RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT, 485APOS, 1998-11-02

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
485APOS, 1998-11-02

Previous: POST APARTMENT HOMES LP, 8-K, 1998-11-02

Next: SYMONS INTERNATIONAL GROUP INC, 4, 1998-11-02

<PAGE>

As filed with the Securities and Exchange Commission on November 2, 1998

FILE NO. 333-03093 (811-07615)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 /X/

PRE-EFFECTIVE AMENDMENT NO. ___ / /

POST-EFFECTIVE AMENDMENT NO. 10* /X/

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT of 1940 /X/

AMENDMENT NO. 12* /X/

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)

CONSECO VARIABLE INSURANCE COMPANY**
(Name of Depositor)

11825 North Pennsylvania Street, Carmel, Indiana 46032-4572
(Address of Principal Executive Offices of Depositor)
Depositor's Telephone Number: 800-437-3506

------------------

Karl W. Kindig, Esq.
Conseco Variable Insurance Company
11825 North Pennsylvania Street
Carmel, Indiana 46032
(Name and Address of Agent for Service)

COPY TO:
John H. Grady, Jr.
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993

------------------

It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
---
on (date) pursuant to paragraph (b) of Rule 485
---
X 60 days after filing pursuant to paragraph (a) of Rule 485
---
on (date) pursuant to paragraph (a) of Rule 485
---

If appropriate, check the following box:
This post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment

TITLE OF SECURITIES BEING REGISTERED: Individual Variable Annuity
Contracts

*Amendment on Form N-4 to Registration Statement on Form N-3 in connection with
change in registration from a management investment company to a unit investment
trust.
**Name changed from Great American Reserve Insurance Company to Conseco Variable
Insurance Company

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

CROSS REFERENCE SHEET

Item 2. Definitions Definitions N/A

Item 3. Synopsis Table of Fees N/A
or Highlights and Expenses

Item 4. Condensed Accumulation N/A
Financial Unit Values
Information

Item 5. General Conseco Variable N/A
Description Insurance Company;
of Registrant, The Separate Account
Depositor and
Portfolio
Companies

Item 6. Deductions The Contract - Fees and N/A
and Expenses Charges

Item 7. General The Contract N/A
Description
of Variable
Annuity
Contracts

Item 8. Annuity Period The Contract - Annuity N/A
Provisions

Item 9. Death Benefit The Contract - Payment N/A
On Death

Item 10. Purchases and The Contract - Purchases Payments; N/A
Contract The Contract - Accumulation
Value Units

Item 11. Redemptions The Contract - Withdrawals N/A

Item 12. Taxes Federal Income Tax N/A
Considerations

Item 13. Legal N/A N/A
Proceedings

</TABLE>

<PAGE>

CROSS REFERENCE SHEET

Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- -------------------- ------------------------ ----------------------
<S> <C> <C>
Item 14. Table of Table of Contents of N/A
Contents of Statement of Additional
Statement of Information
Additional
Information

Item 15. Cover Page N/A Cover Page

Item 16. Table of N/A Cover Page
Contents

Item 17. General N/A N/A
Information
and History

Item 18. Services Conseco Variable N/A
Insurance Company

Item 19. Purchase of The Contract - Purchases Payments; Distribution of
Securities The Contract - Withdrawals Contracts and
Being Offered Certificates
and Expenses

Item 20. Underwriters N/A Distribution of
Contracts

Item 21. Calculation of N/A Calculation of
Performance Return Quotations
Data

Item 22. Annuity N/A Variable Annuity
Payments Provisions

Item 23. Financial N/A Financial Statements
Statements
</TABLE>

<PAGE>

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)
ADMINISTRATIVE OFFICE: 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032
PHONE: (800) 437-3506

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT - FLEXIBLE PURCHASE PAYMENTS

The individual deferred variable annuity contract (the "Contract")
described in this Prospectus is issued by Conseco Variable Insurance Company
("CVI"). The Contract provides seven investment options and provides for the
payment of annuity and other benefits at a future date. The Contract is sold
ONLY to individuals who wish to accumulate assets by engaging in strategic or
tactical asset allocation investing with the assistance of a professional money
manager.

The investment options, which are provided through Rydex Advisor Variable
Annuity Account (a separate account of CVI ), are separate investment funds
("Funds") of Rydex Variable Trust ("Trust"). The names of the Funds are the
Nova, Ursa, OTC, Precious Metals, U.S. Government Bond, Juno, U.S. Government
Money Market Funds. THE TRUST PROSPECTUS, WHICH ACCOMPANIES THIS PROSPECTUS,
PROVIDES AN INVESTMENT RISK/RETURN SUMMARY AND OTHER INFORMATION ABOUT THE FUNDS
AND THE TRUST.

The Contract also provides for investment in a Fixed Account of CVI .
Allocations and transfers to the Fixed Account are held in the general account
of CVI, accumulate on a fixed basis and are guaranteed by the general account
assets of CVI .

The Contract is not intended as a short-term investment vehicle. Early
withdrawals of purchase payments from the Contract may be subject to a
contingent deferred sales charge of up to 7%, and withdrawals by an owner before
age 59 1/2 may be subject to a 10% additional income tax penalty. See "Fees and
Charges" and "Federal Income Tax Considerations" for additional information.

A Contract may be returned within ten days of receipt for a full refund of
the Contract Value (or purchase payments, if required under applicable law).
Longer free look periods apply in some states.

INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

This Prospectus contains information that a prospective Contract Owner
should know before investing. It should be read and retained for future
reference. Additional information is contained in a Statement of Additional
Information, dated November 2, 1998, which has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The Securities
and Exchange Commission has a Web site (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference and
other information regarding companies that file electronically with the
Securities and Exchange Commission.

INQUIRIES: If you would like the Statement of Additional Information at no
charge or would like more information about the Contract, please write to
Conseco Equity Sales, Inc., 11825 North, Pennsylvania Street, Carmel, Indiana
46032, or call (800) 437-3506. The Table of Contents of the Statement of
Additional Information is included at the end of this Prospectus.

November 2, 1998

PROSPECTUS

<PAGE>

TABLE OF CONTENTS

<S> <C>
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

TABLE OF FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ACCUMULATION UNIT VALUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CONSECO VARIABLE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 7

THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Rydex Variable Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Suspension of Payment or Transfers. . . . . . . . . . . . . . . . . . . . . . 13
Systematic Withdrawal Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Payment on Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Annuity Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fees and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 19
Annuity Contracts in General. . . . . . . . . . . . . . . . . . . . . . . . . 19
Qualified and Non-Qualified Contracts . . . . . . . . . . . . . . . . . . . . 19
Withdrawals -- Non-Qualified Contracts. . . . . . . . . . . . . . . . . . . . 20
Withdrawals -- Qualified Contracts . . . . . . . . . . . . . . . . . . . . . 20
Withdrawals -- Tax-Sheltered Annuities. . . . . . . . . . . . . . . . . . . . 20
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Investor Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . 22
</TABLE>

-2-
<PAGE>

DEFINITIONS

ACCUMULATION UNIT: A unit of measure used to compute your interest in a
Subaccount of the Separate Account.

ANNUITY DATE: The date on which annuity payments begin.

CONTRACT: The individual deferred variable annuity offered by and described in
this Prospectus.

CONTRACT OWNER: The person specified in the Contract as the owner of the
Contract and entitled to exercise ownership rights under the Contract.

CONTRACT VALUE: The current value of all interests held under the Contract in
Subaccounts of the Separate Account and the Fixed Account.

FINANCIAL ADVISOR: A person who is registered as an Investment Adviser with the
U.S. Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended, or who qualifies for exclusion from such registration, and who
provides strategic or tactical asset allocation services to the Contract Owner
and who is not prevented from providing such services by any federal or state
regulatory action.

FIXED ACCOUNT: An account maintained by CVI as part of its general asset
account where amounts allocated and transferred to the account are held and
accumulated on a fixed basis.

FUND: An investment portfolio of Rydex Variable Trust.

SEPARATE ACCOUNT: Rydex Advisor Variable Annuity Account, a separate account of
Conseco Variable Insurance Company.

SUBACCOUNT: A segment within the Separate Account which invests in a Fund of
Rydex Variable Trust.

TRUST: Rydex Variable Trust.

YOU: A reference to "you" denotes the Contract Owner or prospective Contract
Owner.

WE OR US: A reference to "we" or "us" denotes Conseco Variable Insurance
Company.

-3-
<PAGE>

TABLE OF FEES AND EXPENSES

CONTRACT OWNER TRANSACTION EXPENSES
<S> <C>
Sales Load Imposed on Purchase Payments . . . . . . . . . . . . . . . None

Withdrawal Charge (percent of purchase payments withdrawn) . . . . . 7%*

Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . None

ANNUAL CONTRACT FEE . . . . . . . . . . . . . . . . . . . . . . . . . NONE

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF SUBACCOUNT VALUES)

Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . 1.25%

Contract Administration Fee . . . . . . . . . . . . . . . . . . . . 0.15%

Total Separate Account Annual Expenses . . . . . . . . . . . . . . . 1.40%
</TABLE>
_________________________

* A WITHDRAWAL CHARGE MAY BE APPLIED IF MONEY IS WITHDRAWN FROM THE CONTRACT
OR, IF THE CONTRACT HAS BEEN IN EFFECT FOR LESS THAN FIVE YEARS, AND MONEY IN
THE CONTRACT IS APPLIED TO PROVIDE ANNUITY PAYMENTS FOR LESS THEN FIVE YEARS.
THE CHARGE ON A WITHDRAWAL OF A PURCHASE PAYMENT DECLINES TO ZERO OVER A
SEVEN-YEAR PERIOD COMMENCING ON THE DATE WE RECEIVED THE PURCHASE PAYMENT. SEE
"FEES AND CHARGES" IN THIS PROSPECTUS FOR ADDITIONAL INFORMATION, INCLUDING
INFORMATION ON FREE WITHDRAWALS.

RYDEX VARIABLE TRUST ANNUAL EXPENSES
(AS A PERCENT OF AVERAGE NET ASSETS, REFLECTING EXPENSE LIMITATIONS)
<TABLE>
<CAPTION>

TOTAL
MANAGEMENT OTHER FUND
FEES EXPENSES* EXPENSES*
---------- ---------- ----------
<S> <C> <C> <C>
Nova Fund 0.75% 1.45% 2.20%
Ursa Fund 0.90% 1.40% 2.30%
OTC Fund 0.75% 1.45% 2.20%
Precious Metals Fund 0.75% 1.45% 2.20%
U.S. Government Bond Fund 0.50% 1.30% 1.80%
Juno Fund 0.90% 1.40% 2.30%
U.S. Government Money Market Fund 0.50% 1.10% 1.60%

</TABLE>

________________________

* PADCO ADVISORS II, INC., INVESTMENT ADVISER TO THE FUNDS, AND PADCO
SERVICE COMPANY, INC., SERVICER TO THE FUNDS, HAVE VOLUNTARILY AGREED TO
WAIVE FEES AND/OR REIMBURSE EXPENSES TO ENSURE THAT EXPENSES DO NOT EXCEED
THE EXPENSES SHOWN. FOR THE PERIOD ENDING JUNE 30, 1998, ABSENT THESE
VOLUNTARY EXPENSE LIMITATIONS, AND ADJUSTED TO EXCLUDE INSURANCE RELATED
CHARGES, TOTAL FUND EXPENSES WERE AS FOLLOWS: NOVA FUND -- 2.71%; URSA
FUND -- 2.87%; OTC FUND -- 2.57%; PRECIOUS METALS FUND -- 2.82%; U.S.
GOVERNMENT BOND FUND -- 2.36%; JUNO FUND -- 2.54%; U.S. GOVERNMENT MONEY
MARKET FUND -- 2.46%. FOR THE PERIOD ENDING DECEMBER 31, 1997, ABSENT
THESE VOLUNTARY EXPENSE LIMITATIONS AND ADJUSTED TO EXCLUDE INSURANCE
RELATED CHARGES, TOTAL FUND EXPENSES WERE AS FOLLOWS: NOVA FUND -- 7.69%;
URSA FUND -- 7.81%; OTC FUND -- 7.67%; PRECIOUS METALS FUND -- 8.36%; U.S.
GOVERNMENT BOND FUND -- 7.07%; U.S. GOVERNMENT MONEY MARKET FUND -- 5.42%.

EXAMPLES

The following examples illustrate the cumulative dollar amount of expenses
that would be incurred on each $1,000 invested.

-4-
<PAGE>

If you surrender your Contract at the end of the applicable period, or
if your Contract has been in effect for less than five years and you elect to
receive annuity payments (or the annuity payments you have elected are not
for life or for a period of at least five years), you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets.

ONE THREE
YEAR YEARS
----- -----
<S> <C> <C>
Nova Subaccount . . . . . . . . . . . . . . . . . . . . $106 $163
Ursa Subaccount . . . . . . . . . . . . . . . . . . . . . $107 $166
OTC Subaccount . . . . . . . . . . . . . . . . . . . . . $106 $163
Precious Metals Subaccount . . . . . . . . . . . . . . . $106 $163
U.S. Government Bond Account . . . . . . . . . . . . . . $102 $151
Juno Subaccount . . . . . . . . . . . . . . . . . . . . . $107 $166
U.S. Government Money Market Subaccount . . . . . . . . . $100 $145

</TABLE>

If you do not surrender your Contract at the end of the applicable
period, or if your Contract has been in effect for at least five years and
you elect to receive annuity payments for life or for a period of at least
five years, you would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets.

<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
----- ------
<S> <C> <C>
Nova Subaccount . . . . . . . . . . . . . . . $36 $110
Ursa Subaccount . . . . . . . . . . . . . . . $37 $112
OTC Subaccount . . . . . . . . . . . . . . . $36 $110
Precious Metals Subaccount . . . . . . . . . $36 $110
U.S. Government Bond Subaccount . . . . . . . $32 $ 98
Juno Subaccount . . . . . . . . . . . . . . . $37 $112
U.S. Government Money Market Subaccount . . . $30 $ 92

</TABLE>

The purpose of the above table is to assist you in understanding the costs
and expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account as well as the Trust. The examples should not
be considered a representation of future expenses and charges. Actual expenses
may be more or less than those shown. Similarly, the assumed 5% annual rate of
return is not an estimate or a guarantee of future investment performance of the
Subaccounts of the Separate Account. Neither the tables nor the examples
reflect any state premium taxes that may be applicable to variable annuity
Contracts, which currently range from 0% to 3.5%, or any fees that you pay your
Financial Advisor for assisting in strategic or tactical asset allocation
services. Additional information on fees and expenses may be found under "Fees
and Charges" in this Prospectus and under "Management of the Fund" in the
Statement of Additional Information of the Trust.

ACCUMULATION UNIT VALUES

The following table shows Accumulation Unit values and the number of
Accumulation Units outstanding for the Nova, Ursa, OTC, Precious Metals, U.S.
Government Bond, Juno and U.S. Government Money Market Subaccounts of the
Separate Account for the periods indicated. The information in the table is
derived from the financial statements of the Separate Account. The Accumulation
Unit values and numbers of Accumulation Units are the same as they would have
been if the Separate Account had operated as a unit investment trust and had
invested in shares of the Funds of

-5-
<PAGE>

the Trust for the periods shown, and the operations of the Funds had been as
currently reported in the Trust's Prospectus and Statement of Additional
Information. The Nova, Ursa, OTC, Juno and U.S. Government Money Market
Subaccounts commenced operations on May 7, 1997. The Precious Metals and U.S.
Government Bond Subaccounts commenced operations on May 29, 1997. For the Ursa,
U.S. Government Bond and Juno Subaccounts, there were periods during which no
Accumulations Units were outstanding.

NUMBER OF ACCUMULATION
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE UNITS OUTSTANDING AT
AT BEGINNING OF PERIOD AT END OF PERIOD END OF PERIOD
------------------------- ------------------------- ---------------------
<S> <C> <C> <C>
Nova Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 12.21 855,862
1/1/98 TO 6/30/98 12.21 14.57 1,518,888

Ursa Subaccount
FOR THE PERIODS
5/7/97 TO 5/21/97 10.00 9.63 0
5/24/97 TO 6/3/97 9.57 9.58 0
6/10/97 TO 12/31/97 9.36 8.07 356,784
1/1/98 TO 6/30/98 8.07 6.95 463,004
OTC Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 10.65 222,217
1/1/98 TO 6/30/98 10.65 14.36 1,933,702

Precious Metals Subaccount
FOR THE PERIODS
5/29/97 TO 12/31/97 10.00 7.02 73,827
1/1/98 TO 6/30/98 7.02 6.61 10,094

U.S. Gov't. Bond
Subaccount
FOR THE PERIODS
5/29/97 TO 6/5/97 10.00 10.15 0
6/24/97 TO 7/14/97 10.44 10.67 0
7/29/97 TO 8/12/97 10.92 10.56 0
8/18/97 TO 12/31/97 10.70 11.82 75,493
1/1/98 TO 6/30/98 11.82 12.51 116,899

Juno Subaccount
FOR THE PERIODS
5/7/97 TO 6/3/97 10.00 9.86 0
6/16/97 TO 7/2/97 9.71 9.68 0
7/7/97 9.59 9.54 0
7/24/97 TO 8/11/97 9.41 9.68 0
8/26/97 TO 10/19/97 9.72 9.52 0
10/22/97 TO 12/11/97 9.50 9.01 0
1/20/98 TO 1/25/98 8.88 8.99 0
2/2/98 8.98 8.98 0
2/23/98 TO 2/25/98 9.03 9.07 0
3/2/98 9.09 9.09 0
3/4/98 TO 6/30/98 9.20 8.60 6,440

-6-

<PAGE>

<CAPTION>
NUMBER OF ACCUMULATION
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE UNITS OUTSTANDING AT
AT BEGINNING OF PERIOD AT END OF PERIOD END OF PERIOD
------------------------- ------------------------- ---------------------
<S> <C> <C> <C>
U.S. Gov't. Money Market
Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 10.32 1,734,974
1/1/98 TO 6/30/98 10.32 10.45 1,405,279

</TABLE>

In advertisements of the Contracts, information on total return performance
and on annual changes in Accumulation Unit values may be provided. Information
on total return performance will include average annual rates of total return
for one, five and ten year periods of continuous operation, or lesser periods
depending on the date of commencement of continuous operation of the underlying
Fund. Total return figures will show the average annual rates of increase or
decrease in investments in the Subaccounts, assuming a $1,000 investment at the
beginning of the period, withdrawal of the investment at the end of the period,
and the deduction of all applicable charges. We may also show total return
figures, assuming no withdrawals from the Contract. Total return figures which
assume no withdrawal at the end of the period will reflect all recurring
charges, but will not reflect the withdrawal charge (if applicable, the
withdrawal charge would reduce the amount that may be withdrawn under the
Contracts). In addition, we may show cumulative total return for selected
periods, assuming no withdrawal at the end of the period. We may also include
yield and effective yield on investments in the U.S. Government Money Market
Fund advertisements. Future performance will, of course, vary; the results
shown will not necessarily be representative of future results.

CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)

Conseco Variable Insurance Company (formerly Great American Reserve
Insurance Company) is incorporated as a life insurance company under the laws
of the State of Texas and is authorized to sell life insurance, annuity and
similar financial products in 49 states and the District of Columbia.
Originally organized in 1937, we are an indirect wholly owned subsidiary of
Conseco, Inc. ("Conseco"). Texas regulatory authorities approved a change in
our name from Great American Reserve Insurance to Conseco Variable Insurance
Company ("CVI") on October 7, 1998. We are currently engaged in obtaining
approvals for the name change from regulatory authorities of the other states
in which we operate. We anticipate that we will complete the filing and
approval process by the end of the first quarter of 1999.

Conseco provides corporate and Contract administration services to us.
Conseco is a publicly-owned financial services holding company, the principal
operations of which are the development, marketing and administration of
supplemental health insurance, annuity, life insurance, individual and group
major medical insurance, other insurance products and consumer and commercial
finance products and services. Conseco is located at 11825 N. Pennsylvania
Street, Carmel, Indiana, 46032.

All inquiries regarding the Separate Account, the Contracts, or any
related matter should be directed to CVI's administrative office at 11825
North Pennsylvania Street, Carmel, Indiana, 46032, (800)437-3506.

-7-
<PAGE>

We depend on the smooth functioning of computer systems in almost every
aspect of our business. Like other insurance companies, businesses and
individuals around the world, we could be adversely affected if the computer
systems used by our service providers do not properly process dates on and
after January 1, 2000 and distinguish between the year 2000 and the year
1900. We have asked our service providers whether they expect to have their
computer systems adjusted for the year 2000 transition, and received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to us and the Separate Account. CVI
and our Contract Owners may experience losses if these assurances prove to be
incorrect or as a result of year 2000 computer difficulties experienced by
the Trust, issuers of portfolio securities or third parties, such as
custodians, banks, broker-dealers or others with which the CVI Trust does
business.

THE SEPARATE ACCOUNT

We established the Separate Account under Texas insurance law on April
15, 1996 for the purpose of segregating separate portfolios of investments
for the Contracts. Income, gains and losses, realized or unrealized, of the
Separate Account are credited to or charged against the Separate Account
without regard to any other income, gains or losses of CVI. Assets equal to
the reserves and other Contract liabilities with respect to the Separate
Account are not chargeable with liabilities arising out of any of our other
business activities. We are obligated to pay all benefits and make all
payments under the Contracts.

The Separate Account was registered with the U. S. Securities and
Exchange Commission (the "SEC") as a management investment company on May 2,
1996. It was divided into seven different Subaccounts - the Nova Subaccount,
Ursa Subaccount, OTC Subaccount, Precious Metals Subaccount, U. S. Government
Bond Subaccount, Juno Subaccount and Money Market Subaccount, each with its
own investment objective and investment policies. As a registered management
investment company, the Separate Account and its Subaccounts invested
directly in securities in accordance with their investment objectives and
policies.

On November 2, 1998, registration of the Separate Account was changed
to a unit investment trust and the investment portfolios of the Subaccounts
were transferred to newly established Funds of the Trust - the Nova Fund,
Ursa Fund, OTC Fund, Precious Metals Fund, U. S. Government Bond Fund, Juno
Fund and U. S. Government Money Market Fund. In exchange for the investment
portfolio of each Subaccount, the Trust issued a separate series of shares of
common stock to the Subaccount, representing shares of the Fund corresponding
to the Subaccount, and assumed the liabilities of the Subaccount other than
liabilities for Contract insurance charges.

As a Contract Owner participating in a Subaccount of the Separate
Account, you may instruct us as to the voting of the shares of the Fund held
in the Subaccount. The number of shares of a Fund for which voting
instructions may be given is determined by dividing the Contract Owner's
interest in the applicable Subaccount by the net asset value of the Fund
share. Should the governing law, or interpretations thereof, change so as to
permit us to vote shares of the Funds in our own right, we may elect to do
so. Further, we reserve the right to modify the manner in which we calculate
the weight to be given to pass-through voting instructions where such a
change is necessary to comply with federal law or interpretations thereof.

-8-
<PAGE>

RYDEX VARIABLE TRUST

Purchase payments allocated or transferred to a Subaccount of the
Separate Account are invested in shares of the corresponding Fund of the
Trust. The Trust is organized as a Delaware business trust and is registered
with the SEC as an open-end management investment company under the
Investment Company act of 1940, as amended. PADCO Advisors II, Inc. serves
as the investment adviser and manager of the Funds. The Funds and their
investment objectives are as follows:

<TABLE>
<S> <C>
Nova Fund - seeks to provide investment returns that are 150% of the
S&P 500 Index

Ursa Fund - seeks to provide investment results that will inversely
correlate to the performance of the S&P 500 Index

OTC Fund - seeks to provide investment results that correspond to a
bench mark for over-the-counter securities. The Fund's
current benchmark is the NASDAQ 100 Index.

Precious Metals Fund - seeks to provide investment results that correspond to a
benchmark primarily for metals-related securities. The
Fund's current benchmark is the XAU Index

U.S. Government - seeks to provide investment results that correspond to a
Bond Fund benchmark for U.S. Government securities. The Fund's
current benchmark is 120% of the price movement of the
Long Treasury Bond.

Juno Fund - seeks to provide total returns that will inversely
correlate to the price movement of a benchmark for U.S.
Treasury debt instruments or futures contract on a
specified debt instrument. The Fund's current benchmark
is the inverse of the price movement of the Long Treasury
Bond.

U.S. Government - seeks to provide security of principal, high current
Money Market Fund income and liquidity

</TABLE>

THE TRUST PROSPECTUS ACCOMPANIES THIS PROSPECTUS. YOU SHOULD READ IT
CAREFULLY BEFORE INVESTING.

THE CONTRACT

The Contract is sold only to individuals who have retained a Financial
Advisor to provide strategic or tactical asset allocation services under
their Contract. You are responsible for selecting, supervising, and paying
any compensation to your Financial Advisor. You must execute a power of
attorney authorizing your Financial Advisor to give allocation and transfer
directions to us and/or our designee. You may make withdrawals from or
surrender your Contract at any time, BUT ONLY YOUR FINANCIAL ADVISOR MAY GIVE
US DIRECTIONS TO ALLOCATE PURCHASE PAYMENTS OR TRANSFER AMOUNTS TO THE
SUBACCOUNTS OR TO THE FIXED ACCOUNT. We do not recommend, select or
supervise your Financial Advisor. We do not make recommendations on strategic
or tactical asset allocations or transfers. We are not responsible for
advice

-9-
<PAGE>

provided by your Financial Advisor. If you enter into an advisory agreement
with your Financial Advisor to have the Financial Advisor's fee paid out of
your Contract Value, you should consider the tax consequences of withdrawing
funds from the Contract to pay the fee. See "Federal Income Tax
Considerations" in this Prospectus.

To change your Financial Advisor without interrupting allocations and
transfers among Subaccounts, you must: (1) notify us in writing of the name
of your new Financial Advisor and (2) provide us with a power of attorney
authorizing your new Financial Advisor to give us asset allocation directions.

If we receive notification that your Financial Advisor is no longer
authorized by you to give strategic or tactical asset allocation directions
on your behalf, or that your Financial Advisor has resigned or has died, or
that your Financial Advisor is otherwise not able to act on your behalf,
amounts credited under your Contract to Subaccounts of the Separate Account
will be transferred to the U.S. Government Money Market Subaccount and you
will be notified of the transfer and the information we received. You may
transfer amounts from the U.S. Government Money Market Subaccount to the
Fixed Account without a Financial Advisor (subject to time restrictions on
transferring amounts out of the Fixed Account). Until such time as we
receive written notification of the name of your new Financial Advisor and we
receive a power of attorney authorizing your new Financial Advisor to give us
investment instructions, your investment options are limited to the U.S.
Government Money Market Subaccount and the Fixed Account. When we receive
written notification of your new Financial Advisor and the power of attorney,
allocations and transfers among the investment options may resume. You may
also surrender your Contract. Withdrawals may be made from the Contract
Value subject to any applicable withdrawal fee.

THE STRATEGIC OR TACTICAL ASSET ALLOCATION CONTEMPLATED IN THE CONTRACT
MAY BE CHARACTERIZED AS AGGRESSIVE INVESTING. THERE CAN BE NO ASSURANCE THAT
ANY FINANCIAL ADVISOR WILL PREDICT MARKET MOVES SUCCESSFULLY. IN SELECTING
YOUR FINANCIAL ADVISOR, YOU SHOULD CAREFULLY CONSIDER HIS OR HER EDUCATION,
EXPERIENCE AND REPUTATION.

The Contract may be amended at any time to conform to applicable laws or
governmental regulations. If, in our judgment, investment in any of the
Funds becomes inappropriate to the purposes of the Contract, we may, with
approval of the Securities and Exchange Commission and any governing state
insurance department, substitute another fund for existing and future funds.
In addition, we may, in our discretion, no longer make available any of the
Subaccounts and may offer additional Subaccounts of the Separate Account.

PURCHASE PAYMENTS

To purchase a Contract, your completed application and all required
documentation, together with a check for the first purchase payment, must be
forwarded to our administrative office. Once we receive your purchase
payment and all necessary information, we will issue a Contract to you and
allocate your first purchase payment within 2 business days. If you do not
provide us all of the information needed, we will contact you. If for some
reason we are unable to complete this process within 5 business days, we will
either send back your money or get your permission to keep it until we obtain
all of the necessary information. If you add more money to your Contract by
making additional purchase payments, we will credit these amounts to your
Contract within one business day. The transaction cut-off time for receipt
by us of purchase payments for allocation to the Separate Account is 2:30
p.m., Eastern time. The transaction cut-off time for receipt by us of
purchase payments for allocation to the Fixed Account is

-10-
<PAGE>

4:00 p.m., Eastern time. We reserve the right to reject any application or
purchase payment. All subsequent purchase payments are sent directly to our
administrative office.

If you change your mind about owning the Contract, you may cancel the
Contract by returning it to us within 10 days of receiving it (or within a
longer period as provided under applicable state law). If you exercise this
right, we will refund either the Contract Value or all of your purchase
payments, as required under applicable state law.

Initial purchase payments to be allocated to the Separate Account are
credited to the U.S. Government Money Market Subaccount. Fourteen days after
the Contract Date, transfers will be made to other Subaccounts of the
Separate Account or the Fixed Account pursuant to instructions from your
Financial Advisor.

The minimum initial purchase payment is $25,000 and the minimum for each
subsequent purchase payment is $1,000. We will accept total purchase
payments under your Contract of up to $500,000. Payments to us in excess of
$500,000 require our prior approval.

The principal underwriter of the Contract (under federal securities
laws) is Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel,
Indiana 46032.

ACCUMULATION UNITS

Purchase payments and amounts allocated and transferred to a Subaccount
are credited to the Contract in the form of Accumulation Units. The number
of Accumulation Units is determined by dividing the purchase payment or
transfer amount by the value of the Accumulation Unit for the valuation
period in which the purchase payment or transfer amount is received at our
administrative office or, in the case of the initial purchase payment, is
accepted by us. The number of Accumulation Units will not change as a result
of the investment experience of the Subaccounts.

Accumulation Units are used to account for all amounts allocated or
transferred to or withdrawn from a Subaccount as a result of purchase
payments, withdrawals, transfers and charges.

For each Subaccount of the Separate Account the value of an Accumulation
Unit was set at $10 when it commenced operations. The value of an
Accumulation Unit may increase or decrease from one valuation period to the
next. We calculate the value of an Accumulation Unit for each Subaccount
after the New York Stock Exchange closes each day. A valuation period is the
interval from one valuation day of a Subaccount to the next valuation day,
measured from the time each day the Subaccount is valued.

The value of an Accumulation Unit for a valuation period, is determined
by dividing the current market value of the assets of the Subaccount less any
liabilities, by the total number of Accumulation Units of the Subaccount.
The investment experience of the shares of the Fund held in the Subaccount,
expenses of the Subaccount and the Fund and the deduction of fees and charges
at the Subaccount and Fund levels, all affect the Accumulation Unit value.

-11-
<PAGE>

TRANSFERS

Transfers among the Subaccounts may only be made by your Financial
Advisor at any time prior to the Annuity Date. Transfer requests may be made
by written instruction or by telephonic or other electronic instruction
satisfactory to us. By authorizing your Financial Advisor to give transfer
instructions by telephone or other electronic medium, you agree that we will
not be liable for any losses you may suffer from any fraudulent or
unauthorized transfer instruction. We or our designee will employ reasonable
procedures to confirm that transfer instructions are genuine, such as
requiring some form of personal identification. We may discontinue or change
the right to make telephonic and other electronic transfers at any time.

The minimum amount which can be transferred is $500 from any Subaccount
or your entire interest in the Subaccount, if less. We do not charge you for
transfers.

The transaction cut-off times for the receipt by us requests to make of
transfers among the Subaccounts are as follows. With respect to transfers
for the Nova, Ursa, and OTC Subaccounts, the time is 3:45 p.m., Eastern time;
for the Precious Metals Subaccount, the time is 3:30 p.m., Eastern time; for
the U.S. Government Bond and Juno Subaccounts, the time is 2:45 p.m., Eastern
time; and for the U.S. Government Money Market Subaccount and the Fixed
Account, the time is 4:00 p.m., Eastern time. For transfers involving
different transaction end times, the earlier of the times indicated above
applies. Telephone and electronic transfer orders will be accepted only
prior to the transaction cut-off times. If the primary exchange or market on
which the underlying Fund transacts business closes early, the above cut-off
time will be approximately thirty minutes (forty-five minutes, in the case of
the Precious Metals Fund) prior to the close of such exchange or market.

WITHDRAWALS

Prior to of the Annuity Date, you may withdraw all or part of your
Contract Value. Withdrawals will be based on values for the valuation period
in which a proper written request for withdrawal (and the Contract, if
required) are received at our administrative office. Withdrawals will be
received by us only between 8:30 a.m. Eastern time, and 2:30 p.m. Eastern
time; withdrawal requests received after 2:30 p.m., will be deemed received
by us on the next business day and the withdrawal will be based on the
Accumulation Unit value next determined after receipt on that date. Payment
will normally be made within seven days of receipt of the written request and
the Contract, if required. A withdrawal may result in a withdrawal charge
and/or tax consequences (including an additional 10% tax penalty under
certain circumstances). Certain withdrawal restrictions may apply if your
Contract is issued in connection with a Section 403(b) tax-qualified plan
(also known as a tax-sheltered annuity). See "Withdrawal Charge" and
"Federal Income Tax Considerations" in this Prospectus.

The minimum withdrawal is $500, and the remaining Contract Value must be
at least $10,000 ($3,500 for Contracts held under a tax-qualified retirement
arrangement.) If a partial withdrawal plus any withdrawal charge would
reduce the value of your Contract to less than $10,000 ($3,500 for
tax-qualified Contracts), CVI reserves the right to treat the partial
withdrawal as a total withdrawal of your Contract Value. We reserve the
right to increase or decrease such minimums. If you request a partial
withdrawal, you must specify in writing the Subaccount(s) and/or Fixed
Account from which funds are to be withdrawn.

-12-
<PAGE>

CVI will, pursuant to an agreement with you, make a partial withdrawal
from your Contract Value to pay for the services of your Financial Advisor.
If your Contract is non-qualified, the withdrawal will be treated like any
other distribution and may be included in gross income for federal tax
purposes and, if you are under age 59 1/2, may be subject to a tax penalty.
If your Contract is tax-qualified, the withdrawal for the payment of fees
will not be treated as a taxable distribution if certain conditions are met.
You should consult a tax adviser regarding the tax treatment of the payment
of Financial Advisor fees from your Contract.

SUSPENSION OF PAYMENT OR TRANSFERS

CVI may be required to suspend or postpone payments for withdrawal or
transfers for any period when:

1. the New York Stock Exchange, the Chicago Board of Trade or the Chicago
Mercantile Exchange, as appropriate, is closed (other than customary
weekend and holiday closings);

2. trading on the New York Stock Exchange, the Chicago Board of Trade or the
Chicago Mercantile Exchange is restricted;

3. an emergency exists as a result of which disposal of shares of the Funds is
not reasonably practicable or it is not reasonably practicable for the
Trust fairly to determine the net asset value of the shares of the Funds;

4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.

SYSTEMATIC WITHDRAWAL PLAN

We administer a systematic withdrawal plan which enables you to arrange
for pre-authorized systematic withdrawals. To take advantage of the plan,
you enter into an agreement with us to withdraw a level dollar amount from
specified Subaccounts on a periodic basis. The plan is available only with
respect to amounts which are free of any withdrawal charge. See "Fees and
Charges" in this Prospectus for information on amounts that may be withdrawn
from the Contract free of any withdrawal charge. If you make an additional
withdrawal which is not part of the systematic withdrawal plan, the plan
will terminate automatically and may be reinstated only on or after making a
written request to us. Withdrawals under the plan may result in tax
consequences (including an additional 10% tax penalty under certain
circumstances). See "Federal Income Tax Considerations" in this Prospectus.

PAYMENT ON DEATH

If you or your spouse, as joint Contract Owner, dies prior to the
Annuity Date, we will pay the death benefit to the beneficiary. Upon the
death of a joint Contract Owner, the surviving joint Contract Owner will
become the beneficiary. The death benefit is the greater of the Contract
Value or purchase payments made under the Contract less any applicable
withdrawals, on the date proof of death is received at our administrative
office (subject to state regulations which vary from state to state). When
we receive notification of a Contract Owner's death, the amounts held in
Subaccounts under your Contract will be transferred to the U.S. Government
Money Market Subaccount. Payment will be in a lump sum unless an annuity
option is chosen. A beneficiary, other than the surviving spouse of the
deceased Contract

-13-
<PAGE>

Owner, may choose only an annuity option which provides for full payout
within five years of death, or within the life or life expectancy of the
beneficiary. Payments must begin within one year of the Contract Owner's
death if a life expectancy option is selected. If the surviving spouse of a
deceased Contract Owner is the beneficiary, he or she may choose to continue
the Contract in force at the then current Contract Value.

If you or your spouse, as joint Contract Owner, who is not the
Annuitant, dies after the Annuity Date, any remaining payments under the
Annuity Option that was selected will continue at least as rapidly as under
the pay-out plan in effect upon death. If you die after the Annuity Date,
the beneficiary becomes the Contract Owner. Upon the death of a joint
Contract Owner after the Annuity Date, the surviving joint Contract Owner
will be treated as the primary beneficiary. Any other person designated on
record as a beneficiary at the time of death will be treated as a contingent
beneficiary.

If you are a natural person and not the Annuitant and the Annuitant dies
prior to the Annuity Date, the Contract will continue in force on the same
terms and you will become the Annuitant, unless another person is designated
by you and we are notified in writing within thirty days. If the Contract
Owner is a non-natural person (for example, a corporation) then the death of
the Annuitant will be treated as the death of the Contract Owner and a new
Annuitant may not be named.

If the Annuitant dies after the Annuity Date, any remaining payments
will be made as provided for in the annuity option selected. See "Annuity
Provisions" in this Prospectus.

Different rules apply to payments on death under tax-qualified Contracts.

ANNUITY PROVISIONS

You may select any one of the following annuity options which currently
are available on a fixed basis only or any other option satisfactory to you
and CVI. You can change the annuity option with 30 days written notice to us
prior to the Annuity Date. The Contract Value, less any applicable
Withdrawal Charge, is applied to the Annuity Table in the Contract to
determine the amount of each fixed annuity payment to be made under the
annuity option selected. No withdrawal charge is applicable if the annuity
payments begin at least 5 years after the effective date of the Contract and
are paid under any life annuity option, or any annuity option with payments
for a minimum of 5 years. Annuity payments will be made to the Annuitant
unless you notify us otherwise in writing. The annuitant is the individual
designated by the Contract Owner on whose continuation of life annuity
payments may depend.

First Option--Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant and ceasing with the last monthly payment due prior
to the death of the Annuitant. This option offers a greater level of
monthly payments than the second option, since there is no minimum number of
payments guaranteed (nor a provision for a death benefit payable to a
beneficiary). It would be possible under this option to receive only one
annuity payment if the Annuitant died prior to the due date of the second
annuity payment. This option is generally not available for Contract Owners
annuitizing over the age of 85.

Second Option--Life Annuity With Guaranteed Periods. An annuity payable
monthly during the lifetime of the Annuitant with the guarantee that if, at
the death of the Annuitant, payments have been made for less than 5, 10, or
20 years (you choose before payments begin), annuity payments will be
continued during the remainder of such period to the beneficiary. If no
beneficiary is designated, we will, pay in a lump sum to the Annuitant's
estate the present value, as of the date of death, of the number

-14-
<PAGE>

of guaranteed annuity payments remaining after that date, computed on the
basis of the assumed net investment rate used in determining the first
monthly payment. Because this Second Option provides a specified minimum
number of annuity payments, this option results in somewhat lower payments
per month than the First Option.

Third Option--Installment Refund Life Annuity. Payments are made for
the installment refund period, which is the time required for the sum of the
payments to equal the amount applied, and thereafter for the life of the
payee.

Fourth Option--Payments for a Fixed Period. Payments are made for the
number of years selected, which may be from 3 through 20. Should the
Annuitant die before the specified number of monthly payments are made, the
remaining payments will be commuted and paid to the designated beneficiary in
a lump sum payment.

Fifth Option--Joint and Survivor Annuity. We will make monthly payments
during the joint lifetime of the Annuitant and a joint Annuitant. Payments
will continue during the lifetime of the surviving Annuitant and will be
computed on the basis of 100%, 50%, or 66 2/3% of the annuity payment (or
limits) in effect during their joint lifetime.

Annuity payments will be made monthly. However, if any payment would be
or become less than $50, we may change the frequency so payments are at least
$50 each. If the net Contract Value to be applied at the Annuity Date is
less than $10,000 ($3,500 for a Contract held under tax-qualified retirement
arrangements), we reserve the right to pay such amount in a lump sum.

We may require proof of age, sex, or survival of any person upon whose
continuation of life annuity payments depend.

You select the Annuity Date in the application for the Contract, and you
may change the Annuity Date by notifying us in writing of a new Annuity Date
at least 30 days prior to the current Annuity Date. The Annuity Date may not
be later than the first Contract year after the Annuitant's 90th birthday or
the maximum date permitted under applicable state law. If the Contract Owner
is 85 or older on the date of issue, the Annuity Date may not be later than
the fifth Contract year. If no Annuity Date is selected, we will assume the
latest possible Annuity Date. For a Contract held under a tax-qualified
retirement arrangement (other than an IRA), the Annuity Date generally may
not be later than (i) April 1 of the year after the year in which the Annuitant
attains age 70 1/2 or (ii) the calendar year in which the Annuitant retires
if later. For a contract held as an IRA, the Annuity Date may not be later than
April 1 of the year after the year in which the Annuitant attains age 70 1/2.

FEES AND CHARGES

CONTRACT ADMINISTRATION FEE. We deduct a Contract administration fee
from the Separate Account for services rendered in administering the
Contract. Contract administration includes preparing and issuing Contracts,
communicating with Contract Owners, maintaining Contract records and
preparing and distributing Contract Owner reports and statements. The fee is
equal to an effective annual rate of 0.15% of the daily net assets of each
Subaccount of the Separate Account. We may not increase the fee over the
duration of the Contract.

-15-
<PAGE>

MORTALITY AND EXPENSE RISK CHARGE. We deduct a mortality and expense
risk charge from the Separate Account. Mortality risk refers to risks CVI
assumes in the obligation to make annuity payments over the life time of
Annuitants and the obligation to pay minimum death benefits in the future in
a declining securities market and Contract Value. Expense risk refers to the
risk CVI assumes in the obligation not to increase administration charges
over the life of the Contract even though future expenses may increase. The
mortality and expense risk charge is equal to an annual rate of 1.25% of the
daily net assets of each Subaccount.

WITHDRAWAL CHARGE. The withdrawal charge, when applicable, permits us
to recover a portion of our expenses relating to the sale of the Contract.
Sales expenses which are not covered by the withdrawal charge are paid from
surplus in our general account, which may include revenues from our mortality
and expense risk charge. We may assess a withdrawal charge against the
purchase payments when the payments are withdrawn and, if the Contract has
been in effect less than five years, when payments are used to provide
annuity payments for less then five years. Subject to certain state
variations, the withdrawal charge will be a specified percentage of the sum
of the purchase payments paid within seven years prior to the date of
withdrawal, adjusted for any prior withdrawals. There is no charge on
withdrawals of (a) purchase payments that have been in the Contract more than
seven complete Contract years or (b) free withdrawal amounts described below.
The length of time from receipt of a purchase payment to the time of
withdrawal determines the withdrawal charge. For the purpose of calculating
the withdrawal charge, withdrawals will be deemed made first from purchase
payments on a first-in, first-out basis and then from any gain. The
withdrawal charge is applicable to withdrawals from both the Separate Account
and Fixed Account.

No withdrawal charge is applicable in the event of the death of the
Contract Owner (subject to certain state variations) or if payments are made
under an annuity option under the Contract that begins at least five years
after the effective date of the Contract and is paid under any life annuity
option, or any option with payments for a minimum of five years.

The withdrawal charge, if applicable, equals:
<TABLE>
<CAPTION>

Complete Years Since
Receipt of Payment Withdrawal Charge
--------------------- ------------------
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and thereafter 0%
</TABLE>

In addition, in certain states the following circumstances further limit
or reduce withdrawal charges: for issue ages up to 56, there is no withdrawal
charge made after you attain age 67 and later; for issue ages 57 and later,
any otherwise applicable withdrawal charge will be multiplied by a factor
ranging from 0.9 to 0 for Contract years one through 10.

A Contract Owner may make one free withdrawal per Contract year from
Contract Value of an amount up to 10% of the Contract Value (as determined on
the date of receipt of the withdrawal request).

-16-
<PAGE>

Additional withdrawals in excess of that amount in any Contract year during
the period when any withdrawal charge is applicable will be subject to the
appropriate charge as set forth above.

Withdrawals which may be authorized by you to pay compensation to your
Financial Advisor are treated as free withdrawals, and such free withdrawals
are in addition to the 10% free withdrawal you may make each Contract year.
There may, however, be certain adverse tax consequences. See "Withdrawals"
and "Federal Income Tax Considerations" in this Prospectus.

With respect to any Contract which is owned by a "charitable remainder
unitrust" or a "charitable remainder annuity trust" (both a "Charitable
Remainder Trust") within the meaning of Section 664(d) of the Internal
Revenue Code (the "Code"), CVI may, in its discretion, permit an additional
free withdrawal necessary to fund required distributions by the Charitable
Remainder Trust in any Contract year. In order for a Charitable Remainder
Trust to qualify for such an increase, the trustee or trustees of the
Charitable Remainder Trust will be required to certify: (i) that such trust
is a bona fide "charitable remainder unitrust" or a "charitable remainder
annuity trust" within the meaning of Section 664 of the Code, and that all
amounts proposed to be withdrawn will be used to make distributions required
under Section 664 of the Code for the year in which such amounts are
withdrawn or for a prior year; (ii) that the required distribution exceeds
the one free withdrawal of 10% of the Contract Value which is permitted
without a withdrawal charge; and (iii) that the funds necessary to make the
required distribution could not otherwise be made available without hardship
to the trust or its beneficiaries.

CVI also reserves the right to reduce the withdrawal charge under
certain circumstances when sales of Contracts are made to a trustee,
employer, or similar party pursuant to a retirement plan or similar
arrangement for sales of Contracts to a group of individuals if the program
results in a savings of sales expenses. The amount of reduction will depend
on such factors as the size of the group, the total amount of purchase
payments, and other factors that might tend to reduce expenses incurred in
connection with such sales. This reduction will not be unfairly
discriminatory to any Contract Owner.

PREMIUM TAXES

Some states and other governmental entities (e.g., municipalities)
charge premium taxes or similar taxes. CVI is responsible for the payment of
these taxes and will make a deduction from the value of the Contract for
them. These taxes are due either when the Contract is issued or when annuity
payments begin. It is CVI's current practice to deduct these taxes when
either annuity payments begin or upon partial or full surrender of the
Contract. CVI may in the future discontinue this practice and assess the
charge when the tax is due. Premium taxes currently range from 0% to 3.5%,
depending on the jurisdiction.

INCOME TAXES

CVI will deduct from the Contract for any income taxes which it incurs
because of the Contract. At the present time, we are not making any such
deductions.

FUND EXPENSES

See the accompanying Trust Prospectus for fees and expenses incurred by
the Funds.

-17-
<PAGE>

THE FIXED ACCOUNT

In addition to the investment options in the Separate Account, the
Contract provides for a Fixed Account, where amounts held under the Contract
may accumulate at a guaranteed interest rate and become part of our general
account. We guarantee that we will credit daily interest of at least 3% on an
annual basis, compounded annually. We may credit interest at higher rates
from time to time in our discretion. Gains or losses on amounts allocated or
transferred to Subaccounts of the Separate Account and charges against assets
held in the Separate Account, have no effect on the Fixed Account. The Fixed
Account is subject to certain transfer restrictions (e.g., in any six-month
period, a maximum of 20% of the Fixed Account Value may be transferred; this
restriction, however, is not effective until one year after the Contract
Date).

BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED
ACCOUNT ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 AND OUR GENERAL
ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. OUR
GENERAL ACCOUNT AND ANY INTERESTS HELD IN THE GENERAL ACCOUNT ARE THEREFORE
NOT SUBJECT TO THE PROVISIONS OF THESE ACTS. HENCE THIS PROSPECTUS GENERALLY
DISCUSSES ONLY THE VARIABLE PORTION OF THE CONTRACT. WE UNDERSTAND THAT THE
STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING
TO THE FIXED ACCOUNT. DISCLOSURE REGARDING THE FIXED ACCOUNT, HOWEVER, MAY
BE SUBJECT TO GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN THIS
PROSPECTUS.

BENEFICIARY

The beneficiary and any contingent beneficiary are named in the
application for the Contract. However, unless the beneficiary has been
irrevocably designated, you may change the beneficiary by written
notification to our administrative office. The change will be effective as
of the date signed, unless we have acted in reliance on your designation of
the prior beneficiary. The estate or heirs of a beneficiary who died before
payment under the Contract becomes due have no rights under the Contract. If
no beneficiary survives when payment under the Contract becomes due, payment
will be made to the Contract Owner's estate.

OWNERSHIP

As Contract Owner, you are entitled to all rights under the Contract.
Unless otherwise designated in the application for the Contract or by
endorsement to the Contract, the Contract Owner is also the Annuitant.
Spousal joint Contract Owners are allowed except in the case of a qualified
Contract. Upon the death of a joint Contract Owner, the surviving Contract
Owner will be the primary beneficiary. Any other beneficiary will be treated
as a contingent beneficiary unless otherwise stated in writing. No
contingent owner of the Contract may be named.

You may transfer ownership of the Contract to another person, if
permitted under applicable law, subject to certain conditions. A transfer of
ownership must be in writing and the new Contract Owner must appoint a
Financial Advisor and execute a power of attorney authorizing the Financial
Advisor to give us allocation and transfer instructions. Documentation for
the foregoing must be received at our administrative office before the
transfer of ownership becomes effective. A transfer of ownership does not
affect the legal validity of a designation of beneficiary.

-18-
<PAGE>

You may also pledge your Contract, if permitted by applicable law. A
collateral assignment does not change Contract ownership. The rights of a
collateral assignee have priority over the rights of a beneficiary.

An assignment or transfer may have adverse tax consequences, and therefore
you should consult a competent tax adviser before assigning or transferring your
Contract.

FEDERAL INCOME TAX CONSIDERATIONS

NOTE: CVI HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL
DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER ABOUT YOUR OWN
CIRCUMSTANCES. CVI HAS INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION
AN ADDITIONAL DISCUSSION REGARDING TAXES.

ANNUITY CONTRACTS IN GENERAL

Annuity contracts are a means of setting aside money for future needs,
usually retirement. Congress recognized how important saving for retirement
was and provided special rules in the Internal Revenue Code (the "Code") for
annuities.

Simply stated, these rules provide that you will not be taxed on the earnings
on the money held in your annuity contract until you take the money out. This
is referred to as tax-deferral. There are different rules as to how you
will be taxed depending on how you take the money out and the type of
Contract -qualified or non-qualified (see following sections).

You, as the Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs -- either as a withdrawal or as annuity
payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For annuity payments, different rules apply. A
portion of each annuity payment is treated as a partial return of your
purchase payments and will not be taxed. The remaining portion of the
annuity payment will be treated as ordinary income. How the annuity payment
is divided between taxable and non-taxable portions depends upon the period
over which the annuity payments are expected to be made. Annuity payments
received after you have received all of your purchase payments are fully
includible in income. When a non-qualified Contract is owned by a
non-natural person (e.g., corporation or certain other entities other than
tax-qualified trusts), the Contract will generally not be treated as an
annuity for tax purposes.

QUALIFIED AND NON-QUALIFIED CONTRACTS

A Contract purchased by an individual under a tax-qualified pension plan
or employer sponsored program, or as an individual retirement annuity
("IRA"), is referred to as a tax-qualified Contract. Examples of qualified
Contracts are IRAs and tax-sheltered annuities (sometimes referred to as
403(b) Contracts). A Contract which is not purchased under such a plan or
program, or is not purchased as an IRA, is referred to as a non-qualified
Contract.

-19-
<PAGE>

WITHDRAWALS -- NON-QUALIFIED CONTRACTS

If you make a withdrawal from your Contract, the Code generally treats
such a withdrawal as first coming from earnings and then from your purchase
payments. Such withdrawn earnings are includible in income.

The Code also provides that any amount received under an annuity
Contract which is included in income may be subject to a penalty. The amount
of the penalty is equal to 10% of the amount that is includible in income.
Some withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2; (2) paid after you die; (3) paid
if you become totally disabled (as that term is defined in the Code); (4)
paid in a series of substantially equal payments made annually (or more
frequently) under a lifetime annuity; (5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.

WITHDRAWALS -- QUALIFIED CONTRACTS

The above information describing the taxation of non-qualified Contracts
does not apply to qualified Contracts. There are special rules that govern
with respect to qualified Contracts. We have provided a more complete
discussion in the Statement of Additional Information.

WITHDRAWALS -- TAX-SHELTERED ANNUITIES

The Code limits the withdrawal of purchase payments made by owners from
certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes
disabled (as that term is defined in the Code); (5) in the case of hardship;
or (6) made pursuant to a qualified domestic relations order.

DIVERSIFICATION

The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as
an annuity contract. CVI believes that the Funds are being managed so as to
comply with such requirements.

INVESTOR CONTROL

Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not CVI
would be considered the owner of the shares of the Funds. If this occurs, it
will result in the loss of the favorable tax treatment for the Contract. It
is unknown to what extent under federal tax law owners are permitted to
select funds, to make transfers among the funds or the number and type of
funds owners may select from. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new
position, it may be applied retroactively. This would mean that you, as the
owner of the Contract, could be treated as the owner of the Funds.

Due to the uncertainty in this area, CVI reserves the right to modify
the Contract as reasonably deemed necessary to maintain favorable tax
treatment.

-20-
<PAGE>

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
Page
-----
<S> <C>
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Comparisons of Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 3
Yields (U.S. Government Money Market Fund). . . . . . . . . . . . . . . . . . 5

DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Multiple Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Contracts Owned by Other than Natural Persons . . . . . . . . . . . . . . . . 8
Tax Treatment of Assignments. . . . . . . . . . . . . . . . . . . . . . . . . 9
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Tax Treatment of Withdrawals - Non-Qualified Contracts. . . . . . . . . . . . 9
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Tax Treatment of Withdrawals - Qualified Contracts. . . . . . . . . . . . . . 12
Tax-Sheltered Annuities - Withdrawal Limitations. . . . . . . . . . . . . . . 13

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>

-21-

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

NOVEMBER 2, 1998

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)
ADMINISTRATIVE OFFICE: 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032
PHONE: (800) 437-3506

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
FLEXIBLE PURCHASE PAYMENTS

THIS STATEMENT OF ADDITIONAL INFORMATION (WHICH IS NOT A PROSPECTUS)
SHOULD BE READ IN CONJUNCTION WITH THE CURRENT PROSPECTUS FOR RYDEX ADVISOR
VARIABLE ANNUITY ACCOUNT (THE "SEPARATE ACCOUNT"), DATED NOVEMBER 2, 1998. YOU
MAY OBTAIN A COPY OF THE CURRENT PROSPECTUS BY WRITING TO OR CALLING CONSECO
EQUITY SALES, INC., 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032,
TELEPHONE: (800) 437-3506

TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Information. . . . . . . . . . . . . . . . . . . . . . . . 2
Comparisons of Total Return . . . . . . . . . . . . . . . . . . . . . . 3
Yields (U.S. Government Money Market Fund). . . . . . . . . . . . . . . 5

DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . 6

FEDERAL INCOME TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Multiple Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Contracts Owned by Other than Natural Persons . . . . . . . . . . . . . 8
Tax Treatment of Assignments. . . . . . . . . . . . . . . . . . . . . . 9
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . 9
Tax Treatment of Withdrawals - Non-Qualified Contracts. . . . . . . . . 9
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Tax Treatment of Withdrawals - Qualified Contracts. . . . . . . . . . .12
Tax-Sheltered Annuities - Withdrawal Limitations. . . . . . . . . . . .13

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .13

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
</TABLE>

<PAGE>

PERFORMANCE INFORMATION

TOTAL RETURN INFORMATION

The following tables show investment returns of the subaccounts of the
Separate Account (other than the U.S. Government Money Market Fund), assuming
different amounts invested, different periods of time amounts are invested, and
withdrawal and non-withdrawal of amounts at the end of the periods. Past
performance of a subaccount does not necessarily indicate how a subaccount will
perform in the future.

The average annual rates of total return are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
n
the following formula: P(1 + T) = ERV. In the formula, P is a hypothetical
purchase payment of $1,000; T is the average annual total return; n is the
number of years; and ERV is the withdrawal value at the end of the period shown.

Table 1: Amount Invested in Subaccount: $1,000 - Withdrawn at End of Period

<TABLE>
<CAPTION>
Date of
Commencement of Average Annual Total Return
Continuous For the Periods Ending
Operations November 2, 1998
--------------- -----------------------------------
Since Commencement of
One Year Continuous Operations
-------- ---------------------
<S> <C> <C> <C>
Nova Subaccount 5/7/97

Ursa Subaccount 6/10/97

OTC Subaccount 5/7/97

Precious Metals Subaccount 5/29/97

U.S. Government Bond Subaccount 8/18/98

Juno Subaccount 5/7/97
</TABLE>

-2-

<PAGE>

Table 2: Amount Invested in Subaccount: $1,000 -- Not Withdrawn at the End of
Period

Ursa Subaccount* 6/10/97

OTC Subaccount 5/7/97

Precious Metals Subaccount 5/29/97

U.S. Government Bond Subaccount* 8/18/97

Juno Subaccount* 5/7/97
</TABLE>

- -----------
* Due to the nature of the investment activity of the Funds underlying the
Subaccounts, there were discrete periods when certain Subaccounts had zero
net assets. The discrete periods for the Ursa Subaccount, and the
investment return for those periods, were as follows: 5/7/97 to 5/21/97
(___%) and 5/24/97 to 6/3/97 (___%). The discrete periods for the U.S.
Government Bond Subaccount. The discrete periods, and the investment
return for those periods, were as follows: 5/29/97 to 6/5/97 (___%),
6/24/97 to 7/14/97 (%___) and 7/29/97 to 8/12/97 (___%). The discrete
periods for Juno Subaccount, and the investment return for those periods,
were as follows: 5/7/97 to 6/3/97 (___%), 6/16/97 to 7/2/97 (___%), 7/7/97
(___%), 7/24/97 to 8/11/97 (___%), 8/26/97 to 10/19/97 (___%), 10/22/97 to
12/11/97 (___%), 1/20/98 to 1/25/98 (___%), 2/2/98 (___%), 2/23/98 to
2/25/98 (___%) and 3/2/98 (___%).

COMPARISONS OF TOTAL RETURN

Performance information for each of the Separate Account subaccounts
contained in reports to Contract Owners or prospective Contract Owners,
advertisements, and other promotional literature may be compared to the record
of various unmanaged indexes for the same period. In conjunction with
performance reports, promotional literature, and/or analyses of Contract Owner
service for a subaccount, comparisons of the performance information of the
subaccount for a given period to the performance of recognized, unmanaged
indexes for the same period may be made. Such indexes include, but are not
limited to, ones provided by Dow Jones & Company, Standard & Poor's Corporation,
Lipper Analytical Services, Inc., Shearson Lehman Brothers, National Association
of Securities Dealers, Inc., The Frank Russell Company, Value Line Investment
Survey, the American Stock Exchange, the Philadelphia Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times-Stock
Exchange, and the Nikkei Stock Average and Deutcher Aktienindex, all of which
are unmanaged market indicators. Such comparisons can be a useful measure of
the quality of a subaccount's investment performance.

-3-

<PAGE>

In particular, performance information for the Nova subaccount, the Ursa
subaccount, and the Precious Metals subaccount may be compared to various
unmanaged indexes, including, but not limited to, the Standard & Poor's 500
Composite Stock Price Index-TM- (the "S&P 500 Index") or the Dow Jones
Industrial Average. Performance information for the Precious Metals subaccount
also may be compared to the current benchmark for the Precious Metals
subaccount, Philadelphia Stock Exchange Gold/Silver Index-TM- (the "XAU Index").
Performance information for the OTC subaccount may be compared to various
unmanaged indexes, including, but not limited to the current benchmark for the
OTC Fund, NASDAQ 100 Index-TM-, and the NASDAQ Composite Index-TM-. The NASDAQ
Composite Index-TM- comparison may be provided to show how the OTC subaccount's
total return compares to the record of a broad average of over-the-counter stock
prices over the same period. The OTC Fund has the ability to invest in
securities not included in the NASDAQ 100 Index-TM- or the NASDAQ Composite
Index-TM-, and the OTC Fund's investment portfolio may or may not be similar in
composition to NASDAQ 100 Index-TM- or the NASDAQ Composite Index-TM-. The
NASDAQ Composite Index-TM- is based on the prices of an unmanaged group of
stocks and, unlike the OTC Fund's returns, the returns of the NASDAQ Composite
Index-TM-, and such other unmanaged indexes, may assume the reinvestment of
dividends, but generally do not reflect payments of brokerage commissions or
deductions for operating costs and other expenses of investing. Performance
information for the U.S. Government Bond subaccount and the Juno subaccount may
be compared to the price movement of the current long treasury bond (the "Long
Bond") and to various unmanaged indexes, including, but not limited to, the
Shearson Lehman Government (LT) Index-TM-. Such unmanaged indexes may assume
the reinvestment of dividends, but generally do not reflect deductions for
operating costs and expenses.

In addition, rankings, ratings, and comparisons of investment performance
and/or assessments of the quality of Contract Owner service appearing in
publications such as MONEY, FORBES, KIPLINGER'S MAGAZINE, PERSONAL INVESTOR,
MORNINGSTAR, INC., THE MORNINGSTAR VARIABLE ANNUITY/LIFE REPORTER, VARDS, and
similar sources which utilize information compiled internally or by Lipper
Analytical Services, Inc., may be provided.

From time to time, each subaccount, other than the U.S. Government Money
Market subaccount, also may include in such advertising a total return figure
that is not calculated according to the formula set forth above in order to
compare more accurately the performance of the subaccount with other measures of
investment return. For example, in comparing the total return of a subaccount
with data published by Lipper Analytical Services, Inc., or with the performance
of the S&P 500 Index or the Dow Jones Industrial Average for each of the Nova
subaccount and the Ursa subaccount, the NASDAQ 100 Index-TM- for the OTC
subaccount, the XAU Index for the Precious Metals subaccount, and the Lehman
Government (LT) Index for the U.S. Government Bond subaccount and the Juno
subaccount, Conseco Variable Insurance Company ("CVI") (formerly Great American
Reserve Insurance Company) may calculate for each subaccount the aggregate total
return for the specified periods of time by assuming the allocation of $10,000
to the subaccount and assuming the reinvestment of each dividend or other
distribution at Accumulation Unit value on the reinvestment date. Percentage
increases are

-4-

<PAGE>

determined by subtracting the initial value of the investment from the ending
value and by dividing the remainder by the beginning value. Each subaccount may
show non-standardized total returns and average annual total returns that do not
include the withdrawal charge (ranging from 7% to 0%) which, if included, would
reduce total return. Such alternative total return information will be given no
greater prominence in such advertising than the information prescribed under SEC
Rules.

YIELDS (U.S. GOVERNMENT MONEY MARKET FUND)

The "yield" and "effective yield" of the U.S. Government Money Market Fund
subaccount for the seven days ended November 2, 1998 were ___% and ___%,
respectively.

The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical preexisting account having a balance of
one accumulation unit of the Subaccount at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from Contract Owner
accounts (if any), and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting figure carried
to at least the nearest hundredth of 1%. The hypothetical charge reflects
deductions from Contract Owners' accounts in proportion to the length of the
base period.

The effective yield is obtained by taking the base period return as
computed above, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield - [(base period return
365/7
+1) ] -1.

The yields do not reflect the withdrawal charge, which grades downward from
7% to 0% of purchase payments over a seven year period.

THE YIELDS ON AMOUNTS HELD IN THE MONEY MARKET SUBACCOUNT NORMALLY WILL
FLUCTUATE ON A DAILY BASIS. THEREFORE, THE STATED YIELDS FOR ANY GIVEN PERIOD
ARE NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS.

------------------------

THE PERFORMANCE INFORMATION SET FORTH ABOVE IS FOR PAST PERFORMANCE AND IS
NOT AN INDICATION OR REPRESENTATION OF FUTURE PERFORMANCE.

-5-

<PAGE>

DISTRIBUTION OF CONTRACTS

Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel,
Indiana 46032, is the principal underwriter of the Contracts. Prior to
November 2, 1998, PADCO Financial Services, Inc., was the principal underwriter
of the Contracts. The offering of the Contracts is continuous, although CVI
reserves the right to suspend the offer and sale of the Contracts whenever, in
its opinion, market or other conditions make a suspension appropriate. CES is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended,
and is a member of the National Association of Securities Dealers, Inc. The
Contracts are sold by authorized broker-dealers, and their registered
representatives, including registered representatives of CES. The
broker-dealers and their registered representatives are also licensed insurance
agents of CVI. CVI and its principal underwriter pay commissions to authorized
broker-dealers not exceeding 6.0% of purchase payments.

FEDERAL INCOME TAX CONSIDERATIONS

GENERAL

NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON CVI'S UNDERSTANDING OF CURRENT
FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. CVI CANNOT PREDICT
THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE. PURCHASERS ARE
CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY OF SUCH
CHANGES. CVI DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS. PURCHASERS
BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS "ANNUITY
CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER UNDERSTOOD
THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL RULES NOT
DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT
HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.

Section 72 of the Code governs taxation of annuities in general. A
Contract Owner is not taxed on increases in the value of a Contract until
distribution occurs, either in the form of a lump sum payment or as annuity
payments under the annuity option selected. For a lump sum payment received as
a total withdrawal (total surrender), the recipient is taxed on the portion of
the payment that exceeds the cost basis of the Contract. For non-qualified
Contracts, this cost basis is generally the purchase payments, while for
qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.

For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by the
ratio that the cost basis of the Contract

-6-

<PAGE>

(adjusted for any period or refund feature) bears to the expected return under
the Contract. Payments received after the investment in the Contract has been
recovered (i.e. when the total of the excludable amount equals the investment in
the Contract) are fully taxable. The taxable portion is taxed at ordinary
income tax rates. For certain types of qualified plans there may be no cost
basis in the Contract within the meaning of Section 72 of the Code. Contract
Owners, annuitants and beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any distributions.

CVI is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from CVI, and
its operations form a part of CVI.

DIVERSIFICATION

Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contract meet
the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated investment
company and no more than fifty-five percent (55%) of the total assets consist of
cash, cash items, U.S. Government securities and securities of other regulated
investment companies.

On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.

The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."

-7-

<PAGE>

CVI intends that all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.

The Treasury Department has indicated that the diversification Regulations
do not provide guidance regarding the circumstances in which Contract Owner
control of the investments of the Separate Account will cause the Contract Owner
to be treated as the owner of the assets of the Separate Account, thereby
resulting in the loss of favorable tax treatment for the Contract. At this time
it cannot be determined whether additional guidance will be provided and what
standards may be contained in such guidance.

The amount of Contract Owner control which may be exercised under the
Contract is different in some respects from the situations addressed in
published rulings issued by the Internal Revenue Service in which it was held
that the policy owner was not the owner of the assets of the separate account.
It is unknown whether these differences, such as the Contract Owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the Contract Owner to be considered as the owner of the
assets of the Separate Account resulting in the imposition of federal income tax
to the Contract Owner with respect to earnings allocable to the Contract prior
to receipt of payments under the Contract.

In the event any forthcoming guidance or ruling is considered to set forth
a new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Contract
Owners being retroactively determined to be the owners of the assets of the
Separate Account.

Due to the uncertainty in this area, CVI reserves the right to modify the
Contract in an attempt to maintain favorable tax treatment.

MULTIPLE CONTRACTS

The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Contract Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.

CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS

Under Section 72(u) of the Code, the investment earnings on premiums for
the Contracts will be taxed currently to the Contract Owner if the Contract
Owner is a non-natural person, e.g., a corporation or certain other entities.
Such Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to a Contract

-8-

<PAGE>

held by a trust or other entity as an agent for a natural person nor to
Contracts held by qualified plans. Purchasers should consult their own tax
counsel or other tax adviser before purchasing a Contract to be owned by a
non-natural person.

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable event. Contract
Owners should therefore consult competent tax advisers should they wish to
assign or pledge their Contracts.

INCOME TAX WITHHOLDING

All distributions or the portion thereof which is includible in the gross
income of the Contract Owner are subject to federal income tax withholding.
Generally, amounts are withheld from periodic payments at the same rate as
wages and at the rate of 10% from non-periodic payments. However, the Contract
Owner, in most cases, may elect not to have taxes withheld or to have
withholding done at a different rate.

Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a mandatory
20% withholding for federal income tax. The 20% withholding requirement
generally does not apply to: a) a series of substantially equal payments made
at least annually for the life or life expectancy of the participant or joint
and last survivor expectancy of the participant and a designated beneficiary or
for a specified period of 10 years or more; or b) distributions which are
required minimum distributions; or c) the portion of the distributions not
includible in gross income (i.e. returns of after-tax contributions).
Participants should consult their own tax counsel or other tax adviser regarding
withholding requirements.

TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS

Section 72 governs treatment of distributions from annuity contracts.
Section 72 provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. Section 72
further provides that a ten percent (10%) penalty will apply to the income
portion of any premature distribution. However, the penalty is not imposed
on amounts received: (a) after the taxpayer reaches age 59 1/2; (b) after the
death of the Contract Owner; (c) if the taxpayer is totally disabled (for
this purpose disability is as defined in Section 72(m)(7) of the Code); (d)
in a series of substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy) of the taxpayer or
for the joint lives (or joint life expectancies) of the taxpayer and his or
her beneficiary; (e) under an immediate annuity; or (f) which are allocable
to purchase payments made prior to August 14, 1982.

-9-

<PAGE>

The above information does not apply to qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)

QUALIFIED PLANS

The Contracts offered herein are designed to be suitable for use under
various types of qualified plans. Taxation of participants in each qualified
plan varies with the type of plan and terms and conditions of each specific
plan. Contract Owners, annuitants and beneficiaries are cautioned that benefits
under a qualified plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into CVI's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of
the types of qualified plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
qualified plan.

Contracts issued pursuant to qualified plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)

On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE
V. NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by CVI in connection with
certain qualified plans will utilize annuity tables which do not differentiate
on the basis of sex. Such annuity tables will also be available for use in
connection with certain non-qualified deferred compensation plans.

a. Tax-Sheltered Annuities

Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employees until the employees receive distributions
from the

-10-

<PAGE>

Contracts. The amount of contributions to the tax-sheltered annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code
sets forth additional restrictions governing such items as transferability,
distributions, nondiscrimination and withdrawals. (See "Tax Treatment of
Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not permitted under
these Contracts. Any employee should obtain competent tax advice as to the
tax treatment and suitability of such an investment.

b. Individual Retirement Annuities

Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed
to an IRA which will be deductible from the individual's gross income.
These IRAs are subject to limitations on eligibility, contributions,
transferability and distributions. (See "Tax Treatment of Withdrawals -
Qualified Contracts" below.) Under certain conditions, distributions from
other IRAs and other qualified plans may be rolled over or transferred on a
tax-deferred basis into an IRA. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including the
requirement that certain informational disclosure be given to persons
desiring to establish an IRA. Purchasers of Contracts to be qualified as
Individual Retirement Annuities should obtain competent tax advice as to
the tax treatment and suitability of such an investment.

Roth IRAs

Beginning in 1998, individuals may purchase a new type of non-deductible
IRA, known as a Roth IRA. Purchase payments for a Roth IRA are limited to
a maximum of $2,000 per year. Lower maximum limitations apply to
individuals with adjusted gross incomes between $95,000 and $110,000 in the
case of single taxpayers, between $150,000 and $160,000 in the case of
married taxpayers filing joint returns, and between $0 and $10,000 in the
case of married taxpayers filing separately. An overall $2,000 annual
limitation continues to apply to all of a taxpayer's IRA contributions,
including Roth IRA and non-Roth IRAs.

Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual hold a Roth IRA
for at least five years and, in addition, that the distribution be held
either after the individual reaches age 59 1/2, on the individual's death
or disability, or as a qualified first-time home purchase, subject to a
$10,000 lifetime maximum, for the individual, a spouse, child, grandchild,
or ancestor. Any distribution which is not a qualified distribution is
taxable to the extent of earnings in the distribution. Distributions are
treated as made from contributions first and therefore no distributions are
taxable until distributions exceed the amount of

-11-

<PAGE>

contributions and conversions to the Roth IRA. The 10% penalty tax and the
regular IRA exceptions to the 10% penalty tax apply to taxable
distributions from a Roth IRA. In addition, distributions of amounts
attributable to conversion deposits (i.e. rollover contributions from a
Non-Roth IRA to a Roth IRA) held for less than five years will also be
subject to the penalty tax.

Amounts may be rolled over from one Roth IRA to another Roth IRA.
Furthermore, an individual may make a rollover contribution from a non-Roth
IRA to a Roth IRA, unless the individual has adjusted gross income over
$100,000 or the individual is a married taxpayer filing a separate return.
The individual must pay tax on any portion of the IRA being rolled over
that represents income or a previously deductible IRA contribution.
However, for rollovers in 1998, the individual may pay that tax ratably
over the four taxable year period beginning with tax year 1998.

Purchasers of Contracts to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.

TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS

In the case of a withdrawal under a qualified Contract, a ratable portion
of the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 403(b)
(Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement Annuities).
To the extent amounts are not includible in gross income because they have been
rolled over to an IRA or to another eligible qualified plan, no tax penalty will
be imposed. The tax penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the Contract Owner reaches
age 59 1/2; (b) distributions following the death or disability of the Contract
Owner (for this purpose disability is as defined in Section 72(m) (7) of the
Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the Contract Owner or the joint lives (or
joint life expectancies) of such Contract Owner and his or her designated
Beneficiary; (d) distributions to a Contract Owner who has separated from
service after he has attained age 55; (e) distributions made to the Contract
Owner to the extent such distributions do not exceed the amount allowable as a
deduction under Code Section 213 to the Contract Owner or Annuitant (as
applicable) for amounts paid during the taxable year for medical care; (f)
distributions made to an alternate payee pursuant to a qualified domestic
relations order; (g) distributions from an Individual Retirement Annuity for the
purchase of medical insurance (as described in Section 213(d)(1)(D) of the Code)
for the Contract Owner and his or her spouse and dependents if the Contract
Owner has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Contract Owner has been re-employed for
at least 60 days); (h) distributions from an Individual Retirement Annuity made
to the Contract Owner to the extent such distributions do not exceed the
qualified higher education expenses (as defined in Section 72(t)(7) of the Code)
of the Contract Owner for the taxable year; and (i) distributions from an
Individual Retirement Annuity

-12-

<PAGE>

made to the Contract Owner which are qualified first-time home buyer
distributions (as defined in Section 72(t)(8)of the Code.) The exceptions stated
in (d) and (f) above do not apply in the case of an Individual Retirement
Annuity. The exception stated in (c) above applies to an Individual Retirement
Annuity without the requirement that there be a separation from service.

Generally, distributions from a qualified plan must begin no later than
April 1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. 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. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.

TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS

The Code limits the withdrawal of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in Section 403(b)(11)
of the Code) to circumstances only: (1) when the Contract Owner attains age 59
1/2; (2) when the Contract Owner separates from service; (3) when the Contract
Owner dies; (4) when the Contract Owner becomes disabled (within the meaning of
Section 72(m)(7) of the Code); (5) in the case of hardship; or (6) pursuant to
the terms of a Qualified Domestic Relations Order. However, withdrawals for
hardship are restricted to the portion of the Contract Owner's Contract Value
which represents contributions made by the Contract Owner and does not include
any investment results. The limitations on withdrawals became effective on
January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect transfers between Tax-Sheltered Annuity Plans.
Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.

INDEPENDENT ACCOUNTANTS

The financial statements of CVI as of December 31, 1997 and for the two
years then ended, included in this Statement of Additional Information, have
been audited by PricewaterhouseCoopers LLP, Indianapolis, IN 46282-0002, as
stated in their report herein.

FINANCIAL STATEMENTS

The financial statements of CVI are included on the following pages. They
should only be considered as bearing on the ability of the Company to meet its
obligations under the Contracts.

-13-
<PAGE>
PART A

INFORMATION REQUIRED IN A PROSPECTUS

<PAGE>

PART B

INFORMATION REQUIRED IN A STATEMENT

OF ADDITIONAL INFORMATION

<PAGE>

PART C

OTHER INFORMATION

<PAGE>

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS OF THE REGISTRANT:

Statement of Net Assets as of November 2, 1998 -- to be filed by
amendment.
Notes to Statement of Net Assets -- to be filed by amendment.

FINANCIAL STATEMENTS OF THE DEPOSITOR:

Financial Statements of Conseco Variable Insurance Company,
formerly Great American Reserve Insurance Company. Filed herewith.
Notes to Financial Statements. Filed herewith.

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
Great American Reserve Insurance Company

We have audited the accompanying balance sheet of Great American Reserve
Insurance Company (the "Company") as of December 31, 1997 and 1996, and the
related statements of operations, shareholder's equity and cash flows for the
years ended December 31, 1997 and 1996 and the four months ended December 31,
1995. We have also audited the accompanying statement of operations,
shareholder's equity and cash flows of the Company for the eight months ended
August 31, 1995 based on the basis of accounting applicable to periods prior to
the adoption of push down accounting upon Conseco, Inc.'s purchase of all common
shares of the Company it did not previously own (see note 1 of the notes to
financial statements regarding the adoption of push down accounting). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great American Reserve
Insurance Company as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996,
the four months ended December 31, 1995 and the eight months ended August 31,
1995, in conformity with generally accepted accounting principles.

/S/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.

Indianapolis, Indiana
April 20, 1998
F-1

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

BALANCE SHEET
December 31, 1997 and 1996
(Dollars in millions)

ASSETS

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Investments:
Actively managed fixed maturities at fair value (amortized cost:
1997 - $1,705.2; 1996 - $1,810.8)............................................... $1,734.0 $1,795.1
Mortgage loans..................................................................... 57.2 77.3
Credit-tenant loans................................................................ 88.9 93.4
Policy loans....................................................................... 80.6 80.8
Other invested assets ............................................................. 88.2 89.0
Short-term investments............................................................. 49.5 14.8
Assets held in separate accounts................................................... 402.1 232.4
-------- --------

Total investments............................................................ 2,500.5 2,382.8

Accrued investment income.............................................................. 30.5 32.9
Cost of policies purchased............................................................. 101.6 143.0
Cost of policies produced.............................................................. 60.7 38.2
Reinsurance receivables................................................................ 21.9 25.7
Goodwill (net of accumulated amortization: 1997 - $13.2; 1996 - $11.7)................. 48.2 49.7
Other assets........................................................................... 8.3 8.2
-------- --------

Total assets................................................................. $2,771.7 $2,680.5
======== ========
</TABLE>

(continued on next page)

The accompanying notes are an
integral part of the financial
statements.

F-2

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

BALANCE SHEET (Continued)
December 31, 1997 and 1996
(Dollars in millions, except per share amount)

LIABILITIES AND SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Liabilities:
Insurance liabilities:
Interest sensitive products...................................................... $1,522.1 $1,636.5
Traditional products............................................................. 248.3 251.5
Claims payable and other policyholder funds...................................... 62.5 69.5
Liabilities related to separate accounts......................................... 402.1 232.4
Income tax liabilities............................................................. 44.2 29.8
Investment borrowings.............................................................. 61.0 48.4
Other liabilities.................................................................. 14.6 15.5
-------- --------

Total liabilities.......................................................... 2,354.8 2,283.6
-------- --------

Shareholder's equity:
Common stock and additional paid-in capital (par value $4.80 per share, 1,065,000
shares authorized, 1,043,565 shares issued and outstanding).................... 380.8 380.8
Accumulated other comprehensive income:
Unrealized appreciation (depreciation) of fixed maturity securities (net of
applicable deferred income taxes: 1997 - $4.4; 1996 - $(2.4))............... 8.2 (4.4)
Unrealized appreciation (depreciation) of other investments (net of applicable
deferred income taxes: 1997 - $.3; 1996 - $(.1))............................ .5 (.2)
Retained earnings.................................................................. 27.4 20.7
-------- --------

Total shareholder's equity................................................. 416.9 396.9
-------- --------

Total liabilities and shareholder's equity................................. $2,771.7 $2,680.5
======== ========
</TABLE>

The accompanying notes are an
integral part of the financial
statements.

F-3
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

STATEMENT OF OPERATIONS
(Dollars in millions)
<TABLE>
<CAPTION>
Prior basis
------------
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Insurance policy income............................... $ 75.7 $ 81.4 $ 31.8 $ 60.5
Net investment income................................. 222.6 218.4 74.2 136.4
Net investment gains.................................. 13.3 2.7 12.5 7.3
------- ------- ------ -------

Total revenues................................... 311.6 302.5 118.5 204.2
------- ------- ------ -------

Benefits and expenses:
Insurance policy benefits............................. 56.5 54.9 18.9 45.9
Change in future policy benefits...................... (4.8) (3.7) .2 (4.3)
Amounts added to annuity and financial product
policyholder account balances:
Interest......................................... 83.6 93.8 32.9 66.7
Other amounts added to variable annuity products 55.7 35.6 11.3 7.9
Interest expense on investment borrowings............. 4.0 6.2 1.0 3.6
Amortization.......................................... 27.1 20.3 15.3 16.0
Other operating costs and expenses.................... 28.2 54.3 13.1 23.7
------- ------- ------ -------

Total benefits and expenses...................... 250.3 261.4 92.7 159.5
------- ------- ------ -------

Income before income taxes....................... 61.3 41.1 25.8 44.7

Income tax expense........................................ 22.1 15.4 9.7 16.5
------- ------- ------ -------

Net income....................................... $ 39.2 $ 25.7 $ 16.1 $ 28.2
======= ======= ====== ======
</TABLE>

The accompanying notes are an
integral part of the financial
statements.

F-4

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

STATEMENT OF SHAREHOLDER'S EQUITY
(Dollars in millions)
<TABLE>
<CAPTION>

Common stock Accumulated other
and additional comprehensive Retained
Total paid-in capital income earnings
----- --------------- ------ --------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 (a)............................. $364.9 $339.7 $(55.1) $80.3

Comprehensive income, net of tax:
Net income (a)........................................ 28.2 - - 28.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income taxes of
34.1) (a)........................................... 59.0 - 59.0 -
------

Total comprehensive income (a).................... 87.2

Dividends on common stock (a)........................... (41.2) - - (41.2)
Adjustment of balance due to new accounting basis....... 5.1 41.1 (2.0) (34.0)
------ ------ ------ -----

Balance, August 31, 1995................................... 416.0 380.8 1.9 33.3

Comprehensive income, net of tax:
Net income............................................ 16.1 - - 16.1
Change in unrealized appreciation (depreciation) of
securities (net of applicable income
taxes of $6.1)................................... 10.5 - 10.5 -
------

Total comprehensive income........................ 26.6
------ ------ ------ -----

Balance, December 31, 1995................................. 442.6 380.8 12.4 49.4

Comprehensive income, net of tax:
Net income............................................ 25.7 - - 25.7
Change in unrealized appreciation (depreciation) of
securities (net of applicable income
taxes of ($9.7)).................................... (17.0) - (17.0) -
------

Total comprehensive income........................ 8.7

Dividends on common stock............................... (54.4) - - (54.4)
------ ------ ------ ------

Balance, December 31, 1996................................. 396.9 380.8 (4.6) 20.7

Comprehensive income, net of tax:
Net income............................................ 39.2 - - 39.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income taxes of $7.2). 13.3 - 13.3 -
------

Total comprehensive income........................ 52.5 - - -

Dividends on common stock............................... (32.5) - - (32.5)
------ ------ ------ -----

Balance, December 31, 1997................................. $416.9 $380.8 $ 8.7 $ 27.4
====== ====== ====== ======
</TABLE>

(a) Prior basis.

The accompanying notes are an
integral part of the financial
statements.

F-5

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

STATEMENT OF CASH FLOWS
(Dollars in millions)

<TABLE>
<CAPTION>
Prior basis
------------
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 39.2 $ 25.7 $ 16.1 $ 28.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization..................................... 27.1 20.3 15.3 16.0
Income taxes..................................... 6.7 (3.9) 2.3 2.9
Insurance liabilities............................ (60.9) (40.5) (25.8) (14.0)
Amounts added to annuity and financial
product policyholder account balances......... 139.3 129.4 44.2 74.6
Fees charged to insurance liabilities............ (31.3) (32.8) (10.3) (22.2)
Accrual and amortization of investment income.... .3 3.1 3.2 (1.8)
Deferral of cost of policies produced............ (31.8) (13.2) (3.0) (6.6)
Investment gains................................. (13.3) (2.7) (12.5) (7.3)
Other............................................ (4.6) (8.8) (8.9) (3.2)
--------- -------- ------ -------

Net cash provided (used) by operating
activities................................. 70.7 76.6 20.6 66.6
--------- -------- ------ -------

Cash flows from investing activities:
Sales of investments.................................. 755.2 988.9 513.2 406.5
Maturities and redemptions............................ 150.4 101.7 60.4 57.5
Purchases of investments.............................. (753.6) (954.2) (532.2) (476.2)
--------- -------- ------- -------

Net cash provided (used) by investing
activities................................ 152.0 136.4 41.4 (12.2)
--------- -------- ------ -------

Cash flows from financing activities:
Deposits to insurance liabilities..................... 255.9 169.8 50.8 104.4
Cash paid in reinsurance recapture ................... - - (71.1) -
Investment borrowings................................. 12.6 (35.8) (36.8) 121.0
Withdrawals from insurance liabilities................ (424.0) (306.7) (71.9) (166.3)
Dividends paid on common stock........................ (32.5) (44.5) - (41.2)
--------- ------- -------- -------

Net cash provided (used) by
financing activities...................... (188.0) (217.2) (129.0) 17.9
--------- -------- -------- -------

Net increase (decrease) in short-term
investments............................... 34.7 (4.2) (67.0) 72.3

Short-term investments, beginning of period............... 14.8 19.0 86.0 13.7
--------- -------- -------- -------

Short-term investments, end of period..................... $ 49.5 $ 14.8 $ 19.0 $ 86.0
========= ======== ======== =======
</TABLE>

The accompanying notes are an
integral part of the financial
statements.

F-6

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Organization and Basis of Presentation

Great American Reserve Insurance Company (the "Company") markets
tax-qualified annuities and certain employee benefit- related insurance products
through professional independent agents. Since August 1995, the Company has been
a wholly owned subsidiary of Conseco, Inc. ("Conseco"), a financial services
holding company engaged in the development, marketing and administration of
supplemental health insurance, annuity, individual life insurance, individual
and group major medical insurance and other insurance products. During 1994,
Conseco effectively owned 36 percent of the Company, through its ownership
interest in CCP Insurance, Inc. ("CCP"), a holding company organized for
companies previously acquired by Conseco Capital Partners, Inc. (the
"Partnership"), a limited partnership organized by Conseco. The Company was
acquired by the Partnership in 1990 (the "Partnership Acquisition"). During
1995, Conseco's ownership in CCP (and in the Company) increased to 49 percent as
a result of purchases of CCP common stock by CCP and Conseco. In August 1995,
Conseco completed the purchase of the remaining shares of CCP common stock it
did not already own in a transaction pursuant to which CCP was merged with
Conseco, with Conseco being the surviving corporation (the "Conseco
Acquisition").

The accompanying financial statements give effect to "push down" purchase
accounting to reflect the Partnership Acquisition and the Conseco Acquisition.
As a result of applying "push down" purchase accounting: (i) the Company's
financial position and results of operations for periods subsequent to the
Partnership Acquisition and before the Conseco Acquisition (the "prior basis")
reflect the Partnership's cost to acquire the Company's asset and liability
accounts based upon their estimated fair values at the purchase date; and (ii)
the Company's financial position and results of operations for periods
subsequent to the Conseco Acquisition reflect Conseco's cost to acquire the
Company's asset and liability accounts based upon their estimated fair values at
the purchase dates.

The effect of the adoption of the new basis of accounting on the Company's
balance sheet accounts on August 31, 1995, was as follows (dollars in millions):
<TABLE>
<CAPTION>
Debit
(Credit)
--------
<S> <C>
Cost of policies purchased.............................................. $ 59.0
Cost of policies produced .............................................. (27.0)
Goodwill................................................................ (15.1)
Insurance liabilities................................................... (1.2)
Income tax liabilities.................................................. (11.9)
Other................................................................... 1.3
Common stock and additional paid-in capital............................. (41.1)
Net unrealized appreciation of fixed maturity securities................ 1.4
Net unrealized appreciation of other investments........................ .6
Retained earnings....................................................... 34.0
</TABLE>

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"), which differ in some respects
from statutory accounting practices followed in the preparation of financial
statements submitted to state insurance departments. As such, they include
amounts based on informed estimates and judgment, with consideration given to
materiality. Many estimates and assumptions are utilized in calculating
amortized value and recoverability of securities, cost of policies produced,
cost of policies purchased, goodwill, insurance liabilities, guaranty fund
assessment accruals, liabilities for litigation and deferred income taxes.
Actual results could differ from reported results using those estimates. Certain
amounts from the 1996 financial statements and notes have been reclassified to
conform with the 1997 presentation.

Investments

Fixed maturity investments are securities that mature more than one year
after issuance. They include bonds, notes receivable and preferred stocks with
mandatory redemption features and are classified as follows:

F-7
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

Actively managed - fixed maturity securities that may be sold prior to
maturity due to changes that might occur in market interest rates,
issuer credit quality or the Company's liquidity requirements. Actively
managed fixed maturity securities are carried at estimated fair value
and the unrealized gain or loss is recorded net of tax and related
adjustments described below as a component of shareholder's equity.

Trading - fixed maturity securities are bought and held principally for
the purpose of selling them in the near term. Trading securities are
carried at estimated fair value. Unrealized gains or losses are
included in net investment gains (losses). The Company held $.9 million
of trading securities at December 31, 1997, which are included in other
invested assets. The Company did not hold any trading securities at
December 31, 1996 or 1995.

Held to maturity - fixed maturity securities which the Company has the
ability and positive intent to hold to maturity, and are carried at
amortized cost. The Company may dispose of these securities if the
credit quality of the issuer deteriorates, if regulatory requirements
change or under other unforeseen circumstances. The Company has not
held any securities in this classification during 1997, 1996 or 1995.

Anticipated returns, including investment gains and losses, from the
investment of policyholder balances are considered in determining the
amortization of the cost of policies purchased and the cost of policies
produced. When actively managed fixed maturity securities are stated at
estimated fair value, an adjustment to the cost of policies purchased and the
cost of policies produced may be necessary if a change in amortization would
have been recorded if such securities had been sold at their fair value and the
proceeds reinvested at current yields. Furthermore, if future yields expected to
be earned on such securities decline, it may be necessary to increase certain
insurance liabilities. Adjustments to such liabilities are required when their
balances, in addition to future net cash flows (including investment income),
are insufficient to cover future benefits and expenses.

Unrealized gains and losses and the related adjustments described in the
preceding paragraph have no effect on earnings, but are recorded, net of tax, as
a component of shareholder's equity. The following tables summarize the effect
of these adjustments as of December 31, 1997:
<TABLE>
<CAPTION>
Effect of fair
Balance value adjustment to
before actively managed Reported
adjustment fixed maturity securities amount
---------- ------------------------- --------
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities.................... $1,705.2 $ 28.8 $1,734.0
Cost of policies purchased.................................... 115.0 (13.4) 101.6
Cost of policies produced..................................... 63.5 (2.8) 60.7
Income tax liabilities........................................ 39.8 4.4 44.2
Net unrealized appreciation of fixed maturity securities, net. - 8.2 8.2
</TABLE>

When changes in conditions cause a fixed maturity investment to be
transferred to a different category (e.g. actively managed, held to maturity or
trading), the security is transferred to the new category at its fair value at
the date of the transfer. There were no such transfers in 1997, 1996 or 1995. At
the transfer date, the security's unrealized gain or loss is recorded as
follows:

- For transfers to the trading category, the unrealized gain or loss is
recognized in earnings;

- For transfers from the trading category, the unrealized gain or loss
already recognized in earnings is not reversed;

- For transfers to actively managed from held to maturity, the unrealized
gain or loss is recognized in shareholder's equity; and

- For transfers to held to maturity from actively managed, the unrealized
gain or loss at the date of transfer continues to be recognized in
shareholder's equity, but is amortized as a yield adjustment until
ultimately sold.

F-8
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

Credit-tenant loans ("CTLs") are loans for commercial properties which
require: (i) the lease of the principal tenant to be assigned to the Company;
(ii) the lease to produce adequate cash flow to fund substantially all the cash
requirements of the loan; and (iii) the principal tenant, or the guarantor of
such tenant's obligations, to have an investment-grade credit rating when the
loan is made. These loans also must be secured by the value of the related
property. Underwriting guidelines take into account such factors as: (i) the
lease term of the property; (ii) the borrower's management ability, including
business experience, property management capabilities and financial soundness;
and (iii) such economic, demographic or other factors that may affect the income
generated by the property or its value. The underwriting guidelines generally
require a loan-to-value ratio of 75 percent or less. Credit-tenant loans and
traditional mortgage loans are carried at amortized cost.

Policy loans are stated at their current unpaid principal balance.

Short-term investments include commercial paper, invested cash and other
investments purchased with maturities of less than three months and are carried
at amortized cost, which approximates fair value. The Company considers all
short-term investments to be cash equivalents.

Fees received and costs incurred in connection with origination of
investments, principally CTLs and mortgage loans, are deferred. Fees, costs,
discounts and premiums are amortized as yield adjustments over the contractual
life of the investments. Anticipated prepayments on mortgage-backed securities
are taken into consideration in determining estimated future yields on such
securities.

The specific identification method is used to account for the disposition
of investments. The differences between sale proceeds and carrying values are
reported as investment gains and losses, or as adjustments to investment income
if the proceeds are prepayments by issuers prior to maturity.

The Company regularly evaluates investment securities, credit-tenant loans
and mortgage loans based on current economic conditions, past credit loss
experience and other circumstances of the investee. A decline in a security's
net realizable value that is other than temporary is treated as an investment
loss and the cost basis of the security is reduced to its estimated fair value.
Impaired loans are revalued at the present value of expected cash flows
discounted at the loan's effective interest rate when it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the agreement. The Company accrues interest on the net carrying amount
of impaired loans.

As part of the Company's investment strategy, the Company may enter into
reverse repurchase agreements and dollar-roll transactions to increase its
investment return or to improve liquidity. These transactions are accounted for
as collateral borrowings, where the amount borrowed is equal to the sales price
of the underlying securities.

Separate Accounts

Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policyholders. The assets of these accounts are
legally segregated. They are not subject to the claims which may arise out of
any other business of the Company. The Company reports separate account assets
at market value; the underlying investment risks are assumed by the contract
holders. The Company records the related liabilities at amounts equal to the
underlying assets; the fair value of these liabilities equals their carrying
amount.

Cost of Policies Purchased

The cost of policies purchased represents the portion of the acquisition
cost that was allocated to the value of the right to receive future cash flows
from insurance contracts existing at the date such insurance contracts were
acquired. The value of cost of policies purchased is the actuarially determined
present value of the projected future cash flows from the insurance contracts
existing at the acquisition date. The method used to value the cost of policies
purchased is consistent with the valuation methods used most commonly to value
blocks of insurance business, which is also consistent with the basic
methodology generally used to value assets. The method used is summarized as
follows:

- Identify the expected future cash flows from the blocks of business.

F-9

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

- Identify the risks inherent in realizing those cash flows (i.e., what is
the probability that the cash flows will be realized).

- Identify the rate of return necessary to accept these risks, based on
consideration of the factors summarized below.

- Determine the value of the policies purchased by discounting the expected
future cash flows by the discount rate required.

The expected future cash flows used in determining such value are based on
actuarially determined projections of future premium collections, mortality,
surrenders, operating expenses, changes in insurance liabilities, investment
yields on the assets held to back the policy liabilities and other factors.
These projections take into account all factors known or expected at the
valuation date, based on the collective judgment of the Company's management.
Actual experience on purchased business may vary from projections due to
differences in renewal premiums collected, investment spread, investment gains
or losses, mortality and morbidity costs and other factors.

The discount rate used to determine the value of the cost of policies
purchased is the rate of return needed to earn in order to invest in the
business being acquired. In determining this required rate of return, the
following factors are considered:

- The magnitude of the risks associated with each of the actuarial
assumptions used in determining expected future cash flows.

- The cost of capital required to fund the acquisition.

- The likelihood of changes in projected future cash flows that might
occur if there are changes in insurance regulations and tax laws.

- The acquired business compatibility with other activities of the Company
that may favorably affect future cash flows.

- The complexity of the acquired business.

- Recent prices (i.e., discount rates used in determining valuations)
paid by others to acquire similar blocks of business.

After the cost of policies purchased is determined, it is amortized based
on the incidence of the expected cash flows. This asset is amortized using the
interest rate credited to the underlying policies.

If renewal premiums collected, investment spread, investment gains or
losses, mortality and morbidity costs or other factors differ from expectations,
amortization of the cost of policies purchased is adjusted. For example, the
sale of a fixed maturity investment may result in a gain (or loss). If the sale
proceeds are reinvested at a lower (or higher) earnings rate, there may also be
a reduction (or increase) in future investment spread. Amortization must be
increased (decreased) to reflect the change in the incidence of expected cash
flows consistent with the methods used with the cost of policies produced
(described below).

Each year, the recoverability of the cost of policies purchased is
evaluated by line of business within each block of purchased insurance business.
If current estimates indicate that the existing insurance liabilities, together
with the present value of future net cash flows from the blocks of business
purchased, will be insufficient to recover the cost of policies purchased, the
difference is charged to expense. Amortization is adjusted consistent with the
methods used with the cost of policies produced (as described below).

The cost of policies purchased related to the original acquisition of the
Company by the Partnership in 1990 is amortized under a slightly different
method than that described above. However, the effect of the different method on
1997 net income was insignificant.

F-10

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

Cost of Policies Produced

Costs which vary with and are primarily related to the acquisition of new
business are deferred to the extent that such costs are deemed recoverable.
These costs include commissions, certain costs of policy issuance and
underwriting and certain agency expenses. For traditional life and health
contracts, deferred costs are amortized with interest in relation to future
anticipated premium revenue using the same assumptions that are used in
calculating the insurance liabilities. For immediate annuities with mortality
risks, deferred costs are amortized in relation to the present value of benefits
to be paid. For universal life-type, interest-sensitive and investment-type
contracts, deferred costs are amortized in relation to the present value of
expected gross profits from these contracts, discounted using the interest rate
credited to the policy (currently, 5 percent to 8 percent).

Recoverability of the unamortized balance of cost of policies produced is
evaluated regularly and considers anticipated investment income. For universal
life-type contracts and investment-type contracts, the accumulated amortization
is adjusted (whether an increase or a decrease) whenever there is a change in
the estimated gross profits expected over the life of a block of business in
order to maintain a constant relationship between amortization and the present
value (discounted at the rate of interest that accrues to the policies) of
expected gross profits. For traditional and most other contracts, the
unamortized asset balance is reduced by a charge to income only when the sum of
the present value of discounted future cash flows and the policy liabilities is
not sufficient to cover such asset balance.

Goodwill

Goodwill is the excess of the amount paid to acquire a company over the
fair value of its net assets. Goodwill is amortized on the straight-line basis
over a 40-year period. The Company continually monitors the value of the
goodwill based on estimates of future earnings. The Company determines whether
goodwill is fully recoverable from projected undiscounted net cash flows from
earnings of the subsidiaries over the remaining amortization period. If it is
determined that changes in such projected cash flows no longer supported the
recoverability of goodwill over the remaining amortization period, the Company
would reduce its carrying value with a corresponding charge to expense or
shorten the amortization period (no such changes have occurred). Cash flows
considered in such an analysis are those of the business acquired, if separately
identifiable, or the business segment that acquired the business if such
earnings are not separately identifiable.

Insurance Liabilities, Recognition of Insurance Policy Income and Related
Benefits and Expenses

Reserves for traditional and limited-payment life insurance contracts are
generally calculated using the net level premium method based on assumptions as
to investment yields, mortality, morbidity, withdrawals and dividends. The
assumptions are based on projections using past and expected experience and
include provisions for possible adverse deviation. These assumptions are made at
the time the contract is issued or, in the case of contracts acquired by
purchase, at the purchase date.

Reserves for universal life-type and investment-type contracts are based on
the contract account balance, if future benefit payments in excess of the
account balance are not guaranteed, or on the present value of future benefit
payments when such payments are guaranteed. Additional increases to insurance
liabilities are made if future cash flows including investment income are
insufficient to cover future benefits and expenses.

For investment-type contracts without mortality risk (such as deferred
annuities and immediate annuities with benefits paid for a period certain) and
for contracts that permit the Company or the insured to make changes in the
contract terms (such as single- premium whole life and universal life), premium
deposits and benefit payments are recorded as increases or decreases in a
liability account rather than as revenue and expense. Amounts charged against
the liability account for the cost of insurance, policy administration and
surrender penalties are recorded as revenues. Interest credited to the liability
account and benefit payments made in excess of the contract liability account
balance are charged to expense.

For traditional life insurance contracts, premiums are recognized as income
when due. Benefits and expenses are associated with earned premiums resulting in
their level recognition over the premium paying period of the contracts. Such
recognition is accomplished through the provision for future policy benefits and
the amortization of deferred policy acquisition costs.

F-11

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

For contracts with mortality risk, but with premiums paid for only a
limited period (such as single-premium immediate annuities with benefits paid
for the life of the annuitant), the accounting treatment is similar to
traditional contracts. However, the excess of the gross premium over the net
premium is deferred and recognized in relation to the present value of expected
future benefit payments.

Liabilities for incurred claims are determined using historical experience
and represent an estimate of the present value of the ultimate net cost of all
reported and unreported claims. Management believes these estimates are
adequate. Such estimates are periodically reviewed and any adjustments are
reflected in current operations.

For participating policies, the amount of dividends to be paid (which are
not significant) is determined annually by the Company. The portion of the
earnings allocated to participating policyholders is recorded as an insurance
liability.

Reinsurance

In the normal course of business, the Company seeks to limit its exposure
to loss on any single insured and to recover a portion of benefits paid over
such limit by ceding reinsurance to other insurance enterprises or reinsurers
under excess coverage and coinsurance contracts. The Company has set its
retention limit for acceptance of risk on life insurance policies at various
levels up to $.5 million.

Assets and liabilities related to insurance contracts are reported before
the effects of reinsurance. Reinsurance receivables and prepaid reinsurance
premiums (including amounts related to insurance liabilities) are reported as
assets. Estimated reinsurance receivables are recognized in a manner consistent
with the liabilities relating to the underlying reinsured insurance contracts.

Income Taxes

Income tax expense includes deferred taxes arising from temporary
differences between the tax and financial reporting basis of assets and
liabilities. This liability method of accounting for income taxes also requires
the Company to reflect in income the effect of a tax rate change on accumulated
deferred income taxes in the period in which the change is enacted.

In assessing the realization of deferred tax assets, the Company considers
whether it is more likely than not that the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which temporary
differences become deductible. If future income does not occur as expected,
deferred income taxes may need to be written off.

Comprehensive Income

As of December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for reporting and presentation of comprehensive
income and its components in a full set of financial statements. Comprehensive
income includes all changes in shareholders' equity (except those arising from
transactions with shareholders) and includes net income and net unrealized gains
(losses) on securities. The new standard requires only additional disclosures in
the consolidated financial statements; it does not affect the financial position
or results of operations.

Comprehensive income excludes net investment gains (losses) included in net
income of: (i) $(3.9) million (after income taxes of $(2.1) million) in 1997;
(ii) $.2 million (after income taxes of $.1 million) in 1996; (iii) $1.4 million
(after income taxes of $.7 million) in the four months ended December 31, 1995;
and (iv) $2.2 million (after income taxes of $1.2 million) in the eight months
ended August 31, 1995.

Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in
determining estimated fair values of financial instruments:

Investment securities: The estimated fair values of fixed maturity
securities (including redeemable preferred stocks), equity

F-12

<PAGE>
GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

securities and trading securities are based on quotes from independent
pricing services, where available. For investment securities for which such
quotes are not available, the estimated fair values are obtained from
broker-dealer market makers or by discounting expected future cash flows
using current market interest rates appropriate for the yield, credit
quality of the investments and for fixed maturities, the maturity of the
investments being priced.

Mortgage loans, credit-tenant loans and policy loans: The estimated fair
values of mortgage loans, credit-tenant loans and policy loans are
determined by discounting future expected cash flows using interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. Loans with similar characteristics are aggregated for purposes of
the calculations.

Other invested assets: The estimated fair values of these assets have been
assumed to be equal to their carrying value. Such value is believed to be a
reasonable approximation of the fair value of these investments.

Short-term investments: The estimated fair values of short-term investments
are based on quoted market prices, where available. The carrying amount
reported on the balance sheet for these assets approximates their estimated
fair value.

Insurance liabilities for investment contracts: The estimated fair values
of liabilities under investment-type insurance contracts are determined
using discounted cash flow calculations based on interest rates currently
being offered for similar contracts with maturities consistent with the
contracts being valued.

Investment borrowings: Due to the short-term nature of these borrowings
(terms generally less than 30 days), estimated fair values are assumed to
approximate the carrying amount reported in the balance sheet.

The estimated fair values of financial instruments are as follows:

<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Financial assets held for purposes other than trading:
Actively managed fixed maturity securities........... $1,734.0 $1,734.0 $1,795.1 $1,795.1
Mortgage loans....................................... 57.2 61.2 77.3 77.0
Credit-tenant loans.................................. 88.9 93.4 93.4 92.5
Policy loans......................................... 80.6 80.6 80.8 80.8
Other invested assets................................ 88.2 88.2 89.0 89.0
Short-term investments............................... 49.5 49.5 14.8 14.8

Financial liabilities held for purposes other than
trading:
Insurance liabilities for investment contracts (1). 1,177.5 1,177.5 $1,282.1 $1,282.1
Investment borrowings.............................. 61.0 61.0 48.4 48.4
</TABLE>

(1) The estimated fair value of the liabilities for investment contracts
was approximately equal to its carrying value at December 31, 1997
and 1996, because interest rates credited on the vast majority of
account balances approximate current rates paid on similar
investments and because these rates are not generally guaranteed
beyond one year. The Company is not required to disclose fair values
for insurance liabilities, other than those for investment contracts.
However, the Company takes into consideration the estimated fair
values of all insurance liabilities in its overall management of
interest rate risk. The Company attempts to minimize exposure to
changing interest rates by matching investment maturities with
amounts due under insurance contracts.

Recently Issued Accounting Standards

Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS 125") was issued in June 1996 and provides accounting and reporting
standards for transfers of financial assets and extinguishments of liabilities.
SFAS 125 is effective for 1997 financial statements; however, certain provisions

F-13
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

relating to accounting for repurchase agreements and securities lending are not
effective until January 1, 1998. Provisions effective in 1997 did not have any
effect on the Company's financial position or results of operations. The
adoption of provisions effective in 1998 are not expected to have a material
effect on the Company's financial position or results of operations.

Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131") establishes new
standards for reporting about operating segments and products and services,
geographic areas and major customers. Under SFAS 131, segments are to be defined
consistent with the basis management uses internally to assess performance and
allocate resources. Implementing SFAS 131 will have no impact on the
consolidated amounts the Company reports. SFAS 131 is effective for the
Company's December 31, 1998 financial statements.

Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132") was
issued in February 1998 and revises current disclosure requirements for
employers' pensions and other retiree benefits. SFAS 132 will have no effect on
the Company's financial position or results of operations. SFAS 132 is effective
for the Company's December 31, 1998 financial statements.

Statement of Position 97-3, "Accounting by Insurance and Other Enterprises
for Insurance-Related Assessments" ("SOP 97-3") was issued by the American
Institute of Certified Public Accountants in December 1997 and provides guidance
for determining when an insurance company or other enterprise should recognize a
liability for guaranty-fund assessments and guidance for measuring the
liability. The statement is effective for 1999 financial statements with early
adoption permitted. The adoption of this statement is not expected to have a
material effect on the Company's financial position or results of operations.

2. INVESTMENTS

At December 31, 1997, the amortized cost and estimated fair value of
actively managed fixed maturity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
United States Treasury securities and obligations
of United States government corporations and
agencies............................................ $ 28.0 $ .7 $ - $ 28.7
Obligations of state and political subdivisions........ 20.5 1.1 .1 21.5
Debt securities issued by foreign governments.......... 18.5 .1 1.2 17.4
Public utility securities.............................. 184.6 3.5 2.3 185.8
Other corporate securities............................. 902.0 26.6 7.8 920.8
Mortgage-backed securities............................. 551.6 8.6 .4 559.8
-------- ----- ----- --------

Total............................................... $1,705.2 $40.6 $11.8 $1,734.0
======== ===== ===== ========
</TABLE>

F-14

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

At December 31, 1996, the amortized cost and estimated fair value of
actively managed fixed maturity securities were as follows:
<TABLE>
<CAPTION>

Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
United States Treasury securities and obligations
of United States government corporations and
agencies............................................ $ 29.9 $ .3 $ .3 $ 29.9
Obligations of state and political subdivisions........ 6.1 .1 .1 6.1
Debt securities issued by foreign governments.......... 11.6 - .5 11.1
Public utility securities.............................. 234.8 2.4 7.0 230.2
Other corporate securities............................. 950.1 10.9 17.6 943.4
Mortgage-backed securities............................. 578.3 2.3 6.2 574.4
-------- ----- ----- --------

Total............................................... $1,810.8 $16.0 $31.7 $1,795.1
======== ===== ===== ========
</TABLE>

Actively managed fixed maturity securities, summarized by the source of
their estimated fair value, were as follows at December 31, 1997:
<TABLE>
<CAPTION>

Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>

Nationally recognized pricing services.......................................... $1,416.9 $1,441.2
Broker-dealer market makers..................................................... 143.6 146.2
Internally developed methods (calculated based
on a weighted-average current market yield of 8.0 percent)................... 144.7 146.6
-------- --------

Total ................................................................. $1,705.2 $1,734.0
======== ========
</TABLE>

F-15

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

The following table sets forth actively managed fixed maturity securities
at December 31, 1997, classified by rating categories. The category assigned is
the highest rating by a nationally recognized statistical rating organization
or, as to $42.4 million fair value of fixed maturity securities not rated by
such firms, the rating assigned by the National Association of Insurance
Commissioners ("NAIC"). For the purposes of this table, NAIC Class 1 is included
in the "A" rating; Class 2, "BBB-"; Class 3, "BB-"; and Classes 4-6, "B+ and
below":
<TABLE>
<CAPTION>
Percent of Percent of
Investment fixed total
Rating maturities investments
------ ---------- -----------
<S> <C> <C>
AAA................................................................................... 39% 27%
AA.................................................................................... 7 5
A..................................................................................... 18 13
BBB+.................................................................................. 8 6
BBB................................................................................... 12 8
BBB-.................................................................................. 8 5
--- --

Investment-grade................................................................. 92 64
--- ---

BB+................................................................................... 2 1
BB.................................................................................... 2 1
BB-................................................................................... 1 1
B+ and below ......................................................................... 3 2
--- --

Below investment-grade........................................................... 8 5
--- --

Total actively managed fixed maturities...................................... 100% 69%
=== ==
</TABLE>

Below investment-grade actively managed fixed maturity securities,
summarized by the amount their amortized cost exceeds fair value, were as
follows at December 31, 1997:
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Amortized cost exceeds fair value by more than 30%.................................. $ 1.0 $ .5
Amortized cost exceeds fair value by more than 15% but not more than 30%............ 14.8 11.8
Amortized cost exceeds fair value by more than 5% but not more than 15%............. 15.5 14.0
All others.......................................................................... 104.5 106.0
------ ------

Total below investment-grade fixed maturity investments.................... $135.8 $132.3
====== ======
</TABLE>

The Company had $.3 million of fixed maturity investments in substantive
default and no fixed maturities in technical default as of December 31, 1997.
The Company recorded writedowns of fixed maturity investments and other invested
assets totaling $.3 million in 1997, $.8 million in 1996 and $1.6 million in
1995, as a result of changes in conditions which caused it to conclude the
decline in the fair value of the investment was other than temporary. As of
December 31, 1997, there were no fixed maturity investments about which the
Company had serious doubts as to the ability of the issuer to comply with the
contractual terms of their obligations on a timely basis. Investment income
foregone due to defaulted securities was not significant in 1997, 1996 or 1995.

F-16

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

Actively managed fixed maturity securities at December 31, 1997, summarized
by contractual maturity date, are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties and because most
mortgage-backed securities provide for periodic payments throughout their lives.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Due in one year or less......................................................... $ 5.8 $ 5.9
Due after one year through five years........................................... 103.0 101.3
Due after five years through ten years.......................................... 357.4 360.5
Due after ten years............................................................. 687.4 706.5
-------- --------

Subtotal................................................................. 1,153.6 1,174.2
Mortgage-backed securities...................................................... 551.6 559.8
-------- --------

Total ................................................................... $1,705.2 $1,734.0
======== ========
</TABLE>

Net investment income consisted of the following:
<TABLE>
<CAPTION>

Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Actively managed fixed maturity securities....... $133.6 $146.4 $53.9 $110.2
Mortgage loans................................... 8.8 11.8 4.8 8.0
Credit-tenant loans ............................. 7.6 7.2 1.7 4.1
Policy loans..................................... 5.4 5.0 1.9 3.5
Short-term investments........................... 3.4 2.3 .8 1.9
Other invested assets............................ 9.4 11.4 .3 1.6
Separate accounts................................ 55.7 35.6 11.3 7.9
----- ------ ----- ------

Gross investment income..................... 223.9 219.7 74.7 137.2
Investment expenses.............................. 1.3 1.3 .5 .8
------ ------ ----- ------

Net investment income....................... $222.6 $218.4 $74.2 $136.4
====== ====== ===== ======
</TABLE>

The Company had insignificant fixed maturity investments and mortgage loans
that were not accruing investment income in 1997, 1996 and 1995.

F-17

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

The proceeds from sales of actively managed fixed maturity securities were
$739.4 million in 1997, $938.3 million in 1996 and $918.5 million in 1995. Net
investment gains consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>

Fixed maturities:
Gross gains................................... $20.6 $16.6 $16.5 $14.4
Gross losses.................................. (5.1) (9.2) (2.2) (2.3)
Other than temporary decline in fair value.... (.3) (.2) (.4) (1.2)
----- ----- ----- -----

Net investment gains from fixed maturities
before expenses........................... 15.2 7.2 13.9 10.9
Mortgage loans................................... (.2) - - (.2)
Other .......................................... 2.4 - - (1.0)
Other than temporary decline in fair value....... - (.6) - -
----- ----- ----- -----

Net investment gains before expenses........ 17.4 6.6 13.9 9.7
Investment gain expenses......................... 4.1 3.9 1.4 2.4
----- ----- ----- -----

Net investment gains........................ $13.3 $ 2.7 $12.5 $ 7.3
===== ===== ===== =====
</TABLE>

The change in net unrealized appreciation (depreciation) on investments
consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Actively managed fixed maturities................ $ 44.5 $(66.5) $45.5 $164.1
Other invested assets............................ 1.1 (1.3) .1 5.1
------- ------ ------ ------

Subtotal................................ 45.6 (67.8) 45.6 169.2
Less effect on other balance sheet accounts:
Cost of policies purchased.................... (21.2) 36.6 (26.3) (64.1)
Cost of policies produced..................... (3.9) 4.5 (2.7) (12.0)
Income taxes.................................. (7.2) 9.7 (6.1) (34.1)
------- ------ ------ ------

Change in net unrealized appreciation
(depreciation) of securities.................. $ 13.3 $(17.0) $10.5 $ 59.0
======= ====== ===== ======
</TABLE>

Investments in mortgage-backed securities at December 31, 1997, included
collateralized mortgage obligations ("CMOs") of $194.2 million and
mortgage-backed pass-through securities of $365.6 million. CMOs are
securities backed by pools of pass-through securities and/or mortgages that
are segregated into sections or "tranches." These securities provide for
sequential retirement of principal, rather than the pro rata share of
principal return which occurs through regular monthly principal payments on
pass-through securities.

F-18
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

The following table sets forth the par value, amortized cost and estimated
fair value of investments in mortgage-backed securities including CMOs at
December 31, 1997, summarized by interest rates on the underlying collateral:
<TABLE>
<CAPTION>
Par Amortized Estimated
value cost fair value
----- ---- -----------
(Dollars in millions)
<S> <C> <C> <C>
Below 7 percent ..................................................... $218.9 $216.2 $218.9
7 percent - 8 percent................................................ 228.4 232.5 235.5
8 percent - 9 percent................................................ 63.9 62.6 64.2
9 percent and above.................................................. 38.9 40.3 41.2
------ ------ ------

Total mortgage-backed securities................................ $550.1 $551.6 $559.8
====== ====== ======
</TABLE>

The amortized cost and estimated fair value of mortgage-backed securities
including CMOs at December 31, 1997, summarized by type of security were as
follows:
<TABLE>
<CAPTION>
Estimated fair value
--------------------
Percent
Amortized of fixed
cost Amount maturities
---- ------ ----------
Type (Dollars in millions)
- ----
<S> <C> <C> <C>
Pass-throughs and sequential and targeted amortization classes........... $455.4 $462.2 26%
Planned amortization classes and accretion directed bonds................ 67.6 68.7 4
Subordinated classes .................................................... 28.6 28.9 2
------ ------- --

Total mortgage-backed securities................................ $551.6 $559.8 32%
====== ====== ==
</TABLE>
At December 31, 1997, approximately 84 percent of the estimated fair value
of the Company's mortgage-backed securities was determined by nationally
recognized pricing services, 6 percent was determined by broker-dealer market
makers, and 10 percent was determined by internally developed methods. The
call-adjusted modified duration of the Company's mortgage-backed securities was
4.8 years at December 31, 1997.

At December 31, 1997, no mortgage loans or credit-tenant loans had
defaulted as to principal or interest for more than 60 days, had been converted
to foreclosed real estate or had been restructured while the Company owned them.
Mortgage loans of $1.1 million were in foreclosure at December 31, 1997. At
December 31, 1997, the Company had a loan loss reserve of $.8 million.
Approximately 35 percent, 20 percent, 9 percent and 9 percent of the mortgage
loan balance were on properties located in California, Texas, Kentucky and
Florida, respectively. No other state comprised greater than 5 percent of the
mortgage loan balance.

As part of its investment strategy, the Company enters into reverse
repurchase agreements and dollar roll transactions to increase its return on
investments and improve its liquidity. These transactions are accounted for as
short-term borrowings collateralized by pledged securities with book values
approximately equal to the loan value. Such borrowings averaged approximately
$90.4 million during 1997 compared with $115.3 million during 1996. The weighted
average interest rate on short-term collateralized borrowings was 4.4 percent
and 5.3 percent during 1997 and 1996, respectively. The primary risk associated
with short-term collateralized borrowings is that the counterparty will be
unable to perform under the terms of the contract. The Company's exposure is
limited to the excess of the net replacement cost of the securities over the
value of the short-term investments (which was not material at December 31,
1997). The Company believes that the counterparties to its reverse repurchase
and dollar roll agreements are financially responsible and that the counterparty
risk is minimal.

Investments on deposit for regulatory authorities as required by law were
$18.3 million at December 31, 1997.

No investments of a single issuer were in excess of 10 percent of
shareholder's equity at December 31, 1997, other than investments issued or
guaranteed by the United States government.

F-19

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

3. INSURANCE LIABILITIES

Insurance liabilities consisted of the following:
<TABLE>
<CAPTION>
Interest
Withdrawal Mortality rate December 31, December 31,
assumption assumption assumption 1997 1996
---------- ---------- ---------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Interest-sensitive products:
Investment contracts .............. N/A N/A (b) $1,177.5 $1,282.1
Universal life-type contracts...... N/A N/A N/A 344.6 354.4
-------- --------
Total interest-sensitive
products..................... 1,522.1 1,636.5
-------- --------

Traditional products:
Traditional life insurance Company
contracts........................ experience (a) 8% 142.8 146.2
Limited-payment contracts.......... None (a) 8% 105.5 105.3
-------- --------
Total traditional products..... 248.3 251.5
-------- --------

Claims payable and other policyholder
funds................................. N/A N/A N/A 62.5 69.5
Liabilities related to separate
accounts.............................. N/A N/A N/A 402.1 232.4
-------- --------

Total insurance liabilities.... $2,235.0 $2,189.9
======== ========
</TABLE>
- --------------------

(a) Principally modifications of the 1975-80 Basic Table, Select and Ultimate
Table.

(b) At December 31, 1997 and 1996, approximately 97 percent of this liability
represented account balances where future benefits were not guaranteed. The
weighted average interest rate on the remainder of the liabilities,
representing the present value of guaranteed future benefits, was
approximately 6.4 percent at December 31, 1997.

Participating policies represented approximately 4.1 percent, 3.5 percent
and 3.7 percent of total life insurance in force at December 31, 1997, 1996 and
1995, respectively, and approximately 2.9 percent, 2.7 percent and 2.4 percent
of premium income for 1997, 1996 and 1995, respectively. Dividends on
participating policies amounted to $2.1 million, $1.9 million and $1.8 million
in 1997, 1996 and 1995, respectively.

4. REINSURANCE

Cost of reinsurance ceded where the reinsured policy contains mortality
risks totaled $24.2 million in 1997, $24.6 million in 1996, and $29.1 million in
1995. This cost was deducted from insurance premium revenue. The Company is
contingently liable for claims reinsured if the assuming company is unable to
pay. Reinsurance recoveries netted against insurance policy benefits totaled
$14.9 million in 1997, $19.4 million in 1996 and $19.5 million in 1995.

Effective October 1, 1995, Western National Life Insurance Company, a
former subsidiary of Conseco, recaptured certain annuity businesses ceded to the
Company through a reinsurance agreement. Reserves related to these policies
totaled $72.8 million. Recapture fees of $.7 million were recognized as income
during the four months ended December 31, 1995.

F-20

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

The Company's reinsurance receivable balance at December 31, 1997 relates
to many reinsurers. No balance from a single reinsurer exceeds $6.5 million.

5. INCOME TAXES

Income tax liabilities consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
---- ----
(Dollars in millions)
<S> <C> <C>
Deferred income tax liabilities:
Cost of policies purchased and produced................................... $ 52.2 $60.3
Investments............................................................... 9.8 (3.3)
Insurance liabilities..................................................... (19.5) (19.7)
Unrealized appreciation (depreciation).................................... 4.7 (2.5)
Other..................................................................... (4.0) (5.0)
------ -----

Deferred income tax liabilities....................................... 43.2 29.8
Current income tax liabilities............................................... 1.0 -
------ -----

Income tax liabilities................................................ $ 44.2 $29.8
====== =====
</TABLE>

Income tax expense was as follows:
<TABLE>
<CAPTION>

Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Current tax provision............................... $16.3 $10.5 $11.9 $19.9
Deferred tax provision (benefit).................... 5.8 4.9 (2.2) (3.4)
----- ----- ----- -----

Income tax expense........................... $22.1 $15.4 $ 9.7 $16.5
===== ===== ====== =====
</TABLE>

Income tax expense differed from that computed at the applicable statutory
rate of 35 percent for the following reasons:
<TABLE>
<CAPTION>

Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Federal tax on income before income taxes at
statutory rate.................................... $21.5 $14.4 $9.0 $15.6
State taxes and other................................ .4 .6 .5 .4
Nondeductible items.................................. .2 .4 .2 .5
----- ----- ---- -----

Income tax expense.............................. $22.1 $15.4 $9.7 $16.5
===== ===== ==== =====
</TABLE>

F-21

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

During 1997, the Internal Revenue Service completed its examination of the
Company for the 1994 tax year and such examination did not result in any
significant adjustments.

6. RELATED PARTY TRANSACTIONS

The Company operates without direct employees through management and
service agreements with subsidiaries of Conseco. Fees for such services
(including data processing, executive management and investment management
services) were based on negotiated rates for periods prior to January 1, 1996.
Pursuant to new service agreements effective January 1, 1996, such fees are
based on Conseco's direct and directly allocable costs plus a 10 percent margin.
Total fees incurred by the Company under such agreement were $36.7 million in
1997, $44.1 million in 1996 and $26.6 million in 1995.

During 1997 and 1996, the Company purchased $11.2 million and $31.5 million
par value, respectively, of senior subordinated notes issued by subsidiaries of
Conseco. Such notes had a carrying value of $29.8 million and $34.7 million at
December 31, 1997 and 1996, respectively, and are classified as "other invested
assets" in the accompanying balance sheet. In addition, during 1997, a
subsidiary of Conseco redeemed $16.5 million par value of such notes which were
purchased in 1996. During 1996, the Company forgave receivables from Conseco
totaling $9.9 million. This transaction is reflected as a dividend to Conseco in
the accompanying statement of shareholder's equity.

7. OTHER OPERATING INFORMATION

Insurance policy income consisted of the following:
<TABLE>
<CAPTION>

Premiums collected, net of reinsurance.......... 300.3 218.4 72.3 142.7
Less premiums on universal life and products without
mortality risk which are recorded as additions to
insurance liabilities............................. (255.9) (169.8) (50.8) (104.4)
-------- ------ ----- ------
Premiums on products with mortality and
morbidity risk, recorded as insurance policy
income........................................ 44.4 48.6 21.5 38.3
Fees and surrender charges........................... 31.3 32.8 10.3 22.2
-------- ------ ----- ------

Insurance policy income....................... $ 75.7 $ 81.4 $ 31.8 $ 60.5
======== ====== ====== ======
</TABLE>

F-22

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

The four states with the largest shares of the Company's premiums
collected in 1997 were Texas (27 percent), Florida (17 percent), California (13
percent) and Michigan (6 percent). No other state's premiums collected exceeded
5 percent.

Other operating costs and expenses were as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Policy maintenance expense........................... $18.1 $37.8 $ 6.5 $14.0
State premium taxes and guaranty assessments......... 2.0 4.4 1.6 1.1
Commission expense................................... 8.1 12.1 5.0 8.6
----- ----- ----- -----

Other operating costs and expenses............ $28.2 $54.3 $13.1 $23.7
===== ===== ===== =====
</TABLE>

Anticipated returns from the investment of policyholder balances are
considered in determining the amortization of the cost of policies purchased and
cost of policies produced. The sales of fixed maturity investments during 1997,
1996 and 1995 changed the incidence of profits on such policies because
investment gains and losses were recognized currently and the expected future
yields on the investment of policyholder balances were affected. Accordingly,
amortization of the cost of policies purchased and cost of policies produced was
increased by $14.2 million in 1997, $2.5 million in 1996, $10.0 million in the
four months ended December 31, 1995 and $4.3 million for the eight months ended
August 31, 1995.

The changes in the cost of policies purchased were as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Balance, beginning of period........................... $143.0 $120.0 $159.0 $173.9
Amortization related to operations:
Cash flow realized................................ (18.2) (26.2) (9.4) (19.1)
Interest added.................................... 11.8 13.1 5.0 12.7
Amortization related to sales of fixed maturity
investments....................................... (13.8) (2.2) (8.3) (3.4)
Amounts related to fair value adjustment of
actively managed fixed maturity securities........ (21.2) 36.6 (26.3) (64.1)
Adjustment of balance due to new accounting
basis and other................................... - 1.7 - 59.0
------ ------ ------ ------

Balance, end of period................................. $101.6 $143.0 $120.0 $159.0
====== ====== ====== ======
</TABLE>

F-23

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY

Notes to Financial Statements
------------------------------

Based on current conditions and assumptions as to future events on all
policies in force, approximately 10 percent, 10 percent, 10 percent, 10 percent
and 11 percent of the cost of policies purchased as of December 31, 1997, are
expected to be amortized in each of the next five years, respectively. The
discount rates used to determine the amortization of the cost of policies
purchased ranged from 3.6 percent to 8.0 percent and averaged 5.8 percent.

The changes in the cost of policies produced were as follows:
<TABLE>
<CAPTION>

Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Balance, beginning of period.......................... $38.2 $24.0 $25.9 $ 63.2
Additions.......................................... 31.8 13.2 3.0 6.6
Amortization related to operations................. (5.0) (3.2) (.5) (4.0)
Amortization related to sales of fixed maturity
investments...................................... (.4) (.3) (1.7) (.9)
Amounts related to fair value adjustment of
actively managed fixed maturity securities....... (3.9) 4.5 (2.7) (12.0)
Adjustment of balance due to new accounting basis.. - - - (27.0)
----- ----- ----- -------

Balance, end of period................................ $60.7 $38.2 $24.0 $ 25.9
===== ===== ===== =======
</TABLE>

8. STATEMENT OF CASH FLOWS

Income taxes paid during 1997, 1996, and 1995, were $14.8 million, $18.1
million and $19.3 million, respectively.

Short-term investments having original maturities of three months or less
are considered to be cash equivalents. All cash is invested in short-term
investments.

9. STATUTORY INFORMATION

Statutory accounting practices prescribed or permitted for insurance
companies by regulatory authorities differ from generally accepted accounting
principles. The Company reported the following amounts to regulatory agencies:
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1996
---- ----
(Dollars in millions)
<S> <C> <C>
Statutory capital and surplus.................................................. $140.7 $140.3
Asset valuation reserve........................................................ 29.2 28.7
Interest maintenance reserve................................................... 68.8 63.1
------ ------

Total...................................................................... $238.7 $232.1
====== ======
</TABLE>
The Company's statutory net income was $32.7 million, $32.6 million and
$38.4 million in 1997, 1996 and 1995, respectively.

State insurance laws generally restrict the ability of insurance companies
to pay dividends or make other distributions. Approximately $32.9 million of the
Company's net assets at December 31, 1997, are available for distribution in
1998 without permission of state regulatory authorities.

F-24

<PAGE>

(b) EXHIBITS

1. (a) Resolutions of Board of Directors of Conseco Variable
Insurance Company authorizing the establishment
of the Registrant. Incorporated herein by reference to
Exhibit b(1) to initial Registration Statement on
Form N-3 filed on May 2, 1996 (CIK 0001013169;
Accession No. 0000906287-96-000070).

(b) Resolutions of the Board of Directors of Conseco
Variable Insurance Company authorizing restructuring of
investments of the Registrant and registration of
Registrant under the 1940 Act as a unit investment
trust. Filed herewith.

(c) Resolutions of the Board of Managers of the Registrant
authorizing restructuring of investments of the
Registrant and registration of Registrant under the
1940 Act as a unit investment trust. Filed herewith.

2. Not Applicable.

3. (a) Form of Underwriting Agreement Among Conseco Variable
Insurance Company, the Rydex Advisor Variable
Annuity Account, and Conseco Equity Sales, Inc.
Filed by Amendment.

(b) (1) Form of Group Selling Agreement Among Conseco Variable
Insurance Company, Conseco Equity Sales, Inc., Broker,
and Insurance Agent. Filed Amendment.

(2) Form of Notice of Assignment of Group Selling
Agreements by PADCO Financial Services, Inc. to
Conseco Equity Sales, Inc. effective November 2, 1998.
Filed by Amendment.

4. (a) Form of Variable Annuity Contract. Incorporated herein
by reference to initial Registration Statement, filed
on May 2, 1996. (CIK No. 0001013169; Accession No.
0000906287-96-000070).

(b) Form of Variable Annuity Contract Endorsement
(regarding the Death Benefit). Incorporated herein by
reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed on September 24, 1997.
(CIK No. 0001013169; Accession No.
0000906287-97-000264).

C-1
<PAGE>

5. Form of Applications for Variable Annuity Contract.
Incorporated herein by reference to Post-Effective Amendment
No. 1 to this Registration Statement, filed on September 24,
1997. (CIK No. 0001013169; Accession No.
0000906287-97-000264).

6. (a) Certificate of Incorporation and Bylaws of Conseco
Variable Insurance Company. Incorporated herein by
reference to initial Registration Statement, filed on
May 2, 1996. (CIK No. 0001013169; Accession
No. 0000906287-96-000070).

(b) Articles of Amendment to the Articles of Incorporation
of Great American Reserve Insurance Company, changing
name to Conseco Variable Insurance Company. Filed
herewith.

(c) Official Order of the Commissioner of Insurance of the
State of Texas approving Articles of Amendment to
the Articles of Incorporation, changing name from
Great American Reserve Insurance Company to Conseco
Variable Insurance Company. Filed herewith.

7. None.

8. Form Participation Agreement between Conseco Variable
Insurance Company, Rydex Variable Trust and PADCO Financial
Services, Inc. Filed herewith.

9. Opinion of Counsel and Consent to its use as to the legality
of the securities registered and indicating that they will be
legally issued and will represent binding obligations of
Conseco Variable Insurance Company. Filed herewith.

10. Consent of Independent Accountants, PricewaterhouseCoopers
filed herewith.

11. None.

12. None.

13. Schedule for Computation of Performance Quotations. To be
filed by amendment.

14. (a) Powers-of-Attorney of Executive Officers and Directors
of Conseco Variable Insurance Company: Stephen C.
Hilbert, Chairman of the Board and Chief Executive
Officer; Rollin M. Dick, Executive Vice President,
Chief Financial Officer and Director; James S. Adams,
Senior Vice President and Treasurer (Chief Accounting
Officer); Thomas J. Kilian, President and Director;
and John J. Sabl, Director. Incorporated by reference
to Post-Effective Amendment No. 8 to this Registration
Statement, filed on August 12, 1998 (CIK No.
0001013169; Accession No. 0001047469-98-030723)

Power-of-Attorney of Ngaire E. Cuneo, Director. Filed
herewith.

(b) Powers-of-Attorney of the Officers and Managers of
Rydex Adviser Variable Annuity Account: Corey A.
Colehour, Member; J. Kenneth Dalton, Member; John O.
Demaret, Member; Patrick T. McCarville, Member; and
Roger Somers, Member. Incorporated by reference to

C-2
<PAGE>

Post-Effective Amendment No. 5 filed on February 5,
1998 (CIK No. 0001013169; Accession No.
0000906287-98-000026).

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The following table sets forth the names of (a) the officers and
trustees of the Conseco Variable Insurance Company who are
engaged directly or indirectly in activities relating to the
Registrant or the variable annuity contracts and (b) the executive
officers of the Conseco Variable Insurance Company.

STEPHEN C. HILBERT THOMAS J. KILIAN
Chairman and Director President and Director

NGAIRE E. CUNEO ROLLIN M. DICK
Director Executive Vice President, Chief
Financial Officer and Director

James S. Adams
Senior Vice President and
Treasurer

JOHN J. SABL
Executive Vice President,
General Counsel, Secretary
and Director

The business address of the directors and officers is Conseco
Variable Insurance Company, 11825 North Pennsylvania Street, Carmel,
Indiana 46032.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

The following information concerns those companies that may be
deemed to be controlled by or under common control with Conseco
Variable Insurance Company. Conseco, Inc. owns 100% of each of the
companies listed below, unless indicated otherwise:

Conseco, Inc.

Conseco Risk Management, Inc.
Wells & Company
CRM Acquisition Company
Wellsco, Inc.

Conseco Mortgage Capital, Inc.

Conseco Group Risk Management, Inc.

Conseco Capital Management, Inc.

Conseco Private Capital Group, Inc.

Conseco Equity Sales, Inc.

Lincoln American Life Insurance Company

Marketing Distribution Systems Consulting Group, Inc.
MDS Securities Incorporated

C-3
<PAGE>

BankMark School of Business, Inc.
Investment Services Center of Delaware, Inc.
BankMark, Inc.
Community Insurance Agency, Inc.
InveStar Insurance Agency, Inc. (IN)
InveStar Insurance Agency, Inc. (OH)
Marketing Distribution Systems, Inc.
MDS of New Jersey, Inc.
Community Insurance Agency, Inc.

CIHC, Incorporated
NACT, Inc.
Conseco Services, L.L.C.
Conseco Marketing LLC
Conseco Entertainment Nevada, Inc.
American Travelers Insurance Services Company, Inc.
Conseco L.L.C.
Conseco Global Investments, Inc.
CNC Real Estate, Inc.
Bankers National Life Insurance Company
National Fidelity Life Insurance Company
K.F. Acquisition Corporation
Jefferson National Life Insurance Company of Texas
Beneficial Standard Life Insurance Company
Conseco Variable Insurance Company
American Travelers Life Insurance Company
Conseco Life Insurance Company of New York
United General Life Insurance Company
Continental Life Insurance Company
Conseco Financial Services, Inc.
Eagles' National Corporation
Bankers Life Insurance Company of Illinois
Bankers Life and Casualty Company
Certified Life Insurance Company
Capitol American Financial Corporation
Capitol Insurance Company of Ohio*
Capital American Life Insurance Company
Capitol National Life Insurance Company
Frontier National Life Insurance Company
K.F. Agency Inc. of Texas
Colonial Penn Life Insurance Company
C.P. Real Estate Services Corp.
Hawthorne Advertising Agency Incorporated
Providential Life Insurance Company
Eagle Mortgage Company, Inc.
U.S. Insurance Marketing, Inc.
K.F. Insurance Agency of Massachusetts, Inc.
Wabash Life Insurance Company
Conseco Life Insurance company
Philadelphia Life Insurance Company
Lamar Life Insurance Company
Independent Processing Services, Inc.

C-4
<PAGE>

Conseco Travel Services, inc.
K.F. Agency, Inc.
American Life Holdings, Inc.
American Life and Casualty Marketing Division Co.
American Life and Casualty Insurance Company
Vulcan Life Insurance Company**
Automobile Underwriters Corporation
Automobile Underwriters Incorporated
Statesman Data Services, Inc.
Pioneer Financial Services, Inc.
PL Holdings, Inc.
Integrated Networks, Inc.
Administrators Service Corporation
National Benefit Plans, Inc.
Design Securities Corporation
Conseco Teleservices, Inc.
Target Ad Group, Inc.
Design Benefit Plans, Inc.
Continental Marketing Corporation of Illinois, Inc.
DBP of Nevada, Inc.
Design Benefit Plans of Oregon, Inc.
Pioneer Life Insurance Company
Health and Life Insurance Company of America
Manhattan National Life Insurance Company
Connecticut National Life Insurance Company
MNL Marketing Corporation
Business Information Group, Inc.
Geneva International Insurance Company, Inc.
Response Air Ambulance Network, Inc.
United Life Holdings, Inc.
Direct Financial Services, Inc.
Erie International Insurance Company, Inc.
Association Management Corporation
Pioneer Savers Plan, Inc.
Independent Savers Plan, Inc.
Network Air Medical Systems, Inc.
Partners Health Group, Inc.
Personal Healthcare, Inc.
Healthscape, Inc.
Preferred Health Choice, Inc.
Markman International, L.L.C.
United Group Holdings, Inc.
National Group Life Insurance Company
Continental Life and Accident Company

Conseco Entertainment, Inc.
Conseco Entertainment, L.L.C.

Conseco HPLP, L.L.C.

Washington National Corporation
Anchor Corporation

C-5
<PAGE>

Washington National Financial Services, Inc.
Washington National Insurance Company
Washington National Development Company
United Presidential Corporation
United Presidential Life Insurance Company
Diversified National Corporation

* Mutual Assessment Life and Accident Association.
** Conseco, Inc. owns 98% of Vulcan Life Insurance Company's voting
securities.

ITEM 27. NUMBER OF CONTRACT OWNERS

As of September 30, 1998, there were:

261 Contract Owners of qualified variable annuity contracts; and
634 Contract Owners of nonqualified variable annuity contracts.

ITEM 28. INDEMNIFICATION

Article VI of the By-Laws of Conseco Variable Insurance
Company generally provide that the Company shall indemnify its
directors and officers against liabilities incurred in acting as
directors and officers if they acted in good faith and in a manner
they reasonably believed to be in the best interest of the Company
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. See the
By-Laws of the Company, filed as Exhibit (6) to this Registration
Statement.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to members of the Board of Directors, officers, and
controlling persons of the Company pursuant to the provisions
described under "Indemnification" or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange
Commission 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 payment by the Company of expenses incurred or paid by
a member of the Board of Directors, officer, or controlling person
of the Company in the successful defense of any action, suit or
proceeding) is asserted by such member of the Board of Directors,
officer, or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of such
issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Conseco Equity Sales, Inc. is principal underwriter for the
following other investment companies (other than the
Registrant):

Great American Reserve Variable Annuity Account C
Great American Reserve Variable Annuity Account E
Great American Reserve Variable Annuity Account F
Great American Reserve Variable Annuity Account G

C-6
<PAGE>

Conseco Fund Group

(b) Conseco Equity Sales, Inc. ("CES") is principal underwriter
for the Registrant and for the Contracts. The following
persons are the officers and directors of CES. The principal
business address for each officer and director of CES is 11815
N. Pennsylvania Street, Carmel, Indiana 46032.

POSITIONS AND OFFICES
NAME WITH UNDERWRITER

L. Gregory Gloeckner President and Director

William P. Latimer Vice President, Senior Counsel,
Secretary and Director
James S. Adams Senior Vice President,
Treasurer and Director

William T. Devanney, Jr. Senior Vice President,
Corporate Taxes

Christine H. Darnell Vice President,
Management Reporting

Lisa M. Zimmerman Assistant Vice President,
Corporate Taxes

Christine E. Monical Second Vice President
and Assistant General
Counsel

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The name and address of the person who maintains physical
possession of each account, book or other document of the
Registrant required by Section 31(a) of the Investment Company Act
of 1940 is as follows:

Lowell Short
Conseco Variable Insurance Company
11825 North Pennsylvania Street
Carmel, Indiana 46032

ITEM 31. MANAGEMENT SERVICES

Not applicable.

ITEM 32. UNDERTAKINGS

(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the Contracts may be accepted.

(b) The Registrant hereby undertakes to include, as part of any
application to purchase a Contract, a space that an applicant
can check to request a Statement of Additional Information.

(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this Form N-4 promptly upon written
or oral request.

C-7
<PAGE>

(d) The Registrant is relying on a no-action letter issued to the
American Council of Life Insurance, published November 28,
1988, relating to Section 403(b)(11) of the Internal Revenue
Code and Sections 22(e), 27(c)(1), and 27(d) of the Investment
Company Act of 1940. The Registrant hereby represents that it
has complied with the provisions paragraphs (1) through (4) of
said no-action letter.

(e) Conseco Variable Insurance Company hereby represents
that the fees and charges deducted under the Contract, in the
aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred, and the risks assumed
by Conseco Variable Insurance Company.

C-8
<PAGE>
SIGNATURES

As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has duly caused this Registration Statement to be
signed on its behalf, in the city of Carmel, of the State of Indiana on this
2nd day of November, 1998.

RYDEX ADVISER VARIABLE ANNNUITY ACCOUNT
REGISTRANT

By: CONSECO VARIABLE INSURANCE COMPANY
(Depositor)

By: /s/
-------------------------------------------------
Rollin M. Dick Executive Vice President

As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Depositor has duly caused this Registration Statement to be
signed on its behalf, in the City of Carmel, State of Indiana, on the 2nd Day
of November 1998.

CONSECO VARIABLE INSURANCE COMPANY
Depositor

By: /s/
-------------------------------------------------
Rollin M. Dick Executive Vice President

As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities on the 2nd
Day of November 1998.

Signature Title
--------- -----

Chairman of the Board
--------------------------- (Chief Executive Officer)
Stephen C. Hilbert

Executive Vice President, Chief
--------------------------- Financial Officer and Director
Rollin M. Dick

Senior Vice President and
--------------------------- Treasurer (Chief Accounting
James S. Adams Officer)

Director and President
---------------------------
Thomas J. Kilian

Director
---------------------------
John J. Sabl

Director
---------------------------
Ngaire E. Cuneo

*By: /s/ Attorney-in-Fact
---------------------------
Karl W. Kindig

C-9
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 10 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Rockville, State of Maryland on this
30th day of October, 1998.

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(Registrant)

By: /s/Albert P. Viragh, Jr.
----------------------------------
Albert P. Viragh, Jr., President

As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons, in the capacities indicated, on this
30th day of October, 1998.

SIGNATURE TITLE

/s/Albert P. Viragh, Jr. Chairman of the Board of Managers,
---------------------------- Principal Executive Officer, and
Albert P. Viragh, Jr. President

* Member of the Board of Managers
----------------------------
Corey A. Colehour

* Member of the Board of Managers
----------------------------
J. Kenneth Dalton

* Member of the Board of Managers
----------------------------
John O. Demaret

Member of the Board of Managers
----------------------------
L. Gregory Gloeckner

* Member of the Board of Managers
----------------------------
Patrick T. McCarville

* Member of the Board of Managers
----------------------------
Roger Somers

/s/Carl G. Verboncoeur Vice President and Treasurer
----------------------------
Carl G. Verboncoeur

*By: /s/Albert P. Viragh, Jr.
----------------------------
Albert P. Viragh, Jr.
Attorney-in-Fact

C-10
<PAGE>

EXHIBIT INDEX

Ex-1(b) Resolutions of the Board of Directors of Conseco Variable
Insurance Company authorizing restructuring of investments of the
Registrant and registration of Registrant under the 1940 Act as a
unit investment trust.

Ex-1(c) Resolutions of the Board of Managers of the Registrant authorizing
restructuring of investments of the Registrant and registration of
Registrant under the 1940 Act as a unit investment trust.

Ex-3(a) Form of Underwriting Agreement Among Conseco Variable
Insurance Company, the Rydex Advisor Variable Annuity Account, and
Conseco Equity Sales, Inc.

Ex-3(b)(1) Form of Group Selling Agreement Among Conseco Variable
Insurance Company, Conseco Equity Sales, Inc., Broker, and
Insurance Agent.

Ex-3(b)(2) Form of Notice of Assignment of Group Selling Agreements by
PADCO Financial Services, Inc. to Conseco Equity Sales, Inc.
effective November 2, 1998.

Ex-6(b) Articles of Amendment to the Articles of Incorporation of Great
American Reserve Insurance Company changing name to Conseco
Variable Insurance Company.

Ex-6(c) Official Order of the Commissioner of Insurance of the State of
Texas approving Articles of Amendment to the Articles of
Incorporation changing name from Great American Reserve Insurance
Company to Conseco Variable Insurance Company.

Ex-8 Form Participation Agreement between Conseco Variable
Insurance Company, Rydex Variable Trust and PADCO Financial
Services, Inc.

Ex-9 Opinion of Counsel and Consent to its use as to the legality of the
securities registered and indicating that they will be legally
issued and will represent binding obligations of Conseco Variable
Insurance Company.

Ex-10 Consent of Independent Accountants PricewaterhouseCoopers.

Ex-14(a) Power-of-Attorney of Ngaire E. Cuneo, Director.

C-11

<PAGE>

WRITTEN CONSENT TO RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
CONSECO VARIABLE INSURANCE COMPANY

The undersigned, being all of the members of the Board of Directors of
Conseco Variable Insurance Company (the "Company") hereby unanimously consent to
the adoption of the following resolutions without a meeting of the
Board of Directors of the Company:

RESOLVED, that the restructuring of the Company's segregated asset account,
known as Rydex Advisor Variable Annuity Account (the "Variable Account"), from
an open-end managed separate account into a unit investment trust investing in
shares of the newly formed Rydex Variable Trust (the "Trust"), pursuant to the
Agreement and Plan of Restructuring dated August 11, 1998 (the "Restructuring
Agreement") and presented with this Written Consent, be, and it hereby is,
approved subject to such changes as the officers of the Company, in consultation
with counsel to the Company, deem necessary and appropriate; and

RESOLVED, that the proper officers of the Company be, and hereby are,
authorized and directed to sign the Restructuring Agreement substantially in the
form presented with this Written Consent; and

RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized to take all actions they deem necessary or appropriate to implement
the Restructuring Agreement, and to carry out the intentions and accomplish the
purposes of the Restructuring Agreement, including but not limited to, making
any changes to the forms of variable annuity applications or variable annuity
contracts, entering into any underwriting or administrative contracts, making
any filings with the SEC and state insurance boards, and any other matters
properly incident thereto; and

RESOLVED, that the filing with the U.S. Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933, on Form N-4, of a post
effective Amendment to the Form N-3 registration statement for the Variable
Account and Contracts, including the filing of any amendments thereto and all
matters properly incident thereto, is hereby specifically authorized and
approved; and

RESOLVED, that the filing with the U.S. Securities and Exchange Commission
pursuant to Section 8 of the Investment Company Act of 1940 ("1940 Act"),
registering the Variable Account as a unit investment trust under said Act,
including the filing of any amendments thereto and all matters properly incident
thereto, is hereby authorized and approved; and

RESOLVED, that the filing with the U.S. Securities and Exchange Commission
of applications, and amendments thereto, for exemptions from the provisions of
the Investment Company Act of 1940 and the rules and regulations thereunder as
may be necessary or appropriate to effectuate the purposes of these resolutions,
are hereby authorized and approved; and

RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized to take all actions necessary to maintain the registration of the

<PAGE>

Variable Account as a unit investment trust under the 1940 Act, and to take such
related actions as they deem necessary or appropriate to carry out the
foregoing, including, without limitation, the following: determining that the
fundamental investment policy of the Variable Account shall be to invest and
reinvest its assets in securities issued by such open-end management investment
companies registered under the 1940 Act as the officers may designate consistent
with provisions of the Contracts issued by the Company; establishing one or more
sub-accounts of the Variable Account to which payments under the Contracts will
be allocated in accordance with orders received from Contract owners or
Participants; reserving to the officers the authority to increase or decrease
the number of sub-accounts in the Variable Account as they deem necessary or
appropriate; investing each sub-account only in shares of a single investment
company or a single portfolio of an investment company organized as a series
fund pursuant to the 1940 Act, including substituting from time to time the
shares of another single investment company or single portfolio of a series fund
for such shares then invested in such sub-account, as the officers acting in
accordance with the provisions of the Contracts deem necessary or appropriate;
and the aforesaid being subject to the commencement of the Variable Account's
operations as a unit investment trust which invests in shares of one or more
portfolios of the Conseco Series Trust; and

RESOLVED, that in connection with the Variable Account and the offer and
sale of Contracts the officers of the Company be, and each of them hereby is,
authorized to execute and file with such authorities of the states of the United
States of America, and to take such related actions as they deem necessary or
appropriate to carry out the foregoing, including, without limitation, the
following: such applications, notices, certificates, affidavits, powers of
attorney, consents of service of process, covenants of an issuer, bonds, escrow
and impending agreements, and other writing and instruments as may be necessary
or appropriate in order to render permissible the offering and sale of
Contracts in any jurisdiction within the United States of America; the forms
of any resolutions required by any state authority to be filed in connection
with any of the documents or instruments referred to above be, and the same
hereby are, adopted by this Board of Directors as if such resolutions were fully
set forth herein if (i) in the opinion of the officers of the Company, the
adoption of such resolutions is necessary or advisable, and (ii) the Secretary
or any Assistant Secretary of the Company evidences the adoption of any such
resolution by filing a copy of such resolution with this Written Consent; and

RESOLVED, that the officers of the Company be and hereby are authorized to
take such further action and to execute such additional documents as they deem
necessary or appropriate to effectuate the purposes of the foregoing
resolutions.

The resolutions adopted pursuant to this Written Consent shall be effective
as of October 28, 1998.

/S/ NGAIRE E. CUNEO /S/ ROLLIN M. DICK
- - ------------------- -------------------
Ngaire E. Cuneo Rollin M. Dick

/S/ THOMAS J. KILIAN /S/ STEPHEN C. HILBERT
- - ----------------------- -----------------------
Thomas J. Kilian Stephen C. Hilbert

<PAGE>

/S/ JOHN J. SABL
- - -----------------------
John J. Sabl

<PAGE>

THE RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
APPROVAL OF PLAN OF RESTRUCTURING WITH RYDEX VARIABLE TRUST

VOTED: That the Restructuring of the Separate Account into the Rydex Variable
Trust be, and it hereby is, approved subject to such changes as the
officers of the Separate Account, in consultation with counsel to the
Separate Account, deem necessary and appropriate.

VOTED: That the proper officers of the Separate Account be, and hereby are,
authorized and directed to sign the Agreement and Plan of
Restructuring and Liquidation substantially in the form presented at
this meeting.

<PAGE>

PRINCIPAL UNDERWRITER'S AGREEMENT

IT IS HEREBY AGREED by and between CONSECO VARIABLE INSURANCE COMPANY
("INSURANCE COMPANY") on behalf of RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(the "Separate Account") and CONSECO EQUITY SALES, INC. ("PRINCIPAL
UNDERWRITER") as follows:

INSURANCE COMPANY proposes to issue and sell Individual Fixed and Variable
Deferred Annuity Contracts and Certificates (the "Contracts") of the Separate
Account to the public through PRINCIPAL UNDERWRITER. The PRINCIPAL UNDERWRITER
agrees to provide sales service subject to the terms and conditions hereof.
The Contracts to be sold are more fully described in the registration statement
and prospectus hereinafter mentioned. Such Contracts will be issued by
INSURANCE COMPANY through the Separate Account.

INSURANCE COMPANY grants PRINCIPAL UNDERWRITER the exclusive right, during
the term of this Agreement, subject to registration requirements of the
Securities Act of 1933 and the Investment Company Act of 1940 and the provisions
of the Securities Exchange Act of 1934, to be the distributor of
the Contracts issued through the Separate Account. PRINCIPAL UNDERWRITER will
sell the Contracts under such terms as set by INSURANCE COMPANY and will make
such sales to purchasers permitted to buy such Contracts as specified in the
prospectus.

III

PRINCIPAL UNDERWRITER shall be compensated for its distribution services in
such amount as to meet all of its obligations to selling broker dealers
with respect to all Purchase Payments accepted by INSURANCE COMPANY on the
Contracts covered hereby.

On behalf of the Separate Account, INSURANCE COMPANY shall furnish
PRINCIPAL UNDERWRITER with copies of all prospectuses, financial statements
and other documents which PRINCIPAL UNDERWRITER reasonably requests for use in
connection with the distribution of the Contracts. INSURANCE COMPANY shall
provide to PRINCIPAL UNDERWRITER such number of copies of the current effective
prospectuses as PRINCIPAL UNDERWRITER shall request.

PRINCIPAL UNDERWRITER is not authorized to give any information, or to make
any representations concerning the Contracts or the Separate Account of
INSURANCE COMPANY other than those contained in the current registration
statements or prospectuses relating to the Separate Account filed with the
Securities and Exchange Commission or such sales literature as may be authorized
by INSURANCE COMPANY.

<PAGE>

Both parties to this Agreement agree to keep the necessary records as
indicated by applicable state and federal law and to render the necessary
assistance to one another for the accurate and timely preparation of such
records.

VII
This Agreement shall be effective upon the execution hereof and will remain
in effect unless terminated as hereinafter provided. This Agreement shall
automatically be terminated in the event of its assignment by PRINCIPAL
UNDERWRITER.

This Agreement may at any time be terminated by either party hereto upon 60
days' written notice to the other party.

VIII

All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given on the
date of service if served personally on the party to whom notice is to be given,
or on the date of mailing if sent by First Class Mail, Registered or
Certified, postage prepaid and properly addressed.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly authorized.

EXECUTED this ____ day of ___________, 1998.

INSURANCE COMPANY

CONSECO VARIABLE INSURANCE COMPANY

BY:
--------------------------------------------
Michael A. Colliflower, Senior Vice President

ATTEST:

- ------------------------------
Secretary

PRINCIPAL UNDERWRITER

CONSECO EQUITY SALES, INC.

BY:
-------------------------------------------
L. Gregory Gloeckner, President

ATTEST:

- -----------------------------
Secretary

<PAGE>

Exhibit 3(b)1

GREAT AMERICAN RESERVE INSURANCE COMPANY
PADCO FINANCIAL SERVICES, INC.
GROUP SELLING AGREEMENT

This Agreement is made between Great American Reserve Insurance Company
("Company") with Administrative Offices in Carmel, Indiana, PADCO Financial
Services, Inc. ("Underwriter") with Administrative Offices in Rockville,
Maryland, the Broker-Dealer named herein ("Broker"), and the Insurance Agent
named herein ("Insurance Agent"). The parties hereby agree as follows:

1. AUTHORIZATION.

Broker, either an individual, partnership, limited liability company, or
corporation, is hereby authorized by Company and Underwriter to solicit
applications for variable annuity policies ("Policies"), as set forth in the
Compensation Schedule which is made a part of the Group Selling Agreement, to
collect and remit initial required premiums to Company, and to promptly deliver
Policies issued by Company:

a. only in jurisdictions where Broker is duly licensed and appointed by
the appropriate regulatory agencies, and;
b. only in states or territories in which Company is admitted to do
business and only for those Policies offered by Company that have been
approved by the appropriate regulatory agencies.

Broker shall supply Company with copies of all certificates of qualification or
licenses required of Broker under this Agreement.

1.1. LIMITATION OF AUTHORITY, RELATIONSHIP.

Neither Broker nor Insurance Agent has authority during the time this Agreement
is in effect, or after termination, to:

a. make or modify Policies on behalf of Company or waive any of Company's
rights or requirements;
b. collect the first premiums on such Policies other than in the form of
a check or money order made payable to the Company.
c. endorse, cash or deposit any checks or drafts payable to Company;
d. open any bank account or trust account on behalf of, for the benefit
of, or containing the name of, Company;
e. advertise or publish any matter or thing, including use of the names
or logos of Company or those of its subsidiaries or affiliates,
concerning Company or its Policies without prior written permission of
Company;
f. directly or indirectly cause or endeavor to cause any broker or agent
of Company or registered representatives of Underwriter to terminate
or alter its/his contract with Company, or induce or attempt to induce
any policyholder of Company to relinquish, surrender, replace or lapse
a Policy; or
g. incur any liability, indebtedness or expense on behalf of the Company
other than for commissions to be paid for sales of Policies, make any
purchases on behalf of the Company, or otherwise obligate the Company;
or
h. institute, prosecute or maintain any legal proceeding on behalf of the
Company; or
i. do or perform any acts or things other than expressly authorized
herein.

This Agreement shall not create an employer-employee relationship. The
relationship of Broker to Company shall be that of independent contractor.
Broker and Insurance Agent, jointly and severely shall indemnify and hold
harmless Company, Underwriter, and any marketing agent of Company and each of
their affiliates and any officer, director, employee or agent if the foregoing
from any and all claims, demands, penalties, suits, or actions, and from any and
all losses, costs, expenses, damages and liability in connection therewith,
arising out of or resulting from the default in the performance of, or in the

1
<PAGE>

negligent performance of, by Broker, Insurance Agent, or their partners,
directors, officers, employees, representatives, or agents, the obligations of
Broker or Insurance Agent under this Agreement, including but not limited to any
payments made by Company or Underwriter to any marketing agent pursuant to any
obligation of Company or Underwriter to indemnify or hold harmless such
marketing agent in connection with sales of the Policies by or through the
Broker. In addition, Broker or Insurance Agent agrees to furnish and maintain a
satisfactory bond of indemnity when requested by Company, a copy of such bond to
be submitted to Company within 30 days of request. This indemnification is in
addition to any other liability which Broker and Insurance Agent may have for
any unauthorized acts by Broker or Insurance Agent or their partners, directors,
officers, employees, representatives or agents. The provisions of this
paragraph shall survive the termination of this Agreement.

1.2. REPRESENTATION AND SERVICE.

Broker and Insurance Agent agree:

a. to establish such rules and procedures as are necessary to insure
compliance with applicable federal and state securities and insurance
laws;
b. to observe the rules, procedures and other directives established, and
given by Underwriter relating to the sale of the Policies. Broker
will comply with the rules and regulations of the Securities and
Exchange Commission ("SEC") and the National Association of Securities
Dealers, Inc., ("NASD") relating to the sale and distribution of the
Policies, maintain the required registrations or licenses and will
observe all applicable federal and state laws relating to the
Policies. Insurance Agent will maintain all necessary licenses for
the sale of the Policies and shall conduct its activities in
compliance with all applicable federal and state laws relating to the
Polices;
c. that all solicitations for Policies are accompanied by the appropriate
current prospectuses for the Policies conforming to the requirements
of the Securities Act of 1933;
d. no registrations and licenses concerning the Policies will be made
except those contained in the appropriate current prospectuses and in
information supplemental to the prospectuses;
e. to become fully informed as to the provisions and benefits of each
Policy offered by Company for which applications are solicited under
this Agreement;
f. to represent such Policies accurately and fairly to prospects;
g. to provide all usual and customary service to policyholders and
attempt to maintain in force any business placed with Company;
h. to hold in a fiduciary capacity all premiums received with any
application for Policies solicited for the Company; and
i. that they are in compliance with the terms and conditions of letters
issued by the Staff of the SEC with respect to the non-registration as
a broker/dealer of an insurance agency associated with a registered
broker/dealer. Broker and Insurance Agent shall notify Underwriter
immediately In writing if Broker and/or Insurance Agent fail to comply
with any such terms and conditions and shall take such measures as may
be necessary to comply with any such terms and conditions.
j. to conduct activities in a professional manner. Broker and Insurance
Agent agree to comply and cooperate with the Company in any
investigations by federal or state regulators, the NASD, or other self
regulatory organization.
k. that the right to sell the policies is subject to the Broker's and
representative's continued registration and compliance with such
agreement and the rules and procedures which may be established by
Company and/or the Underwriter.

1.3. BROKER'S AGENTS.

Broker will recruit, train and supervise registered representatives
("Representatives") for the sale of the Policies. Appointment of each
Representative shall be subject to Company's prior approval. Company may require
termination of any Representative's authority to sell the Policies. Broker is
responsible for the Representatives' compliance with the terms and conditions of
this Agreement and for the Representatives being duly licensed pursuant to
applicable state and federal laws. Broker acknowledges its responsibility to
Company for any unauthorized acts of Representatives.

2
<PAGE>

All matters concerning the licensing of any of the Broker's representatives
under any applicable state insurance law shall be a matter handled directly by
the Broker and the representative involved; but the Company must be furnished
proof of licensing before any commission payments may be made with respect to
sales of policies by such representative or before Company will designate such
representative as an authorized person to sell such policies.

1.4. DELIVERY OF POLICY.

Broker and/or Insurance Agent shall return promptly to the Company all receipts
for delivered Policies, all undelivered Policies and all receipts for
cancellation, in accordance with the instructions from the Company. Upon
issuance of a Policy by the Company and delivery of such Policy to Broker and
Insurance Agent, Broker or Insurance Agent shall promptly deliver such Policy to
its purchaser. For purposes of this provision "promptly" shall be deemed to
mean not later than five calendar days. The Company will assume that a Policy
will be delivered to the purchaser of such Policy within five calendar days for
purposes of determining when to transfer premiums initially allocated to the
Money Market Subaccount available under such Policy to the particular investment
options specified by such purchaser. As a result, if purchasers exercise the
free look provisions under such Policy, Broker and Insurance Agent shall
indemnify the Company for any loss incurred by the Company that results from
Broker's or Insurance Agent's failure to deliver such Policy to the purchasers
within the contemplated five calendar day period.

1.5 ADMINISTRATIVE GUIDELINES AND COMPLIANCE.

Company's administrative guidelines, including bulletins, product and procedure
updates, any revisions, additions and amendments thereto, from the time made by
Company, shall be for all purposes a part of this Agreement as fully as if set
out word for word herein and shall be complied with by Broker and Insurance
Agent. Broker and Insurance Agent agree to comply fully with all applicable
regulations, bulletins, rulings, circular letters, proclamations and statutes,
now or hereafter in force, and to promptly notify Company in writing of all
contacts and/or correspondence received from insurance regulatory or other
governmental authorities, and to cooperate fully with Company in making
responses to those authorities.

Broker and Insurance Agent agree that all applications for policies shall be
remitted in full together with such applications, signed by the applicants,
directly to the Company. Checks or money orders in payment thereof shall be
drawn to the order of "Great American Reserve Insurance Company". Payments shall
not be considered as received until the application has been accepted by the
Company, except as otherwise provided at the direction and risk of the Company.
After the initial purchase payment has been made and the policy has been issued,
the policyowner shall make all future payments (if any are called for under the
policy or otherwise permitted by the Company) directly to the Company.

SALES MATERIALS.

a. During the term of this Agreement, the Underwriter and the Company
will provide Broker and Insurance Agent, without charge, with as many
copies of prospectuses (and any supplements thereto), current fund
prospectus(es) (and any supplements thereto), and applications. The
Broker and Insurance Agent will promptly return to Underwriter any
prospectuses, applications, fund prospectuses, and other materials and
supplies furnished by Underwriter or the Company to Broker or
Insurance Agent or to the Representatives.
b. During the term of this Agreement, Underwriter and the Company will be
responsible for providing and approving all promotional, sales and
advertising material to be used by Broker, Insurance Agent and the
Representatives. Underwriter will file such materials or will cause
such materials to be filed with the SEC, the NASD, and/or with any
state securities regulatory authorities, as appropriate.
c. Broker and Insurance Agent shall not use or implement any promotional,
sales or advertising material relating to the Contracts without the
prior written approval of Underwriter and the Company.

3
<PAGE>

1.6 LIMITATION OF LIABILITY.

The Broker understands and agrees that the Company and the Underwriter may
employ or may have employed a marketing agent in order to market to the Broker
the opportunity to enter into this Agreement and sell the Policies. Broker
agrees that such marketing agent shall not be held liable by Broker for any
claim, liability, judgment or cost, including attorneys fee, that may arise in
respect of or relating to this Agreement.

2. COMPENSATION.

All compensation payable for sales of the Policies shall be paid by Company to
Broker on behalf of Underwriter and nothing contained herein shall create any
right, title or interest in Underwriter to such compensation nor any
responsibility on the part of Underwriter for payment of such compensation.
Broker and Insurance Agent agree that the Company will be discharged from
liability for such compensation payments upon payment of any compensation due
under this Agreement to Underwriter. Company agrees to pay compensation in the
form of commissions and service fees as provided in the Compensation Schedule(s)
delivered to Broker by Company and incorporated herein by reference, upon any
cash premiums received by Company for Policies issued on applications submitted
by Broker. Such compensation shall be payment in full for all services performed
and all expenses incurred by Broker and Insurance Agent. Company reserves the
right to accrue compensation under this Agreement until a minimum of $25.00 has
become due.

2.1. COMPENSATION SCHEDULE(S).

The Compensation Schedule(s) attached, or which may hereafter be added, is
incorporated herein and made a part of this Agreement. Company reserves the
right to change such Compensation Schedule(s) at any time upon written notice to
Broker. However, no such change shall be applicable to Policies for which
Company has accepted premiums prior to the effective date of such change.

2.2. ACCOUNTING.

Company will give to Broker a weekly statement of all compensation becoming due
and payable since the date of the previous weekly statement. Unless Company
receives written objection to such weekly statement from Broker, within 90 days
after the date this statement is mailed to Broker's last known address or
delivered to Broker in person, the same shall be deemed final and binding upon
Broker.

2.3. EXCHANGES.

If in the sole discretion of Company a new Policy is issued to replace a
terminated or in force policy of Company or its affiliates or subsidiaries, the
new Policy shall be regarded as an exchanged Policy, and any compensation
payable shall be determined and adjusted by Company in accordance with Company's
then current exchange rules.

2.4 RETURN OF PREMIUM.

If no Policy is issued on an application, all moneys collected by Broker or
Insurance Agent will be immediately returned to the applicant. If Company finds
it necessary, for any reason, to cancel a Policy

4
<PAGE>

and refund premiums, any compensation paid to Broker on the amount refunded
shall be repaid to Company, or may be deducted from any compensation payable to
Broker under this Agreement.

2.5. LOCAL TAXES.

Broker is responsible for any county or municipal occupational or privilege fee,
tax or license which may be required of Broker, Insurance Agent or
Representatives as a result of business submitted hereunder.

3. INDEBTEDNESS.

Broker and Insurance Agent hereby authorize Underwriter and the Company to set
off from all amounts otherwise payable to Broker and the Insurance Agent all
liabilities of Broker or Insurance Agent. Broker and Insurance Agent shall be
jointly and severally liable for the payment of all Monies due to Underwriter
and/or the Company which may arise out of this Agreement or any other agreements
between Broker, Insurance Agent and Underwriter or the Company including, but
not limited to, any liability for any chargebacks or for any amounts advanced by
or otherwise due Underwriter or the Company hereunder. Underwriter and the
Company do not waive any of its other rights to pursue collection of any
indebtedness owed by Broker or Insurance Agent to Underwriter or the Company.
In the event Underwriter or the Company initiates legal action to collect any
indebtedness of Broker or Insurance Agent, Broker and Insurance Agent shall
reimburse Underwriter and the Company for reasonable attorney fees and expenses
in connection therewith.

Upon termination of this Agreement, any indebtedness by Broker and Insurance
Agent to the Company or Underwriter becomes immediately due and payable.

4. TERMINATION.

Termination of this Agreement is effected as follows:

a. Cause. This Agreement may be terminated for cause by Company,
immediately upon written notice to Broker and Insurance Agent, when
Broker or Insurance Agent or it's partner, director, officer, employee
or agent has, or is reasonably believed to have: (i) misappropriated
or withheld funds from any policyowner or from Company; (ii) induced
or attempted to induce Brokers of Company or registered
representatives of Underwriter to terminate, reduce, limit or
otherwise alter their services performed for or relationships with the
Company or Underwriter, or policyowners of Company to terminate or
replace their Policies; (iii) interfered with the collection of
renewal premiums; (iv) engaged in fraudulent or dishonest acts; (v)
been adjudged a bankrupt or executed a general assignment for benefit
of creditors or committed an act of bankruptcy; or (vi) otherwise
acted to adversely affect the reputation, good standing or business of
Company. If Company does not terminate this Agreement for any such
cause, a waiver shall not result and this Agreement may be terminated
under this subparagraph for any subsequent cause.

b. Death or Dissolution. If Broker or Insurance Agent is not a
corporation or partnership, this Agreement will terminate on the date
of Broker's or Insurance Agent's death. If broker or Insurance Agent
is a corporation or partnership, this Agreement will terminate on the
date that the corporation or partnership is dissolved or otherwise
determined by appropriate regulatory agencies to no longer be a legal
entity.

c. License Suspension or Revocation. This Agreement will terminate
immediately in the event of any order of suspension, revocation or
termination of Broker's or Insurance Agent's license by any regulatory
authority.

5
<PAGE>

d. Breach. This Agreement will terminate immediately upon notice in the
event of:
1. breach of any of the terms or provisions of this Agreement; or
2. Broker or Broker's associated person's failure to timely and
fully comply with Company supervisory directives, rules,
regulations or manuals.

e. Ownership Change. This Agreement will terminate if Broker or Insurance
Agent is not a natural person and in the event of a significant change
in Broker's or Insurance Agent's ownership or management as determined
by the Underwriter or Company in their sole discretion, or in the
event of the execution of an agreement of sale, transfer or merger of
Broker or Insurance Agent, without prior notice and written consent of
Company.

f. Notice. This Agreement may be terminated by any party without cause by
giving the other parties at least 30 days advance written notice
delivered personally or mailed to the last known address of the other
parties.

4.1. VESTED COMPENSATION.

a. Definition. Vested compensation is any compensation that would become
due under this Agreement for business submitted prior to the effective
date of termination, subsequent to the termination of this Agreement,
as described within Compensation Schedule(s) attached to this
Agreement. No compensation is vested unless specifically described in
the applicable Compensation Schedule. However, if this agreement were
to be terminated under the provisions of Paragraph 4.a., "Cause",
regardless of what the Compensation Schedule(s) might provide, no
compensation of any kind shall thereafter be payable.

b. Dissolution of Corporation or Partnership. Any vested compensation
shall be paid as directed by the Articles of Dissolution, or by the
Liquidation Agreement, or by the courts, or in accordance with
applicable statutes, as appropriate.

c. Death. If termination is by reason of Broker's or Insurance Agent's
death, such vested compensation shall be paid to Broker's or Insurance
Agent's lawful widow, and thereafter, lawful heirs or legal
representative.

d. Earnings Requirement for Continued Vested Compensation. In the event
less than $600 is earned in any calendar year after termination, no
further compensation will ever be paid regardless of the reason for
termination.

e. Payment of vested compensation will be reduced by any debt or
liability of Broker or Insurance Agent due the Company.

5. PREVIOUS AGREEMENT.

By execution of this Agreement, any prior agreement between the Company,
Underwriter, Broker and Insurance Agent or between Company and the signing
principal(s) related specifically to the business transacted under this
Agreement is terminated as of the effective date of this Agreement; but while
this Agreement remains in force, any rights of Broker and Insurance Agent to
receive compensation under the terms and conditions of the prior agreement are
continued hereunder, and such earned compensation shall be payable at the rate,
for the remainder of the period, and on the basis applicable as if that
agreement remained in force.

6. ENTIRE AGREEMENT.

This Agreement, including any supplements and the Compensation Schedule(s), is
the entire Agreement

6
<PAGE>

between the parties for all dealings after its effective date. Any
understandings, negotiations, representations, statements, promises, and
agreements, oral or otherwise, not included herein shall have no force and
effect in the instruction of the rights and obligations of the parties hereto
except as provided in this Section 6. This Agreement shall not be assigned
without the prior written consent of Company. No amendment of this Agreement
shall be valid unless made in writing by an authorized officer of the Company.

7. WAIVER.

No waiver by Company of rights arising from wrongdoing or failure by Broker or
Insurance Agent shall occur by Company's election not to enforce any provision
of this Agreement, nor reduce or affect Company's rights arising from subsequent
wrongdoing or failure by Broker or Insurance Agent.

8. NOTICE.

Any written notice given under any provision of this Agreement shall be complete
upon deposit, postage paid, in the U.S. Mail addressed to Broker and Insurance
Agent's at Broker's and Insurance Agent's last known address according to
Company's records or to Company or Underwriter at its Administrative Offices.

9. LEGAL ACTION

If any legal action is filed or threatened against the Company,
Underwriter, Broker or Insurance Agent pertaining to the Company's business or
Policies, the Underwriter, Broker, or Insurance Agent shall notify the Company
of such action within twenty-four (24) hours of receipt of knowledge and shall
forward to the Company by overnight delivery service copies of all documents
served upon the Underwriter, Broker or Insurance Agent.

10. CONSTRUCTION.

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
INDIANA EXCLUSIVE OF CHOICE OF LAWS PROVISIONS. Venue for any action between the
parties arising under this Agreement shall be in a Court located in Noblesville,
Hamilton County, Indiana.

The effective date of this Group Selling Agreement with Great American Reserve
Insurance Company shall be: ___________________ _____________, _______________.
(Month) (Day) (Year)

- ----------------------------------------------------
Contract Account Number (Assigned by Company)

BROKER: INSURANCE AGENT:

Check Type of Legal Entity: Check Type of Legal Entity:
/ / Individual / / Partnership / / Individual / / Partnership
/ / Corporation / / Corporation

- ---------------------------------------- -----------------------------------
Type or Print Name of Broker Type or Print Name of Insurance
Agent (if different from Broker)

7
<PAGE>

- ---------------------------------------- -----------------------------------
Signature of Broker Signature of Insurance Agent
(if different from Broker)

- ---------------------------------------- -----------------------------------
Social Security Number of Broker Social Security Number of Insurance
Agent (if different from Broker)

- ---------------------------------------- -----------------------------------
Taxpayer Identification Number of Broker Taxpayer Identification Number of
Insurance Agent (if different
from Broker)

GREAT AMERICAN RESERVE INSURANCE PADCO FINANCIAL SERVICES INC.
COMPANY

By: By:
------------------------------------ --------------------------------
Authorized Signature Authorized Signature

------------------------------------ --------------------------------
Type or Print Name Type or Print Name

--------------------------------
Date

<PAGE>

Exhibit 3(b)2

NOTICE OF ASSIGNMENT

PADCO FINANCIAL SERVICES, INC. TO CONSECO EQUITY SALES, INC.

GROUP SELLING AGREEMENTS AMONG CONSECO VARIABLE INSURANCE COMPANY (FORMERLY
GREAT AMERICAN RESERVE INSURANCE COMPANY), PADCO FINANCIAL SERVICES, INC.,
AND BROKER-DEALERS AND INSURANCE AGENTS NAMED IN THE AGREEMENTS

Effective November 2, 1998, PADCO Financial Services, Inc. assigns and
transfers the rights and obligations of the Underwriter set forth in Group
Selling Agreements among Conseco Variable Insurance Company (formerly Great
American Reserve Insurance Company), PADCO Financial Services, Inc., and
Broker-Dealers and Insurance Agents named in the Agreements, pertaining to the
distribution and sale of individual variable annuity contracts (the "Contracts")
issued by Conseco Variable Insurance Company and funded through Rydex Advisor
Variable Annuity Account, a separate account of Conseco Variable Insurance
Company, to Conseco Equity Sales, Inc. On and after the effective date of this
assignment and transfer, PADCO Financial Services, Inc. shall cease serving as
Underwriter under the Group Selling Agreements and Conseco Equity Sales, Inc.
shall commence serving as Underwriter under the Agreements. The rights and
obligations of Conseco Equity Sales, Inc. under the Group Selling Agreements are
limited to rights and obligations with respect to Contracts distributed and sold
under the Agreements on and after the effective date of the assignment.

PADCO FINANCIAL SERVICES, INC.

By:
-----------------------------------------
Albert P. Viragh, Inc., President

CONSECO EQUITY SALES, INC.

By:
-----------------------------------------
L. Gregory Gloeckner, President

CONSECO VARIABLE INSURANCE COMPANY

By:
-----------------------------------------
David A. White, Vice President

<PAGE>

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY

Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and Article 3.05 of the Insurance Code of Texas, Great American
Reserve Insurance Company (herein after referred to as the "Company") adopts the
following Articles of Amendment to its Articles of Incorporation:

ARTICLE ONE

The following amendment to the Articles of Incorporation was adopted by the
sole shareholder of the Company pursuant to a Written Consent dated June 3,
1998:

RESOLVED, that Article One of the Articles of
Incorporation of the Company be amended to read as follows:

"ARTICLE ONE

The name of the corporation shall be Conseco Variable
Insurance Company."

ARTICLE TWO

The total number of shares of the Company outstanding at the time of such
adoption was one million forty-three thousand five hundred sixty-five
(1,043,565) and the number of shares entitled to vote thereon was one million
forty-three thousand five hundred sixty-five (1,043,565).

ARTICLE THREE

The holder of all of the one million forty-three thousand five hundred
sixty-five (1,043,565) shares outstanding and entitled to

<PAGE>

vote on said amendment has signed a consent in writing voting for said
amendment. No votes were cast against said amendment.

IN WITNESS WHEREOF, the undersigned officer executes these Articles of
Amendment to the Articles of Incorporation of Great American Reserve Insurance
Company, this 15th day of June 1998.

GREAT AMERICAN RESERVE INSURANCE
COMPANY

/s/ Thomas J. Kilian
------------------------------
Thomas J. Kilian, President

Attest:

/s/Michael A. Colliflower
- -------------------------------------------------------
Michael A. Colliflower, Assistant
Secretary

STATE OF INDIANA )
)
COUNTY OF HAMILTON )

Before me, a Notary Public in and for said County and State personally
appeared Thomas J. Kilian, President, and Michael A. Colliflower, Assistant
Secretary, of Great American Reserve Insurance Company who acknowledge the
execution of the foregoing instrument, and who, having been duly sworn, stated
that any representations contained therein are true.

Witness my hand and Notarial Seal this 15th day of June, 1998.

/s/ Holley Jeannette Schwab
------------------------------------
HOLLEY JEANNETTE SCHWAB,Notary Public
[Notarial Seal] Residing in MORTON County, IN
Commission Expires 6/22/99

<PAGE>

No. 98-1144
-------

OFFICIAL ORDER
of the
COMMISSIONER OF INSURANCE
OF THE
STATE OF TEXAS
AUSTIN, TEXAS

Date: October 07, 1998

Subject Considered:

GREAT AMERICAN RESERVE INSURANCE COMPANY
Amarillo, Texas
TDI No. 01-35200

AMENDMENT TO THE ARTICLES OF INCORPORATION
DOCKET NO. R-98-0579

General remarks and official action taken:

On this day came on for consideration by the Commissioner of Insurance, the
application of GREAT AMERICAN RESERVE INSURANCE COMPANY, Amarillo, Texas, for
approval of an amendment to the Articles of Incorporation changing its name
from GREAT AMERICAN RESERVE INSURANCE COMPANY to CONSECO VARIABLE INSURANCE
COMPANY and for a Certificate of Authority evidencing such change. Since the
amendment to the Articles of Incorporation involves only a change of name, a
hearing is not required by law.

Action by GREAT AMERICAN RESERVE INSURANCE COMPANY as required and permitted
by TEX. INS. CODE ANN. art. 1.14 and art. 3.05, has been evidenced to the
Commissioner of Insurance. The amendment is properly supported by the required
documents, which evidence that the name CONSECO VARIABLE INSURANCE COMPANY, is
not so similar of that of any other insurance company as to be likely to mislead
the public. The name change endorsement for CONSECO VARIABLE INSURANCE COMPANY,
Amarillo, Texas, Form No. CVIC-7000 has been filed with the Life/Health Group
Division.

<PAGE>

Based upon the evidence submitted, it is hereby ORDERED, by the Commissioner of'
Insurance, that such amendment be, and the same is hereby, approved. It is
further ORDERED that a Certificate of Authority be issued to CONSECO VARIABLE
INSURANCE COMPANY, Amarillo, Texas, evidencing the change affected by the
amendment and that thereupon the prior Certificate of Authority No. 9474, dated
December 31, 1990, be canceled.

ELTON BOMER
COMMISSIONER OF INSURANCE

By: /S/ KATHY A. WILCOX
--------------------------------------
Kathy A. Wilcox, Director
Insurer Services
Order 94-0580

Recommended by:

/S/ JOSE FLORES

- ----------------------------------------------
Jose Flores, Insurance Specialist
Insurer Services

<PAGE>

PARTICIPATION AGREEMENT

AMONG

RYDEX VARIABLE TRUST,

PADCO FINANCIAL SERVICES, INC.

AND

CONSECO VARIABLE INSURANCE COMPANY

DATED AS OF

NOVEMBER __, 1998

<PAGE>

TABLE OF CONTENTS

Page
----
ARTICLE I Purchase of Trust Shares. . . . . . . . . . . . . . . . . . . 2

ARTICLE II Representations and Warranties. . . . . . . . . . . . . . . . 4

ARTICLE III Prospectuses, Reports to Shareholders
and Proxy Statements, Voting. . . . . . . . . . . . . . . . . 6

ARTICLE IV Sales Material and Information. . . . . . . . . . . . . . . . 7

ARTICLE V Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE VI Diversification . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE VII Potential Conflicts . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE VIII Indemnification . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE IX Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE X Termination . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE XI Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 19

SCHEDULE A Separate Accounts and Contracts . . . . . . . . . . . . . . . 22

SCHEDULE B Proxy Voting Procedures . . . . . . . . . . . . . . . . . . . 23

<PAGE>

THIS AGREEMENT, made and entered into as of the ____ day of __________,
1998 by and among CONSECO VARIABLE INSURANCE COMPANY (hereinafter the
"Company"), a _______________ corporation, on its own behalf and on behalf of
each separate account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), RYDEX VARIABLE TRUST (hereinafter the "Trust"), a Delaware business
trust, and PADCO FINANCIAL SERVICES, INC. (hereinafter the "Underwriter"), a
Maryland corporation.

WHEREAS, the Trust engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and individual and group annuity contracts with variable
accumulation and/or pay-out provisions (hereinafter referred to individually
and/or collectively as "Variable Insurance Products") and (ii) the investment
vehicle for certain qualified pension and retirement plans (hereinafter
"Qualified Plans"); and

WHEREAS, insurance companies desiring to utilize the Trust as an investment
vehicle under their Variable Insurance Products enter into participation
agreements with the Trust and the Underwriter (the "Participating Insurance
Companies");

WHEREAS, beneficial interests in the Trust are divided into several series
of interests or shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series is hereinafter referred to as
a "Fund"); and

WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated _______________________ (File No. __________), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (hereinafter the "1940
Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of a Fund to be sold to and held by Variable
Insurance Product separate accounts of both affiliated and unaffiliated life
insurance companies and Qualified Plans (hereinafter the "Shared Funding
Exemptive Order"); and

WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and

WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Trust; and

<PAGE>

WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and

WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforementioned
Variable Insurance Products; and

WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforementioned Variable Insurance Products
and the Underwriter is authorized to sell such shares to each such Account at
net asset value;

NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust and each Underwriter agree as follows:

ARTICLE I. PURCHASE OF TRUST SHARES

1.1. The Trust agrees to make available for purchase by the Company shares
of the Trust and shall execute orders placed for each Account on a daily basis
at the net asset value next computed after receipt by the Trust or its designee
of such order. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from each Account and receipt
by such designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such order not later than the appropriate fund closing time
on the same Business Day that such order is received by the Company. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.

1.2. The Trust, so long as this Agreement is in effect, agrees to make its
shares available indefinitely for purchase at the applicable net asset value per
share by the Company and its Accounts on those days on which the Trust
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission and the Trust shall use reasonable efforts to calculate such net
asset value on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Trust (hereinafter
the "Board") may refuse to permit the Trust to sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Fund if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Fund.

-2-
<PAGE>

1.3. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of any Fund will be sold to the general public.

1.4. The Trust will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as in Section 1.3 of Article I, Section 3.5 of Article
III, Article VI and Article VII of this Agreement is in effect to govern such
sales.

1.5. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional shares of a Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. Subject to and in
accordance with applicable laws, and subject to written consent of the Company,
the Trust may redeem shares for assets other than cash. For purposes of this
Section 1.5, the Company shall be the designee of the Trust for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
order not later than the appropriate fund closing time on the same Business Day
that such order is received by the Company.

1.6. The Company agrees that purchases and redemptions of Fund shares
offered by the then current prospectus of the Trust shall be made in accordance
with the provisions of such prospectus. The Variable Insurance Products issued
by the Company, under which amounts may be invested in the Trust (hereinafter
the "Contracts"), are listed on Schedule A attached hereto and incorporated
herein by reference, as such Schedule A may be amended from time to time by
mutual written agreement of all of the parties hereto. The Company will give
the Trust and the Underwriter 45 days advance written notice of its intention to
make available in the future, as a funding vehicle under the Contracts, any
other investment company.

1.7. The Company shall pay for Trust shares on the next Business Day after
an order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purposes of Section 2.9 and 2.10, upon receipt by the Trust of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Trust.

1.8. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.

1.9. The Trust shall furnish same day notice (by electronic means, wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on Fund shares. The Company
hereby elects to receive all such income

-3-
<PAGE>

dividends and capital gain distributions as are payable on the Fund shares in
additional shares of that Fund. The Company reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash. The Trust shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.

1.10. The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time.

ARTICLE II. REPRESENTATIONS AND WARRANTIES

2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section _______________________ and has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.

2.2. The Trust represents and warrants that Trust shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Trust is and shall
remain registered under the 1940 Act. The Trust shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Trust
shall register and qualify the shares for sale in accordance with the laws of
the various states, to the extent required by applicable state law.

2.3. The Trust represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.

2.4. The Company represents and warrants that the Contracts are currently
treated as life insurance policies or annuity contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Trust immediately

-4-
<PAGE>

upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.

2.5. The Trust represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, it will have a
board of trustees, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.

2.6. The Trust represents that the Trust's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Delaware and the Trust represents that their respective operations are
and shall at all times remain in material compliance with the laws of the State
of Delaware to the extent required to perform this Agreement.

2.7. The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.

2.8. The Underwriter represents and warrants that it is and shall remain
duly registered in all material respects to the extent under all applicable
federal and state securities laws and that it will perform its obligations for
the Trust in compliance in all material respects with the laws of its state of
domicile and any applicable state and federal securities laws.

2.9. The Trust represents and warrants that its directors, officers,
employees, and other individuals/entities dealing with the money and/or
securities of the Trust are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimum coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.

2.10. The Company represents and warrants that all of its directors,
officers, employees, investment Underwriter, and other individuals/entities
dealing with the money and/or securities of the Trust are covered by a blanket
fidelity bond or similar coverage, in an amount not less $5 million. The
aforesaid includes coverage for larceny and embezzlement is issued by a
reputable bonding company. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Underwriter in the event that
such coverage no longer applies.

-5-
<PAGE>

ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING

3.1. The Trust or its designee shall provide the Company with as many
printed copies of the Trust's current prospectus and statement of additional
information as the Company may reasonably request. If requested by the Company,
in lieu of providing printed copies the Trust shall provide camera-ready film or
computer diskettes containing the Trust's prospectus and statement of additional
information, and such other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus and/or
statement of additional information for the Trust is amended during the year) to
have the prospectus for the Contracts and the Trust's prospectus printed
together in one document, and to have the statement of additional information
for the Trust and the statement of additional information for the Contracts
printed together in one document. Alternatively, the Company may print the
Trust's prospectus and/or its statement of additional information in combination
with other Trust companies' prospectuses and statements of additional
information.

3.2. Except as provided in this Section 3.2., all expenses of printing and
distributing Trust prospectuses and statements of additional information shall
be the expense of the Company. For prospectuses and statements of additional
information provided by the Company to its existing owners of Contracts in order
to update disclosure as required by the 1933 Act and/or the 1940 Act, the cost
of printing shall be borne by the Trust. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Trust's prospectus, the Trust will reimburse the Company in an amount equal
to the product of x and y where x is the number of such prospectuses distributed
to owners of the Contracts, and y is the Trust's per unit cost of typesetting
and printing the Trust's prospectus. The same procedures shall be followed with
respect to the Trust's statement of additional information. The Company agrees
to provide the Trust or its designee with such information as may be reasonably
requested by the Trust to assure that the Trust's expenses do not include the
cost of printing any prospectuses or statements of additional information other
than those actually distributed to existing owners of the Contracts.

3.3. The Trust's statement of additional information shall be obtainable
from the Trust, the Company or such other person as the Trust may designate, as
agreed upon by the parties.

3.4. The Trust, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and statements of additional information, which are covered in
section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.

3.5. If and to the extent required by law the Company shall:

(i) solicit voting instructions from Contract owners;

-6-
<PAGE>

(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and

(iii) vote Fund shares for which no instructions have been
received in the same proportion as Trust shares of such Fund
for which instructions have been received,

so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any Account in its own right, to the extent permitted by law.
The Trust and the Company shall follow the procedures, and shall have the
corresponding responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule B attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in a Fund calculates
voting privileges in a manner consistent with the standards set forth on
Schedule B, which standards will also be provided to the other Participating
Insurance Companies.

3.6. The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Trust will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Trust
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act
in accordance with the Securities and Exchange Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.

3.7. The Trust shall use reasonable efforts to provide Trust prospectuses,
reports to shareholders, proxy materials and other Trust communications (or
camera-ready equivalents) to the Company sufficiently in advance of the
Company's mailing dates to enable the Company to complete, at reasonable cost,
the printing, assembling and distribution of the communications in accordance
with applicable laws and regulations.

ARTICLE IV. SALES MATERIAL AND INFORMATION

4.1. The Company shall furnish, or shall cause to be furnished, to the
Underwriter, each piece of sales literature or other promotional material in
which the Trust or the Underwriter is named, at least five Business Days prior
to its use. No such material shall be used if the Trust or its designee
reasonably objects to such use within five Business Days after receipt of such
material.

4.2. The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the sale of the

-7-
<PAGE>

Contracts other than the information or representations contained in the
registration statement or prospectus for the Trust, as such registration
statement and prospectus may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales literature or other
promotional material approved by the Trust or its designee, except with the
permission of the Trust.

4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account(s) or
Contracts are named at least five Business Days prior to its use.

No such material shall be used if the Company or its designee
reasonably objects to such use within five Business Days after receipt of such
material.

4.4. The Trust and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.

4.5. The Trust will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Trust or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.

4.6. The Company will provide to the Trust at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in the Trust under the Contracts, contemporaneously with the filing of such
document with the Securities and Exchange Commission or other regulatory
authorities.

4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Trust or any affiliate of the Trust: advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature

-8-
<PAGE>

(I.E., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials.

ARTICLE V. FEES AND EXPENSES

5.1. The Trust shall pay no fee or other compensation to the Company under
this Agreement, except that if the Trust or any Fund adopts and implements a
plan pursuant to Rule 12b-1 to finance distribution expenses, then the
Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.

5.2. All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses
for the cost of registration and qualification of Fund shares, preparation and
filing of the Trust's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of Fund shares.

5.3. The Company shall bear the expenses of distributing the Trust's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company, other than the expenses of distributing prospectuses and statements of
additional information to existing contract owners.

ARTICLE VI. DIVERSIFICATION

6.1. The Trust will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Trust will at all times comply with Section 817(h)
of the Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by a Fund, the Trust will take all
reasonable steps (a) to notify

-9-
<PAGE>

Company of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.

ARTICLE VII. POTENTIAL CONFLICTS

7.1. The Board will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by Variable Insurance Product owners; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.

7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.

7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another Fund of the Trust, or submitting
the question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance policy owners,
or variable contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.

7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position

-10-
<PAGE>

or would preclude a majority vote, the Company may be required, at the Trust's
election, to withdraw the affected Account's investment in the Trust and
terminate this Agreement with respect to such Account (at the Company's
expense); provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board.

7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the position of the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Trust and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Trust shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.

7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Trust be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict.

7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.

ARTICLE VIII. INDEMNIFICATION

8.1. INDEMNIFICATION BY THE COMPANY

8.1(a) The Company agrees to indemnify and hold harmless the Trust and
each member of the Board and each officer and employee of the Trust, the
Underwriter and each

-11-
<PAGE>

director, officer and employee of the Underwriter, and each person, if any, who
controls the Trust, or the Underwriter within the meaning of Section 15 of the
1933 Act (collectively, an "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of Fund shares or the Contracts and:

(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus or statement of additional
information for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of the Trust for use in the registration statement or prospectus or
statement of additional information for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or

(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the registration statement, prospectus, statement of additional
information or sales literature of the Trust not supplied by the
Company, or persons under its control and other than statements or
representations authorized by the Trust or the Underwriter) or
unlawful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
or

(iii) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, statement of additional
information or sales literature of the Trust or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust by or on behalf of the Company; or

-12-
<PAGE>

(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or

(v) arise out of or result from any material breach of any
representation or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.

8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.

8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.

8.2. INDEMNIFICATION BY THE UNDERWRITER

8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, an "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the

-13-
<PAGE>

Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of shares of a Fund or the Contracts and:

(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus, statement of
additional information or sales literature of the Trust
(or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf
of the Company for use in the registration statement,
prospectus, statement of additional information for the
Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or

(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus, statement of additional
information or sales literature for the Contracts not
supplied by the Trust or persons under its control and
other than statements or representations authorized by
the Company) or unlawful conduct of the Trust,
Underwriter(s) or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or

(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained
in a registration statement, prospectus, statement of
additional information or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein
or necessary to make the statement or statements
therein not misleading, if such statement or omission
was made in reliance upon information furnished to the
Company by or on behalf of the Trust; or

(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement, or

-14-
<PAGE>

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.

8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement.

8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.

8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.

8.3. INDEMNIFICATION BY THE TRUST

8.3(a). The Trust agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Trust) or litigation (including legal and other expenses) to which the
Indemnified Parties may become

-15-
<PAGE>

subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct of
the Board or any member thereof, and are related to the operations of the Trust
and:

(i) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement; or

(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Trust;

8.3(b). The Trust shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.

8.3(c). The Trust shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve the Trust from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Trust will be entitled to participate, at its own
expense, in the defense thereof. The Trust also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Trust to such party of the Trust's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.

8.3(d). The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Trust.

-16-
<PAGE>

ARTICLE IX. APPLICABLE LAW

9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the substantive laws of the State of
Delaware.

9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.

ARTICLE X. TERMINATION

10.1.This Agreement shall continue in full force and effect until the first
to occur of:

(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or

(b) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund based upon the Company's
determination that shares of such Fund are not reasonably available to
meet the requirements of the Contracts; or

(c) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund in the event any of the Fund's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of
such shares as the underlying investment media of the Contracts issued
or to be issued by the Company; or

(d) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund in the event that such Fund
ceases to qualify as a Regulated Investment Company under Subchapter M
of the Code or under any successor or similar provision, or if the
Company reasonably believes that the Trust may fail to so qualify; or

(e) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund in the event that such Fund falls
to meet the diversification requirements specified in Article VI
hereof; or

(f) termination by either the Trust by written notice to the Company if
the Trust shall determine, in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business,

-17-
<PAGE>

operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity, or

(g) termination by the Company by written notice to the Trust and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Trust or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or

(h) termination by the Trust or the Underwriter by written notice to the
Company, if the Company gives the Trust and the Underwriter the
written notice specified in Section 1.6 hereof and at the time such
notice was given there was no notice of termination outstanding under
any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6 was given.

10.2. Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing, Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to direct
reallocation of investments in the Trust, redemption of investments in the Trust
and investment in the Trust upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.2 shall
not apply to any terminations under Article VII and the effect of such Article
VII terminations shall be governed by Article VII of this Agreement.

10.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Trust the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Fund that was otherwise
available under the Contracts without first giving the Trust 90 days prior
written notice of its intention to do so.

-18-
<PAGE>

ARTICLE XI. NOTICES

Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.

If to the Trust:

Rydex Variable Trust
6116 Executive Boulevard, Suite 400
Rockville, MD 20852

If to Underwriter:

PADCO Financial Services, Inc.
6116 Executive Boulevard, Suite 400
Rockville, MD 20852

If to the Company:

Conseco Variable Insurance Company
11825 North Pennsylvania Street
Carmel, IN 46032

ARTICLE XII. MISCELLANEOUS

12.1. All persons dealing with the Trust must look solely to the property
of the Trust for the enforcement of any claims against the Trust as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust.

12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.

12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.

-19-
<PAGE>

12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.

12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.

12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.

12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations
at law or in equity, which the parties hereto are entitled to under state and
federal laws.

12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that an Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.

12.9. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee copies of the following reports:

(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 90 days after the end
of each fiscal year;

(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 45 days after
the end of each quarterly period:

(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;

-20-
<PAGE>

(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;

(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.

CONSECO VARIABLE INSURANCE COMPANY

By:
------------------------------

RYDEX VARIABLE TRUST

By:
------------------------------

PADCO FINANCIAL SERVICES, INC.

By:
------------------------------

-21-
<PAGE>

CONSECO VARIABLE INSURANCE COMPANY

SCHEDULE A

SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS

Shares of the Funds of the Trust shall be made available as investments for
the following Separate Accounts:

NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF CONTRACT
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
- -------------------------------------- -----------------------------------

-22-
<PAGE>

SCHEDULE B

PROXY VOTING PROCEDURES

The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.

1. The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.

2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.

Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Trust , as soon as possible, but no later
than two weeks after the Record Date.

3. The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the Agreement
to which this Schedule relates.

4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Trust. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Trust or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:

a. name (legal name as found on account registration)
b. address
c. Trust or account number
d. coding to state number of units

-23-
<PAGE>

e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).

(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)

5. During this time, the Trust will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:

a. Voting Instruction Card(s)
b. one proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Trust.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by the Trust

6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.

7. Package mailed by the Company.
* The Trust must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including,) the meeting, counting backwards.

8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.

Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Trust in the past.

9. Signatures on Card checked against legal name on account registration which
was printed on the Card.

-24-
<PAGE>

Note: For Example, if the account registration is under "John A. Smith,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.

10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.

11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.

12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.

13. Final tabulation in shares is verbally given by the Company to the Trust on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.

14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Trust will provide a standard form for each Certification.

15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Trust will be
permitted reasonable access to such Cards.

16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.

-25-

<PAGE>

Exhibit 9
Conseco Variable Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032

November 2, 1998

Board of Directors
Great American Reserve Insurance Company

Re: Rydex Advisor Variable Annuity Account
Registration Statement on Form N-4 (File Nos. 333-03093 and 811-07615)

Gentlemen and Madam:

I am Executive Vice President, Secretary and General Counsel of Conseco
Variable Life Insurance Company (the "Company"). At your request, I have
examined or caused to be examined the Registration Statement on Form N-4,
(the "Registration Statement") of Rydex Advisor Variable Annuity Account (the
"Registrant" or "Account") with respect to the securities issued in
connection with the offering of variable annuity contracts through the
Account. The Registrant's Form N-4 Registration Statement is filed pursuant
to the Securities Act of 1933 (the "Act") and the Investment Company Act of
1940 ("1940 Act"). This opinion is being furnished pursuant to the 1933 Act
in connection with the Registrant's Form N-4 Registration Statement. No fee
is payable because the Registrant files a declaration of indefinite
registration pursuant to Rule 24f-2 under the 1940 Act.

In rendering this opinion, I, or attorneys under my supervision (together
referred to herein as "we"), have examined and relied upon a copy of the
Registration Statement. We have also examined originals, or copies of
originals certified to our satisfaction, of such agreements, documents,
certificates and statements of government officials and other instruments,
and have examined such questions of law and have satisfied ourselves as to
such matters of fact, as we have considered relevant and necessary as a basis
for this opinion. We have assumed the authenticity of all documents submitted
to us as originals, the genuineness of all signatures, the legal capacity of
all natural persons and the conformity with the original documents of any
copies thereof submitted to us for examination.

Based on the foregoing, and subject to the qualifications and limitations
hereinafter set forth, I am of the opinion that:

1. The Account has been duly organized and is an existing separate account
pursuant to the applicable laws of the State of Texas;

2. The Account is a unit investment trust registered under the 1940 Act;

<PAGE>

3. The securities issued in connection with the Account offering
variable annuity contracts, when issued as described in the Registration
Statement, will be duly authorized, will be legally issued, and will represent
binding obligations of the Company.

I do not find it necessary for the purposes of this opinion to cover, and
accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the securities to be
registered pursuant to the Registration Statement. Without limiting the
generality of the foregoing, I express no opinion in connection with the
matters contemplated by the Registration Statement, and no opinion may be
implied or inferred, except as expressly set forth herein.

This opinion is limited to the laws of the State of Indiana and of the United
States of America to the extent applicable. If any of the securities included
in the Registration Statement are governed by the laws of a state other than
Indiana, I have assumed for the purposes of this opinion that the laws of
such other state are the same as those of the State of Indiana.

I hereby consent to the inclusion of the opinion as Exhibit B-9 to the
Registration Statement and to all references to me in the Registration
Statement or the Prospectus included therein.

Very truly yours,

/s/JOHN J. SABL
- - ----------------------------------
John J. Sabl
Executive Vice President, Secretary,
and General Counsel

<PAGE>

Exhibit 10

[PRICEWATERHOUSECOOPERS LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form N-4
(File Nos. 33-03093 and 811-07615), of our report dated April 20, 1998 on our
audit of the financial statements of Great American Reserve Insurance Company
(which name was changed to Conseco Variable Insurance Company in October 1998).
We also consent to the reference to our firm under the caption "Independent
Accountants" in the Statement of Additional Information.

/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP

Indianapolis, Indiana
October 30, 1998

<PAGE>

LIMITED POWER OF ATTORNEY

We, the undersigned directors and officers of Great American Reserve Insurance
Company, a corporation duly organized under the laws of the State of Texas, do
hereby severally constitute and appoint John J. Sable and/or Karl W. Kindig, or
either one of the foregoing individually, as our attorney and agent, for us, and
in our names and in the capacities indicated below on behalf of the Company or
otherwise, with full power to execute, deliver and file with the Securities and
Exchange Commission all documents required for registration of variable annuity
contracts under the Securities Act of 1933, as amended, and the registration of
unit investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.

WITNESS our hands this 11th day of August, 1998.

SIGNATURE TITLE
- --------- -----
/s/Stephen C. Hilbert Chairman of the Board (Chief Executive Officer)
- ---------------------
Stephen C. Hilbert

/s/Rollin M. Dick Executive Vice President, Chief Financial Officer
- -----------------
Rollin M. Dick and Director

Senior Vice President and Treasurer (Chief
- -------------------------
James S. Adams Accounting Officer)

/s/Ngaire E. Cuneo Director
- ------------------
Ngaire E. Cuneo

/s/Thomas J. Kilian Director and President
- -------------------
Thomas J. Kilian

/s/John J. Sabl Director
- ---------------
John J. Sabl