AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 2010
REGISTRATION NO. 333-143494
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[LOGO]
Genworth/R/
Financial
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 63 54-0283385
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NUMBER)
6610 W. BROAD STREET RICHMOND, VIRGINIA 23230 (804) 281-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL D. PAPPAS COPY TO:
ASSOCIATE GENERAL COUNSEL HEATHER C. HARKER, ESQ.
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY DYKEMA GOSSETT PLLC
6610 W. BROAD STREET 1300 I STREET, N.W.
RICHMOND, VIRGINIA 23230 WASHINGTON, DC 20005
(804) 281-6000 (202) 906-8649
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Continuously
on and after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
Large Accelerated Filer [_] Accelerated Filer [_]
Non-Accelerated Filer [X] Smaller Reporting Company [_]
(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
================================================================================
AMOUNT TO PROPOSED PROPOSED AMOUNT OF
BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT* OFFERING PRICE FEE
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Certificates issued pursuant to Guaranteed
Income Annuity Contracts N/A N/A $60,000,000* $1,842**
================================================================================
* The proposed maximum aggregate offering price is estimated solely for the
purposes of determining the registration fee. The amount to be registered and
the proposed maximum offering price per unit are not applicable since these
securities are not issued in predetermined amounts or units.
** The registration fee was paid concurrently with the filing of Registrant's
initial Registration Statement on June 4, 2007.
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LIFEHARBOR/SM/ SERIES, GENWORTH FINANCIAL WEALTH MANAGEMENT
GROUP GUARANTEED INCOME ANNUITY CERTIFICATE
ISSUED BY
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
6610 WEST BROAD STREET
RICHMOND, VA 23230
TEL. 800.352.9910
SUBJECT TO COMPLETION, DATED [.]
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This prospectus describes the LifeHarbor/SM/ Series, Genworth Financial Wealth
Management Guaranteed Income Annuity Certificate issued by Genworth Life and
Annuity Insurance Company. The certificate is offered to clients participating
in the Genworth Financial Wealth Management Program, an investment advisory
program sponsored by Genworth Financial Wealth Management, Inc. The certificate
provides for guaranteed income for the life of a designated person based on the
certificate owner's advisory account in the Genworth Financial Wealth
Management Program, provided all conditions specified in the certificate are
met, regardless of how long you live or the actual performance or value of the
investments in the account. The certificate has no cash value and no surrender
value.
Prospective purchasers may apply to purchase a certificate through
broker-dealers that have entered into a selling agreement with Capital
Brokerage Corporation, the principal underwriter for the certificates. Capital
Brokerage Corporation will use its best efforts to sell the certificates, but
is not required to sell any specific number or dollar amount of certificates.
THIS PROSPECTUS PROVIDES IMPORTANT INFORMATION THAT A PROSPECTIVE PURCHASER OF
A CERTIFICATE SHOULD KNOW BEFORE INVESTING. PLEASE RETAIN THIS PROSPECTUS FOR
FUTURE REFERENCE.
The Securities and Exchange Commission ("SEC") has not approved or disapproved
these securities, nor has the SEC determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not be lawfully made.
The certificate:
. Is NOT a bank deposit
. Is NOT FDIC insured
. Is NOT insured or endorsed by a bank or any government agency
. Is NOT available in every state
A purchase of the certificate is subject to certain risks. See "Risks
Associated With Purchasing a Certificate" on page 7. THE CERTIFICATE IS NOVEL
AND INNOVATIVE. WHILE WE UNDERSTAND THAT THE INTERNAL REVENUE SERVICE MAY BE
CONSIDERING TAX ISSUES ASSOCIATED WITH PRODUCTS SIMILAR TO THE CERTIFICATE, TO
DATE THE TAX CONSEQUENCES OF THE CERTIFICATE HAVE NOT BEEN ADDRESSED IN
PUBLISHED LEGAL AUTHORITIES. UNDER THE CIRCUMSTANCES, YOU SHOULD THEREFORE
CONSULT A TAX ADVISOR BEFORE PURCHASING A CERTIFICATE.
1
TABLE OF CONTENTS
SUMMARY...................................................................................................................... 4
Preliminary Note Regarding Terms Used in this Prospectus.................................................................. 4
What is the Certificate?.................................................................................................. 4
How much will your Certificate cost?...................................................................................... 5
Can you cancel your Certificate?.......................................................................................... 5
What protection does the Certificate provide?............................................................................. 5
How does your Certificate work?........................................................................................... 6
How do you purchase a Certificate? How does it relate to Genworth Financial Wealth Management, Inc.?...................... 6
Designated Asset Allocation Models........................................................................................ 6
RISKS ASSOCIATED WITH PURCHASING A CERTIFICATE............................................................................... 7
Your Account may perform well enough so that you may not need the guarantee............................................... 7
The Contract may be terminated between us and GFWM........................................................................ 7
Strategists' changes may cause the asset allocation model to no longer be in compliance, potentially causing Certificate
termination............................................................................................................. 8
You may die before receiving payments from us............................................................................. 8
You may not live long enough to receive enough income to exceed the amount of total fees paid............................. 8
The Certificate does not protect the assets in your GFWM Account from your creditors...................................... 8
Early Withdrawals and Excess Withdrawals may substantially reduce your guarantee.......................................... 8
We reserve the right to change the Withdrawal Guarantee Factors on January 1st of each year............................... 8
You may choose to cancel your Certificate prior to a severe market downturn............................................... 8
Claims Paying Ability of the Company...................................................................................... 8
Tax Consequences.......................................................................................................... 8
THE CERTIFICATE.............................................................................................................. 9
MANAGEMENT OF YOUR GFWM ACCOUNT.............................................................................................. 10
THE ACCOUNT PHASE OF THE CERTIFICATE......................................................................................... 13
How are the Birthday and the date Withdrawals may begin being calculated?................................................. 13
How is the Initial Withdrawal Guarantee calculated?....................................................................... 13
How are increases to the Withdrawal Guarantee calculated?................................................................. 14
Other increases in the Withdrawal Guarantee............................................................................... 15
How are decreases to the Withdrawal Guarantee calculated?................................................................. 16
What are some things to consider in managing your Withdrawals from your Account?.......................................... 16
ASSET CHARGES................................................................................................................ 17
Will you pay the same amount (in dollars) for the Withdrawal Guarantee every quarter?..................................... 18
Will the fees you pay for advice and other services impact the guarantees under your Certificate?......................... 19
GUARANTEE PHASE UNDER THE CERTIFICATE........................................................................................ 19
What is Guaranteed Income? When will you receive payments?................................................................ 19
Alternative Annuity Payments.............................................................................................. 21
DEATH PROVISIONS UNDER THE CERTIFICATE....................................................................................... 21
DIVORCE PROVISIONS UNDER THE CERTIFICATE..................................................................................... 22
ILLUSTRATION OF HOW THE CERTIFICATE WORKS.................................................................................... 23
OTHER RISK FACTORS........................................................................................................... 24
Financial Condition of the Company........................................................................................ 24
Asset Allocation Issues................................................................................................... 24
2
SUSPENSION AND TERMINATION PROVISIONS OF THE CONTRACT AND THE CERTIFICATES.. 25
Suspension of the Contract............................................... 25
Termination of the Contract.............................................. 25
Suspension of the Certificate............................................ 26
Termination of the Certificate........................................... 26
MISCELLANEOUS PROVISIONS.................................................... 26
Periodic Communications to Certificate Owners............................ 26
Amendments to the Contract and Certificate............................... 26
Assignment............................................................... 26
Cancellation............................................................. 26
Misstatements............................................................ 27
DETERMINING WHETHER A CERTIFICATE IS RIGHT FOR YOU.......................... 27
TAXATION OF THE CERTIFICATE................................................. 27
In General............................................................... 27
Non-Qualified Certificates............................................... 28
Qualified Certificates................................................... 30
ABOUT US.................................................................... 31
SALES OF THE CERTIFICATES................................................... 31
LEGAL PROCEEDINGS........................................................... 32
ADDITIONAL INFORMATION...................................................... 33
Owner Questions.......................................................... 33
Return Privilege......................................................... 33
State Regulation......................................................... 33
Evidence of Death, Age, Gender or Survival............................... 33
LEGAL MATTERS............................................................... 33
EXPERTS..................................................................... 33
WHERE YOU CAN FIND MORE INFORMATION......................................... 34
RELIANCE ON RULE 12H-7 UNDER THE SECURITIES EXCHANGE ACT OF 1934............ 34
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY................................. 34
DEFINITIONS................................................................. 34
3
LIFEHARBOR/SM/ SERIES, GENWORTH FINANCIAL WEALTH MANAGEMENT
GROUP GUARANTEED INCOME ANNUITY CERTIFICATE
ISSUED BY
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
6610 WEST BROAD STREET
RICHMOND, VIRGINIA 23230
800.352.9910
SUMMARY
PRELIMINARY NOTE REGARDING TERMS USED IN THIS PROSPECTUS.
Certain terms used in this prospectus have specific and important meanings.
Some important terms are explained below, and in most cases the meaning of
other important terms is explained the first time they are used in the
prospectus. You will also find in the back of this prospectus a listing of all
of the terms, with the meaning of each term explained.
. The "Certificate" is the LifeHarbor/SM/ Series, Genworth Financial Wealth
Management Group Guaranteed Income Annuity Certificate issued by Genworth
Life and Annuity Insurance Company pursuant to the terms of a Group
Guaranteed Income Annuity Contract issued to Genworth Financial Wealth
Management, Inc. ("GFWM").
. "We," "us," "our" or the "Company" means Genworth Life and Annuity
Insurance Company.
. "You" or "yours" means the owner, or if applicable, the joint owners, of
the Certificate described in this prospectus. A sole owner of the
Certificate can be an individual or a non-natural person such as a trust.
Joint owners are permitted only when they are spouses as recognized by
applicable Federal law, unless the laws of the state in which the
Certificate is issued afford benefits of the marriage relationship to
certain persons who are not considered to be married for purposes of
Federal law ("civil union partners"). The terms "you," "yours," "Owner,"
and "Certificate Owner" may be used interchangeably in this prospectus.
. "Participant" or "Participants" means the person or persons, respectively,
named in the Certificate whose age is used for certain important purposes
under the Certificate, including determining the amount of the guaranteed
income provided by this Certificate.
The Certificate can be owned in the following ways:
. Sole Owner who is an individual and also the Participant.
. Sole Owner who is an individual and the Participant, with his or her
spouse as the Joint Participant.
. Joint Owners who are individuals and are the sole Joint Participants.
. A non-natural Owner (such as a trust), with an individual named as the
Participant.
. A non-natural Owner (such as a trust), with an individual named as
Participant and his or her spouse named as Joint Participant.
We believe that in most cases the Certificate will have a sole Owner who is the
only Participant. Therefore, for ease of reference, most of the discussions in
this prospectus assume you are the sole Owner and the only Participant under
the Certificate. In some places in the prospectus, however, we explain how
certain features of the Certificate differ if there are Joint Owners or Joint
Participants.
The following is a summary of the Certificate. You should read the entire
prospectus in addition to this summary.
WHAT IS THE CERTIFICATE?
Certificates are issued pursuant to the terms of the Group Guaranteed Income
Annuity Contract (the "Contract"), which is a group guaranteed income annuity
contract issued by the Company and owned by GFWM. Certificates are offered to
clients participating in the Genworth Financial Wealth Management Program (the
"GFWM Program"). Under the GFWM Program, client assets are invested in mutual
funds and/or exchange traded funds in accordance with designated asset
allocation models. The Certificate provides, under certain specified
conditions, for guaranteed minimum lifetime income based on the value of your
account in the GFWM Program (your "Account"), regardless of how long you live
or how the investments in the Account perform. The Certificate does not have a
cash value.
Provided all conditions of the Certificate and Contract are met, if the value
of the assets in your Account ("Account Value") falls below a specified minimum
amount, we will make annual payments to you for the rest of your life. The
amount of the
4
guaranteed annual payment you would receive may increase from time to time
based on your Account Value. It may also decrease if you take withdrawals from
your Account.
The guaranteed income provided by your Certificate is based on the age and life
of the Participant (or if there are Joint Participants, on the age and life of
the younger Joint Participant).
GFWM makes the asset allocation models available for your use. Subject to your
ability to impose reasonable restrictions on the management of the Account, the
assets in your Account are required to remain invested at all times in
accordance with one of the designated asset allocation models as discussed in
this prospectus or your Certificate may terminate and your guarantee may be
reduced to zero. GFWM is an affiliate of the Company, but neither we nor GFWM
manage the Account. Your Account is managed by your designated financial
advisor and administered by a custodian.
HOW MUCH WILL YOUR CERTIFICATE COST?
While your Certificate is in force, an asset charge (the "Asset Charge") is
periodically calculated and deducted from your Account Value. The Asset Charge
is calculated as a specified percentage of your Account Value at the time the
Asset Charge is calculated.
The Asset Charge pays for the insurance protections provided by the Certificate.
The guaranteed maximum Asset Charge we can ever charge for your Certificate is
shown below. We currently charge a lower amount, which is also shown below. For
an explanation of when we could increase the Asset Charge under your
Certificate, see "Will you pay the same amount (in dollars) for the Withdrawal
Guarantee every quarter?"
The guaranteed maximum Asset Charge for the Certificate,
as a percentage of your Account Value, on an annual basis,
is:
IF YOU
IF YOU HAVE A
HAVE A MODERATE
MODERATE GROWTH
ASSET ASSET
ALLOCATION ALLOCATION
MODEL MODEL
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Single Participant 2.00% 2.50%
Joint Participants (provides protection
during the lives of two spouses) 2.25% 2.75%
The current Asset Charge for the Certificate, as a percentage of your Account
Value on an annual basis, is:
IF YOU
IF YOU HAVE A
HAVE A MODERATE
MODERATE GROWTH
ASSET ASSET
ALLOCATION ALLOCATION
MODEL MODEL
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Single Participant 0.85% 1.10%
Joint Participants (provides protection
during the lives of two spouses) 1.00% 1.25%
Detailed examples of how the Asset Charge is calculated in different
circumstances are set forth in the section of this prospectus entitled "Asset
Charge."
The Asset Charge is in addition to any charges that are imposed in connection
with advisory, custodial and other services, and charges imposed by the mutual
funds and exchange traded funds ("ETFs") in which your Account invests.
Premium taxes may be applicable in certain states. Premium tax applicability
and rates vary by state and may change. We reserve the right to deduct any such
tax from premium when received.
CAN YOU CANCEL YOUR CERTIFICATE?
You have the right to cancel your Certificate at any time without additional
charges. We will return the portion of the Asset Charge collected in advance
for the current billing period relating to the number of days remaining in the
billing period.
WHAT PROTECTION DOES THE CERTIFICATE PROVIDE?
The Certificate provides two fundamental protections to GFWM Program clients
against risks that are important to clients who consider the assets in their
Account a source or potential source for lifetime income in retirement or for
other long-term purposes. First, it protects the Certificate Owner from the
risk of outliving the assets in the Account. This risk is often called
"longevity risk." Second, it protects the Owner from downward fluctuations in
his or her retirement income due to changes in market performance. This is
known as "income volatility risk."
Both of these risks increase when you have poor market performance early in
retirement. The risk of retiring on the eve of a down market (or "point-in-time
risk") contributes greatly to both longevity and income volatility risk.
5
The Certificate does not provide a guarantee that your Account will retain a
certain value or that the value of your Account will remain steady or grow over
time. Instead, it provides for a guarantee, under certain specified conditions,
that regardless of the performance of the assets in your Account and regardless
of how long you live, you will be able to receive a guaranteed level of annual
income for life. Therefore, it is important for you to understand that while
the preservation of capital may be one of the goals of the underlying asset
management strategy of your Account, the achievement of that goal is not
guaranteed by this product.
HOW DOES YOUR CERTIFICATE WORK?
The Certificate has two phases: an "Account Phase" and a "Guarantee Phase."
During the Account Phase, you may make additional investments in your Account
and take withdrawals from your Account just as you would with any investment
advisory account (although certain withdrawals will reduce the amount of your
guaranteed minimum lifetime income under your Certificate). You are responsible
for managing your withdrawals during the Account Phase. After you (or if there
are Joint Participants, the younger Joint Participant) have turned age 65, you
can take annual withdrawals that do not exceed a specified amount (called the
"Withdrawal Guarantee") without reducing your guaranteed income. If your
Account Value falls below a specified minimum amount as a result of withdrawals
or poor investment performance, your Account will be closed and the Guarantee
Phase will begin. During the Guarantee Phase, we make fixed guaranteed annual
annuity payments ("Guaranteed Income Payments") to you for as long as you live.
However, the Guarantee Phase may never occur, depending on how long you live
and how well your investments perform.
NOTE: THE ACCOUNT PHASE IS CALLED THE "FUNDING PHASE" IN THE CERTIFICATE, AND
THE GUARANTEE PHASE IS CALLED THE "PAYOUT PHASE."
Your Withdrawal Guarantee when we issue your Certificate is your Account Value,
multiplied by the "Withdrawal Guarantee Factor" which is currently 5%. As
described in more detail below, the amount of the Withdrawal Guarantee may
increase on an annual basis during the Account Phase due to positive investment
performance or if you make additional investments in your Account, and will
decrease as a result of withdrawals before age 65 or withdrawals after age 65
in excess of the Withdrawal Guarantee.
The minimum Account Value for purposes of closing your Account and beginning
your Guarantee Phase is the greater of the most recently determined Withdrawal
Guarantee and $20,000. Your Guarantee Phase will also begin if you (or if there
are Joint Participants, the younger Joint Participant) reaches age 100.
Guaranteed Income Payments are equal to your Withdrawal Guarantee. (In some
circumstances, you may receive higher payments under the "Alternative Annuity
Payment" provision of the Certificate described below.)
HOW DO YOU PURCHASE A CERTIFICATE? HOW DOES IT RELATE TO GENWORTH FINANCIAL
WEALTH MANAGEMENT, INC.?
You may purchase a Certificate when you first open your Account or at any time
thereafter (prior to your or the younger Joint Participant's age 85). The
minimum size of your Account in order to purchase a Certificate is $50,000 for
mutual fund Accounts, $50,000 for the Genworth Financial Asset Management
("GFAM") 60/40 Strategy or GFAM 70/30 Strategy and $100,000 for ETF Accounts.
(The different types of Accounts are discussed below. See "Management of Your
GFWM Account" on page 10.) The Certificates are issued in accordance with the
terms of the Contract issued by us to GFWM. The Contract is a group guaranteed
income annuity contract. We will not issue Certificates to Owners (other than
in the case of an IRA) whose Account Values are greater than $2,000,000 (the
"Account Limit") without the approval of our home office at the address listed
on page 1 of this prospectus. If you invest an additional amount in your
Account (each additional investment is an "Addition") which brings your Account
Value over $2,000,000, we will suspend increases to the Withdrawal Guarantee
until you withdraw the excess amount from your Account. Similarly, if you make
an Addition when your Account Value is already over $2,000,000, we will suspend
increases to the Withdrawal Guarantee until you withdraw the entire amount of
the Addition. If an Owner has more than one Account with GFWM, we will apply
these limits to the aggregate Account Values relating to all of the
Certificates (other than in the case of an IRA) of the same Certificate Owner
(or beneficial owner) and reserve the right to limit the number of Certificates
(other than in the case of an IRA) held by the same Owner (or beneficial owner)
to three.
The Certificate is purchased under the Contract by clients participating in the
GFWM Program. You may elect to purchase a Certificate pursuant to the Contract
with GFWM by completing an election form or other form authorized by us. If
this form is accepted by us at our home office, we will issue a Certificate to
you describing your rights and obligations.
DESIGNATED ASSET ALLOCATION MODELS
The following is a list of the currently available professional asset managers
or "Strategists" that provide specific asset allocation models for use with the
Certificate. Each Strategist provides "moderate" and "moderate growth" asset
allocation models that can be used with the Certificate.
6
Mutual Fund Accounts:
. Callan Associates, Inc. (Domestic model)
. Callan Associates, Inc. (Global model)
. Callan Associates, Inc. (Hedged model)
. Goldman Sachs Asset Management
. JPMorgan Asset Management
. Litman/Gregory Asset Management (without GFWM mutual funds)
. Litman/Gregory Asset Management (with GFWM mutual funds)
. New Frontier Advisors
ETF Accounts:
. Avatar Associates
. New Frontier Advisors
. State Street Global Advisors
Combination Mutual Funds and ETFs:
. GFAM 60/40 Strategy
. GFAM 70/30 Strategy
Certificate holders whose Certificate is issued on or after September 1, 2010
may only invest assets in the GFAM 60/40 Strategy or the GFAM 70/30 Strategy.
See the "Management of Your GFWM Account" on page 10 of this prospectus.
RISKS ASSOCIATED WITH PURCHASING A CERTIFICATE
YOUR ACCOUNT MAY PERFORM WELL ENOUGH SO THAT YOU MAY NOT NEED THE GUARANTEE.
In general, the assets in your Account must be invested in accordance with one
of the asset allocation models. Oversight of the asset allocation models is
provided by GFWM. The actual development and maintenance is performed by the
Strategists (the currently-available Strategists are listed above), investment
management firms that are selected by GFWM through a due diligence process. The
asset allocation models, together with the limits on the amount you may
withdraw annually without reducing your Withdrawal Guarantee, are intended to
minimize the risk to the Company that we will have to make payments to you.
Accordingly, the risk against which the Certificate protects, i.e., that your
Account Value will be reduced below the greater of your most recently
determined Withdrawal Guarantee and $20,000 by withdrawals and/or poor
investment performance and that you live beyond the age when your Account value
is reduced below the greater of your most recently determined Withdrawal
Guarantee and $20,000, is likely to be small. In this case, you will have paid
us Asset Charges for the life of your Certificate and received no payments in
return.
THE CONTRACT MAY BE TERMINATED BETWEEN US AND GFWM.
There is a group Contract between us and GFWM. GFWM is an affiliated company.
Both GFWM and the Company are subsidiaries of Genworth Financial, Inc. The
Contract between GFWM and us may be terminated by either party for reasons
unrelated to any action or inaction by you. If the Contract between GFWM and us
is terminated, to preserve your Withdrawal Guarantee you must either:
. Withdraw your Account Value from your GFWM account and invest in another
advisory account offered by an investment adviser other than GFWM eligible
for coverage by a certificate similar in material respects to this
Certificate. (PLEASE NOTE: ANOTHER PRODUCT OFFERED BY AN INVESTMENT
ADVISER ELIGIBLE FOR COVERAGE IS NOT AVAILABLE AT THIS TIME AND MAY NOT BE
AVAILABLE IN THE FUTURE); or
. Withdraw your Account Value from your GFWM account and reinvest the
proceeds in a specified annuity contract we or one of our affiliates offer.
IN EITHER CASE ABOVE, YOUR NEW PRODUCT WILL PRESERVE THE AMOUNT OF THE
WITHDRAWAL GUARANTEE AT THE TIME UNDER YOUR CERTIFICATE. If you purchase a
specified annuity discussed above, you will NOT be assessed any sales or
surrender charges on the purchase or sale of the annuity. However, your new
product may have higher ongoing fees and charges than those currently assessed
by your GFWM Certificate.
In either case above, there may be tax consequences associated with the
withdrawals of your Account Value to either invest in another advisory account
eligible for coverage by another certificate, or to purchase a specified
annuity contract.
If you do not withdraw your Account Value and select one of the options listed
above, your Certificate will terminate 60 days after receiving notice of the
Contract termination between GFWM and us. If your Certificate terminates, you
will lose your Withdrawal Guarantee and you will not receive a refund of the
fees paid to us for the benefit. See the "Suspension and Termination Provisions
of the Contract and the Certificates" on page 25 of this prospectus.
7
STRATEGISTS' CHANGES MAY CAUSE THE ASSET ALLOCATION MODEL TO NO LONGER BE IN
COMPLIANCE, POTENTIALLY CAUSING CERTIFICATE TERMINATION.
Strategists may make changes to the asset allocation models that may cause the
asset allocation models to no longer be in compliance with the required
Risk-Return Profile. In addition, GFWM may remove Strategists. Under either
circumstance, you must change to another asset allocation model within your
Risk-Return Profile within 90 days of receipt of notice or your Certificate
will terminate. There may be tax consequences associated with a change to
another asset allocation model.
YOU MAY DIE BEFORE RECEIVING PAYMENTS FROM US.
This Certificate is designed to provide protection in many cases to GFWM
clients who live beyond life expectancy. Despite general societal increases in
longevity, you may not live beyond life expectancy which may decrease the
likelihood you will receive Guaranteed Income payments under the Certificate.
However, because the Certificate also protects against market risk, you do not
have to live beyond life expectancy to receive payments under the Certificate.
YOU MAY NOT LIVE LONG ENOUGH TO RECEIVE ENOUGH INCOME TO EXCEED THE AMOUNT OF
TOTAL FEES PAID.
This product is designed to provide protection to GFWM clients against the risk
of outliving the assets in their GFWM Account. However, even if you live long
enough to begin to receive Guaranteed Income, you may not live long enough to
receive enough income to exceed the amount of the total fees you have paid for
the Certificate.
THE CERTIFICATE DOES NOT PROTECT THE ASSETS IN YOUR GFWM ACCOUNT FROM YOUR
CREDITORS.
The assets in your Account are owned by you and not us. We have no control over
any of the assets in your Account. The assets in your Account are not subject
to our creditors. However, assets in your Account may be subject to being
directly attached by your creditors. Moreover, because you may at any time sell
the assets in your Account in your complete and sole discretion and without any
permission from us, you are entitled at any time to pledge those assets as
collateral for a loan. There is a risk that if you pledge the assets in your
Account as collateral for a loan and the value of the assets in your Account
decrease in value, your creditor may liquidate assets in your Account to pay
the loan. The liquidation of the Assets will be considered a Withdrawal from
your Account and it may reduce your Withdrawal Guarantee. Using the assets in
your Account as collateral for a loan, therefore, may cause you to lose the
protection afforded by the Certificate.
EARLY WITHDRAWALS AND EXCESS WITHDRAWALS MAY SUBSTANTIALLY REDUCE YOUR
GUARANTEE.
If you take withdrawals before age 65 (or in the case of Joint Participants,
the younger Participant's age 65), or if you take more than the Withdrawal
Guarantee in a given year after that date, you will adversely affect the
benefits under the Certificate.
WE RESERVE THE RIGHT TO CHANGE THE WITHDRAWAL GUARANTEE FACTORS ON
JANUARY 1/ST/ OF EACH YEAR.
We reserve the right to change the Withdrawal Guarantee Factors on
January 1/st/ of each year, including the right to reduce your current
Withdrawal Guarantee Factor. If we reduce your Withdrawal Guarantee Factor, it
is less likely that your Withdrawal Guarantee will increase on any subsequent
Birthday, even if your Account Value is increased due to positive investment
performance. Your current Withdrawal Guarantee will not be reduced if we lower
the Withdrawal Guarantee Factor. However, because we may change the Withdrawal
Guarantee Factor, it is possible that younger Certificate Owners will pay more
for the same benefit than older Certificate Owners (those Owners that are
closer to age 65).
YOU MAY CHOOSE TO CANCEL YOUR CERTIFICATE PRIOR TO A SEVERE MARKET DOWNTURN.
The Certificate is designed to protect you from outliving the assets in your
Account. If you terminate the Certificate before reaching the Guarantee Phase,
we will not make payments to you, even if subsequent market performance reduces
your Account Value below the minimum amount specified in your Certificate when
your Certificate was in force.
CLAIMS PAYING ABILITY OF THE COMPANY.
Any payments we are required to make to you under the Certificate will depend
on our long term ability to make such payments. See "Financial Condition of the
Company" on page 24 and "Genworth Life and Annuity Insurance Company" on page
34.
TAX CONSEQUENCES.
THE CERTIFICATE IS NOVEL AND INNOVATIVE. WHILE THE INTERNAL REVENUE SERVICE
("IRS") HAS RECENTLY ISSUED FAVORABLE PRIVATE LETTER RULINGS ("PLRS")
CONCERNING PRODUCTS SIMILAR TO THE CERTIFICATE ISSUED BY OTHER INSURANCE
COMPANIES, THESE RULING ARE NOT BINDING ON THE IRS WITH RESPECT TO THE
CERTIFICATE. We intend to treat your Certificate as an annuity
8
contract in reporting taxable income attributable to the Certificate to you and
to the Internal Revenue Service. Assuming the Certificate is correctly treated
as an annuity contract for tax purposes, guaranteed income payments made to you
after your Account Value has been reduced below the greater of your most
recently determined Withdrawal Guarantee and $20,000 or upon reaching age 100
(or the younger Participant's age 100) will be ordinary income to you that is
taxable to the extent provided under the tax rules for annuities. (It is also
possible that in certain circumstances your guaranteed income payments might be
subject to the 10% penalty tax imposed under Section 72(q) of the Code,
particularly with respect to guaranteed income payments received before you
reach age 59 1/2.) Similarly, if you exercise your right to liquidate your
Account and apply all of the proceeds to purchase the "Alternative Annuity
Payment option" described later in this prospectus, these payments should also
be treated as ordinary income that is taxable to the extent provided under the
tax rules for annuities. We believe that, in general, the tax treatment of
transactions involving investments in your Account more likely than not will be
the same as it would be in the absence of the Certificate. You should also be
aware that you may have tax consequences if your Strategist changes its asset
allocation models or if you are required to change your asset allocation model
because your current model no longer falls within the investment parameters
permitted by us. WE CAN PROVIDE NO ASSURANCES, HOWEVER, THAT A COURT WOULD
AGREE WITH THE FOREGOING INTERPRETATIONS OF THE LAW IF THE INTERNAL REVENUE
SERVICE WERE TO CHALLENGE THE FOREGOING TREATMENT. YOU SHOULD CONSULT A TAX
ADVISOR BEFORE PURCHASING A CERTIFICATE. See "Taxation of the Certificate" on
page 27 for further discussion of tax issues relating to the Certificate.
THE CERTIFICATE
The Certificate is a group guaranteed income annuity certificate offered to
clients of the GFWM Program. While you generally will not have personal contact
with representatives of GFWM, GFWM is a registered investment adviser that
serves as one of your investment advisers for this product for the limited
purpose of providing asset allocation models that meet the investment risk
criteria required to maintain the guaranteed minimum lifetime income benefits
that may be provided by the Certificate. Certificates are offered only to
participants in the GFWM Program whose assets are invested in accordance with
designated asset allocation models available under the GFWM Program. The
Certificates are designed for GFWM Program participants who intend to use the
investments in their Account as the basis for periodic withdrawals (such as
systematic withdrawal programs involving regular annual withdrawals of a
certain percentage of the Account Value) to provide income payments for
retirement or for other purposes. For more information about the GFWM Program,
you should talk to your Advisor and review the materials provided concerning
the GFWM Program.
As the owner of the group Contract under which the Certificates are offered,
GFWM is the entity responsible for administering the Certificate on your behalf
during the Account Phase. This responsibility includes obtaining your
instructions as to whether you want to use your Account Value to purchase the
"Alternative Annuity Payment" option described later in this prospectus, and if
so, how you want payments to be made to you. You may elect to purchase this
Alternative Annuity Payment option at any time before age 100 (or the younger
Participant's age 100). GFWM is also responsible for transferring to us your
Account Value at the time you elect to purchase the Alternative Annuity Payment
option. GFWM and/or your custodian may require your written authorization to
complete this transfer. Any delay in providing such authorization, if required,
may delay your income payments. GFWM makes available asset allocation models
for your use and administers your Certificate during the Account Phase of the
Certificate. GFWM is an affiliate of the Company, but neither we nor GFWM
manage your Account. Your account is managed by your own investment adviser and
administered by the custodian of your GFWM Account.
The Certificate provides for a guaranteed income over the remaining life of the
Participant (or in certain circumstances if there are Joint Participants, for
the remaining lives of both Joint Participants), based on the Withdrawal
Guarantee, should the Account Value drop below the greater of your most
recently determined Withdrawal Guarantee and $20,000. Provided all contractual
terms have been satisfied, we will make continuing payments for the lifetime of
the Participant (or in certain circumstances if there are Joint Participants,
for the remaining lives of both Joint Participants) in the form of fixed
annuity payments equal to the Withdrawal Guarantee (or payments under the
Alternative Annuity Payment option amount if greater).
As noted above, in certain circumstances the Certificate will provide for a
guaranteed income over the remaining lives of Joint Participants. Joint
Participants are guaranteed to receive income payments over both of their
remaining lives only if they are the Joint Owners of the Certificate and are
spouses as recognized by applicable Federal law. You should be aware that the
laws of some states afford benefits of the marriage relationship to certain
persons who are not considered to be married for purposes of Federal law
("civil union partners") and that we permit civil union partners to be Joint
Participants under the Certificate when required by state law. However, you
should also be aware that restrictions imposed by federal tax law upon the
death of a Joint Owner or Joint Participant may limit the
9
benefits of naming a civil union partner as a Joint Owner and Joint
Participant. In particular, in situations where Joint Owners are civil union
partners and one Joint Owner dies before guaranteed income payments begin, a
non-qualified Certificate is required to terminate no later than the fifth
anniversary of that individual's death. Such termination could occur before the
Certificate provides any guaranteed income payments or prematurely terminate
guaranteed income payments while the Joint Participant is alive. Civil union
partners considering purchasing a Certificate should consult their tax and
financial advisors before purchasing a Certificate to determine whether such a
Certificate is suitable to their circumstances, particularly if the civil union
partners are contemplating the purchase of a non-qualified Certificate with
Joint Owners or Joint Participants.
MANAGEMENT OF YOUR GFWM ACCOUNT
The Certificate provides supplemental protection relating to your GFWM Program
investments by ensuring that, regardless of how your investments actually
perform or the actual value of your investments when you begin your withdrawal
program from your GFWM Account for retirement or other purposes, you will
receive predictable income payments for as long as you live.
The GFWM Program is offered through investment advisors (each, an "Advisor")
who generally act as a client's primary contact with respect to the GFWM
programs. The Advisor evaluates the client's needs and objectives, recommends a
risk return profile ("Risk-Return Profile") (frequently through the completion
by the client of a "Discovery Workbook" provided by GFWM), and consults with
the client concerning the client's participation in the GFWM Program. The
Advisor may also recommend a specific asset allocation model.
You should note that the Company issues the Certificates, but the Company is
not your investment adviser and does not provide investment advice to you in
connection with the Certificate.
Asset allocation models that correspond to two Risk-Return Profiles -- the
Moderate Risk-Return Profile and the Moderate Growth Risk-Return Profile -- are
designated for use with the Certificate. These two Risk-Return Profiles are
designed with several goals in mind. The Moderate Risk-Return Profile
corresponds to a "moderate" asset allocation strategy. The Moderate Growth
Risk-Return Profile corresponds to a "moderate growth" allocation strategy.
The Moderate Risk-Return Profile is considered a balanced allocation strategy
and is designed for current income and long-term capital appreciation. This
Profile is broadly diversified, with allocations to U.S. fixed income
instruments to provide current income and to U.S. and international equity
instruments to enhance diversification, protect the real value of principal and
enhance long-term returns. The target allocation mix is 60% equities and 40%
fixed income. The Moderate Growth Risk-Return Profile is considered a balanced
growth allocation and is designed for long-term capital appreciation, with a
secondary objective of moderate current income. Assets are predominately
allocated to U.S. equity instruments to provide long-term capital appreciation
and to protect the real value of principal. International instruments may be
included to provide diversification and enhance long-term returns. U.S. fixed
income instruments may be included to provide current income and
diversification. The target allocation mix is 70% - 75% equities and 25% - 30%
fixed income investments.
Your Account Value is required to remain invested at all times in accordance
with an asset allocation model with the same Risk-Return Profile as the model
you select when you purchase a Certificate. In other words, you may not switch
between the Moderate and the Moderate Growth Risk-Return Profiles and still
maintain the Withdrawal Guarantee. However, if your Certificate is issued prior
to September 1, 2010, you may switch from one Strategist's asset allocation
model to another Strategist's model that is within the same Risk-Return Profile.
The oversight of the asset allocation models is managed by GFWM. The actual
development and maintenance of the models is performed by Strategists retained
by GFWM. GFWM reviews such asset allocation models and monitors the execution
and maintenance of the asset allocation models. Neither we nor the provisions
of the Certificate determine or direct the management of the investments in
your Account. Investments in accordance with the various asset allocation
models are the same whether or not a client purchases the Certificate. If you
cancel your Certificate but choose to remain in the asset allocation model you
previously selected, no change will occur to the asset allocation model solely
because you canceled your Certificate with us.
Each of the Strategists provides asset allocation models that correspond to the
Moderate Risk-Return Profile and the Moderate Growth Risk-Return Profile. The
goal is to provide clients with a variety of asset allocation models for
attaining the client's investment objectives. The use of asset allocation
models is intended to reduce your market risk over time thereby reducing the
possibility that we will be required to make Guaranteed Income payments under
the Certificate.
You and your Advisor should review each Strategist's style and the available
asset allocation models prior to making the election of which model(s) to
follow in your own Account
10
under the GFWM Program. Each of the Strategists is evaluated periodically
(typically quarterly) by GFWM and its investment oversight committee to assess
if the Strategist is performing its role of developing and maintaining models
properly. From time to time, GFWM adds Strategists to or removes Strategists
from the GFWM Program. Except as provided in the following paragraph, your
Account Value is required to remain invested at all times in accordance with an
asset allocation model of one of the currently approved Strategists in the GFWM
Program.
Clients may impose "reasonable restrictions" on the management of their
Accounts in accordance with an asset allocation model. Whether a particular
restriction is reasonable is a factual determination that will be made by GFWM
in the context of each requested restriction. In general, requests that an
Account not invest in a particular mutual fund or ETF and requests not to
invest Account assets in an asset class that has a small allocation under the
asset allocation model that the client has selected will be considered
reasonable. In contrast, restrictions that are fundamentally inconsistent with
the basic approach of an asset allocation model or that would result in an
investment allocation for the client that does not correspond to the
Risk-Return Profile to which the selected asset allocation model normally
corresponds would not be considered reasonable.
A table is set forth below which shows each Strategist available for each
Risk-Return Profile and the asset classes each Strategist currently recommends
for each available asset allocation model. Certain asset allocation models
provide for investments in mutual funds, others use ETFs, while others use a
combination of mutual funds and ETFs. The types of asset allocation models are
shown. All asset allocation models shown below are available to Certificates
issued prior to September 1, 2010. If your Certificate is issued on or after
September 1, 2010, you may only choose either the GFAM 60/40 Strategy or the
GFAM 70/30 Strategy.
MUTUAL FUNDS
------------------------------------------------------------------------------------------------------------------------
STRATEGIST US EQ INTL EQ EMG MKTS US BONDS INTL BONDS EMG. BONDS REITS CASH OTHER
------------------------------------------------------------------------------------------------------------------------
Moderate Callan (Global) 40.00% 17.00% 0.00% 38.00% 0.00% 0.00% 3.00% 2.00% 0.00%
Risk Return Callan (Domestic) 58.00% 0.00% 0.00% 38.00% 0.00% 0.00% 2.00% 2.00% 0.00%
Profile Callan (Hedged) 40.00% 17.00% 0.00% 30.94% 0.00% 0.00% 3.00% 2.00% 7.06%
Goldman Sachs Asset Management 32.40% 23.00% 5.90% 6.10% 20.20% 2.80% 3.30% 2.00% 4.30%
JP Morgan Asset Management 42.00% 14.00% 6.00% 27.00% 0.00% 2.00% 3.00% 2.00% 4.00%
Litman/Gregory Asset Management 25.50% 10.00% 0.00% 55.50% 0.00% 7.00% 0.00% 2.00% 0.00%
Litman/Gregory Asset Mgt AM Funds 25.50% 11.00% 0.00% 56.50% 0.00% 5.00% 0.00% 2.00% 0.00%
New Frontier Advisors 32.67% 24.27% 0.00% 35.41% 0.00% 0.00% 5.65% 2.00% 0.00%
MUTUAL FUNDS
----------------------------------------------------------------------------------------------------------------------------
STRATEGIST US EQ INTL EQ EMG MKTS US BONDS INTL BONDS EMG. BONDS REITS CASH OTHER
----------------------------------------------------------------------------------------------------------------------------
Moderate Growth Callan (Global) 50.00% 21.00% 0.00% 23.00% 0.00% 0.00% 4.00% 2.00% 0.00%
Risk Return Callan (Domestic) 72.00% 0.00% 0.00% 22.00% 0.00% 0.00% 4.00% 2.00% 0.00%
Profile Goldman Sachs Asset Management 41.90% 30.70% 6.80% 3.20% 5.20% 2.80% 3.30% 2.00% 4.10%
JP Morgan Asset Management 51.00% 17.00% 8.00% 16.00% 0.00% 2.00% 4.00% 2.00% 0.00%
Litman/Gregory Asset Management 40.00% 15.00% 0.00% 36.00% 0.00% 7.00% 0.00% 2.00% 0.00%
Litman/Gregory Asset Mgt AM Funds 41.50% 14.00% 0.00% 37.50% 0.00% 5.00% 0.00% 2.00% 0.00%
New Frontier Advisors 38.83% 32.78% 0.00% 19.81% 0.00% 0.00% 6.58% 2.00% 0.00%
ETFS
-----------------------------------------------------------------------------------------------------------------------
STRATEGIST US EQ INTL EQ EMG MKTS US BONDS INTL BONDS EMG. BONDS REITS CASH OTHER
-----------------------------------------------------------------------------------------------------------------------
Moderate Avatar Associates 39.20% 9.80% 4.50% 38.10% 0.00% 0.00% 2.60% 5.80% 0.00%
Risk Return New Frontier Advisors 33.81% 18.71% 4.54% 34.84% 1.21% 0.00% 3.89% 2.00% 1.00%
Profile State Street Global Advisors 39.00% 16.00% 4.00% 32.50% 1.50% 0.00% 3.00% 2.00% 2.00%
- ------------------------------------------------------------------------------------------------------
Moderate Growth Avatar Associates 46.40% 14.20% 4.80% 23.10% 0.00% 0.00% 2.70% 8.80% 0.00%
Risk Return New Frontier Advisors 40.48% 24.52% 6.52% 20.73% 1.14% 0.00% 4.61% 2.00% 0.00%
Profile State Street Global Advisors 49.00% 20.00% 5.00% 18.00% 1.00% 0.00% 3.00% 2.00% 2.00%
11
COMBINATION MUTUAL FUNDS AND
ETFS
-----------------------------------------------------------------------------------------------------------------------
STRATEGISTS US EQ INTL EQ EMG MKTS US BONDS INTL BONDS EMG. BONDS REITS CASH OTHER
-----------------------------------------------------------------------------------------------------------------------
Moderate
Risk Return
Profile GFAM 60/40 Strategy 50.00% 10.00% 0.00% 36.00% 0.00% 0.00% 0.00% 4.00% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Moderate Growth
Risk Return
Profile GFAM 70/30 Strategy 58.00% 12.00% 0.00% 28.00% 0.00% 0.00% 0.00% 2.00% 0.00%
U.S. EQUITIES -- this asset class is generally represented by investments in
the equity of U.S. publicly traded companies across various capitalization
ranges.
INTERNATIONAL EQUITIES -- this asset class is generally represented by
investments in the equity of publicly traded companies based in countries other
than the U.S., also referred to as "Developed Markets" which are typically
classified in the MSCI EAFE index. Exposure may include companies across
various capitalization ranges. (The Morgan Stanley Capital International
Europe, Australia and Far East Index (MSCI EAFE) is an unmanaged index holding
approximately 1,000 companies traded on 20 stock exchanges from around the
world, excluding the U.S.A., Canada, and Latin America.)
EMERGING MARKETS EQUITIES -- this asset class is generally represented by
investments in the equity of publicly traded companies based in emerging market
countries as typically classified in the MSCI Barra Emerging Markets index.
(The MSCI Emerging Markets Index is a free float-adjusted market capitalization
index. As of August 2005, the index consisted of the following 26 emerging
market country indices: Argentina, Brazil, Chile, China, Colombia, Czech
Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia,
Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa,
Taiwan, Thailand, Turkey and Venezuela.)
US BONDS -- this asset class is generally represented by investments in
corporate and government bonds issued by companies and government entities
based in the United States.
INTERNATIONAL BONDS -- this asset class is generally represented by investments
in corporate and government bonds issued by companies and governments domiciled
outside of the U.S., also referred to as "Developed Markets." Securities from
countries classified as emerging markets are excluded.
EMERGING MARKETS BONDS -- this asset class is generally represented by
investments in corporate and government bonds issued by companies and
governments based in emerging market countries.
REITS -- this asset class is generally represented by investments in common
stocks and other publicly traded real estate securities, such as Real Estate
Investment Trusts (REITs) and Real Estate Operating Companies.
CASH -- this asset class is generally represented by investments in money
market mutual fund vehicles and bank deposit accounts sponsored by custodial
entities for use as cash management vehicles.
OTHER -- this category is represented by investments in asset categories that
are not defined in the above classifications, including but not limited to such
areas as commodities, currencies and other specialty asset categories.
Each Strategist may change its asset allocation models, such as by revising the
percentages allocated to various asset classes and the specific mutual funds or
ETFs used for investing in a particular class. When your asset allocation model
is updated, GFWM will reallocate your Account Value in accordance with any
changes to the model you have selected. This means the allocation of your
Account Value, and potentially the securities, in which you are invested, will
change to reflect the allocations and securities in the updated model.
Reallocation transactions may have tax consequences. For example, any sales
resulting from a reallocation will be a taxable event, and you will not be able
to apply the proceeds therefrom to purchase new Account investments that
satisfy the revised asset allocation model(s) on a tax-free basis (unless your
Account is an IRA Account). The amount of your Guaranteed Income payments will
not be reduced if your investments are reallocated in accordance with the
revised model. If you do not accept the changes to your selected model (subject
to any reasonable restrictions you have imposed), the amount of Guaranteed
Income payments will be reduced or your Certificate may terminate. Upon any
termination any fees previously paid for the Certificate will not be returned
with the exception of the portion of that quarter's Asset Charge which is equal
to the number of days remaining in the quarter.
If a Strategist makes a change which causes the asset allocation model to no
longer fall within its corresponding specific Risk-Return Profile, then, within
90 days of receipt of notice, you must change to another asset allocation model
currently available within the Risk-Return Profile you selected at the time the
Certificate was issued. If you do not select another asset allocation model
within the notice period, your Certificate will terminate.
Strategists generally utilize either strategic (passive) or tactical (active)
asset allocation. Asset allocation models using strategic asset allocation are
generally revised on a quarterly or annual basis. Models using tactical asset
allocation are revised in accordance with the Strategist's perception of
changes in market conditions. Revisions of tactical models could take place
more or less frequently than quarterly. If you do not approve of changes made
by the Strategist, you may still keep your Withdrawal Guarantee if you switch
to another asset allocation
12
model available with the Risk-Return Profile selected at the time the
Certificate is issued. A Certificate Owner is permitted to switch models within
their Risk-Return Profile, including switching between mutual fund and ETF
Accounts, so long as the changes meet GFWM's account minimums and are made
between asset allocation models available within the Risk-Return Profile
selected at the time the Certificate is issued. Certificate Owners are NOT
currently permitted to switch between Profiles, although we reserve the right
to permit such switching in the future.
The asset allocation models offered by GFWM are subject to the same risks faced
by similar asset allocation models offered in the market, including, without
limitation, market risk (the risk of an overall down market), interest rate
risk (the risk that rising or declining interest rates will hurt your
investment returns), idiosyncratic risk (the risk that an individual asset will
hurt your returns) and concentration risk (the risk that due to concentrations
in a certain segment of the market which performs poorly, your returns are
lower than the overall market). The asset allocation models may not achieve
their respective investment objectives regardless of whether or not you
purchase the Certificate.
GFWM provides you or your Advisor with written descriptions of each of the
Strategists, an overview of the firm's key personnel, and a summary of the
prior performance of each Model. GFWM has software applications which provide
your Advisor with the capability of directly monitoring its client accounts,
downloading information concerning changes in the GFWM Program, and accessing
current information relating to the GFWM Program. You are provided with
custodial reports from an independent third-party custodian and quarterly
performance reports.
Your Advisor provides the specific advice to you concerning the Strategist(s)
and model(s) you chose. Your Advisor and/or you retain discretion to choose the
Strategist(s), and the model(s) from the approved list of asset allocation
models in order to maintain the Withdrawal Guarantee and the initial
Risk-Return Profile. YOU SHOULD UNDERSTAND, HOWEVER, THAT APPLICABLE FEDERAL
AND STATE LAWS AND REGULATIONS RELATING TO BROKER-DEALERS AND INSURANCE AGENTS
MAY PRECLUDE YOUR ADVISOR FROM PROVIDING ADVICE TO YOU REGARDING THE
CERTIFICATE.
THE ACCOUNT PHASE OF THE CERTIFICATE
As stated previously in this prospectus, the Certificate has two phases: an
"Account Phase" and "Guarantee Phase." The Account Phase is described in the
following section of this prospectus.
Important definitions you will need to understand are the following:
"Withdrawals" are any withdrawals from your Account that are not shown in the
Certificate as a "Withdrawal Exception." Amounts you may withdraw pursuant to
the Withdrawal Guarantee are "Guaranteed Withdrawals."
THE ACCOUNT PHASE BEGINS ON THE "CERTIFICATE DATE," WHICH IS THE DATE YOUR
CERTIFICATE IS ISSUED BY US. THERE ARE SEVERAL IMPORTANT ASPECTS OF THE ACCOUNT
PHASE YOU SHOULD UNDERSTAND. THEY ARE:
. Determination of the Birthday and the date you may begin taking Withdrawals
. Calculation of the initial Withdrawal Guarantee
. Calculating changes to your Withdrawal Guarantee
. Computing your Asset Charge
. Managing your Withdrawals
. Determining if and when the Guarantee Phase of your Certificate will begin.
HOW ARE THE BIRTHDAY AND THE DATE WITHDRAWALS MAY BEGIN BEING CALCULATED?
. If you are the sole Owner and Participant, the Birthday is the anniversary
of your date of birth each year. If there is also a Joint Participant, the
Birthday is the anniversary of the date of birth of the younger person. If
the younger Joint Participant dies before the other Participant, the
Birthday does not change.
. The date Withdrawals may begin is the date you reach age 65. On or after
this date, you may begin to take Guaranteed Withdrawals from your Account.
This date will be listed on your Certificate.
. If there is a Joint Participant (who must be the spouse, as recognized
under applicable Federal law, of the other Participant) on the
Certificate, the date Withdrawals may begin is the 65th birthday of the
younger person. If the younger person passed their 65th birthday before
the Certificate was purchased, this date is the Certificate Date.
. Once a Certificate is issued, we will not change the stated date
Withdrawals may begin other than for error correction. We reserve the
right to increase the age for Withdrawals from age 65 for Certificates not
yet issued.
HOW IS THE INITIAL WITHDRAWAL GUARANTEE CALCULATED?
WHAT IS THE WITHDRAWAL GUARANTEE? The Withdrawal Guarantee is the amount that
you may withdraw from your
13
Account each year after age 65 without reducing the guaranteed minimum lifetime
income under the Certificate. Understanding and managing the Withdrawal
Guarantee has a direct impact on the amount of Guaranteed Income payments (if
any) we will pay to you in the Guarantee Phase under the Certificate. You
should pay very close attention to the Withdrawal Guarantee over the life of
your Certificate and understand how it is computed and how it can increase and
decrease. Such calculations are described in the following sections.
WHAT IS THE WITHDRAWAL GUARANTEE FACTOR? The Withdrawal Guarantee Factor is
currently 5%. This Factor may be a percentage or mathematical formula used,
along with your Account Value, to determine your Withdrawal Guarantee. We
reserve the right to change the Factor on January 1st of each year. You will be
provided at least 30 days prior notice of any changes. If there is a Withdrawal
Guarantee Factor change, calculations using this new Factor will be compared to
the current Withdrawal Guarantee. If the result is lower, you will retain your
current Withdrawal Guarantee, (unless your Withdrawal Guarantee is impaired by
any Early Withdrawals or Excess Withdrawals). Therefore, the Initial Withdrawal
Guarantee cannot decrease as a result of a change in the Withdrawal Guarantee
Factor.
WHAT IS A WITHDRAWAL YEAR? You must have reached age 65 to have a Withdrawal
Year. Once you reach age 65, a Withdrawal Year is the year between two
Birthdays. It is the period during which you can take your annual Withdrawal
Guarantee.
WHAT IS A VALUATION DAY? Your Account will be invested in mutual funds and/or
ETF shares that are valued by the mutual funds or the ETFs in accordance with
applicable legal and regulatory requirements. GFWM will calculate your Account
Value and provide it to us on each day the New York Stock Exchange is open for
trading. These days are referred to as Valuation Days. If for any reason the
share value of one or more funds or ETFs is not available to GFWM on a
Valuation Day, GFWM will calculate your Account Value using the last share
price provided by the mutual fund or the ETFs.
Your initial Withdrawal Guarantee is equal to the Account Value on your
Certificate Date multiplied by the Withdrawal Guarantee Factor.
EXAMPLE: Assume in the following example that you are the sole Owner and
Participant and that you are invested in accordance with the Moderate
Risk-Return Profile with an Account Value of $500,000. In this case, your
initial Withdrawal Guarantee is:
$500,000, multiplied by the Withdrawal Guarantee Factor of 5%, for an
initial Withdrawal Guarantee of $25,000.
ARE YOU PERMITTED TO START TAKING GUARANTEED WITHDRAWALS IMMEDIATELY? If you
are over age 65 when the Certificate is issued, you may begin to take
Guaranteed Withdrawals immediately or at anytime thereafter. In that case, if
you take Withdrawals before your next Birthday, you are limited to an amount
proportional to the number of days until your next Birthday.
EXAMPLE: Assume in the following example that you are the sole Owner and
Participant and that you are invested in accordance with the Moderate
Risk-Return Profile with an Account Value of $500,000. Also assume that
today is March 31st, that your Birthday is July 1st and that you are
currently over 65 years old.
Your initial Withdrawal Guarantee is:
$500,000, multiplied by the Withdrawal Factor of 5%;
for an initial Withdrawal Guarantee of $25,000.
If you wish to take Guaranteed Withdrawals before your next Birthday, you
may Withdraw the following amount:
Existing Withdrawal Guarantee of $25,000, multiplied by 91 days until your
next Birthday, divided by 365, equals $6,232.88 in Guaranteed Withdrawals
you may take before your next Birthday.
In each Withdrawal Year following your Birthday, you may take the full
$25,000 amount of Guaranteed Withdrawals at any time during the year
(unless your Withdrawal Guarantee changes).
HOW ARE INCREASES TO THE WITHDRAWAL GUARANTEE CALCULATED?
INCREASES (IF ANY) MAY OCCUR ONLY ON YOUR BIRTHDAY. Increases to the
Withdrawal Guarantee can occur as a result of additional investments in your
Account that you make and by positive investment performance by your Account.
Each year on your Birthday, we will perform a calculation to see if your
Withdrawal Guarantee is increased. If your Account Value, multiplied by the
then current Withdrawal Guarantee Factor, equals an amount greater than your
current Withdrawal Guarantee, we will increase your Withdrawal Guarantee to the
higher amount. Once this increase occurs, your new Withdrawal Guarantee can
decrease only as set forth in the "How are Decreases to the Withdrawal
Guarantee calculated?" section below.
EXAMPLE: Assume in the following example that you are the sole Owner and
Participant, that your initial Account Value was $500,000 and that your
initial Withdrawal Guarantee was $25,000. Assume further that as a result of
additional investments you have made, Guaranteed
14
Withdrawals you have taken, gains and losses in your Account and the various
fees you have paid from your Account, your current Account Value on your
next Birthday is $600,000.
Your new Withdrawal Guarantee would be:
(1) The greater of your prior Withdrawal Guarantee of $25,000; and
(2) Your current Account Value of $600,000, multiplied by, the Withdrawal
Guarantee Factor of 5% equaling $30,000.
Since $30,000 is greater than $25,000, your new Withdrawal Guarantee is
$30,000.
As noted above in "How is the Withdrawal Guarantee Calculated? -- What is the
Withdrawal Guarantee Factor?," we reserve the right to change the Withdrawal
Guarantee Factor on January 1st of each year. If we reduce your Withdrawal
Guarantee Factor, it is less likely that your Withdrawal Guarantee will
increase on any subsequent Birthday. For example, if the Withdrawal Guarantee
Factor was 4% in the above Example instead of 5% and all of the other
assumptions were the same, the preceding Withdrawal Guarantee would not have
increased. The Example is restated below to show the effect of a reduction in
the Withdrawal Guarantee Factor from 5% to 4%:
EXAMPLE: Assume that you are the sole Owner and Participant, that your
initial Account Value was $500,000 and that your initial Withdrawal
Guarantee was $25,000. Assume further that as a result of additional
investments you have made, Guaranteed Withdrawals you have taken, gains and
losses in your Account and the various fees you paid from your Account, your
current Account Value on your next Birthday is $600,000.
Your new Withdrawal Guarantee would be:
(1) The greater of your prior Withdrawal Guarantee of $25,000; and
(2) Your current Account Value of $600,000, multiplied by the current
Withdrawal Guarantee Factor of 4%; equaling $24,000.
Since $25,000 is greater than $24,000, your current Withdrawal Guarantee of
$25,000 does not increase.
However, if instead of your Account Value on your next Birthday being
$600,000, it is $700,000, your Withdrawal Guarantee would increase, because
your current Account Value of $700,000, multiplied by the current Withdrawal
Guarantee Factor of 4% equals $28,000. Since $28,000 is greater than
$25,000, your Withdrawal Guarantee would increase to $28,000.
OTHER INCREASES IN THE WITHDRAWAL GUARANTEE.
Your Certificate will contain an endorsement, for which there is no additional
Asset Charge. The endorsement may serve to increase your Withdrawal Guarantee
on your Birthday, so long as you have not taken a Withdrawal from your Account
since your Certificate Date.
On your Birthday, if no Withdrawals have been taken since the Certificate Date,
the Withdrawal Guarantee will be the greater of: (1) the Withdrawal Guarantee
computed as described above; and (2) the Withdrawal Guarantee due to Total
Additions. "Total Additions" are described below:
Total Additions Feature:
"Additions" are amounts, not set forth as addition exceptions in the
Certificate, that are received and applied to your Account after the
Certificate Date. "Total Additions" is the sum of the initial Account Value
on the Certificate Date plus any Additions. The Withdrawal Guarantee is
equal to the total Withdrawal Guarantee that the Total Additions (including
the original payment) would purchase.
EXAMPLE: Assume that your Certificate Date was February 1/st/ of this year,
and that your initial Account Value and Withdrawal Guarantee were $100,000
and $5,000 respectively. Also assume that the market declined, bringing your
Account Value to $90,000 by July 1/st/. If you made a subsequent Addition of
$10,000 on August 1, and if you have not made any Withdrawals since the
Certificate Date, on your next Birthday (assume September 1/st/) your
Withdrawal Guarantee under this feature would be:
Total Additions (including original payment) x Withdrawal Guarantee Factor
($100,000 + $10,000) x 5% = $5,500
The importance of the Total Additions feature is that losses in your Account
due to poor investment performance are ignored for purposes of calculating
your Withdrawal Guarantee, so that you are more likely to get the benefit of
positive investment performance and Additions. However, it is important to
remember that the Total Additions feature only applies as long as you do not
take any Withdrawals from your Account.
90 Day Feature:
On the 90/th/ day following the Certificate Date, we will perform and apply
all calculations permitted to increase your Withdrawal Guarantee as if it
were your Birthday. This will only occur once during the term of your
Certificate.
15
EXAMPLE: Assume for this example that your Certificate Date is June 1,
2010. Your initial Account Value is $200,000 and your initial Withdrawal
Guarantee is $10,000. On August 29, 2010, 90 days after the Certificate
Date, your Account Value is $300,000 due to several Additions. Your new
Withdrawal Guarantee on the 90/th /Day would be $15,000.
$300,000 x 5% = $15,000
HOW ARE DECREASES TO THE WITHDRAWAL GUARANTEE CALCULATED?
Your Withdrawal Guarantee will decrease for two specific types of Withdrawals:
(1) an Early Withdrawal and (2) an Excess Withdrawal.
WHAT IS AN EARLY WITHDRAWAL? An Early Withdrawal is any Withdrawal prior to
age 65. Early Withdrawals may significantly lower your Withdrawal Guarantee;
therefore, you should carefully consider your decision to take Withdrawals
prior to age 65. The Certificate does not require us to warn you or provide you
with notice regarding potentially adverse consequences that may be associated
with any Withdrawals or other types of transactions involving your Account
Value.
If your Certificate is issued after age 65, you do not have to be concerned
about an Early Withdrawal.
Each time you make an Early Withdrawal, your Withdrawal Guarantee will be
reduced to the lower of: (1) an amount equal to the Withdrawal Guarantee you
would have if you bought a new Certificate on the day of the Early Withdrawal
and (2) your prior Withdrawal Guarantee. Here is an example:
EXAMPLE: Assume for this example that you purchased the Certificate at age
57 and that you are now age 58. Assume further that your current Withdrawal
Guarantee is $10,000 and that your Account Value yesterday was $215,000.
Your withdrawal today was $25,000 and your Account Value at the end of the
day today is $189,000 (a reduction being the result of the Withdrawal and
investment losses of $1,000).
Because you are under age 65, this is an Early Withdrawal. Your adjusted
Withdrawal Guarantee will be the lower of:
(1) Account Value of $189,000, multiplied by the then current Withdrawal
Guarantee Factor of 5%, equaling $9,450; and
(2) Withdrawal Guarantee yesterday of $10,000.
Because $9,450 is less than $10,000, your new Withdrawal Guarantee will be
$9,450.
WHAT IS AN EXCESS WITHDRAWAL? Once you are age 65 or more, an Excess
Withdrawal occurs each time you Withdraw more in a Withdrawal Year than your
Withdrawal Guarantee. An Excess Withdrawal may substantially reduce your
Withdrawal Guarantee. You should carefully consider the consequences of Excess
Withdrawals. The Certificate does not require us to warn you or provide you
with notice regarding potentially adverse consequences that may be associated
with any Withdrawals or other types of transactions involving your Account
Value.
Each time you make an Excess Withdrawal, your Withdrawal Guarantee will be
reduced to the lower of: (1) an amount equal to the Withdrawal Guarantee you
would have if you bought a new Certificate on that day and (2) your prior
Withdrawal Guarantee.
EXAMPLE: Assume that your current Withdrawal Guarantee is $20,000 and that
your Account Value yesterday was $390,000. Assume also that while you have
not taken any Withdrawals since your last Birthday, you decide to take a
$30,000 Withdrawal today. This is an Excess Withdrawal. If your Account
Value at the end of the day today is $360,000, your new Withdrawal Guarantee
will be:
The lower of:
(1) Account Value $360,000, multiplied by the current Withdrawal Guarantee
Factor of 5%, equaling $18,000; and
(2) Withdrawal Guarantee as of yesterday equal to $20,000.
Since $18,000 is lower than $20,000, your new Withdrawal Guarantee will be
$18,000.
In the case of an Early Withdrawal or an Excess Withdrawal, you will have 30
days to restore the Withdrawal Guarantee to the amount that was in effect prior
to the Early or Excess Withdrawal. To do so, you must do the following:
(1) Make additional payments to your Account equal to or greater than the
Early or Excess Withdrawal amount; and
(2) Request that we restore your Withdrawal Guarantee.
WHAT ARE SOME THINGS TO CONSIDER IN MANAGING YOUR WITHDRAWALS FROM YOUR ACCOUNT?
There are many factors that will influence your decision of when to take
Withdrawals from your Account, and in what amount. No two investors' situations
will be exactly the same. You should carefully weigh your decision to take
Withdrawals
16
from your Account, the timing of the Withdrawals and their amount. You should
consult with your Advisor and a tax advisor.
In addition to the advice you receive, here are a few things to consider.
First, Early Withdrawals and Excess Withdrawals will reduce your Withdrawal
Guarantee. The reduction may be substantial, especially if your Account Value
is significantly lower than it was when the Withdrawal Guarantee was last
computed or adjusted. Consider if you have other sources of income, especially
non-guaranteed income, before making such Withdrawals.
Second, once you are ready to take Guaranteed Withdrawals from your Account,
consider setting up a quarterly, monthly or other systematic withdrawal program
through your Advisor, custodian or other service provider. Doing so may help
limit the risk that you will make an Excess Withdrawal. You may plan to update
the systematic withdrawal each year on your Birthday in case your Withdrawal
Guarantee has increased.
Third, consider the timing of taking any Withdrawals. Because your Withdrawal
Guarantee can increase on your Birthday and is generally based on the Account
Value and the Withdrawal Guarantee Factor, the higher your Account Value is on
your Birthday, the more likely you will be to receive an increase in your
Withdrawal Guarantee. You might have a higher Withdrawal Guarantee if you defer
the Withdrawal until after your Birthday. MORE GENERALLY, ONCE YOU HAVE REACHED
AGE 65, YOU SHOULD CONSIDER THAT THE LONGER YOU WAIT TO BEGIN MAKING
WITHDRAWALS, THE LESS LIKELY YOU WILL BE TO BENEFIT FROM THE WITHDRAWAL
GUARANTEE. This is because your life expectancy will decrease as you get older,
so that there will be fewer years for Withdrawals to reduce your Account Value
to the level where we would be required to begin paying Guaranteed Income
payments, and in the event that we did begin making such payments, we would
make fewer payments before you die.
ASSET CHARGES
After you purchase your Certificate, you are required to pay the Asset Charge.
The Asset Charge is set forth in your Certificate, and is based on the asset
allocation model in accordance with which the assets in your Account are
invested, as well as whether you purchase the Certificate with yourself
designated as the sole Participant, or with you and your spouse designated as
Joint Participants. The Asset Charge will be deducted quarterly as a separate
charge from your Account and remitted to us. The sale or transfer of
investments in your GFWM Account to pay the Asset Charge will not be treated as
a Withdrawal for purposes of determining the Withdrawal Guarantee, but may have
tax consequences.
As of the Certificate Date, we will assess a full quarterly Asset Charge. This
full amount will be deducted from your Account at the end of the month. At the
beginning of the next calendar quarter, we will assess a quarterly Asset
Charge, in advance, based on the average Account Value during the previous
quarter. This may result in a slightly lower charge for Certificates which were
in force for only part of the prior quarter, to compensate for the full
quarterly fee billed in advance when the Certificate was purchased.
Set forth below are examples of how the initial and subsequent Asset Charge is
computed.
EXAMPLE: Assume that your Certificate Date is February 14, and your
initial Account Value is $100,000. Assume also that the Asset Charge is
1.25% annually.
You will be billed for the initial $312.50 full quarterly Asset Charge at
the end of February: Initial Account Value ($100,000) multiplied by the
Asset Charge (1.25%) /4 = $312.50.
At the end of March, you will be charged in advance for the second quarter
of the year, based on the average Account Value during the first quarter.
If your Account Value was constant each day through March 31 at $100,000,
your average balance for the first quarter would be $50,000, as the
Account was only open for one-half of the first quarter. Thus your Asset
Charge for the second quarter would be: Average Account Value ($50,000)
multiplied by Asset Charge (1.25%) /4 = $156.25.
Thereafter, at the end of each calendar quarter the Asset Charge will be
calculated based on the average Account Value for the entire prior quarter. If
you pay the quarterly Asset Charge and then cancel your Certificate during the
quarter, we will refund to you the portion of that quarter's Asset Charge which
is equal to the number of days remaining the in the quarter.
The guaranteed maximum Asset Charge we can ever charge for your Certificate is
shown below. We currently charge a lower amount, which is also shown below. For
an explanation of when we could increase the Asset Charge under your
Certificate, see "Will you pay the same amount (in dollars) for the Withdrawal
Guarantee every quarter?"
17
The guaranteed maximum Asset Charge, as a percentage
of the Account Value relating to a Certificate, is:
FOR ASSET
FOR ASSET ALLOCATION
ALLOCATION MODELS
MODELS CORRESPONDING
CORRESPONDING TO MODERATE
TO MODERATE GROWTH
RISK-RETURN RISK-RETURN
PROFILE PROFILE
-------------------------------------------------------------
Single Participant 2.00% 2.50%
Joint Participants (provides
protection during the lives of
two spouses) 2.25% 2.75%
Converting these charges to a dollar fee per $1,000 of
Account Value:
FOR ASSET
FOR ASSET ALLOCATION
ALLOCATION MODELS
MODELS CORRESPONDING
CORRESPONDING TO MODERATE
TO MODERATE GROWTH
RISK-RETURN RISK-RETURN
PROFILE PROFILE
-------------------------------------------------------------
Single Participant $20.00 $25.00
Joint Participants (provides
protection during the lives of
two spouses) $22.50 $27.50
The current Asset Charge, as a percentage of your Account Value is:
FOR ASSET
FOR ASSET ALLOCATION
ALLOCATION MODELS
MODELS CORRESPONDING
CORRESPONDING TO MODERATE
TO MODERATE GROWTH
RISK-RETURN RISK-RETURN
PROFILE PROFILE
-------------------------------------------------------------
Single Participant 0.85% 1.10%
Joint Participants (provides
protection during the lives of
two spouses) 1.00% 1.25%
Converting these charges to a dollar fee per $1,000 of
Account Value:
FOR ASSET
FOR ASSET ALLOCATION
ALLOCATION MODELS
MODELS CORRESPONDING
CORRESPONDING TO MODERATE
TO MODERATE GROWTH
RISK-RETURN RISK-RETURN
PROFILE PROFILE
------------------------------------------------------------
Single Participant $ 8.50 $11.00
Joint Participants (provides
protection during the life of
two spouses) $10.00 $12.50
The Asset Charge listed above is in addition to any charges that are imposed in
connection with advisory, custodial and other services (including any fees
charged by your Advisor) or charges imposed by the mutual funds and ETFs in
which your Account invests.
We reserve the right to have the Asset Charges deducted through means other
than deduction from the Account.
WILL YOU PAY THE SAME AMOUNT (IN DOLLARS) FOR THE WITHDRAWAL GUARANTEE EVERY
QUARTER?
Only if your average Account Value multiplied by the Asset Charge percentage is
exactly the same amount (in dollars) every quarter will your actual fee remain
constant. Because the amount (in dollars) you pay us for the Withdrawal
Guarantee varies based in part on your Account Value, it will likely change
from quarter to quarter. Here are several examples:
EXAMPLE: Assume in the following example that your Asset Charge is 1.25%
and that you have an average Account Value of $500,000. In this case, your
quarterly Asset Charge for the Withdrawal Guarantee would be:
$500,000, multiplied by 1.25%, divided by 4, for a quarterly Asset Charge
of $1,562.50.
EXAMPLE, CONTINUED: Assume that over the next quarter due to Guaranteed
Withdrawals and due to poor market performance of the assets in your
Account, your average Account Value for the quarter was $400,000.
The quarterly Asset Charge for the Withdrawal Guarantee for the following
quarter would be:
$400,000, multiplied by 1.25%, divided by 4, for a quarterly Asset Charge
of $1,250.
EXAMPLE, CONTINUED: Assume now that over the next quarter you take no
Withdrawals, but your average Account Value, due to Additions and good
market performance, rises to $600,000 for the quarter.
The quarterly Asset Charge would be:
$600,000 multiplied by 1.25%, divided by 4, for a quarterly Asset Charge
of $1,875.
You should note that in these scenarios, your Withdrawal Guarantee would not
decline even though your Account Value declined as a result of the deduction of
the Asset Charge because the Asset Charge does not constitute an Early
Withdrawal or Excess Withdrawal. However, the resulting decrease in Account
Value will reduce the possibility that your Withdrawal Guarantee will increase
on your next Birthday,
18
because the Withdrawal Guarantee will increase only if your Account Value on
your next Birthday, multiplied by the Withdrawal Guarantee Factor, is greater
than your current Withdrawal Guarantee. Because the Asset Charge is computed
based on your average Account Value and not on the amount of the Withdrawal
Guarantee, the fee you pay will go down when the average Account Value
declines. Similarly, if your Account Value and Asset Charge have increased as
of a quarterly computation date, unless that date is a Birthday, your
Withdrawal Guarantee would not increase.
We reserve the right to change the Asset Charge. We will send you advance
written notice of such change at least 30 days before the change becomes
effective, which will be at the end of the next calendar quarter. Charges will
be assessed on the weighted average of the Account Value on the effective date
of the change at the old rate, and Additions at the new rate from the point of
the Addition forward. Thereafter the new rate will be used at the end of each
calendar quarter to calculate your Asset Charge and will be applied to your
entire average Account Value for the prior calendar quarter.
WILL THE FEES YOU PAY FOR ADVICE AND OTHER SERVICES IMPACT THE GUARANTEES UNDER
YOUR CERTIFICATE?
Yes, they might, since Withdrawals may reduce the guarantees under the
Certificate. However, the provisions of your Certificate allow for a certain
percentage of your Account Value to be paid each year for advisory and other
services rendered in connection with your GFWM Program without being considered
a Withdrawal (the "Withdrawal Exception"). (Any fees taken for custodial
services, and mutual fund or ETF expenses, are not considered to be for
"advisory and other services rendered in connection with your GFWM Program" and
typically are not withdrawn directly from your Account. Therefore, these fees
and expenses are not considered a Withdrawal for purposes of this Withdrawal
Exception provision.) However, if your actual fees for advice and other
services exceed this amount, the excess is considered a Withdrawal. Currently,
the Withdrawal Exception percentage is 1.55%. We monitor the fees you pay and
compare it to this percentage to see if you have exceeded the permitted amount.
The dollar amount of the Withdrawal Exception percentage is computed at the end
of each quarter in the same manner as the Asset Charge is calculated.
This means that if you are under age 65 and you exceed the Withdrawal Exception
percentage for the year, you will, in effect, have an Early Withdrawal. If you
are age 65 or over and exceed the Withdrawal Exception percentage, you will
have, in effect, an Excess Withdrawal if you also take the full Withdrawal
Guarantee that year. Both Early and Excess Withdrawals reduce your Withdrawal
Guarantee. Here is an example of the Withdrawal Exception:
EXAMPLE: Assume in the following example that for the current quarterly
billing cycle your average Account Value was $500,000 and that for the
quarter you paid $1,750 for advisory and other fees. Assume further that
the Withdrawal Exception percentage listed on your Certificate is 1.55%.
In this case, the amount of the Withdrawal Exception for the quarter is:
Average Account Value ($500,000), multiplied by the Withdrawal Exception
percentage (1.55%) divided by 4 (to compute a quarterly amount), equaling
$1,937.50. Since $1,750 is less than $1,937.50, you have not exceeded the
Withdrawal Exception. Had your advisory and other platform fees exceeded
$1,937.50, every dollar over that amount would count as a Withdrawal.
Any unused portion of the Withdrawal Exception in a Withdrawal Year does not
carry over to subsequent Withdrawal Years.
GUARANTEE PHASE UNDER THE CERTIFICATE
In the Guarantee Phase, there are two types of income provisions available
under the Certificate. You may elect only one and not both. They are the
Guaranteed Income and Alternative Annuity Payment option provisions. (The
Alternative Annuity Payment option is referred to as the "Base Income"
provision in the Certificate.) In both cases, your Account Value is transferred
to the Company as the premium payment for a fixed income annuity ("Annuity")
issued by the Company.
WHAT IS GUARANTEED INCOME? WHEN WILL YOU RECEIVE PAYMENTS?
You will begin to receive Guaranteed Income payments from us after your Account
Value is transferred to us as your premium payment to us on the Annuity
Exercise Date. There are three ways to reach the Annuity Exercise Date:
(1) your Account Value falls below your Withdrawal Guarantee, (2) your Account
Value falls below $20,000 or (3) you (or if there are Joint Participants, the
younger Joint Participant), reach age 100. In each case there will be a 30-day
Notice Period after the Annuity Exercise Date, during which you can still
cancel your Certificate. If you do not cancel your Certificate, your entire
Account Value will be paid to us at the end of the Notice Period. You will then
receive lifetime annual income payments
19
equal to the Withdrawal Guarantee. You or your named beneficiary are guaranteed
to receive the premium amount back in the form of income payments even if you
were to die before such payments occur ("return of premium").
The three scenarios triggering Guaranteed Income payments (or Alternative
Annuity Payment option if these payments are greater than the Guaranteed Income
payment would be) are described below:
WHEN YOUR ACCOUNT VALUE FALLS BELOW THE WITHDRAWAL GUARANTEE. On the first
Valuation Day when your Account Value falls below the current Withdrawal
Guarantee, a 30-day Notice Period will begin in anticipation of paying us your
premium on the Latest Annuity Date (the date ending 30 days after the Annuity
Exercise Date). We will provide you written notice of the Notice Period. You do
not need to reply to us if you wish to continue to the Guarantee Phase at the
end of the Notice Period. In taking no action, you will allow this to occur
automatically. Only if you wish to cancel your Certificate or elect an
Alternative Annuity Payment option do you need to contact us. Or, you may
instead contact GFWM to cancel the Certificate. At the end of the notice
period, if no action has been taken, the Guarantee Phase will begin. Once the
Guarantee Phase begins, you may not elect an Alternative Annuity Payment option
or cancel the Certificate. YOU SHOULD CAREFULLY CONSIDER ALL OPTIONS DURING THE
NOTICE PERIOD. ELECTING AN ALTERNATIVE ANNUITY PAYMENT OPTION MAY OR MAY NOT BE
IN YOUR BEST INTEREST UNDER YOUR CURRENT CIRCUMSTANCES. WE RECOMMEND YOU SEEK
ADVICE FROM YOUR TAX ADVISER AND/OR YOUR FINANCIAL ADVISER PRIOR TO ELECTING TO
CANCEL THE CERTIFICATE OR ELECTING AN ALTERNATIVE ANNUITY PAYMENT OPTION.
At the end of the Notice Period, regardless of whether your Account Value
increased or decreased during the Notice Period, your Account Value will be
paid to us as premium. Your Guaranteed Income is established on that day and is
equal to the Withdrawal Guarantee on the Annuity Exercise Date.
We will then pay you the remaining amount of the current year's Guaranteed
Income, reduced by the amount of Withdrawals you have made since your last
Birthday. On each subsequent Birthday we will make payments to you equal to the
Withdrawal Guarantee. We will make other payment options available, such as
monthly or quarterly, so long as each scheduled payment is $100 or more.
EXAMPLE: Assume for this example that your Withdrawal Guarantee is $35,000,
that today is March 31st, that your Birthday is July 1st and that you have
made withdrawals of $25,000 since your last Birthday. Also assume that at
the end of the day today your Account Value fell to $34,500 due to a day of
negative stock and bond performance. Additionally, assume that your Account
Value at the end of the 30 day Notice Period is $35,250 due to a rise in the
market.
Your Account Value has fallen below your Withdrawal Guarantee, triggering
the 30-day Notice Period.
First day of the Notice Period: April 1st.
Notice Period ends: April 30th.
Actions required if you wish to move to the Guarantee Phase: None (unless
GFWM or your custodian requires your written authorization for transfer).
Premium paid to us on the Annuity Exercise Date of May 1st: $35,250.
Guaranteed Income Amount: $35,000 annually for life.
Payment we will make to you immediately: $10,000 (for the remaining annual
payment since your last Birthday).
Payment we will make to you on your next Birthday: $35,000.
Total amount guaranteed to be paid to you or your estate even if you die
immediately after May 1st: $35,250.
WHEN YOUR ACCOUNT VALUE FALLS BELOW $20,000 FOR YOUR GFWM ACCOUNT. If your
Account Value is less than $20,000 for your GFWM Account, the same procedure
applies as it would in the case of your Account Value falling below your
Withdrawal Guarantee, except that the triggering Account Value is $20,000, not
the Withdrawal Guarantee.
WHEN YOU REACH AGE 100. If the Notice Period has not yet been triggered by
your Account Value falling below your Withdrawal Guarantee or $20,000, it will
be triggered automatically when you are 30 days from reaching the age 100. In
the case of a Certificate issued with Joint Participants, this will be the
younger of the Participants reaching age 100. The same procedures apply to the
calculation of the Guaranteed Income in this case.
At any time prior to you (or the younger Participant in the case of Joint
Participants) reaching age 100, and even if your Account Value is greater than
your most recently determined Withdrawal Guarantee or $20,000, the Participant
may elect to begin receiving payments under the "Alternative Annuity Payment"
provision specified in the Certificate. Payments under the Alternative Annuity
Payment provision will be based on your Account Value at the time of the
election.
20
ALTERNATIVE ANNUITY PAYMENTS
At any time before you reach age 100, you may elect the Alternative Annuity
Payment option under your Certificate. If you elect the Alternative Annuity
Payment option, you must liquidate all of the investments in your GFWM Account,
and apply this amount as premium to purchase the Alternative Annuity Payment
benefit. The Alternative Annuity Payments we will pay you will be at least
equal to an amount calculated by multiplying the Account Value by the annuity
rates guaranteed in your Certificate. We may make higher payments if the
applicable annuity rates we are using at the time to calculate annuity payments
are higher and would therefore result in higher annuity payments. These
payments are not the same as payments that might commence after your Account
Value decreases below the Minimum Amount had you not elected the Alternative
Annuity Payment option. If you elect the Alternative Annuity Payment option,
your Withdrawal Guarantee is reduced to zero.
DEATH PROVISIONS UNDER THE CERTIFICATE
The treatment of the Certificate upon the death of the Participant or Joint
Participant and the options available to the Owner or beneficiary at that time
depend on a number of factors. These include whether the Certificate is
Qualified or Non-Qualified, whether the Owner is a trust or other entity,
whether there is a Joint Owner, whether there is a Joint Participant, and
whether the Certificate is in the Account Phase or the Guarantee Phase.
A Qualified Contract is a contract that receives special tax treatment under
the Code, such as a contract held is an individual retirement account. A
Non-Qualified contract is a contract not receiving special tax treatment under
the Code.
For Non-Qualified Certificates and if you are the sole Owner and Participant or
if the Certificate Owner is a non-natural person:
. If you die (or if the Participant dies where the Certificate is owned by
a non-natural person) before the Annuity Exercise Date, your Certificate
terminates. We will make no payments to your beneficiary and will not
return any fees except for the portion of the current billing period's
fees for the number of days from your death until the end of the billing
period;
. If you die (or if the Participant dies where the Certificate is owned by
a non-natural person) on or after the Annuity Exercise Date, we will
calculate the remaining amount of premium that has not yet been paid to
you, and will make annual payments to your beneficiary in the same
amount that you were receiving while alive until the annuity payments
equal the amount of premium you paid for either the Base Income or
Guaranteed Income provision. If you have already been paid annuity
payments equal to or greater than your Premium, we will make no further
payments.
For Non-Qualified Certificates and there are Joint Owners:
. Each Owner is a Joint Participant with respect to the death of the other
Owner and a Participant with respect to their own death;
. The Joint Participant rules described below apply on death.
For Non-Qualified Certificates with Joint Participants during the Account Phase:
. If the Joint Participant dies before the Participant, the Certificate
will generally continue with the sole surviving Owner and Participant.
. The Certificate cannot be continued, if the Owner is not an individual.
If the Owner is an entity, the Certificate will terminate on the death
of either the Participant or Joint Participant.
. If the Owner and Participant dies before the Joint Participant, the
Joint Participant may continue the Certificate as Owner and Participant.
For Non-Qualified Certificates with Joint Participants during the Guarantee
Phase:
. If the Joint Participant dies before the Participant, we will continue
to make annuity payments to the Owner while the Participant is alive. If
the Participant then dies, the rule described below for the situation
where the Participant is the first to die will apply.
. If the Participant dies, we will calculate the remaining amount of
premium that has not yet been paid to the Owner, and will make annual
payments to the beneficiary in the same amount that the Owner was
receiving while the Participant was alive until annuity payments equal
the amount of premium paid for either the Base Income or Guaranteed
Income provision. If the Owner has already been paid annuity payments
equal to or greater than the Premium, we will make no further payments.
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For Qualified Certificates and there is no Joint Participant:
. If you die before the reaching the Guarantee Phase, your Certificate
terminates. We will make no payments to your beneficiary and will not
return any fees except for the portion of the current billing period's
fees for the number of days from your death until the end of the billing
period.
. If you die on or after reaching the Guarantee Phase, we will calculate
the remaining amount of premium that has not yet been paid to you, and
will make annual payments to your beneficiary in the same amount that
you were receiving while alive until the annuity payments equal the
amount of premium you paid for either the Base Income or Guaranteed
Income provision. If you have already been paid annuity payments equal
to or greater than your premium, we will make no further payments.
For Qualified Certificates with Joint Participants during the Account Phase:
. If the Joint Participant dies before the Participant, the Certificate
will continue with the same Participant.
. If the Participant dies before the Joint Participant and the sole
beneficiary of the Account is the Joint Participant, the Owner may
continue the Certificate with the Joint Participant as the new
Participant.
For Qualified Certificates with Joint Participants during the Guarantee
Phase:
. If the Joint Participant dies before the Participant, we will continue
to make annuity payments to the Owner while the Participant is alive.
If the Participant then dies, the rule described below for the
situation where the Participant is the first to die will apply.
. If the Participant dies, we will calculate the remaining amount of
premium that has not yet been paid to the Owner, and will make annual
payments to the Owner in the same amount that the Owner was receiving
while the Participant was alive until the annuity payments equal the
amount of Premium paid for either the Base Income or Guaranteed Income
provision. If the Owner has already been paid annuity payments equal
to or greater than the Premium, we will make no further payments.
In all events, the Certificates will be interpreted and administered in
accordance with the requirements of Sections 72(s) and 401(a)(9) of the
Code, as applicable.
DIVORCE PROVISIONS UNDER THE CERTIFICATE
In the event of a divorce whose decree affects a Certificate, we will require
written notice of the divorce in a manner acceptable to us. Options available
as a result of divorce include:
During the Account Phase:
If there was a sole Participant (Qualified or Non-Qualified Certificates, with
a natural person as Certificate Owner):
. If the Participant remains the sole Owner of the Account, there will be no
change to the Certificate.
. If the former spouse of the Participant becomes the sole Owner of the
Account, the Certificate may be reissued with the former spouse as Owner
or may be terminated, at their discretion. The Participant on the
Certificate may not be changed. If the former spouse of the Participant
becomes the Owner of the Certificate, the Certificate will terminate upon
the death of the former spouse who owns the Certificate.
. If the Account is divided between the Owner and the former spouse, the
Certificate may be reissued as two Certificates (one to each of the former
spouses), with the Withdrawal Guarantee divided in proportion to the
division of the assets in the Account. The Participant may not be changed,
nor is a Joint Participant permitted.
If there were Joint Participants (Qualified or Non-Qualified, with natural
person(s) as Certificate Owner):
. If both Joint Participants (the former spouses) divided the assets in the
Account, the Certificate may be reissued as two Certificates (one to each
of the former spouses), with the Withdrawal Guarantee divided in
proportion to the division of the assets in the Account. The Participants
may remain as Joint Participants or each may become the only Participant
on their respective Certificate. Once reissued, the Participants are not
permitted to be changed. If the Participants remain as Joint Participants,
the Certificate will, however, terminate upon the death of the former
spouse who owns such Certificate.
. If a former spouse becomes the sole Owner of the Certificate and the
Account, the Certificate may be reissued to reflect the new ownership with
the sole
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Certificate Owner as the sole Participant, or with the former spouses
remaining as Joint Participants. Once reissued, the Participants are not
permitted to be changed. If the Participants remain as Joint Participants,
the Certificate will, however, terminate upon the death of the former
spouse who owns such Certificate.
. In the case of divorce, if a Certificate with Joint Participants becomes a
Certificate with a sole Participant, the Asset Charge for a Certificate
with a sole Participant will thereafter be assessed.
In the case of a non-natural Certificate Owner:
. If the same non-natural Certificate Owner maintains ownership of the
Account, there will be no changes to the Certificate.
. If new non-natural Certificate Owners divide the ownership of the Account,
the Certificate's status will be handled on a case-by-case basis so as not
to violate Internal Revenue Service regulations.
Certificate Owners and Participants should consult with their own advisors to
assess the tax consequences associated with these divorce provisions.
ILLUSTRATION OF HOW THE CERTIFICATE WORKS
EXAMPLE #1: Assume for this example the following scenario: a 64 year old
client who buys the Certificate just before his 65/th/ Birthday, and takes
the full amount of his Withdrawal Guarantee immediately after his Birthday
each year and lives to age 95. In this scenario, the performance of the
assets in the Account is minus 9% for the first two years and positive 8%
each year thereafter. Performance is gross of investment advisory fees and
any fees assessed by the mutual funds and ETFs:
. Single Owner and Participant;
. Initial Account Value $500,000;
. Initial Withdrawal Guarantee of $25,000 (5% x $500,000);
. Buys Certificate just prior to his 65/th/ birthday and takes the full
amount of Guaranteed Withdrawals after his Birthday annually;
. Moderate Risk-Return Profile asset allocation model, Asset Charge of 0.85%;
. Mutual fund and/or ETF expenses of 1.00%
. Advisory, custodial and other services fees of 1.55%; and
. Account Investment performance (gross of fees) of MINUS 9% in years 1 and
2, and positive 8% per year thereafter for life.
Result:
. Client withdraws $25,000 per year from his Account;
. Several months after their 86/th/ Birthday, he move to the Guarantee Phase
when the Account Value falls below their Withdrawal Guarantee of $25,000;
and
. We make annual $25,000 payments to the client from then until he dies at
age 95.
ILLUSTRATION OF EXAMPLE #1
[CHART]
[CHART]
EXAMPLE #1A: Assume for this example the same scenario except that the client
DOES NOT buy the Certificate:
. Single Owner and Participant;
. Account Value $500,000;
. Withdrawal Guarantee: none;
. Mutual fund and/or ETF expenses of 1.00%;
. Advisory, custodial and other services fees of 1.55%;
. Account investment performance (gross of fees) of MINUS 9% in years 1 and
2 and positive 8% per year thereafter for life; and
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. Withdrawals of $25,000 each year.
Result:
. Client withdraws $25,000 per year from his Account;
. Several months after his 89/th/ Birthday, the client runs out of money in
their Account; it takes longer for the client to run out of money in this
example because there are no fees being paid for the Certificate.
. We make no payments, since the client did not purchase a Certificate.
ILLUSTRATION OF EXAMPLE #1A
[CHART]
OTHER RISK FACTORS
FINANCIAL CONDITION OF THE COMPANY.
Many financial services companies, including insurance companies, continue to
face challenges in this unprecedented market environment, and we are not immune
to those challenges. We know it is important for you to understand how the
market environment may impact our ability to meet guarantees under your
Certificate. The Certificate is not a separate account product, which means
that no assets are set aside in a segregated or "separate" account to satisfy
all obligations under the Certificates. Lifetime income payments (if any), or
Base Income payments (if any) will be paid from our general account and,
therefore, are subject to our claims paying ability. We issue other types of
insurance policies and financial products as well, such as group variable
annuities offered through retirement plans, term and universal life insurance,
Medicare supplement insurance, funding agreements and guaranteed investment
contracts ("GICs"), and we also pay our obligations under these products from
our assets in the general account. In the event of an insolvency or
receivership, payments we make from our general account to satisfy claims under
the contract would generally receive the same priority as our other policy
holder obligations.
OUR FINANCIAL CONDITION. As an insurance company, we are required by state
insurance regulation to hold a specified amount of reserves in order to meet
all the contractual obligations of our general account to our contract owners.
In order to meet our claims-paying obligations, we regularly monitor our
reserves to ensure we hold sufficient amounts to cover actual or expected
contract and claims payments. In addition, we actively hedge our investments in
our general account. However, it is important to note that there is no
guarantee that we will always be able to meet our claims paying obligations,
and that there are risks to purchasing any insurance product.
State insurance regulators also require insurance companies to maintain a
minimum amount of capital, which acts as a cushion in the event that the
insurer suffers a financial impairment, based on the inherent risks in the
insurer's operations. These risks include those associated with losses that we
may incur as the result of defaults on the payment of interest or principal on
our general account assets, which include, but are not limited to, bonds,
mortgages, general real estate investments, and stocks, as well as the loss in
value of these investments resulting from a loss in their market value.
The market effects on our investment portfolio has caused us to re-evaluate
product offerings. We continue to evaluate our investment portfolio to mitigate
market risk and actively manage the investments in the portfolio.
HOW TO OBTAIN MORE INFORMATION. We encourage both existing and prospective
contract owners to read and understand our financial statements. We prepare our
financial statements on both a statutory basis and according to Generally
Accepted Accounting Principles (GAAP). [Provision to be amended by
Post-Effective Amendment to the Registration Statement.] You may obtain our
audited statutory financial statements and any unaudited statutory financial
statements that may be available by visiting our website at www.genworth.com.
You also will find on our website information on ratings assigned to us by one
or more independent rating organizations. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of its
insurance and annuity contracts based on its financial strength and/or
claims-paying ability.
ASSET ALLOCATION ISSUES.
The asset allocation models eligible for coverage under the Certificate are
generally designed to provide consistent returns by reducing risk and,
accordingly, the use of such models may also limit the potential for your
investments to appreciate. You may earn a higher rate of return with an asset
allocation model not eligible for coverage under the Certificate.
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GFWM has agreed to certain investment parameters for those asset allocation
models eligible for use with the Certificate, which, in certain circumstances,
if not adhered to, may result in the termination of your Certificate.
If you become dissatisfied with the asset allocation model in accordance with
which the assets in your Account are invested, and you make Withdrawals to
invest in another investment account or other model not eligible for use with
the Certificate, the Withdrawals may reduce the Withdrawal Guarantee Amount;
for example, if you took Excess Withdrawals or Early Withdrawals in order to
invest in another investment account or model, your withdrawal Guarantee Amount
will be reduced, however, if you are over age 65 and you take a permitted
Withdrawal in order to invest in another investment account or model, your
Guarantee Amount will not be reduced. In addition, such Withdrawals may have
tax consequences. See "Taxation of the Certificate" on page 27 for a discussion
of the tax consequences of the Certificate.
SUSPENSION AND TERMINATION PROVISIONS OF THE CONTRACT AND THE CERTIFICATES
SUSPENSION OF THE CONTRACT.
Certificates are issued pursuant to the terms of the Contract. In certain
circumstances described below, we may suspend the Contract. Suspension of the
Contract may result in termination of the Contract in certain circumstances.
Suspension or termination of the Contract may reduce or eliminate the benefits
you may receive from your Certificate. How this may happen is described in the
following section.
We reserve the right to suspend the Contract in whole or in part if any of the
following events occur:
. non-compliance with any provision of this Contract;
. non-compliance with an applicable asset allocation model;
. violation of any rights or obligations imposed by law as determined by
governing regulatory and/or judicial bodies; or
. upon the occurrence of any additional Contract suspension events.
We will provide the Contract Owner with written notice that one of these
suspension events has occurred. The notice will indicate the scope of the
suspension and the date the suspension will begin. The suspension will not take
effect if the cause is cured within the pre-suspension cure period as shown in
your Certificate in a mutually acceptable manner. Your ability to pay Additions
to your Account may be restricted due to the suspension an indicated in the
notice described below. Contract suspension will not otherwise change or
suspend the calculation of the benefits or charges under your Certificate.
If the Contract is suspended, we will provide you with written notification of
the suspension. You will have the right, during the suspension cure period, to
preserve your Withdrawal Guarantee by transferring your Account Value to an
advisory account offered by an investment adviser other than GFWM eligible for
coverage by a certificate similar in material respects to the Certificate or to
an annuity contract that we, or one of our affiliates, offer. The charges for
these products may be higher than the Asset Charge imposed under your
Certificate. Upon such transfer, the Contract Owner will not charge any fees
for the transfer notwithstanding termination fees imposed by your Custodian
consistent with your custodian agreement. The Withdrawal Guarantee transferred
will be equal to the Withdrawal Guarantee on the Valuation Day of the transfer.
TERMINATION OF THE CONTRACT.
We reserve the right to terminate the Contract if any of the following occur:
. the Contract Owner fails to cure the cause of a Contract suspension within
the suspension cure period as shown on the Data Pages;
. the Contract Owner discontinues administration of this Contract without
arranging for a successor acceptable to us;
. there is a violation of any material rights or obligations imposed by law
as determined by governing regulatory and/or judicial bodies; or
. upon the occurrence of any additional Contract termination events.
We will provide you with written notice if one of these Contract termination
events occurs. The notice will state the reason(s) for the termination and that
we intend to terminate the Contract at the end of the Contract termination cure
period as shown in your Certificate. The termination will not take effect if
the cause is cured in a mutually acceptable manner prior to the intended
termination date. If the Contract does terminate, we will provide you with
written notification of Contract termination.
During the Contract termination cure period, you will have the right to
preserve the Withdrawal Guarantee by transferring your Account Values to an
advisory account offered by an investment adviser other than GFWM eligible for
coverage by a certificate similar in material respects to the Certificate or to
an
25
annuity contract we, or one of our affiliates, offer. The charges for these
products may be higher than the Asset Charge imposed under your Certificate.
Upon such transfer, the Contract Owner will not charge any fees for the
transfer. The Withdrawal Guarantee transferred will be equal to the Withdrawal
Guarantee on the Valuation Day of the transfer. Termination will not affect
your Certificate if it is in the Guarantee Phase. Upon termination of the
Contract, your Certificate, if it is in the Account Phase, will terminate.
We reserve the right to establish a higher Withdrawal Guarantee for certain
Certificates under this Contract in order to accommodate a transfer of a
Withdrawal Guarantee from a suspended or terminated Contract that we issued.
SUSPENSION OF THE CERTIFICATE.
If you transfer your Account Value to an asset allocation model offered by GFWM
but not listed on your Certificate, and we are notified of the transfer by GFWM
(or we learn of the transfer through any other means), if the transfer is the
first such transfer your Certificate will not be terminated but will be
suspended. If the transfer is the second such transfer your Certificate will be
terminated as described below in "Termination of the Certificate." We will
notify you that the suspension occurred and that it will last until the end of
the suspension cure period as shown in your Certificate. During the suspension
cure period, you may cure the suspension by transferring your Account Value to
an asset allocation model listed in your Certificate. Following such a
transfer, your Withdrawal Guarantee will be recalculated on the Valuation Day
following the suspension cure period using the Account Value multiplied by the
current Withdrawal Guarantee Factor for the attained age. This calculation will
occur as of the Valuation Day following the end of the suspension cure period
regardless of on which day during the cure period the transfer of the Account
Value occurs. THIS RECALCULATION COULD RESULT IN A DECREASE, WHICH COULD BE
SIGNIFICANT, IN THE AMOUNT OF YOUR WITHDRAWAL GUARANTEE. If you fail to
transfer your Account Value to an asset allocation model listed in the
Certificate by the end of the suspension cure period, your Certificate will
terminate.
If you pay an Addition to your Account when the Account already exceeds the
Account Limit, or if you pay an Addition that causes your Account to exceed the
Account Limit, your Certificate will be suspended. During the suspension cure
period, if your Account was already over the Account Limit, you may cure the
suspension by withdrawing the entire Addition. In the case of an Addition that
caused your Account to exceed the Account Limit, you may cure the suspension by
withdrawing the portion of your Account Value exceeding the Account Limit. In
neither case will the Withdrawal constitute an Early or Excess Withdrawal. If
the suspension cure period ends without such corrective action, your
Certificate will remain suspended until the amount needed to cure the
suspension is withdrawn from the Account. In this case, Early Withdrawals and
Excess Withdrawals will apply. Until the suspension is lifted, asset charges
will apply to the greater of the Account Limit and the Account Value prior to
the Addition.
TERMINATION OF THE CERTIFICATE.
Your Certificate will terminate if any of the following events occur:
. A second occurrence of your transferring your Account Value to an asset
allocation model not shown in your Certificate; or
. Failure to pay the Asset Charge.
MISCELLANEOUS PROVISIONS
PERIODIC COMMUNICATIONS TO CERTIFICATE OWNERS.
GFWM account statements will be provided to you periodically by GFWM, or
designated third party.
AMENDMENTS TO THE CONTRACT AND CERTIFICATE.
The Contract and Certificate may be amended to conform to changes in applicable
law or interpretations of applicable law, or to accommodate design changes.
Amendments (if any) to accommodate design changes will be applicable only with
respect to purchasers of new Certificates, unless the Company reasonably
determines the change would be favorable for all existing Certificate Owners.
Changes in the Contract and Certificate may need to be approved by the state
insurance departments. The consent of the Contract and/or Certificate Owner to
an amendment will be obtained to the extent required by law.
ASSIGNMENT.
You may not assign your interest in your Certificate during the Account Phase
or without Home Office prior approval during the Guarantee Phase.
CANCELLATION.
Once you purchase the Certificate, you can only cancel your Certificate by
(i) advising GFWM that you no longer wish the coverage and to stop payment of
the periodic fees from your Account or (ii) liquidating all of the investments
in your Account.
26
MISSTATEMENTS.
If the age or Birthday of the Participant or any Joint Participant is
misstated, any Certificate benefits will be re-determined using the correct
age(s). If any overpayments have been made, future payments will be adjusted.
Any underpayments will be paid in full.
DETERMINING WHETHER A CERTIFICATE IS RIGHT FOR YOU
It is important to understand that the Certificate does not protect the actual
value of your investments in your Account. For example, if you invest $500,000
in your Account, and your Account Value has dropped to $400,000 on the
Withdrawal Exercise Date, we are not required to add $100,000 to your Account.
Rather, the Certificate guarantees that when you have reached the Withdrawal
Exercise Date, you may begin withdrawing guaranteed lifetime annual income
payments of $25,000 (5% of $500,000), rather than $20,000 (5% of $400,000).
It is also important to understand that even after you have reached the
Withdrawal Exercise Date and start taking Withdrawals from your Account, those
Withdrawals are made first from your own investments. We are required to start
using our own money to make annual annuity payments to you only if and when
your Account Value is less than the greater of your most recently determined
Withdrawal Guarantee and $20,000 or you reach the age of 100. We limit our risk
under the Certificate in this regard by limiting the amount you may withdraw
each year from your Account to your current Withdrawal Guarantee. If your
investment return on your Account over time is sufficient to generate gains
that can sustain constant 5% annual withdrawals or greater, your investments
will never be reduced below the greater of your most recently determined
Withdrawal Guarantee and $20,000.
There are many variables, however, other than average annual return on your
investments that will determine whether your investments generate enough gain
over time to sustain a 5% annual rate of systematic withdrawals on your
investments. Your Account Value may have declined over time before you reach
age 65, which means that your investments would have to produce an even greater
return after you reach age 65 to make up for the investment losses before that
date. Moreover, negative annual average investment returns early in retirement
can have a disproportionate impact on the ability of your retirement
investments to sustain systematic Withdrawals over an extended period.
Of course, even if your investments do not generate sufficient gains after you
reach age 65 to support 5% systematic annual Withdrawals and your actual
Account Value declines over time, your investments may not be reduced below the
greater of your most recently determined Withdrawal Guarantee and $20,000 for a
number of years. If you die before your investments are reduced, the strategy
of liquidating your retirement assets through a program of systematic
Withdrawals without the guarantee provided by the Certificate will have proved
to be an effective one. However, studies indicate that life spans are generally
continuing to increase, and therefore, while everyone wants to live a long
life, funding retirement through systematic withdrawals presents the risk of
outliving those withdrawals. The Certificate is designed to protect you against
the risk of living too long, commonly known as "longevity risk."
TAXATION OF THE CERTIFICATE
THE FOLLOWING IS A GENERAL DISCUSSION BASED ON OUR INTERPRETATION OF CURRENT
UNITED STATES FEDERAL INCOME TAX LAWS. THIS DISCUSSION DOES NOT ADDRESS ALL
POSSIBLE CIRCUMSTANCES THAT MAY BE RELEVANT TO THE TAX TREATMENT OF A
PARTICULAR CERTIFICATE HOLDER. IN GENERAL, THIS DISCUSSION DOES NOT ADDRESS THE
TAX TREATMENT OF TRANSACTIONS INVOLVING INVESTMENT ASSETS HELD IN YOUR ACCOUNT
EXCEPT INSOFAR AS THEY MAY BE AFFECTED BY THE HOLDING OF A CERTIFICATE.
FURTHER, IT DOES NOT ADDRESS THE CONSEQUENCES, IF ANY, OF HOLDING A CERTIFICATE
UNDER APPLICABLE FEDERAL ESTATE TAX LAWS OR STATE AND LOCAL INCOME AND
INHERITANCE TAX LAWS. YOU SHOULD ALSO BE AWARE THAT THE TAX LAWS MAY CHANGE,
POSSIBLY WITH RETROACTIVE EFFECT. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR
REGARDING THE POTENTIAL TAX IMPLICATIONS OF PURCHASING A CERTIFICATE IN LIGHT
OF YOUR PARTICULAR CIRCUMSTANCES.
IN GENERAL.
THE CERTIFICATE IS A NOVEL AND INNOVATIVE INSTRUMENT AND, TO DATE, ITS PROPER
CHARACTERIZATION AND CONSEQUENCES FOR FEDERAL INCOME TAX PURPOSES HAVE NOT BEEN
DIRECTLY ADDRESSED IN ANY CASES, ADMINISTRATIVE RULINGS OR OTHER PUBLISHED
AUTHORITIES. While the IRS has recently issued favorable private letter rulings
("PLRs") concerning products similar to the Certificate issued by other
insurance companies, these rulings are not binding on the IRS with respect to
the Certificate. Due to factual differences between the Certificate and the
products involved in these PLRs, and their non-precedential nature, the
analysis and rulings in the PLRs may not reflect the IRS' position with respect
to the tax treatment of the Certificate, now or in the future. We can give no
assurances that the IRS will agree with our interpretations regarding the
proper tax treatment of a Certificate or the effect (if any) of the purchase of
a Certificate on the tax treatment of any transactions in your Account, or that
a court will agree with our
27
interpretations if the IRS challenges them. YOU SHOULD CONSULT A TAX ADVISOR
BEFORE PURCHASING A CERTIFICATE.
If sold in connection with an Individual Retirement Account (IRA), a
Certificate is called a Qualified Certificate. If a Certificate is independent
of any formal retirement or pension plan, it is termed a Non-Qualified
Certificate. Different tax rules apply to Qualified Certificates and
Non-Qualified Certificates, and the tax rules applicable to Qualified
Certificates vary according to the type of IRA and the terms and conditions of
the plan.
NON-QUALIFIED CERTIFICATES.
TREATMENT OF A CERTIFICATE AS ANNUITY CONTRACT. Although there is no direct
guidance on this issue, we intend to treat a Non-Qualified Certificate as an
annuity contract for federal income tax purposes. It is possible that the IRS
will characterize Certificates as some type of financial derivative such as an
option or notional principal contract rather than an annuity, possibly with
different tax consequences than if they were treated as annuities. For example,
if a Certificate were treated as an option with respect to your Account assets,
dividends on investments in your Account that would otherwise constitute
"qualifying dividend income" might be ineligible for lower tax rates and you
may be unable to qualify for long-term capital gain treatment with respect to
investments in your Account. IN VIEW OF THE UNCERTAINTY OF THE TAX TREATMENT OF
A NON-QUALIFIED CERTIFICATE, HOLDERS OR BENEFICIARIES OF A NON-QUALIFIED
CERTIFICATE SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO THEM OF HOLDING A CERTIFICATE.
In order to be treated as an annuity contract for federal tax purposes, a
non-qualified annuity contract must contain certain provisions prescribing
distributions that must be made when an owner of the contract dies. We believe
that by its terms a Non-Qualified Certificate satisfies these requirements. In
all events, we will administer a Non-Qualified Certificate to comply with these
federal tax requirements.
We also intend to treat a Non-Qualified Certificate as an annuity contract that
is separate and apart from the assets in your Account for federal income tax
purposes. THERE IS NO AUTHORITY DIRECTLY AUTHORIZING THIS TREATMENT, HOWEVER,
AND YOU SHOULD CONSULT A TAX ADVISOR ON THIS ISSUE.
YOUR ACCOUNT. We believe that, in general, the tax consequences of
transactions involving the investments in your Account, including redemptions,
dispositions and distributions with respect to such investments, more likely
than not, will initially and, for most individuals, during the entire period a
Non-Qualified Certificate is in effect, be the same as such treatment would be
if the Account were not subject to a Certificate. (The tax consequences of
these transactions is beyond the scope of this prospectus. You should consult a
tax advisor for further information regarding such consequences.) Thus, we
believe, in general, that it is more likely than not that initially and, for
most individuals, during the entire period a Non-Qualified Certificate is in
effect, (1) distributions and dividends on investments in your Account will not
be treated as payments under your Certificate, but rather as distributions with
respect to such investments; (2) amounts received on redemption or disposition
of such investments will be treated as amounts realized on the sale or exchange
of the investments, rather than as distributions with respect to your
Certificate; and (3) the purchase of a Non-Qualified Certificate will not
automatically result in either (a) loss of the benefit of preferential income
tax rates currently applicable to dividends paid on investments in your Account
otherwise constituting "qualified dividend income" or (b) suspension of the
holding period for purposes of determining eligibility for long-term capital
gains treatment of any gains, or potential deferral of losses, when investments
in your Account are sold or exchanged, under the so-called "straddle" rules.
These conclusions are in part based on the low probability when your
Certificate is issued that your Account Value will reach the greater of your
most recently determined Withdrawal Guarantee and $20,000 and that you will
receive lifetime income payments of the Guaranteed Income thereafter.
THERE ARE NO PUBLISHED AUTHORITIES DIRECTLY SUPPORTING OUR CONCLUSIONS AND THE
RELEVANT GUIDANCE IS POTENTIALLY SUSCEPTIBLE TO DIFFERING INTERPRETATIONS THAT
MAY CAUSE THE IRS TO DISAGREE WITH OUR INTERPRETATIONS. IF THE IRS WERE TO
SUCCESSFULLY TAKE A DIFFERENT POSITION ON THESE ISSUES, IT COULD HAVE A
MATERIAL ADVERSE EFFECT ON THE TAX CONSEQUENCES OF YOUR ACQUISITION, HOLDING
AND DISPOSITION OF INVESTMENTS IN YOUR ACCOUNT. FURTHERMORE, EVEN IF OUR
INTERPRETATIONS ARE CORRECT, IT IS POSSIBLE THAT THE TAX CONSEQUENCES UNDER THE
QUALIFIED DIVIDEND AND STRADDLE RULES COULD CHANGE DEPENDING ON CHANGES IN YOUR
CIRCUMSTANCES IN FUTURE YEARS, PARTICULARLY IF LOSSES ARE REALIZED AT A TIME
WHEN IT HAS BECOME LIKELY THAT YOUR ACCOUNT VALUE WILL REACH THE GREATER OF
YOUR MOST RECENTLY DETERMINED WITHDRAWAL GUARANTEE AND $20,000 AND YOU WILL
RECEIVE LIFETIME INCOME PAYMENTS OF THE GUARANTEED INCOME THEREAFTER. THE TAX
CONSEQUENCES COULD ALSO CHANGE DUE TO CHANGES IN THE TAX LAWS. GIVEN THE
NOVELTY OF A CERTIFICATE, YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE TAX
CONSEQUENCES, IF ANY, OF A NON-QUALIFIED CERTIFICATE UNDER THESE RULES AND
OTHER RELEVANT TAX PROVISIONS, BOTH AT THE TIME OF INITIAL PURCHASE AND IN
SUBSEQUENT YEARS.
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The following discussion assumes that a Non-Qualified Certificate will be
treated as an annuity contract for federal tax purposes and that the
Certificate will have no effect on the tax treatment of transactions involving
the assets held in your Account.
GUARANTEED INCOME PAYMENTS. If your Non-Qualified Certificate is treated as an
annuity contract for federal tax purposes, Guaranteed Income payments should
generally be treated in part as taxable ordinary income and in part as
non-taxable recovery of your investment in the contract until you recover all
of your investment in the contract. The non-taxable portion of your Guaranteed
Income payments will generally be recoverable over your life expectancy, as
determined when such payments start. After you recover all of your investment
in the contract, Guaranteed Income payments will be taxable in full as ordinary
income. In determining the non-taxable portion of your Guaranteed Income
payments, your investment in the contract should include any Account Value paid
to us as a result of your Account Value being reduced below the greater of your
most recently determined Withdrawal Guarantee and $20,000 (or upon reaching age
100, if applicable) and, while not free from doubt, the aggregate Asset Charges
you have paid under your Certificate.
. PLEASE NOTE: ANY ACCOUNT VALUE PAID TO US AS A RESULT OF YOUR ACCOUNT
VALUE BEING REDUCED BELOW YOUR MINIMUM AMOUNT (OR UPON REACHING AGE 100,
IF APPLICABLE) MAY BE A TAXABLE EVENT AND THEREFORE CANNOT BE PAID TO US
ON A TAX-FREE BASIS. IN ADDITION, IT IS POSSIBLE THAT THE IRS MAY TAKE THE
POSITION THAT YOUR AGGREGATE ASSET CHARGES CONSTITUTE NONDEDUCTIBLE
EXPENSES THAT ARE NOT INCLUDIBLE IN YOUR INVESTMENT IN THE CONTRACT. AT
PRESENT, WE INTEND TO TREAT THE AGGREGATE ASSET CHARGES YOU HAVE PAID FOR
YOUR NON-QUALIFIED CERTIFICATE AS AMOUNTS INCLUDIBLE IN YOUR INVESTMENT IN
THE CONTRACT. You should consult a tax advisor as to the tax treatment of
Guaranteed Income payments since the propriety of this treatment is not
free from doubt.
. POTENTIAL PENALTY TAX: GUARANTEED INCOME PAYMENTS RECEIVED BY YOU PRIOR TO
THE TIME YOU ATTAIN AGE 591/2 WILL LIKELY BE SUBJECT TO THE 10% PENALTY
TAX IMPOSED UNDER SECTION 72(Q) OF THE CODE IN RESPECT OF AMOUNTS RECEIVED
UNDER AN ANNUITY CONTRACT. IN THIS REGARD, IT IS POSSIBLE THAT ANY
GUARANTEED INCOME PAYMENT RECEIVED BY A NON-NATURAL PERSON OWNER, SUCH AS
A TRUST, MAY BE SUBJECT TO THIS PENALTY IRRESPECTIVE OF WHEN SUCH PAYMENT
IS RECEIVED. Before purchasing a Certificate, you should consult a tax
advisor about the potential application of the Section 72(q) penalty tax
to your Guaranteed Income payments.
LIQUIDATION OF ACCOUNT INVESTMENTS TO PURCHASE THE ALTERNATIVE ANNUITY PAYMENT
OPTION. The liquidation of your Account investments to purchase the
Alternative Annuity Payment option will be a taxable event, and you will not be
able to apply the proceeds therefrom to purchase the Alternative Annuity
Payment option provided under a Non-Qualified Certificate on a tax-free basis.
TAXATION OF DISTRIBUTIONS UNDER ALTERNATIVE ANNUITY PAYMENT PROVISION. If you
exercise your right to liquidate your Account and apply all of the proceeds to
the Alternative Annuity Payment provision, we believe that distributions under
the Alternative Annuity Payment provision should be taxed as annuity
distributions. Thus, distributions under the Alternative Annuity Payment
provision will be taxed as ordinary income to the extent that the value is more
than your investment in the contract (discussed further below). Alternative
Annuity Payment distributions should generally be treated in part as taxable
ordinary income and in part as non-taxable recovery of your investment in the
contract. The non-taxable portion of your Alternative Annuity Payment
distributions will generally be recoverable over your life expectancy, as
determined when such distributions start. After you recover all of your
investment in the contract, Alternative Annuity Payment distributions will be
taxable in full as ordinary income.
If you exercise your right to liquidate your Account and apply all of the
proceeds to the Alternative Annuity Payment provision, your investment in the
contract should be equal to the Account Value applied to the Alternative
Annuity Payment provision plus, while not free from doubt, the aggregate Asset
Charges you previously paid under your Certificate. WITH RESPECT TO THE
INCLUSION OF THE AGGREGATE ASSET CHARGES YOU PREVIOUSLY PAID UNDER YOUR
CERTIFICATE IN YOUR INVESTMENT IN THE CONTRACT FOR THE ALTERNATIVE ANNUITY
PAYMENT PROVISION, IT IS POSSIBLE THAT THE IRS MAY TAKE THE POSITION THAT THE
AGGREGATE ASSET CHARGES YOU PREVIOUSLY PAID UNDER YOUR CERTIFICATE DO NOT
CONSTITUTE PART OF YOUR INVESTMENT IN THE CONTRACT WHEN YOU HAVE ELECTED THE
ALTERNATIVE ANNUITY PAYMENT ON THE THEORY THAT SUCH CHARGES DO NOT CONSTITUTE
AMOUNTS PAID FOR THE ALTERNATIVE ANNUITY PAYMENT. WHILE FOR TAX REPORTING
PURPOSES WE CURRENTLY INTEND TO INCLUDE ANY AGGREGATE ASSET CHARGES YOU
PREVIOUSLY PAID FOR YOUR CERTIFICATE IN THE INVESTMENT IN THE CONTRACT SHOULD
YOU ELECT THE ALTERNATIVE ANNUITY PAYMENT PROVISION, YOU SHOULD CONSULT A TAX
ADVISOR ON THIS MATTER AS IT IS NOT FREE FROM DOUBT.
PAYMENT OF THE ASSET CHARGE. Payment of the Asset Charge with proceeds from
the sale of investment assets held in your
29
Account may have tax consequences. You should consult a tax advisor for further
information.
REALLOCATIONS TO SATISFY REVISED ASSET ALLOCATION MODELS. You may be required
to liquidate or sell some or all of the investments in your Account in the
event that the asset allocation model(s) you have selected are changed. Any
such liquidation or sale will be a taxable event, and you will not be able to
apply the proceeds therefrom to purchase new Account investments that satisfy
the revised asset allocation model(s) on a tax-free basis.
QUALIFIED CERTIFICATES.
A Certificate may be used with traditional Individual Retirement Accounts and
Roth IRA Accounts (collectively, "IRA Accounts"). A Qualified Certificate may
be purchased by an IRA Account, including a brokerage account held under that
IRA Account. A Qualified Certificate is not available as an Individual
Retirement Annuity or for use with any other type of tax-qualified retirement
plan.
The tax rules applicable to Qualified Certificates vary according to the type
of IRA Account and the terms and conditions of the IRA Account. No attempt is
made here to provide more than general information about the use of the
Qualified Certificate with the IRA Account. Owners of IRA Accounts, as well as
beneficiaries, are cautioned that the rights of any person to any benefits
under such IRA Account may be subject to the terms and conditions of the IRA
Account itself or limited by applicable law, regardless of the terms and
conditions of the Qualified Certificate.
We reserve the right to discontinue offering the Certificates to new
Certificate Owners that plan to use the Certificates with IRA Accounts.
A Qualified Certificate is available only with respect to the IRA Account for
which the Qualified Certificate is purchased.
. A Qualified Certificate is intended for purchase only by the trustee
or custodian of an IRA Account.
. We are not responsible for determining whether a Qualified Certificate
complies with the terms and conditions of, or applicable law
governing, any IRA Account. You are responsible for making that
determination. Similarly, we are not responsible for administering any
applicable tax or other legal requirements applicable to your IRA
Account. You or a service provider for your IRA Account is responsible
for determining that distributions, beneficiary designations,
investment restrictions, charges and other transactions under a
Qualified Certificate are consistent with the terms and conditions of
your IRA Account and applicable law.
. If your spouse is a Joint Participant, your spouse must be your
beneficiary under your IRA Account.
. IRA Accounts may be subject to required minimum distribution rules.
The value of the guarantee provided by a Qualified Certificate may
have to be taken into account in determining your required minimum
distributions under the IRA Account. Withdrawals from your Account
taken to meet required minimum distribution requirements, in the
proportion of your Account Value to your overall IRA Account balance,
will be deemed to be within the contract limits for your Certificate.
The required minimum distribution shall not exceed the required
minimum distribution amount calculated under the Code and regulations
issued thereunder as in effect on the Certificate Date.
Numerous changes have been made to the income tax rules governing IRA Accounts
as a result of legislation enacted during the past several years, including
rules with respect to: maximum contributions, required distributions, penalty
taxes on early or insufficient distributions and income tax withholding on
distributions. The following are general descriptions of the various types of
IRA Accounts and of the use of the contracts in connection therewith.
INDIVIDUAL RETIREMENT ACCOUNTS. Code Sections 408 and 408A permit eligible
individuals to contribute to an individual retirement program known as an "IRA"
or "Roth IRA". These IRAs are subject to limitations on the amount that may be
contributed, the persons who may be eligible and on the time when distributions
may commence. In addition, distributions from certain other types of qualified
plans may be placed on a tax-deferred basis into an IRA. Individuals may
establish Roth IRAs.
TAX ON CERTAIN DISTRIBUTIONS RELATING TO IRA ACCOUNTS. Distributions under a
Qualified Certificate may be paid to the IRA Account, if permitted under the
terms of the IRA Account, or directly to you. Distributions paid to the IRA
Account are not in and of themselves taxable.
In the case of distributions from a traditional IRA Account to you, including
payments to you from a Qualified Certificate, a ratable portion of the amount
received is taxable, generally based on the ratio of your cost basis (if any)
to your total accrued benefit under the IRA Account. Section 72(t) of the Code
imposes a 10% penalty tax on the taxable portion of any
30
distribution from IRA Accounts. To the extent amounts are not includable in
gross income because they have been properly rolled over to another IRA or to
another eligible qualified plan, no tax penalty will be imposed. The tax
penalty also will not apply to: (a) distributions made on or after the date on
which you reach age 59 1/2; (b) distributions following your death or
disability (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) distributions that are part of substantially equal periodic
payments made not less frequently than annually for your life (or life
expectancy) or the joint lives (or joint life expectancies) of your and your
designated beneficiary; and (d) certain other distributions specified in the
Code.
Generally, distributions from a traditional IRA Account must commence no later
than April 1 of the calendar year following the year in which the individual
attains age 70 1/2. Required distributions must be over a period not exceeding
the life expectancy of the individual or the joint lives or life expectancies
of the individual and his or her designated beneficiary. Distribution
requirements also apply to IRAs (including Roth IRAs) upon the death of the IRA
owner. If the required minimum distributions are not made, a 50% penalty tax is
imposed as to the amount not distributed. Pursuant to special legislation,
required minimum distributions for the 2009 tax year generally are not required
and 2009 minimum distributions that otherwise would be required may be eligible
for rollover.
Special rules apply to participants' contributions to and withdrawals from
SIMPLE IRAs and Roth IRA's.
PAYMENT OF THE ASSET CHARGE. If you pay the Asset Charge for a Qualified
Certificate issued to your IRA Account from other assets in your IRA Account,
that payment will not be a "distribution" from your IRA Account under the Code.
If you pay the Asset Charge for a Qualified Certificate from other assets held
outside your IRA Account, the Asset Charge may have tax consequences and also
be treated as an additional contribution to your IRA Account. You should
consult a tax advisor for further information.
SEEK TAX ADVICE. The above description of federal income tax consequences of
the different types of IRAs which may be funded by a Qualified Certificate
offered by this prospectus is only a brief summary meant to alert you to the
issues and is not intended as tax advice. Anything less than full compliance
with the applicable rules, all of which are subject to change, may have adverse
tax consequences. Any person considering the purchase of a Certificate in
connection with an IRA Account should first consult a qualified tax advisor,
with regard to the suitability of a Qualified Certificate for the IRA Account.
ABOUT US
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
policies and annuity contracts. We do business in 49 states and the District of
Columbia. Our principal offices are located at 6610 West Broad Street,
Richmond, Virginia 23230. We are obligated to pay all amounts promised under
the Contract and Certificates.
Capital Brokerage Corporation (which does business in Indiana as Genworth
Financial Brokerage Corporation) serves as principal underwriter for the
Certificates and is a broker/dealer registered with the SEC. Genworth North
America Corporation (formerly, GNA Corporation) directly owns the stock of
Capital Brokerage Corporation and the Company. Genworth North America
Corporation is directly owned by Genworth Financial, Inc. ("Genworth"), a
public company.
We are a charter member of the Insurance Marketplace Standards Association
("IMSA"). We may use the IMSA membership logo and language in our
advertisements, as outlined in IMSA's Marketing and Graphics Guidelines.
Companies that belong to IMSA subscribe to a set of ethical standards covering
the various aspects of sales and service for individually sold life insurance
and annuities.
Effective August 1, 2008, AssetMark Investment Services, Inc. changed its name
to Genworth Financial Wealth Management, Inc. ("GFWM"). GFWM is a California
corporation, owned by Genworth. GFWM is a registered investment advisor, and
provides consulting services to other advisors and investment advisory clients.
Its executive and administrative office is located at 2300 Contra Costa
Boulevard, Suite 600, Pleasant Hill, California 94523.
SALES OF THE CERTIFICATES
We have entered into an underwriting agreement with Capital Brokerage
Corporation (doing business in Indiana as Genworth Financial Brokerage
Corporation) (collectively, "Capital Brokerage Corporation") for the
distribution and sale of the Certificates. Pursuant to this agreement, Capital
Brokerage Corporation serves as principal underwriter for the Certificates,
offering them on a continuous basis. Capital Brokerage Corporation is located
at 6620 West Broad Street, Building 2, Richmond, Virginia 23230. Capital
Brokerage Corporation will use its best efforts to sell the Certificates, but
is not required to sell any specific number or dollar amount of Certificates.
Capital Brokerage Corporation was organized as a corporation under the laws of
the state of Washington in 1981 and is an affiliate of ours. Capital Brokerage
Corporation is registered as
31
a broker-dealer with the SEC under the Securities Exchange Act of 1934, as well
as with the securities commissions in the states in which it operates, and is a
member of the Financial Industry Regulatory Authority ("FINRA") (formerly, the
NASD, Inc.).
Capital Brokerage Corporation offers the Certificates through registered
representatives who are registered with FINRA and with the states in which they
do business. More information about Capital Brokerage Corporation and the
registered representatives is available at http://www.finra.org or by calling
800.289.9999. You can also obtain an investor brochure from FINRA describing
its Public Disclosure Program. Registered representatives with Capital
Brokerage Corporation are also licensed as insurance agents in the states in
which they do business and are appointed with us.
Capital Brokerage Corporation also enters into selling agreements with an
affiliated broker-dealer and unaffiliated broker-dealers to sell the
Certificates. The registered representatives of these selling firms are
registered with FINRA and with the states in which they do business, are
licensed as insurance agents in the states in which they do business and are
appointed with us.
We do not pay commissions to Capital Brokerage Corporation or to the affiliated
broker-dealer or unaffiliated broker-dealers for the promotion and sales of the
Certificates.
At times, Capital Brokerage Corporation may make other cash and non-cash
payments to selling firms, as well as receive payments from selling firms, for
expenses relating to the recruitment and training of personnel, periodic sales
meetings, the production of promotional sales literature and similar expenses.
These expenses may also relate to the synchronization of technology between the
Company, Capital Brokerage Corporation and the selling firm in order to
coordinate data for the sale and maintenance of the Certificates. In addition,
registered representatives may be eligible for non-cash compensation programs
offered by Capital Brokerage Corporation or an affiliated company, such as
conferences, trips, prizes and awards. The amount of other cash and non-cash
compensation paid by Capital Brokerage Corporation or its affiliated companies
ranges significantly among the selling firms. Likewise, the amount received by
Capital Brokerage Corporation from the selling firms ranges significantly.
You indirectly pay for the incentives described above through the fees and
charges imposed under the Certificates.
All payments made or received by Capital Brokerage Corporation to or from
selling firms come from or are allocated to the general assets of Capital
Brokerage Corporation or one of its affiliated companies. Therefore, regardless
of the amount paid or received by Capital Brokerage Corporation or one of its
affiliated companies, the amount of expenses you pay under the Certificate do
not vary because of such payments to or from such selling firms.
Although the Company and Capital Brokerage Corporation do not anticipate
discontinuing offering the Certificates, we do reserve the right to discontinue
offering the Certificates at any time.
LEGAL PROCEEDINGS
We face a significant risk of litigation and regulatory investigations and
actions in the ordinary course of operating our businesses, including the risk
of class action lawsuits. Our pending legal and regulatory actions include
proceedings specific to us and others generally applicable to business
practices in the industries in which we operate. In our insurance operations,
we are or may become subject to class actions and individual suits alleging,
among other things, issues relating to sales or underwriting practices, payment
of contingent or other sales commissions, claims payments and procedures,
product design, product disclosure, administration, additional premium charges
for premiums paid on a periodic basis, denial or delay of benefits, charging
excessive or impermissible fees on products, recommending unsuitable products
to customers and breaching fiduciary or other duties to customers. Plaintiffs
in class action and other lawsuits against us may seek very large or
indeterminate amounts, including punitive and treble damages, which may remain
unknown for substantial periods of time. In our investment-related operations,
we are subject to litigation involving commercial disputes with counterparties.
We are also subject to litigation arising out of our general business
activities such as our contractual and employment relationships. We are also
subject to various regulatory inquiries, such as information requests,
subpoenas and books and record examinations and market conduct and financial
examinations, from state and federal regulators and other authorities. A
substantial legal liability or a significant regulatory action against us could
have an adverse effect on our business, financial condition and results of
operations. Moreover, even if we ultimately prevail in the litigation,
regulatory action or investigation, we could suffer significant reputational
harm, which could have an adverse effect on our business, financial condition
and results of operations.
We cannot ensure that the current investigations and proceedings will not have
a material adverse effect on our business, financial condition or results of
operations. In addition, it is possible that related investigations and
proceedings may be commenced in the future, and we could become subject to
further investigations and have lawsuits filed against us. In addition,
increased regulatory scrutiny and any
32
resulting investigations or proceedings could result in new legal precedents
and industry-wide regulations or practices that could adversely affect our
business, financial condition and results of operations.
The Company shall, and may through insurance coverage, indemnify any directors
or officers who are a party to any proceeding by reason of the fact that he or
she was or is a director or officer of the Company against any liability
incurred by him or her in connection with such proceeding unless he or she
engaged in willful misconduct or a knowing violation of the criminal law or any
federal or state securities law. Such indemnification covers all judgments,
settlements, penalties, fines and reasonable expenses incurred with respect to
such proceeding. If the person involved is not a director or officer of the
Company, the board of directors may cause the Company to indemnify, or contract
to indemnify, to the same extent allowed for its directors and officers, such
person who was, is or may become a party to any proceeding, by reason of the
fact that he or she is or was an 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, employee benefit
plan or other enterprise.
Insofar as indemnification for liability arising under the 1933 Act may be
permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the depositor in successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.
Capital Brokerage Corporation is not in any pending or threatened lawsuits that
are reasonably likely to have a material adverse impact on us or on the
Variable Account.
Although it is not anticipated that these developments will have an adverse
impact on us, the Variable Account, or on the ability of Capital Brokerage
Corporation to perform under its principal underwriting agreement, there can be
no assurance at this time.
Capital Brokerage Corporation and GFWM are not involved in any pending or
threatened lawsuits that are reasonably likely to have a material adverse
impact on us.
ADDITIONAL INFORMATION
OWNER QUESTIONS.
The obligations to Owners and Participants under the Contracts and Certificates
are ours. Please direct your questions and concerns to us at our Home Office.
RETURN PRIVILEGE.
Within the free-look period (generally 30 days) after you receive the
Certificate, you may cancel it for any reason by delivering or mailing it
postage prepaid to:
Genworth Life and Annuity Insurance Company
Annuity New Business
6610 West Broad Street
Richmond, Virginia 23230
If the Owner cancels the Certificate, the Certificate will be void.
STATE REGULATION.
As a life insurance company organized and operated under the laws of the
Commonwealth of Virginia, we are subject to provisions governing life insurers
and to regulation by the Virginia Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the Commonwealth of Virginia at all times. That
Commission conducts a full examination of our operations at least every five
years.
EVIDENCE OF DEATH, AGE, GENDER OR SURVIVAL.
We may require proof of the age, gender, death or survival of any person or
persons before acting on any applicable Certificate provision.
LEGAL MATTERS
[To be provided by Post-Effective Amendment to the Registration Statement.]
Opinions may be issued in the future by counsel other than those listed above.
The name of such counsel, other than those listed above, will be included in a
prospectus supplement.
EXPERTS
[To be provided by Post-Effective Amendment to the Registration Statement.]
33
WHERE YOU CAN FIND MORE INFORMATION
This prospectus, which constitutes part of the registration statement, does not
contain all the information set forth in the registration statement. Parts of
the registration statement are omitted from this prospectus in accordance with
the rules and regulations of the SEC.
The registration statement, including exhibits, contains additional relevant
information about us. You can read and copy any information we file at the SEC
public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can
also request copies of our documents upon payment of a duplicating fee, by
writing the SEC's public reference room. You can obtain information regarding
the public reference room by calling the SEC at 1-800-SEC-0330. Our filings are
available to the public from commercial document retrieval services and over
the internet at http://www.sec.gov. (This uniform resource locator (URL) is an
inactive textual reference only and is not intended to incorporate the SEC web
site into this prospectus.)
RELIANCE ON RULE 12H-7 UNDER THE SECURITIES EXCHANGE ACT OF 1934
The SEC adopted rule 12h-7 under the Securities Exchange Act of 1934, as
amended ("Exchange Act") which went May 1, 2009. Rule 12h-7 exempts insurance
companies from filing reports under the Exchange Act when the insurance company
issues certain types of insurance products that are registered under the
Securities Act of 1933 and such products are regulated under state law. The
Certificates issued under Guaranteed Annuity Contracts described in this
prospectus fall within the exemption provided under rule 12h-7. The Company is
hereby providing notice that it is relative on the exemption provided under
rule 12h-7.
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
[Information required by Item 11 of Form S-1 to be provided by Post-Effective
Amendment to the Registration Statement.]
DEFINITIONS
The following is a listing of defined terms.
ACCOUNT -- The account in which the assets in each investment portfolio owned
by the Certificate Owner(s) and covered under the Certificate are held. The
Account is managed according to the asset allocation model(s) shown in the
Certificate.
ACCOUNT VALUE -- The value of the assets in the Account, as determined as of
the close of business on a Valuation Day. For purposes of the Certificate, once
determined on a Valuation Day, the Account Value does not change until the next
Valuation Day.
ADDITION -- An amount, not set forth as an Addition exception in the
Certificate, received and applied to the Account after the Certificate Date.
ADVISORS -- Investment advisors who act as the primary contact for clients
under the GFWM Program.
ALTERNATIVE ANNUITY PAYMENT -- The annual payment under the Alternative Annuity
provision of your Certificate paid by us to the Certificate Owner(s). This
provision is referred to as "Base Income" in your Certificate.
ANNUITY -- Benefits to be provided in the form of a series of payments for the
life of the named Participant as determined under the terms of the Certificate.
ANNUITY EXERCISE DATE -- The earliest of the following three dates: the date
the Account Value is less than the Withdrawal Guarantee, the date the Account
Value is less than $20,000, and the date the Participant (or if there are Joint
Participants, the younger Joint Participant) reaches age 100, less the number
of days in the Notice Period.
ASSET ALLOCATION MODEL -- One of the asset allocation model portfolios created
by investment management firms and made available by GFWM.
ASSET CHARGE -- The asset charge periodically calculated and deducted from your
Account Value or assessed through another means of payment pursuant to the
terms of the Certificate and while the Certificate is in force.
BIRTHDAY -- The end of day each year on the anniversary of the date of birth of
the Participant (or if there are Joint Participants, the younger Joint
Participant).
CERTIFICATE -- A no cash value certificate issued by the Company to the
Certificate Owner(s) pursuant to the terms of the Contract. The Certificate
describes the Withdrawal Guarantee as well as the Certificate Owner's rights
and obligations with respect to the Guaranteed Income to be paid when the
Account Value reaches the Minimum Amount. The Certificate also describes the
Certificate Owner's rights and obligations with respect to the Alternative
Annuity Payment provision available under the Annuity.
CERTIFICATE DATE -- The Valuation Day as of which a Certificate becomes
effective as shown on the Certificate.
34
CERTIFICATE OWNER(S) -- The person(s) or entity named on the Certificate.
"You," "your" or "Owner" refers to the Certificate Owner.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- Genworth Life and Annuity Insurance Company, the issuer of the
Contract and Certificate (also referred to as "we", "us" or "our").
CONTRACT -- The group guaranteed income annuity contract issued by the Company
to GFWM with any attached riders, endorsements and Certificates.
EARLY WITHDRAWAL -- Any Withdrawal prior to the date you turn age 65 (or the
younger Participant's age 65 in the case of Joint Participants).
EXCESS WITHDRAWAL -- On or after the date you turn age 65 (or the younger
Participant's age 65 in the case of Joint Participants) and before the Latest
Annuity Date, the portion of all Withdrawals during a Withdrawal Year that is
in excess of the Withdrawal Guarantee.
GENWORTH -- Genworth Financial, Inc., the parent of the Company.
GFWM -- Genworth Financial Wealth Management, Inc.
GFWM PROGRAM -- The program through which the Certificates are exclusively
available.
GUARANTEED INCOME -- The guaranteed annual payment as determined by the last
recorded Withdrawal Guarantee payable under the Guaranteed Income provision by
us to the Certificate Owner(s).
GUARANTEED WITHDRAWALS -- Amounts you may withdraw from your Account pursuant
to the Withdrawal Guarantee.
HOME OFFICE -- Our Home Office that is located at the address shown on the
Certificate cover page.
JOINT PARTICIPANT -- The person whose age, together with the age of the other
Joint Participant (if any), determines the Withdrawal Guarantee under each
Certificate.
LATEST ANNUITY DATE -- The Annuity Exercise Date PLUS the Notice Period.
1940 ACT -- The Investment Company Act of 1940, as amended.
NOTICE PERIOD -- The length of time as shown on the Certificate prior to the
Latest Annuity Date during which you may still cancel your Certificate.
PARTICIPANT -- The person whose age is used to determine the Withdrawal
Guarantee under each Certificate.
RISK-RETURN PROFILE -- A risk return profile in mutual fund and/or ETF wrap
accounts provided under the GFWM Program.
QUALIFIED ACCOUNT -- An Account listed under the Qualified Accounts provision
receiving special tax treatment under the Code.
SECURITIES ACT -- The Securities Act of 1933, as amended.
SPOUSES -- Legally married under applicable Federal law.
STRATEGIST -- An institutional investment management firm hired by GFWM that
makes recommendations as to asset allocation models.
TOTAL ADDITIONS -- The sum of the initial Account Value on the Certificate Date
plus any Additions.
VALUATION DAY -- Each day on which the New York Stock Exchange is open for
regular trading.
WITHDRAWAL -- Any disbursement from the Account other than Withdrawal
Exceptions.
WITHDRAWAL EXCEPTIONS -- Disbursements shown on the Certificate that will not
be treated as Withdrawals.
WITHDRAWAL GUARANTEE -- After the the date you turn age 65 (or the younger
Participant's age 65 in the case of Joint Participants), the maximum amount the
Certificate Owner may withdraw from the Account Value in a Withdrawal Year
without reducing Guaranteed Income.
WITHDRAWAL GUARANTEE FACTOR -- A factor used in the calculation of the
Withdrawal Guarantee as shown on the tables located on the Certificate.
WITHDRAWAL YEAR -- The first Withdrawal Year is the period of time between the
Withdrawal Exercise Date and the first Birthday following the Withdrawal
Exercise Date. Subsequent Withdrawal Years are the one-year periods beginning
on each Birthday.
35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
Certificates, other than any underwriting discounts and commissions, are as
follows (except for the Securities and Exchange Commission Filing Fee, all
amounts shown are estimates):
Securities and Exchange Commission $ 1,842 (based on a total of $60,000,000 Proposed
Registration Fees................ Maximum Aggregate Offering)
Printing and engraving............. $ 10,000
Accounting fees and expenses....... $ 10,000
Legal fees and expenses............ $300,000
Miscellaneous...................... $ 10,000
--------
Total expenses (approximate).... $331,842
========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 13.1-876 and 13.1-881 of the Code of Virginia, in brief, allow a
corporation to indemnify any person made party to a proceeding because such
person is or was a director, officer, employee, or agent of the corporation,
against liability incurred in the proceeding if: (1) he conducted himself in
good faith; and (2) he believed that (a) in the case of conduct in his official
capacity with the corporation, his conduct was in its best interests; and
(b) in all other cases, his conduct was at least not opposed to the
corporation's best interests and (3) in the case of any criminal proceeding, he
had no reasonable cause to believe his conduct was unlawful. The termination of
a proceeding by judgment, order, settlement or conviction is not, of itself,
determinative that the director, officer, employee, or agent of the corporation
did not meet the standard of conduct described. A corporation may not indemnify
a director, officer, employee, or agent of the corporation in connection with a
proceeding by or in the right of the corporation, in which such person was
adjudged liable to the corporation, or in connection with any other proceeding
charging improper personal benefit to such person, whether or not involving
action in his official capacity, in which such person was adjudged liable on
the basis that personal benefit was improperly received by him. Indemnification
permitted under these sections of the Code of Virginia in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
Genworth Life and Annuity Insurance Company's Articles of Incorporation
provide that Genworth Life and Annuity Insurance Company shall, and may through
insurance coverage, indemnify any directors or officers who are a party to any
proceeding by reason of the fact that he or she was or is a director or officer
of Genworth Life and Annuity Insurance Company against any liability incurred
by him or her in connection with such proceeding, unless he or she engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law. Such indemnification covers all judgments, settlements,
penalties, fines and reasonable expenses incurred with respect to such
proceeding. If the person involved is not a director or officer of Genworth
Life and Annuity Insurance Company, the board of directors may cause Genworth
Life and Annuity Insurance Company to indemnify, or contract to indemnify, to
the same extent allowed for its directors and officers, such person who was, is
or may become a party to any proceeding, by reason of the fact that he or she
is or was an employee or agent of Genworth Life and Annuity Insurance Company,
or is or was serving at the request of Genworth Life and Annuity Insurance
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
1
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers or persons controlling Genworth Life
and Annuity Insurance Company pursuant to the foregoing provisions, Genworth
Life and Annuity Insurance Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
* * *
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
1.1 Form of Underwriting Agreement. Previously filed on February 28, 2008
with Pre-Effective Amendment No. 2 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-143494.
1.2 Form of Broker-Dealer Sales Agreement. Previously filed on February
28, 2008 with Pre-Effective Amendment No. 2 to Form S-1 for Genworth
Life and Annuity Insurance Company, Registration No. 333-143494.
2 Not applicable.
3.1 Amended and Restated Articles of Incorporation of Genworth Life and
Annuity Insurance Company. Previously filed on March 31, 2007 with
Post-Effective Amendment No. 6 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-67902.
3.2 Amended and Restated By-laws of Genworth Life and Annuity Insurance
Company. Previously filed on March 31, 2007 with Post-Effective
Amendment No. 6 to Form S-1 for Genworth Life and Annuity Insurance
Company, Registration No. 333-67902.
4.1 Form of Contract. Previously filed on February 28, 2008 with
Pre-Effective Amendment No. 2 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-143494.
4.2 Form of Certificate. Previously filed on February 28, 2008 with
Pre-Effective Amendment No. 2 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-143494.
4.3 Form of 90 Day Withdrawal Guarantee Calculation Endorsement. Filed
herewith.
4.4 Form of Guaranteed Income Total Additions Endorsement. Filed herewith.
4.5 Form of Application. Previously filed on February 28, 2008 with
Pre-Effective Amendment No. 2 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-143494.
5 Opinion of Re Legality. To be filed by Post-Effective Amendment to
the Registration Statement.
6 Reserved.
7 Not applicable.
8 Opinion Re tax matters (included in Exhibit 5).
9 Not applicable.
10 Form of Administrative Services Agreement. Previously filed on
February 28, 2008 with Pre-Effective Amendment No. 2 to Form S-1 for
Genworth Life and Annuity Insurance Company, Registration
No. 333-143494.
11 Not applicable.
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12 Not applicable.
13 Not applicable.
14 Not applicable.
15 Not applicable.
16 Not applicable.
17 Not applicable.
18 Not applicable.
19 Not applicable.
20 Not applicable.
21 Subsidiaries of the Registrant. Previously filed on March 6, 2009
with Post-Effective Amendment No. 1 to Form S-1 for Genworth Life and
Annuity Insurance Company, Registration No. 333-143494
22 Not applicable.
23.1 Consent of Counsel. To be filed by Post-Effective Amendment to the
Registration Statement.
23.2 Consent of experts. To be filed by Post-Effective Amendment to the
Registration Statement.
24 Power of Attorney. Filed herewith.
25 Not applicable.
26 Not applicable.
27 Not applicable.
(b) Financial Statement Schedules. To be filed by Post-Effective Amendment
to the Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from low or high end estimated offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b), if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is subject to Rule 430C ((S)230.430C of this
chapter), each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A ((S)230.430A of this chapter), shall be deemed to
be part of and included in the registration statement as of the date it
is first used after effectiveness. Provided, however, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration or made in any such document
immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to
Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing materials or information about the undersigned
registrant or their securities provided by or on behalf of the
undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed on
its behalf by the undersigned thereunto duly authorized, in the County of
Henrico in the Commonwealth of Virginia, on the 8th day of March, 2010.
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
(Registrant)
By: /s/ MICHAEL P. COGSWELL
-------------------------------------
MICHAEL P. COGSWELL
VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ PAMELA S. SCHUTZ* Chairperson of the Board, President and March 8, 2010
------------------------ Chief Executive Officer
PAMELA S. SCHUTZ
/s/ PAUL A. HALEY* Director, Senior Vice President and March 8, 2010
------------------------ Chief Actuary
PAUL A. HALEY
/s/ RONALD P. JOELSON* Director, Senior Vice President and March 8, 2010
------------------------ Chief Investment Officer
RONALD P. JOELSON
/s/ LEON E. RODAY* Director and Senior Vice President March 8, 2010
------------------------
LEON E. RODAY
/s/ GEOFFREY S. STIFF* Director and Senior Vice President March 8, 2010
------------------------
GEOFFREY S. STIFF
/s/ KELLY L. GROH* Senior Vice President and Chief March 8, 2010
------------------------ Financial Officer
KELLY L. GROH
/s/ JAC J. AMERELL* Vice President and Controller March 8, 2010
------------------------
JAC J. AMERELL
*By: /s/ MICHAEL P. COGSWELL , pursuant to Powers of March 8, 2010
------------------------- Attorney executed on December 16,
MICHAEL P. COGSWELL 2009
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