisions of Code Section 72(s) do not apply to
certain contracts held in tax-qualified retirement arrangements or structured
settlement arrangements.
2. OTHER OWNERS (NATURAL PERSONS).
A Owner is not taxed on increases in the value of the Contract until an amount
is received or deemed received, e.g., in the form of a lump sum payment (full or
partial value of a Contract) or as Annuity payments under the settlement option
elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
a. AMOUNTS RECEIVED AS AN ANNUITY
Contract payments made periodically at regular intervals over a period of more
than one full year, such that the total amount payable is determinable from the
start ("amounts received as an annuity") are includable in gross income to the
extent the payments exceed the amount determined by the application of the ratio
of the allocable "investment in the contract" to the total amount of the
payments to be made after the start of the payments (the "exclusion ratio")
under Section 72 of the Code. Total premium payments less amounts received which
were not includable in gross income equal the "investment in the contract." The
start of the payments may be the Annuity Commencement Date, or may be an annuity
starting date assigned should any portion less than the full Contract be
converted to periodic payments from the Contract (Annuity Payouts).
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the allocated investment in the contract for
the Annuity Payout, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract". It is
unclear what value should be used in determining the "income on the
contract." We believe that the "income on the contract" does not include
some measure of the value of certain future cash-value type benefits, but
the IRS could take a contrary position and include such value in
determining the "income on the contract".
iii. Under Section 72(a)(2) of the Code, if any amount is received as an
annuity (i.e., as one of a series of periodic payments at regular
intervals over more than one full year) for a period of 10 or more years,
or during one or more lives, under any portion of an annuity, endowment,
or life insurance contract, then that portion of the contract shall be
treated as a separate contract with its own annuity starting date
(otherwise referred to as a partial annuitization of the contract). This
assigned annuity starting date for the new separate contract can be
different from the original Annuity Commencement Date for the Contract.
Also, for purposes of applying the exclusion ratio for the amounts
received under the partial annuitization, the investment in the contract
before receiving any such amounts shall be allocated pro rata between the
portion of the Contract from which such amounts are received as an annuity
and the portion of the Contract from which amounts are not received as an
annuity. These provisions apply to payments received in taxable years
beginning after December 31, 2010.
b. AMOUNTS NOT RECEIVED AS AN ANNUITY
i. To the extent that the "cash value" of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
ii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a withdrawal or Partial Withdrawal), which is non-periodic
and not part of a partial annuitization, is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" is computed by
reference to the aggregation rule described in subparagraph 2.c. below. As
a result, any such amount received or deemed received (1) shall be
includable in gross income to the extent that such amount does not exceed
any such "income on the contract," and (2) shall not be includable in gross
income to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract," and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iii. Generally, non-periodic amounts received or deemed received after the
Annuity Commencement Date (or after the assigned annuity starting date for
a partial annuitization) are not entitled to any exclusion ratio and shall
be fully includable in gross income. However, upon a full surrender after
such date, only the excess of the amount received (after any surrender
charge)
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over the remaining "investment in the contract" shall be includable in
gross income (except to the extent that the aggregation rule referred to
in the next subparagraph 2.c. may apply).
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph 2.b. and the previous
subparagraph 2.a.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph 2.b. and the previous subparagraph 2.a. This transfer rule
does not apply, however, to certain transfers of property between Spouses
or incident to divorce.
vi. In general, any amount actually received under the Contract as a Death
Benefit, including an optional Death Benefit, if any, will be treated as an
amount received for purposes of this subparagraph 2.b. and the previous
subparagraph 2.
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same owner within the same calendar year (other than certain
contracts held in connection with tax-qualified retirement arrangements) will be
aggregated and treated as one annuity contract for the purpose of determining
the taxation of distributions prior to the Annuity Commencement Date. An annuity
contract received in a tax-free exchange for another annuity contract or life
insurance contract may be treated as a new contract for this purpose. We believe
that for any Contracts subject to such aggregation, the values under the
Contracts and the investment in the contracts will be added together to
determine the taxation under subparagraph 2.a., above, of amounts received or
deemed received prior to the Annuity Commencement Date. Withdrawals will be
treated first as withdrawals of income until all of the income from all such
Contracts is withdrawn. In addition, the Treasury Department has specific
authority under the aggregation rules in Code Section 72(e)(12) to issue
regulations to prevent the avoidance of the income-out-first rules for
non-periodic distributions through the serial purchase of annuity contracts or
otherwise. As of the date of this prospectus, there are no regulations
interpreting these aggregation provisions.
d. 10% PENALTY TAX - APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions:
1. Distributions made on or after the date the taxpayer has attained
the age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a taxpayer becoming disabled.
4. A distribution that is part of a scheduled series of substantially
equal periodic payments (not less frequently than annually) for the
life (or life expectancy) of the taxpayer (or the joint lives or
life expectancies of the taxpayer and the taxpayer's designated
Beneficiary).
5. Distributions made under certain annuities issued in connection with
structured settlement agreements.
6. Distributions of amounts which are allocable to the "investment in
the contract" prior to August 14, 1982 (see next subparagraph e.).
7. Distributions purchased by an employer upon termination of certain
qualified plans and held by the employer until the employee
separates from service.
If the taxpayer avoids this 10% penalty tax by qualifying for the substantially
equal periodic payments exception and later such series of payments is modified
(other than by death or disability), the 10% penalty tax will be applied
retroactively to all the prior periodic payments (i.e., penalty tax plus
interest thereon), unless such modification is made after both (a) the taxpayer
has reached age 59 1/2 and (b) 5 years have elapsed since the first of these
periodic payments.
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED
PRIOR TO AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable
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thereto, such amount is not subject to the 10% penalty tax. In all other
respects, amounts received or deemed received from such post-exchange Contracts
are generally subject to the rules described in this subparagraph e.
f. REQUIRED DISTRIBUTIONS
i. Death of Owner or Primary Annuitant
Subject to the alternative election or Spouse beneficiary provisions in ii
or iii below:
1. If any Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the
date of such death;
2. If any Owner dies before the Annuity Commencement Date, the entire
interest in the Contract shall be distributed within 5 years after
such death; and
3. If the Owner is not an individual, then for purposes of 1. or 2.
above, the primary annuitant under the Contract shall be treated as
the Owner, and any change in the primary annuitant shall be treated
as the death of the Owner. The primary annuitant is the individual,
the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Owner described in i. above is payable
to or for the benefit of a designated beneficiary, such beneficiary may
elect to have the portion distributed over a period that does not extend
beyond the life or life expectancy of the beneficiary. Such distributions
must begin within a year of the Owner's death.
iii. Spouse Beneficiary
If any portion of the interest of a Owner is payable to or for the benefit
of his or her Spouse, and the Annuitant is living, such Spouse shall be
treated as the Owner of such portion for purposes of section i. above.
This Spousal Contract continuation shall apply only once for this
Contract.
g. ADDITION OF RIDER OR MATERIAL CHANGE.
The addition of a rider to the Contract, or a material change in the Contract's
provisions, could cause it to be considered newly issued or entered into for tax
purposes, and thus could cause the Contract to lose certain grandfathered tax
status. Please contact your tax adviser for more information.
h. PARTIAL EXCHANGES.
The IRS, in Rev. Rul. 2003-76, confirmed that the owner of an annuity contract
can direct its insurer to transfer a portion of the contract's cash value
directly to another annuity contract (issued by the same insurer or by a
different insurer), and such a direct transfer can qualify for tax-free exchange
treatment under Code Section 1035 (a "partial exchange").
The IRS issued additional guidance, Rev. Proc. 2011-38, that addresses partial
exchanges. Rev. Proc. 2011-38 modifies and supersedes Rev. Proc. 2008-24 and
applies to the direct transfer of a portion of the cash surrender value of an
existing annuity contract for a second annuity contract, regardless of whether
the two annuity contracts are issued by the same or different companies and is
effective for transfers that are completed on or after October 24, 2011. The
Rev. Proc. does not apply to transactions to which the rules for partial
annuitization under Code Section 72(a)(2) apply.
Under Rev. Proc. 2011-38, a transfer within the scope of the Rev. Proc. will be
treated as a tax-free exchange under Section 1035 if no amount, other than an
amount received as an annuity for a period of 10 years or more or during one or
more lives, is received under either the original contract or the new contract
during the 180 days beginning on the date of the transfer (in the case of a new
contract, the date the contract is placed in-force). A subsequent direct
transfer of all or a portion of either contract is not taken into account for
purposes of this characterization if the subsequent transfer qualifies (or is
intended to qualify) as a tax-free exchange under Code Section 1035.
If a transfer falls within the scope of the Rev. Proc. but is not described
above (for example - if a distribution is made from either contract within the
180 day period), the transfer will be characterized in a manner consistent with
its substance, based on general tax principles and all the facts and
circumstances. The IRS will not require aggregation (under Code Section
72(e)(12)) of an original, pre-existing contract with a second contract that is
the subject of a tax-free exchange, even if both contracts are issued by the
same insurance company, but will instead treat the contracts as separate annuity
contracts. The applicability of the IRS's partial exchange guidance to the
splitting of an annuity contract is not clear. You should consult with a
qualified tax adviser as to potential tax consequences before attempting any
partial exchange or split of annuity contracts.
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3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your Contract be adequately
diversified. Code Section 817(h) provides that a variable annuity contract will
not be treated as an annuity contract for any period during which the
investments made by the separate account or Fund are not adequately diversified.
If a contract is not treated as an annuity contract, the Owner will be subject
to income tax on annual increases in cash value.
The Treasury Department's diversification regulations under Code Section 817(h)
require, among other things, that:
- no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- no more than 70% is represented by any two investments,
- no more than 80% is represented by any three investments and
- no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the insurer
or the Owner must agree to make adjustments or pay such amounts as may be
required by the IRS for the period during which the diversification requirements
were not met.
Fund shares may also be sold to tax-qualified plans pursuant to an exemptive
order and applicable tax laws. If Fund shares are sold to non-qualified plans,
or to tax-qualified plans that later lose their tax-qualified status, the
affected Funds may fail the diversification requirements of Code Section 817(h),
which could have adverse tax consequences for Owners with premiums allocated to
affected Funds.
4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax income deferral,
assets in the separate account supporting the contract must be considered to be
owned by the insurance company, and not by the Owner, for tax purposes. The IRS
has stated in published rulings that a variable Owner will be considered the
"owner" of separate account assets for income tax purposes if the Owner
possesses sufficient incidents of ownership in those assets, such as the ability
to exercise investment control over the assets. In circumstances where the
variable Owner is treated as the "tax owner" of certain separate account assets,
income and gain from such assets would be includable in the variable Owner's
gross income. The Treasury Department indicated in 1986 that it would provide
guidance on the extent to which Owners may direct their investments to
particular Sub-Accounts without being treated as tax owners of the underlying
shares. Although no such regulations have been issued to date, the IRS has
issued a number of rulings that indicate that this issue remains subject to a
facts and circumstances test for both variable annuity and life insurance
contracts.
Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where
interests in a partnership offered in an insurer's separate account are not
available exclusively through the purchase of a variable insurance contract
(e.g., where such interests can be purchased directly by the general public or
others without going through such a variable contract), such "public
availability" means that such interests should be treated as owned directly by
the Owner (and not by the insurer) for tax purposes, as if such Owner had chosen
instead to purchase such interests directly (without going through the variable
contract). None of the shares or other interests in the fund choices offered in
our Separate Account for your Contract are available for purchase except through
an insurer's variable contracts or by other permitted entities.
Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund
choices for its variable Owners (each with a general investment strategy, e.g.,
a small company stock fund or a special industry fund) under certain
circumstances, without causing such a Owner to be treated as the tax owner of
any of the Fund assets. The ruling does not specify the number of fund options,
if any, that might prevent a variable Owner from receiving favorable tax
treatment. As a result, although the owner of a Contract has more than 20 fund
choices, we believe that any owner of a Contract also should receive the same
favorable tax treatment. However, there is necessarily some uncertainty here as
long as the IRS continues to use a facts and circumstances test for investor
control and other tax ownership issues. Therefore, we reserve the right to
modify the Contract as necessary to prevent you from being treated as the tax
owner of any underlying assets.
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D. FEDERAL INCOME TAX WITHHOLDING
The portion of an amount received under a Contract that is taxable gross income
to the Payee is also subject to federal income tax withholding, pursuant to Code
Section 3405, which requires the following:
1. Non-Periodic Distributions. The portion of a non-periodic distribution
that is includable in gross income is subject to federal income tax
withholding unless an individual elects not to have such tax withheld
("election out"). We will provide such an "election out" form at the
time such a distribution is requested. If the necessary "election out"
form is not submitted to us in a timely manner, generally we are
required to withhold 10 percent of the includable amount of
distribution and remit it to the IRS.
2. Periodic Distributions (payable over a period greater than one year).
The portion of a periodic distribution that is includable in gross
income is generally subject to federal income tax withholding as if the
Payee were a married individual claiming 3 exemptions, unless the
individual elects otherwise. An individual generally may elect out of
such withholding, or elect to have income tax withheld at a different
rate, by providing a completed election form. We will provide such an
election form at the time such a distribution is requested. If the
necessary "election out" forms are not submitted to us in a timely
manner, we are required to withhold tax as if the recipient were
married claiming 3 exemptions, and remit this amount to the IRS.
Generally no "election out" is permitted if the distribution is delivered
outside the United States and any possession of the United States. Regardless of
any "election out" (or any amount of tax actually withheld) on an amount
received from a Contract, the Payee is generally liable for any failure to pay
the full amount of tax due on the includable portion of such amount received. A
Payee also may be required to pay penalties under estimated income tax rules, if
the withholding and estimated tax payments are insufficient to satisfy the
Payee's total tax liability.
E. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and mandatory withholding on U.S. source taxable annuity
distributions at a 30% rate, unless a lower treaty rate applies and any required
tax forms are submitted to us. If withholding applies, we are required to
withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it
to the IRS. In addition, purchasers may be subject to state premium tax, other
state and/or municipal taxes, and taxes that may be imposed by the purchaser's
country of citizenship or residence.
F. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS
Any amount payable upon a Owner's death, whether before or after the Annuity
Commencement Date, is generally includable in the Owner's estate for federal
estate tax purposes. Similarly, prior to the Owner's death, the payment of any
amount from the Contract, or the transfer of any interest in the Contract, to a
beneficiary or other person for less than adequate consideration may have
federal gift tax consequences. In addition, any transfer to, or designation of,
a non-Spouse beneficiary who either is (1) 37 1/2 or more years younger than a
Owner or (2) a grandchild (or more remote further descendent) of a Owner may
have federal generation-skipping-transfer ("GST") tax consequences under Code
Section 2601. Regulations under Code Section 2662 may require us to deduct any
such GST tax from your Contract, or from any applicable payment, and pay it
directly to the IRS. However, any federal estate, gift or GST tax payment with
respect to a Contract could produce an offsetting income tax deduction for a
beneficiary or transferee under Code Section 691(c) (partially offsetting such
federal estate or GST tax) or a basis increase for a beneficiary or transferee
under Code Section 691(c) or Section 1015(d). In addition, as indicated above in
"Distributions Prior to the Annuity Commencement Date," the transfer of a
Contract for less than adequate consideration during the Owner's lifetime
generally is treated as producing an amount received by such Owner that is
subject to both income tax and the 10% penalty tax. To the extent that such an
amount deemed received causes an amount to be includable currently in such
Owner's gross income, this same income amount could produce a corresponding
increase in such Owner's tax basis for such Contract that is carried over to the
transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and
Section 1015.
G. TAX DISCLOSURE OBLIGATIONS
In some instances certain transactions must be disclosed to the IRS or penalties
could apply. See, for example, IRS Notice 2004-67. The Code also requires
certain "material advisers" to maintain a list of persons participating in such
"reportable transactions," which list must be furnished to the IRS upon request.
It is possible that such disclosures could be required by The Company, the
Owner(s) or other persons involved in transactions involving annuity contracts.
It is the responsibility of each party, in consultation with their tax and legal
advisers, to determine whether the particular facts and circumstances warrant
such disclosures.
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H. MEDICARE TAX
Beginning in 2013, distributions from non-qualified annuity policies will be
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 whose income exceeds certain threshold amounts. Please consult a tax
advisor for more information.
INFORMATION REGARDING IRAS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by IRAs. State income
tax rules applicable to IRAs may differ from federal income tax rules, and this
summary does not describe any of these differences. Because of the complexity of
the tax rules, owners and beneficiaries are encouraged to consult their own tax
advisors as to specific tax consequences.
1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS").
In addition to "traditional" IRAs governed by Code Sections 408(a) and (b)
("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP
IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section
408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) may elect
to provide for a separate account or annuity contract that accepts after-tax
employee contributions and is treated as a "Deemed IRA" under Code Section
408(q), which is generally subject to the same rules and limitations as
Traditional IRAs. Contributions to each of these types of IRAs are subject to
differing limitations. The following is a very general description of each type
of IRA for which a Contract is available.
a. TRADITIONAL IRAS
Traditional IRAs are subject to limits on the amounts that may be contributed
each year, the persons who may be eligible, and the time when minimum
distributions must begin. Depending upon the circumstances of the individual,
contributions to a Traditional IRA may be made on a deductible or non-deductible
basis. Failure to make required minimum distributions ("RMDs") when the Owner
reaches age 70 1/2 or dies, as described below, may result in imposition of a
50% penalty tax on any excess of the RMD amount over the amount actually
distributed. In addition, any amount received before the Owner reaches age 59
1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a
special exception applies, as described below. Under Code Section 408(e), an IRA
may not be used for borrowing (or as security for any loan) or in certain
prohibited transactions, and such a transaction could lead to the complete tax
disqualification of an IRA.
You (or your surviving spouse if you die) may rollover funds tax-free from
certain existing Qualified Plans (such as proceeds from existing insurance
contracts, annuity contracts or securities) into a Traditional IRA under certain
circumstances, as indicated below. In addition, under Code Section 402(c)(11) a
non-spouse "designated beneficiary" of a deceased Plan participant may make a
tax-free "direct rollover" (in the form of a direct transfer between Plan
fiduciaries, as described below in "Rollover Distributions") from certain
Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional
IRA must be designated and treated as an "inherited IRA" that remains subject to
applicable RMD rules (as if such IRA had been inherited from the deceased Plan
participant).
IRAs generally may not invest in life insurance contracts. However, an annuity
contract that is used as an IRA may provide a death benefit that equals the
greater of the premiums paid or the contract's cash value. The Contract offers
an enhanced death benefit that may exceed the greater of the Contract Value or
total premium payments. The tax rules are unclear as to what extent an IRA can
provide a death benefit that exceeds the greater of the IRA's cash value or the
sum of the premiums paid and other contributions into the IRA. Please note that
the IRA rider for the Contract has provisions that are designed to maintain the
Contract's tax qualification as an IRA, and therefore could limit certain
benefits under the Contract (including endorsement, rider or option benefits) to
maintain the Contract's tax qualification.
b. SEP IRAS
Code Section 408(k) provides for a Traditional IRA in the form of an
employer-sponsored defined contribution plan known as a Simplified Employee
Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, and in
limited circumstances employee and salary reduction contributions, as well as
higher overall contribution limits than a Traditional IRA, but a SEP is also
subject to special tax-qualification requirements (e.g., on participation,
nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is
generally subject to the same tax rules as for a Traditional IRA, which are
described above. Please note that the IRA rider for the Contract has provisions
that are designed to maintain the Contract's tax qualification as an IRA, and
therefore could limit certain benefits under the Contract (including
endorsement, rider or option benefits) to maintain the Contract's tax
qualification.
c. SIMPLE IRAS
SIMPLE IRAs permit certain small employers to establish SIMPLE plans as provided
by Code Section 408(p), under which employees may elect to defer to a SIMPLE IRA
a specified percentage of compensation. The sponsoring employer is required to
make matching or non-elective contributions on behalf of employees.
Distributions from SIMPLE IRAs are subject to the same restrictions that apply
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to IRA distributions and are taxed as ordinary income. Subject to certain
exceptions, premature distributions prior to age 59 1/2 are subject to a 10
percent penalty tax, which is increased to 25.
d. ROTH IRAS
Code Section 408A permits eligible individuals to establish a Roth IRA.
Contributions to a Roth IRA are not deductible, but withdrawals of amounts
contributed and the earnings thereon that meet certain requirements are not
subject to federal income tax. In general, Roth IRAs are subject to limitations
on the amounts that may be contributed by the persons who may be eligible to
contribute, certain Traditional IRA restrictions, and certain RMD rules on the
death of the Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD
rules during the Owner's lifetime. Generally, however, upon the Owner's death
the amount remaining in a Roth IRA must be distributed by the end of the fifth
year after such death or distributed over the life expectancy of a designated
beneficiary. The Owner of a Traditional IRA or other qualified plan assets may
convert a Traditional IRA into a Roth IRA under certain circumstances. The
conversion of a Traditional IRA or other qualified plan assets to a Roth IRA
will subject the fair market value of the converted Traditional IRA to federal
income tax in the year of conversion. In addition to the amount held in the
converted Traditional IRA, the fair market value may include the value of
additional benefits provided by the annuity contract on the date of conversion,
based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA
can be made only to another Roth IRA under limited circumstances, as indicated
below. Distributions from eligible Qualified Plans can be "rolled over" directly
(subject to tax) into a Roth IRA under certain circumstances. Anyone considering
the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA
should consult with a qualified tax adviser. Please note that the Roth IRA rider
for the Contract has provisions that are designed to maintain the Contract's tax
qualification as a Roth IRA, and therefore could limit certain benefits under
the Contract (including endorsement, rider or option benefits) to maintain the
Contract's tax qualification.
5. TAXATION OF AMOUNTS RECEIVED FROM IRAS
Except under certain circumstances in the case of Roth IRAs or Roth accounts in
certain Qualified Plans, amounts received from Qualified Contracts or Plans
generally are taxed as ordinary income under Code Section 72, to the extent that
they are not treated as a tax-free recovery of after-tax contributions or other
"investment in the contract." For annuity payments and other amounts received
after the Annuity Commencement Date from a Qualified Contract or Plan, the tax
rules for determining what portion of each amount received represents a tax-free
recovery of "investment in the contract" are generally the same as for
Non-Qualified Contracts, as described above.
For non-periodic amounts from certain Qualified Contracts or Plans, Code Section
72(e)(8) provides special rules that generally treat a portion of each amount
received as a tax-free recovery of the "investment in the contract," based on
the ratio of the "investment in the contract" over the Contract Value at the
time of distribution. However, in determining such a ratio, certain aggregation
rules may apply and may vary, depending on the type of Qualified Contract or
Plan. For instance, all Traditional IRAs owned by the same individual are
generally aggregated for these purposes, but such an aggregation does not
include any IRA inherited by such individual or any Roth IRA owned by such
individual.
In addition, penalty taxes, mandatory tax withholding or rollover rules may
apply to amounts received from a Qualified Contract or Plan, as indicated below,
and certain exclusions may apply to certain distributions (e.g., distributions
from an eligible Government Plan to pay qualified health insurance premiums of
an eligible retired public safety officer). Accordingly, you are advised to
consult with a qualified tax adviser before taking or receiving any amount
(including a loan) from a Qualified Contract or Plan.
6. PENALTY TAXES FOR IRAS
Unlike Non-Qualified Contracts, IRAs are subject to federal penalty taxes not
just on premature distributions, but also on excess contributions and failures
to make required minimum distributions ("RMDs").
a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS
Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable
portion of a distribution from certain types of Qualified Plans that is made
before the employee reaches age 59 1/2. However, this 10% penalty tax does not
apply to a distribution that is either:
(i) made to a beneficiary (or to the employee's estate) on or after the
employee's death;
(ii) attributable to the employee's becoming disabled under Code Section
72(m)(7);
(iii) part of a series of substantially equal periodic payments (not less
frequently than annually - "SEPPs") made for the life (or life
expectancy) of the employee or the joint lives (or joint life
expectancies) of such employee and a designated beneficiary ("SEPP
Exception"), and for certain Qualified Plans (other than IRAs) such a
series must begin after the employee separates from service;
58
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(iv) (except for IRAs) made to an alternate payee pursuant to a qualified
domestic relations order under Code Section 414(p) (a similar exception
for IRAs in Code Section 408(d)(6) covers certain transfers for the
benefit of a spouse or ex-spouse);
(v) not greater than the amount allowable as a deduction to the employee
for eligible medical expenses during the taxable year;
(vi) certain qualified reservist distributions under Code Section
72(t)(2)(G) upon a call to active duty;
(vii) made an account of an IRS levy on the Qualified Plan under Code
Section 72(t)(2)(A)(vii); or
(viii) made as a "direct rollover" or other timely rollover to an Eligible
Retirement Plan, as described below.
In addition, the 10% penalty tax does not apply to a distribution from an IRA
that is either:
(ix) made after separation from employment to an unemployed IRA owner for
health insurance premiums, if certain conditions in Code Section
72(t)(2)(D) are met;
(x) not in excess of the amount of certain qualifying higher education
expenses, as defined by Code Section 72(t)(7); or
(xi) for a qualified first-time home buyer and meets the requirements of
Code Section 72(t)(8).
If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception
and later such series of payments is modified (other than by death, disability
or a method change allowed by Rev. Rul. 2002-62), the 10% penalty tax will be
applied retroactively to all the prior periodic payments (i.e., penalty tax plus
interest thereon), unless such modification is made after both (a) the employee
has reached age 59 1/2 and (b) 5 years have elapsed since the first of these
periodic payments.
b. RMDS AND 50% PENALTY TAX
If the amount distributed from a Qualified Contract or Plan is less than the
amount of the required minimum distribution ("RMD") for the year, the
participant is subject to a 50% penalty tax on the amount that has not been
timely distributed.
An individual's interest in an IRA generally must be distributed, or begin to be
distributed, not later than the Required Beginning Date. Generally, the Required
Beginning Date is April 1 of the calendar year following the calendar year in
which the individual attains age 70 1/2, or
The entire interest of the individual must be distributed beginning no later
than the Required Beginning Date over -
(a) the life of the individual or the lives of the individual and a
designated beneficiary (as specified in the Code), or
(b) over a period not extending beyond the life expectancy of the individual
or the joint life expectancy of the individual and a designated
beneficiary.
If an individual dies before reaching the Required Beginning Date, the
individual's entire interest generally must be distributed within 5 years after
the individual's death. However, this RMD rule will be deemed satisfied if
distributions begin before the close of the calendar year following the
individual's death to a qualifying designated beneficiary and distribution is
over the life of such designated beneficiary (or over a period not extending
beyond the life expectancy of such beneficiary). If the individual's surviving
spouse is the sole designated beneficiary, distributions may be delayed until
the deceased individual would have attained age 70 1/2.
If an individual dies after RMDs have begun for such individual, any remainder
of the individual's interest generally must be distributed at least as rapidly
as under the method of distribution in effect at the time of the individual's
death.
The RMD rules that apply while the Owner is alive do not apply with respect to
Roth IRAs. The RMD rules applicable after the death of the Owner apply to Roth
IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the
Owner's surviving spouse is the sole designated beneficiary, this surviving
spouse may elect to treat the Traditional or Roth IRA as his or her own.
The RMD amount for each year is determined generally by dividing the account
balance by the applicable life expectancy. This account balance is generally
based upon the Contract Value as of the close of business on the last day of the
previous calendar year. RMD incidental benefit rules also may require a larger
annual RMD amount, particularly when distributions are made over the joint lives
of the Owner and an individual other than his or her spouse. RMDs also can be
made in the form of annuity payments that satisfy the rules set forth in
Regulations under the Code relating to RMDs.
In addition, in computing any RMD amount based on a contract's Contract Value,
such Contract Value must include the actuarial value of certain additional
benefits provided by the contract. As a result, electing an optional benefit
under an IRA may require the RMD amount for such IRA to be increased each year,
and expose such additional RMD amount to the 50% penalty tax for RMDs if such
additional RMD amount is not timely distributed.
59
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7. TAX WITHHOLDING FOR IRAS
Distributions from an IRA generally are subject to federal income tax
withholding requirements. These federal income tax withholding requirements,
including any "elections out" and the rate at which withholding applies,
generally are the same as for periodic and non-periodic distributions from a
Non-Qualified Contract, as described above, except where the distribution is an
"eligible rollover distribution" from a Qualified Plan.
Regardless of any "election out" (or any actual amount of tax actually withheld)
on an amount received from an IRA the payee is generally liable for any failure
to pay the full amount of tax due on the includable portion of such amount
received. A payee also may be required to pay penalties under estimated income
tax rules, if the withholding and estimated tax payments are insufficient to
satisfy the payee's total tax liability.
8. ROLLOVER DISTRIBUTIONS
Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and
408A(d)(3) vary according to the type of transferor IRA and type of transferee
IRA or other Plan. For instance, generally no tax-free "direct rollover" or
"60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or
SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a
"conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In
addition, generally no tax-free "direct rollover" or "60-day rollover" can be
made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA
set up by that same individual as the original owner. Generally, any amount
other than an RMD distributed from a Traditional or SEP IRA is eligible for a
"direct rollover" or a "60-day rollover" to another Traditional IRA for the same
individual. Similarly, any amount other than an RMD distributed from a Roth IRA
is generally eligible for a "direct rollover" or a "60-day rollover" to another
Roth IRA for the same individual. However, in either case such a tax-free 60-day
rollover is limited to 1 per year (365-day period); whereas no 1-year limit
applies to any such "direct rollover." Similar rules apply to a "direct
rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another
SIMPLE IRA or a Traditional IRA, except that any distribution of employer
contributions from a SIMPLE IRA during the initial 2-year period in which the
individual participates in the employer's SIMPLE Plan is generally disqualified
(and subject to the 25% penalty tax on premature distributions) if it is not
rolled into another SIMPLE IRA for that individual. Amounts other than RMDs
distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial
2-year period) also are eligible for a "direct rollover" or a "60-day rollover"
to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but
any such rollover is limited to the amount of the distribution that otherwise
would be includable in gross income (i.e., after-tax contributions are not
eligible).
Special rollover rules also apply to (1) transfers or rollovers for the benefit
of a spouse (or ex-spouse) or a nonspouse designated beneficiary, (2) Plan
distributions of property, (3) distributions from a Roth account in certain
Plans, (4) recontributions within 3 years of "qualified hurricane distributions"
made before 2007 under Code Section 1400Q(a), (5) transfers from a Traditional
or Roth IRA to certain health savings accounts under Code Section 408(d)(9), and
(6) obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS.
60
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
[Download Table]
GENERAL INFORMATION
Safekeeping of Assets
Independent Registered Public Accounting Firms
Non-Participating
Misstatement of Age or Sex
Principal Underwriter
Additional Payments to Financial Intermediaries
PERFORMANCE RELATED INFORMATION
Total Return for all Sub-Accounts
Yield for Sub-Accounts
Money Market Sub-Accounts
Additional Materials
Performance Comparisons
FINANCIAL STATEMENTS
APP A-1
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APPENDIX A - EXAMPLES
TABLE OF CONTENTS
[Download Table]
PAGE
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CONTINGENT DEFERRED SALES CHARGE EXAMPLES APP A-2
PREMIUM BASED CHARGE EXAMPLES APP A-7
RETURN OF PREMIUM EXAMPLE APP A-8
LEGACY LOCK II EXAMPLES APP A-8
MAXIMUM DAILY VALUE EXAMPLES APP A-10
DAILY STEP UP WITHDRAWAL BENEFIT EXAMPLES APP A-12
APP A-2
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CONTINGENT DEFERRED SALES CHARGE EXAMPLES (CLASS B AND CLASS L SHARES)
All CDSC Examples reflect gross withdrawals that deduct the CDSC from the amount
of the Partial Withdrawals requested.
EXAMPLE 1: ILLUSTRATES A PARTIAL WITHDRAWAL THAT IS EQUAL TO THE FREE WITHDRAWAL
AMOUNT (FWA) IN A DOWN MARKET. ASSUME A PARTIAL WITHDRAWAL TAKEN IN CONTRACT
YEAR 2 EQUALS $5,000.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
Values immediately prior to the Partial Withdrawal:
- Premiums subject to CDSC are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $90,000
- Earnings are $0
- Your earnings are the greater of (1) Contract Value - Remaining
Gross Premiums, or (2) $0
- FWA is $5,000
- Your FWA is the greater of (1) 5% of total Premiums subject to
CDSC, or (2) earnings
STEP 2: As the amount withdrawn is equal to the FWA, there are no CDSC incurred
on the transaction. Also, there is no adjustment to Remaining Gross Premiums.
The FWA has been exhausted for the duration of the Contract Year. There are no
additional steps.
Values after the Partial Withdrawal:
- Premiums subject to CDSC are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $85,000
- FWA is $0
EXAMPLE 2: ILLUSTRATES A PARTIAL WITHDRAWAL IN EXCESS OF THE FWA IN A DOWN
MARKET AND IMPACTS TO SUBSEQUENT FWA CALCULATIONS. ASSUME A PARTIAL WITHDRAWAL
TAKEN IN CONTRACT YEAR 2 EQUALS $5,000.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
Values immediately prior to the first Partial Withdrawal:
- Premiums subject to CDSC are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $90,000
- Earnings are $0
- Your earnings are the greater of (1) Contract Value - Remaining
Gross Premiums, or (2) $0
- FWA is $5,000
- Your FWA is the greater of (1) 5% of total Premiums subject to
CDSC, or (2) earnings
STEP 2: As the amount Surrendered is equal to the FWA, there are no CDSC
incurred on the transaction. Also, there is no adjustment to Remaining Gross
Premiums. The FWA has been exhausted for the duration of the Contract Year.
There are no additional steps.
Values after the Partial Withdrawal:
- Premiums subject to CDSC are $100,000
- Remaining Gross Premiums are $100,000
APP A-3
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- Contract Value is $85,000
- FWA is $0
NEXT, ASSUME AN ADDITIONAL WITHDRAWAL DURING THE SAME CONTRACT YEAR EQUALS
$5,000. THE CONTRACT VALUE HAS CHANGED DUE TO MARKET FLUCTUATION, BUT NO OTHER
TRANSACTIONS HAVE OCCURRED.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
STEP 2: Determines that the transaction is in excess of the FWA.
Values immediately prior to the second Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $75,000
- Earnings are $0
- FWA is $0
STEP 3: As the FWA is $0; the entire $5,000 is in excess of the FWA.
STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $6,667 ($100,000 x [$5,000/$75,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
STEP 5: The applicable CDSC is 7.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $500 [7.5% x
$6,667].
STEP 6: We deduct the CDSC of $500 from the excess amount $5,000. The amount
paid to you is $4,500.
Values after the second Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premium is $93,333 ($100,000 - $6,667)
- Contract Value is $70,000
- FWA is $0
NEXT, ASSUME THAT A THIRD PARTIAL WITHDRAWAL IS TAKEN DURING CONTRACT YEAR 3 FOR
AN AMOUNT EQUAL TO $15,000. THE CONTRACT VALUE HAS CHANGED DUE TO MARKET
FLUCTUATION, BUT NO OTHER TRANSACTIONS HAVE OCCURRED.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
STEP 2: Determines that the transaction is in excess of the FWA.
Values prior to the third Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premium is $93,333
- Contract Value is $78,000
- Earnings are $0
- FWA is $5,000
STEP 3: We deduct the available FWA of $5,000; the remaining $10,000 is in
excess of the FWA.
APP A-4
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STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $12,785 ($93,333 x [$10,000/$73,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
STEP 5: The applicable CDSC is 6.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $831 [6.5% x
$12,785].
STEP 6: We deduct the CDSC of $831 from the excess amount $10,000, and combine
this with your FWA of $5,000. The amount paid to you is $14,169.
Values after the third Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premium is $80,548 ($93,333 - $12,785)
- Contract Value is $63,000
- FWA is $0
EXAMPLE 3: ILLUSTRATES A PARTIAL WITHDRAWAL IN EXCESS OF THE FWA IN AN UP
MARKET, THE NON-CUMULATIVE FEATURE OF THE FWA AND IMPACTS TO FUTURE FWA
CALCULATIONS. ASSUME A PARTIAL WITHDRAWAL IS TAKEN IN CONTRACT YEAR 1 FOR
$10,000.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
Values prior to the first Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $110,000
- Earnings are $10,000
- Your earnings are the greater of (1) Contract Value - Remaining
Gross Premiums, or (2) $0
- FWA is $10,000
- Your FWA is the greater of (1) 5% of total Premiums subject to
CDSC, or (2) earnings
STEP 2: As the amount Surrendered is equal to the FWA, there are no CDSC
incurred on the transaction. Also, there is no adjustment to Remaining Gross
Premiums. The FWA has been exhausted for the duration of the Contract Year.
There are no additional steps.
Values after the first Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premium is $100,000
- Contract Value is $100,000
- FWA is $0
NEXT, ASSUME AN ADDITIONAL PARTIAL WITHDRAWAL IS TAKEN IN CONTRACT YEAR 1 FOR
$10,000. THE CONTRACT VALUE HAS CHANGED DUE TO MARKET FLUCTUATION, BUT NO OTHER
TRANSACTIONS HAVE OCCURRED.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
APP A-5
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STEP 2: Determines that the transaction is in excess of the FWA.
Values prior to the second Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value is $100,000
- Earnings are $0
- FWA is $0
STEP 3: As the FWA is $0; the entire $10,000 is in excess of the FWA.
STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $10,000 ($100,000 x [$10,000/$100,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
STEP 5: The applicable CDSC is 8.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $850 [8.5% x
$10,000].
STEP 6: We deduct the CDSC of $850 from the excess amount $10,000. The amount
paid to you is $9,150.
Values after the second Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $90,000 ($100,000 - $10,000)
- Contract Value is $90,000
- FWA is $0
NEXT, ASSUME AN ADDITIONAL PARTIAL WITHDRAWAL IS TAKEN IN CONTRACT YEAR 3 FOR
$15,000. THE CONTRACT VALUE HAS CHANGED DUE TO MARKET FLUCTUATION, BUT NO OTHER
TRANSACTIONS HAVE OCCURRED.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
STEP 2: Determines that the transaction is in excess of the FWA of $0.
Values prior to the third Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $90,000
- Contract Value is $99,000
- Earnings are $9,000
- FWA is $9,000
STEP 3: We deduct the available FWA of $9,000; the remaining $6,000 is in excess
of the FWA.
STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $6,000 ($90,000 x [$6,000/$90,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
APP A-6
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STEP 5: The applicable CDSC is 6.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $390 [6.5% x
$6,000].
STEP 6: We deduct the CDSC of $390 from the excess amount $6,000, and combine
this with your FWA of $9,000. The amount paid to you is $14,610.
Values after the third Partial Withdrawal:
- Premiums are $100,000
- Remaining Gross Premiums are $84,000 ($90,000 - $6,000)
- Contract Value is $84,000
- FWA is $0
EXAMPLE 4: ILLUSTRATES A FULL SURRENDER CALCULATION WITH ONE OF TWO PREMIUMS OUT
OF THE APPLICABLE CDSC SCHEDULE. ASSUME TWO PREMIUMS WERE MADE FOR $100,000 EACH
INVESTED IN THE SUB-ACCOUNTS. THE FIRST WAS APPLIED AT THE BEGINNING OF CONTRACT
YEAR 1, THE SECOND IN THE BEGINNING OF CONTRACT YEAR 3. A FULL SURRENDER IS
TAKEN IN CONTRACT YEAR 8.
STEP 1: Your initial Premium of $100,000 is available without a CDSC.
Values prior to the full Surrender:
- Premiums are $200,000
- Remaining Gross Premiums is $200,000
- Remaining Gross Premium subject to CDSC is $100,000
- Contract Value just prior to the full Surrender is $300,000
- Earnings are $100,000
- Your earnings are the greater of (1) Contract Value - Remaining
Gross Premiums, or (2) $0
- FWA is $100,000
- Your FWA is the greater of (1) 5% of total Premiums subject to
CDSC, or (2) earnings.
STEP 2: The full Surrender is in excess of the sum of the FWA of $100,000 plus
the amount determined in Step 1 of $100,000.
STEP 3: We deduct the available FWA; the remaining $100,000 is in excess of the
FWA.
STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $100,000 ($100,000 x [$100,000/$100,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
STEP 5: The applicable CDSC is 3.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $3,500 [3.5% x
$100,000].
STEP 6: We deduct the CDSC of $3,500 from the excess amount $100,000, and
combine this with your FWA of $200,000. The amount paid to you is $296,500.
Values after the full Surrender:
- Contract Value is $0
The Contract is terminated.
APP A-7
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EXAMPLE 5: ILLUSTRATES A FULL SURRENDER CALCULATION IN A DOWN MARKET. ASSUME
$100,000 IS INVESTED IN THE SUB-ACCOUNTS, AND A FULL SURRENDER OCCURS IN
CONTRACT YEAR 3.
STEP 1 DOES NOT APPLY because Premiums have not been invested for longer than
the applicable CDSC as referenced in the CDSC section of the prospectus.
STEP 2: Determines that the full Surrender is in excess of the FWA.
Values prior to the full Surrender:
- Premiums are $100,000
- Remaining Gross Premiums are $100,000
- Contract Value just prior to the full Surrender is $50,000
- Earnings are $0
- Your earnings are the greater of (1) Contract Value - Remaining
Gross Premiums, or (2) $0
- FWA is $5,000
- Your FWA is the greater of (1) 5% of total Premiums subject to
CDSC, or (2) earnings
STEP 3: We deduct the available FWA of $5,000; the remaining $45,000 is in
excess of the FWA.
STEP 4: We determine the amount that is subject to CDSC by applying a
proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A = The amount in Step 3
B = Contract Value immediately prior to the withdrawal - FWA
The amount subject to CDSC is $100,000 ($100,000 x [$45,000/$45,000])
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount
subject to CDSC.
STEP 5: The applicable CDSC is 6.5%. We apply this to the amount subject to CDSC
as determined in Step 4, and the resulting CDSC incurred is $6,500 [6.5% x
$100,000].
STEP 6: We deduct the CDSC of $6,500 from the excess amount $45,000, and combine
this with your FWA of $5,000. The amount paid to you is $43,500.
Values after the full Surrender:
- Contract Value is $0
The Contract is terminated.
PREMIUM BASED CHARGE EXAMPLES (CLASS B AND CLASS L SHARES)
EXAMPLE 1: ASSUME THAT YOUR INITIAL PREMIUM IS $100,000. NO WITHDRAWALS OCCUR
DURING CONTRACT YEAR 1. ON DAY 70 OF CONTRACT YEAR 2 YOU MAKE A PARTIAL
WITHDRAWAL IN EXCESS OF THE FWA BY $5,000.
Upon each Quarterly Contract Anniversary, your annual Premium Based Charge
is calculated solely on the Remaining Gross Premium upon each Quarterly
Contract Anniversary. As there were no Partial Withdrawals during Contract
Year 1, the amount deducted from your Contract Value is $125 [($100,000 x
0.50%)/4] upon each Quarterly Contract Anniversary.
Upon the Partial Withdrawal in Contract Year 2, the Premium Based Charge is
NOT deducted at the time of the Partial Withdrawal. The Remaining Gross
Premium after the Partial Withdrawal is $95,000.
At the next Quarterly Contract Anniversary, the Premium Based Charge
applied to the Remaining Gross Premium is $118.75 [($95,000 x 0.50%)/4].
EXAMPLE 2: ASSUME THAT YOUR INITIAL DEPOSIT INTO YOUR B-SHARE VARIABLE ANNUITY
IS $100,000. ON DAY 75 OF CONTRACT YEAR 5 YOU CHOOSE TO SURRENDER YOUR ENTIRE
CONTRACT VALUE, WHICH IS EQUAL TO $120,000.
A prorated Premium Based Charge is assessed upon the full Surrender and the
entire Remaining Gross Premium is subject to the charge. The Premium Based
Charge is equal to $104.17 [($100,000 x 0.50%)/4 x (75 / 90)]. We would
also assess a CDSC on the amount of Remaining Gross Premium subject to
CDSC. The CDSC is equal to $4,500 [($120,000-$20,000)/ ($120,000-$20,000) x
$100,000 x 0.045%] as the $20,000 in earnings is the Free Withdrawal Amount
that is not subject to a CDSC. Therefore, the Surrender Value of the
Contract is $115,395.83 ($120,000 - $104.17 - $4,500).
APP A-8
-------------------------------------------------------------------------------
RETURN OF PREMIUM EXAMPLE
EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. IN CONTRACT YEAR 2
YOU APPLY A SUBSEQUENT PREMIUM PAYMENT OF $50,000. IN CONTRACT YEAR 3 YOU
WITHDRAW $7,500.00, AN AMOUNT EQUAL TO THE LIFETIME ANNUAL PAYMENT OF THE DAILY
STEP UP WITHDRAWAL BENEFIT. IN CONTRACT YEAR 5 YOU TAKE A PARTIAL WITHDRAWAL FOR
$10,000.
[Download Table]
MINIMUM
GUARANTEED
DEATH BENEFIT
CONTRACT CONTRACT PREMIUM AT END OF
YEAR VALUE(3)(4) PAYMENTS EACH CONTRACT YEAR
--------------------------------------------------------------------------------
0 $100,000.00 $100,000.00 $100,000.00
1 102,120.00 100,000.00 102,120.00
2 157,001.34 150,000.00 (1) 157,001.34
3 147,538.82 142,500.00 (5) 147,538.82
4 134,407.86 142,500.00 142,500.00
5 130,657.83 132,465.41 (2) 132,465.41
(1) Premium Payments of $100,000 are adjusted by the subsequent Premium
Payment of $50,000.
(2) The $10,000 Partial Withdrawal results in a factor of 0.981225287
being applied to Premium Payments. After multiplying the factor of
0.98122 to $135,000, the adjusted Premium Payments equal
$132,465.41. The factor of 0.98122 is derived by (Contract Value
prior to Partial Withdrawal less Excess Withdrawal / Contract Value
prior to Partial Withdrawal less the Partial Withdrawal not
considered Excess Withdrawal).
(3) Does not reflect a Premium Based Charge, if applicable.
(4) Assumes annual performance on the Contract Value, as well as
subsequent Premium Payment and Partial Withdrawal activity.
(5) Premium Payments of $150,000 are adjusted by Partial Withdrawal of
$7,500.00.
LEGACY LOCK II EXAMPLES
Your Guaranteed Minimum Death Benefit is the greatest of:
1) Return of Premium
2) Enhanced Return of Premium
3) Contract Value
EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM IS $100,000. AT THE END OF CONTRACT YEAR
1 YOU WITHDRAW $5,300 WHICH IS EQUAL TO THE ALLOWABLE WITHDRAWAL. IN CONTRACT
YEAR 3 YOU WITHDRAW $7,000 WHICH IS GREATER THAN THE ALLOWABLE WITHDRAWAL OF
$5,300.
[Enlarge/Download Table]
CONTRACT VALUE ASSUMED RETURN AFTER TRANSACTION GUARANTEED
CONTRACT PRIOR TO (NET OF ALL POLICY RETURN ENHANCED RETURN MINIMUM DEATH
YEAR* TRANSACTIONS(1)(2) EXPENSES) OF PREMIUM OF PREMIUM BENEFIT
------------------------------------------------------------------------------------------------------------------------------------
0 $100,000 $100,000 $100,000 $100,000
1 102,120 2.12% 94,700 (3) 102,120 (3) 102,120
2 101,448 4.78% 94,700 102,120 102,120
3 100,180 -1.25% 87,798 (4) 100,290 (5) 100,290
4 84,887 -8.90% 87,798 100,290 100,290
5 93,851 10.56% 87,798 100,290 100,290
* Contract Year "0" represents your Contract issue date
(1) Does not reflect a Premium Based Charge, if applicable
(2) Assumes annual performance on the Contract Value, as well as Partial
Withdrawal activity
(3) As a result of the Withdrawal, the Return of Premium is adjusted
dollar for dollar to $94,700 as the withdrawal did not exceed the
Allowable Withdrawal. Because the withdrawal did not exceed the
Allowable Withdrawal, the
APP A-9
-------------------------------------------------------------------------------
Enhanced Return of Premium is not adjusted down. Since this
is the first withdrawal, the Enhanced Return of Premium will
step up to the Contract Value prior to the withdrawal.
(4) As a result of the year 3 withdrawal, an excess withdrawal,
the Return of Premium is adjusted first dollar for dollar by
the partial withdrawal that was not excess ($5,300) and
subsequently by a proportional factor of 0.98208. This factor
is derived by (A / B) where A is Contract Value immediately
after the Partial Withdrawal and B is the Contract Value
immediately prior to the Partial Withdrawal less the
Allowable Withdrawal.
a. Return of Premium = (94,700 - 5,300) x (100,180 -
7,000)/(100,180 - 5,300) = 87,798
(5) As a result of the year 3 withdrawal, an excess withdrawal,
the Enhanced Return of Premium is adjusted by a proportional
factor of 0.98208. This factor is derived by (A / B) where A
is Contract Value immediately after the Partial Withdrawal
and B is the Contract Value immediately prior to the Partial
Withdrawal less the Allowable Withdrawal.
a. Enhanced Return of Premium = (102,120) x (100,180 -
7,000)/(100,180 - 5,300) = 100,290
EXAMPLE 2: ASSUME YOUR INITIAL PREMIUM IS $100,000. AT THE END OF CONTRACT YEAR
1 YOU WITHDRAW $5,300 WHICH IS EQUAL TO THE ALLOWABLE WITHDRAWAL. IN CONTRACT
YEAR 3 YOU WITHDRAW $7,000 WHICH IS GREATER THAN THE ALLOWABLE WITHDRAWAL OF
$5,300.
[Enlarge/Download Table]
CONTRACT VALUE ASSUMED RETURN AFTER TRANSACTION GUARANTEED
CONTRACT PRIOR TO (NET OF ALL POLICY RETURN ENHANCED RETURN MINIMUM DEATH
YEAR * TRANSACTIONS(1)(2) EXPENSES) OF PREMIUM OF PREMIUM BENEFIT
------------------------------------------------------------------------------------------------------------------------------------
0 $100,000 $100,000 $100,000 $100,000
1 105,000 5.00% 94,700 (3) 105,000 (3) 105,000
2 104,685 5.00% 94,700 105,000 105,000
3 109,919 5.00% 87,947 (4) 103,294 (5) 103,294
4 108,065 5.00% 87,947 103,294 103,294
5 113,468 5.00% 87,947 103,294 103,294
* Contract Year "0" represents your Contract issue date
(1) Does not reflect a Premium Based Charge, if applicable
(2) Assumes annual performance on the Contract Value, as well as Partial
Withdrawal activity
(3) As a result of the Withdrawal, the Return of Premium is adjusted
dollar for dollar to $94,700 as the withdrawal did not exceed the
Allowable Withdrawal. Because the withdrawal did not exceed the
Allowable Withdrawal, the Enhanced Return of Premium is not adjusted
down. Since this is the first withdrawal, the Enhanced Return of
Premium will step up to the Contract Value prior to the withdrawal.
(4) As a result of the year 3 withdrawal, an excess withdrawal, the
Return of Premium is adjusted first dollar for dollar by the partial
withdrawal that was not excess ($5,300) and subsequently by a
proportional factor of 0.98375. This factor is derived by (A / B)
where A is Contract Value immediately after the Partial Withdrawal
and B is the Contract Value immediately prior to the Partial
Withdrawal less the Allowable Withdrawal.
a. Return of Premium = (94,700 - 5,300) x (109,919 -
7,000)/(109,919 - 5,300) = 87,947
(5) As a result of the year 3 withdrawal, an excess withdrawal,
the Enhanced Return of Premium is adjusted by a proportional
factor of 0.98375. This factor is derived by (A / B) where A
is Contract Value immediately after the Partial Withdrawal
and B is the Contract Value immediately prior to the Partial
Withdrawal less the Allowable Withdrawal.
a. Enhanced Return of Premium = (105,000) x (109,919 -
7,000)/(109,919 - 5,300) = 103,294
APP A-10
-------------------------------------------------------------------------------
EXAMPLE 3: ASSUME YOUR INITIAL PREMIUM IS $100,000. AT THE END OF CONTRACT YEAR
1 YOU WITHDRAW $5,300 WHICH IS EQUAL TO THE ALLOWABLE WITHDRAWAL. IN CONTRACT
YEAR 3 YOU WITHDRAW $7,000 WHICH IS GREATER THAN THE ALLOWABLE WITHDRAWAL OF
$5,300.
[Enlarge/Download Table]
CONTRACT VALUE ASSUMED RETURN AFTER TRANSACTION GUARANTEED
CONTRACT PRIOR TO (NET OF ALL POLICY RETURN ENHANCED RETURN MINIMUM DEATH
YEAR * TRANSACTIONS(1)(2) EXPENSES) OF PREMIUM OF PREMIUM BENEFIT
------------------------------------------------------------------------------------------------------------------------------------
0 $100,000 $100,000 $100,000 $100,000
1 95,000 -5.00% 94,700 (3) 100,000 (3) 100,000
2 85,215 -5.00% 94,700 100,000 100,000
3 80,954 -5.00% 87,391 (4) 97,753 (5) 97,753
4 70,257 -5.00% 87,391 97,753 97,753
5 66,744 -5.00% 87,391 97,753 97,753
* Contract Year "0" represents your Contract issue date
(1) Does not reflect a Premium Based Charge, if applicable
(2) Assumes annual performance on the Contract Value, as well as Partial
Withdrawal activity
(3) As a result of the Withdrawal, the Return of Premium is adjusted
dollar for dollar to $94,700 as the withdrawal did not exceed the
Allowable Withdrawal. Because the withdrawal did not exceed the
Allowable Withdrawal, the Enhanced Return of Premium is not adjusted
down. Since this is the first withdrawal, the Enhanced Return of
Premium will step up to the Contract Value prior to the withdrawal.
(4) As a result of the year 3 withdrawal, an excess withdrawal, the
Return of Premium is adjusted first dollar for dollar by the partial
withdrawal that was not excess ($5,300) and subsequently by a
proportional factor of 0.97753. This factor is derived by (A / B)
where A is Contract Value immediately after the Partial Withdrawal
and B is the Contract Value immediately prior to the Partial
Withdrawal less the Allowable Withdrawal.
a. Return of Premium = (94,700 - 5,300) x (80,954 -
7,000)/(80,954 - 5,300) = 87,391
(5) As a result of the year 3 withdrawal, an excess withdrawal,
the Enhanced Return of Premium is adjusted by a proportional
factor of 0. 97753. This factor is derived by (A / B) where A
is Contract Value immediately after the Partial Withdrawal
and B is the Contract Value immediately prior to the Partial
Withdrawal less the Allowable Withdrawal.
a. Enhanced Return of Premium = (100,000) x (80,954 -
7,000)/(80,954 - 5,300) = 97,753
MAXIMUM DAILY VALUE EXAMPLES
EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. ON THE 2ND FRIDAY,
YOU MAKE AN ADDITIONAL PREMIUM PAYMENT OF $50,000.
[Download Table]
MAXIMUM DAILY
CONTRACT MAXIMUM VALUE DEATH
VALUE(1)(5) DAILY VALUE BENEFIT(2)
---------------------------------------------------------------------------------
Monday $100,000 $100,000 $100,000
Tuesday 98,105 100,000 100,000
Wednesday 98,887 100,000 100,000
Thursday 101,321 (3) 101,321 (3) 101,321
Friday 101,895 (3) 101,895 (3) 101,895
Monday 103,676 (3) 103,676 (3) 103,676
Tuesday 105,460 (3) 105,460 (3) 105,460
Wednesday 105,120 105,460 105,460
Thursday 103,895 105,460 105,460
Friday 155,108 155,460 (4) 155,460
(1) Does not reflect Premium Based Charge, if applicable.
APP A-11
-------------------------------------------------------------------------------
(2) The Death Benefit under Maximum Daily Value pays the
greater value of: (A) the Maximum Daily Value, adjusted for
Partial Withdrawals; or (B) the Contract Value.
(3) The Maximum Daily Value component is equal to the greater
of the Contract Value or the Maximum Daily Value as of the
prior Valuation Day.
(4) The additional Premium Payment increases the Maximum Daily
Value on a dollar-for-dollar basis.
(5) Assumes annual performance on the Contract Value. Annual
performance is only shown for illustration purposes, and it
is not indicative of the performance you have achieved or
will achieve under the rider.
EXAMPLE 2: ASSUME THAT NO ADDITIONAL PREMIUM PAYMENT WAS MADE, AND YOU INSTEAD
TAKE A PARTIAL WITHDRAWAL OF $5,000 ON THE FOLLOWING TUESDAY (PRIOR TO THE
PARTIAL WITHDRAWAL, THE CONTRACT VALUE WAS 103,385).
[Download Table]
MAXIMUM DAILY
CONTRACT MAXIMUM VALUE DEATH
VALUE(1)(4) DAILY VALUE BENEFIT
------------------------------------------------------------------------------
Monday $102,568 $105,460 $105,460
Tuesday 98,385 100,360 (2) 100,360
Wednesday 99,887 100,360 100,360
Thursday 99,460 100,360 100,360
Friday 101,052 101,052 (3) 101,052
(1) Does not reflect Premium Based Charge, if applicable.
(2) The Partial Withdrawal adjusts the Maximum Daily Value by a
proportional factor of 0.95164. The factor is derived as (A/B),
where A = Contract Value prior to the Partial Withdrawal minus the
Partial Withdrawal and B = Contract Value prior to the Partial
Withdrawal.
(3) The Maximum Daily Value continues to increase any day that the
Contract Value exceeds the Maximum Daily Value as of the prior
Valuation Day.
(4) Assumes annual performance on the Contract Value. Annual
performance is only shown for illustration purposes, and it is not
indicative of the performance you have achieved or will achieve
under the rider.
EXAMPLE 3: ASSUME THE SAME FACTS AS ABOVE, AND THAT YOU HAVE ELECTED DAILY STEP
UP WITHDRAWAL BENEFIT AND HAVE A LIFETIME BENEFIT PAYMENT AVAILABLE OF $5,677
WHEN YOU TAKE THE PARTIAL WITHDRAWAL OF $5,000.
[Download Table]
MAXIMUM DAILY
CONTRACT MAXIMUM VALUE DEATH
VALUE(1)(3) DAILY VALUE BENEFIT
------------------------------------------------------------------------------
Monday $102,568 $105,460 $105,460
Tuesday 98,385 100,460 (2) $100,460
Wednesday 99,887 100,460 $100,460
Thursday 99,460 100,460 $100,460
Friday 101,052 101,052 $101,052
(1) Does not reflect Premium Based Charge, if applicable.
(2) The Partial Withdrawal adjusts the Maximum Daily Value by the
dollar amount of the Partial Withdrawal.
(3) Assumes annual performance on the Contract Value. Annual
performance is only shown for illustration purposes, and it is not
indicative of the performance you have achieved or will achieve
under the rider.
APP A-12
-------------------------------------------------------------------------------
DAILY STEP UP WITHDRAWAL BENEFIT EXAMPLES
EXAMPLE 1(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY 6 WAS ELECTED ON
THE RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000, YOU
ARE AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE OCCURRED.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
-----------------------------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 98,105 -1.90% 100,000 100,000 100,000 5,000
Wednesday 98,887 0.80% 100,000 100,000 100,000 5,000
Thursday 101,321 2.46% 101,321 (3) 100,000 100,000 5,066 (3)
Friday 101,895 0.57% 101,895 (3) 100,000 100,000 5,094 (3)
Monday 103,676 1.75% 103,676 (3) 100,000 100,000 5,183 (3)
Tuesday 105,460 1.72% 105,460 (3) 100,000 100,000 5,273 (3)
Wednesday 105,120 -0.32% 105,460 100,000 100,000 5,273
Thursday 103,895 -1.17% 105,460 100,000 100,000 5,273
Friday 105,108 1.17% 105,460 100,000 100,000 5,273
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) When the Contract Value exceeds the Withdrawal Base as of the prior
Valuation Day, the Withdrawal Base increases. As no Partial
Withdrawal has occurred, the Lifetime Annual Payment also increases.
EXAMPLE 1(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
-----------------------------------------------------------------------------------------------------------------------------
Monday 102,568 105,460 100,000 100,000 5,273
Tuesday 104,385 1.77% 106,000 (3) 106,000 100,000 5,300
Wednesday 105,887 1.44% 106,000 106,000 100,000 5,300
Thursday 105,460 -0.40% 106,000 106,000 100,000 5,300
Friday 107,459 1.90% 107,459 (4) 106,000 100,000 5,373 (4)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs because the sum
of the Anniversary Withdrawal Base as of the prior Valuation Day
($100,000) plus 6% of the Deferral Bonus Base ($6,000) exceeds both
the Withdrawal Base as of the prior Valuation Day and the current
Contract Value.
(4) When the Contract Value exceeds the Withdrawal Base as of the prior
Valuation Day, the Withdrawal Base increases. As no Partial
Withdrawal has occurred, the Lifetime Annual Payment also increases.
EXAMPLE 1(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $473 THAT REPRESENTS ONE-TWELFTH OF
YOUR LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
-------------------------------------------------------------------------------------------------------------------------------
Monday 110,941 110,941 106,000 100,000 5,547
Tuesday 112,576 1.47% 112,576 106,000 100,000 5,629
Wednesday 111,892 -0.61% 112,576 106,000 100,000 5,629
Thursday 113,540 (3) 1.47% 113,540 (3) 113,540 (3) 113,540 (3) 5,677 (3)
Friday 112,137 -1.24% 113,540 113,540 113,540 5,677
Monday 111,244 -0.80% 113540 113,540 113,540 5,677
Tuesday 111,509 0.24% 113540 113,540 113,540 5,677
Wednesday 112,458 1.28% 113,540 113,540 0 (4) 5,677
Thursday 112,044 -0.37% 113,540 113,540 0 5,677
Friday 114,286 (5) 2.00% 114,286 (5) 113,540 0 5,677 (5)
(1) Does not reflect Premium Based Charge, if applicable.
APP A-13
-------------------------------------------------------------------------------
(2) For illustration purposes only. Does not indicate actual
Contract Value performance.
(3) On the Contract Anniversary, the Contract Value exceeds both
the Withdrawal Base as of the prior Valuation Day and the sum
of the Anniversary Withdrawal Base as of the prior Valuation
Day ($106,000) plus 6% of the Deferral Bonus Base ($6,000).
There is no Deferral Bonus increase applied, but the Deferral
Bonus Base increases to the Withdrawal Base.
(4) The Deferral Bonus Period terminates upon the Partial
Withdrawal, and the Deferral Bonus Base is zero.
(5) Step Ups continue to occur to the Withdrawal Base, however,
following the first Partial Withdrawal, the Lifetime Annual
Payment amount does not increase due to the Step Up alone.
EXAMPLE 1(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
-----------------------------------------------------------------------------------------------------------------------------
Monday 111,244 113540 113,540 113,540 5,677
Tuesday 111,509 0.24% 113540 113,540 113,540 5,677
Wednesday 103,404 1.70% 108,984 (3) 108,984 (3) 0 (3) 5,499
Thursday 102,517 -0.86% 108,984 108,984 0 5,499
Friday 104,759 2.19% 108,984 108,984 0 5,499
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) The Partial Withdrawal in excess of the Lifetime Annual Payment
adjusts the Withdrawal Base and the Anniversary Withdrawal Base by a
factor of 0.95987. The factor is derived as (113,404 - 10,000) /
(113,404 - 5,677). Upon the Excess Withdrawal, the Lifetime Annual
Payment is reset. There is zero Available Lifetime Annual Payment
for the remainder of the year.
EXAMPLE 2(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY 6 WAS ELECTED ON
THE RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000, YOU
ARE AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE OCCURRED.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
--------------------------------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 101,000 1.00% 101,000 (3) 100,000 100,000 5,050 (3)
Wednesday 102,010 1.00% 102,010 (3) 100,000 100,000 5,101 (3)
Thursday 103,030 1.00% 103,030 (3) 100,000 100,000 5,152 (3)
Friday 104,060 1.00% 104,060 (3) 100,000 100,000 5,203 (3)
Monday 105,101 1.00% 105,101 (3) 100,000 100,000 5,255 (3)
Tuesday 106,152 1.00% 106,152 (3) 100,000 100,000 5,308 (3)
Wednesday 107,214 1.00% 107,214 (3) 100,000 100,000 5,361 (3)
Thursday 108,286 1.00% 108,286 (3) 100,000 100,000 5,414 (3)
Friday 109,369 1.00% 109,369 (3) 100,000 100,000 5,468 (3)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) When the Contract Value exceeds the Withdrawal Base as of the prior
Valuation Day, the Withdrawal Base increases. As no Partial
Withdrawal has occurred, the Lifetime Annual Payment also increases.
EXAMPLE 2(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
--------------------------------------------------------------------------------------------------------------------------------
Monday 110,000 110,000 100,000 100,000 5,500
Tuesday 111,100 1.00% 111,100 (3) 111,100 111,100 5,555 (3)
Wednesday 112,211 1.00% 112,211 (4) 111,100 111,100 5,611 (4)
Thursday 113,333 1.00% 113,333 (4) 111,100 111,100 5,667 (4)
Friday 114,466 1.00% 114,466 (4) 111,100 111,100 5,723 (4)
(1) Does not reflect Premium Based Charge, if applicable.
APP A-14
-------------------------------------------------------------------------------
(2) For illustration purposes only. Does not indicate actual
Contract Value performance.
(3) Applies a Step Up to the Withdrawal Base and the Bonus Base
on the first Contract Anniversary because the Contract Value
exceeds the prior Withdrawal Base plus the Deferral Bonus.
(4) When the Contract Value exceeds the Withdrawal Base as of the
prior Valuation Day, the Withdrawal Base increases. As no
Partial Withdrawal has occurred, the Lifetime Annual Payment
also increases.
EXAMPLE 2(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $509 THAT REPRESENTS ONE-TWELFTH OF
YOUR LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
--------------------------------------------------------------------------------------------------------------------------------
Monday 115,000 115,000 111,100 111,100 5,750
Tuesday 116,150 1.00% 116,150 (5) 111,100 111,100 5,808 (5)
Wednesday 117,312 1.00% 117,312 (5) 111,100 111,100 5,866 (5)
Thursday 118,485 1.00% 118,485 (3) 118,485 (2) 118,485 (3) 5,924 (3)
Friday 119,669 1.00% 119,669 (5) 118,485 118,485 5,983 (5)
Monday 120,866 1.00% 120,866 (5) 118,485 118,485 6,043 (5)
Tuesday 122,075 1.00% 122,075 (5) 118,485 118,485 6,104 (5)
Wednesday 122,787 1.00% 122,787 (5) 118,485 0 (4) 6,139 (5)
Thursday 124,015 1.00% 124,015 (5) 118,485 0 6,139 (5)
Friday 125,255 1.00% 125,255 (5) 118,485 0 6,139 (5)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Contract Anniversary, the Contract Value exceeds both the
Withdrawal Base as of the prior Valuation Day and the sum of the
Anniversary Withdrawal Base as of the prior Valuation Day ($106,000)
plus 6% of the Deferral Bonus Base ($6,000). There is no Deferral
Bonus increase applied, but the Deferral Bonus Base increases to the
Withdrawal Base.
(4) The Deferral Bonus Period terminates upon the Partial Withdrawal,
and the Deferral Bonus Base is zero.
(5) Step Ups continue to occur to the Withdrawal Base, however,
following the first Partial Withdrawal, the Lifetime Annual Payment
amount does not increase due to the Step Up alone.
EXAMPLE 2(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
--------------------------------------------------------------------------------------------------------------------------------
Monday 120,866 120,866 118,485 118,485 6,043
Tuesday 122,075 1.00% 122,075 118,485 118,485 6,104
Wednesday 113,296 1.00% 118,016 (3) 114,545 0 5,901 (3)
Thursday 114,429 1.00% 118,016 114,545 0 5,901
Friday 115,573 1.00% 118,016 114,545 0 5,901
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) The Partial Withdrawal in excess of the Lifetime Annual Payment
adjusts the Withdrawal Base and the Anniversary Withdrawal Base by a
factor of 0.96675. The factor is derived as (123,296 - 10,000) /
(123,296 - 6,104). Upon the Excess Withdrawal, the Lifetime Annual
Payment is reset. There is zero Available Lifetime Annual Payment
for the remainder of the year.
APP A-15
-------------------------------------------------------------------------------
3(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY 6 WAS ELECTED ON THE
RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000, YOU ARE
AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE OCCURRED.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
-----------------------------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 99,000 -1.00 % 100,000 100,000 100,000 5,000
Wednesday 98,010 -1.00 % 100,000 100,000 100,000 5,000
Thursday 97,030 -1.00 % 100,000 100,000 100,000 5,000
Friday 96,060 -1.00 % 100,000 100,000 100,000 5,000
Monday 95,099 -1.00 % 100,000 100,000 100,000 5,000
Tuesday 94,148 -1.00 % 100,000 100,000 100,000 5,000
Wednesday 93,207 -1.00 % 100,000 100,000 100,000 5,000
Thursday 92,274 -1.00 % 100,000 100,000 100,000 5,000
Friday 91,352 -1.00 % 100,000 100,000 100,000 5,000
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
EXAMPLE 3(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
------------------------------------------------------------------------------------------------------------------
Monday 80,000 100,000 100,000 100,000 5,000
Tuesday 79,200 -1.00 % 106,000 (2) 106,000 100,000 5,300 (3)
Wednesday 78,408 -1.00 % 106,000 106,000 100,000 5,300
Thursday 77,624 -1.00 % 106,000 106,000 100,000 5,300
Friday 76,848 -1.00 % 106,000 106,000 100,000 5,300
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs because the sum
of the Anniversary Withdrawal Base as of the prior Valuation Day
($100,000) plus 6% of the Deferral Bonus Base ($6,000) exceeds both
the Withdrawal Base as of the prior Valuation Day and the current
Contract Value.
EXAMPLE 3(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $473 THAT REPRESENTS ONE-TWELFTH OF
YOUR LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
----------------------------------------------------------------------------------------------------------------------
Monday 70,000 106,000 106,000 100,000 5,300
Tuesday 69,300 -1.00 % 106,000 106,000 100,000 5,300
Wednesday 68,607 -1.00 % 106,000 106,000 100,000 5,300
Thursday 67,921 -1.00 % 112,000 (3) 112,000 100,000 5,600 (3)
Friday 67,242 -1.00 % 112,000 112,000 100,000 5,600
Monday 66,569 -1.00 % 112,000 112,000 100,000 5,600
Tuesday 65,904 -1.00 % 112,000 112,000 100,000 5,600
Wednesday 64,778 -1.00 % 112,000 112,000 0 (4) 5,600
Thursday 64,130 -1.00 % 112,000 112,000 0 5,600
Friday 63,489 -1.00 % 112,000 112,000 0 5,600
(1) Does not reflect Premium Based Charge, if applicable.
APP A-16
-------------------------------------------------------------------------------
(2) For illustration purposes only. Does not indicate actual
Contract Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs because
the sum of the Anniversary Withdrawal Base as of the prior
Valuation Day ($106,000) plus 6% of the Deferral Bonus Base
($6,000) exceeds both the Withdrawal Base as of the prior
Valuation Day and the current Contract Value.
(4) The Deferral Bonus Period terminates upon the Partial
Withdrawal, and the Deferral Bonus Base is zero.
EXAMPLE 3(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
ANNIVERSARY LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL WITHDRAWAL DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE BASE BONUS BASE PAYMENT
----------------------------------------------------------------------------------------------------------------
Monday 66,569 112,000 112,000 100,000 5,600
Tuesday 65,904 -1.00 % 112,000 112,000 100,000 5,600
Wednesday 55,245 -1.00 % 103,738 (3) 103,738 0 5,187 (3)
Thursday 54,692 -1.00 % 103,738 103,738 0 5,187
Friday 54,145 -1.00 % 103,738 103,738 0 5,187
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) The Partial Withdrawal in excess of the Lifetime Annual Payment
adjusts the Withdrawal Base and the Anniversary Withdrawal Base by a
factor of 0.92623. The factor is derived as (65,245 - 10,000) /
(65,245 - 5,600). Upon the Excess Withdrawal, the Lifetime Annual
Payment is reset. There is zero Available Lifetime Annual Payment
for the remainder of the year.
EXAMPLE 4(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY +4 WAS ELECTED
ON THE RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000,
YOU ARE AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE
OCCURRED.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
-----------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 98,105 -1.90 % 100,000 100,000 100,000 5,000
Wednesday 98,887 0.80 % 100,000 100,000 100,000 5,000
Thursday 101,321 2.46 % 101,321 (3) 101,321 100,000 5,066 (3)
Friday 101,895 0.57 % 101,895 (3) 101,895 100,000 5,094 (3)
Monday 103,676 1.75 % 103,676 (3) 103,676 100,000 5,183 (3)
Tuesday 105,460 1.72 % 105,460 (3) 105,460 100,000 5,273 (3)
Wednesday 105,120 -0.32 % 105,460 105,460 100,000 5,273
Thursday 103,895 -1.17 % 105,460 105,460 100,000 5,273
Friday 105,108 1.17 % 105,460 105,460 100,000 5,273
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) When there is an increase in the High Water Mark from the prior
Valuation Day to the current Valuation Day, the Withdrawal Base
increases. As no Partial Withdrawal has occurred, the Lifetime
Annual Payment also increases.
APP A-17
-------------------------------------------------------------------------------
EXAMPLE 4(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
----------------------------------------------------------------------------------------------------------
Monday 102,568 105,460 105,460 100,000 5,273
Tuesday 104,385 1.77 % 109,460 (3) 105,460 100,000 5,473
Wednesday 105,887 1.44 % 109,887 (4) 105,887 100,000 5,494 (4)
Thursday 105,460 -0.40 % 109,887 105,887 100,000 5,494
Friday 107,459 1.90 % 111,459 (4) 107,459 100,000 5,573 (4)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
(4) When there is an increase in the High Water Mark from the prior
Valuation Day to the current Valuation Day, the Withdrawal Base
increases. As no Partial Withdrawal has occurred, the Lifetime
Annual Payment also increases.
EXAMPLE 4(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $473.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
---------------------------------------------------------------------------------------------------------------
Monday 110,941 114,941 110,941 100,000 5,747
Tuesday 112,576 1.47 % 116,576 112,576 100,000 5,829
Wednesday 111,892 -0.61 % 116,576 112,576 100,000 5,829
Thursday 113,540 (3) 1.47 % 121,540 (3) 113,540 (3) 100,000 6,077 (3)
Friday 112,137 -1.24 % 121,540 113,540 100,000 6,077
Monday 111,244 -0.80 % 121,540 113,540 100,000 6,077
Tuesday 111,509 0.24 % 121,540 113,540 100,000 6,077
Wednesday 112,458 1.28 % 121,540 113,540 0 (4) 6,077
Thursday 112,044 -0.37 % 121,540 113,540 0 6,077
Friday 114,286 (4) 2.00 % 122,286 (5) 114,286 0 6,077 (5)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
(4) The Deferral Bonus Period terminates upon the Partial Withdrawal,
and the Deferral Bonus Base is zero.
(5) Step Ups continue to occur to the Withdrawal Base, however,
following the first Partial Withdrawal, the Lifetime Annual Payment
amount does not increase due to the Step Up alone.
EXAMPLE 4(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
----------------------------------------------------------------------------------------------------------
Monday 111,244 121,540 113,540 100,000 6,077
Tuesday 111,509 0.24 % 121,540 113,540 100,000 6,077
Wednesday 103,404 1.70 % 117,097 (3) 109,390 (2) 0 (3) 5,855
Thursday 102,517 -0.86 % 117,097 109,390 0 5,855
Friday 104,759 2.19 % 117,097 109,390 0 5,855
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
APP A-18
-------------------------------------------------------------------------------
(3) The Partial Withdrawal in excess of the Lifetime Annual
Payment adjusts the Withdrawal Base and the High Water Mark
by a factor of 0.963448. The factor is derived as (113,404 -
10,000) / (113,404 - 6,077). Upon the Excess Withdrawal, the
Lifetime Annual Payment is reset. There is zero Available
Lifetime Annual Payment for the remainder of the year.
EXAMPLE 5(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY +4 WAS ELECTED
ON THE RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000,
YOU ARE AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE
OCCURRED.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
------------------------------------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 101,000 1.00 % 101,000 (3) 101,000 (3) 100,000 5,050 (3)
Wednesday 102,010 1.00 % 102,010 (3) 102,010 (3) 100,000 5,101 (3)
Thursday 103,030 1.00 % 103,030 (3) 103,030 (3) 100,000 5,152 (3)
Friday 104,060 1.00 % 104,060 (3) 104,060 (3) 100,000 5,203 (3)
Monday 105,101 1.00 % 105,101 (3) 105,101 (3) 100,000 5,255 (3)
Tuesday 106,152 1.00 % 106,152 (3) 106,152 (3) 100,000 5,308 (3)
Wednesday 107,214 1.00 % 107,214 (3) 107,214 (3) 100,000 5,361 (3)
Thursday 108,286 1.00 % 108,286 (3) 108,286 (3) 100,000 5,414 (3)
Friday 109,369 1.00 % 109,369 (3) 109,369 (3) 100,000 5,468 (3)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) When there is an increase in the High Water Mark from the prior
Valuation Day to the current Valuation Day, the Withdrawal Base
increases. As no Partial Withdrawal has occurred, the Lifetime
Annual Payment also increases.
EXAMPLE 5(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
------------------------------------------------------------------------------------------------------------------------------------
Monday 110,000 110,000 110,000 100,000 5,500
Tuesday 111,100 1.00 % 115,100 (3) 111,100 (2) 100,000 5,755 (3)
Wednesday 112,211 1.00 % 116,211 (4) 112,211 (3) 100,000 5,811 (4)
Thursday 113,333 1.00 % 117,333 (4) 113,333 (3) 100,000 5,867 (4)
Friday 114,466 1.00 % 118,466 (4) 114,466 (3) 100,000 5,923 (4)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
(4) When there is an increase in the High Water Mark from the prior
Valuation Day to the current Valuation Day, the Withdrawal Base
increases. As no Partial Withdrawal has occurred, the Lifetime
Annual Payment also increases.
APP A-19
-------------------------------------------------------------------------------
EXAMPLE 5(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $509 THAT REPRESENTS ONE-TWELFTH OF
YOUR LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
------------------------------------------------------------------------------------------------------------------------------------
Monday 115,000 119,000 115,000 100,000 5,950
Tuesday 116,150 1.00 % 120,150 (5) 116,150 (5) 100,000 6,008 (5)
Wednesday 117,312 1.00 % 121,312 (5) 117,312 (5) 100,000 6,066 (5)
Thursday 118,485 1.00 % 126,485 (3) 118,485 (3) 100,000 6,324 (3)
Friday 119,669 1.00 % 127,669 (5) 119,669 (5) 100,000 6,383 (5)
Monday 120,866 1.00 % 128,866 (5) 120,866 (5) 100,000 6,443 (5)
Tuesday 122,075 1.00 % 130,075 (5) 122,075 (5) 100,000 6,504 (5)
Wednesday 122,787 1.00 % 130,787 (5) 122,787 (5) 0 (4) 6,539 (5)
Thursday 124,015 1.00 % 132,015 (5) 124,015 (5) 0 6,539 (5)
Friday 125,255 1.00 % 133,255 (5) 125,255 (5) 0 6,539 (5)
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
(4) The Deferral Bonus Period terminates upon the Partial Withdrawal,
and the Deferral Bonus Base is zero.
(5) Step Ups continue to occur to the Withdrawal Base, however,
following the first Partial Withdrawal, the Lifetime Annual Payment
amount does not increase due to the Step Up alone.
EXAMPLE 5(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
------------------------------------------------------------------------------------------------------------------------------------
Monday 120,866 128,866 120,866 100,000 6,443
Tuesday 122,075 1.00 % 130,075 122,075 100,000 6,504
Wednesday 113,296 1.00 % 126,181 (3) 118,421 (3) 0 6,309 (3)
Thursday 114,429 1.00 % 126,181 118,421 0 6,309
Friday 115,573 1.00 % 126,181 118,421 0 6,309
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) The Partial Withdrawal in excess of the Lifetime Annual Payment
adjusts the Withdrawal Base and the High Water Mark by a factor of
0.97007. The factor is derived as (123,296 - 10,000) / (123,296 -
6,504). Upon the Excess Withdrawal, the Lifetime Annual Payment is
reset. There is zero Available Lifetime Annual Payment for the
remainder of the year.
APP A-20
-------------------------------------------------------------------------------
EXAMPLE 6(A): ASSUME THE DAILY STEP UP WITHDRAWAL BENEFIT DAILY +4 WAS ELECTED
ON THE RIDER EFFECTIVE DATE. ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000,
YOU ARE AGE 67, AND YOU ELECTED SINGLE OPTION. NO PARTIAL WITHDRAWALS HAVE
OCCURRED.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
-------------------------------------------------------------------------------------------------------------------
Monday 100,000 100,000 100,000 100,000 5,000
Tuesday 99,000 -1.00 % 100,000 100,000 100,000 5,000
Wednesday 98,010 -1.00 % 100,000 100,000 100,000 5,000
Thursday 97,030 -1.00 % 100,000 100,000 100,000 5,000
Friday 96,060 -1.00 % 100,000 100,000 100,000 5,000
Monday 95,099 -1.00 % 100,000 100,000 100,000 5,000
Tuesday 94,148 -1.00 % 100,000 100,000 100,000 5,000
Wednesday 93,207 -1.00 % 100,000 100,000 100,000 5,000
Thursday 92,274 -1.00 % 100,000 100,000 100,000 5,000
Friday 91,352 -1.00 % 100,000 100,000 100,000 5,000
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
EXAMPLE 6(B): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT TUESDAY IS THE FIRST
CONTRACT ANNIVERSARY.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
-------------------------------------------------------------------------------------------------------------------------
Monday 80,000 100,000 100,000 100,000 5,000
Tuesday 79,200 -1.00 % 104,000 (3) 100,000 100,000 5,200 (3)
Wednesday 78,408 -1.00 % 104,000 100,000 100,000 5,200
Thursday 77,624 -1.00 % 104,000 100,000 100,000 5,200
Friday 76,848 -1.00 % 104,000 100,000 100,000 5,200
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
EXAMPLE 6(C): ASSUME THE SAME FACTS AS ABOVE, AND THE NEXT THURSDAY IS THE
SECOND CONTRACT ANNIVERSARY. ADDITIONALLY, ON WEDNESDAY OF THE FOLLOWING WEEK
YOU TAKE YOUR FIRST PARTIAL WITHDRAWAL OF $473 THAT REPRESENTS ONE-TWELFTH OF
YOUR LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
-------------------------------------------------------------------------------------------------------------------------
Monday 70,000 104,000 100,000 100,000 5,200
Tuesday 69,300 -1.00 % 104,000 100,000 100,000 5,200
Wednesday 68,607 -1.00 % 104,000 100,000 100,000 5,200
Thursday 67,921 -1.00 % 108,000 (3) 100,000 100,000 5,400 (3)
Friday 67,242 -1.00 % 108,000 100,000 100,000 5,400
Monday 66,569 -1.00 % 108,000 100,000 100,000 5,400
Tuesday 65,904 -1.00 % 108,000 100,000 100,000 5,400
Wednesday 64,778 -1.00 % 108,000 100,000 0 (4) 5,400
Thursday 64,130 -1.00 % 108,000 100,000 0 5,400
Friday 63,489 -1.00 % 108,000 100,000 0 5,400
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) On the Anniversary, a Deferral Bonus increase occurs and is added to
the Withdrawal Base.
(4) The Deferral Bonus Period terminates upon the Partial Withdrawal,
and the Deferral Bonus Base is zero.
APP A-21
-------------------------------------------------------------------------------
EXAMPLE 6(D): ASSUME THE SAME FACTS AS ABOVE, BUT INSTEAD YOU MAKE A PARTIAL
WITHDRAWAL OF $10,000 INSTEAD OF ONE TWELFTH OF THE LIFETIME ANNUAL PAYMENT.
[Enlarge/Download Table]
LIFETIME
CONTRACT ASSUMED NET WITHDRAWAL HIGH WATER DEFERRAL ANNUAL
DAY OF THE WEEK VALUE(1) RETURN(2) BASE MARK BONUS BASE PAYMENT
-------------------------------------------------------------------------------------------------------------------------
Monday 66,569 108,000 100,000 100,000 5,400
Tuesday 65,904 -1.00 % 108,000 100,000 100,000 5,400
Wednesday 55,245 -1.00 % 99,699 (3) 92,313 0 4,985 (3)
Thursday 54,692 -1.00 % 99,699 92,313 0 4,985
Friday 54,145 -1.00 % 99,699 92,313 0 4,985
(1) Does not reflect Premium Based Charge, if applicable.
(2) For illustration purposes only. Does not indicate actual Contract
Value performance.
(3) The Partial Withdrawal in excess of the Lifetime Annual Payment
adjusts the Withdrawal Base and the Anniversary Withdrawal Base by a
factor of 0.923135. The factor is derived as (65,245 - 10,000) /
(65,245 - 5,400). Upon the Excess Withdrawal, the Lifetime Annual
Payment is reset. There is zero Available Lifetime Annual Payment
for the remainder of the year.
APP B-1
-------------------------------------------------------------------------------
APPENDIX B - ACCUMULATION UNIT VALUES
The following information should be read in conjunction with the financial
statements for the Separate Account included in the Statement of Additional
Information.
The following table lists the Condensed Financial Information of Accumulation
Unit Values for Accumulation Units outstanding under the Contracts as of
December 31, 2013.
FORERETIREMENT VARIABLE ANNUITY
B-SHARE
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.338
Number of Units Outstanding at End of Period (in
thousands) 64.138
AMERICAN CENTURY VP MID CAP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.211
Number of Units Outstanding at End of Period (in
thousands) 14.898
AMERICAN CENTURY VP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.299
Number of Units Outstanding at End of Period (in
thousands) 26.863
AMERICAN FUNDS INSURANCE SERIES(R) GLOBAL GROWTH AND
INCOME FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.775
Number of Units Outstanding at End of Period (in
thousands) 36.086
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH FUND - CLASS
4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.407
Number of Units Outstanding at End of Period (in
thousands) 167.242
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH-INCOME FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.719
Number of Units Outstanding at End of Period (in
thousands) 112.927
AMERICAN FUNDS INSURANCE SERIES(R) INTERNATIONAL FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.686
Number of Units Outstanding at End of Period (in
thousands) 74.124
AMERICAN FUNDS INSURANCE SERIES(R) MANAGED RISK ASSET
ALLOCATION FUND - CLASS P2
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.593
Number of Units Outstanding at End of Period (in
thousands) 5575.355
AMERICAN FUNDS INSURANCE SERIES(R) NEW WORLD FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.861
Number of Units Outstanding at End of Period (in
thousands) 2.026
APP B-2
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
BLACKROCK CAPITAL APPRECIATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.882
Number of Units Outstanding at End of Period (in
thousands) 48.114
BLACKROCK EQUITY DIVIDEND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.837
Number of Units Outstanding at End of Period (in
thousands) 95.797
BLACKROCK GLOBAL ALLOCATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.104
Number of Units Outstanding at End of Period (in
thousands) 69.927
BLACKROCK HIGH YIELD V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.702
Number of Units Outstanding at End of Period (in
thousands) 23.187
BLACKROCK U.S. GOVERNMENT BOND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.658
Number of Units Outstanding at End of Period (in
thousands) 0.667
FORETHOUGHT AMERICAN FUNDS(R) MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.211
Number of Units Outstanding at End of Period (in
thousands) 327.419
FORETHOUGHT BLACKROCK GLOBAL ALLOCATION MANAGED RISK
PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.101
Number of Units Outstanding at End of Period (in
thousands) 469.842
FORETHOUGHT INDEX MANAGED RISK PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.111
Number of Units Outstanding at End of Period (in
thousands) 74.693
FORETHOUGHT SELECT ADVISOR MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.140
Number of Units Outstanding at End of Period (in
thousands) 102.957
FORETHOUGHT WMC RESEARCH MANAGED RISK PORTFOLIO - CLASS
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.180
Number of Units Outstanding at End of Period (in
thousands) 129.679
FRANKLIN INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.010
Number of Units Outstanding at End of Period (in
thousands) 32.972
APP B-3
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.209
Number of Units Outstanding at End of Period (in
thousands) 35.833
FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.797
Number of Units Outstanding at End of Period (in
thousands) 29.546
FRANKLIN STRATEGIC INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.186
Number of Units Outstanding at End of Period (in
thousands) 15.415
MUTUAL SHARES SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.108
Number of Units Outstanding at End of Period (in
thousands) 77.025
TEMPLETON FOREIGN SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.854
Number of Units Outstanding at End of Period (in
thousands) 15.196
TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.023
Number of Units Outstanding at End of Period (in
thousands) 24.424
TEMPLETON GROWTH SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.362
Number of Units Outstanding at End of Period (in
thousands) 51.816
HARTFORD CAPITAL APPRECIATION HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.073
Number of Units Outstanding at End of Period (in
thousands) 73.645
HARTFORD DIVIDEND AND GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.426
Number of Units Outstanding at End of Period (in
thousands) 93.513
HARTFORD GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.797
Number of Units Outstanding at End of Period (in
thousands) 0.000
HARTFORD HIGH YIELD HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.461
Number of Units Outstanding at End of Period (in
thousands) 1.904
APP B-4
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.451
Number of Units Outstanding at End of Period (in
thousands) 104.136
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND - CLASS
IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.810
Number of Units Outstanding at End of Period (in
thousands) 46.272
HARTFORD PORTFOLIO DIVERSIFIER HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $8.939
Number of Units Outstanding at End of Period (in
thousands) 1611.775
HARTFORD TOTAL RETURN BOND HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.780
Number of Units Outstanding at End of Period (in
thousands) 57.515
HARTFORD VALUE HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.374
Number of Units Outstanding at End of Period (in
thousands) 3.803
INVESCO V.I. BALANCED - RISK ALLOCATION FUND - SERIES
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.925
Number of Units Outstanding at End of Period (in
thousands) 16.020
INVESCO V.I. CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.158
Number of Units Outstanding at End of Period (in
thousands) 16.936
INVESCO V.I. INTERNATIONAL GROWTH FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.388
Number of Units Outstanding at End of Period (in
thousands) 71.436
INVESCO V.I. MID CAP CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.071
Number of Units Outstanding at End of Period (in
thousands) 9.949
INVESCO V.I. MONEY MARKET FUND - SERIES I
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.936
Number of Units Outstanding at End of Period (in
thousands) 8.337
INVESCO V.I. SMALL CAP EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.790
Number of Units Outstanding at End of Period (in
thousands) 19.609
APP B-5
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
LORD ABBETT BOND DEBENTURE PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.598
Number of Units Outstanding at End of Period (in
thousands) 27.430
LORD ABBETT FUNDAMENTAL EQUITY PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.615
Number of Units Outstanding at End of Period (in
thousands) 82.138
LORD ABBETT GROWTH OPPORTUNITIES PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.766
Number of Units Outstanding at End of Period (in
thousands) 7.466
MFS(R) GROWTH SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.990
Number of Units Outstanding at End of Period (in
thousands) 81.839
MFS(R) INTERNATIONAL VALUE PORTFOLIO - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.130
Number of Units Outstanding at End of Period (in
thousands) 23.308
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.452
Number of Units Outstanding at End of Period (in
thousands) 25.275
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.048
Number of Units Outstanding at End of Period (in
thousands) 21.864
MFS(R) VALUE SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.711
Number of Units Outstanding at End of Period (in
thousands) 39.063
PIMCO ALL ASSET PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.866
Number of Units Outstanding at End of Period (in
thousands) 3.148
PIMCO EQS PATHFINDER PORTFOLIO( TM) - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.516
Number of Units Outstanding at End of Period (in
thousands) 81.113
PIMCO TOTAL RETURN PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.743
Number of Units Outstanding at End of Period (in
thousands) 106.581
APP B-6
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
PUTNAM VT EQUITY INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.369
Number of Units Outstanding at End of Period (in
thousands) 30.978
PUTNAM VT INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.053
Number of Units Outstanding at End of Period (in
thousands) 47.273
PUTNAM VT VOYAGER FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.611
Number of Units Outstanding at End of Period (in
thousands) 34.353
TOPS( TM ) MANAGED RISK BALANCED ETF PORTFOLIO - CLASS
3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.541
Number of Units Outstanding at End of Period (in
thousands) 1927.233
TOPS( TM ) MANAGED RISK GROWTH ETF PORTFOLIO - CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.127
Number of Units Outstanding at End of Period (in
thousands) 5365.244
TOPS( TM ) MANAGED RISK MODERATE GROWTH ETF PORTFOLIO -
CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.901
Number of Units Outstanding at End of Period (in
thousands) 4020.254
FORERETIREMENT VARIABLE ANNUITY
C-SHARE
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.238
Number of Units Outstanding at End of Period (in
thousands) 2.018
AMERICAN CENTURY VP MID CAP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.112
Number of Units Outstanding at End of Period (in
thousands) 3.067
AMERICAN CENTURY VP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.199
Number of Units Outstanding at End of Period (in
thousands) 1.033
AMERICAN FUNDS INSURANCE SERIES(R) GLOBAL GROWTH AND
INCOME FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.680
Number of Units Outstanding at End of Period (in
thousands) 1.652
APP B-7
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH FUND - CLASS
4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.307
Number of Units Outstanding at End of Period (in
thousands) 10.419
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH-INCOME FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.616
Number of Units Outstanding at End of Period (in
thousands) 5.831
AMERICAN FUNDS INSURANCE SERIES(R) INTERNATIONAL FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.592
Number of Units Outstanding at End of Period (in
thousands) 2.269
AMERICAN FUNDS INSURANCE SERIES(R) MANAGED RISK ASSET
ALLOCATION FUND - CLASS P2
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.500
Number of Units Outstanding at End of Period (in
thousands) 169.204
AMERICAN FUNDS INSURANCE SERIES(R) NEW WORLD FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.773
Number of Units Outstanding at End of Period (in
thousands) 9.208
BLACKROCK CAPITAL APPRECIATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.777
Number of Units Outstanding at End of Period (in
thousands) 0.000
BLACKROCK EQUITY DIVIDEND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.741
Number of Units Outstanding at End of Period (in
thousands) 0.000
BLACKROCK GLOBAL ALLOCATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.014
Number of Units Outstanding at End of Period (in
thousands) 9.075
BLACKROCK HIGH YIELD V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.616
Number of Units Outstanding at End of Period (in
thousands) 5.089
BLACKROCK U.S. GOVERNMENT BOND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.579
Number of Units Outstanding at End of Period (in
thousands) 8.327
FORETHOUGHT AMERICAN FUNDS(R) MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.200
Number of Units Outstanding at End of Period (in
thousands) 0.393
APP B-8
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
FORETHOUGHT BLACKROCK GLOBAL ALLOCATION MANAGED RISK
PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.090
Number of Units Outstanding at End of Period (in
thousands) 0.397
FORETHOUGHT INDEX MANAGED RISK PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.101
Number of Units Outstanding at End of Period (in
thousands) 0.000
FORETHOUGHT SELECT ADVISOR MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.130
Number of Units Outstanding at End of Period (in
thousands) 0.000
FORETHOUGHT WMC RESEARCH MANAGED RISK PORTFOLIO - CLASS
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.169
Number of Units Outstanding at End of Period (in
thousands) 0.000
FRANKLIN INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.921
Number of Units Outstanding at End of Period (in
thousands) 2.730
FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.110
Number of Units Outstanding at End of Period (in
thousands) 2.850
FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.693
Number of Units Outstanding at End of Period (in
thousands) 4.560
FRANKLIN STRATEGIC INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.103
Number of Units Outstanding at End of Period (in
thousands) 2.212
MUTUAL SHARES SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.010
Number of Units Outstanding at End of Period (in
thousands) 0.000
TEMPLETON FOREIGN SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.758
Number of Units Outstanding at End of Period (in
thousands) 5.794
TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.942
Number of Units Outstanding at End of Period (in
thousands) 10.733
APP B-9
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
TEMPLETON GROWTH SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.262
Number of Units Outstanding at End of Period (in
thousands) 0.000
HARTFORD CAPITAL APPRECIATION HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.967
Number of Units Outstanding at End of Period (in
thousands) 3.759
HARTFORD DIVIDEND AND GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.325
Number of Units Outstanding at End of Period (in
thousands) 7.595
HARTFORD GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.693
Number of Units Outstanding at End of Period (in
thousands) 4.867
HARTFORD HIGH YIELD HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.376
Number of Units Outstanding at End of Period (in
thousands) 0.000
HARTFORD INDEX HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.350
Number of Units Outstanding at End of Period (in
thousands) 1.233
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND - CLASS
IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.715
Number of Units Outstanding at End of Period (in
thousands) 1.166
HARTFORD PORTFOLIO DIVERSIFIER HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $8.866
Number of Units Outstanding at End of Period (in
thousands) 56.969
HARTFORD TOTAL RETURN BOND HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.700
Number of Units Outstanding at End of Period (in
thousands) 0.950
HARTFORD VALUE HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.274
Number of Units Outstanding at End of Period (in
thousands) 2.991
INVESCO V.I. BALANCED - RISK ALLOCATION FUND - SERIES
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.844
Number of Units Outstanding at End of Period (in
thousands) 9.592
APP B-10
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.060
Number of Units Outstanding at End of Period (in
thousands) 4.573
INVESCO V.I. INTERNATIONAL GROWTH FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.296
Number of Units Outstanding at End of Period (in
thousands) 9.179
INVESCO V.I. MID CAP CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.973
Number of Units Outstanding at End of Period (in
thousands) 5.186
INVESCO V.I. MONEY MARKET FUND - SERIES I
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.855
Number of Units Outstanding at End of Period (in
thousands) 0.064
INVESCO V.I. SMALL CAP EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.686
Number of Units Outstanding at End of Period (in
thousands) 7.558
LORD ABBETT BOND DEBENTURE PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.512
Number of Units Outstanding at End of Period (in
thousands) 2.164
LORD ABBETT FUNDAMENTAL EQUITY PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.513
Number of Units Outstanding at End of Period (in
thousands) 5.014
LORD ABBETT GROWTH OPPORTUNITIES PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.663
Number of Units Outstanding at End of Period (in
thousands) 1.648
MFS(R) GROWTH SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.885
Number of Units Outstanding at End of Period (in
thousands) 0.000
MFS(R) INTERNATIONAL VALUE PORTFOLIO - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.031
Number of Units Outstanding at End of Period (in
thousands) 3.183
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.351
Number of Units Outstanding at End of Period (in
thousands) 0.000
APP B-11
-------------------------------------------------------------------------------
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.942
Number of Units Outstanding at End of Period (in
thousands) 4.028
MFS(R) VALUE SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.608
Number of Units Outstanding at End of Period (in
thousands) 7.653
PIMCO ALL ASSET PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.786
Number of Units Outstanding at End of Period (in
thousands) 8.852
PIMCO EQS PATHFINDER PORTFOLIO( TM) - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.422
Number of Units Outstanding at End of Period (in
thousands) 0.000
PIMCO TOTAL RETURN PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.664
Number of Units Outstanding at End of Period (in
thousands) 1.695
PUTNAM VT EQUITY INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.269
Number of Units Outstanding at End of Period (in
thousands) 5.395
PUTNAM VT INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.971
Number of Units Outstanding at End of Period (in
thousands) 0.000
PUTNAM VT VOYAGER FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.501
Number of Units Outstanding at End of Period (in
thousands) 3.732
TOPS( TM ) MANAGED RISK BALANCED ETF PORTFOLIO - CLASS
3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.456
Number of Units Outstanding at End of Period (in
thousands) 68.914
TOPS( TM ) MANAGED RISK GROWTH ETF PORTFOLIO - CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.037
Number of Units Outstanding at End of Period (in
thousands) 82.568
TOPS( TM ) MANAGED RISK MODERATE GROWTH ETF PORTFOLIO -
CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.812
Number of Units Outstanding at End of Period (in
thousands) 136.680
APP B-12
-------------------------------------------------------------------------------
FORERETIREMENT VARIABLE ANNUITY
L-SHARE
[Download Table]
AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.299
Number of Units Outstanding at End of Period (in
thousands) 118.407
AMERICAN CENTURY VP MID CAP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.172
Number of Units Outstanding at End of Period (in
thousands) 30.699
AMERICAN CENTURY VP VALUE FUND - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.260
Number of Units Outstanding at End of Period (in
thousands) 18.271
AMERICAN FUNDS INSURANCE SERIES(R) GLOBAL GROWTH AND
INCOME FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.738
Number of Units Outstanding at End of Period (in
thousands) 8.284
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH FUND - CLASS
4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.368
Number of Units Outstanding at End of Period (in
thousands) 188.252
AMERICAN FUNDS INSURANCE SERIES(R) GROWTH-INCOME FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.679
Number of Units Outstanding at End of Period (in
thousands) 118.239
AMERICAN FUNDS INSURANCE SERIES(R) INTERNATIONAL FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.649
Number of Units Outstanding at End of Period (in
thousands) 86.657
AMERICAN FUNDS INSURANCE SERIES(R) MANAGED RISK ASSET
ALLOCATION FUND - CLASS P2
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.557
Number of Units Outstanding at End of Period (in
thousands) 8296.725
AMERICAN FUNDS INSURANCE SERIES(R) NEW WORLD FUND -
CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.826
Number of Units Outstanding at End of Period (in
thousands) 5.257
BLACKROCK CAPITAL APPRECIATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.841
Number of Units Outstanding at End of Period (in
thousands) 18.650
APP B-13
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AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
BLACKROCK EQUITY DIVIDEND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.799
Number of Units Outstanding at End of Period (in
thousands) 30.820
BLACKROCK GLOBAL ALLOCATION V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.068
Number of Units Outstanding at End of Period (in
thousands) 33.622
BLACKROCK HIGH YIELD V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.668
Number of Units Outstanding at End of Period (in
thousands) 16.803
BLACKROCK U.S. GOVERNMENT BOND V.I. FUND - CLASS III
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.627
Number of Units Outstanding at End of Period (in
thousands) 1.286
FORETHOUGHT AMERICAN FUNDS(R) MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.207
Number of Units Outstanding at End of Period (in
thousands) 305.217
FORETHOUGHT BLACKROCK GLOBAL ALLOCATION MANAGED RISK
PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.097
Number of Units Outstanding at End of Period (in
thousands) 353.582
FORETHOUGHT INDEX MANAGED RISK PORTFOLIO - CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.107
Number of Units Outstanding at End of Period (in
thousands) 49.123
FORETHOUGHT SELECT ADVISOR MANAGED RISK PORTFOLIO -
CLASS II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.136
Number of Units Outstanding at End of Period (in
thousands) 134.218
FORETHOUGHT WMC RESEARCH MANAGED RISK PORTFOLIO - CLASS
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.176
Number of Units Outstanding at End of Period (in
thousands) 48.463
FRANKLIN INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.975
Number of Units Outstanding at End of Period (in
thousands) 0.618
FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.170
Number of Units Outstanding at End of Period (in
thousands) 45.831
APP B-14
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AS OF DECEMBER 31,
SUB-ACCOUNT 2013
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FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.757
Number of Units Outstanding at End of Period (in
thousands) 31.031
FRANKLIN STRATEGIC INCOME SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.154
Number of Units Outstanding at End of Period (in
thousands) 15.787
MUTUAL SHARES SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.069
Number of Units Outstanding at End of Period (in
thousands) 113.912
TEMPLETON FOREIGN SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.817
Number of Units Outstanding at End of Period (in
thousands) 42.089
TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.992
Number of Units Outstanding at End of Period (in
thousands) 78.870
TEMPLETON GROWTH SECURITIES FUND - CLASS 4
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.323
Number of Units Outstanding at End of Period (in
thousands) 68.575
HARTFORD CAPITAL APPRECIATION HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.032
Number of Units Outstanding at End of Period (in
thousands) 24.175
HARTFORD DIVIDEND AND GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.387
Number of Units Outstanding at End of Period (in
thousands) 47.442
HARTFORD GROWTH HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.756
Number of Units Outstanding at End of Period (in
thousands) 8.455
HARTFORD HIGH YIELD HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.428
Number of Units Outstanding at End of Period (in
thousands) 0.000
HARTFORD INDEX HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.412
Number of Units Outstanding at End of Period (in
thousands) 203.057
APP B-15
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AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND - CLASS
IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.773
Number of Units Outstanding at End of Period (in
thousands) 15.094
HARTFORD PORTFOLIO DIVERSIFIER HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $8.910
Number of Units Outstanding at End of Period (in
thousands) 1843.640
HARTFORD TOTAL RETURN BOND HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.749
Number of Units Outstanding at End of Period (in
thousands) 48.950
HARTFORD VALUE HLS FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.335
Number of Units Outstanding at End of Period (in
thousands) 20.212
INVESCO V.I. BALANCED - RISK ALLOCATION FUND - SERIES
II
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.893
Number of Units Outstanding at End of Period (in
thousands) 40.539
INVESCO V.I. CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.120
Number of Units Outstanding at End of Period (in
thousands) 24.102
INVESCO V.I. INTERNATIONAL GROWTH FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.352
Number of Units Outstanding at End of Period (in
thousands) 89.836
INVESCO V.I. MID CAP CORE EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.033
Number of Units Outstanding at End of Period (in
thousands) 7.623
INVESCO V.I. MONEY MARKET FUND - SERIES I
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.904
Number of Units Outstanding at End of Period (in
thousands) 0.000
INVESCO V.I. SMALL CAP EQUITY FUND - SERIES II
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.749
Number of Units Outstanding at End of Period (in
thousands) 19.450
LORD ABBETT BOND DEBENTURE PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.564
Number of Units Outstanding at End of Period (in
thousands) 14.916
APP B-16
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AS OF DECEMBER 31,
SUB-ACCOUNT 2013
--------------------------------------------------------------------------------
LORD ABBETT FUNDAMENTAL EQUITY PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.575
Number of Units Outstanding at End of Period (in 92.903
thousands)
LORD ABBETT GROWTH OPPORTUNITIES PORTFOLIO - CLASS VC
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.726
Number of Units Outstanding at End of Period (in 6.789
thousands)
MFS(R) GROWTH SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.949
Number of Units Outstanding at End of Period (in 38.520
thousands)
MFS(R) INTERNATIONAL VALUE PORTFOLIO - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.091
Number of Units Outstanding at End of Period (in 15.566
thousands)
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.412
Number of Units Outstanding at End of Period (in 18.092
thousands)
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.007
Number of Units Outstanding at End of Period (in 26.055
thousands)
MFS(R) VALUE SERIES - SERVICE CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.671
Number of Units Outstanding at End of Period (in 94.611
thousands)
PIMCO ALL ASSET PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.835
Number of Units Outstanding at End of Period (in 13.359
thousands)
PIMCO EQS PATHFINDER PORTFOLIO( TM) - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.479
Number of Units Outstanding at End of Period (in 24.087
thousands)
PIMCO TOTAL RETURN PORTFOLIO - ADVISOR CLASS
UNIT VALUE:
Beginning of Period $10.000
End of Period $9.712
Number of Units Outstanding at End of Period (in 43.871
thousands)
PUTNAM VT EQUITY INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $12.330
Number of Units Outstanding at End of Period (in 32.882
thousands)
APP B-17
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AS OF DECEMBER 31,
SUB-ACCOUNT 2013
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PUTNAM VT INCOME FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.021
Number of Units Outstanding at End of Period (in
thousands) 45.524
PUTNAM VT VOYAGER FUND - CLASS IB
UNIT VALUE:
Beginning of Period $10.000
End of Period $13.568
Number of Units Outstanding at End of Period (in
thousands) 47.272
TOPS( TM ) MANAGED RISK BALANCED ETF PORTFOLIO - CLASS
3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.508
Number of Units Outstanding at End of Period (in
thousands) 1673.639
TOPS( TM ) MANAGED RISK GROWTH ETF PORTFOLIO - CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $11.092
Number of Units Outstanding at End of Period (in
thousands) 6426.915
TOPS( TM ) MANAGED RISK MODERATE GROWTH ETF PORTFOLIO -
CLASS 3
UNIT VALUE:
Beginning of Period $10.000
End of Period $10.866
Number of Units Outstanding at End of Period (in
thousands) 4934.031
APP C-1
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APPENDIX C - FUND DATA
[Enlarge/Download Table]
INVESTMENT INVESTMENT
FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS (INVESCO
VARIABLE INSURANCE FUNDS)
Invesco V.I. Balanced-Risk Allocation Seeks total return with a low to moderate Invesco Advisers, Inc.
Fund - Series II correlation to traditional financial market
indices.
Invesco V.I. Core Equity Fund - Series Seeks long-term growth of capital. Invesco Advisers, Inc.
II
Invesco V.I. International Growth Fund Seeks long-term growth of capital. Invesco Advisers, Inc.
- Series II
Invesco V.I. Mid Cap Core Equity Fund Seeks long-term growth of capital. Invesco Advisers, Inc.
- Series II
Invesco V.I. Money Market Fund - Seeks to provide current income consistent Invesco Advisers, Inc.
Series I with preservation of capital and liquidity.
Invesco V.I. Small Cap Equity Fund - Seeks long-term growth of capital. Invesco Advisers, Inc.
Series II
AMERICAN CENTURY VARIABLE PORTFOLIOS,
INC.
American Century VP Growth Fund - Seeks long-term capital growth. American Century Investment Management,
Class II Inc.
American Century VP Mid Cap Value Fund Seeks long-term capital growth. Income is a American Century Investment Management,
- Class II secondary objective. Inc.
American Century VP Value Fund - Class Seeks long-term capital growth. Income is a American Century Investment Management,
II secondary objective Inc.
AMERICAN FUNDS INSURANCE SERIES(R)
Global Growth and Income Fund - Class Seeks to provide long-term growth of Capital Research and Management Company
4 capital while providing current income.
Growth Fund - Class 4 Seeks to provide growth of capital. Capital Research and Management Company
Growth-Income Fund - Class 4 Seeks to achieve long-term growth of Capital Research and Management Company
capital and income.
International Fund - Class 4 Seeks to provide long-term growth of Capital Research and Management Company
capital.
New World Fund - Class 4 Seeks long-term capital appreciation. Capital Research and Management Company
Managed Risk Asset Allocation Fund - Seeks high total return (including income Capital Research and Management Company
Class P2 and capital gains) consistent with Sub-advised by Milliman Financial Risk
preservation of capital over the long term Management LLC
while seeking to manage volatility and
provide downside protection.
BLACKROCK VARIABLE SERIES FUNDS, INC.
BlackRock Capital Appreciation V.I. Seeks long-term growth of capital. BlackRock Advisors, LLC
Fund - Class III Sub-advised by BlackRock Investment
Management, LLC
BlackRock Equity Dividend V.I. Fund - Seek long-term total return and current BlackRock Advisors, LLC
Class III income. Sub-advised by BlackRock Investment
Management, LLC
BlackRock Global Allocation V.I. Fund Seeks high total investment return. BlackRock Advisors, LLC
- Class III Sub-advised by BlackRock Investment
Management, LLC
APP C-2
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[Enlarge/Download Table]
INVESTMENT INVESTMENT
FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
BlackRock High Yield V.I. Fund - Class Seeks to maximize total return, consistent BlackRock Advisors, LLC
III with income generation and prudent Sub-advised by BlackRock Financial
investment management. Management, Inc.
BlackRock U.S. Government Bond V.I. Seeks to maximize total return, consistent BlackRock Advisors, LLC
Fund - Class III with income generation and prudent Sub-advised by BlackRock Financial
investment management. Management, Inc.
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Franklin Income VIP Fund - Class 4 (1) Seeks to maximize income while maintaining Franklin Advisers, Inc.
prospects for capital appreciation.
Franklin Rising Dividends VIP Fund - Seeks long-term capital appreciation with Franklin Advisory Services, LLC
Class 4 (2) preservation of capital as an important
consideration.
Franklin Small Cap Value VIP Fund - Seeks long-term total return. Franklin Advisory Services, LLC
Class 4 (3)
Franklin Strategic Income VIP Fund - Seeks a high level of current income, with Franklin Advisers, Inc.
Class 4 (4) capital appreciation over the long term as
a secondary goal.
Franklin Mutual Shares VIP Fund - Capital appreciation, with income as a Franklin Mutual Advisers, LLC
Class 4 (5) secondary goal.
Templeton Foreign VIP Fund - Class 4 Seeks long-term capital growth. Templeton Investment Counsel, LLC
(6)
Templeton Global Bond VIP Fund - Class Seeks high current income, consistent with Franklin Advisers, Inc.
4 (7) preservation of capital, with capital
appreciation as a secondary consideration.
Templeton Growth VIP Fund - Class 4 Seeks long-term capital growth. Templeton Global Advisors Limited
(8)
FORETHOUGHT VARIABLE INSURANCE TRUST
FVIT American Funds(R) Managed Risk Seeks to provide income and capital Forethought Investment Advisors, LLC
Portfolio - Class II appreciation while seeking to manage Sub-advised by Milliman Financial Risk
volatility. Management LLC
FVIT Balanced Managed Risk Portfolio - Seeks to provide income and capital Forethought Investment Advisors, LLC
Class II (9) appreciation while seeking to manage Sub-advised by Milliman Financial Risk
volatility. Management LLC
FVIT BlackRock Global Allocation Seeks to provide income and capital Forethought Investment Advisors, LLC
Managed Risk Portfolio - Class II appreciation while seeking to manage Sub-advised by Milliman Financial Risk
volatility. Management LLC
FVIT Franklin Dividend and Income Seeks to provide capital appreciation and Forethought Investment Advisors, LLC
Managed Risk Portfolio - Class II income while seeking to manage volatility. Sub-advised by Franklin Advisory Services,
LLC and Milliman Financial Risk Management
LLC
FVIT Growth Managed Risk Portfolio - Seeks to provide capital appreciation and Forethought Investment Advisors, LLC
Class II income while seeking to manage volatility. Sub-advised by Milliman Financial Risk
Management LLC
FVIT Moderate Growth Managed Risk Seeks to provide capital appreciation and Forethought Investment Advisors, LLC
Portfolio - Class II income while seeking to manage volatility. Sub-advised by Milliman Financial Risk
Management LLC
FVIT Select Advisor Managed Risk Seeks to provide income and capital Forethought Investment Advisors, LLC
Portfolio - Class II appreciation while seeking to manage Sub-advised by Milliman Financial Risk
volatility. Management LLC
APP C-3
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[Enlarge/Download Table]
INVESTMENT INVESTMENT
FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
FVIT WMC Research Managed Risk Seeks to provide income and capital Forethought Investment Advisors, LLC
Portfolio - Class II appreciation while seeking to manage Sub-advised by Milliman Financial Risk
volatility. Management LLC and Wellington Management
Company, LLP
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Global Markets Navigator Seeks to achieve investment results that Goldman Sachs Asset Management, L.P.
Fund - Service Shares approximate the performance of the GS
Global Markets Navigator Index(TM)
Goldman Sachs Multi-Strategy Seeks long-term growth of capital Goldman Sachs Asset Management, L.P.
Alternatives Portfolio - Advisor
Shares
Goldman Sachs Strategic Income Fund - Seeks total return comprised of income and Goldman Sachs Asset Management, L.P.
Advisor Shares capital appreciation
HARTFORD SERIES FUND, INC.
Hartford Capital Appreciation HLS Fund Seeks growth of capital. Hartford Funds Management Company, LLC
- Class IB Sub-advised by Wellington Management
Company, LLP
Hartford Dividend and Growth HLS Fund Seeks a high level of current income Hartford Funds Management Company, LLC
- Class IB consistent with growth of capital. Sub-advised by Wellington Management
Company, LLP
Hartford High Yield HLS Fund - Class Seeks to provide high current income, and Hartford Funds Management Company, LLC
IB long-term total return. Sub-advised by Wellington Management
Company, LLP
Hartford Index HLS Fund - Class IB Seeks to provide investment results which Hartford Funds Management Company, LLC
approximate the price and yield performance Sub-advised by Hartford Investment
of publicly traded common stocks in the Management Company
aggregate.
Hartford International Opportunities Seeks long-term growth of capital. Hartford Funds Management Company, LLC
HLS Fund - Class IB Sub-advised by Wellington Management
Company, LLP
Hartford Total Return Bond HLS Fund - Seeks a competitive total return, with Hartford Funds Management Company, LLC
Class IB income as a secondary objective Sub-advised by Wellington Management
Company, LLP
Hartford Value HLS Fund - Class IB Seeks long-term total return. Hartford Funds Management Company, LLC
Sub-advised by Wellington Management
Company, LLP
LORD ABBETT SERIES FUND, INC.
Bond Debenture Portfolio - Class VC Seeks high current income and the Lord, Abbett & Co. LLC
opportunity for capital appreciation to
produce a high total return.
Fundamental Equity Portfolio - Class Seeks long-term growth of capital and Lord, Abbett & Co. LLC
VC income without excessive fluctuations in
market value.
Growth Opportunities Portfolio - Class Seeks capital appreciation. Lord, Abbett & Co. LLC
VC
APP C-4
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[Enlarge/Download Table]
INVESTMENT INVESTMENT
FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) VARIABLE INSURANCE TRUST
MFS(R) Growth Series - Service Class Seeks capital appreciation. MFS(R) Investment Management
MFS(R) Investors Trust Series - Seeks capital appreciation. MFS(R) Investment Management
Service Class
MFS(R) New Discovery Series - Service Seeks capital appreciation. MFS(R) Investment Management
Class
MFS(R) Value Series - Service Class Seeks capital appreciation. MFS(R) Investment Management
MFS(R) VARIABLE INSURANCE TRUST II
MFS(R) International Value Portfolio - Seeks capital appreciation. MFS(R) Investment Management
Service Class
PIMCO EQUITY SERIES VIT
PIMCO EqS Pathfinder Portfolio(R) - Seeks capital appreciation. PIMCO
Advisor Class
PIMCO VARIABLE INSURANCE TRUST
PIMCO All Asset Portfolio - Advisor Seeks maximum real return, consistent with PIMCO
Class preservation of real capital and prudent Sub-advised by Research Affiliates, LLC
investment management.
PIMCO Total Return Portfolio - Advisor Seeks maximum total return, consistent with PIMCO
Class preservation of capital and prudent
investment management.
PUTNAM VARIABLE TRUST
Putnam VT Equity Income Fund - Class Seeks capital growth and current income. Putnam Investment Management, LLC
IB
Putnam VT Income Fund - Class IB Seeks high current income consistent with Putnam Investment Management, LLC
what Putnam Investment Management, LLC
believes to be prudent risk.
Putnam VT Voyager Fund - Class IB Seeks capital appreciation. Putnam Investment Management, LLC
(1) Name changed effective 5/1/14. Formerly known as Franklin Income Securities
Fund.
(2) Name changed effective 5/1/14. Formerly known as Franklin Rising Dividends
Securities Fund.
(3) Name changed effective 5/1/14. Formerly known as Franklin Small Cap Value
Securities Fund.
(4) Name changed effective 5/1/14. Formerly known as Franklin Strategic Income
Securities Fund.
(5) Name changed effective 5/1/14. Formerly known as Mutual Shares Securities
Fund.
(6) Name changed effective 5/1/14. Formerly known as Templeton Foreign
Securities Fund.
(7) Name changed effective 5/1/14. Formerly known as Templeton Global Bond
Securities Fund.
(8) Name changed effective 5/1/14. Formerly known as Templeton Growth
Securities Fund.
(9) Name changed effective 4/30/14. Formerly known as FVIT Index Managed Risk
Portfolio.
APP D-1
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APPENDIX D - OPTIONAL RIDER INVESTMENT RESTRICTIONS
DAILY STEP UP WITHDRAWAL BENEFIT, LEGACY LOCK II, AND MAXIMUM DAILY VALUE
If you elected Daily Step Up Withdrawal Benefit, Legacy Lock II, or Maximum
Daily Value you must allocate your Contract Value to one or more of the approved
individual Sub-Accounts below.
APPROVED SUB-ACCOUNTS
[Download Table]
American Funds Insurance Series(R) - Managed Risk
Asset Allocation Fund
FVIT American Funds(R) Managed Risk Portfolio
FVIT Balanced Managed Risk Portfolio
FVIT BlackRock Global Allocation Managed Risk
Portfolio
FVIT Franklin Dividend and Income Managed Risk
Portfolio
FVIT Growth Managed Risk Portfolio
FVIT Moderate Growth Managed Risk Portfolio
FVIT Select Advisor Managed Risk Portfolio
FVIT WMC Research Managed Risk Portfolio
To obtain a Statement of Additional Information, please
complete the form below and mail to:
Forethought Life Insurance Company
Annuity Service Center
P.O. Box 758507
Topeka, Kansas 66675-8507
Please send a Statement of Additional Information to me at the
following address:
----------------------------------------------------------------
Name
----------------------------------------------------------------
Address
----------------------------------------------------------------
City/State Zip Code
Contract Name
Issue Date
PART B
STATEMENT OF ADDITIONAL INFORMATION
FORETHOUGHT LIFE INSURANCE COMPANY
300 N. MERIDIAN ST.
SUITE 1800
INDIANAPOLIS, IN 46204
1-866-645-2449
FORERETIREMENT II VARIABLE ANNUITY
This Statement of Additional Information contains additional information to the
Prospectus for the individual deferred flexible premium variable annuity
contract ("Contract"). This Statement of Additional Information is not a
Prospectus, and it should be read only in conjunction with the Prospectus for
the Contract. The Prospectus for the Contract is dated the same date as this
Statement of Additional Information. Unless otherwise indicated, all terms used
in this Statement of Additional Information have the same meaning as when used
in the Prospectus. You may obtain a copy by writing us at our Annuity Service
Center or calling the toll-free number shown above.
Dated: May 1, 2014
TABLE OF CONTENTS
[Download Table]
GENERAL INFORMATION 2
Safekeeping of Assets 2
Independent Registered Public Accounting 2
Firms
Non-Participating 2
Misstatement of Age or Sex 2
Principal Underwriter 2
Additional Payments to Financial 2
Intermediaries
PERFORMANCE RELATED INFORMATION 2
Total Return for all Sub-Accounts 3
Yield for Sub-Accounts 3
Money Market Sub-Accounts 3
Additional Materials 4
Performance Comparisons 4
FINANCIAL STATEMENTS F-1
2
-------------------------------------------------------------------------------
GENERAL INFORMATION
SAFEKEEPING OF ASSETS
We hold title to the assets of the Separate Account. The assets are kept
physically segregated and are held separate and apart from our general corporate
assets. Records are maintained of all purchases and redemptions of the
underlying fund shares held in each of the Sub-Accounts.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
The statutory financial statements of Forethought Life Insurance Company as of
December 31, 2013 and for the period then ended and the Forethought Life
Insurance Company Separate Account A financial statements as of December 31,
2013 and for the period March 15, 2013 (commencement of operation) through
December 31, 2013 included in this Statement of Additional Information have been
so included in reliance on the reports of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting. PricewaterhouseCoopers LLP's
principal business address is 1201 Louisiana, Suite 2900, Houston, TX
77002-5678.
NON-PARTICIPATING
The Contract is non-participating and we pay no dividends.
MISSTATEMENT OF AGE OR SEX
If an Owner or Annuitant's age or sex was misstated on the Contract, any
Contract payments or benefits will be determined using the correct age and sex.
If we have overpaid Annuity Payouts, an adjustment, including interest on the
amount of the overpayment, will be made to the next Annuity Payout or Payouts.
If we have underpaid due to a misstatement of age or sex, we will credit the
next Annuity Payout with the amount we underpaid and credit interest.
PRINCIPAL UNDERWRITER
The Contracts, which are offered continuously, are distributed by Forethought
Distributors, LLC. Forethought Distributors, LLC serves as Principal Underwriter
for the securities issued with respect to the Separate Account. Forethought
Distributors, LLC is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of
the Financial Industry Regulatory Authority, Inc. Forethought Distributors, LLC
is ultimately controlled by Global Atlantic Financial Group Limited.
ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES
As stated in the prospectus, we (or our affiliates) may pay Additional Payments
to Financial Intermediaries in the future. In addition to the Financial
Intermediaries listed in the prospectus with whom we will have an ongoing
contractual arrangement to make Additional Payments, listed below are all
Financial Intermediaries that received Additional Payments with at least a $100
value in 2013 of items such as sponsorship of meetings, education seminars, and
travel and entertainment, whether or not an ongoing contractual relationship
exists: AIG Advisor Group, Inc.; BBVA Compass Investment Solutions, Inc.;
Cambridge Investment Research, Inc.; Capital Financial Services; Capital
Investment Companies; CFD Investments; Commerce Brokerage Services; Corecap
Investments; Fifth Third Securities; First Bancorp; First Tennessee Brokerage;
Geneos Wealth Management Inc.; Girard Securities; Harvest Capital LLC; HBW
Securities, LLC; HD Vest Investment Services; Hines Securities Inc.; The
Huntington Investment Company; Independent Financial Group; Infinex Investments,
Inc.; ING Financial Partners; Investacorp; Janney Montgomery Scott LLC; JJB
Hilliard, WL Lyons LLC; Key Investment Services; Lincoln Financial Advisors; LPL
Financial LLC; Morgan Stanley Smith Barney LLC; New Era Investments, LLC;
NewBridge Financial Inc.; Parsonex Securities; People's Securities, Inc.; Quest
Securities; RBC Capital Markets, LLC; RBC Wealth Management; Sammons Securities
Inc.; Securities America; Sigma Financial Corp; Summit Brokerage Services Inc.;
SunTrust Bank; TFS Securities Inc.; Transamerica Financial Advisors, Inc.; Triad
Advisors; UBS Financial Services Insurance Agency Inc.; United Capital
Management of Kansas; US Bancorp Investments, Inc.; VSR Financial Services,
Inc.; VSR Group Inc.; WRP Investments.
Forethought currently pays Forethought Distributors, LLC underwriting
commissions for its role as Principal Underwriter of all variable annuities
associated with this Separate Account. For the past year, the aggregate dollar
amount of underwriting commissions paid to Forethought Distributors, LLC in its
role as Principal Underwriter has been $31,345,583.23.
3
-------------------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance-related information
concerning the Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
TOTAL RETURN FOR ALL SUB-ACCOUNTS
When a Sub-Account advertises its standardized total return, it will be
calculated on a quarterly basis from the date the underlying fund is made
available in the Separate Account for one, five and ten year periods or some
other relevant periods if the underlying fund has not been in existence for at
least ten years. Total return is measured by comparing the value of an
investment in the Sub-Account at the beginning of the relevant period to the
value of the investment at the end of the period. To calculate standardized
total return, the Total Annual Fund Operating Expenses, applicable Sales
Charges, Premium Based Charges, if applicable, Separate Account Annual Expenses,
and the Annual Maintenance Fee are deducted from a hypothetical initial Premium
Payment of $1,000.00. Standardized total returns do not include charges for
optional benefit riders.
The formula we use to calculate standardized total return is P(1+T)n = ERV. In
this calculation, "P" represents a hypothetical initial premium payment of
$1,000.00, "T" represents the average annual total return, "n" represents the
number of years and "ERV" represents the redeemable value at the end of the
period.
The Sub-Account may advertise a non-standardized total return. These figures
will be calculated on a monthly basis from the inception date of the underlying
fund for one, five and ten year periods or other relevant periods.
Non-standardized total return is measured in the same manner as the standardized
total return described above, except that non-standardized total return does not
include the Annual Maintenance Fee, or Sales Charges. Therefore,
non-standardized total return for a Sub-Account is higher than standardized
total return for a Sub-Account.
A Sub-Account may advertise non-standardized total returns for periods predating
its inception as an investment option in this variable annuity. Such
non-standardized total returns reflect the adjusted historical returns of the
underlying Fund in which the Sub-Account invests, as adjusted for certain
Separate Account annual expenses (Mortality and Expense Risk Charges and
Administrative Fees), but excludes adjustments for optional riders or deductions
for Annual Maintenance Fees, sales charges, premium taxes and federal/state
taxes (including possible penalties).
YIELD FOR SUB-ACCOUNTS
If applicable, the Sub-Accounts may advertise yield in addition to total return.
At any time in the future, yields may be higher or lower than past yields and
past performance is no indication of future performance.
The standardized yield will be computed for periods beginning with the inception
of the Sub-Account in the following manner. The net investment income per
Accumulation Unit earned during a one-month period is divided by the
Accumulation Unit Value on the last day of the period.
The formula we use to calculate yield is:
YIELD = 2[ (a -b +1)TO THE POWER OF 6 -1].
-----
cd
In this calculation, "a" represents the net investment income earned during the
period by the underlying fund, "b" represents the expenses accrued for the
period, "c" represents the average daily number of Accumulation Units
outstanding during the period and "d" represents the maximum offering price per
Accumulation Unit on the last day of the period.
MONEY MARKET SUB-ACCOUNTS
At any time in the future, current and effective yields may be higher or lower
than past yields and past performance is no indication of future performance.
Current yield of a money market fund Sub-Account is calculated for a seven-day
period or the "base period" without taking into consideration any realized or
unrealized gains or losses on shares of the underlying fund. The first step in
determining yield is to compute the base period return. We take a hypothetical
account with a balance of one Accumulation Unit of the Sub-Account and calculate
the net change in its value from the beginning of the base period to the end of
the base period. We then subtract an amount equal to the total deductions for
the Contract and then divide that number by the value of the account at the
beginning of the base period. The result is the base period return or "BPR."
Once the base period return is calculated, we then multiply it by 365/7 to
compute the current yield. Current yield is calculated to the nearest hundredth
of one percent.
The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A -
B)/C. "A" is equal to the net change in value of a hypothetical account with a
balance of one Accumulation Unit of the Sub-Account from the beginning of the
base period to the end of the
4
-------------------------------------------------------------------------------
base period. "B" is equal to the amount that we deduct for mortality and expense
risk charge, any applicable administrative charge and the Annual Maintenance
Fee. "C" represents the value of the Sub-Account at the beginning of the base
period.
Effective yield is also calculated using the base period return. The effective
yield is calculated by adding 1 to the base period return and raising that
result to a power equal to 365 divided by 7 and subtracting 1 from the result.
The calculation we use is:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1.
ADDITIONAL MATERIALS
We may provide information on various topics to Owners and prospective Owners in
advertising, sales literature or other materials. These topics may include the
relationship between sectors of the economy and the economy as a whole and its
effect on various securities markets, investment strategies and techniques (such
as value investing, dollar cost averaging and asset allocation), the advantages
and disadvantages of investing in tax-deferred and taxable instruments, customer
profiles and hypothetical purchase scenarios, financial management and tax and
retirement planning, and other investment alternatives, including comparisons
between the Contracts and the characteristics of and market for any
alternatives.
PERFORMANCE COMPARISONS
Each Sub-Account may, from time to time, include in advertisements the ranking
of its performance figures compared with performance figures of other annuity
contract's sub-accounts with the same investment objectives which are created by
Lipper Analytical Services, Morningstar, Inc. or other recognized ranking
services.
FORETHOUGHT LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
FINANCIAL STATEMENTS
Year Ended December 31, 2013
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
SA-1
[PRICEWATERHOUSECOOPERS LLP LOGO]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
FORETHOUGHT LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A:
--------------------------------------------------------------------------------
In our opinion, the accompanying statement of net assets, including the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Forethought Life Insurance Company Separate Account A (the "Company") at
December 31, 2013, and the results of its operations, the changes in its net
assets and the financial highlights for the period March 15, 2013 (commencement
of operations) through December 31, 2013, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Separate Accounts' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31, 2013 by
correspondence with the mutual fund companies, provides a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
April 11, 2014
PricewaterhouseCoopers LLP, 1201 Louisiana, Suite 2900, Houston, TX 77002-5678
T: (713) 356 4000, F: (713) 356 4717, www.pwc.com/us
SA-2
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN CENTURY VP AMERICAN CENTURY VP AMERICAN CENTURY VP
GROWTH FUND MID CAP VALUE VALUE FUND
--------------------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $2,311,969 $605,980 $567,004
---------- -------- --------
Net assets 2,311,969 605,980 567,004
========== ======== ========
UNITS OUTSTANDING:
B-Share 67,355 15,982 26,864
C-Share 2,018 3,067 1,033
L-Share 118,407 30,699 18,271
---------- -------- --------
Total units 187,780 49,748 46,168
========== ======== ========
UNIT VALUE:
B-Share $12.34 $12.21 $12.30
C-Share $12.24 $12.11 $12.20
L-Share $12.30 $12.17 $12.26
Mutual funds, at cost $2,106,953 $563,779 $532,711
Mutual fund shares 174,488 32,791 67,022
AMERICAN FUNDS
GLOBAL
GROWTH AND AMERICAN FUNDS
INCOME FUND GROWTH FUND
-------------------------------------- ------------------------------------------
ASSETS:
Mutual funds, at market value $557,228 $4,732,275
-------- ----------
Net assets 557,228 4,732,275
======== ==========
UNITS OUTSTANDING:
B-Share 37,425 183,424
C-Share 1,652 10,419
L-Share 8,284 188,252
-------- ----------
Total units 47,361 382,095
======== ==========
UNIT VALUE:
B-Share $11.78 $12.41
C-Share $11.68 $12.31
L-Share $11.74 $12.37
Mutual funds, at cost $536,382 $4,334,715
Mutual fund shares 44,578 60,422
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS
GROWTH-INCOME FUND INTERNATIONAL FUND NEW WORLD FUND
--------------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $3,099,118 $1,947,562 $178,106
---------- ---------- --------
Net assets 3,099,118 1,947,562 178,106
========== ========== ========
UNITS OUTSTANDING:
B-Share 120,018 78,020 2,026
C-Share 5,831 2,269 9,208
L-Share 118,239 86,657 5,257
---------- ---------- --------
Total units 244,088 166,946 16,491
========== ========== ========
UNIT VALUE:
B-Share $12.72 $11.69 $10.86
C-Share $12.62 $11.59 $10.77
L-Share $12.68 $11.65 $10.83
Mutual funds, at cost $2,857,033 $1,803,808 $171,473
Mutual fund shares 61,296 92,040 7,127
AMERICAN FUNDS BLACKROCK
MANAGED RISK ASSET CAPITAL
ALLOCATION FUND (B) APPRECIATION V.I.
-------------------------------------- --------------------------------------------
ASSETS:
Mutual funds, at market value $164,362,541 $978,157
------------ --------
Net assets 164,362,541 978,157
============ ========
UNITS OUTSTANDING:
B-Share 5,738,826 57,343
C-Share 169,204 --
L-Share 8,296,725 18,650
------------ --------
Total units 14,204,755 75,993
============ ========
UNIT VALUE:
B-Share $11.59 $12.88
C-Share $11.50 $12.78
L-Share $11.56 $12.84
Mutual funds, at cost $158,512,424 $968,855
Mutual fund shares 13,777,246 100,221
(b) Name change. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
BLACKROCK BLACKROCK BLACKROCK
EQUITY GLOBAL HIGH
DIVIDEND V.I. ALLOCATION V.I. YIELD V.I. FUND
------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $1,676,165 $1,248,525 $484,388
---------- ---------- --------
Net assets 1,676,165 1,248,525 484,388
========== ========== ========
UNITS OUTSTANDING:
B-Share 110,885 69,927 23,657
C-Share -- 9,075 5,089
L-Share 30,820 33,622 16,803
---------- ---------- --------
Total units 141,705 112,624 45,549
========== ========== ========
UNIT VALUE:
B-Share $11.84 $11.10 $10.70
C-Share $11.74 $11.01 $10.62
L-Share $11.80 $11.07 $10.67
Mutual funds, at cost $1,578,776 $1,243,671 $476,991
Mutual fund shares 155,633 80,136 63,154
FORETHOUGHT
BLACKROCK AMERICAN FUNDS
U.S. GOVERNMENT MANAGED RISK
BOND V.I. FUND PORTFOLIO (A)
-------------------------------------- -------------------------------------------
ASSETS:
Mutual funds, at market value $98,519 $6,462,490
------- ----------
Net assets 98,519 6,462,490
======= ==========
UNITS OUTSTANDING:
B-Share 667 327,419
C-Share 8,327 393
L-Share 1,286 305,217
------- ----------
Total units 10,280 633,029
======= ==========
UNIT VALUE:
B-Share $9.66 $10.21
C-Share $9.58 $10.20
L-Share $9.63 $10.21
Mutual funds, at cost $99,094 $6,372,192
Mutual fund shares 9,813 628,647
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FORETHOUGHT
BLACKROCK FORETHOUGHT
GLOBAL ALLOCATION FORETHOUGHT SELECT ADVISOR
MANAGED RISK INDEX MANAGED RISK MANAGED RISK
PORTFOLIO (A) PORTFOLIO (A) PORTFOLIO (A)
----------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $8,417,458 $1,251,751 $2,404,467
---------- ---------- ----------
Net assets 8,417,458 1,251,751 2,404,467
========== ========== ==========
UNITS OUTSTANDING:
B-Share 479,491 74,693 102,957
C-Share 397 -- --
L-Share 353,582 49,123 134,218
---------- ---------- ----------
Total units 833,470 123,816 237,175
========== ========== ==========
UNIT VALUE:
B-Share $10.10 $10.11 $10.14
C-Share $10.09 $10.10 $10.13
L-Share $10.10 $10.11 $10.14
Mutual funds, at cost $8,318,593 $1,241,930 $2,373,173
Mutual fund shares 823,626 122,841 234,811
FORETHOUGHT
WMC RESEARCH FRANKLIN
MANAGED RISK INCOME
PORTFOLIO (A) SECURITIES FUND
-------------------------------------- ------------------------------------------
ASSETS:
Mutual funds, at market value $1,813,276 $415,316
---------- --------
Net assets 1,813,276 415,316
========== ========
UNITS OUTSTANDING:
B-Share 129,679 34,399
C-Share -- 2,730
L-Share 48,463 618
---------- --------
Total units 178,142 37,747
========== ========
UNIT VALUE:
B-Share $10.18 $11.01
C-Share $10.17 $10.92
L-Share $10.18 $10.97
Mutual funds, at cost $1,787,860 $398,034
Mutual fund shares 175,875 25,386
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FRANKLIN FRANKLIN FRANKLIN
RISING SMALL CAP STRATEGIC
DIVIDENDS VALUE INCOME
SECURITIES FUND SECURITIES FUND SECURITIES FUND
----------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $1,059,745 $848,854 $343,553
---------- -------- --------
Net assets 1,059,745 848,854 343,553
========== ======== ========
UNITS OUTSTANDING:
B-Share 38,289 30,876 15,797
C-Share 2,850 4,560 2,212
L-Share 45,831 31,031 15,787
---------- -------- --------
Total units 86,970 66,467 33,796
========== ======== ========
UNIT VALUE:
B-Share $12.21 $12.80 $10.19
C-Share $12.11 $12.69 $10.10
L-Share $12.17 $12.76 $10.15
Mutual funds, at cost $981,752 $767,684 $340,805
Mutual fund shares 38,175 34,832 27,462
TEMPLETON
MUTUAL SHARES FOREIGN
SECURITIES FUND SECURITIES FUND
-------------------------------------- ----------------------------------------
ASSETS:
Mutual funds, at market value $2,367,577 $758,995
---------- --------
Net assets 2,367,577 758,995
========== ========
UNITS OUTSTANDING:
B-Share 81,991 16,325
C-Share -- 5,794
L-Share 113,912 42,089
---------- --------
Total units 195,903 64,208
========== ========
UNIT VALUE:
B-Share $12.11 $11.85
C-Share $12.01 $11.76
L-Share $12.07 $11.82
Mutual funds, at cost $2,225,880 $698,297
Mutual fund shares 108,954 43,696
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
TEMPLETON TEMPLETON CAPITAL
GLOBAL BOND GROWTH APPRECIATION
SECURITIES FUND SECURITIES FUND HLS FUND
-------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $1,145,471 $1,531,034 $1,326,545
---------- ---------- ----------
Net assets 1,145,471 1,531,034 1,326,545
========== ========== ==========
UNITS OUTSTANDING:
B-Share 25,015 55,488 73,646
C-Share 10,733 -- 3,759
L-Share 78,870 68,575 24,175
---------- ---------- ----------
Total units 114,618 124,063 101,580
========== ========== ==========
UNIT VALUE:
B-Share $10.02 $12.36 $13.07
C-Share $9.94 $12.26 $12.97
L-Share $9.99 $12.32 $13.03
Mutual funds, at cost $1,130,747 $1,401,464 $1,185,627
Mutual fund shares 60,383 99,742 22,415
HARTFORD
DIVIDEND HARTFORD
AND GROWTH GROWTH
HLS FUND HLS FUND
------------------------------- ------------------------------------
ASSETS:
Mutual funds, at market value $1,850,455 $169,639
---------- --------
Net assets 1,850,455 169,639
========== ========
UNITS OUTSTANDING:
B-Share 94,091 --
C-Share 7,595 4,867
L-Share 47,442 8,455
---------- --------
Total units 149,128 13,322
========== ========
UNIT VALUE:
B-Share $12.43 $12.80
C-Share $12.33 $12.69
L-Share $12.39 $12.76
Mutual funds, at cost $1,742,082 $153,946
Mutual fund shares 68,561 9,909
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
HARTFORD HARTFORD INTERNATIONAL
HIGH YIELD INDEX OPPORTUNITIES
HLS FUND HLS FUND HLS FUND
-------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $19,919 $3,905,974 $738,394
------- ---------- --------
Net assets 19,919 3,905,974 738,394
======= ========== ========
UNITS OUTSTANDING:
B-Share 1,904 110,071 46,317
C-Share -- 1,233 1,166
L-Share -- 203,057 15,094
------- ---------- --------
Total units 1,904 314,361 62,577
======= ========== ========
UNIT VALUE:
B-Share $10.46 $12.45 $11.81
C-Share $10.38 $12.35 $11.71
L-Share $10.43 $12.41 $11.77
Mutual funds, at cost $19,779 $3,623,512 $674,930
Mutual fund shares 2,271 101,851 48,579
HARTFORD HARTFORD
PORTFOLIO TOTAL
DIVERSIFIER RETURN BOND
HLS FUND HLS FUND
---------------------------------------- ---------------------------------
ASSETS:
Mutual funds, at market value $34,113,840 $1,057,547
----------- ----------
Net assets 34,113,840 1,057,547
=========== ==========
UNITS OUTSTANDING:
B-Share 1,922,172 58,401
C-Share 56,969 950
L-Share 1,843,640 48,950
----------- ----------
Total units 3,822,781 108,301
=========== ==========
UNIT VALUE:
B-Share $8.94 $9.78
C-Share $8.87 $9.70
L-Share $8.91 $9.75
Mutual funds, at cost $35,541,387 $1,074,342
Mutual fund shares 4,196,044 93,837
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD HUNTINGTON VA
VALUE DIVIDEND HUNTINGTON VA
HLS FUND CAPTURE FUND GROWTH FUND
-----------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market
value $333,102 $464,056 $5,177
-------- -------- ------
Net assets 333,102 464,056 5,177
======== ======== ======
UNITS OUTSTANDING:
B-Share 3,803 40,680 408
C-Share 2,991 -- --
L-Share 20,213 -- --
-------- -------- ------
Total units 27,007 40,680 408
======== ======== ======
UNIT VALUE:
B-Share $12.37 $11.41 $12.69
C-Share $12.27 $ -- $ --
L-Share $12.34 $ -- $ --
Mutual funds, at cost $314,647 $448,941 $4,740
Mutual fund shares 21,658 36,977 470
HUNTINGTON VA HUNTINGTON VA
INCOME INTERNATIONAL
EQUITY FUND EQUITY FUND
----------------------------- --------------------------------------
ASSETS:
Mutual funds, at market
value $446,537 $243,522
-------- --------
Net assets 446,537 243,522
======== ========
UNITS OUTSTANDING:
B-Share 38,055 20,365
C-Share -- --
L-Share -- --
-------- --------
Total units 38,055 20,365
======== ========
UNIT VALUE:
B-Share $11.73 $11.96
C-Share $ -- $ --
L-Share $ -- $ --
Mutual funds, at cost $428,806 $221,504
Mutual fund shares 39,136 14,117
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HUNTINGTON VA HUNTINGTON VA
MID CORP MORTGAGE HUNTINGTON VA
AMERICA FUND SECURITIES FUND SITUS FUND
-----------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market
value $13,628 $7,789 $8,110
------- ------ ------
Net assets 13,628 7,789 8,110
======= ====== ======
UNITS OUTSTANDING:
B-Share 1,098 797 659
C-Share -- -- --
L-Share -- -- --
------- ------ ------
Total units 1,098 797 659
======= ====== ======
UNIT VALUE:
B-Share $12.41 $9.77 $12.30
C-Share $ -- $ -- $ --
L-Share $ -- $ -- $ --
Mutual funds, at cost $13,710 $8,039 $7,413
Mutual fund shares 596 680 339
INVESCO V.I.
BALANCED RISK INVESCO V.I.
ALLOCATION CORE
FUND EQUITY FUND
---------------------------- --------------------------------------
ASSETS:
Mutual funds, at market
value $654,468 $553,175
-------- --------
Net assets 654,468 553,175
======== ========
UNITS OUTSTANDING:
B-Share 16,020 16,936
C-Share 9,592 4,573
L-Share 40,538 24,102
-------- --------
Total units 66,150 45,611
======== ========
UNIT VALUE:
B-Share $9.92 $12.16
C-Share $9.84 $12.06
L-Share $9.89 $12.12
Mutual funds, at cost $665,813 $519,667
Mutual fund shares 53,645 14,546
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
INVESCO V.I. INVESCO V.I. INVESCO V.I.
INTERNATIONAL MID CAP CORE MONEY
GROWTH FUND EQUITY FUND MARKET FUND
---------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market
value $2,057,611 $273,911 $83,464
---------- -------- -------
Net assets 2,057,611 273,911 83,464
========== ======== =======
UNITS OUTSTANDING:
B-Share 82,029 9,949 8,337
C-Share 9,179 5,186 64
L-Share 89,836 7,623 --
---------- -------- -------
Total units 181,044 22,758 8,401
========== ======== =======
UNIT VALUE:
B-Share $11.39 $12.07 $9.94
C-Share $11.30 $11.97 $9.86
L-Share $11.35 $12.03 $9.91
Mutual funds, at cost $1,907,364 $267,131 $83,464
Mutual fund shares 58,991 18,322 83,464
INVESCO V.I. LORD ABBETT
SMALL CAP BOND-DEBENTURE
EQUITY FUND PORTFOLIO
-------------------------- ----------------------------------------
ASSETS:
Mutual funds, at market
value $596,790 $471,012
-------- --------
Net assets 596,790 471,012
======== ========
UNITS OUTSTANDING:
B-Share 19,776 27,429
C-Share 7,558 2,164
L-Share 19,450 14,916
-------- --------
Total units 46,784 44,509
======== ========
UNIT VALUE:
B-Share $12.79 $10.60
C-Share $12.69 $10.51
L-Share $12.75 $10.56
Mutual funds, at cost $545,803 $487,670
Mutual fund shares 24,016 38,263
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
LORD ABBETT LORD ABBETT
FUNDAMENTAL GROWTH OPPORTUNITIES MFS GROWTH
EQUITY PORTFOLIO PORTFOLIO SERIES
--------------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $2,421,261 $202,828 $1,680,744
---------- -------- ----------
Net assets 2,421,261 202,828 1,680,744
========== ======== ==========
UNITS OUTSTANDING:
B-Share 94,350 7,486 90,988
C-Share 5,014 1,648 --
L-Share 92,903 6,789 38,520
---------- -------- ----------
Total units 192,267 15,923 129,508
========== ======== ==========
UNIT VALUE:
B-Share $12.62 $12.77 $12.99
C-Share $12.51 $12.66 $12.88
L-Share $12.58 $12.73 $12.95
Mutual funds, at cost $2,479,352 $218,847 $1,473,434
Mutual fund shares 115,134 13,300 43,976
MFS INVESTORS MFS NEW
TRUST SERIES DISCOVERY SERIES
-------------------------------------- ----------------------------------------
ASSETS:
Mutual funds, at market value $542,316 $727,918
-------- --------
Net assets 542,316 727,918
======== ========
UNITS OUTSTANDING:
B-Share 25,519 25,819
C-Share -- 4,028
L-Share 18,092 26,055
-------- --------
Total units 43,611 55,902
======== ========
UNIT VALUE:
B-Share $12.45 $13.05
C-Share $12.35 $12.94
L-Share $12.41 $13.01
Mutual funds, at cost $498,220 $656,954
Mutual fund shares 18,247 34,630
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
TOPS MANAGED
MFS INTERNATIONAL RISK BALANCED
MFS VALUE VALUE ETF
SERIES PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $1,844,933 $513,150 $40,517,497
---------- --------- ------------
Net assets 1,844,933 513,150 40,517,497
========== ========= ============
UNITS OUTSTANDING:
B-Share 43,238 23,632 2,107,008
C-Share 7,653 3,183 68,914
L-Share 94,611 15,566 1,673,639
---------- --------- ------------
Total units 145,502 42,381 3,849,561
========== ========= ============
UNIT VALUE:
B-Share $12.71 $12.13 $10.54
C-Share $12.61 $12.03 $10.46
L-Share $12.67 $12.09 $10.51
Mutual funds, at cost $1,685,787 $490,045 $39,538,151
Mutual fund shares 96,949 23,779 3,504,974
TOPS MANAGED TOPS MANAGED
RISK GROWTH RISK MODERATE
ETF GROWTH ETF
PORTFOLIO PORTFOLIO
-------------------------------------- ----------------------------------------------
ASSETS:
Mutual funds, at market value $133,130,668 $101,174,719
------------ ------------
Net assets 133,130,668 101,174,719
============ ============
UNITS OUTSTANDING:
B-Share 5,475,730 4,227,578
C-Share 82,568 136,680
L-Share 6,426,915 4,934,031
------------ ------------
Total units 11,985,213 9,298,289
============ ============
UNIT VALUE:
B-Share $11.13 $10.90
C-Share $11.04 $10.81
L-Share $11.09 $10.87
Mutual funds, at cost $127,043,942 $97,197,433
Mutual fund shares 11,378,690 8,494,939
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF NET ASSETS -- (CONCLUDED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
PIMCO PIMCO PIMCO VIT
EQS PATHFINDER ALL ASSET TOTAL RETURN
PORTFOLIO PORTFOLOIO PORTFOLIO
--------------------------------------------------------------------------------------------------------
ASSETS:
Mutual funds, at market value $1,389,777 $249,071 $1,514,595
----------- --------- ----------
Net assets 1,389,777 249,071 1,514,595
=========== ========= ==========
UNITS OUTSTANDING:
B-Share 96,674 3,148 110,045
C-Share -- 8,852 1,695
L-Share 24,087 13,359 43,871
----------- --------- ----------
Total units 120,761 25,359 155,611
=========== ========= ==========
UNIT VALUE:
B-Share $11.52 $9.87 $9.74
C-Share $11.42 $9.79 $9.66
L-Share $11.48 $9.84 $9.71
Mutual funds, at cost $1,299,601 $253,535 $1,541,575
Mutual fund shares 111,360 22,684 137,941
PUTNAM VT
EQUITY PUTNAM VT PUTNAM VT
INCOME FUND INCOME FUND VOYAGER FUND
-------------------------------------- --------------------------------------------------------------
ASSETS:
Mutual funds, at market value $854,797 $931,436 $1,261,848
--------- --------- ----------
Net assets 854,797 931,436 1,261,848
========= ========= ==========
UNITS OUTSTANDING:
B-Share 30,978 47,274 41,884
C-Share 5,395 -- 3,732
L-Share 32,881 45,524 47,272
--------- --------- ----------
Total units 69,254 92,798 92,888
========= ========= ==========
UNIT VALUE:
B-Share $12.37 $10.05 $13.61
C-Share $12.27 $9.97 $13.50
L-Share $12.33 $10.02 $13.57
Mutual funds, at cost $789,475 $920,758 $1,099,498
Mutual fund shares 41,902 78,272 24,478
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN CENTURY VP AMERICAN CENTURY VP AMERICAN CENTURY VP
GROWTH FUND MID CAP VALUE VALUE FUND
----------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $5,428 $2,664 $3,138
Expenses:
Mortality and expense
risk charge (6,100) (1,574) (1,181)
Other expense charge (1,862) (427) (390)
-------- ------- -------
Net investment income
(loss) (2,534) 663 1,567
-------- ------- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 1,729 74 --
Realized capital gain
(loss) on investments 42,188 932 3,476
Change in unrealized
appreciation/depreciation
on investments during the
year 205,016 42,201 34,293
-------- ------- -------
Net realized and
unrealized capital gain
(loss) on investments 248,933 43,207 37,769
-------- ------- -------
Net increase (decrease)
in net assets from
operations $246,399 $43,870 $39,336
======== ======= =======
AMERICAN FUNDS
GLOBAL
GROWTH AND AMERICAN FUNDS
INCOME FUND GROWTH FUND
--------------------------- ---------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $19,045 $31,936
Expenses:
Mortality and expense
risk charge (776) (9,861)
Other expense charge (302) (3,093)
------- --------
Net investment income
(loss) 17,967 18,982
------- --------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- --
Realized capital gain
(loss) on investments 2,075 16,788
Change in unrealized
appreciation/depreciation
on investments during the
year 20,846 397,560
------- --------
Net realized and
unrealized capital gain
(loss) on investments 22,921 414,348
------- --------
Net increase (decrease)
in net assets from
operations $40,888 $433,330
======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-16
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS
GROWTH-INCOME FUND INTERNATIONAL FUND NEW WORLD FUND
-------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $31,209 $21,824 $1,756
Expenses:
Mortality and expense
risk charge (5,810) (4,063) (529)
Other expense charge (1,828) (1,272) (95)
-------- -------- ------
Net investment income
(loss) 23,571 16,489 1,132
-------- -------- ------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- -- 198
Realized capital gain
(loss) on investments 15,685 5,708 44
Change in unrealized
appreciation/depreciation
on investments during the
year 242,085 143,754 6,633
-------- -------- ------
Net realized and
unrealized capital gain
(loss) on investments 257,770 149,462 6,875
-------- -------- ------
Net increase (decrease)
in net assets from
operations $281,341 $165,951 $8,007
======== ======== ======
AMERICAN FUNDS BLACKROCK
MANAGED RISK ASSET CAPITAL
ALLOCATION FUND (B) APPRECIATION V.I.
--------------------------- ------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $1,383,984 $6
Expenses:
Mortality and expense
risk charge (230,165) (1,980)
Other expense charge (106,015) (764)
---------- --------
Net investment income
(loss) 1,047,804 (2,738)
---------- --------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- 130,753
Realized capital gain
(loss) on investments 28,795 12,599
Change in unrealized
appreciation/depreciation
on investments during the
year 5,850,117 9,302
---------- --------
Net realized and
unrealized capital gain
(loss) on investments 5,878,912 152,654
---------- --------
Net increase (decrease)
in net assets from
operations $6,926,716 $149,916
========== ========
(b) Name change. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-17
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
BLACKROCK BLACKROCK BLACKROCK
EQUITY GLOBAL HIGH
DIVIDEND V.I. ALLOCATION V.I. YIELD V.I. FUND
-------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $14,914 $12,303 $6,357
Expenses:
Mortality and expense
risk charge (3,076) (2,402) (959)
Other expense charge (1,216) (858) (469)
-------- ------- -------
Net investment income
(loss) 10,622 9,043 4,929
-------- ------- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 23,209 44,613 --
Realized capital gain
(loss) on investments 5,095 1,370 393
Change in unrealized
appreciation/
depreciation on
investments during the
year 97,389 4,854 7,397
-------- ------- -------
Net realized and
unrealized capital gain
(loss) on investments 125,693 50,837 7,790
-------- ------- -------
Net increase (decrease)
in net assets from
operations $136,315 $59,880 $12,719
======== ======= =======
FORETHOUGHT
BLACKROCK AMERICAN FUNDS
U.S. GOVERNMENT MANAGED RISK
BOND V.I. FUND PORTFOLIO (A)
--------------------------- ------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $44 $ --
Expenses:
Mortality and expense
risk charge (63) (1,959)
Other expense charge (18) (681)
----- -------
Net investment income
(loss) (37) (2,640)
----- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 88 --
Realized capital gain
(loss) on investments (94) --
Change in unrealized
appreciation/
depreciation on
investments during the
year (575) 90,298
----- -------
Net realized and
unrealized capital gain
(loss) on investments (581) 90,298
----- -------
Net increase (decrease)
in net assets from
operations $(618) $87,658
===== =======
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-18
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FORETHOUGHT FORETHOUGHT FORETHOUGHT
BLACKROCK GLOBAL INDEX MANAGED SELECT ADVISOR
ALLOCATION MANAGED RISK RISK MANAGED RISK
PORTFOLIO (A) PORTFOLIO (A) PORTFOLIO (A)
--------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $ -- $ -- $ --
Expenses:
Mortality and expense risk charge (2,460) (262) (635)
Other expense charge (804) (84) (235)
------- ------ -------
Net investment income (loss) (3,264) (346) (870)
------- ------ -------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- -- --
Realized capital gain (loss) on
investments (2) -- 2
Change in unrealized appreciation/
depreciation on investments during
the year 98,865 9,821 31,294
------- ------ -------
Net realized and unrealized capital
gain (loss) on investments 98,863 9,821 31,296
------- ------ -------
Net increase (decrease) in net
assets from operations $95,599 $9,475 $30,426
======= ====== =======
FORETHOUGHT
WMC RESEARCH FRANKLIN
MANAGED RISK INCOME
PORTFOLIO (A) SECURITIES FUND
-------------------------------------- ----------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $ -- $ --
Expenses:
Mortality and expense risk charge (431) (434)
Other expense charge (157) (180)
------- -------
Net investment income (loss) (588) (614)
------- -------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- --
Realized capital gain (loss) on
investments 2 19
Change in unrealized appreciation/
depreciation on investments during
the year 25,416 17,282
------- -------
Net realized and unrealized capital
gain (loss) on investments 25,418 17,301
------- -------
Net increase (decrease) in net
assets from operations $24,830 $16,687
======= =======
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-19
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FRANKLIN FRANKLIN FRANKLIN
RISING SMALL CAP STRATEGIC
DIVIDENDS VALUE INCOME
SECURITIES FUND SECURITIES FUND SECURITIES FUND
----------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $4,118 $2,282 $3,073
Expenses:
Mortality and expense
risk charge (2,583) (1,946) (784)
Other expense charge (774) (572) (238)
------- ------- ------
Net investment income
(loss) 761 (236) 2,051
------- ------- ------
NET REALIZED AND
UNREALIZED CAPITAL GAIN
(LOSS) ON INVESTMENTS:
Capital gain
distributions -- 3,284 680
Realized capital gain
(loss) on investments 6,162 6,775 (562)
Change in unrealized
appreciation/
depreciation on
investments during the
year 77,993 81,170 2,748
------- ------- ------
Net realized and
unrealized capital gain
(loss) on investments 84,155 91,229 2,866
------- ------- ------
Net increase (decrease)
in net assets from
operations $84,916 $90,993 $4,917
======= ======= ======
TEMPLETON
MUTUAL SHARES FOREIGN
SECURITIES FUND SECURITIES FUND
-------------------------- ---------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $22,149 $3,359
Expenses:
Mortality and expense
risk charge (5,206) (1,801)
Other expense charge (1,592) (505)
-------- -------
Net investment income
(loss) 15,351 1,053
-------- -------
NET REALIZED AND
UNREALIZED CAPITAL GAIN
(LOSS) ON INVESTMENTS:
Capital gain
distributions -- --
Realized capital gain
(loss) on investments 8,725 3,450
Change in unrealized
appreciation/
depreciation on
investments during the
year 141,697 60,698
-------- -------
Net realized and
unrealized capital gain
(loss) on investments 150,422 64,148
-------- -------
Net increase (decrease)
in net assets from
operations $165,773 $65,201
======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-20
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
TEMPLETON TEMPLETON CAPITAL
GLOBAL BOND GROWTH APPRECIATION
SECURITIES FUND SECURITIES FUND HLS FUND
------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $4,859 $8,784 $8,324
Expenses:
Mortality and expense risk
charge (2,554) (3,573) (2,829)
Other expense charge (665) (1,100) (1,302)
------- -------- --------
Net investment income (loss) 1,640 4,111 4,193
------- -------- --------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 1,299 -- 3,397
Realized capital gain (loss)
on investments (663) 9,202 6,506
Change in unrealized
appreciation/ depreciation
on investments during the
year 14,724 129,570 140,918
------- -------- --------
Net realized and unrealized
capital gain (loss) on
investments 15,360 138,772 150,821
------- -------- --------
Net increase (decrease) in
net assets from operations $17,000 $142,883 $155,014
======= ======== ========
HARTFORD
DIVIDEND HARTFORD
AND GROWTH GROWTH
HLS FUND HLS FUND
----------------------------- -------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $29,857 $ --
Expenses:
Mortality and expense risk
charge (4,280) (526)
Other expense charge (1,473) (97)
-------- -------
Net investment income (loss) 24,104 (623)
-------- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 28,846 --
Realized capital gain (loss)
on investments 8,284 301
Change in unrealized
appreciation/ depreciation
on investments during the
year 108,373 15,693
-------- -------
Net realized and unrealized
capital gain (loss) on
investments 145,503 15,994
-------- -------
Net increase (decrease) in
net assets from operations $169,607 $15,371
======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-21
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
HARTFORD HARTFORD INTERNATIONAL
HIGH YIELD INDEX OPPORTUNITIES
HLS FUND HLS FUND HLS FUND
-------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $251 $53,332 $6,828
Expenses:
Mortality and expense risk charge (26) (8,469) (1,580)
Other expense charge (11) (4,436) (602)
---- -------- -------
Net investment income (loss) 214 40,427 4,646
---- -------- -------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- -- --
Realized capital gain (loss) on
investments 100 23,164 3,442
Change in unrealized
appreciation/depreciation on
investments during the year 140 282,462 63,464
---- -------- -------
Net realized and unrealized
capital gain (loss) on
investments 240 305,626 66,906
---- -------- -------
Net increase (decrease) in net
assets from operations $454 $346,053 $71,552
==== ======== =======
HARTFORD HARTFORD
PORTFOLIO TOTAL
DIVERSIFIER RETURN BOND
HLS FUND HLS FUND
------------------------------------ ------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $139,904 $28,207
Expenses:
Mortality and expense risk charge (76,885) (2,607)
Other expense charge (24,695) (1,124)
----------- --------
Net investment income (loss) 38,324 24,476
----------- --------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- --
Realized capital gain (loss) on
investments (17,486) (9,268)
Change in unrealized
appreciation/depreciation on
investments during the year (1,427,547) (16,795)
----------- --------
Net realized and unrealized
capital gain (loss) on
investments (1,445,033) (26,063)
----------- --------
Net increase (decrease) in net
assets from operations $(1,406,709) $(1,587)
=========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-22
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD HUNTINGTON VA
VALUE DIVIDEND HUNTINGTON VA
HLS FUND CAPTURE FUND GROWTH FUND
---------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $4,404 $13,673 $51
Expenses:
Mortality and expense
risk charge (722) (900) (6)
Other expense charge (185) (401) (3)
------- ------- ----
Net investment income
(loss) 3,497 12,372 42
------- ------- ----
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- -- --
Realized capital gain
(loss) on investments 1,003 364 21
Change in unrealized
appreciation/
depreciation on
investments during the
year 18,455 15,115 437
------- ------- ----
Net realized and
unrealized capital gain
(loss) on investments 19,458 15,479 458
------- ------- ----
Net increase (decrease)
in net assets from
operations $22,955 $27,851 $500
======= ======= ====
HUNTINGTON VA HUNTINGTON VA
INCOME INTERNATIONAL
EQUITY FUND EQUITY FUND
--------------------------- ----------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $17,804 $3,269
Expenses:
Mortality and expense
risk charge (882) (461)
Other expense charge (392) (205)
------- -------
Net investment income
(loss) 16,530 2,603
------- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- --
Realized capital gain
(loss) on investments 514 757
Change in unrealized
appreciation/
depreciation on
investments during the
year 17,731 22,018
------- -------
Net realized and
unrealized capital gain
(loss) on investments 18,245 22,775
------- -------
Net increase (decrease)
in net assets from
operations $34,775 $25,378
======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-23
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HUNTINGTON VA HUNTINGTON VA
MID CORP MORTGAGE HUNTINGTON VA
AMERICA FUND SECURITIES FUND SITUS FUND
------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $105 $196 $25
Expenses:
Mortality and expense risk
charge (15) (9) (9)
Other expense charge (7) (4) (4)
---- ----- ----
Net investment income (loss) 83 183 12
---- ----- ----
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 793 -- --
Realized capital gain (loss)
on investments (1) -- 34
Change in unrealized
appreciation/ depreciation
on investments during the
year (82) (250) 697
---- ----- ----
Net realized and unrealized
capital gain (loss) on
investments 710 (250) 731
---- ----- ----
Net increase (decrease) in
net assets from operations $793 $(67) $743
==== ===== ====
INVESCO V.I.
BALANCED RISK INVESCO V.I.
ALLOCATION CORE
FUND EQUITY FUND
----------------------------- -------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $5,586 $3,793
Expenses:
Mortality and expense risk
charge (1,632) (1,105)
Other expense charge (443) (319)
-------- -------
Net investment income (loss) 3,511 2,369
-------- -------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 10,602 --
Realized capital gain (loss)
on investments (107) 1,328
Change in unrealized
appreciation/ depreciation
on investments during the
year (11,345) 33,508
-------- -------
Net realized and unrealized
capital gain (loss) on
investments (850) 34,836
-------- -------
Net increase (decrease) in
net assets from operations $2,661 $37,205
======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-24
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
INVESCO V.I. INVESCO V.I. INVESCO V.I.
INTERNATIONAL MID CAP CORE MONEY
GROWTH FUND EQUITY FUND MARKET FUND
----------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $12,917 $733 $7
Expenses:
Mortality and expense risk
charge (4,630) (630) (110)
Other expense charge (1,377) (171) (149)
-------- ------- -----
Net investment income (loss) 6,910 (68) (252)
-------- ------- -----
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions -- 10,194 --
Realized capital gain (loss) on
investments 7,094 (33) --
Change in unrealized
appreciation/ depreciation on
investments during the year 150,247 6,780 --
-------- ------- -----
Net realized and unrealized
capital gain (loss) on
investments 157,341 16,941 --
-------- ------- -----
Net increase (decrease) in net
assets from operations $164,251 $16,873 $(252)
======== ======= =====
INVESCO V.I. LORD ABBETT
SMALL CAP BOND-DEBENTURE
EQUITY FUND PORTFOLIO
-------------------------------- ---------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $ -- $21,630
Expenses:
Mortality and expense risk
charge (1,296) (991)
Other expense charge (356) (355)
------- --------
Net investment income (loss) (1,652) 20,284
------- --------
NET REALIZED AND UNREALIZED
CAPITAL GAIN (LOSS) ON
INVESTMENTS:
Capital gain distributions 2,418 8,216
Realized capital gain (loss) on
investments 3,414 2,122
Change in unrealized
appreciation/ depreciation on
investments during the year 50,987 (16,658)
------- --------
Net realized and unrealized
capital gain (loss) on
investments 56,819 (6,320)
------- --------
Net increase (decrease) in net
assets from operations $55,167 $13,964
======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-25
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
LORD ABBETT LORD ABBETT
FUNDAMENTAL GROWTH MFS GROWTH
EQUITY PORTFOLIO OPPORTUNITIES PORTFOLIO SERIES
---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $5,341 $ -- $1,393
Expenses:
Mortality and expense risk charge (5,331) (357) (3,601)
Other expense charge (1,632) (109) (1,350)
-------- ------- --------
Net investment income (loss) (1,622) (466) (3,558)
-------- ------- --------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions 279,040 31,878 8,508
Realized capital gain (loss) on
investments 6,053 597 24,355
Change in unrealized appreciation/
depreciation on investments during
the year (58,091) (16,019) 207,310
-------- ------- --------
Net realized and unrealized capital
gain (loss) on investments 227,002 16,456 240,173
-------- ------- --------
Net increase (decrease) in net
assets from operations $225,380 $15,990 $236,615
======== ======= ========
MFS INVESTORS MFS NEW
TRUST SERIES DISCOVERY SERIES
-------------------------------------- --------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $2,762 $ --
Expenses:
Mortality and expense risk charge (1,117) (1,611)
Other expense charge (381) (451)
------- -------
Net investment income (loss) 1,264 (2,062)
------- -------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- 2,332
Realized capital gain (loss) on
investments 4,892 4,098
Change in unrealized appreciation/
depreciation on investments during
the year 44,096 70,964
------- -------
Net realized and unrealized capital
gain (loss) on investments 48,988 77,394
------- -------
Net increase (decrease) in net
assets from operations $50,252 $75,332
======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-26
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
TOPS MANAGED
MFS INTERNATIONAL RISK BALANCED
MFS VALUE VALUE ETF
SERIES PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $9,971 $2,518 $164,107
Expenses:
Mortality and expense risk charge (4,613) (947) (69,571)
Other expense charge (1,329) (289) (39,992)
-------- ------- ----------
Net investment income (loss) 4,029 1,282 54,544
-------- ------- ----------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions 3,059 -- --
Realized capital gain (loss) on
investments 5,867 2,778 16,203
Change in unrealized appreciation/
depreciation on investments during
the year 159,146 23,105 979,346
-------- ------- ----------
Net realized and unrealized capital
gain (loss) on investments 168,072 25,883 995,549
-------- ------- ----------
Net increase (decrease) in net
assets from operations $172,101 $27,165 $1,050,093
======== ======= ==========
TOPS MANAGED TOPS MANAGED
RISK GROWTH RISK MODERATE
ETF GROWTH ETF
PORTFOLIO PORTFOLIO
-------------------------------------- ------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $637,281 $470,486
Expenses:
Mortality and expense risk charge (223,987) (195,628)
Other expense charge (207,522) (134,023)
---------- ----------
Net investment income (loss) 205,772 140,835
---------- ----------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- --
Realized capital gain (loss) on
investments 7,936 3,796
Change in unrealized appreciation/
depreciation on investments during
the year 6,086,726 3,977,286
---------- ----------
Net realized and unrealized capital
gain (loss) on investments 6,094,662 3,981,082
---------- ----------
Net increase (decrease) in net
assets from operations $6,300,434 $4,121,917
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-27
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONCLUDED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
PIMCO PIMCO PIMCO VIT
EQS PATHFINDER ALL ASSET TOTAL RETURN
PORTFOLIO PORTFOLOIO PORTFOLIO
-------------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $28,412 $6,651 $12,655
Expenses:
Mortality and expense risk charge (2,802) (488) (2,757)
Other expense charge (1,104) (146) (1,746)
-------- ------- --------
Net investment income (loss) 24,506 6,017 8,152
-------- ------- --------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- -- 12,698
Realized capital gain (loss) on
investments 6,354 (1,053) (398)
Change in unrealized appreciation/
depreciation on investments during
the year 90,176 (4,464) (26,980)
-------- ------- --------
Net realized and unrealized capital
gain (loss) on investments 96,530 (5,517) (14,680)
-------- ------- --------
Net increase (decrease) in net
assets from operations $121,036 $500 $(6,528)
======== ======= ========
PUTNAM VT
EQUITY PUTNAM VT PUTNAM VT
INCOME FUND INCOME FUND VOYAGER FUND
-------------------------------------- --------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend distributions $ -- $ -- $ --
Expenses:
Mortality and expense risk charge (1,964) (1,840) (2,712)
Other expense charge (621) (596) (799)
------- ------- --------
Net investment income (loss) (2,585) (2,436) (3,511)
------- ------- --------
NET REALIZED AND UNREALIZED CAPITAL
GAIN (LOSS) ON INVESTMENTS:
Capital gain distributions -- -- --
Realized capital gain (loss) on
investments 7,930 610 13,159
Change in unrealized appreciation/
depreciation on investments during
the year 65,322 10,678 162,350
------- ------- --------
Net realized and unrealized capital
gain (loss) on investments 73,252 11,288 175,509
------- ------- --------
Net increase (decrease) in net
assets from operations $70,667 $8,852 $171,998
======= ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-28
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN CENTURY VP AMERICAN CENTURY VP AMERICAN CENTURY VP
GROWTH FUND MID CAP VALUE VALUE FUND
2013 2013 2013
-----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(2,534) $663 $1,567
Capital gains distributions 1,729 74 --
Realized capital gain (loss) on
sales of fund shares 42,188 932 3,476
Change in unrealized appreciation/
depreciation on investments during
the year 205,016 42,201 34,293
----------- --------- ---------
Net increase (decrease) in net
assets from operations 246,399 43,870 39,336
----------- --------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 2,256,393 479,006 498,365
Contract owner maintenance charges (13,340) (3,737) (1,273)
Terminations and withdrawals (3,361) (1,963) (729)
Annuity benefits (185,017) -- (53,548)
Transfers between subaccounts, net 10,895 88,804 84,853
----------- --------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 2,065,570 562,110 527,668
----------- --------- ---------
Net increase (decrease) in net
assets 2,311,969 605,980 567,004
Net assets at beginning of year -- -- --
----------- --------- ---------
Net assets at end of year $2,311,969 $605,980 $567,004
=========== ========= =========
AMERICAN FUNDS
GLOBAL
GROWTH AND AMERICAN FUNDS
INCOME FUND GROWTH FUND
2013 2013
-------------------------------------- -------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $17,967 $18,982
Capital gains distributions -- --
Realized capital gain (loss) on
sales of fund shares 2,075 16,788
Change in unrealized appreciation/
depreciation on investments during
the year 20,846 397,560
---------- -----------
Net increase (decrease) in net
assets from operations 40,888 433,330
---------- -----------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 626,452 3,770,386
Contract owner maintenance charges (975) (24,826)
Terminations and withdrawals (219) (15,745)
Annuity benefits -- (70,948)
Transfers between subaccounts, net (108,918) 640,078
---------- -----------
Net increase (decrease) in net
assets from contract owner
transactions 516,340 4,298,945
---------- -----------
Net increase (decrease) in net
assets 557,228 4,732,275
Net assets at beginning of year -- --
---------- -----------
Net assets at end of year $557,228 $4,732,275
========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-29
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS
GROWTH-INCOME FUND INTERNATIONAL FUND NEW WORLD FUND
2013 2013 2013
---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $23,571 $16,489 $1,132
Capital gains distributions -- -- 198
Realized capital gain (loss) on
sales of fund shares 15,685 5,708 44
Change in unrealized appreciation/
depreciation on investments during
the year 242,085 143,754 6,633
---------- ---------- ---------
Net increase (decrease) in net
assets from operations 281,341 165,951 8,007
---------- ---------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 2,208,693 1,556,694 158,164
Contract owner maintenance charges (16,428) (9,108) (111)
Terminations and withdrawals (12,014) (6,554) (1,176)
Annuity benefits -- (40,037) --
Transfers between subaccounts, net 637,526 280,616 13,222
---------- ---------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 2,817,777 1,781,611 170,099
---------- ---------- ---------
Net increase (decrease) in net
assets 3,099,118 1,947,562 178,106
Net assets at beginning of year -- -- --
---------- ---------- ---------
Net assets at end of year $3,099,118 $1,947,562 $178,106
========== ========== =========
AMERICAN FUNDS BLACKROCK
MANAGED RISK ASSET CAPITAL
ALLOCATION FUND APPRECIATION V.I.
2013 (B) 2013
-------------------------------------- ---------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $1,047,804 $(2,738)
Capital gains distributions -- 130,753
Realized capital gain (loss) on
sales of fund shares 28,795 12,599
Change in unrealized appreciation/
depreciation on investments during
the year 5,850,117 9,302
------------ ---------
Net increase (decrease) in net
assets from operations 6,926,716 149,916
------------ ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 138,092,258 759,858
Contract owner maintenance charges (500,258) (7,027)
Terminations and withdrawals (319,493) (4,847)
Annuity benefits (282,843) --
Transfers between subaccounts, net 20,446,161 80,257
------------ ---------
Net increase (decrease) in net
assets from contract owner
transactions 157,435,825 828,241
------------ ---------
Net increase (decrease) in net
assets 164,362,541 978,157
Net assets at beginning of year -- --
------------ ---------
Net assets at end of year $164,362,541 $978,157
============ =========
(b) Name change. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-30
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
BLACKROCK BLACKROCK BLACKROCK
EQUITY GLOBAL HIGH
DIVIDEND V.I. ALLOCATION V.I. YIELD V.I. FUND
2013 2013 2013
------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $10,622 $9,043 $4,929
Capital gains distributions 23,209 44,613 --
Realized capital gain (loss) on
sales of fund shares 5,095 1,370 393
Change in unrealized appreciation/
depreciation on investments during
the year 97,389 4,854 7,397
---------- ---------- --------
Net increase (decrease) in net
assets from operations 136,315 59,880 12,719
---------- ---------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,195,840 926,411 440,192
Contract owner maintenance charges (10,927) (3,048) (989)
Terminations and withdrawals (7,461) (11,796) (566)
Annuity benefits -- (35,958) (38,369)
Transfers between subaccounts, net 362,398 313,036 71,401
---------- ---------- --------
Net increase (decrease) in net
assets from contract owner
transactions 1,539,850 1,188,645 471,669
---------- ---------- --------
Net increase (decrease) in net
assets 1,676,165 1,248,525 484,388
Net assets at beginning of year -- -- --
---------- ---------- --------
Net assets at end of year $1,676,165 $1,248,525 $484,388
========== ========== ========
FORETHOUGHT
BLACKROCK AMERICAN FUNDS
U.S. GOVERNMENT MANAGED RISK
BOND V.I. FUND PORTFOLIO
2013 2013 (A)
-------------------------------------- -------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(37) $(2,640)
Capital gains distributions 88 --
Realized capital gain (loss) on
sales of fund shares (94) --
Change in unrealized appreciation/
depreciation on investments during
the year (575) 90,298
-------- -----------
Net increase (decrease) in net
assets from operations (618) 87,658
-------- -----------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 113,285 6,318,939
Contract owner maintenance charges (1) --
Terminations and withdrawals (14,697) (361)
Annuity benefits -- --
Transfers between subaccounts, net 550 56,254
-------- -----------
Net increase (decrease) in net
assets from contract owner
transactions 99,137 6,374,832
-------- -----------
Net increase (decrease) in net
assets 98,519 6,462,490
Net assets at beginning of year -- --
-------- -----------
Net assets at end of year $98,519 $6,462,490
======== ===========
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-31
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FORETHOUGHT FORETHOUGHT FORETHOUGHT
BLACKROCK GLOBAL INDEX MANAGED SELECT ADVISOR
ALLOCATION MANAGED RISK RISK MANAGED RISK
PORTFOLIO PORTFOLIO PORTFOLIO
2013 (A) 2013 (A) 2013 (A)
----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(3,264) $(346) $(870)
Capital gains distributions -- -- --
Realized capital gain (loss) on
sales of fund shares (2) -- 2
Change in unrealized appreciation/
depreciation on investments during
the year 98,865 9,821 31,294
---------- ---------- ----------
Net increase (decrease) in net
assets from operations 95,599 9,475 30,426
---------- ---------- ----------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 7,667,415 1,166,204 2,084,998
Contract owner maintenance charges -- -- --
Terminations and withdrawals (858) (2,339) (2,213)
Annuity benefits -- -- --
Transfers between subaccounts, net 655,302 78,411 291,256
---------- ---------- ----------
Net increase (decrease) in net
assets from contract owner
transactions 8,321,859 1,242,276 2,374,041
---------- ---------- ----------
Net increase (decrease) in net
assets 8,417,458 1,251,751 2,404,467
Net assets at beginning of year -- -- --
---------- ---------- ----------
Net assets at end of year $8,417,458 $1,251,751 $2,404,467
========== ========== ==========
FORETHOUGHT
WMC RESEARCH FRANKLIN
MANAGED RISK INCOME
PORTFOLIO SECURITIES FUND
2013 (A) 2013
-------------------------------------- ----------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(588) $(614)
Capital gains distributions -- --
Realized capital gain (loss) on
sales of fund shares 2 19
Change in unrealized appreciation/
depreciation on investments during
the year 25,416 17,282
---------- --------
Net increase (decrease) in net
assets from operations 24,830 16,687
---------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,433,945 398,846
Contract owner maintenance charges (1,250) (71)
Terminations and withdrawals (360) (86)
Annuity benefits -- --
Transfers between subaccounts, net 356,111 (60)
---------- --------
Net increase (decrease) in net
assets from contract owner
transactions 1,788,446 398,629
---------- --------
Net increase (decrease) in net
assets 1,813,276 415,316
Net assets at beginning of year -- --
---------- --------
Net assets at end of year $1,813,276 $415,316
========== ========
(a) New subaccount. See Note 1.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-32
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
FRANKLIN FRANKLIN FRANKLIN
RISING SMALL CAP STRATEGIC
DIVIDENDS VALUE INCOME
SECURITIES FUND SECURITIES FUND SECURITIES FUND
2013 2013 2013
----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $761 $(236) $2,051
Capital gains distributions -- 3,284 680
Realized capital gain (loss) on
sales of fund shares 6,162 6,775 (562)
Change in unrealized
appreciation/depreciation on
investments during the year 77,993 81,170 2,748
---------- -------- --------
Net increase (decrease) in net
assets from operations 84,916 90,993 4,917
---------- -------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 758,304 641,129 329,637
Contract owner maintenance charges (7,467) (4,236) (721)
Terminations and withdrawals (2,986) (2,773) (413)
Annuity benefits -- (16,011) (22,848)
Transfers between subaccounts, net 226,978 139,752 32,981
---------- -------- --------
Net increase (decrease) in net
assets from contract owner
transactions 974,829 757,861 338,636
---------- -------- --------
Net increase (decrease) in net
assets 1,059,745 848,854 343,553
Net assets at beginning of year -- -- --
---------- -------- --------
Net assets at end of year $1,059,745 $848,854 $343,553
========== ======== ========
TEMPLETON
MUTUAL SHARES FOREIGN
SECURITIES FUND SECURITIES FUND
2013 2013
-------------------------------------- ----------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $15,351 $1,053
Capital gains distributions -- --
Realized capital gain (loss) on
sales of fund shares 8,725 3,450
Change in unrealized
appreciation/depreciation on
investments during the year 141,697 60,698
---------- --------
Net increase (decrease) in net
assets from operations 165,773 65,201
---------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,490,872 642,917
Contract owner maintenance charges (15,797) (4,842)
Terminations and withdrawals (6,409) (5,043)
Annuity benefits -- --
Transfers between subaccounts, net 733,138 60,762
---------- --------
Net increase (decrease) in net
assets from contract owner
transactions 2,201,804 693,794
---------- --------
Net increase (decrease) in net
assets 2,367,577 758,995
Net assets at beginning of year -- --
---------- --------
Net assets at end of year $2,367,577 $758,995
========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-33
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
TEMPLETON TEMPLETON CAPITAL
GLOBAL BOND GROWTH APPRECIATION
SECURITIES FUND SECURITIES FUND HLS FUND
2013 2013 2013
-----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $1,640 $4,111 $4,193
Capital gains distributions 1,299 -- 3,397
Realized capital gain (loss) on
sales of fund shares (663) 9,202 6,506
Change in unrealized
appreciation/depreciation on
investments during the year 14,724 129,570 140,918
----------- ----------- -----------
Net increase (decrease) in net
assets from operations 17,000 142,883 155,014
----------- ----------- -----------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 585,713 1,070,639 1,107,191
Contract owner maintenance charges (3,639) (11,096) (8,238)
Terminations and withdrawals (2,135) (4,404) (3,626)
Annuity benefits (38,387) -- --
Transfers between subaccounts, net 586,919 333,012 76,204
----------- ----------- -----------
Net increase (decrease) in net
assets from contract owner
transactions 1,128,471 1,388,151 1,171,531
----------- ----------- -----------
Net increase (decrease) in net
assets 1,145,471 1,531,034 1,326,545
Net assets at beginning of year -- -- --
----------- ----------- -----------
Net assets at end of year $1,145,471 $1,531,034 $1,326,545
=========== =========== ===========
HARTFORD
DIVIDEND HARTFORD
AND GROWTH GROWTH
HLS FUND HLS FUND
2013 2013
-------------------------------------- -----------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $24,104 $(623)
Capital gains distributions 28,846 --
Realized capital gain (loss) on
sales of fund shares 8,284 301
Change in unrealized
appreciation/depreciation on
investments during the year 108,373 15,693
----------- --------
Net increase (decrease) in net
assets from operations 169,607 15,371
----------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,702,767 139,096
Contract owner maintenance charges (9,638) (118)
Terminations and withdrawals (5,243) (1,097)
Annuity benefits (61,507) --
Transfers between subaccounts, net 54,469 16,387
----------- --------
Net increase (decrease) in net
assets from contract owner
transactions 1,680,848 154,268
----------- --------
Net increase (decrease) in net
assets 1,850,455 169,639
Net assets at beginning of year -- --
----------- --------
Net assets at end of year $1,850,455 $169,639
=========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-34
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD
HARTFORD HARTFORD INTERNATIONAL
HIGH YIELD INDEX OPPORTUNITIES
HLS FUND HLS FUND HLS FUND
2013 2013 2013
-----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income (loss) $214 $40,427 $4,646
Capital gains distributions -- -- --
Realized capital gain (loss)
on sales of fund shares 100 23,164 3,442
Change in unrealized
appreciation/depreciation
on investments during the
year 140 282,462 63,464
-------- ---------- ----------
Net increase (decrease) in
net assets from operations 454 346,053 71,552
-------- ---------- ----------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 6,000 2,214,505 660,835
Contract owner maintenance
charges (24) (32,227) (4,506)
Terminations and withdrawals -- (23,150) (1,868)
Annuity benefits -- -- (31,650)
Transfers between
subaccounts, net 13,489 1,400,793 44,031
-------- ---------- ----------
Net increase (decrease) in
net assets from contract
owner transactions 19,465 3,559,921 666,842
-------- ---------- ----------
Net increase (decrease) in
net assets 19,919 3,905,974 738,394
Net assets at beginning of
year -- -- --
-------- ---------- ----------
Net assets at end of year $19,919 $3,905,974 $738,394
======== ========== ==========
HARTFORD HARTFORD
PORTFOLIO TOTAL
DIVERSIFIER RETURN BOND
HLS FUND HLS FUND
2013 2013
------------------------------ --------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income (loss) $38,324 $24,476
Capital gains distributions -- --
Realized capital gain (loss)
on sales of fund shares (17,486) (9,268)
Change in unrealized
appreciation/depreciation
on investments during the
year (1,427,547) (16,795)
----------- ----------
Net increase (decrease) in
net assets from operations (1,406,709) (1,587)
----------- ----------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 26,493,450 1,155,818
Contract owner maintenance
charges (247,413) (2,974)
Terminations and withdrawals (152,836) (9,725)
Annuity benefits -- (125,561)
Transfers between
subaccounts, net 9,427,348 41,576
----------- ----------
Net increase (decrease) in
net assets from contract
owner transactions 35,520,549 1,059,134
----------- ----------
Net increase (decrease) in
net assets 34,113,840 1,057,547
Net assets at beginning of
year -- --
----------- ----------
Net assets at end of year $34,113,840 $1,057,547
=========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-35
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HARTFORD HUNTINGTON VA
VALUE DIVIDEND HUNTINGTON VA
HLS FUND CAPTURE FUND GROWTH FUND
2013 2013 2013
-----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $3,497 $12,372 $42
Capital gains distributions -- -- --
Realized capital gain
(loss) on sales of fund
shares 1,003 364 21
Change in unrealized
appreciation/ depreciation
on investments during the
year 18,455 15,115 437
-------- -------- ------
Net increase (decrease) in
net assets from operations 22,955 27,851 500
-------- -------- ------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 283,833 412,861 4,959
Contract owner maintenance
charges (1,250) (3,927) (5)
Terminations and
withdrawals (4,124) (1,411) --
Annuity benefits -- -- --
Transfers between
subaccounts, net 31,688 28,682 (277)
-------- -------- ------
Net increase (decrease) in
net assets from contract
owner transactions 310,147 436,205 4,677
-------- -------- ------
Net increase (decrease) in
net assets 333,102 464,056 5,177
Net assets at beginning of
year -- -- --
-------- -------- ------
Net assets at end of year $333,102 $464,056 $5,177
======== ======== ======
HUNTINGTON VA HUNTINGTON VA
INCOME INTERNATIONAL
EQUITY FUND EQUITY FUND
2013 2013
----------------------------- --------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $16,530 $2,603
Capital gains distributions -- --
Realized capital gain
(loss) on sales of fund
shares 514 757
Change in unrealized
appreciation/ depreciation
on investments during the
year 17,731 22,018
-------- --------
Net increase (decrease) in
net assets from operations 34,775 25,378
-------- --------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 395,926 214,838
Contract owner maintenance
charges (3,894) (1,986)
Terminations and
withdrawals (1,412) (708)
Annuity benefits -- --
Transfers between
subaccounts, net 21,142 6,000
-------- --------
Net increase (decrease) in
net assets from contract
owner transactions 411,762 218,144
-------- --------
Net increase (decrease) in
net assets 446,537 243,522
Net assets at beginning of
year -- --
-------- --------
Net assets at end of year $446,537 $243,522
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-36
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
HUNTINGTON VA HUNTINGTON VA
MID CORP MORTGAGE HUNTINGTON VA
AMERICA FUND SECURITIES FUND SITUS FUND
2013 2013 2013
-----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $83 $183 $12
Capital gains
distributions 793 -- --
Realized capital gain
(loss) on sales of fund
shares (1) -- 34
Change in unrealized
appreciation/
depreciation on
investments during the
year (82) (250) 697
------- ------ ------
Net increase (decrease) in
net assets from
operations 793 (67) 743
------- ------ ------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 13,024 7,499 7,782
Contract owner maintenance
charges (24) (6) (13)
Terminations and
withdrawals -- -- --
Annuity benefits -- -- --
Transfers between
subaccounts, net (165) 363 (402)
------- ------ ------
Net increase (decrease) in
net assets from contract
owner transactions 12,835 7,856 7,367
------- ------ ------
Net increase (decrease) in
net assets 13,628 7,789 8,110
Net assets at beginning of
year -- -- --
------- ------ ------
Net assets at end of year $13,628 $7,789 $8,110
======= ====== ======
INVESCO V.I.
BALANCED RISK INVESCO V.I.
ALLOCATION CORE
FUND EQUITY FUND
2013 2013
---------------------------- --------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $3,511 $2,369
Capital gains
distributions 10,602 --
Realized capital gain
(loss) on sales of fund
shares (107) 1,328
Change in unrealized
appreciation/
depreciation on
investments during the
year (11,345) 33,508
-------- --------
Net increase (decrease) in
net assets from
operations 2,661 37,205
-------- --------
FROM CONTRACT OWNER
TRANSACTIONS:
Variable annuity deposits 505,390 448,144
Contract owner maintenance
charges (1,574) (2,290)
Terminations and
withdrawals (8,864) (6,193)
Annuity benefits -- --
Transfers between
subaccounts, net 156,855 76,309
-------- --------
Net increase (decrease) in
net assets from contract
owner transactions 651,807 515,970
-------- --------
Net increase (decrease) in
net assets 654,468 553,175
Net assets at beginning of
year -- --
-------- --------
Net assets at end of year $654,468 $553,175
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-37
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
INVESCO V.I. INVESCO V.I. INVESCO V.I.
INTERNATIONAL MID CAP CORE MONEY
GROWTH FUND EQUITY FUND MARKET FUND
2013 2013 2013
-----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $6,910 $(68) $(252)
Capital gains distributions -- 10,194 --
Realized capital gain (loss) on
sales of fund shares 7,094 (33) --
Change in unrealized appreciation/
depreciation on investments during
the year 150,247 6,780 --
---------- -------- ---------
Net increase (decrease) in net
assets from operations 164,251 16,873 (252)
---------- -------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,708,936 260,778 453,620
Contract owner maintenance charges (11,421) (490) (1)
Terminations and withdrawals (4,180) (305) (88,504)
Annuity benefits (23,800) (15,591) --
Transfers between subaccounts, net 223,825 12,646 (281,399)
---------- -------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 1,893,360 257,038 83,716
---------- -------- ---------
Net increase (decrease) in net
assets 2,057,611 273,911 83,464
Net assets at beginning of year -- -- --
---------- -------- ---------
Net assets at end of year $2,057,611 $273,911 $83,464
========== ======== =========
INVESCO V.I. LORD ABBETT
SMALL CAP BOND-DEBENTURE
EQUITY FUND PORTFOLIO
2013 2013
-------------------------------------- ----------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(1,652) $20,284
Capital gains distributions 2,418 8,216
Realized capital gain (loss) on
sales of fund shares 3,414 2,122
Change in unrealized appreciation/
depreciation on investments during
the year 50,987 (16,658)
-------- --------
Net increase (decrease) in net
assets from operations 55,167 13,964
-------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 563,247 421,540
Contract owner maintenance charges (1,174) (1,243)
Terminations and withdrawals (3,294) --
Annuity benefits (23,629) (81,226)
Transfers between subaccounts, net 6,473 117,977
-------- --------
Net increase (decrease) in net
assets from contract owner
transactions 541,623 457,048
-------- --------
Net increase (decrease) in net
assets 596,790 471,012
Net assets at beginning of year -- --
-------- --------
Net assets at end of year $596,790 $471,012
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-38
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
LORD ABBETT LORD ABBETT
FUNDAMENTAL GROWTH OPPORTUNITIES MFS GROWTH
EQUITY PORTFOLIO PORTFOLIO SERIES
2013 2013 2013
------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(1,622) $(466) $(3,558)
Capital gains distributions 279,040 31,878 8,508
Realized capital gain (loss) on
sales of fund shares 6,053 597 24,355
Change in unrealized appreciation/
depreciation on investments during
the year (58,091) (16,019) 207,310
---------- -------- ---------
Net increase (decrease) in net
assets from operations 225,380 15,990 236,615
---------- -------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 2,107,388 169,698 1,400,115
Contract owner maintenance charges (12,013) (282) (9,167)
Terminations and withdrawals (5,658) (72) (4,832)
Annuity benefits (69,331) (15,702) (139,062)
Transfers between subaccounts, net 175,495 33,196 197,075
---------- -------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 2,195,881 186,838 1,444,129
---------- -------- ---------
Net increase (decrease) in net
assets 2,421,261 202,828 1,680,744
Net assets at beginning of year -- -- --
---------- -------- ---------
Net assets at end of year $2,421,261 $202,828 $1,680,744
========== ======== =========
MFS INVESTORS MFS NEW
TRUST SERIES DISCOVERY SERIES
2013 2013
-------------------------------------- ----------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $1,264 $(2,062)
Capital gains distributions -- 2,332
Realized capital gain (loss) on
sales of fund shares 4,892 4,098
Change in unrealized appreciation/
depreciation on investments during
the year 44,096 70,964
-------- --------
Net increase (decrease) in net
assets from operations 50,252 75,332
-------- --------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 490,910 563,171
Contract owner maintenance charges (1,257) (3,580)
Terminations and withdrawals (732) (2,576)
Annuity benefits (54,317) --
Transfers between subaccounts, net 57,460 95,571
-------- --------
Net increase (decrease) in net
assets from contract owner
transactions 492,064 652,586
-------- --------
Net increase (decrease) in net
assets 542,316 727,918
Net assets at beginning of year -- --
-------- --------
Net assets at end of year $542,316 $727,918
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-39
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
TOPS MANAGED
MFS INTERNATIONAL RISK BALANCED
MFS VALUE VALUE ETF
SERIES PORTFOLIO PORTFOLIO
2013 2013 2013
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $4,029 $1,282 $54,544
Capital gains distributions 3,059 -- --
Realized capital gain (loss) on
sales of fund shares 5,867 2,778 16,203
Change in unrealized appreciation/
depreciation on investments during
the year 159,146 23,105 979,346
---------- --------- -----------
Net increase (decrease) in net
assets from operations 172,101 27,165 1,050,093
---------- --------- -----------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,514,895 346,396 33,850,255
Contract owner maintenance charges (14,185) (1,008) (201,181)
Terminations and withdrawals (3,656) (1,386) (131,783)
Annuity benefits -- (23,527) --
Transfers between subaccounts, net 175,778 165,510 5,950,113
---------- --------- -----------
Net increase (decrease) in net
assets from contract owner
transactions 1,672,832 485,985 39,467,404
---------- --------- -----------
Net increase (decrease) in net
assets 1,844,933 513,150 40,517,497
Net assets at beginning of year -- -- --
---------- --------- -----------
Net assets at end of year $1,844,933 $513,150 $40,517,497
========== ========= ===========
TOPS MANAGED TOPS MANAGED
RISK GROWTH RISK MODERATE
ETF GROWTH ETF
PORTFOLIO PORTFOLIO
2013 2013
-------------------------------------- ----------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $205,772 $140,835
Capital gains distributions -- --
Realized capital gain (loss) on
sales of fund shares 7,936 3,796
Change in unrealized appreciation/
depreciation on investments during
the year 6,086,726 3,977,286
------------ ------------
Net increase (decrease) in net
assets from operations 6,300,434 4,121,917
------------ ------------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 118,412,943 92,034,416
Contract owner maintenance charges (500,358) (459,074)
Terminations and withdrawals (172,854) (300,440)
Annuity benefits (35,832) (406,459)
Transfers between subaccounts, net 9,126,335 6,184,359
------------ ------------
Net increase (decrease) in net
assets from contract owner
transactions 126,830,234 97,052,802
------------ ------------
Net increase (decrease) in net
assets 133,130,668 101,174,719
Net assets at beginning of year -- --
------------ ------------
Net assets at end of year $133,130,668 $101,174,719
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-40
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED)
FOR THE PERIOD MARCH 15, 2013 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
PIMCO PIMCO PIMCO VIT
EQS PATHFINDER ALL ASSET TOTAL RETURN
PORTFOLIO PORTFOLOIO PORTFOLIO
2013 2013 2013
----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $24,506 $6,017 $8,152
Capital gains distributions -- -- 12,698
Realized capital gain (loss) on
sales of fund shares 6,354 (1,053) (398)
Change in unrealized appreciation/
depreciation on investments during
the year 90,176 (4,464) (26,980)
--------- -------- ---------
Net increase (decrease) in net
assets from operations 121,036 500 (6,528)
--------- -------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 1,064,654 254,133 1,375,339
Contract owner maintenance charges (10,443) (522) (2,773)
Terminations and withdrawals (7,109) -- (893)
Annuity benefits -- (33,925) (37,911)
Transfers between subaccounts, net 221,639 28,885 187,361
--------- -------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 1,268,741 248,571 1,521,123
--------- -------- ---------
Net increase (decrease) in net
assets 1,389,777 249,071 1,514,595
Net assets at beginning of year -- -- --
--------- -------- ---------
Net assets at end of year $1,389,777 $249,071 $1,514,595
========= ======== =========
PUTNAM VT
EQUITY PUTNAM VT PUTNAM VT
INCOME FUND INCOME FUND VOYAGER FUND
2013 2013 2013
-------------------------------------- ------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $(2,585) $(2,436) $(3,511)
Capital gains distributions -- -- --
Realized capital gain (loss) on
sales of fund shares 7,930 610 13,159
Change in unrealized appreciation/
depreciation on investments during
the year 65,322 10,678 162,350
--------- -------- ---------
Net increase (decrease) in net
assets from operations 70,667 8,852 171,998
--------- -------- ---------
FROM CONTRACT OWNER TRANSACTIONS:
Variable annuity deposits 793,699 717,359 1,004,496
Contract owner maintenance charges (2,886) (2,157) (7,015)
Terminations and withdrawals (5,092) (822) (3,296)
Annuity benefits (110,833) (45,712) --
Transfers between subaccounts, net 109,242 253,916 95,665
--------- -------- ---------
Net increase (decrease) in net
assets from contract owner
transactions 784,130 922,584 1,089,850
--------- -------- ---------
Net increase (decrease) in net
assets 854,797 931,436 1,261,848
Net assets at beginning of year -- -- --
--------- -------- ---------
Net assets at end of year $854,797 $931,436 $1,261,848
========= ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-41
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
-------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Separate Account A (the Account) is a separate account of Forethought Life
Insurance Company (FLIC). Purchase payments are allocated to one or more of
the subaccounts that comprise the Account. The Account is registered as a
unit investment trust under the Investment Company Act of 1940, as amended.
As directed by the owners, amounts may be invested in a designated mutual
fund as follows:
[Enlarge/Download Table]
MUTUAL FUND CLASS INVESTMENT ADVISER SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
American Century VP Growth Fund Class II American Century Investment --
Management, Inc.
American Century VP Mid Cap Value Class II American Century Investment --
Management, Inc.
American Century VP Value Fund Class II American Century Investment --
Management, Inc.
American Funds Global Growth and Class 4 Capital Research and Management --
Income Fund Company
American Funds Growth Fund Class 4 Capital Research and Management --
Company
American Funds Growth-Income Fund Class 4 Capital Research and Management --
Company
American Funds International Fund Class 4 Capital Research and Management --
Company
American Funds New World Fund Class 4 Capital Research and Management --
Company
American Funds Managed Risk Asset Class P2 Capital Research and Management Millman Financial Risk Management LLC
Allocation Fund Company
BlackRock Capital Appreciation V.I. Class III BlackRock Advisors LLC BlackRock Investment Management, LLC
BlackRock Equity Dividend V.I. Class III BlackRock Advisors LLC BlackRock Investment Management, LLC
BlackRock Global Allocation V.I. Class III BlackRock Advisors LLC BlackRock Investment Management, LLC
BlackRock High Yield V.I. Fund Class III BlackRock Advisors LLC Blackrock Financial Management, Inc
BlackRock U.S. Government Bond V.I. Class III BlackRock Advisors LLC Blackrock Financial Management, Inc
Fund
Forethought American Funds Managed Series I Forethought Investment Advisors, LLC Millman Financial Risk Management, LLC
Risk Portfolio
Forethought BlackRock Global Series I Forethought Investment Advisors, LLC Millman Financial Risk Management, LLC
Allocation Managed Risk Portfolio
Forethought Index Managed Risk Series I Forethought Investment Advisors, LLC Millman Financial Risk Management, LLC
Portfolio
Forethought Select Advisor Managed Series I Forethought Investment Advisors, LLC Millman Financial Risk Management, LLC
Risk Portfolio
SA-42
-------------------------------------------------------------------------------
[Enlarge/Download Table]
MUTUAL FUND CLASS INVESTMENT ADVISER SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
Forethought WMC Research Managed Series I Forethought Investment Advisors, LLC Millman Financial Risk Management, LLC
Risk Portfolio Wellington Management Company, LLC
Franklin Income Securities Fund Class 4 Franklin Advisers, Inc. --
Franklin Rising Dividends Class 4 Franklin Advisory Services, LLC --
Securities Fund
Franklin Small Cap Value Securities Class 4 Franklin Advisory Services, LLC --
Fund
Franklin Strategic Income Class 4 Franklin Advisers, Inc. --
Securities Fund
Mutual Shares Securities Fund Class 4 Franklin Mutual Advisers, LLC --
Templeton Foreign Securities Fund Class 4 Templeton Investment Counsel, LLC --
Templeton Global Bond Securities Class 4 Franklin Advisers, Inc. --
Fund
Templeton Growth Securities Fund Class 4 Templeton Global Advisors Ltd --
Hartford Capital Appreciation HLS Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Fund
Hartford Dividend and Growth HLS Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Fund
Hartford Growth HLS Fund Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Hartford High Yield HLS Fund Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Hartford Index HLS Fund Class IB Hartford Funds Management Company, LLC Hartford Investment Management Company
Hartford International Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Opportunities HLS Fund
Hartford Portfolio Diversifier HLS Class IB Hartford Funds Management Company, LLC Hartford Investment Management Company
Fund
Hartford Total Return Bond HLS Fund Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Hartford Value HLS Fund Class IB Hartford Funds Management Company, LLC Wellington Management Company, LLP
Huntington VA Dividend Capture Fund -- Huntington Asset Advisors, Inc --
Huntington VA Growth Fund -- Huntington Asset Advisors, Inc --
Huntington VA Income Equity Fund -- Huntington Asset Advisors, Inc --
Huntington VA International Equity -- Huntington Asset Advisors, Inc --
Fund
Huntington VA Mid Corp America Fund -- Huntington Asset Advisors, Inc --
Huntington VA Mortgage Securities -- Huntington Asset Advisors, Inc --
Fund
Huntington VA Rotating Markets Fund -- Huntington Asset Advisors, Inc --
Huntington VA Situs Fund -- Huntington Asset Advisors, Inc --
Invesco V.I. Balanced Risk Series II Invesco Advisers, Inc. --
Allocation Fund
Invesco V.I. Core Equity Fund Series II Invesco Advisers, Inc. --
Invesco V.I. International Growth Series II Invesco Advisers, Inc. --
Fund
Invesco V.I. Mid Cap Core Equity Series II Invesco Advisers, Inc. --
Fund
SA-43
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
MUTUAL FUND CLASS INVESTMENT ADVISER SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Money Market Fund Series I Invesco Advisers, Inc. --
Invesco V.I. Small Cap Equity Fund Series II Invesco Advisers, Inc. --
Lord Abbett Bond-Debenture Class VC Lord, Abbett & Co. LLC --
Portfolio
Lord Abbett Fundamental Equity Class VC Lord, Abbett & Co. LLC --
Portfolio
Lord Abbett Growth Opportunities Class VC Lord, Abbett & Co. LLC --
Portfolio
MFS Growth Series Service MFS Investment Management --
Class
MFS Investors Trust Series Service MFS Investment Management --
Class
MFS New Discovery Series Service MFS Investment Management --
Class
MFS Value Series Service MFS Investment Management --
Class
MFS International Value Portfolio Service MFS Investment Management --
Class
TOPS Managed Risk Balanced ETF Class 3 ValMark Advisers, Inc. Millman, Inc.
Portfolio
TOPS Managed Risk Growth ETF Class 3 ValMark Advisers, Inc. Millman, Inc.
Portfolio
TOPS Managed Risk Moderate Growth Class 3 ValMark Advisers, Inc. Millman, Inc.
ETF Portfolio
PIMCO EqS Pathfinder Portfolio Advisor PIMCO --
Class
PIMCO All Asset Portfoloio Advisor PIMCO --
Class
PIMCO VIT Total Return Portfolio Advisor PIMCO --
Class
Putnam VT Equity Income Fund Class IB Putnam Investment Management Company --
LLC
Putnam VT Income Fund Class IB Putnam Investment Management Company --
LLC
Putnam VT Voyager Fund Class IB Putnam Investment Management Company --
LLC
Under applicable insurance law, the assets and liabilities of the Account
are clearly identified and distinguished from FLIC's other assets and
liabilities. The portion of the Account's assets applicable to the variable
annuity contracts is not chargeable with liabilities arising out of any
other business FT may conduct.
Sixty-seven Subaccounts are currently offered by the Separate Account, the
following subaccount had no activity as indicated:
[Download Table]
SUBACCOUNT WITH NO ACTIVITY 2013
--------------------------------------------------------------------------------
Huntington VA Rotating Markets Fund X
SA-44
-------------------------------------------------------------------------------
All subaccounts reported activity from 3/15/2013 to 12/31/2013 except for
the following as indicated:
[Enlarge/Download Table]
INCEPTION DATE SUBACCOUNT
------------------------------------------------------------------------------------------------------
November 18, 2013 Forethought American Funds Managed Risk Portfolio
November 18, 2013 Forethought BlackRock Global Allocation Managed
Risk Portfolio
November 18, 2013 Forethought Index Managed Risk Portfolio
November 18, 2013 Forethought Select Advisor Managed Risk Portfolio
November 18, 2013 Forethought WMC Research Managed Risk Portfolio
During the current year the following subaccount name change was made
effective:
[Enlarge/Download Table]
DATE NEW NAME OLD NAME
--------------------------------------------------------------------------------------------------------------------------------
August 12, 2013 American Funds Managed Risk Asset Allocation Fund American Funds Protected Asset Allocation Fund
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the statement of net assets at
market value (net asset value of the underlying mutual fund). Investment
transactions are accounted for on the trade date. Realized capital gains and
losses on sales of investments are determined based on the average cost of
investments sold.
The cost of investment purchases and proceeds from investments sold for the year
ended December 31, 2013, were as follows:
[Download Table]
COST OF PROCEEDS
SUBACCOUNT PURCHASES FROM SALES
--------------------------------------------------------------------------------
American Century VP Growth Fund $2,980,114 $915,349
American Century VP Mid Cap Value 610,157 47,310
American Century VP Value Fund 651,135 121,900
American Funds Global Growth and Income Fund 696,430 162,123
American Funds Growth Fund 4,716,677 398,750
American Funds Growth-Income Fund 3,198,533 357,185
American Funds International Fund 1,992,477 194,377
American Funds New World Fund 174,594 3,165
American Funds Managed Risk Asset Allocation Fund 161,342,693 2,859,064
(b)
BlackRock Capital Appreciation V.I. 1,145,033 188,777
BlackRock Equity Dividend V.I. 1,837,739 264,058
BlackRock Global Allocation V.I. 1,298,580 56,279
BlackRock High Yield V.I. Fund 555,829 79,231
BlackRock U.S. Government Bond V.I. Fund 113,461 14,273
Forethought American Funds Managed Risk Portfolio 6,372,456 264
(a)
Forethought BlackRock Global Allocation Managed 8,320,465 1,870
Risk Portfolio (a)
Forethought Index Managed Risk Portfolio (a) 1,242,040 110
Forethought Select Advisor Managed Risk Portfolio 2,373,381 210
(a)
Forethought WMC Research Managed Risk Portfolio 1,789,407 1,549
(a)
Franklin Income Securities Fund 398,722 707
Franklin Rising Dividends Securities Fund 1,130,057 154,467
Franklin Small Cap Value Securities Fund 879,665 118,756
Franklin Strategic Income Securities Fund 389,762 48,395
Mutual Shares Securities Fund 2,555,579 338,424
Templeton Foreign Securities Fund 774,183 79,336
Templeton Global Bond Securities Fund 1,214,225 82,815
Templeton Growth Securities Fund 1,622,463 230,201
Hartford Capital Appreciation HLS Fund 1,279,242 100,121
SA-45
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Download Table]
COST OF PROCEEDS
SUBACCOUNT PURCHASES FROM SALES
--------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund $1,950,151 $216,353
Hartford Growth HLS Fund 162,147 8,502
Hartford High Yield HLS Fund 25,809 6,130
Hartford Index HLS Fund 4,383,102 782,754
Hartford International Opportunities HLS Fund 761,826 90,338
Hartford Portfolio Diversifier HLS Fund 36,718,676 1,159,803
Hartford Total Return Bond HLS Fund 1,512,927 429,317
Hartford Value HLS Fund 343,262 29,618
Huntington VA Dividend Capture Fund 468,523 19,946
Huntington VA Growth Fund 5,010 291
Huntington VA Income Equity Fund 452,164 23,872
Huntington VA International Equity Fund 235,694 14,947
Huntington VA Mid Corp America Fund 13,922 211
Huntington VA Mortgage Securities Fund 8,058 19
Huntington VA Situs Fund 7,807 428
Invesco V.I. Balanced Risk Allocation Fund 681,979 16,059
Invesco V.I. Core Equity Fund 562,323 43,984
Invesco V.I. International Growth Fund 2,059,554 159,284
Invesco V.I. Mid Cap Core Equity Fund 304,641 37,477
Invesco V.I. Money Market Fund 431,870 348,406
Invesco V.I. Small Cap Equity Fund 619,825 77,436
Lord Abbett Bond-Debenture Portfolio 652,869 167,321
Lord Abbett Fundamental Equity Portfolio 2,767,015 293,716
Lord Abbett Growth Opportunities Portfolio 250,577 32,327
MFS Growth Series 1,893,533 444,454
MFS Investors Trust Series 621,647 128,319
MFS New Discovery Series 720,974 68,118
MFS Value Series 1,903,781 223,861
MFS International Value Portfolio 600,851 113,584
TOPS Managed Risk Balanced ETF Portfolio 42,073,867 2,551,919
TOPS Managed Risk Growth ETF Portfolio 127,657,980 621,974
TOPS Managed Risk Moderate Growth ETF Portfolio 98,185,994 992,357
PIMCO EqS Pathfinder Portfolio 1,478,411 185,164
PIMCO All Asset Portfoloio 294,183 39,595
PIMCO VIT Total Return Portfolio 1,628,630 86,657
Putnam VT Equity Income Fund 1,033,713 252,168
Putnam VT Income Fund 1,115,957 195,809
Putnam VT Voyager Fund 1,248,795 162,456
(a) New subaccount. See Note 1.
(b) Name change. See Note 1.
SA-46
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ANNUITY RESERVES
As of December 31, 2013, annuity reserves have not been established, as
there are no contracts that have matured and are in the payout stage. Such
reserves would be computed on the basis of published mortality tables using
assumed interest rates that will provide reserves as prescribed by law. In
cases where the payout option selected is life contingent, Forethought
periodically recalculates the required annuity reserves, and any resulting
adjustment is either charged or credited to Forethought and not to the
Account.
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the
Account are reinvested in additional shares of each respective fund.
Dividend income and capital gains distributions are recorded as income on
the ex-dividend date.
FEDERAL INCOME TAXES
The operations of the Account are included in the federal income tax return
of Forethought, which is taxed as a life insurance company under the
provisions of the Internal Revenue Code (IRC). Under the current provisions
of the IRC, FT does not expect to incur federal income taxes on the
earnings of the Account to the extent the earnings are credited under
contracts. Based on this, no charge is being made currently to the Account
for federal income taxes. FT will review periodically the status of this
policy in the event of changes in the tax law.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
RECENTLY ADOPTED ACCOUNTING STANDARDS
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic
820): Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs, authoritative guidance that clarifies
and changes fair value measurement and disclosure requirements. This
guidance expands existing disclosure requirements for fair value
measurements and includes other amendments but does not require additional
fair value measurements. This guidance is effective for annual periods
beginning on or after December 15, 2011. The Account adopted the guidance
at its inception. The adoption of this guidance did not have a material
impact on the financial statements.
FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (an exit price). The fair value
hierarchy prioritizes the inputs to valuation techniques used to measure
fair value into three levels:
- LEVEL 1 -- Unadjusted quoted prices in active markets for identical
assets or liabilities.
- LEVEL 2 -- Inputs other than quoted prices within Level 1 that are
observable for the asset or liability, either directly or indirectly.
- LEVEL 3 -- Unobservable inputs for the asset or liability reflecting
internal assumptions.
The Account invests in shares of open-end mutual funds, which process
contract owner-directed purchases, sales and transfers on a daily basis at
the fund's computed net asset values (NAV). The fair value of the Account's
assets is based on the NAVs of mutual funds, which are obtained from the
custodian and reflect the fair values of the mutual fund investments. The
NAV is calculated daily and is based on the fair values of the underlying
securities.
Because the fund provides liquidity for the investments through purchases
and redemptions at NAV, this may represent the fair value of the investment
in the fund. That is, for an open-ended mutual fund, the fair value of an
investment in the fund would not be expected to be higher than the amount
that a new investor would be required to spend in order to directly invest
in the mutual fund. Similarly, the hypothetical seller of the investment
would not be expected to accept less in proceeds than it could receive by
directly redeeming its investment with the fund. As a result, the quoted
NAV of the mutual fund is to be considered quoted prices in active markets.
The Account's financial assets are recorded at fair value on the statements
of net assets and are categorized as Level 1 as of December 31, 2013, based
on the priority of the inputs to the valuation technique above. There were
no transfers between levels during the year ended December 31, 2013. The
Account had no financial liabilities as of December 31, 2013.
SA-47
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
2. VARIABLE ANNUITY CONTRACT CHARGES
[Enlarge/Download Table]
SEPARATE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY
CONTRACT VALUE EXCLUDING FIXED
ACCUMULATION FEATURE AND PERSONAL
PENSION ACCOUNT INVESTMENTS) B SHARE C SHARE L SHARE
--------------------------------------------------------------------------------------------
Mortality and Expense Risk Charge 0.45% 1.35% 0.80%
Administrative Charge 0.20% 0.20% 0.20%
Premium Based Charge 0.50% None 0.50%
Fund Facilitation Fee (1) 0.50% 0.50% 0.50%
Total Separate Account Annual
Expenses 1.65% 2.05% 2.00%
(1) Fee is applied daily to amounts invested in the following Sub-Accounts:
American Funds Insurance Series(R) -- Managed Risk Asset Allocation Fund
BlackRock High Yield V.I. Fund
BlackRock U.S. Government Bond V.I. Fund
Hartford Capital Appreciation HLS Fund
Hartford Index HLS Fund
Hartford Total Return Bond HLS Fund
Invesco V.I. Money Market Fund
PIMCO Total Return Portfolio
TOPSTM Managed Risk Balanced ETF Portfolio
TOPSTM Managed Risk Growth ETF Portfolio
TOPSTM Managed Risk Moderate Growth ETF Portfolio
Forethought Variable Insurance Trust American Funds(R) Managed Risk
Portfolio
Forethought Variable Insurance Trust BlackRock Global Allocation Managed
Risk Portfolio
Forethought Variable Insurance Trust Index Managed Risk Portfolio
Forethought Variable Insurance Trust Select Advisor Managed Risk Portfolio
Forethought Variable Insurance Trust WMC Research Managed Risk Portfolio
3. SUMMARY OF UNIT TRANSACTIONS
The changes in units outstanding for the periods December 31, 2013, were as
follows:
2013
--------------------
[Enlarge/Download Table]
UNITS UNITS NET INCREASE
SUBACCOUNT ISSUED REDEEMED (DECREASE)
-------------------------------------------------------------------------------------------
American Century VP Growth Fund 306,458 (118,678) 187,780
American Century VP Mid Cap Value 63,527 (13,779) 49,748
American Century VP Value Fund 59,216 (13,048) 46,168
American Funds Global Growth and
Income Fund 68,476 (21,115) 47,361
American Funds Growth Fund 473,206 (91,111) 382,095
American Funds Growth-Income Fund 306,414 (62,326) 244,088
American Funds International Fund 210,102 (43,156) 166,946
American Funds New World Fund 19,829 (3,338) 16,491
American Funds Managed Risk Asset
Allocation Fund (b) 18,093,007 (3,888,252) 14,204,755
BlackRock Capital Appreciation V.I. 105,863 (29,870) 75,993
BlackRock Equity Dividend V.I. 175,071 (33,366) 141,705
BlackRock Global Allocation V.I. 127,449 (14,825) 112,624
BlackRock High Yield V.I. Fund 55,867 (10,318) 45,549
BlackRock U.S. Government Bond V.I.
Fund 11,800 (1,520) 10,280
Forethought American Funds Managed
Risk Portfolio (a) 667,492 (34,463) 633,029
Forethought BlackRock Global
Allocation Managed Risk Portfolio
(a) 849,602 (16,132) 833,470
Forethought Index Managed Risk
Portfolio (a) 126,234 (2,418) 123,816
Forethought Select Advisor Managed
Risk Portfolio (a) 238,354 (1,179) 237,175
Forethought WMC Research Managed
Risk Portfolio (a) 178,663 (521) 178,142
Franklin Income Securities Fund 38,052 (305) 37,747
Franklin Rising Dividends
Securities Fund 117,572 (30,602) 86,970
SA-48
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[Enlarge/Download Table]
2013
UNITS UNITS NET INCREASE
SUBACCOUNT ISSUED REDEEMED (DECREASE)
------------------------------------------------------------------------------------------------
Franklin Small Cap Value Securities Fund 89,345 (22,878) 66,467
Franklin Strategic Income Securities
Fund 40,392 (6,596) 33,796
Mutual Shares Securities Fund 262,475 (66,572) 195,903
Templeton Foreign Securities Fund 82,508 (18,300) 64,208
Templeton Global Bond Securities Fund 126,432 (11,814) 114,618
Templeton Growth Securities Fund 171,327 (47,264) 124,063
Hartford Capital Appreciation HLS Fund 162,193 (60,613) 101,580
Hartford Dividend and Growth HLS Fund 191,081 (41,953) 149,128
Hartford Growth HLS Fund 16,497 (3,175) 13,322
Hartford High Yield HLS Fund 2,504 (600) 1,904
Hartford Index HLS Fund 501,145 (186,784) 314,361
Hartford International Opportunities HLS
Fund 77,017 (14,440) 62,577
Hartford Portfolio Diversifier HLS Fund 4,525,126 (702,345) 3,822,781
Hartford Total Return Bond HLS Fund 168,772 (60,471) 108,301
Hartford Value HLS Fund 38,981 (11,974) 27,007
Huntington VA Dividend Capture Fund 49,341 (8,661) 40,680
Huntington VA Growth Fund 431 (23) 408
Huntington VA Income Equity Fund 47,505 (9,450) 38,055
Huntington VA International Equity Fund 25,590 (5,225) 20,365
Huntington VA Mid Corp America Fund 1,113 (15) 1,098
Huntington VA Mortgage Securities Fund 798 (1) 797
Huntington VA Situs Fund 693 (34) 659
Invesco V.I. Balanced Risk Allocation
Fund 78,053 (11,903) 66,150
Invesco V.I. Core Equity Fund 56,710 (11,099) 45,611
Invesco V.I. International Growth Fund 222,886 (41,842) 181,044
Invesco V.I. Mid Cap Core Equity Fund 27,152 (4,394) 22,758
Invesco V.I. Money Market Fund 72,757 (64,356) 8,401
Invesco V.I. Small Cap Equity Fund 63,693 (16,909) 46,784
Lord Abbett Bond-Debenture Portfolio 62,853 (18,344) 44,509
Lord Abbett Fundamental Equity Portfolio 231,086 (38,819) 192,267
Lord Abbett Growth Opportunities
Portfolio 27,765 (11,842) 15,923
MFS Growth Series 178,009 (48,501) 129,508
MFS Investors Trust Series 57,594 (13,983) 43,611
MFS New Discovery Series 63,200 (7,298) 55,902
MFS Value Series 202,653 (57,151) 145,502
MFS International Value Portfolio 54,334 (11,953) 42,381
TOPS Managed Risk Balanced ETF Portfolio 5,373,520 (1,523,959) 3,849,561
TOPS Managed Risk Growth ETF Portfolio 15,322,564 (3,337,351) 11,985,213
TOPS Managed Risk Moderate Growth ETF
Portfolio 12,812,543 (3,514,254) 9,298,289
PIMCO EqS Pathfinder Portfolio 145,206 (24,445) 120,761
PIMCO All Asset Portfoloio 30,248 (4,889) 25,359
PIMCO VIT Total Return Portfolio 192,403 (36,792) 155,611
Putnam VT Equity Income Fund 94,780 (25,526) 69,254
Putnam VT Income Fund 118,197 (25,399) 92,798
Putnam VT Voyager Fund 111,467 (18,579) 92,888
(a) New subaccount. See Note 1.
(b) Name change. See Note 1.
SA-49
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
4. FINANCIAL HIGHLIGHTS
The Account has a number of products, which have unique combinations of
features and fees that are charged against the contract owner's account
balance. Differences in the fee structures result in a variety of unit
values, expense ratios, and total returns. The information presented below
identifies the range of lowest to highest expense ratios and the
corresponding total return. Only product designs within each product that
had units outstanding during the respective periods were considered when
determining the lowest and highest total return. The summary may not reflect
the minimum and maximum contract charges offered by the Account as contract
owners may not have selected all available and applicable contract options
as discussed in Note 2.
A summary of units outstanding, unit values, net assets, expense ratios,
investment income ratios and total return ratios for the period March 15,
2013 (commencement of operations) through December 31, 2013, were as
follows:
[Enlarge/Download Table]
UNIT UNIT
VALUES VALUES
SUBACCOUNT UNITS LOWEST (4) HIGHEST (4)
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND
2013 187,780 $12.24 $12.34
AMERICAN CENTURY VP MID CAP VALUE
2013 49,748 12.11 12.21
AMERICAN CENTURY VP VALUE FUND
2013 46,168 12.20 12.30
AMERICAN FUNDS GLOBAL GROWTH AND
INCOME FUND
2013 47,361 11.68 11.78
AMERICAN FUNDS GROWTH FUND
2013 382,095 12.31 12.41
AMERICAN FUNDS GROWTH-INCOME FUND
2013 244,088 12.62 12.72
AMERICAN FUNDS INTERNATIONAL FUND
2013 166,946 11.59 11.69
AMERICAN FUNDS NEW WORLD FUND
2013 16,491 10.77 10.86
AMERICAN FUNDS MANAGED RISK ASSET
ALLOCATION FUND (B)
2013 14,204,755 11.50 11.60
BLACKROCK CAPITAL APPRECIATION V.I.
2013 75,993 12.78 12.88
BLACKROCK EQUITY DIVIDEND V.I.
2013 141,705 11.74 11.84
BLACKROCK GLOBAL ALLOCATION V.I.
2013 112,624 11.01 11.10
BLACKROCK HIGH YIELD V.I. FUND
2013 45,549 10.62 10.71
BLACKROCK U.S. GOVERNMENT BOND V.I.
FUND
2013 10,280 9.58 9.67
FORETHOUGHT AMERICAN FUNDS MANAGED
RISK PORTFOLIO (A)
2013 633,029 10.20 10.21
FORETHOUGHT BLACKROCK GLOBAL
ALLOCATION MANAGED RISK PORTFOLIO (A)
2013 833,470 10.09 10.10
INVESTMENT EXPENSE
INCOME RATIOS
SUBACCOUNT NET ASSETS RATIOS (1) LOWEST (2)
-------------------------------------- ------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND
2013 $2,311,969 0.47% 1.15%
AMERICAN CENTURY VP MID CAP VALUE
2013 605,980 0.88% 1.15%
AMERICAN CENTURY VP VALUE FUND
2013 567,004 1.11% 1.15%
AMERICAN FUNDS GLOBAL GROWTH AND
INCOME FUND
2013 557,228 6.84% 1.15%
AMERICAN FUNDS GROWTH FUND
2013 4,732,275 1.35% 1.15%
AMERICAN FUNDS GROWTH-INCOME FUND
2013 3,099,118 2.01% 1.15%
AMERICAN FUNDS INTERNATIONAL FUND
2013 1,947,562 2.24% 1.15%
AMERICAN FUNDS NEW WORLD FUND
2013 178,106 1.97% 1.15%
AMERICAN FUNDS MANAGED RISK ASSET
ALLOCATION FUND (B)
2013 164,362,541 1.68% 1.65%
BLACKROCK CAPITAL APPRECIATION V.I.
2013 978,157 -- 1.15%
BLACKROCK EQUITY DIVIDEND V.I.
2013 1,676,165 1.78% 1.15%
BLACKROCK GLOBAL ALLOCATION V.I.
2013 1,248,525 1.97% 1.15%
BLACKROCK HIGH YIELD V.I. FUND
2013 484,388 2.62% 1.65%
BLACKROCK U.S. GOVERNMENT BOND V.I.
FUND
2013 98,519 0.09% 1.65%
FORETHOUGHT AMERICAN FUNDS MANAGED
RISK PORTFOLIO (A)
2013 6,462,490 -- 1.65%
FORETHOUGHT BLACKROCK GLOBAL
ALLOCATION MANAGED RISK PORTFOLIO (A)
2013 8,417,458 -- 1.65%
EXPENSE TOTAL TOTAL
RATIOS RETURNS RETURNS
SUBACCOUNT HIGHEST (2) LOWEST (3)(4) HIGHEST (3)(4)
-------------------------------------- ----------------------------------------------------------
AMERICAN CENTURY VP GROWTH FUND
2013 1.55% 22.40% 23.40%
AMERICAN CENTURY VP MID CAP VALUE
2013 1.55% 21.10% 22.10%
AMERICAN CENTURY VP VALUE FUND
2013 1.55% 22.00% 23.00%
AMERICAN FUNDS GLOBAL GROWTH AND
INCOME FUND
2013 1.55% 16.80% 17.80%
AMERICAN FUNDS GROWTH FUND
2013 1.55% 23.10% 24.10%
AMERICAN FUNDS GROWTH-INCOME FUND
2013 1.55% 26.20% 27.20%
AMERICAN FUNDS INTERNATIONAL FUND
2013 1.55% 15.90% 16.90%
AMERICAN FUNDS NEW WORLD FUND
2013 1.55% 7.70% 8.60%
AMERICAN FUNDS MANAGED RISK ASSET
ALLOCATION FUND (B)
2013 2.05% 15.00% 16.00%
BLACKROCK CAPITAL APPRECIATION V.I.
2013 1.55% 27.80% 28.80%
BLACKROCK EQUITY DIVIDEND V.I.
2013 1.55% 17.40% 18.40%
BLACKROCK GLOBAL ALLOCATION V.I.
2013 1.55% 10.10% 11.00%
BLACKROCK HIGH YIELD V.I. FUND
2013 2.05% 6.20% 7.10%
BLACKROCK U.S. GOVERNMENT BOND V.I.
FUND
2013 2.05% (4.20)% (3.30)%
FORETHOUGHT AMERICAN FUNDS MANAGED
RISK PORTFOLIO (A)
2013 2.05% 2.00% 2.10%
FORETHOUGHT BLACKROCK GLOBAL
ALLOCATION MANAGED RISK PORTFOLIO (A)
2013 2.05% 0.90% 1.00%
SA-50
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[Enlarge/Download Table]
UNIT UNIT
VALUES VALUES
SUBACCOUNT UNITS LOWEST (4) HIGHEST (4)
-----------------------------------------------------------------------------------------------
FORETHOUGHT INDEX MANAGED RISK
PORTFOLIO (A)
2013 123,816 $10.10 $10.11
FORETHOUGHT SELECT ADVISOR MANAGED
RISK PORTFOLIO (A)
2013 237,175 10.13 10.14
FORETHOUGHT WMC RESEARCH MANAGED RISK
PORTFOLIO (A)
2013 178,142 10.17 10.18
FRANKLIN INCOME SECURITIES FUND
2013 37,747 10.92 11.01
FRANKLIN RISING DIVIDENDS SECURITIES
FUND
2013 86,970 12.11 12.21
FRANKLIN SMALL CAP VALUE SECURITIES
FUND
2013 66,467 12.69 12.80
FRANKLIN STRATEGIC INCOME SECURITIES
FUND
2013 33,796 10.10 10.19
MUTUAL SHARES SECURITIES FUND
2013 195,903 12.01 12.11
TEMPLETON FOREIGN SECURITIES FUND
2013 64,208 11.76 11.85
TEMPLETON GLOBAL BOND SECURITIES FUND
2013 114,618 9.94 10.02
TEMPLETON GROWTH SECURITIES FUND
2013 124,063 12.26 12.36
HARTFORD CAPITAL APPRECIATION HLS FUND
2013 101,580 12.97 13.08
HARTFORD DIVIDEND AND GROWTH HLS FUND
2013 149,128 12.33 12.43
HARTFORD GROWTH HLS FUND
2013 13,322 12.69 12.80
HARTFORD HIGH YIELD HLS FUND
2013 1,904 10.38 10.46
HARTFORD INDEX HLS FUND
2013 314,361 12.35 12.47
HARTFORD INTERNATIONAL OPPORTUNITIES
HLS FUND
2013 62,577 11.71 11.81
HARTFORD PORTFOLIO DIVERSIFIER HLS
FUND
2013 3,822,781 8.87 8.94
HARTFORD TOTAL RETURN BOND HLS FUND
2013 108,301 9.70 9.78
HARTFORD VALUE HLS FUND
2013 27,007 12.27 12.37
HUNTINGTON VA DIVIDEND CAPTURE FUND
2013 40,680 -- 11.41
INVESTMENT EXPENSE
INCOME RATIOS
SUBACCOUNT NET ASSETS RATIOS (1) LOWEST (2)
-------------------------------------- ------------------------------------------------------
FORETHOUGHT INDEX MANAGED RISK
PORTFOLIO (A)
2013 $1,251,751 -- 1.65%
FORETHOUGHT SELECT ADVISOR MANAGED
RISK PORTFOLIO (A)
2013 2,404,467 -- 1.65%
FORETHOUGHT WMC RESEARCH MANAGED RISK
PORTFOLIO (A)
2013 1,813,276 -- 1.65%
FRANKLIN INCOME SECURITIES FUND
2013 415,316 -- 1.15%
FRANKLIN RISING DIVIDENDS SECURITIES
FUND
2013 1,059,745 0.78% 1.15%
FRANKLIN SMALL CAP VALUE SECURITIES
FUND
2013 848,854 0.54% 1.15%
FRANKLIN STRATEGIC INCOME SECURITIES
FUND
2013 343,553 1.79% 1.15%
MUTUAL SHARES SECURITIES FUND
2013 2,367,577 1.87% 1.15%
TEMPLETON FOREIGN SECURITIES FUND
2013 758,995 0.89% 1.15%
TEMPLETON GLOBAL BOND SECURITIES FUND
2013 1,145,471 0.85% 1.15%
TEMPLETON GROWTH SECURITIES FUND
2013 1,531,034 1.15% 1.15%
HARTFORD CAPITAL APPRECIATION HLS FUND
2013 1,326,545 1.25% 1.65%
HARTFORD DIVIDEND AND GROWTH HLS FUND
2013 1,850,455 3.23% 1.15%
HARTFORD GROWTH HLS FUND
2013 169,639 -- 1.15%
HARTFORD HIGH YIELD HLS FUND
2013 19,919 2.52% 1.15%
HARTFORD INDEX HLS FUND
2013 3,905,974 2.73% 1.65%
HARTFORD INTERNATIONAL OPPORTUNITIES
HLS FUND
2013 738,394 1.85% 1.15%
HARTFORD PORTFOLIO DIVERSIFIER HLS
FUND
2013 34,113,840 0.82% 1.15%
HARTFORD TOTAL RETURN BOND HLS FUND
2013 1,057,547 5.33% 1.65%
HARTFORD VALUE HLS FUND
2013 333,102 2.64% 1.15%
HUNTINGTON VA DIVIDEND CAPTURE FUND
2013 464,056 5.89% 1.15%
EXPENSE TOTAL TOTAL
RATIOS RETURNS RETURNS
SUBACCOUNT HIGHEST (2) LOWEST (3)(4) HIGHEST (3)(4)
-------------------------------------- ----------------------------------------------------------
FORETHOUGHT INDEX MANAGED RISK
PORTFOLIO (A)
2013 2.05% 1.00% 1.10%
FORETHOUGHT SELECT ADVISOR MANAGED
RISK PORTFOLIO (A)
2013 2.05% 1.30% 1.40%
FORETHOUGHT WMC RESEARCH MANAGED RISK
PORTFOLIO (A)
2013 2.05% 1.70% 1.80%
FRANKLIN INCOME SECURITIES FUND
2013 1.55% 9.20% 10.10%
FRANKLIN RISING DIVIDENDS SECURITIES
FUND
2013 1.55% 21.10% 22.10%
FRANKLIN SMALL CAP VALUE SECURITIES
FUND
2013 1.55% 26.90% 28.00%
FRANKLIN STRATEGIC INCOME SECURITIES
FUND
2013 1.55% 1.00% 1.90%
MUTUAL SHARES SECURITIES FUND
2013 1.55% 20.10% 21.10%
TEMPLETON FOREIGN SECURITIES FUND
2013 1.55% 17.60% 18.50%
TEMPLETON GLOBAL BOND SECURITIES FUND
2013 1.55% (0.60)% 0.20%
TEMPLETON GROWTH SECURITIES FUND
2013 1.55% 22.60% 23.60%
HARTFORD CAPITAL APPRECIATION HLS FUND
2013 2.05% 29.70% 30.80%
HARTFORD DIVIDEND AND GROWTH HLS FUND
2013 1.55% 23.30% 24.30%
HARTFORD GROWTH HLS FUND
2013 1.55% 26.90% 28.00%
HARTFORD HIGH YIELD HLS FUND
2013 1.55% 3.80% 4.60%
HARTFORD INDEX HLS FUND
2013 2.05% 23.50% 24.70%
HARTFORD INTERNATIONAL OPPORTUNITIES
HLS FUND
2013 1.55% 17.10% 18.10%
HARTFORD PORTFOLIO DIVERSIFIER HLS
FUND
2013 1.55% (11.30)% (10.60)%
HARTFORD TOTAL RETURN BOND HLS FUND
2013 2.05% (3.00)% (2.20)%
HARTFORD VALUE HLS FUND
2013 1.55% 22.70% 23.70%
HUNTINGTON VA DIVIDEND CAPTURE FUND
2013 1.15% -- 14.10%
SA-51
SEPARATE ACCOUNT A
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
DECEMBER 31, 2013
-------------------------------------------------------------------------------
[Enlarge/Download Table]
UNIT UNIT
VALUES VALUES
SUBACCOUNT UNITS LOWEST (4) HIGHEST (4)
-----------------------------------------------------------------------------------------------
HUNTINGTON VA GROWTH FUND
2013 408 $ -- $12.69
HUNTINGTON VA INCOME EQUITY FUND
2013 38,055 -- 11.73
HUNTINGTON VA INTERNATIONAL EQUITY
FUND
2013 20,365 -- 11.96
HUNTINGTON VA MID CORP AMERICA FUND
2013 1,098 -- 12.41
HUNTINGTON VA MORTGAGE SECURITIES FUND
2013 797 -- 9.77
HUNTINGTON VA SITUS FUND
2013 659 -- 12.30
INVESCO V.I. BALANCED RISK ALLOCATION
FUND
2013 66,150 9.84 9.92
INVESCO V.I. CORE EQUITY FUND
2013 45,611 12.06 12.16
INVESCO V.I. INTERNATIONAL GROWTH FUND
2013 181,044 11.30 11.39
INVESCO V.I. MID CAP CORE EQUITY FUND
2013 22,758 11.97 12.07
INVESCO V.I. MONEY MARKET FUND
2013 8,401 9.86 9.94
INVESCO V.I. SMALL CAP EQUITY FUND
2013 46,784 12.69 12.79
LORD ABBETT BOND-DEBENTURE PORTFOLIO
2013 44,509 10.51 10.60
LORD ABBETT FUNDAMENTAL EQUITY
PORTFOLIO
2013 192,267 12.51 12.62
LORD ABBETT GROWTH OPPORTUNITIES
PORTFOLIO
2013 15,923 12.66 12.77
MFS GROWTH SERIES
2013 129,508 12.88 12.99
MFS INVESTORS TRUST SERIES
2013 43,611 12.35 12.45
MFS NEW DISCOVERY SERIES
2013 55,902 12.94 13.05
MFS VALUE SERIES
2013 145,502 12.61 12.71
MFS INTERNATIONAL VALUE PORTFOLIO
2013 42,381 12.03 12.13
INVESTMENT EXPENSE
INCOME RATIOS
SUBACCOUNT NET ASSETS RATIOS (1) LOWEST (2)
-------------------------------------- -----------------------------------------------------
HUNTINGTON VA GROWTH FUND
2013 $5,177 1.97% 1.15%
HUNTINGTON VA INCOME EQUITY FUND
2013 446,537 7.97% 1.15%
HUNTINGTON VA INTERNATIONAL EQUITY
FUND
2013 243,522 2.68% 1.15%
HUNTINGTON VA MID CORP AMERICA FUND
2013 13,628 1.54% 1.15%
HUNTINGTON VA MORTGAGE SECURITIES FUND
2013 7,789 5.03% 1.15%
HUNTINGTON VA SITUS FUND
2013 8,110 0.62% 1.15%
INVESCO V.I. BALANCED RISK ALLOCATION
FUND
2013 654,468 1.71% 1.15%
INVESCO V.I. CORE EQUITY FUND
2013 553,175 1.37% 1.15%
INVESCO V.I. INTERNATIONAL GROWTH FUND
2013 2,057,611 1.26% 1.15%
INVESCO V.I. MID CAP CORE EQUITY FUND
2013 273,911 0.54% 1.15%
INVESCO V.I. MONEY MARKET FUND
2013 83,464 0.02% 1.65%
INVESCO V.I. SMALL CAP EQUITY FUND
2013 596,790 -- 1.15%
LORD ABBETT BOND-DEBENTURE PORTFOLIO
2013 471,012 9.18% 1.15%
LORD ABBETT FUNDAMENTAL EQUITY
PORTFOLIO
2013 2,421,261 0.44% 1.15%
LORD ABBETT GROWTH OPPORTUNITIES
PORTFOLIO
2013 202,828 -- 1.15%
MFS GROWTH SERIES
2013 1,680,744 0.17% 1.15%
MFS INVESTORS TRUST SERIES
2013 542,316 1.02% 1.15%
MFS NEW DISCOVERY SERIES
2013 727,918 -- 1.15%
MFS VALUE SERIES
2013 1,844,933 1.08% 1.15%
MFS INTERNATIONAL VALUE PORTFOLIO
2013 513,150 0.98% 1.15%
EXPENSE TOTAL TOTAL
RATIOS RETURNS RETURNS
SUBACCOUNT HIGHEST (2) LOWEST (3)(4) HIGHEST (3)(4)
-------------------------------------- ----------------------------------------------------------
HUNTINGTON VA GROWTH FUND
2013 1.15% -- 26.90%
HUNTINGTON VA INCOME EQUITY FUND
2013 1.15% -- 17.30%
HUNTINGTON VA INTERNATIONAL EQUITY
FUND
2013 1.15% -- 19.60%
HUNTINGTON VA MID CORP AMERICA FUND
2013 1.15% -- 24.10%
HUNTINGTON VA MORTGAGE SECURITIES FUND
2013 1.15% (2.30)% --
HUNTINGTON VA SITUS FUND
2013 1.15% -- 23.00%
INVESCO V.I. BALANCED RISK ALLOCATION
FUND
2013 1.55% (1.60)% (0.80)%
INVESCO V.I. CORE EQUITY FUND
2013 1.55% 20.60% 21.60%
INVESCO V.I. INTERNATIONAL GROWTH FUND
2013 1.55% 13.00% 13.90%
INVESCO V.I. MID CAP CORE EQUITY FUND
2013 1.55% 19.70% 20.70%
INVESCO V.I. MONEY MARKET FUND
2013 2.05% (1.40)% (0.60)%
INVESCO V.I. SMALL CAP EQUITY FUND
2013 1.55% 26.90% 27.90%
LORD ABBETT BOND-DEBENTURE PORTFOLIO
2013 1.55% 5.10% 6.00%
LORD ABBETT FUNDAMENTAL EQUITY
PORTFOLIO
2013 1.55% 25.10% 26.20%
LORD ABBETT GROWTH OPPORTUNITIES
PORTFOLIO
2013 1.55% 26.60% 27.70%
MFS GROWTH SERIES
2013 1.55% 28.80% 29.90%
MFS INVESTORS TRUST SERIES
2013 1.55% 23.50% 24.50%
MFS NEW DISCOVERY SERIES
2013 1.55% 29.40% 30.50%
MFS VALUE SERIES
2013 1.55% 26.10% 27.10%
MFS INTERNATIONAL VALUE PORTFOLIO
2013 1.55% 20.30% 21.30%
SA-52
-------------------------------------------------------------------------------
[Enlarge/Download Table]
UNIT UNIT
VALUES VALUES
SUBACCOUNT UNITS LOWEST (4) HIGHEST (4)
-----------------------------------------------------------------------------------------------
TOPS MANAGED RISK BALANCED ETF
PORTFOLIO
2013 3,849,561 $10.46 $10.56
TOPS MANAGED RISK GROWTH ETF PORTFOLIO
2013 11,985,213 11.04 11.17
TOPS MANAGED RISK MODERATE GROWTH ETF
PORTFOLIO
2013 9,298,289 10.81 10.93
PIMCO EQS PATHFINDER PORTFOLIO
2013 120,761 11.42 11.52
PIMCO ALL ASSET PORTFOLOIO
2013 25,359 9.79 9.87
PIMCO VIT TOTAL RETURN PORTFOLIO
2013 155,611 9.66 9.76
PUTNAM VT EQUITY INCOME FUND
2013 69,254 12.27 12.37
PUTNAM VT INCOME FUND
2013 92,798 9.97 10.05
PUTNAM VT VOYAGER FUND
2013 92,888 13.50 13.61
INVESTMENT EXPENSE
INCOME RATIOS
SUBACCOUNT NET ASSETS RATIOS (1) LOWEST (2)
-------------------------------------- -----------------------------------------------------
TOPS MANAGED RISK BALANCED ETF
PORTFOLIO
2013 $40,517,497 0.81% 1.65%
TOPS MANAGED RISK GROWTH ETF PORTFOLIO
2013 133,130,668 0.96% 1.65%
TOPS MANAGED RISK MODERATE GROWTH ETF
PORTFOLIO
2013 101,174,719 0.93% 1.65%
PIMCO EQS PATHFINDER PORTFOLIO
2013 1,389,777 4.09% 1.15%
PIMCO ALL ASSET PORTFOLOIO
2013 249,071 5.34% 1.15%
PIMCO VIT TOTAL RETURN PORTFOLIO
2013 1,514,595 1.67% 1.65%
PUTNAM VT EQUITY INCOME FUND
2013 854,797 -- 1.15%
PUTNAM VT INCOME FUND
2013 931,436 -- 1.15%
PUTNAM VT VOYAGER FUND
2013 1,261,848 -- 1.15%
EXPENSE TOTAL TOTAL
RATIOS RETURNS RETURNS
SUBACCOUNT HIGHEST (2) LOWEST (3)(4) HIGHEST (3)(4)
-------------------------------------- ----------------------------------------------------------
TOPS MANAGED RISK BALANCED ETF
PORTFOLIO
2013 2.05% 4.60% 5.60%
TOPS MANAGED RISK GROWTH ETF PORTFOLIO
2013 2.05% 10.40% 11.70%
TOPS MANAGED RISK MODERATE GROWTH ETF
PORTFOLIO
2013 2.05% 8.10% 9.30%
PIMCO EQS PATHFINDER PORTFOLIO
2013 1.55% 14.20% 15.20%
PIMCO ALL ASSET PORTFOLOIO
2013 1.55% (2.10)% (1.30)%
PIMCO VIT TOTAL RETURN PORTFOLIO
2013 2.05% (3.40)% (2.40)%
PUTNAM VT EQUITY INCOME FUND
2013 1.55% 22.70% 23.70%
PUTNAM VT INCOME FUND
2013 1.55% (0.30)% 0.50%
PUTNAM VT VOYAGER FUND
2013 1.55% 35.00% 36.10%
(a) New subaccount. See Note 1.
(b) Name change. See Note 1.
(1) These ratios represent the annualized contract expenses of the Account,
consisting primarily of administrative and mortality and expense charges,
for each period indicated. The ratios include only those expenses that
result in a direct reduction to the unit values. Charges made directly to
contract owner accounts through the redemption of units and expenses of the
underlying fund are excluded. The additional fees for the mortality and
expense risk charges applied to policies whose contract values are less
than $100,000 are excluded from these ratios because they result in
reductions of contract owner units, rather than direct reductions to the
unit values. See Note 2.
(2) These amounts represent the dividends, excluding distributions of capital
gains, received by the subaccount from the underlying mutual fund, net of
management fees assessed by the fund manager, divided by the average net
assets. These ratios exclude those expenses, such as mortality and expense
charges, that result in direct reductions in the unit values. The
recognition of investment income by the subaccount is affected by the
timing of the declaration of dividends by the underlying fund in which the
subaccount invests.
(3) For periods shorter than a year, total return is not annualized. These
amounts represent the total return for the periods indicated, including
changes in the value of the underlying fund, and reflect deductions for all
items included in the expense ratio. The total return does not include any
expenses assessed through the redemption of units; inclusion of these
expenses in the calculation would result in a reduction in the total return
presented. The total return is calculated for the period indicated or from
the inception date through the end of the reporting period.
(4) Unit value information is calculated on a daily basis regardless of whether
or not the subaccount has contractholders.
5. SUBSEQUENT EVENTS
The Account has performed an evaluation of subsequent events through the
date the financial statements were issued and has determined that no items
require recognition or disclosure.
SA-53
FORETHOUGHT LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS AND
SUPPLEMENTAL INFORMATION
December 31, 2013 and 2012
F-1
[PRICEWATERHOUSECOOPERS LLP LOGO]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Forethought Life Insurance Company:
We have audited the accompanying statutory financial statements of Forethought
Life Insurance Company ("the Company"), which comprise the statutory statements
of admitted assets, liabilities and surplus as of December 31, 2013 and 2012,
and the related statutory statements of operations and changes in surplus, and
cash flows for the years then ended.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the
financial statements in accordance with the accounting practices prescribed or
permitted by the Indiana Department of Insurance. Management is also responsible
for the design, implementation, and maintenance of internal control relevant to
the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
AUDITOR'S RESPONSIBILITY
Our responsibility is to express an opinion on the financial statements based on
our audits. We conducted our audits 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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on our judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, we consider internal control relevant to the
Company's preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
BASIS FOR ADVERSE OPINION ON U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
As described in Note 2 to the financial statements, the financial statements are
prepared by the Company on the basis of the accounting practices prescribed or
permitted by the Indiana Department of Insurance, which is a basis of accounting
other than accounting principles generally accepted in the United States of
America.
The effects on the financial statements of the variances between the statutory
basis of accounting described in Note 2 and accounting principles generally
accepted in the United States of America, although not reasonably determinable,
are presumed to be material.
ADVERSE OPINION ON U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
In our opinion, because of the significance of the matter discussed in the
"Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles"
paragraph, the financial statements referred to above do not present fairly, in
accordance with accounting principles generally accepted in the United States of
America, the financial position of the Company as of December 31, 2013 and 2012,
or the results of its operations or its cash flows for the years then ended.
OPINION ON STATUTORY BASIS OF ACCOUNTING
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities and surplus of the
Company as of December 31, 2013 and 2012, and the results of its operations and
its cash flows for the years then ended, in accordance with the accounting
practices prescribed or permitted by the Indiana Department of Insurance
described in Note 2.
F-2
OTHER MATTER
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying Supplemental Schedule of Assets
and Liabilities, Summary Investment Schedule and Investment Risk Interrogatories
of the Company as of December 31, 2013 and for the year then ended are presented
for purposes of additional analysis and are not a required part of the financial
statements. The Supplemental Schedule of Assets and Liabilities, Summary
Investment Schedule and Investment Risk Interrogatories are the responsibility
of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the financial statements. The
effects on the Supplemental Schedule of Assets and Liabilities, Summary
Investment Schedule and Investment Risk Interrogatories of the variances between
the statutory basis of accounting and accounting principles generally accepted
in the United States of America, although not reasonably determinable, are
presumed to be material. As a consequence, the Supplemental Schedule of Assets
and Liabilities, Summary Investment Schedule and Investment Risk Interrogatories
do not present fairly, in conformity with accounting principles generally
accepted in the United States of America, such information of the Company as of
December 31, 2013 and for the year then ended. The Supplemental Schedule of
Assets and Liabilities, Summary Investment Schedule and Investment Risk
Interrogatories have been subjected to the auditing procedures applied in the
audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the financial statements or to the financial
statements themselves and other additional procedures, in accordance with
auditing standards generally accepted in the United States of America. In our
opinion, the Supplemental Schedule of Assets and Liabilities, Summary Investment
Schedule and Investment Risk Interrogatories are fairly stated, in all material
respects, in relation to the financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
April 9, 2014
PricewaterhouseCoopers LLP, 1201 Louisiana, Suite 2900, Houston, TX 77002-5678
T: (713) 356 4000, F: (713) 356 4717, www.pwc.com/us
F-3
FORETHOUGHT LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF ADMITTED ASSETS,
LIABILITIES AND CAPITAL AND SURPLUS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands, except share amounts)
[Download Table]
ADMITTED ASSETS 2013 2012
--------------------------------------------------------------------------------
Invested assets
Bonds $ 6,557,328 $5,489,299
Common stocks -- unaffiliated 8,500 --
Preferred stocks 4,400 2,935
Mortgage loans on real estate 451,890 339,652
Cash, cash equivalents, and short-term
investments 95,291 233,172
Contract loans and other invested assets 102,426 65,251
------------- ------------
Total invested assets 7,219,835 6,130,309
Deferred and uncollected premiums 21,912 22,245
Investment income due and accrued 77,854 69,522
Current income tax recoverable 24,046 --
Net deferred tax asset 40,285 24,920
Other assets 2,613 9,056
------------- ------------
Total admitted assets excluding separate
accounts 7,386,545 6,256,052
Separate account assets 570,681 --
------------- ------------
Total admitted assets $7,957,226 $6,256,052
============= ============
LIABILITIES
Reserves for future policy benefits $ 6,596,544 $5,444,296
Policy and contract claims 6,192 7,402
Funds held under affiliate reinsurance treaty
with unauthorized reinsurers 192,695 201,242
Transfers to separate accounts due or accrued (44,150) --
Asset valuation reserve 45,536 32,286
Interest maintenance reserve 83,817 86,432
Current tax payables -- 8,766
Other liabilities 4,109 14,256
------------- ------------
Total liabilities excluding separate
accounts 6,884,743 5,794,680
Separate account liabilities 550,020 --
------------- ------------
Total liabilities 7,434,763 5,794,680
============= ============
CAPITAL AND SURPLUS
Capital stock, $2,500 par value per share,
1,000 shares authorized, issued and
outstanding at 2013 and 2012 2,500 2,500
Gross paid in and contributed surplus 375,553 325,553
Unassigned surplus 144,410 133,319
------------- ------------
Total capital and surplus 522,463 461,372
------------- ------------
Total liabilities, capital and surplus $7,957,226 $6,256,052
============= ============
The accompanying notes are an integral part of these financial statements.
F-4
FORETHOUGHT LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF OPERATIONS AND
CHANGES IN CAPITAL AND SURPLUS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Download Table]
YEAR ENDED DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
REVENUES
Life and annuity premiums earned $ 2,331,029 $1,413,812
Net investment income 363,799 306,820
Amortization of interest maintenance
reserve 13,256 13,254
Commissions and expense allowances on
reinsurance ceded 11,934 15,982
Other income 15,173 1,325
------------- ------------
Total revenues 2,735,191 1,751,193
------------- ------------
BENEFITS AND EXPENSES
Death and annuity benefits 436,543 422,701
Surrender benefits paid 192,571 145,892
Increase in reserves for future policy
benefits 981,083 656,911
Net transfers to separate accounts 486,298 --
Change in modco reserves assumed 213,739 194,875
Commissions 192,234 139,445
General insurance expenses 165,476 64,277
Taxes, licenses and fees 13,863 7,925
Decrease in loading on deferred and
uncollected premiums (1,765) (1,408)
Other expenses 8,924 4,190
------------- ------------
Total benefits and expenses 2,688,966 1,634,808
------------- ------------
Net gain from operations before federal
income taxes and realized capital
losses 46,225 116,385
Federal income taxes 16,352 34,411
------------- ------------
Net gain from operations 29,873 81,974
------------- ------------
Realized capital losses, net of tax and
transfer to IMR (6,922) (13,013)
------------- ------------
Net income $22,951 $68,961
============= ============
Capital and surplus, beginning of year $ 461,372 $416,380
Net income 22,951 68,961
Change in net unrealized capital gains
(losses), net of tax (716) 8,108
Change in net unrealized foreign exchange
capital gain (loss) 754 --
Change in net deferred income tax 15,541 6,069
Change in nonadmitted assets 190 1,542
Changes in surplus in Separate Accounts 621 --
Surplus paid in 50,000 --
Change in asset valuation reserve (13,250) (4,688)
Dividends to stockholders (15,000) (35,000)
------------- ------------
Capital and surplus, end of year $522,463 $461,372
============= ============
The accompanying notes are an integral part of these financial statements.
F-5
FORETHOUGHT LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOW
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Download Table]
2013 2012
--------------------------------------------------------------------------------
CASH FROM OPERATIONS
Premiums and annuity considerations $ 2,331,698 $1,519,213
Net investment income 330,489 294,082
Other income 21,303 18,662
-------------- ------------
Total receipts from operations 2,683,490 1,831,957
Benefit and loss related payments 618,400 573,856
Net transfers to separate accounts 530,449 --
Commissions and expenses paid 600,312 430,243
Federal and foreign income taxes paid 64,133 48,663
-------------- ------------
Total payments from operations 1,813,294 1,052,762
-------------- ------------
Net cash from operations 870,196 779,195
CASH FROM INVESTMENTS
Proceeds from investments sold, matured
or called
Bonds 1,219,422 1,082,759
Other invested assets 116,768 71,717
-------------- ------------
Total cash proceeds from
investments 1,336,190 1,154,476
Cost of investments acquired
Bonds 2,257,313 1,651,521
Other invested assets 292,474 107,969
-------------- ------------
Total cost of investments acquired 2,549,787 1,759,490
Net increase in policy loans and
premium notes (221) 227
-------------- ------------
Net cash from investments (1,213,376) (605,241)
CASH FROM FINANCING AND MISCELLANEOUS
SOURCES
Cash applied
Capital and paid in surplus 50,000 --
Net deposits on deposit-type contracts 169,708 465
Dividends to stockholders (15,000) (35,000)
Other cash provided (applied) 591 (2,741)
-------------- ------------
Net cash from financing and
miscellaneous sources 205,299 (37,276)
-------------- ------------
Net change in cash and short-term
investments (137,881) 136,678
Cash, cash equivalents, and short-term
investments, beginning of year 233,172 96,494
-------------- ------------
Cash, cash equivalents, and
short-term investments, end of
year $95,291 $233,172
============== ============
The accompanying notes are an integral part of these financial statements.
F-6
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
1. ORGANIZATION AND NATURE OF OPERATIONS
ORGANIZATION
Forethought Life Insurance Company ("FLIC or the Company") is a wholly-owned
subsidiary of Forethought Financial Services, Inc. ("FFSI") as of December 31,
2011, which is a wholly-owned subsidiary of Forethought Financial Group, Inc.
("FFGI"). FFGI was formed in December 2003 for the principal purpose of
acquiring FFSI and its wholly-owned insurance subsidiaries from Hillenbrand
Industries, Inc. The Company was previously a wholly-owned subsidiary of
Forethought National Life Insurance Company ("FNLIC"). On March 7, 2011, FNLIC
received approval from the Texas Department of insurance to make an
extraordinary distribution of its investment in the common stock of FLIC to
FNLIC's parent, FFSI. On March 21, 2011, all the outstanding stock of the
company was transferred from FNLIC to FFSI in a transaction qualifying under
Internal Revenue Code ("IRC") Section 355.
The Company was organized on February 14, 1980 and is a stock life insurance
company organized under the provisions of the laws of the state of Indiana. The
Company sells preneed and final expense life insurance, annuities and Medicare
supplement insurance. The Company is licensed in 49 states, the District of
Columbia and Puerto Rico. Since its inception, FLIC has marketed
nonparticipating individual and group life insurance products used to fund
prearranged funerals. FLIC's life insurance products are sold by independent
agents typically associated with funeral homes or cemeteries, and other funeral
home representatives. Beginning in 2007, the Company began to market fixed
indexed annuities through independent marketing organizations, and in 2008 the
Company began to market final expense policies. In 2010, the Company began to
market Medicare supplement insurance. In 2010, the Company created a new
subsidiary, FLIC Properties, LLC, for the principal purpose of acquiring
investment properties through foreclosure.
The following is a description of the most significant risks facing life and
health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or regulatory
environment in which an insurer operates will create additional expenses not
anticipated by the insurer in pricing its products. That is, regulatory
initiatives designed to reduce insurer profits, new legal theories, or insurance
company insolvencies through guaranty fund assessments may create costs for the
insurer beyond those recorded in the financial statements. The Company mitigates
this risk by operating throughout the United States, thus reducing its exposure
to any single jurisdiction, by tracking and attempting to influence legal and
regulatory initiatives, and by adopting policies designed to limit exposure to
legal liability.
CREDIT RISK is the risk that issuers of securities owned by the Company or
mortgagors on residential and commercial mortgage loans owned by the Company
will default or that other parties, including reinsurers, which owe the Company
money, will not pay. The Company minimizes this risk by adhering to a
conservative investment strategy, by maintaining credit and collection policies
and by providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and cause a
decrease in the value of an insurer's investments. This change in rates may
cause certain interest-sensitive products to become uncompetitive or may cause
disintermediation. The Company mitigates this risk by attempting to match the
maturity schedule of its assets with the expected payouts of its liabilities. To
the extent that liabilities come due more quickly than assets produce cash
flows, an insurer would have to borrow funds or sell assets prior to maturity
and potentially recognize a gain or loss.
Most of the Company's products expose it to the risk that changes in interest
rates will reduce its investment margin or "spread," or the difference between
the amounts the Company is required to pay under the contracts and the rate of
return it is able to earn on its investments intended to support obligations
under the contracts. The Company's spread is a key component of its net income.
As interest rates decrease or remain at low levels, the Company may be forced to
reinvest proceeds from investments that have matured or have been prepaid or
sold at lower yields, reducing its investment margin. Lowering interest
crediting rates can help offset decreases in investment margins on some
products. However, the Company's ability to lower these rates could be limited
by competition or contractually guaranteed minimum rates and may not match the
timing or magnitude of changes in asset yields. As a result, the Company's
spread could decrease or become negative.
MORTALITY RISK is the risk that the Company's mortality experience will
materially exceed the mortality assumed when the products were originally
priced. There are a large number of policies at small face amounts. This coupled
with the homogeneity of the business written allows the Company to predict
mortality risk with a relatively high degree of accuracy. Any random variation
in experience is relatively small.
--------------------------------------------------------------------------------
F-7
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
RATING AGENCY RISK is the risk that the Company may be impacted due to adverse
actions by rating agencies. The Company actively engages with the rating
agencies throughout the year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in conformity with
statutory accounting practices prescribed or permitted by the Insurance
Department of the State of Indiana ("SAP"), which differ in some respects from
accounting principles generally accepted in the United Stated of America
("GAAP"). The more significant of these differences are as follows:
- Bonds and stocks are valued in accordance with rules prescribed by the
National Association of Insurance Commissioners, ("NAIC"), whereby bonds
eligible for amortization under such rules are stated at amortized cost. The
NAIC prescribes the use of a scientific interest method for amortizing debt
securities. All other bonds are stated at values prescribed by the NAIC. The
NAIC issued SSAP 43R, LOAN-BACKED AND STRUCTURED SECURITIES in 2009 to
determine the statutory carrying value of certain non-agency residential
mortgage backed securities. Based upon the carrying values relative to five
price points provided by the NAIC, the non-agency residential
mortgage-backed securities are carried at amortized cost if the rating was
NAIC 1 to 5 and at fair value if the NAIC rating is 6. Common stocks of
other than affiliates are carried at market value and common stocks of
insurance company affiliates are carried at statutory equity plus
unamortized goodwill. Under GAAP, equity securities that have readily
determinable fair values and debt securities would be classified into three
categories: held-to-maturity, trading, and available-for-sale.
Held-to-maturity securities would be reported at amortized cost. Trading
securities would be reported at fair value, with unrealized gains and losses
reported as a separate component of income. Available-for-sale securities
would be reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported as a separate component of equity.
- Acquisition costs, such as commissions and other costs in connection with
acquiring new business, are charged to operations as incurred for SAP rather
than deferred and amortized over the lives of the policies as would be
required under GAAP.
- Policy reserves are determined using the 1980 Commissioners Standard
Ordinary (1980 CSO) or 2001 Commissioners Standard Ordinary (2001 CSO)
mortality table and interest rates that were applicable at the time of
policy issue. Withdrawals and discretionary death benefit increases are not
considered in the calculation of statutory reserves. GAAP reserves are based
on mortality assumptions that reflect the company's experience, cash value
interest rates, and expected death benefit increases.
- An asset valuation reserve ("AVR") and an interest maintenance reserve
("IMR") are recorded in accordance with SAP. The AVR is a reserve designed
to reduce the impact on surplus for fluctuations in the market value of all
invested assets by providing an investment reserve for potential future
losses on invested assets. The IMR, reduced by federal income taxes, defers
the recognition of net gains/losses realized on the sale of fixed maturity
investments resulting from changes in interest rates. Such net gains/losses
are amortized to income over the remaining lives of the assets sold.
- The investment in wholly-owned subsidiaries is valued based on the statutory
equity method, with changes in value reflected directly in surplus, rather
than consolidated as would be required under GAAP.
- Dividends received from affiliates are recognized in net investment income
to the extent they do not exceed the accumulated earnings calculated at the
subsidiary level. Dividends in excess of this amount are recorded as return
of capital.
- Under statutory accounting practices, certain assets are designated as
"nonadmitted assets" and are not included in the accompanying Statutory
Statements of Admitted Assets, Liabilities, and Capital and Surplus since
these assets are not taken into account in determining an insurer's
financial condition. Nonadmitted assets primarily include intangible assets,
furniture and equipment, agents' debit balances, and receivables over 90
days old.
- The methodology used to determine the portion of the deferred tax asset that
is nonadmitted under SSAP 101, INCOME TAXES ("SSAP 101"), differs from the
determination of the valuation allowance under GAAP guidance. Changes in
deferred income taxes are not reported as a component of net income and
instead are presented as a component of surplus.
The effects on the financial statements of the variances between statutory and
GAAP, although not readily determinable, are assumed to be material.
--------------------------------------------------------------------------------
F-8
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
VALUATION OF INVESTMENTS
Investment income is recorded when earned. Realized gains and losses on sale or
maturity of investments are generally determined on the basis of FIFO (First In,
First Out). Aggregate unrealized capital gains and losses are credited or
charged directly to unassigned surplus, net of taxes. SAP requires that
unrealized capital losses on investments that are determined to be
other-than-temporary declines in value must be reclassified to realized capital
losses. The Company reviews its investment portfolio on a periodic basis to
determine other-than-temporary declines in value. In evaluating whether a
decline in value is other-than-temporary, management considers several factors
including, but not limited to, 1) the Company's ability and intent to retain the
security for a sufficient amount of time for it to recover, 2) the extent and
duration of the decline in value, 3) the probability of collecting all cash
flows according to contractual terms in effect at acquisition or restructuring,
4) relevant industry conditions and trends, and 5) the financial condition and
current and future business prospects of the issuer.
Mortgage-backed and asset-backed securities are stated at amortized cost using a
prospective basis. The prospective approach recognizes, through the
recalculation of the effective yield to be applied to future periods, the
effects of all cash flows whose amounts differ from those estimated earlier.
Changes in amortization and amortized cost will occur in future periods.
Assumptions for mortgage-backed and asset-backed securities are updated twice a
year. Agency pass-through and collateralized mortgage obligations use the twelve
month prepayment speed assumption. Non-agency collateralized mortgage
obligations and asset-backed securities are updated using projected principal
payment windows.
Unaffiliated common stocks are carried at market value as published by the NAIC.
Fair value has been determined using quoted NAIC market prices for publicly
traded securities. Unrealized gains and losses are reflected in surplus, net of
deferred taxes.
Mortgage loans on real estate are carried at unpaid principal balances, net of
discounts/premiums and valuation allowances, and are secured. Specific valuation
allowances are established for the excess carrying value of the mortgage loan
over its estimated fair value, when it is probable that based on current
information and events, the Company will be unable to collect all amounts due
under the contractual terms of the loan agreement. Specific valuation allowances
are based on the fair value of the collateral. Fair value is determined by
discounting the projected cash flows for each property to determine the current
net present value.
All real estate is recorded in the financial statements at historical cost, less
accumulated depreciation. In accordance with SAP, the Company has included $493
in 2012 in both its investment income and general expenses for rent related to
the Company's occupancy of its home office.
On May 31, 2012, the Company sold its office building located in Batesville,
Indiana for net proceeds of $1.9 million, realizing a loss of $55. The Company
leased from the purchasers a portion of the building for a seven year period.
The Company holds investments in Low Income Housing Tax Credits with 12 years
remaining of unexpired tax credits and with a required holding period of 15
years.
The Company considers all investments with original maturities less than one
year at the date of acquisition to be short-term investments, and all
investments with maturities less than ninety days at the date of acquisition to
be cash equivalents. Short-term investments and cash equivalents are carried at
amortized cost, which approximates fair value.
All securities are recorded in the financial statements on a trade date basis
except for the acquisition of private placement bonds, which are recorded on the
funding date.
DERIVATIVE INSTRUMENTS
The Company issues fixed indexed annuity ("FIA") products that provide for
potential return that is linked to the S&P 500 index. At December 31, 2013 and
2012, the Company had $3,562,107 and $2,589,688 and of FIA reserves,
respectively. The Company purchases S&P 500 index call options for the purpose
of hedging the potential increases to policyholder benefits resulting from
increases in the S&P 500 Index. The Company also uses various equity futures to
hedge equity exposure associated with the Guaranteed Living Withdrawal benefit
and Guaranteed Minimum Death Benefit features of the variable annuity line of
business. The Company's hedges are categorized as fair value hedges.
--------------------------------------------------------------------------------
F-9
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
The S&P 500 index call options have met the criteria of highly effective hedges
in 2013 and therefore received hedge accounting treatment in accordance with
SSAP 86, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. Under
such treatment, options are recorded at cost and marked to market with any
change in unrealized reported as a component of net investment income. Upon
exercise or expiration, the difference between the cash proceeds and cost is
recognized as investment income / (loss). For equity futures that hedge the
variable annuity guarantees, mark to market adjustments flow through the
Statement of Operations.
As of December 31, 2013, the Company owned call options with a fair value and
carrying value of $31,236 and book value of $17,359. The difference of $13,877
is reported as part of net investment income earned. In 2013, the Company also
reported realized losses of $14,502 which decreases net investment income. As of
December 31, 2012, the Company owned call options with a fair value and carrying
value of $10,112 and book value of $14,362. The difference of ($4,250) is
reported as part of net investment income earned. In 2012, the Company also
reported realized losses on call options of $16,431 which reduces net investment
income.
The Company also issues life products whose death benefit growth rate is
determined by various consumer price indexes. The Company has hedged this risk
by entering into CPI swaps. The Company previously accounted for these swaps as
ineffective hedges. As such, the swaps were recorded at cost and marked to
market with the change in market value recorded as unrealized gains or losses in
capital and surplus. In 2012, the Company performed a detailed analysis of the
effectiveness in achieving offsetting cash flows attributable to the hedged risk
during the term of the hedge from inception. As a result, the Company has deemed
the hedge to be highly effective under the requirements of SSAP 86 allowing for
hedge accounting. Under hedge accounting, the swaps are carried at book value
consistent with the hedged liabilities. As of December 31, 2012, the Company
carried its swaps at book value which is zero resulting in the reversal of
previously recognized unrealized losses in capital and surplus of $6,874 net of
tax.
In 2013, the Company purchased two currency swaps to hedge its currency exposure
resulting from its purchase of GBP denominated bonds. Under the terms of the
swaps, the Company pays fixed and floating GBP and receives fixed USD.
GUARANTY FUND ASSESSMENTS
Guaranty fund assessments are paid to various states. The assessments are
amortized against the premium tax benefit period.
PREMIUMS
Life premiums are recognized as income over the premium-paying period of the
related policies. Annuity considerations are recognized as revenue when
received.
REINSURANCE
Reinsurance premiums and benefits paid or provided are accounted for on a basis
consistent with those used in accounting for the original policies issued and
the terms of the reinsurance contracts.
INCOME TAXES
Deferred income taxes are recorded for temporary differences between amounts
reported in the financial statements and those included in the tax return. The
change in deferred income taxes is recorded directly in capital and surplus.
USE OF ESTIMATES
Preparation of the accompanying statutory financial statements requires the use
of management's judgment, including estimates to establish the reserves for
future policy benefits. Actual results may differ from those estimates.
FUTURE BENEFIT ON LIFE POLICIES AND ANNUITY CONTRACTS
Reserves for life insurance policies are based on amount of insurance, issue
age, duration, and premium paying pattern. Interest rates range from 3.0% to
5.5%, depending on the date of policy issue. The majority of reserves are
calculated using the 1980 CSO Mortality Table. Tabular interest on funds not
involving life contingencies have been determined by formula as described in the
instructions.
Reserves for a majority of the annuity contracts are determined in accordance
with CARVM. Valuation interest rates range from 3.0% to 5.0% based on the date
of issue. The majority of reserves are calculated using the Annuity 2000
mortality table.
F-10
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
The Company, with the permission of the Commissioner of Insurance of the State
of Indiana, uses the Plan Type A discount rate with a guaranteed duration of
less than five years under Actuarial Guideline 33 (AG33) on the entire in-force
block of annuities with Guaranteed Minimum Withdrawal Benefits. By definition,
AG33 would require the defined payments of the Guaranteed Lifetime Income
Benefit (GLIB) benefit stream to be discounted using the Type B or Type C rate
until the policy's contract value is exhausted and the additional payments to be
discounted using the Type A rate. The impact of this permitted practice was an
increase to surplus of $18,000 and $17,700 as of December 31, 2013 and 2012,
respectively.
POLICY AND CONTRACT CLAIMS
The liability for policy and contract claims is based on actual claims submitted
but not paid on the statement date and an estimate of claims that had been
incurred but not been reported on the statement date.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
The assets and liabilities resulting from the receipt of variable annuity
premiums are segregated into separate accounts. Separate account assets and
liabilities generally represent funds for which the contract holder, rather than
the Company, bears the investment risk. Separate account contract holders have
no claim against the assets of the general account of the Company, except for
certain guaranteed products. Separate account assets are generally reported at
fair value. The operations of the separate accounts are excluded from the
statements of operations and cash flows of the Company. The Company receives
fees for assuming mortality and certain expense risks. Such fees are included in
Other Income in the accompanying Statement of Operations. Reserves in the
separate accounts for variable annuity contracts are provided in accordance with
the Variable Annuity Commissioners' Annuity Reserve Valuation Method ("VACARVM")
under Actuarial Guideline 43 ("AG 43").
3. INVESTMENTS
The carrying value, gross unrealized gains, gross unrealized losses, and
estimated fair value, of bonds and equity securities held at December 31, 2013
and 2012 are as follows:
[Enlarge/Download Table]
DECEMBER 31, 2013
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
---------------------------------------------------------------------------------------------------------------------------------
BONDS
U.S. GOVERNMENT SECURITY OBLIGATIONS $ 29,471 $ 2,535 $ (227) $ 31,779
ALL OTHER GOVERNMENTS 129,809 8,019 (7,984) 129,844
STATES, TERRITORIES AND POSSESSIONS 65,772 5,986 (659) 71,099
POLITICAL SUBDIVISIONS OF STATES,
TERRITORIES AND POSSESSIONS 72,049 2,364 (1,613) 72,800
SPECIAL REVENUE AND SPECIAL
ASSESSMENT OBLIGATIONS 721,949 37,258 (29,966) 729,241
INDUSTRIAL AND MISCELLANEOUS 5,538,278 320,196 (139,454) 5,719,020
------------- ----------- ------------ -------------
TOTAL BONDS 6,557,328 376,358 (179,903) 6,753,783
PREFERRED STOCK 4,400 -- (44) 4,356
COMMON STOCK -- UNAFFILIATED 8,500 20,661 -- 29,161
------------- ----------- ------------ -------------
TOTAL $6,570,228 $397,019 $(179,947) $6,787,300
============= =========== ============ =============
F-11
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Enlarge/Download Table]
DECEMBER 31, 2012
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-----------------------------------------------------------------------------------------------------------------------------
Bonds
U.S. government security obligations $37,037 $5,346 $(34) $42,349
All other governments 94,909 15,756 (160) 110,505
States, territories and possessions 60,814 12,829 (1) 73,642
Political subdivisions of states,
territories and possessions 72,073 9,735 (62) 81,746
Special revenue and special assessment
obligations 567,885 77,216 (2,033) 643,068
Industrial and miscellaneous 4,656,581 633,191 (7,010) 5,282,762
------------ ---------- -------- ------------
Total bonds 5,489,299 754,073 (9,300) 6,234,072
Common stock -- unaffiliated 2,935 -- -- 2,935
------------ ---------- -------- ------------
Total $5,492,234 $754,073 $(9,300) $6,237,007
============ ========== ======== ============
Bonds at December 31, 2013, are summarized by stated maturity as follows:
[Download Table]
CARRYING ESTIMATED
VALUE FAIR VALUE
--------------------------------------------------------------------------------
Due in one year or less $34,734 $35,319
Due after one year through five years 570,688 630,342
Due after five years through ten years 2,168,332 2,216,629
Due after ten years 2,958,024 2,996,188
Asset backed securities 825,550 875,305
------------ ------------
Total bonds $6,557,328 $6,753,783
============ ============
The following table presents the Company's gross unrealized losses and fair
values for bonds and equities with unrealized losses that are not deemed to be
other-than-temporarily impaired, aggregated by investment category and length of
time that individual securities have been in an unrealized loss position, at
December 31, 2013 and 2012.
[Enlarge/Download Table]
DECEMBER 31, 2013
LESS THAN 12 MONTHS 12 MONTHS OR MORE
ESTIMATED UNREALIZED ESTIMATED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES
---------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT $ 2,206 $ (199) $ 609 $ (28)
ALL OTHER GOVERNMENTS 40,019 (4,091) 19,065 $ (3,893)
STATES, TERRITORIES AND
POSSESSIONS 5,450 (659) -- --
POLITICAL SUBDIVISIONS 25,730 (1,613) -- --
SPECIAL REVENUE AND SPECIAL
ASSESSMENT OBLIGATIONS 248,679 (27,248) 17,539 (2,718)
INDUSTRIAL AND MISCELLANEOUS 1,887,795 (117,291) 138,586 (22,163)
------------- ------------ ----------- ----------
TOTAL TEMPORARILY IMPAIRED
SECURITIES $2,209,879 $(151,101) $175,799 $(28,802)
============= ============ =========== ==========
DECEMBER 31, 2013
TOTAL
ESTIMATED UNREALIZED
FAIR VALUE LOSSES
----------------------------- ---------------------------------------
U.S. GOVERNMENT $ 2,815 $ (227)
ALL OTHER GOVERNMENTS 59,084 (7,984)
STATES, TERRITORIES AND
POSSESSIONS 5,450 (659)
POLITICAL SUBDIVISIONS 25,730 (1,613)
SPECIAL REVENUE AND SPECIAL
ASSESSMENT OBLIGATIONS 266,218 (29,966)
INDUSTRIAL AND MISCELLANEOUS 2,026,381 (139,454)
------------- ------------
TOTAL TEMPORARILY IMPAIRED
SECURITIES $2,385,678 $(179,903)
============= ============
F-12
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Enlarge/Download Table]
DECEMBER 31, 2012
LESS THAN 12 MONTHS 12 MONTHS OR MORE
ESTIMATED UNREALIZED ESTIMATED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES
------------------------------------------------------------------------------------------------------------------------
U.S. government $23 $(1) $650 $(33)
All other governments 11,822 (160) --
States, territories and
possessions 584 (1) -- --
Political subdivisions 3,408 (62) -- --
Special revenue and special
assessment obligations 18,903 (517) 16,271 (1,516)
Industrial and miscellaneous 304,145 (6,555) 14,831 (455)
---------- -------- --------- --------
Total temporarily impaired
securities $338,885 $(7,296) $31,752 $(2,004)
========== ======== ========= ========
DECEMBER 31, 2012
TOTAL
ESTIMATED UNREALIZED
FAIR VALUE LOSSES
----------------------------- ----------------------------------------
U.S. government $673 $(34)
All other governments 11,822 (160)
States, territories and
possessions 584 (1)
Political subdivisions 3,408 (62)
Special revenue and special
assessment obligations 35,174 (2,033)
Industrial and miscellaneous 318,976 (7,010)
---------- --------
Total temporarily impaired
securities $370,637 $(9,300)
========== ========
The Company has the intent and ability to hold all bonds in an unrealized loss
position until maturity. The reduction of unrealized gains as of December 31,
2013 was primarily due to an increase in treasury rates across the curve,
despite modest credit spread tightening. Certain securities experienced declines
in fair value that were due in part to credit-related considerations amounting
to $10,429 in 2012 of other-than-temporary impairments. There were no
impairments in 2013.
The components of net investment income for the years ended December 31, 2013
and 2012 were as follows:
[Download Table]
YEAR ENDED DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
Mortgage loans $ 19,228 $16,666
Interest on bonds 331,106 299,246
Real estate income 40 670
Short-term investments 203 43
Derivative instruments 24,829 (799)
Other income 1,272 516
----------- ----------
Gross investment income 376,678 316,342
Investment expenses (12,879) (9,522)
----------- ----------
Net investment income $363,799 $306,820
=========== ==========
Summarized below are realized gains or losses on investments sold during 2013
and 2012. The cost of investments sold is determined by FIFO.
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 2013 NET
REALIZED REALIZED REALIZED REALIZED
GAINS LOSSES LOSSES ON GAINS
ON SALES ON SALES IMPAIRMENTS (LOSSES)
--------------------------------------------------------------------------------------------------------------------
Bonds $ 34,723 $ (18,014) $ -- $ 16,709
Other 2,395 (415) -- 1,980
Tax expense (14,969)
----------
Net realized capital gains,
net of tax 3,720
Transfer to IMR, net of tax of
$5,730 10,642
----------
Net realized capital losses,
net of tax and transfers to
IMR $(6,922)
==========
F-13
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 2012
NET
REALIZED REALIZED REALIZED REALIZED
GAINS LOSSES LOSSES ON GAINS
ON SALES ON SALES IMPAIRMENTS (LOSSES)
-----------------------------------------------------------------------------------------------------------------
Bonds $46,327 $(13,753) $(10,429) $22,145
Other 679 (55) (965) (341)
Tax expense (13,512)
--------
Net realized capital gains, net of
tax 8,292
Transfer to IMR, net of tax of $11,472 21,305
--------
Net realized capital losses, net of
tax and transfers to IMR $(13,013)
========
Proceeds from the sale of investments (excluding calls and maturities) were
$780,841 and $748,364 in 2013 and 2012, respectively.
Under the NAIC guidelines prescribed for the interest maintenance reserve, all
interest-related gains and losses for which the remaining life of the sold
security was greater than one year are deferred (adjusted for tax) and amortized
over the estimated life of the sold instrument. The group method, as defined by
the NAIC, is used for amortization purposes. This method is consistent with
prior years.
At December 31, 2013 and 2012, investments carried at $4,228 and $4,127,
respectively, were on deposit with various regulatory authorities to comply with
insurance regulations.
Loan-backed securities with a recognized other-than-temporary impairment held by
the Company at December 31, 2013 and 2012, with the present value of cash flows
expected to be less than amortized cost, were as follows:
[Enlarge/Download Table]
DECEMBER 31, 2013
AMORTIZED AMORTIZED
COST PROJECTED RECOGNIZED COST FAIR
BEFORE OTTI CASH FLOWS OTTI AFTER OTTI VALUE
-------------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ -- $ --
========== ===== ==== ==== ====
[Enlarge/Download Table]
DECEMBER 31, 2012
AMORTIZED AMORTIZED
COST PROJECTED RECOGNIZED COST FAIR
BEFORE OTTI CASH FLOWS OTTI AFTER OTTI VALUE
------------------------------------------------------------------------------------------------------
$7 $3 $(5) $3 $3
========== ==== === === ==
The following is the aggregate amount of unrealized losses and related fair
value of impaired loan- backed securities (the fair value is less than cost or
amortized cost) for which an other-than-temporary impairment has not been
recognized in earnings as a realized loss as of December 31, 2013 and 2012:
[Enlarge/Download Table]
DECEMBER 31, 2013
LESS THAN 12 MONTHS 12 MONTHS OR MORE
ESTIMATED UNREALIZED ESTIMATED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES
--------------------------------------------------------------------------------------------------------------------
Loan-Backed and Structured
Securities $228,046 $(5,387) $620 $(29)
=========== ========= ====== =====
DECEMBER 31, 2013
TOTAL
ESTIMATED UNREALIZED
FAIR VALUE LOSSES
----------------------------- ----------------------------------------------
Loan-Backed and Structured
Securities $228,666 $(5,416)
=========== =========
F-14
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
(in thousands)
-------------------------------------------------------------------------------
[Enlarge/Download Table]
DECEMBER 31, 2012
LESS THAN 12 MONTHS 12 MONTHS OR MORE
ESTIMATED UNREALIZED ESTIMATED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES
---------------------------------------------------------------------------------------------------------------------------
Loan-Backed and Structured Securities $7,035 $(24) $297 $(34)
======= ===== ===== =====
DECEMBER 31, 2012
TOTAL
ESTIMATED UNREALIZED
FAIR VALUE LOSSES
-------------------------------------- --------------------------------------------
Loan-Backed and Structured Securities $7,332 $(58)
======= =====
4. CAPITAL AND SURPLUS AND DIVIDEND RESTRICTIONS
The maximum amount of ordinary dividends that can be paid during a 12-month
period by life insurance companies domiciled in Indiana, without prior approval
of the Insurance Commissioner, is the greater of 10% of capital and surplus
(excluding special unassigned funds) on the most recent preceding annual
statement or the net gain from operations on the most recent preceding annual
statement. Likewise, a dividend from any source of money other than earned
surplus / unassigned funds must be approved before the dividend is paid. The
maximum ordinary dividend the Company can pay in 2014 is $37,246. On September
4, 2013, FLIC paid an ordinary cash dividend of $15,000 to its parent. On
December 27, 2012, FLIC paid an ordinary cash dividend of $35,000 to its parent.
In 2013, the Company received capital contributions of $50,000 from its parent.
The Company reported no capital contributions received from its parent 2012. The
Company's unassigned surplus was impacted by each item as follows:
[Download Table]
DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
Unrealized gains (losses) $ (549) $(1,088)
Nonadmitted asset values (3,762) (3,952)
Asset valuation reserves (45,536) (32,286)
5. INCOME TAXES
On July 1, 2004, the Company was acquired in a stock purchase acquisition which
required the Company to treat the stock acquisition as a deemed sale of assets
for tax purposes, pursuant to Section 338(h)(10) of the IRC. Pursuant to IRC
Section 338 (h)(10), acquired assets are placed into asset classes based upon
their relative liquidity. Once this classification process is complete, an
individual asset class will receive basis in the assets up to the fair market
value before allocating to the next asset class. To the extent that the fair
market value of an asset class exceeds the remaining purchase price to be
allocated, the remaining purchase price available will be allocated to the
individual asset based on their relative fair market value. Thus, if there is no
purchase price remaining to allocate to an asset class, the assets in that class
will have no tax basis.
Deferred tax assets or liabilities represent the future tax consequences of
temporary differences generated by statutory accounting. Changes in deferred tax
assets and liabilities are recognized as a separate component of gains and
losses in unassigned surplus.
F-15
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
(in thousands)
-------------------------------------------------------------------------------
The components of the net deferred tax assets and liabilities at December 31,
2013 and 2012 were as follows:
[Download Table]
DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
DEFERRED TAX ASSETS
ORDINARY
Reserves $ 18,933 $17,972
Basis difference in deferred acquisition costs 33,093 28,101
Commissions 6,448 1,057
Other ordinary 2,047 2,185
--------- ---------
Admitted ordinary deferred tax assets 60,521 49,315
--------- ---------
CAPITAL
Investments 339 918
--------- ---------
Admitted capital deferred tax assets 339 918
--------- ---------
Admitted deferred tax assets 60,860 50,233
--------- ---------
DEFERRED TAX LIABILITIES
ORDINARY
Deferred premium (7,665) (7,792)
Other ordinary (130) --
--------- ---------
Ordinary deferred tax liabilities (7,795) (7,792)
--------- ---------
CAPITAL
Investments (12,780) (17,521)
--------- ---------
Capital deferred tax liabilities (12,780) (17,521)
--------- ---------
Gross deferred tax liabilities (20,575) (25,313)
--------- ---------
Net admitted deferred tax asset $40,285 $24,920
========= =========
F-16
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Enlarge/Download Table]
2013 2013 2013 2012 2012 2012
ORDINARY CAPITAL TOTAL ORDINARY CAPITAL TOTAL
------------------------------------------------------------------------------------------------------------------------------------
DEFERRED TAX ASSETS
Gross deferred tax
assets $ 60,521 $ 339 $ 60,860 $49,315 $918 $50,233
Statutory valuation
allowance -- -- -- -- -- --
--------- ---------- ---------- --------- --------- ---------
Adjusted gross deferred
tax assets 60,521 339 60,860 49,315 918 50,233
Total of gross deferred
tax liabilities (7,795) (12,780) (20,575) (7,792) (17,521) (25,313)
--------- ---------- ---------- --------- --------- ---------
Net deferred tax asset 52,726 (12,441) 40,285 41,523 (16,603) 24,920
Deferred tax asset
nonadmitted -- -- -- -- -- --
--------- ---------- ---------- --------- --------- ---------
Net admitted deferred
tax asset $ 52,726 $ (12,441) $ 40,285 $41,523 $(16,603) $24,920
ADMISSION CALCULATION
COMPONENTS SSAP 101
(a) Federal income taxes
paid in prior years
recoverable through
loss carrybacks $ 46,834 $ 339 $ 47,173 $25,640 $918 $26,558
(b) Adjusted gross
deferred tax assets
expected to be realized
(Excluding the amount
of deferred tax assets
from (a) above) after
application of the
threshold limitation.
(Lesser of (b)1 and
(b)2 below)
1 Adjusted gross
deferred tax assets
expected to be
realized following the
balance sheet date -- -- -- -- -- --
2 Adjusted gross
deferred tax assets
allowed per limitation
threshold -- -- 72,327 -- -- 65,626
(c) Adjusted gross
deferred tax assets
(excluding: the amount
of deferred tax assets
from (a) and (b) above)
offset by gross
deferred tax
liabilities 13,687 -- 13,687 23,675 -- 23,675
--------- ---------- ---------- --------- --------- ---------
(d) Deferred tax assets
admitted as the result
of SSAP No. 101 Total $60,521 $339 $60,860 $49,315 $918 $50,233
========= ========== ========== ========= ========= =========
[Download Table]
2013 2012
--------------------------------------------------------------------------------
(a) Ratio Percentage Used to Determine
Recovery Period and Threshold Limitation
Amount 908% 976%
(b) Amount of Adjusted Capital and Surplus
Used to Determine Recovery Period and
Threshold Limitation in (b)2 above $ 527,714 $468,737
--------------------------------------------------------------------------------
F-17
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
Tax planning strategies, which include the use of reinsurance, had the following
impacts:
[Enlarge/Download Table]
2013 2013 2012 2012
ORDINARY CAPITAL ORDINARY CAPITAL
---------------------------------------------------------------------------------------------------------------------------------
IMPACT OF TAX PLANNING STRATEGIES
Determination of Adjusted Gross Deferred
Tax Assets and Net Admitted Deferred Tax Assets, by
Tax Character as a Percentage
1. Adjusted Gross DTAs Amount $60,521 $339 $49,315 $919
2. Percentage of Adjusted Gross DTAs by Tax
Character Attributable to the Impact of Tax
Planning Strategies 13.1% 0.0% 0.0% 0.0%
3. Net Admitted Adjusted Gross DTAs Amount $60,521 $339 $49,315 $919
4. Percentage of Net Admitted Adjusted Gross DTAs by
Tax Character Admitted Because of the Impact of Tax
Planning Strategies 13.1% 0.0% 0.0% 0.0%
Current income taxes incurred consist of the following major components:
[Download Table]
2013 2012
----------------------------------------------------------------------------
Current income tax expense $ 16,352 $34,411
Tax on capital gains 14,969 13,512
-------- ---------
Federal income taxes incurred $31,321 $47,923
======== =========
The change in net deferred taxes is composed of the following:
[Enlarge/Download Table]
DECEMBER 31,
2013 2012 CHANGE
---------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets $ 60,860 $50,233 $10,627
Total deferred tax liabilities (20,575) (25,313) 4,738
---------- --------- ---------
Net deferred tax asset $40,285 $24,920 $15,365
---------- --------- ---------
Tax effect of unrealized gains/(losses) 176
---------
Change in net deferred income taxes $15,541
=========
The provision for federal income taxes incurred is different from that which
would be obtained by applying the statutory Federal income tax rate to income
before taxes. The significant items causing this difference are as follows:
[Download Table]
2013 2012
--------------------------------------------------------------------------------
Tax expense at the federal statutory rate of
35% $ 22,720 $48,366
Amortization of interest maintenance reserve (4,640) (4,639)
Low income housing tax credits (2,131) (1,648)
Other, net (237) (764)
---------- ---------
Total federal income taxes $15,712 $41,315
========== =========
Federal income tax incurred $ 31,321 $47,923
Change in net deferred income taxes (15,541) (6,069)
Change in deferred income tax on statutorily
nonadmitted assets (68) (539)
---------- ---------
Total statutory income tax $15,712 $41,315
========== =========
The following are income taxes incurred in the current and prior years that will
be available for recoupment in the event of future net losses:
[Download Table]
2013 $31,380
2012 48,785
2011 44,982
----------
Total $125,147
==========
F-18
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
(in thousands)
-------------------------------------------------------------------------------
At December 31, 2013, the Company had $0 operating loss and $0 capital loss
carry forwards. At December 31, 2013, the Company had $0 deposits admitted under
IRC Section 6603.
The Company files a federal income tax return as part of a consolidated tax
group with FNLIC, FFGI, FFSI, Forethought Capital Funding, Inc., Forethought
Financial Savings Bank and ForeLife Agency, Inc. The Company has a written
agreement, approved by the Company's Board of Directors, which sets forth the
manner in which the total combined federal income tax is allocated to each
entity which is part of the consolidation. Pursuant to this agreement, the
Company is required to pay to FFGI its federal income tax liability computed on
a separate company basis using the same methods and elections used with respect
to determining the group's tax liability giving effect to the modifications of
Treas. Reg. Section 1.1552-1(a)(2)(ii) and without regard to any minimum tax
credit arising under IRC Section 53. In addition, the Company will be reimbursed
in each year to the extent that the use of the Company's operating loss
deduction or credit or operating loss deduction or credit carryover results in
either a reduction of the group's tax for a given consolidated return year or a
refund is obtained by FFGI with respect to any given consolidated return year.
The Company recognizes interest and penalties accrued related to unrecognized
tax benefits as a component of its income tax provision. As of December 31, 2013
and 2012, the Company has no amounts accrued for the payment of interest and
penalties, which does not include the federal tax benefit of interest
deductions, where applicable. The Company's total balance of unrecognized tax
benefits as of December 31, 2013 and 2012 is $0.
The Company files income tax returns in the U.S. federal jurisdiction and
various state and local jurisdictions. With few exceptions, the Company is no
longer subject to U.S. federal, state and local, or non-U.S. income tax
examinations by tax authorities for years before 2009. The Company has no tax
positions for which it believes it is reasonably possible that the total amounts
of unrecognized tax benefits will significantly increase or decrease within the
next twelve months.
6. RELATED-PARTY TRANSACTIONS
The Company has a service and administrative agreement with FFSI and other
affiliates. The agreement calls for FFSI to provide the management and
administration support to all companies pursuant to the service and
administrative agreement. Allocated costs to the Company on a net basis for 2013
and 2012 were $249,103 and $115,596, respectively. At December 31, 2013 and
2012, the Company had a net receivable of $1,090 and $10, respectively, with its
affiliated companies.
7. DEFERRED AND UNCOLLECTED PREMIUMS
Deferred and uncollected life insurance premiums represent annual or fractional
premiums, either due and uncollected or not yet due, where policy reserves have
been provided on the assumption that the full life insurance premium for the
current policy year has been collected. Gross premiums as represented below are
net of reinsurance. Net deferred and uncollected premiums represent only the
portion of gross premiums related to mortality charges and interest. As of
December 31, 2013 and 2012, the Company had deferred and uncollected life
insurance premiums (excluding accident and health) as follows:
[Download Table]
DECEMBER 31, 2013
GROSS NET OF LOADING
---------------------------------------------------------------------------
Ordinary new business $ 1,652 $ 780
Ordinary renewal business 6,837 4,570
Group life 38,263 16,556
--------- ---------
Total deferred and uncollected
premiums $46,752 $21,906
========= =========
[Download Table]
DECEMBER 31, 2012
GROSS Net of Loading
----------------------------------------------------------------------------------
Ordinary new business $1,187 $773
Ordinary renewal business 7,380 4,308
Group life 40,264 17,138
--------- ---------
Total deferred and uncollected
premiums $48,831 $22,219
========= =========
F-19
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
(in thousands)
-------------------------------------------------------------------------------
8. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SSAP No. 100, FAIR VALUE MEASUREMENTS,
establishes a framework for measuring fair value that includes a hierarchy used
to classify the inputs used in measuring fair value. The hierarchy prioritizes
the inputs to valuation techniques used to measure fair value into three levels.
The level in the fair value hierarchy within which the fair value measurement
falls is determined based on the lowest level input that is significant to the
fair value measurement. The levels of the fair value hierarchy are as follows:
- Level 1 -- Fair value is based on unadjusted quoted prices in active markets
for identical assets or liabilities.
- Level 2 -- Fair value is based on significant inputs other than Level 1
inputs that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or liability
through corroboration with observable market data. Level 2 inputs include
quoted market prices in active markets for similar assets and liabilities,
quoted market prices in markets that are not active for identical or similar
assets or liabilities and other market observable inputs. Valuations are
generally obtained from third party pricing services for identical or
comparable assets or liabilities, non-binding broker quotes (when pricing
service information is not available) or through the use of valuation
methodologies using observable market inputs.
- Level 3 -- Fair value is based on at least one or more significant
unobservable inputs for the asset or liability.
The table below presents the balances of assets and liabilities measured at fair
value as of December 31, 2013 and 2012.
[Enlarge/Download Table]
DECEMBER 31, 2013
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------------------------------------
DERIVATIVE ASSETS
Options $ -- $ 31,236 $ -- $ 31,236
Swaps -- (751) -- (751)
---- --------- ---- ---------
TOTAL $ -- $30,485 $ -- $30,485
==== ========= ==== =========
LIABILITIES
Derivative liabilities -- 7,000 -- 7,000
---- --------- ---- ---------
Total $ -- $7,000 $ -- $7,000
==== ========= ==== =========
[Enlarge/Download Table]
DECEMBER 31, 2012
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------------------------------------
Derivative Assets -- 10,112 -- 10,112
---- --------- ---- ---------
TOTALS $ -- $10,112 $ -- $10,112
==== ========= ==== =========
There were no material asset transfers between Level 1 and Level 2. The table
below summarizes the reconciliation of the beginning and ending balances and
related changes for the year ended December 31, 2013 and 2012 for the fair value
measurements for which significant unobservable inputs (level 3) were used in
determining each instrument's fair value.
[Enlarge/Download Table]
DECEMBER 31, 2013 TRANSFERS
BEGINNING UNREALIZED PURCHASES / IN/OUT OF ENDING
BALANCE GAINS/(LOSSES) SALES LEVEL 3 BALANCE
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS $ -- $ -- $8,500 $ -- $8,500
---- ---- -------- ---- --------
TOTALS $ -- $ -- $8,500 $ -- $8,500
==== ==== ======== ==== ========
[Enlarge/Download Table]
DECEMBER 31, 2012 TRANSFERS
BEGINNING UNREALIZED PURCHASES / IN/OUT OF ENDING
BALANCE GAINS/(LOSSES) SALES LEVEL 3 BALANCE
------------------------------------------------------------------------------------------------------------------------------------
Common
stocks $22 $ -- $(22) $ -- $ --
------ ---- ------ ---- ----
Totals $22 $ -- $(22) $ -- $ --
====== ==== ====== ==== ====
F-20
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
The disclosure of fair value information about certain financial instruments is
based primarily on values published by the Securities Valuation Office ("SVO")
of the NAIC. The fair values of short-term investments and cash approximate the
carrying amounts reported in the balance sheet. The fair value of the mortgage
loan portfolio was estimated by discounting the future cash flows using current
rates at which similar loans would be made to borrowers with similar credit
ratings for similar maturities. The fair value of other invested assets is based
on quoted market prices when available.
The estimated fair values of the interest-bearing liabilities for policyholder
funds approximate the carrying value because interest rates credited to the
account balances approximate current rates paid on similar funds and are not
generally guaranteed beyond one year.
Fair values for insurance reserves are not required to be disclosed. However,
the estimated fair values for all insurance liabilities are taken into
consideration in the Company's overall management of interest rate risk, which
minimizes exposure to changing interest rates through the matching of investment
maturities with amounts due under insurance contracts.
The fair value of certain financial instruments along with their corresponding
carrying values at December 31, 2013 and 2012 are as follows:
[Enlarge/Download Table]
DECEMBER 31,
2013 2012
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
---------------------------------------------------------------------------------------------------------------------------------
Bonds $ 6,553,723 $ 6,753,783 $5,489,299 $6,234,071
Common stock -- unaffiliated 8,500 8,500 -- --
Preferred stocks 4,400 4,356 2,935 2,935
Mortgage loans 451,890 460,708 339,652 370,955
Cash, cash equivalents and short-term investments 95,291 95,291 233,172 233,172
Contract loans and other invested assets 102,426 102,426 65,251 65,251
9. INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF -- BALANCE-SHEET RISK AND
FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK
The table below summarizes the Company's financial instruments with off-balance
sheet risk or credit risk:
[Download Table]
ASSETS LIABILITIES
2013 2012 2013 2012
--------------------------------------------------------------------------------
Derivatives
Fair value / Statement $ 31,236 $10,112 $ 751 $ --
value
Cost / Book value $ 17,359 $14,362 $ -- $ --
The Company issues fixed indexed annuity products that provide a potential
return that is linked to the S&P 500 index. The Company purchases over the
counter S&P 500 index call options from approved counterparties for the purpose
of hedging the potential increases to policyholder benefits resulting from
increases in the S&P 500 Index. A one-time premium was paid for the purchase of
these options with no additional cash or collateral required.
The Company also uses various equity futures to hedge equity exposure associated
with the Guaranteed Living Withdrawal Benefit and Guaranteed Minimum Death
Benefit features of the variable annuity line of business. Collateral has been
posted for equity futures in the amount of $1,889.
The Company also issues life products whose death benefit growth rate is
determined by various consumer price indexes. The Company hedges this risk by
entering into CPI swaps. Collateral has been posted for the CPI swaps in the
amount of $11,964 as of December 31, 2013.
In 2013, the Company purchased two currency swaps to hedge its currency exposure
resulting from its purchase of GBP denominated bonds. Under the terms of the
swaps, the Company pays fixed and floating GBP and receives fixed USD.
F-21
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
The Company is exposed to the credit-related losses in the event on
nonperformance by counterparties to the financial instruments.
10. REINSURANCE
Effective December 31, 2011, the Company entered into an affiliated reinsurance
agreement with FNLIC whereby the Company ceded annuity reserves on a funds
withheld basis. Reserves ceded under this contract were $192,695 and $201,242 as
of December 31, 2013 and 2012, respectively.
In 2010, the Company entered into a new reinsurance agreement whereby it ceded
95% of its direct written Medicare Supplement premiums to a non-affiliated
reinsurer. On April 1, 2011, the agreement was amended to provide for the
Company to cede 80% of its Medicare Supplemental risk.
On January 1, 2013, the Company entered into a coinsurance reinsurance agreement
with RGA Reinsurance Company. The agreement provides for the Company to reinsure
the return of premium risk associated with MYGA return of premium policies. The
reinsured portion is 90% of the additional reserve liability of the return of
premium amount in excess of the cash value. As of December 31, 2013, the Company
carried $11,055 of reserve credit associated with this reinsurance.
In 2012, the Company entered into reinsurance agreements with two Hartford life
insurance entities in connection with the execution of an agreement for FFG to
acquire identified components of Hartford's Individual Annuities Platform. The
Company reinsures all new business written by the IAP sales force between May 1,
2012 and May 1, 2013 on a 100% indemnity reinsurance basis. The reinsurance
agreements are structured as 100% modified coinsurance between the two Hartford
life insurance entities and FLIC, with reserves for this business held by the
Hartford. This represents a closed reinsurance block. For the period of May 1,
2012 through December 31, 2012 premiums and deposits generated under this
agreement were $210,524. For the period of January 1, 2013 through May 1, 2013,
premiums and deposits generated under this agreement were $244,820.
The Company assumes certain preneed life insurance policies from one
non-affiliated company. This block of assumed business is in run-off. As of
December 31, 2013 and 2012, FLIC assumed $38,578 and $40,545 of reserves. The
Company accounts for its assumed reinsurance business on a basis consistent with
those used in accounting for the original policies issued.
Net premiums earned for the years ended December 31, 2013 and 2012 are
summarized as follows:
[Download Table]
2013 2012
--------------------------------------------------------------------------------
Direct premiums earned $ 2,139,581 $1,339,428
Reinsurance assumed 245,613 211,374
Reinsurance ceded (54,165) (136,990)
------------- ------------
Net premiums earned $2,331,029 $1,413,812
============= ============
Reinsurance does not discharge the Company from its primary liability to
policyholders, and to the extent that a reinsurer should be unable to meet its
obligations, the Company would be liable to policyholders.
11. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
CONCENTRATIONS OF CREDIT RISK
Mortgage loans are collateralized by the underlying properties. Collateral must
meet or exceed 125% of the loan at the time the loan is made. The Company grants
only commercial mortgage loans to customers throughout the United States. The
Company has a diversified loan portfolio with no exposure greater than 18% in
any state at December 31, 2013. The summary below depicts loan exposure of
remaining principal balances by type and region at December 31, 2013 and 2012.
F-22
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
[Download Table]
DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
Mortgage assets by type
Retail $ 132,636 $100,445
Office 87,238 68,820
Industrial 60,013 52,377
Other 172,003 118,010
----------- ----------
Total mortgage loans $451,890 $339,652
=========== ==========
[Download Table]
DECEMBER 31,
2013 2012
--------------------------------------------------------------------------------
Region
Atlantic $ 115,317 $105,386
North Central 46,419 35,504
South Central 67,673 46,088
Mountain 19,360 10,496
New England 17,771 18,703
Pacific 114,585 85,835
Various 70,765 37,640
----------- ----------
Total mortgage loans $451,890 $339,652
=========== ==========
The Company reported other-than-temporary impairments on its commercial mortgage
loan portfolio of $0 and $0 for the years ended December 31, 2013 and 2012,
respectively. The Company reported no impaired mortgage loans. In 2012, the
Company maintained an allowance for credit losses of $750 as a result of the
portfolio manager review and communication with the borrower on a specific
mortgage loan where the borrower anticipates tenant vacancies which could
require the borrower to request a modification to the original terms of the
loan. This amount was recovered in 2013 and the Company had no allowance for
mortgage loans as of December 31, 2013. In 2013, the minimum and maximum rates
of interest received for commercial loans were 3.15% and 7.5%. The Company
reduced the rate on one loan in 2013.
SUBPRIME MORTGAGE EXPOSURES (INCLUDES ALT A)
The Company defines subprime loans as structured securities that have some or
all of the following characteristics: loans within the structures which have
FICO (a way of measuring an individual's credit worthiness) scores 660 and
below, high loan-to-value ratios, poor underwriting documentation, and
affordability characteristics such as rate resets loans, interest only loans,
negative amortization loans, or adjustable rate mortgages. The Company reviews
its mortgage-backed investments for impairments and believes that the current
unrealized losses are temporary and will likely recover in value as conditions
improve in the real estate and mortgage lending industry. To mitigate current
exposure, the Company monitors and reviews subprime-related assets.
At December 31, 2013 and 2012, the Company had no direct exposure through
investments in subprime mortgage loans.
The Company had exposure to subprime and Alt A mortgage related risks through
other investments with carrying values and fair values of $383,530 and $421,655,
respectively, as of December 31, 2013, compared to $198,311 and $230,804,
respectively, as of December 31, 2012. The Company did not recognize any
other-than-temporary impairment losses on these securities for the years ended
December 31, 2013 and 2012.
In 2013, the Company added senior and super senior tranches of non-agency RMBS.
Securities were largely rated high yield by NRSO agencies, however due to
discounted purchase pricing, 96% securities were rated NAIC 1 and 4% were rated
NAIC 2. The Company monitors non-agency exposure on two levels, unrealized
losses due to changes in asset values (market driven) as well as recognized
losses due to receiving less than expected cash flows or cash flow requirements.
As part of the Company's portfolio review for potentially impaired assets, the
Company examines all non-agency RMBS securities for expected loss of principal,
ratings, aging of unrealized losses, and the probability of collection of
contractual cash flows. Its advisors also conduct loan level analysis to look
for defaults and delinquencies.
The Company does not have underwriting exposure to subprime mortgage risk
through mortgage guaranty coverage, financial guaranty coverage, directors and
officers liability coverage, or errors and omissions liability coverage.
F-23
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
(in thousands)
-------------------------------------------------------------------------------
12. ANNUITY RESERVES
The withdrawal characteristics of annuity reserves as of December 31, 2013 and
2012 were as follows:
[Enlarge/Download Table]
2013
GENERAL SEPARATE ACCOUNT
ACCOUNT WITHOUT GUARANTEE TOTAL
--------------------------------------------------------------------------------------------------------------------------------
Subject to discretionary withdrawal:
with fair value adjustment $ 1,454,295 $ -- $ 1,454,295
at book value less current surrender
charge of 5% or more 1,917,955 498,136 2,416,091
--- --- ----
Total with adjustment or at fair
value 3,372,250 498,136 3,870,386
at book value without adjustment
(minimal or no charge or adjustment) 277,738 7,735 285,473
--- --- ----
Subtotal 3,649,988 505,871 4,155,859
Not subject to discretionary withdrawal: 171,716 -- 171,716
--- --- ----
Total 3,821,704 505,871 4,327,575
Reinsurance ceded (203,749) -- (203,749)
--- --- ----
Total $3,617,955 $505,871 $4,123,826
=== === ====
[Download Table]
2012
-------------------------------------------------------------------------
Subject to discretionary withdrawal:
with fair value adjustment $808,016
at book value less current surrender charge of 5% or
more 1,781,118
-----------
Total with adjustment or at fair value 2,589,134
at book value without adjustment (minimal or no charge
or adjustment) 31,253
-----------
Subtotal 2,620,387
Not subject to discretionary withdrawal: 551
-----------
Total 2,620,938
Reinsurance ceded (201,242)
-----------
Total $2,419,696
===========
The Company is a member of the Federal Home Loan Bank (FHLB) of Indiana. Through
its membership, the Company has issued funding agreements to the FHLB Indiana in
exchange for cash advances in the amount of $170,000. The Company uses these
funds in an investment spread strategy, consistent with its other investment
spread operations. As such, the Company applies SSAP No. 52 accounting treatment
to these funds, consistent with its other deposit-type contracts. It is not part
of the Company's strategy to utilize these funds for operations, and any funds
obtained from the FHLB Indiana for use in general operations would be accounted
for consistent with SSAP No. 15 as borrowed money.
The table below indicates the amount of FHLB Indiana stock purchased, collateral
pledged, assets and liabilities related to the agreement with FHLB Indiana
[Download Table]
DECEMBER 31,
2013
--------------------------------------------------------------------------------
FHLB stock purchased/owned as part of the agreement $8,500
Collateral pledged to the FHLB 205,395
Funding capacity currently available 170,909
Total reserves related to funding agreement 170,100
Agreement assets and liabilities
General account assets 8,500
General account liabilities 170,100
F-24
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
13. SEPARATE ACCOUNTS
The Company utilizes separate accounts to record and account for assets and
liabilities for variable annuity transactions. In accordance with the
products/transactions recorded within the separate account, assets are
considered legally insulated. The legal insulation of the separate account
assets prevents such assets from being generally available to satisfy claims
resulting from the general account.
As of December 31, 2013, the Company's separate account statement included
legally insulated assets of $550,020. The assets legally insulated from the
general account as of December 31, 2013 are attributed to the following
products/transactions:
[Enlarge/Download Table]
SEPARATE ACCOUNT ASSETS
PRODUCT/TRANSACTION LEGALLY INSULATED ASSETS (NOT LEGALLY INSULATED)
---------------------------------------------------------------------------------------------------------------------------------
ForeRetirement Variable Annuity $536,867 $ --
Huntington ForeRetirement Variable Annuity 13,153 --
Forethought Variable Interest Trust -- 20,661
----------- ---------
Total $550,020 $20,661
=========== =========
Separate account assets held by the Company relate to individual variable
annuities of a nonguaranteed nature. The net investment experience of the
separate account is credited directly to the policyholder and can be positive or
negative. As of December 31, 2013, separate account liabilities have minimum
death benefits and lifetime withdrawal benefits guaranteed by the general
account. Some variable annuities provide an incidental death benefit equal to
the greater of the highest contract value on a certain date or premium paid
and/or a lifetime withdrawal benefit as a portion of highest contract value on a
certain date. The maximum amount associated with death benefit guarantees for
2013 was $251 with associated risk charges paid by the separate account to
compensate for these risks of $556. The maximum amount associated with
withdrawal benefit guarantees for 2013 was $541 with associated risk charges
paid by the separate account of $1,165.
[Download Table]
NONGUARANTEED
SEPARATE
ACCOUNTS
--------------------------------------------------------------------------------
(1) Premiums, considerations or deposits for year ended $ 472,944
12/31/2013
Reserves at 12/31/2013 505,870
(2) For accounts with assets at:
a. Fair value 505,870
b. Amortized cost --
-----------
c. Total reserves $505,870
===========
(3) By withdrawal characteristics:
a. Subject to discretionary withdrawal --
b. With FB adjustment --
c. At book value without FV adjustment and with $ 498,135
current surrender charge of 5% or more
d. At fair value --
e. At book value without FV adjustment and with 7,735
current surrender charge of less than 5%
-----------
f. Subtotal 505,870
g. Not subject to discretionary withdrawal --
-----------
h. Total $505,870
===========
The following table reconciles transfers as reported in the Summary of
Operations of the Separate Accounts Statement to the Summary of Operations of
the Life, Accident & Health Annual Statement:
[Download Table]
Transfers to Separate Accounts $ 546,545
Transfers from Separate Accounts 60,247
Net transfers to Separate Accounts $486,298
-----------
Transfers as reported in the Summary of Operations of the Life,
Accident & Health Annual Statement $486,298
===========
--------------------------------------------------------------------------------
F-25
FORETHOUGHT LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
--------------------------------------------------------------------------------
(in thousands)
14. NONADMITTED ASSETS
Under SAP guidance, a nonadmitted asset is defined as an asset having economic
value other than that which can be used to fulfill policyholder obligations, or
those assets which are unavailable due to encumbrances or other third party
interests. These assets are not recognized on the balance sheet, and are,
therefore, considered nonadmitted.
The following table shows the major categories of assets that are nonadmitted at
December 31, 2013 and 2012, respectively.
[Download Table]
2013 2012 DECREASE
--------------------------------------------------------------------------------
Intangible asset $ 1,195 $1,819 $(624)
Due from agents 2,567 2,133 434
-------- ------- ------
Total nonadmitted assets $3,762 $3,952 $(190)
======== ======= ======
15. COMMITMENTS AND CONTINGENT LIABILITIES
The Company has funding commitments subsequent to December 31, 2013 for the
following:
[Download Table]
LIHTC Partnerships $6,601
Limited Partnerships 6,555
Private Equities 3,326
Infrastructure Debt 4,300
In addition, on December 31, 2013, the Company committed to a reverse repurchase
agreement to start on January 2, 2014 for $150,096 with a termination date of
January 7, 2014.
Various other lawsuits against the Company may arise in the course of the
Company's business. Contingent liabilities arising from litigation, income taxes
and other matters are not considered material in relation to the financial
position of the Company.
16. SUBSEQUENT EVENT
On January 2, 2014, Global Atlantic Financial Group ("GAFG") acquired
Forethought Financial Group through a merger transaction. As a result of the
merger, GAFG effectuated certain internal restructuring transactions. As a
result of such restructuring, Commonwealth Life and Annuity Insurance Company, a
wholly-owned indirect subsidiary of GAFG, owns 100% of the outstanding ordinary
shares of the Company.
F-26
SUPPLEMENTAL INFORMATION
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
DECEMBER 31, 2013
(in thousands)
-------------------------------------------------------------------------------
The following is a summary of selected financial data included in other exhibits
and schedules included to comply with paragraph 9 of the Annual Audited
Financial Reports in the General section of the NAIC's Annual Statement
Instructions. Certain items not applicable to the Company have been omitted.
[Download Table]
INVESTMENT INCOME EARNED
----------------------------------------------------------------------------------
Government bonds $360
Other bonds (unaffiliated) 330,746
Bonds of affiliates --
Preferred stocks (unaffiliated) 169
Preferred stocks of affiliates --
Common stocks (unaffiliated) 183
Common stocks of affiliates --
Mortgage loans 19,228
Real estate 40
Premium notes, policy loans and liens 355
Cash on hand and on deposit --
Short-term investments 203
Other invested assets (848)
Derivative instruments 24,829
Aggregate write-ins for investment income 1,412
------------
Gross investment income $376,677
------------
Real estate owned -- book value less encumbrances $ --
Mortgage loans -- book value:
Commercial mortgages $451,890
------------
Mortgage loans by standing -- book value:
Good standing $451,890
------------
Interest overdue more than 90 days, not in foreclosure $ --
------------
Other long term assets -- statement value $61,598
------------
Collateral loans $4,766
------------
Bonds and stocks of parents, subsidiaries and affiliates
Book/Adjusted carrying value
Bonds $ --
------------
Preferred stocks $ --
------------
Common stocks $ --
------------
Bonds and short-term investments by class and maturity
Bonds and short-term investments by maturity -- statement value
Due within one year or less $239,481
Over 1 year through 5 years 935,565
Over 5 years through 10 years 2,527,537
Over 10 years through 20 years 955,848
Over 20 years 1,966,661
------------
Total by maturity $6,625,092
============
F-27
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
DECEMBER 31, 2013
(in thousands)
-------------------------------------------------------------------------------
[Download Table]
Bonds and short-term investments by class -- statement value
Class 1 $3,764,915
Class 2 2,584,985
Class 3 239,281
Class 4 35,789
Class 5 122
Class 6 --
------------
Total by class $6,625,092
============
Total bonds publicly traded $5,429,780
------------
Total bonds privately placed $1,195,313
------------
Preferred stocks -- statement value $4,400
------------
Common stocks -- market value $8,500
------------
Short-term investments -- book value: $67,765
------------
Options, Caps & Floors Owned -- Statement Value $30,485
------------
Cash on deposit $27,526
------------
Cash equivalents $ --
------------
Life insurance in force
Industrial $827,708
------------
Ordinary $ --
------------
Credit life $ --
------------
Group life $3,724,140
------------
Annuities
Ordinary
Immediate -- amount of income payable $ --
------------
Deferred -- fully paid account balance $3,960,361
------------
Deferred -- not fully paid account balance $70
------------
Group
Amount of income payable $ --
------------
Fully paid account balance $267,763
------------
Not fully paid account balance $1,518
------------
Accident and Health Insurance -- Premiums In Force:
Ordinary $68,646
------------
Group $70
------------
Credit $ --
------------
Deposit Funds and Dividend Accumulations:
Deposit Funds -- Account Balance $ --
------------
Dividend Accumulations -- Account Balance $ --
------------
Claim Payments:
Other Accident and Health --
2013 $47,259
------------
2012 $24,298
------------
Claims Reserves:
2013 $1,275
------------
2012 $1,837
------------
F-28
FORETHOUGHT LIFE INSURANCE COMPANY
SUMMARY INVESTMENT SCHEDULE
DECEMBER 31, 2013
--------------------------------------------------------------------------------
(in thousands)
[Enlarge/Download Table]
ADMITTED ASSETS AS
GROSS INVESTMENT REPORTED IN THE
HOLDINGS ANNUAL STATEMENT
1 2 3 4
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT CATEGORIES
Bonds
U.S. treasury securities $6,456 0.1 $6,456 0.1
U.S. government agency and corporate obligations
(excluding mortgage-backed securities)
Issued by U.S. government agencies 643 0.0 643 0.0
Issued by U.S. government sponsored agencies 12,300 0.2 12,300 0.2
Non-U.S. government (including Canada, excluding mortgage-
backed securities) 133,273 1.8 133,273 1.8
Securities issued by states, territories and possessions
and political subdivisions
in the U.S.
States, territories and possessions general obligations 65,772 0.9 65,772 0.9
Political subdivisions of states, territories &
possessions & political subdivisions 0.0 0.0
general obligations 72,049 1.0 72,049 1.0
Revenue and assessment obligations 532,635 7.4 532,635 7.4
Industrial development and similar obligations -- 0.0 -- 0.0
Mortgage-backed securities (includes residential and
commercial MBS)
Pass-through securities
Guaranteed by GNMA 16,311 0.2 16,311 0.2
Issued by FNMA and FHLMC 158,311 2.2 158,311 2.2
Privately issued -- 0.0 -- 0.0
CMOs and REMICs
Issued or guaranteed by GNMA, FNMA, FHLMC or VA 24,764 0.3 24,764 0.3
Privately issued and collateralized by MBS issued or
guaranteed by GNMA, FNMA or FHLMC 2,420 0.0 2,420 0.0
All other 536,939 7.4 536,939 7.4
Other debt and other fixed income securities (excluding
short-term)
Unaffiliated domestic securities (includes credit tenant
loans rated by the SVO) 4,192,419 58.1 4,192,419 58.1
Unaffiliated non-U.S. securities (including Canada) 803,036 11.1 803,036 11.1
Affiliated securities -- 0.0 -- 0.0
Equity interests
Investments in mutual funds -- 0.0 -- 0.0
Preferred stocks
Affiliated 4,400 0.1 4,400 0.1
Unaffiliated -- 0.0 -- 0.0
Publicly traded equity securities (excluding preferred
stocks)
Affiliated -- 0.0 -- 0.0
Unaffiliated -- 0.0 -- 0.0
Other equity securities
Affiliated -- 0.0 -- 0.0
Unaffiliated 8,500 0.1 8,500 0.1
Other equity interests including tangible personal
property under lease
Affiliated -- 0.0 -- 0.0
Unaffiliated -- 0.0 -- 0.0
Mortgage loans
Construction and land development -- 0.0 -- 0.0
Agricultural -- 0.0 -- 0.0
Single family residential properties -- 0.0 -- 0.0
Multifamily residential properties -- 0.0 -- 0.0
Commercial loans 451,890 6.3 451,890 6.3
Real estate investments
Property occupied by company -- 0.0 -- 0.0
Property held for production of income (includes $0 of
property acquired in satisfaction of debt) -- 0.0 -- 0.0
Property held for sale ($0 including property acquired in
satisfaction of debt) -- 0.0 -- 0.0
Contract loans 4,766 0.1 4,766 0.1
Derivatives 31,236 0.4 31,236 0.4
Receivables for securities 1,437 0.0 1,437 0.0
Cash, cash equivalents and short-term investments 95,291 1.3 95,291 1.3
Other invested assets 64,987 0.9 64,987 0.9
---------- ------ ---------- ------
Total invested assets $7,219,835 100.0 $7,219,835 100.0
========== ====== ========== ======
F-29
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES
DECEMBER 31, 2013
--------------------------------------------------------------------------------
(in thousands)
[Download Table]
1. Reporting entity's total admitted assets as reported on page 2 $7,386,545
of this annual statement
2. Ten largest exposures to a single issuer/borrower/investment.
[Enlarge/Download Table]
PERCENTAGE OF TOTAL
ISSUER DESCRIPTION OF EXPOSURE AMOUNT ADMITTED ASSETS
---------------------------------------------------------------------------------------------------------------------------------
2.01 State Street Bank Long Term Bond/Money Market $70,737 0.958%
2.02 Aid-Israel Long Term Bond $49,749 0.674%
2.03 Wal-Mart Stores Inc Long Term Bond $45,658 0.618%
2.04 Meditronic Inc Long Term Bond $43,520 0.589%
2.05 Duke Energy corp Long Term Bond $40,451 0.548%
2.06 Southern Cal Edison Long Term Bond $39,976 0.541%
2.07 Scana Corp Long Term Bond $37,110 0.502%
2.08 AT&T Inc. Long Term Bond $36,879 0.499%
2.09 Philip Morris International Inc. Long Term Bond $36,643 0.496%
2.10 The Southern Company Long Term Bond $34,558 0.468%
3. Amounts and percentages of the reporting entity's total admitted assets
held in bonds and preferred stocks by NAIC rating.
[Download Table]
PERCENTAGE OF TOTAL
BONDS AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
3.01 NAIC-1 $3,764,915 50.970%
3.02 NAIC-2 $2,584,985 34.996%
3.03 NAIC-3 $239,281 3.239%
3.04 NAIC-4 $35,789 0.485%
3.05 NAIC-5 $122 0.002%
3.06 NAIC-6 $ -- 0.000%
[Download Table]
PERCENTAGE OF TOTAL
PREFERRED STOCKS AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
3.07 P/RP-1 $ -- 0.000%
3.08 P/RP-2 $4,400 0.060%
3.09 P/RP-3 $ -- 0.000%
3.10 P/RP-4 $ -- 0.000%
3.11 P/RP-5 $ -- 0.000%
3.12 P/RP-6 $ -- 0.000%
4. Assets held in foreign investments:
[Download Table]
4.01 Are assets held in foreign investments less than
2.5% of the reporting entity's total admitted assets? Yes / / No x
4.02 Total admitted assets held in foreign investments $787,890 10.667%
4.03 Foreign-currency-denominated investments $11,460 0.155%
4.04 Insurance liabilities denominated in that same
foreign currency $ -- 0.000%
5. Aggregate foreign investment exposure categorized by NAIC sovereign rating:
[Download Table]
PERCENTAGE OF TOTAL
AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
5.01 Countries rated NAIC-1 $594,787 8.052%
5.02 Countries rated NAIC-2 $119,465 1.617%
5.03 Countries rated NAIC-3 or below $1,289 0.017%
F-30
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES
DECEMBER 31, 2013
--------------------------------------------------------------------------------
(in thousands)
6. Largest foreign investment exposures by country, categorized by the
country's NAIC sovereign rating:
[Download Table]
PERCENTAGE OF TOTAL
AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
Countries rated NAIC-1
6.01 United Kingdom $171,478 2.321%
6.02 Netherlands $79,175 1.072%
Countries rated NAIC-2
6.03 Ireland $34,637 0.469%
6.04 Mexico $27,686 0.375%
Countries rated NAIC-3 or below
6.05 Turkey $1,289 0.017%
6.06 Country: $ -- 0.000%
7. Aggregate unhedged foreign currency $ -- 0.000%
exposure:
8. Aggregate unhedged foreign currency exposure categorized by NAIC sovereign
rating:
[Download Table]
PERCENTAGE OF TOTAL
AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
8.01 Countries rated NAIC-1: $ -- 0.000%
8.02 Countries rated NAIC-2: $ -- 0.000%
8.03 Countries rated NAIC-3 or below $ -- 0.000%
9. Largest unhedged foreign currency exposures by country, categorized by the
country's NAIC sovereign rating:
[Download Table]
PERCENTAGE OF TOTAL
AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
Countries rated NAIC-1
9.01 Country: $ -- 0.000%
9.02 Country: $ -- 0.000%
Countries rated NAIC-2
9.03 Country: $ -- 0.000%
9.04 Country: $ -- 0.000%
Countries rated NAIC-3 or below
9.05 Country: $ -- 0.000%
9.06 Country: $ -- 0.000%
10. Ten largest non-sovereign (i.e. non-governmental) foreign issues:
[Download Table]
NAIC PERCENTAGE OF TOTAL
ISSUER RATING AMOUNT ADMITTED ASSETS
--------------------------------------------------------------------------------
10.01 BHP Billiton Finance 1 $26,666 0.361%
10.02 Smiths Grp PLC 2 $14,142 0.191%
10.03 Pentair Finance SA 2 $13,974 0.189%
10.04 Covidien International 1 $13,826 0.187%
Finance
10.05 British Transco 1 $13,820 0.187%
International
10.06 Tyco International 2 $13,759 0.186%
10.07 Aggreko PLC 1 $13,500 0.183%
10.08 HSBC Holdings PLC 1 $12,685 0.172%
10.09 America Movil 1 $10,869 0.147%
10.10 Rio Tinto Finance 1 $10,787 0.146%
(USA)
F-31
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES, CONTINUED
DECEMBER 31, 2013
--------------------------------------------------------------------------------
(in thousands)
11. Amounts and percentages of the reporting entity's total admitted assets
held in Canadian investments and unhedged Canadian currency exposure:
[Download Table]
11.01 Are assets held in Canadian Yes / / No x
investments less than 2.5% of the
reporting entity's total admitted
assets?
11.02 Total admitted assets held in $224,428 3.038%
Canadian investments
11.03 Canadian currency-denominated $ -- 0.000%
investments
11.04 Canadian-denominated insurance $ -- 0.000%
liabilities
11.05 Unhedged Canadian currency $ -- 0.000%
exposure
12. Report aggregate amounts and percentages of the reporting entity's total
admitted assets held in investments with contractual sales restrictions.
[Download Table]
12.01 Are assets held in investments with conrtactual Yes x No / /
sales restrictions less than 2.5% of the reporting
entity's total admitted assets?
12.02 Aggregate statement value of investments with $ -- 0.000%
with contractual sales restrictions
13. Amounts and percentages of admitted assets held in the ten largest equity
interests:
[Download Table]
13.01 Are assets held in equity interest less than 2.5% of of Yes x No / /
the reporting entity's admitted assets?
14. Amounts and percentages of the reporting entity's total admitted assets
held in nonaffiliated, privately placed equities:
[Download Table]
14.01 Are assets held in nonaffiliated privately placed Yes x No / /
equities less than 2.5% of the reporting entity's
total admitted assets?
14.02 Aggregate statement value of investments held in $ -- 0.000%
nonaffiliated, privately placed equities
15. Amounts and percentages of the reporting entity's total admitted assets
held in general partnership interests:
[Download Table]
15.01 Are assets held in general partnership interests Yes x No / /
less than 2.5% of the reporting entity's total admitted
assets?
15.02 Aggregate statement value of investments held in $ -- 0.000%
general partnership interests
16. Amounts and percentages of the reporting entity's total admitted assets
held in mortgage loans:
[Download Table]
16.01 Are mortgage loans reported in Schedule B less than Yes / / No x
2.5% of the reporting entity's total admitted assets?
Type (Commercial, Residential Agricultural)
[Download Table]
16.02 Commercial $451,890 6.118%
Amounts and percentages of the reporting entity's total admitted assets held in
the following categories of mortgage loans:
[Download Table]
16.12 Construction loans $ -- 0.000%
16.13 Mortgage loans over 90 days past due $ -- 0.000%
16.14 Mortgage loans in the process of foreclosure $ -- 0.000%
16.15 Mortgage loans foreclosed $ -- 0.000%
16.16 Restructured mortgage loans $ -- 0.000%
17. Aggregate mortgage loans having the following loan-to-value ratios as
determined from the most current appraisal as of the annual statement date:
[Enlarge/Download Table]
LOAN-TO-VALUE RESIDENTIAL COMMERCIAL AGRICULTURAL
------------------------------------------------------------------------------------------------------------------
17.01 above 95% $ -- 0.000% $ -- 0.000% $ -- 0.000%
17.02 91% to 95% $ -- 0.000% $ -- 0.000% $ -- 0.000%
17.03 81% to 90% $ -- 0.000% $ -- 0.000% $ -- 0.000%
17.04 71% to 80% $ -- 0.000% $81,991 1.110% $ -- 0.000%
17.05 below 70% $ -- 0.000% $369,899 5.008% $ -- 0.000%
F-32
FORETHOUGHT LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES, CONTINUED
DECEMBER 31, 2013
--------------------------------------------------------------------------------
(in thousands)
18. Amounts and percentages of the reporting entity's total admitted assets
held in each of the five largest investments in real estate:
[Download Table]
18.01 Are assets held in real estate reported less than Yes x No / /
2.5% of the reporting entity's total admitted assets?
19. Report aggregate amounts and percentages of the reporting entity's total
admitted assets held in investments held in mezzanine real estate loans.
[Download Table]
19.01 Are assets held in investments held in mezzanine real Yes x No / /
estate loans less than 2.5% of the reporting entity's
admitted assets?
20. Amounts and percentages of the reporting entity's total admitted assets
subject to the following types of agreements:
[Enlarge/Download Table]
AT YEAR-END AT END OF EACH QUARTER
1ST QTR 2ND QTR 3RD QTR
AMOUNT PERCENTAGE AMOUNT AMOUNT AMOUNT
---------------------------------------------------------------------------------------------------------------------------------
20.01 Securities lending (do not include $ -- 0.000% $ -- $ -- $ --
assets held as collateral for such
transactions)
20.02 Repurchase agreements $ -- 0.000% $ -- $ -- $ --
20.03 Reverse repurchase agreements $ -- 0.000% $106,439 $80,598 $103,518
20.04 Dollar repurchase agreements $ -- 0.000% $ -- $ -- $ --
20.05 Dollar reverse repurchase agreements $ -- 0.000% $ -- $ -- $ --
21. Amounts and percentages of the reporting entity's total admitted assets
for warrants not attached to other financial instruments, options, caps and
floors:
[Enlarge/Download Table]
OWNED WRITTEN
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
---------------------------------------------------------------------------------------------------------------------------------
21.01 Hedging $31,236 0.423% $ -- 0.000%
21.01 Income generation $ -- 0.000% $ -- 0.000%
21.01 Other $ -- 0.000% $ -- 0.000%
22. Amounts and percentages of the reporting entity's total admitted assets
of potential exposure for collars, swaps, and forwards:
[Enlarge/Download Table]
AT END OF EACH QUARTER
AT YEAR-END 1ST QTR 2ND QTR 3RD QTR
AMOUNT PERCENTAGE AMOUNT AMOUNT AMOUNT
---------------------------------------------------------------------------------------------------------------------------------
22.01 Hedging $ -- 0.000% $ -- $ -- $ --
22.02 Income generation $ -- 0.000% $ -- $ -- $ --
22.03 Replications $ -- 0.000% $ -- $ -- $ --
22.04 Other $ -- 0.000% $ -- $ -- $ --
23. Amounts and percentages of the reporting entity's total admitted assets of
potential exposure for future contracts:
[Enlarge/Download Table]
AT END OF EACH QUARTER
AT YEAR-END 1ST QTR 2ND QTR 3RD QTR
AMOUNT PERCENTAGE AMOUNT AMOUNT AMOUNT
---------------------------------------------------------------------------------------------------------------------------------
23.01 Hedging $ -- 0.000% $ -- $8 $80
23.02 Income generation $ -- 0.000% $ -- $ -- $ --
23.03 Replications $ -- 0.000% $ -- $ -- $ --
23.04 Other $ -- 0.000% $ -- $ -- $ --
F-33
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) All financial statements are included in Part B of the Registration
Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Forethought Life Insurance
Company ("Forethought") authorizing the establishment of the
Separate Account.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement(3)
(4) (a) Form of Variable Annuity Contract.(1)
(4) (b) Maximum Daily Value Death Benefit Rider.(1)
(4) (c) Return of Premium Death Benefit Rider.(1)
(4) (d) Enhanced Return of Premium Death Benefit Rider II.
(4) (e) Enhanced Guaranteed Lifetime Withdrawal Benefit Rider II
(Single Life).(6)
(4) (f) Enhanced Guaranteed Lifetime Withdrawal Benefit Rider II
(Joint Life/Spousal).(6)
(4) (g) Fund Facilitation Fee Rider(2)
(5) Form of Application.(6)
(6) (a) Articles of Incorporation of Forethought Life Insurance
Company.(1)
(6) (b) Bylaws of Forethought Life Insurance Company.(1)
(7) Not Applicable.
(8) Fund Participation Agreements.
(8) (a) American Century Investment Services, Inc.(2)
(8) (b) BlackRock Variable Series Funds, Inc.(2)
(8) (c) Huntington Funds(2)
(8) (d) Lord Abbett Series Funds, Inc.(2)
(8) (e) PIMCO(2)
(8) (f) Putnam Variable Trust(2)
(8) (g) Northern Lights Variable Trust(2)
(8) (h) American Funds(2)
(8) (i) MFS Variable Insurance Trust(4)
(8) (j) AIM Variable Insurance Funds (Invesco Variable Insurance
Funds)(4)
(8) (k) Franklin Templeton Variable Insurance Products Trust(4)
(8) (l) Hartford Funds Management Company(4)
(8) (m) Forethought VIT Funds(5)
(9) Opinion and Consent of Sarah M. Patterson, Vice President and
Assistant General Counsel.
(10) Consent of Independent Registered Public Accounting Firm.
(11) No financial statements are omitted.
(12) Not applicable.
(99) Copy of Power of Attorney.
------------
(1) Incorporated by reference to the Initial filing to the Registration
Statement, File No. 333-182946, filed on July 31, 2012.
(2) Incorporated by reference to the amended filing of the Registration
Statement, File No. 333-182946, filed on December 31, 2012.
(3) Incorporated by reference to the amended filing of the Registration
Statement, File No. 333-182946, filed on February 26, 2013.
(4) Incorporated by reference to the amended filing of the Registration
Statement, File No. 333-182946, filed on April 16, 2013.
(5) Incorporated by reference to the amended filing of the Registration
Statement, File No. 333-182946, filed on September 11, 2013.
(6) Incorporated by reference to the amended filing of the Registration
Statement, File No. 333-193535, filed on January 24, 2014.
ITEM 25 DIRECTORS AND OFFICERS OF THE DEPOSITOR
[Download Table]
NAME POSITION WITH FORETHOUGHT LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
Allan Steven Levine (4) Chief Executive Officer, Director*
Michael A. Reardon President, Director*
Craig A. Anderson Chief Financial Officer and Treasurer
Robert M. Arena, Jr. (3) Executive Vice President, Annuity Division
President
Mary L. Cavanaugh Executive Vice President, General Counsel,
Secretary and Chief Compliance Officer
Gilles M. Dellaert (4) Executive Vice President and Chief Investment
Officer, Director*
Hanben Kim Lee (4) Executive Vice President and Chief Risk Officer,
Director*
Paula G. Nelson (1) Executive Vice President, Marketing
Kathleen M. Redgate (4) Executive Vice President
Nicholas H. von Moltke (4) Executive Vice President and Chief Operating
Officer, Director*
Kenneth J. Bohrer (1) Senior Vice President and Life Finance Officer
Dennis M. Cody Senior Vice President and Annuity Finance
Officer
Michael H. Ebmeier Senior Vice President, Annuity Division
John J. Fowler (5) Senior Vice President
Brenda L. Gempler (2) Senior Vice President, National Accounts
Mark E. Gempler (2) Senior Vice President, National Sales
Jonathan Hecht (4) Senior Vice President
Simeon R. Hernandez, III Senior Vice President, Annuities
Justin MacNeil (5) Senior Vice President
Larry E. Mitzman (2) Senior Vice President, Tax
David K. Mullen (1) Senior Vice President and Chief Administrative
Officer
Chad A. Padgett Senior Vice President and Actuary (Appointed
Actuary)
Jean M. Perrigo (5) Senior Vice President
Matthew P. Stone (3) Senior Vice President, National Account Manager
Eric D. Todd (2) Senior Vice President, Director*
Joel Volcy (5) Senior Vice President
John D. Walls II (2) Senior Vice President, Life Division
Cathy L. Wildt (1) Senior Vice President, Product Management Office
Ronald L. Ziegler Senior Vice President and Chief Actuary
Gregg Anderson (2) Vice President, Product Development
Eileen De Mayo (3) Vice President
Walter T. Dixon (1) Vice President, Assistant Secretary, AML
Compliance Officer
Susan L. Fiengo (3) Vice President
Rodney R. Howard (3) Vice President and Actuary
Deborah A. Kohrman (1) Vice President, Life Operations
Jason M. Roach (5) Vice President
Elizabeth Gioia (3) SEC Rule 38a-1 Chief Compliance Officer
Nigel Riggins (2) Assistant Secretary, Special Investigative Unit
Officer
Scott D. Silverman (5) Assistant Secretary
John Graf Director*
Richard V. Spencer (6) Director*
Unless otherwise indicated, the principal business address of each of the above
individuals is 3200 Southwest Freeway, Suite 1300, Houston, Texas 77027
* Denotes Board of Directors.
(1) One Forethought Center, Batesville, Indiana 47006
(2) 300 North Meridian Street, Suite 1800, Indianapolis, Indiana 46204
(3) 82 Hopmeadow Street, Suite 200, Simsbury, CT 06089
(4) 7 World Trade Center, 250 Greenwich Street, New York, NY 10007
(5) 132 Turnpike Road, Suite 210, Southborough, MA 01772
(6) P.O. Box 1842, Wilson, WY 83014
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
[GLOBAL ATLANTIC FINANCIAL GROUP LIMITED]
[Enlarge/Download Table]
-----------------
| THE GOLDMAN | -------------
| SACHS GROUP, | | 3RD PARTY |
| INC.(Delaware)| | INVESTORS |
----------------- -------------
| |
| |
---22%--- --78%--
| |
| |
---------------------------
| GLOBAL ATLANTIC |
| FINANCIAL GROUP LIMITED |
| (Bermuda) |
---------------------------
|
|
--100%---
|
|
------------
| GLOBAL |
| ATLANTIC |
| FINANCIAL|-----------------------
| LIFE | |
| LIMITED | |
| (Bermuda)| |
------------ |
| |
100% |
| |
------------ |
| GLOBAL | |
| ATLANTIC | |
---------------------------------| (FIN) |-------- 100%
| | COMPANY | | |
100% |(Delaware)| | |
| ------------ | |
--------------- | | |
| FORETHOUGHT | 21% | |
| FINANCIAL | | | |
| GROUP, | | | |
| INC. | | | |
| (Delaware) | | | |
--------------- | | |
| | | |
| | | |
--------------------------------------------------- | | |
| | | | | | |
100% 100% 100% 100% | | ----------------
| | | | | | | COMMONWEALTH |
--------------- --------------- ---------------- --------------- | | | RE MIDCO |
| FORETHOUGHT | | FORETHOUGHT | | FORETHOUGHT | | FORETHOUGHT | | | | LIMITED |
| CAPITAL | | INVESTMENT | | DISTRIBUTORS,| | SERVICES, | | | | (Bermuda) |
| FUNDING, | | ADVISORS, | | LLC | | LLC | | | ----------------
| INC. | | LLC | | (Delaware) | | (Delaware) | | | |
| (Delaware) | | (Indiana) | | | | | | | 100%
--------------- --------------- --------------- --------------- | | |
| | | | ----------------
| 79% | | | COMMONWEALTH |
| | ----------------- | | ANNUITY |
| | | COMMONWEALTH | | | AND LIFE |
| |--| ANNUITY & | | | REINSURANCE |
| | LIFE | | | COMPANY |
----------------------------------------------- | INSURANCE | | | LIMITED |
| | | | COMPANY | | | (Bermuda) |
| | | |(Massachusetts)| | ----------------
| | | ----------------- |---------------------
| | | | | |
| | ------------^------------------------------------------- | |
| | | | | | | | | -------------
100% 5% 95% 5% 95% 100% 100% | 100% | EPOCH |
| | | | | | | | | |SECURITIES,|
------------ --------------- --------------- ----------------- ------------ | ---| INC. |
| FORELIFE | | FORETHOUGHT | | FORETHOUGHT | | FIRST | | ACCORDIA | | | |(Delaware) |
| AGENCY, | | LIFE | | NATIONAL | | ALLMERICA | | LIFE AND | | | -------------
| INC. | | INSURANCE | | LIFE | | FINANCIAL | | ANNUITY | | |
|(Indiana) | | COMPANY | | INSURANCE | | LIFE INSURANCE | | COMPANY | | 100% ------------
------------ | (Indiana) | | COMPANY | | COMPANY | | (Iowa) | | | | GLOBAL |
--------------- | (Texas) | |(Massachusetts) | ------------ | ---| ATLANTIC |
| --------------- ------------------ | | | | RISK |
| | | | | | ADVISORS,|
100% | | | | | L.P. |
| 100% | | | |(Delaware)|
| | | | | ------------
------------------- --------------- | 10% | ------------
| FLIC PROPERTIES,| | FORETHOUGHT | | | 100% | GA RISK |
| LLC | | HOLDINGS, | | | | | ADVISORS,|
| (Indiana) | | LLC | | | ---| INC. |
------------------- | (Indiana) | | | | |(Delaware)|
--------------- | | | ------------
| | | ------------
| | 100% | GLOBAL |
--------------------------------------------------------------------- | | | ATLANTIC |
| | | | | | | ---| RISK |
100% 100% 100% 100% 100% 90% | | | SERVICES,|
| | | | | | | | | LLC |
------------- ------------ ---------- ----------- ------------ ------------------------ | |(Delaware)|
| TAPIOCA | | GOTHAM | | CAPE | | CAPE | | CAPE | | GOTHAM ISSUER, | | ------------
| VIEW, LLC | | RE, INC. | | VERITY | | VERITY | | VERITY | | LLC | | ------------
|(Delaware) | |(Vermont) | | I,INC. | | II,INC. | | III,INC. | | (Delaware) | 100% | GLOBAL |
------------- ------------ | (Iowa) | | (Iowa) | | (Iowa) | ------------------------ | | ATLANTIC |
---------- ----------- ------------ ---| FINANCIAL|
| COMPANY |
|(Delaware)|
------------
-----------------
| THE GOLDMAN | -------------
| SACHS GROUP, | | 3RD PARTY |
| INC.(Delaware)| | INVESTORS |
----------------- -------------
| |
| |
---22%--- --78%--
| |
| |
---------------------------
| GLOBAL ATLANTIC |
| FINANCIAL GROUP LIMITED |
| (Bermuda) |
---------------------------
|
|
-----------------------------100%---------------
|
|
--------------------------------
| ARIEL RE (HOLDINGS) LIMITED |
-------------| (Bermuda) |------------------------------100%-------
| -------------------------------- | |
100% | | |
| | 100% |
------------- -----100%------100%----- | |
| ARIEL P&C | | | | |
| MIDCO | -------------- ----------------- ----------------------- -----------------
| LIMITED | | AFCL INC. | | ARIEL RE BDA | | ARROW CORPORATE | | ARIEL RE UK |
| (Bermuda) | | (Delaware) | | LIMITED | | MEMBER HOLDINGS LLC | | LIMITED |
------------- -------------- | (Bermuda | | (Delaware) | | (UK employing |
| | | coverholder) | ----------------------- | entity) |
100% 100% ----------------- | -----------------
| | |
----------- ------------- |
| ACRC | | ARIEL | ------100%-----------100%-----
| LIMITED | | FINANCIAL | | |
|(Bermuda)| | COMPANY | | |
----------- | LIMITED | | |
| (Bermuda) | -------------- --------------------
------------- | ARIEL RE | | ARIEL INDEMNITY |
| PROPERTY & | | LIMITED |
| CASUALTY | |(Bermuda, 953(d)) |
| (UK) | --------------------
--------------
|
100%
|
-------------------
| ARIEL CORPORATE |
| MEMBER LIMITED |
| (UK) |
-------------------
|
100%
|
--------------------
| SYNDICATE 1910 |
|(Lloyd's Syndicate)|
---------------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
LEGAL ENTITY NAME BUSINESS DESCRIPTION PARENT 1 OWNERSHIP INTEREST PARENT 2 OWNERSHIP INTEREST
------------------------------------------------------------------------------------------------------------------------------------
Accordia Life and Annuity Life insurance company Commonwealth Annuity 100%
Company and Life Insurance
Company
------------------------------------------------------------------------------------------------------------------------------------
ACRC Limited Writes collateralized Ariel P&C Midco Limited 100%
reinsurance business
for the P&C business
of GAFGL
------------------------------------------------------------------------------------------------------------------------------------
AFCL Inc. Holdco for a Bermuda Ariel Re (Holdings) 100%
derivative companies Limited
------------------------------------------------------------------------------------------------------------------------------------
Ariel Corporate Member Corporate member of a Ariel Re Property & 100%
Limited Llyod's syndicate Casualty
------------------------------------------------------------------------------------------------------------------------------------
Ariel Financial Company Derivative company in AFCL Inc. 100%
Limited Bermuda
------------------------------------------------------------------------------------------------------------------------------------
Ariel Indemnity Limited Reinsurance company Arrow Corporate Member 100%
running off certain Holdings LLC
Ariel Re transactions
------------------------------------------------------------------------------------------------------------------------------------
Ariel P&C Midco Limited Holdco for the P&C Ariel Re (Holdings) 100%
business of GAFG Limited
------------------------------------------------------------------------------------------------------------------------------------
Ariel Re (Holdings) Holdco for the P&C Global Atlantic 100%
Limited business of GAFG Financial Group Limited
------------------------------------------------------------------------------------------------------------------------------------
Ariel Re Bda Limited Coverholder for the Ariel Re (Holdings) 100%
Lloyd's syndicate and Limited
service company
employing Bermuda
staff
------------------------------------------------------------------------------------------------------------------------------------
Ariel Re Property & Holding company for Arrow Corporate Member 100%
Casualty Lloyd's corporate Holdings LLC
member
------------------------------------------------------------------------------------------------------------------------------------
Ariel Re UK Limitied UK service company Ariel Re (Holdings) 100%
employing UK staff Limited
------------------------------------------------------------------------------------------------------------------------------------
Arrow Corporate Member Holding company for Ariel Re (Holdings) 100%
Holdings LLC Lloyd's corporate Limited
member and Ariel
Indemnity
------------------------------------------------------------------------------------------------------------------------------------
Cape Verity I, Inc. Captive reinsurer for Accordia Life and 100%
ALAC business Annuity Company
------------------------------------------------------------------------------------------------------------------------------------
Cape Verity II, Inc. Captive reinsurer for Accordia Life and 100%
ALAC business Annuity Company
------------------------------------------------------------------------------------------------------------------------------------
Cape Verity III, Inc. Captive reinsurer for Accordia Life and 100%
ALAC business Annuity Company
------------------------------------------------------------------------------------------------------------------------------------
Commonwealth Annuity and Life insurance company Forethought Services, 79% Global Atlantic 21%
Life Insurance Company LLC (Fin) Co
------------------------------------------------------------------------------------------------------------------------------------
Commonwealth Annuity and Reinsurance company Commonwealth Re Midco 100%
Life Reinsurance Company Limited
Limited
------------------------------------------------------------------------------------------------------------------------------------
Commonwealth Re Midco Intermediate holding Global Atlantic 100%
Limited company for L&A Financial Life Limited
business of GAFGL
------------------------------------------------------------------------------------------------------------------------------------
Epoch Securities, Inc. Registered Global Atlantic (Fin) 100%
broker/dealer Co
------------------------------------------------------------------------------------------------------------------------------------
First Allmerica Financial Life insurance company Commonwealth Annuity 100%
Life Insurance Company and Life Insurance
Company
------------------------------------------------------------------------------------------------------------------------------------
FLIC Properties Title holder of Forethought Life 100%
certain real estate Insurance Company
properties on behalf
of FLIC
------------------------------------------------------------------------------------------------------------------------------------
ForeLife Agency, Inc. Holder of Texas Forethought Services, 100%
preneed permit LLC
enabling FLIC to sell
preneed life insurance
in Texas
------------------------------------------------------------------------------------------------------------------------------------
Forethought Capital Insurance policy Forethought Financial 100%
Funding, Inc assignment business Group, Inc
(for deceased
policyholders only)
assignment business
------------------------------------------------------------------------------------------------------------------------------------
Forethought Distributors, Securities Forethought Financial 100%
LLC Broker-dealer Group, Inc
registered with SEC
and FINRA
------------------------------------------------------------------------------------------------------------------------------------
Forethought Financial Forethought Group Global Atlantic (Fin) 100%
Group, Inc holding company; Co
parent company of life
insurance holding
company system
------------------------------------------------------------------------------------------------------------------------------------
Forethought Holdings, LLC Marketing Company for Forethought National 100%
affiliates' products Life Insurance Company
and services
------------------------------------------------------------------------------------------------------------------------------------
Forethought Investment Investment advisor Forethought Financial 100%
Advisors, Inc. registered with SEC Group, Inc
------------------------------------------------------------------------------------------------------------------------------------
Forethought Life Issuer of life Commonwealth Annuity 95% Forethought 5%
Insurance Company insurance and and Life Insurance Services, LLC
annuities contracts Company
------------------------------------------------------------------------------------------------------------------------------------
Forethought National Life Issuer of life Commonwealth Annuity 95% Forethought 5%
Insurance Company insurance and and Life Insurance Services, LLC
reinsurer of annuity Company
contracts
------------------------------------------------------------------------------------------------------------------------------------
Forethought Services, LLC Intermediate holding Forethought Financial 100%
company of life Group, Inc
insurance holding
company system;
paymaster for
employees of FFG
entities
------------------------------------------------------------------------------------------------------------------------------------
GA Risk Advisors, Inc. General partner of Global Atlantic (Fin) 100%
Global Atlantic Risk Co
Advisors, L.P.
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic (Fin) Intermediate holding Global Atlantic 100%
Company company for L&A Financial Life Limited
business of GAFGL
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic Financial Service company and Global Atlantic (Fin) 100%
Company common employer for Co
the L&A business of
GAFG
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic Financial Ultimate parent and The Goldman Sachs 22% Third-party 78%
Group Limited holding company Group, Inc. Investors
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic Financial Parent and holding Global Atlantic 100%
Life Limited company for L&A Financial Group Limited
business of GAFGL
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic Risk Reinsurance Global Atlantic (Fin) 100%
Advisors, L.P. intermediary Co
------------------------------------------------------------------------------------------------------------------------------------
Global Atlantic Risk Insurance producer Global Atlantic (Fin) 100%
Services, LLC and reinsurance Co
intermediary
------------------------------------------------------------------------------------------------------------------------------------
Gotham Issuer, LLC "Limited Liability Accordia Life and 100%
company with limited Annuity Company
purpose of issuing
notes related to
Gotham Re, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Gotham Re, Inc. Vermont special Accordia Life and 100%
purpose financial Annuity Company
insurance company
------------------------------------------------------------------------------------------------------------------------------------
Syndicate 1910 Lloyd's underwriting Ariel Corporate 100%
syndicate Member Limited
------------------------------------------------------------------------------------------------------------------------------------
Tapioca View, LLC Limited liability Accordia Life and 100%
company with limited Annuity Company
purpose of making note
payments and any
applicable early
termination fees
related to Cape Verity
I, LLC.
ITEM 27. NUMBER OF CONTRACT OWNERS
There are no Contract Owners.
ITEM 28. INDEMNIFICATION
The Company may indemnify any person who is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of
the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses reasonably incurred by such person in connection with the defense
of any action, suit or proceeding, civil or criminal, in which he is made
or threatened to be made, a party by reason of being or having been in any
such capacity, or arising out of his status as such, except in relation to
matters as to which he is adjudged in such action, suit or proceeding,
civil or criminal, to be liable for negligence or misconduct in the
performance of duty to the Company; provided however, that such
indemnification shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any provision of the Articles of
Incorporation, By-Laws, resolution, or other authorization heretofore or
hereafter adopted, after notice by a majority vote of all the voting shares
then issued and outstanding.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Forethought Distributors, LLC acts as principal underwriter for the
following investment companies:
Forethought Life Insurance Company Separate Account A
(b) Managers and Officers of Forethought Distributors, LLC
NAME POSITION
------------------------------------------------------------------------
Robert Arena(1) President, Manager
Paula Nelson(1) Vice President, Head of Annuity Distribution
Michael Reardon(2) Head of Principal Underwriter, Manager
Mary Cavanaugh(2) Manager
Jeffrey Harpel(3) Chief Financial Officer (FINOP)
Margot Wallin(4) Chief Compliance Officer
Vanessa Armenta(2) Vice President
Dean Siegel(1) Vice President
Ronald Hensel(1) Vice President
(1) 82 Hopmeadow Street, Suite 200, Simsbury, CT 06089
(2) 320 Southwest Freeway, Suite 1300 Houston, TX 77027
(3) 4405 Cox Road, Suite 150, Glen Allen, VA 23060
(4) 132 Turnpike Road, Suite 210, Southborough, MA 01772
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940 and
rules thereunder, are maintained by Forethought Life Insurance
Company at 3200 Southwest Freeway, Suite 1300, Houston, Texas
77027.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A and Part B of this
Registration Statement.
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective amendment
to this Registration Statement as frequently as is necessary to
ensure that the audited financial statements in the Registration
Statement are never more than 16 months old so long as payments
under the variable annuity Contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a Contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can
remove to send for a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral
request.
(d) Forethought Life Insurance Company hereby represents that the
aggregate fees and charges under the Contract are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Forethought Life Insurance
Company.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Counsel of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with conditions one through four
of the no-action letter.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf, in the Town of Simsbury and State of Connecticut on
this 16th day of April, 2014.
FORETHOUGHT LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT A
(Registrant)
[Download Table]
By: Michael Reardon *By: /s/ Sarah M. Patterson
----------------------------------- -----------------------------------
Michael Reardon Sarah M. Patterson
President* Attorney-in-Fact
FORETHOUGHT LIFE INSURANCE COMPANY
(Depositor)
[Download Table]
By: Michael Reardon
-----------------------------------
Michael Reardon
President*
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons and in the capacity and
on the date indicated.
[Download Table]
Allan Steven Levine, Director, Chairman
Gilles M. Dellaert, Director *By: /s/ Sarah M. Patterson
-----------------------------------
John Graf, Director Sarah M. Patterson
Hanben Kim Lee, Director Attorney-in-Fact
Michael A. Reardon, Director Date: April 16, 2014
Richard V. Spencer, Director
Eric D. Todd, Director
Nicholas H. Von Moltke, Director
EXHIBIT INDEX
[Download Table]
(9) Opinion and Consent of Sarah M. Patterson, Vice President and Assistant
General Counsel
(10) Consent of Independent Registered Public Accounting Firm
(99) Copy of Power of Attorney
Dates Referenced Herein and Documents Incorporated by Reference
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