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Hanlon and Foxhall Sub-Account Additions to WRL VUL Policies

Western Reserve Life ("WRL"), in conjunction with Hanlon Investment Management ("Hanlon") and Foxhall Capital Management ("Foxhall"), recently announced the creation of 8 new sub-account options for VUL policies. These new sub-accounts will utilize 4 investment strategies of each of the money managers. Hanlon strategies became available on May 1, 2009 and Foxhall strategies are expected to become available on July 1, 2009.

Frequently Asked Questions

What is the difference between having Foxhall or Hanlon managing my VUL policy,
versus investing in a Foxhall or Hanlon subaccount?

Prior to the introduction of Foxhall and Hanlon's tactical asset allocation strategies to the WRL VUL sub-account line-up, the only way you could access the Foxhall or Hanlon investment strategies was by adding one of them as a third-party money manager on your VUL policy through a representative of IAI. When acting as the manager on a VUL policy, Foxhall or Hanlon assumes fiduciary responsibility for making sub-account allocations for the entire policy value, and is responsible for allocating and re-allocating monies among ALL the sub-accounts in the policy in an effort to meet your selected investment objective.

As the manager of individual sub-accounts, Foxhall and Hanlon are applying one of their investment strategies to a specific sub-account, and selecting investments for that sub-account, consistent with the sub-account fund prospectus. Their fiduciary duty is to the sub-account fund as whole, and not to your individual VUL policy.

How do I transition from having Foxhall or Hanlon managing my VUL policy, versus investing in a Foxhall or Hanlon subaccount?

The process of changing from VUL policy management to investing in subaccounts begins with your completion and submission of a letter terminating the investment advisory services of Foxhall or Hanlon for your policy. A sample letter is available if you click here. This letter can be either provided to your IAI representative or submitted to Foxhall or Hanlon directly. When you terminate the management of the entire policy, IAI will no longer have a role with your account and Foxhall or Hanlon will no longer have a fiduciary reasonability for managing your VUL policy value.

Once the total policy asset management of your account is terminated you will need to select and choose any subaccount(s) – including any Hanlon and/or Foxhall sub-accounts -- where you wish to invest your policy value. WRL has material available to assist you with these decisions. Once your choice is made, you may work with the WGS registered representative assigned to your account or with WRL directly at (800) 322-3796, extension 6539 in order to reallocate your policy value as you choose.

Does the introduction of these new options mean that the WRL VUL now has actively managed sub-accounts?

Actually, all of the sub-accounts within the WRL VUL are actively managed. Fund managers have always been paid to buy and sell based on their particular management style. What has been missing in the subaccount line up (and asset allocation strategies) is a management strategy that has the willingness and technical ability to get out of stock and bond markets when they are in a down trend. That ability to "get out" --- avoid prolonged participation in markets that are moving downward --- is part of what makes the Foxhall and Hanlon sub-accounts such meaningful additions to the WRL VUL. Note that the investment strategies of sub-accounts are governed by the fund prospectus. You should read the prospectuses for the Foxhall and Hanlon sub-accounts in order to fully understand their investment mandates. So the Foxhall and Hanlon sub-accounts ARE actively managed BUT the better focus of the new value that they bring to the WRL VUL is their tactical asset allocation service that includes the objective of avoiding prolonged participation in markets that are moving downward.

Are the new sub-accounts from Foxhall and Hanlon actively managed?

Yes, the sub-accounts managed by Foxhall and Hanlon are actively managed sub-accounts. WRL VUL policies offer a variety of sub-accounts, including strategic asset allocation and now tactical asset allocation sub-accounts, to which net premiums can be allocated. In the new tactical asset allocation sub-accounts, Foxhall and Hanlon will seek to manage risk by adjusting specific sub-account holdings on a continuous basis in response to market and economic conditions. A tactical strategy gives sub-account managers the opportunity to potentially create extra value by taking advantage of certain situations in the marketplace. For detailed information about the investment objectives, policies and risks of the tactical asset allocation sub-accounts, please refer to the fund prospectuses.

What is the difference between a Tactical Asset Allocation strategy and Strategic Asset Allocation strategy?

A Strategic asset allocation strategy generally seeks to develop diversified subaccounts based on a "buy and hold" approach. The approach relies on long term market cycles to help mitigate volatility and usually stays fully invested as markets cycle up and down. This is the strategy currently used by the portfolio managers for the existing WRL VUL subaccounts.

A Tactical asset allocation strategy is an investment style based on extensive, quantitative analysis of technical financial market data. The results help the portfolio managers responsible for managing the underlying investments within the subaccounts to determine allocations to stocks, bonds and cash-like investments based on their analysis of current trends in the financial markets. A tactical asset allocation strategy may utilize Exchange Traded Funds (ETF’s), rather than individual stocks and bonds. Portfolio changes -- which can be substantial -- may take place at any time.

Are there similar risks associated with the Foxhall or Hanlon sub-accounts as with the existing sub-accounts in the WRL VUL?

Generally, the answer is Yes. Just as there are risks associated with strategic asset allocation sub-accounts, there are risks associated with tactical asset allocation sub-accounts, including but not limited to market risk, tactical and strategic asset allocation risk, active trading risk, and underlying funds risk. For detailed information concerning the risks associated with the tactical asset allocation sub-accounts, please refer to the fund prospectus.

Will all WRL VUL policies have access to the Foxhall or Hanlon sub-accounts?

No, the TFLIC FFB and TFLIC FWP policies will not have the Foxhall or Hanlon subaccount options.