<PAGE>
As Filed with the Securities and Exchange Commission on
File No. 333-47016
File No. 811-8475
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 [X]
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
For Registration Under the Investment Company Act of 1940 [X]
Amendment No. 6
GE Capital Life Separate Account II
(Exact Name of Registrant)
GE Capital Life Assurance Company of New York
(Name of Depositor)
125 Park Avenue, 6th Floor
New York, New York 10017-5529
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (804) 281-6000
Cheryl Whaley, President
GE Capital Life Assurance Company of New York
125 Park Avenue, 6th Floor
New York, New York 10017-5529
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
Title of Securities Being Registered: Interests in a Separate Account under
flexible premium variable annuity contracts.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
files further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
Prospectus For The
Flexible Premium Variable Deferred Annuity Contract
Form NY1155 4/00
issued by:
GE Capital Life Assurance Company of New York
125 Park Avenue, 6th Floor, New York, New York 10017-5529
Telephone: (212) 672-4400
Service Center
6610 West Broad Street
Richmond, VA 23230
(800) 313-5282
--------------------------------------------------------------------------------
This Prospectus describes a flexible premium variable deferred annuity contract
(the "Contract") for individuals and some qualified and nonqualified retirement
plans. GE Capital Life Assurance Company of New York (the "Company," "we," "GE
Capital Life," "us," or "our") issues the Contract.
The Contract offers you the accumulation of Contract Value and the payment of
periodic annuity benefits. We may pay these benefits on a variable or fixed
basis or a combination of both.
You may allocate your purchase payments to the Separate Account, the Guarantee
Account, or both. Each Subaccount of the Separate Account invests in shares of
the Funds. We list the Funds, and their currently available portfolios, below.
AIM Variable Insurance Funds:
AIM V.I. Capital Appreciation Fund, AIM V.I. Growth Fund, AIM V.I. Value
Fund
Alliance Variable Products Series Fund, Inc.:
Growth and Income Portfolio, Premier Growth Portfolio, Quasar Portfolio
Dreyfus:
Dreyfus Investment Portfolios-Emerging Markets Portfolio, The Dreyfus
Socially Responsible Growth Fund, Inc.
Federated Insurance Series:
Federated High Income Bond Fund II, Federated International Small Company
Fund II
Fidelity Variable Insurance Products Fund (VIP):
VIP Equity-Income Portfolio, VIP Growth Portfolio
Fidelity Variable Insurance Products Fund II (VIP II):
VIP II Contrafund(R) Portfolio
Fidelity Variable Insurance Products Fund III (VIP III):
VIP III Growth & Income Portfolio, VIP III Mid Cap Portfolio
GE Investments Funds, Inc.:
Mid-Cap Value Equity Fund, Money Market Fund, Premier Growth Equity Fund,
S&P 500(R) Index Fund, Small-Cap Value Equity Fund, U.S. Equity Fund, Value
Equity Fund
Janus Aspen Series:
Aggressive Growth Portfolio, Balanced Portfolio, Capital Appreciation
Portfolio, Global Life Sciences Portfolio, Global Technology Portfolio,
Growth Portfolio, International Growth Portfolio, Worldwide Growth Portfolio
<PAGE>
MFS(R) Variable Insurance Trust:
MFS(R) Growth Series, MFS(R) Growth With Income Series, MFS(R) New Discovery
Series, MFS(R) Utilities Series
Oppenheimer Variable Account Funds:
Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Growth &
Income Fund/VA
PIMCO Variable Insurance Trust:
Foreign Bond Portfolio, High Yield Bond Portfolio, Long-Term U.S. Government
Bond Portfolio, Total Return Bond Portfolio
Rydex Variable Trust:
Rydex OTC Fund
Except for amounts in the General Account, both the value of a Contract before
the Annuity Commencement Date and the amount of monthly income afterward will
depend upon the investment performance of the portfolio(s) you select. You bear
the investment risk of investing in the portfolios.
The Securities and Exchange Commission has not approved these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Your investment in the Contract is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any government
agency.
This Prospectus gives details about the Separate Account and our Guarantee
Account that you should know before investing. Please read this Prospectus
carefully before investing and keep it for future reference.
A statement of additional information ("SAI"), dated , 2000, concerning the
Separate Account has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. If you would
like a free copy, call us at 1-800-313-5282. The SAI also is available on the
SEC's website at http://www.sec.gov. A table of contents for the SAI appears on
the last page of this Prospectus.
The date of this Prospectus is , 2000
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Definitions................................................................. 1
Expense Table............................................................... 3
Synopsis.................................................................... 18
Investment Results.......................................................... 21
Financial Statements........................................................ 22
GE Capital Life Assurance Company of New York............................... 23
The Separate Account........................................................ 24
The Guarantee Account....................................................... 33
Charges and Other Deductions................................................ 35
The Contract................................................................ 40
Transfers................................................................... 43
Surrenders and Withdrawals.................................................. 48
The Death Benefit........................................................... 50
Income Payments............................................................. 56
Federal Tax Matters......................................................... 60
Voting Rights............................................................... 69
Requesting Payments......................................................... 70
Distribution of the Contracts............................................... 71
Additional Information...................................................... 72
Condensed Financial Information............................................. 74
Appendix.................................................................... A-1
</TABLE>
Statement of Additional Information -- Table of Contents
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
<PAGE>
Definitions
We have tried to make this Prospectus as understandable as possible. However,
in explaining how the Contract works, we have had to use certain terms that
have special meanings. We define these terms below.
Account or Separate Account -- GE Capital Life Separate Account II, a separate
investment account we established to receive and invest the purchase payments
you make under the Contract, and other variable annuity contracts we issue.
Accumulation Unit -- An accounting unit of measure we use in calculating the
Contract Value in the Account before the Annuity Commencement Date.
Annuitant/Joint Annuitant -- The Annuitant is the person(s) named in the
Contract upon whose age and, where appropriate, gender, we determine monthly
income benefits.
Annuity Commencement Date -- The date stated in the Contract on which your
income payments will commence, if any Annuitant is living on that date.
Annuity Unit -- An accounting unit of measure we use in the calculation of the
amount of the second and each subsequent variable income payment.
Contract Date -- The date we issue your Contract and your Contract becomes
effective. Your Contract Date is shown in your Contract. We use it to determine
Contract years and anniversaries.
Contract Value -- The value of the Contract equal to the amount allocated to
the Subaccounts of the Account and the Guarantee Account.
Death Benefit -- The benefit provided under a Contract upon the death of any
Annuitant before the Annuity Commencement Date.
Designated Beneficiary(ies) -- The person(s) designated in the Contract who is
alive (or in existence for non-natural entities) on the date of any Annuitant's
death and who we will treat as the sole owner of the Contract following such a
death.
Fund -- Any open-end management investment company or any unit investment trust
in which a Subaccount invests.
General Account -- Our assets that are not segregated in any of our separate
investment accounts.
Guarantee Account -- Part of our General Account that provides a guaranteed
interest rate for a specified interest rate guarantee period. This account is
not part of and does not depend on the investment performance of the Separate
Account.
Owner -- The person or persons (in the case of Joint Owners) entitled to
receive income payments after the Annuity Commencement Date. During the
lifetime of the Annuitant, the Owner also is entitled to the ownership rights
stated in the Contract
1
<PAGE>
and is shown on the Contract data pages and in any application. "You" or "your"
refers to the Owner or Joint Owners.
Service Center -- The office to which all written and telephone inquiries
concerning the Contract or the portfolios of the Funds should be made: 6610
West Broad Street, Richmond, VA 23230, 1-800-313-5282.
Subaccount -- A subdivision of the Separate Account, each of which invests
exclusively in shares of a designated portfolio of one of the Funds. Not all
Subaccounts may be available in all markets.
Surrender Value -- The Contract Value (after deduction of any applicable
optional benefit charges and annual contract charge) less any applicable
surrender charge and any applicable premium tax charge.
Valuation Day -- For each Subaccount, each day on which the New York Stock
Exchange is open for regular trading except for days that the Subaccount's
corresponding Fund does not value its shares.
Valuation Period -- The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.
2
<PAGE>
Expense Table
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Contract. The table reflects
expenses both of Subaccounts of the Account and of the portfolios. For more
complete descriptions of the various costs and expenses involved, see Charges
and Other Deductions in this Prospectus, and the Fund prospectuses. Premium tax
charges also may apply, although they do not appear in the table.
<TABLE>
<CAPTION>
Owner Transaction Expenses:
--------------------------------------------------------------------------
<S> <C>
The maximum surrender charge (as a percentage of each purchase
payment surrendered/withdrawn): 6%
We reduce the surrender charge percentage over time. In general,
the later you surrender or withdraw a purchase payment, the lower
the surrender charge will be on that purchase payment.
(Note: During each Contract year, up to 10% of purchase payments
plus any gain may be withdrawn without the imposition of the
surrender charge. See Surrender Charge.)
Transfer Charge (for each transfer after the first in a calendar
month)/1/ ........................................................ $10
</TABLE>
<TABLE>
<S> <C>
Annual
Expenses (as
a percentage
of Contract
Value
allocated to
the Separate
Account) :
</TABLE>
<TABLE>
<CAPTION>
Annuitant
& Joint Either
Annuitant Annuitant
Age 70 or Above Age
Less at 70 at
Issue Issue
--------------------------------------------------------------------------
<S> <C> <C>
Mortality and Expense Risk Charge 1.30% 1.50%
Administrative Expense Charge .15% .15%
---- ----
Total Annual Expenses 1.45% 1.65%
Other Annual Expenses:
Annual Contract Charge $30/2/
Maximum Optional Enhanced Death Benefit (assessed
annually as a percentage of average Contract Value) 0.35%/3/
</TABLE>
--------------------------------------------------------------------------------
1 We reserve the right to assess a $10 transfer charge for each transfer after
the first transfer in a calendar month.
2 We do not assess this charge if your Contract Value at the time the charge is
due is more than $40,000.
3 If the Optional Enhanced Death Benefit applies. We currently deduct this
charge annually at a rate of .20% of average Contract Value. This may be
referred to as "GE Earnings ProtectorSM" in our marketing materials.
3
<PAGE>
Portfolio Annual Expense Table
PORTFOLIO ANNUAL EXPENSES
Annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (as a percentage of each portfolio's average net assets):
<TABLE>
<CAPTION>
Management
Fees Other Expenses
(after fee (after Total
waiver as 12b-1 Service reimbursement Annual
Portfolio applicable) Fees* Fees** as applicable) Expenses
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital
Appreciation Fund 0.62% -- -- 0.11% 0.73%
AIM V.I. Growth Fund 0.63 -- -- 0.10 0.73
AIM V.I. Value Fund 0.61 -- -- 0.15 0.76
Alliance Variable Products
Series Fund, Inc./1/
Growth and Income
Portfolio -- Class B Shares 0.63 0.25% -- 0.09 0.97
Premier Growth Portfolio --
Class B Shares 1.00 0.25 -- 0.04 1.29
Quasar Portfolio -- Class B
Shares 0.81 0.25 -- 0.14 1.20
Dreyfus
Dreyfus Investment
Portfolios-Emerging Markets
Portfolio 1.25 -- -- 0.25 1.50
The Dreyfus Socially
Responsible Growth Fund,
Inc. 0.75 -- -- 0.04 0.79
Federated Insurance Series/2/
Federated High Income Bond
Fund II --Service Shares 0.60 -- 0.10 0.19 0.89
Federated International
Small Company Fund II 0.40 -- 0.10 1.00 1.50
Fidelity Variable Insurance
Products Fund (VIP)/3/
VIP Equity-Income
Portfolio -- Service Class
2 Shares 0.48 0.25 -- 0.10 0.83
VIP Growth Portfolio --
Service Class 2 Shares 0.58 0.25 -- 0.10 0.93
Fidelity Variable Insurance
Products Fund (VIP II)/4/
VIP II Contrafund
Portfolio -- Service Class
2 Shares 0.58 0.25 -- 0.12 0.95
Fidelity Variable Insurance
Products Fund (VIP III)/5/
VIP III Growth & Income
Portfolio --Service Class 2
Shares 0.48 0.25 -- 0.13 0.86
VIP III Mid Cap Portfolio --
Service Class 2 Shares 0.57 0.25 -- 0.43 1.25
GE Investments Funds, Inc./6/
Mid-Cap Value Equity Fund 0.65 -- -- 0.06 0.71
Money Market Fund 0.24 -- -- 0.06 0.30
Premier Growth Equity Fund 0.65 -- -- 0.03 0.68
S&P 500(R) Index Fund 0.35 -- -- 0.04 0.39
Small-Cap Value Equity Fund 0.80 -- -- 0.13 0.93
U.S. Equity Fund 0.55 -- -- 0.06 0.61
Value Equity Fund 0.65 -- -- 0.13 0.78
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Management Other
Fees Expenses
(after fee (after Total
waiver as 12b-1 Service reimbursement Annual
Portfolio applicable) Fees* Fees** as applicable Expenses
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Series/7/
Aggressive Growth
Portfolio -- Service Shares 0.65 0.25 -- 0.02 0.92
Balanced Portfolio -- Service
Shares 0.65 0.25 -- 0.02 0.92
Capital Appreciation
Portfolio -- Service Shares 0.65 0.25 -- 0.04 0.94
Global Life Sciences
Portfolio -- Service Shares 0.65 0.25 -- 0.19 1.09
Global Technology
Portfolio -- Service Shares 0.65 0.25 -- 0.13 1.03
Growth Portfolio -- Service
Shares 0.65 0.25 -- 0.02 0.92
International Growth
Portfolio -- Service Shares 0.65 0.25 -- 0.11 1.01
Worldwide Growth Portfolio --
Service Shares 0.65 0.25 -- 0.05 0.95
MFS(R) Variable Insurance
Trust/8/
MFS(R) Growth Series --
Service Class Shares 0.75 0.20 -- 0.16 1.11
MFS(R) Growth with Income
Series -- Service Class
Shares 0.75 0.20 -- 0.13 1.08
MFS(R) New Discovery
Series -- Service Class
Shares 0.90 0.20 -- 0.17 1.27
MFS(R) Utilities Series --
Service Class Shares 0.75 0.20 -- 0.16 1.11
Oppenheimer Variable Account
Funds
Oppenheimer Global Securities
Fund/VA -- Service Shares 0.67 0.15 -- 0.02 0.84
Oppenheimer Main Street
Growth & Income Fund/VA --
Service Shares 0.73 0.15 -- 0.05 0.93
PIMCO Variable Insurance
Trust/9/
Foreign Bond Portfolio --
Administrative Shares 0.25 -- 0.15 0.70 1.10
High Yield Bond Portfolio --
Administrative Shares 0.25 -- 0.15 0.35 0.75
Long-Term U.S. Government
Bond Portfolio --
Administrative Shares 0.25 -- 0.15 0.25 0.65
Total Return Bond
Portfolio -- Administrative
Shares 0.25 -- 0.15 0.25 0.65
Rydex Variable Trust
Rydex OTC Fund 0.75 -- 0.25 0.55 1.55
-------------------------------------------------------------------------------
</TABLE>
* The 12b-1 fees deducted from the 12b-1 classes of these portfolios cover
certain distribution and shareholder support services provided by the
companies selling contracts investing in those portfolios. The portion of
the 12b-1 fees assessed against the Separate Account's assets related to the
portfolios will be remitted to Capital Brokerage Corporation, the principal
underwriter for the contracts.
** The Service Share fees deducted from the service shares of these portfolios
cover certain administrative services provided by companies selling
contracts investing in those portfolios. The portion of the Service Share
fees assessed against the Separate Account's assets related to the
portfolios will be remitted to GE Capital Life.
5
<PAGE>
/1/ Alliance Variable Products Series Fund, Inc. has voluntarily agreed to
reduce or limit certain other expenses. Absent these waivers total annual
expenses during 1999 would have been 1.44% for the Quasar Portfolio,
consisting of 1.00% management fees, .25% 12b-1 fee and .19% other
expenses.
/2/ Federated Insurance Series, Inc. has voluntarily agreed to reduce or limit
certain other expenses. Absent these waivers total annual expenses during
1999 would have been 1.04% for the High Income Bond Fund II, consisting of
.60% management fees, .25% service fees and .19% other expenses; total
annual expenses of 2.50% for International Small Company Fund II,
consisting of 1.25% management fee, .25% service fee and 1.00% other
expenses.
/3/ The expenses of the portfolios of the Variable Insurance Products Fund
(VIP), Service Class 2, are based on the estimated expenses that those
Portfolios expect to incur in their initial fiscal year.
/4/ The expenses of the portfolios of the Variable Insurance Products Fund II
(VIP II), Service Class 2, are based on the estimated expenses that those
Portfolios expect to incur in their initial fiscal year.
/5/ The expenses of the portfolios of the Variable Insurance Products Fund III
(VIP III), Service Class 2, are based on the estimated expenses that those
Portfolios expect to incur in their initial fiscal year.
/6/ GE Asset Management Incorporated currently serves as investment adviser to
GE Investments Funds, Inc. and has agreed to waive a portion of the fee
payable by the Fund. Absent this fee waiver, the total annual expenses of
the GE Money Market Fund would have been .50%, consisting of .44%
management fees and .06% other expenses; GE Premier Growth Equity Fund
would have been .72% total annual expenses, consisting of .65% management
fees and .07% other expenses. Expenses for the Small-Cap Value Equity and
the Value Equity Funds are estimated due to the portfolios being in
existence for less than 10 months.
/7/ Janus Aspen Series expenses (except for Global Technology and Global Life
Sciences Portfolios) are based upon expenses for the fiscal year ended
December 31, 1999, restated to reflect a reduction in the management fees
for Growth, Aggressive Growth, Capital Appreciation, International Growth,
Worldwide Growth, and Balanced Portfolios. Expenses for Global Technology
and Global Life Sciences Portfolios are based on the estimated expenses
that those Portfolios expect to incur in their initial fiscal year. All
expenses are shown without the effect of expense offset arrangements.
/8/ Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of MFS Variable Insurance Trust during 1999 would have been
total annual expenses of 1.66% for the Growth Series, consisting of .75%
management fees, .20% 12b-1 fee and .71% other expenses; total annual
expenses of 2.69% for the New Discovery Series, consisting of .90%
management fees, .20% 12b-1 fees and 1.59% other expenses.
6
<PAGE>
/9/ Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of the PIMCO Variable Insurance Trust during 1999 would
have been total annual expenses of 1.25% for the Foreign Bond Portfolio,
consisting of .25% management fees, .15% service fee and .85% other
expenses; total annual expenses of .71% for the Long-Term U.S. Government
Bond Portfolio, consisting of .25% management fees, .15% service fees and
.31% other expenses; total annual expenses of .69% for Total Return Bond
Portfolio, consisting of .25% management fees, .15% service fees and .29%
other expenses.
PIMCO Foreign Bond Portfolio has contractually agreed to reduce total
annual portfolio operating expenses for the Administrative Class shares to
the extent they would exceed, due to the payment of organizational
expenses and Trustees' fee, 0.90% of average daily net assets. Under the
Expense Limitation Agreement, PIMCO may recoup these waivers and
reimbursements in future periods, not exceeding three years, provided
total expenses, including such recoupment, do not exceed the annual
expense limit.
7
<PAGE>
EXAMPLES
These examples show what your costs would be under certain hypothetical
situations. The examples do not represent past or future expenses. Your actual
expenses may be more or less than those shown. The examples are based on the
annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (shown above in Portfolio Annual Expenses), and assume that the applicable
fee waiver and reimbursements will continue for the periods shown. We cannot
guarantee that they will continue. The Janus Global Life Sciences portfolio and
Global Technology portfolio did not exist as of December 31, 1999; therefore
the expenses for these portfolios are based on the estimated expenses that the
portfolios expect to incur in their initial fiscal year. The examples assume
that the $30 annual contract charge is equivalent to 0.1% of Contract Value
attributable to the hypothetical investment (this charge will be waived if the
Contract Value is more than $40,000 at the time the charge is due). The
examples also assume that the mortality and expense risk charge and the
administrative expense charge apply. To the extent that the examples reflect
charges for the optional enhanced Death Benefit, the examples assume that the
maximum charges apply.
* * *
EXAMPLES: An Owner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Portfolio Annual Expense Table above:
1. If you surrender* your Contract at the end of the applicable period
(assuming each Aunnuitant is age 70 or younger at issue):
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund 77.11 125.23 167.01 261.54
AIM V.I. Growth Fund 77.11 125.23 167.01 261.54
AIM V.I. Value Fund 77.41 126.14 168.52 264.58
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio 79.51 132.45 179.05 285.56
Premier Growth Portfolio 82.71 141.99 194.87 316.64
Quasar Portfolio 81.81 139.32 190.45 308.01
Dreyfus
Dreyfus Investments Portfolios-Emerging Markets
Portfolio 84.80 148.21 205.11 336.45
The Dreyfus Socially Responsible Growth Fund,
Inc. 77.71 127.04 170.03 267.60
Federated Insurance Series
Federated High Income Bond Fund II 78.71 130.05 175.05 277.63
Federated International Small Company Bond Fund
II 84.80 148.21 205.11 336.45
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio 78.11 128.25 172.04 271.63
VIP Growth Portfolio 79.11 131.25 177.05 281.60
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 79.31 131.85 178.05 283.59
Fidelity Variable Insurance Products Fund (VIP
III)
VIP III Growth & Income Portfolio 78.41 129.15 173.55 274.63
VIP III Mid Cap Portfolio 82.31 140.81 192.91 312.81
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------
<S> <C> <C> <C> <C>
GE Investments Funds,
Inc.
Mid-Cap Value Equity
Fund 76.91 124.63 166.00 259.51
Money Market Fund 72.79 112.17 145.07 216.92
Premier Growth Equity
Fund 76.61 123.72 164.48 256.46
S&P 500 Index Fund 73.70 114.92 149.70 226.43
Small Cap Value Fund 79.11 131.25 177.05 281.60
U.S. Equity Fund 75.91 121.60 160.93 249.29
Value Equity Fund 77.61 126.74 169.53 266.60
Janus Aspen Series
Aggressive Growth
Portfolio 79.01 130.95 176.55 280.61
Balanced Portfolio 79.01 130.95 176.55 280.61
Capital Appreciation
Portfolio 79.21 131.55 177.55 282.59
Global Life Sciences
Portfolio 80.71 136.04 185.01 297.34
Global Technology
Portfolio 80.11 134.25 182.03 291.47
Growth Portfolio 79.01 130.95 176.55 280.61
International Growth
Portfolio 79.91 133.65 181.04 289.51
Worldwide Growth
Portfolio 79.31 131.85 178.05 283.59
MFS Variable Insurance
Trust
MFS Growth Series 80.91 136.64 186.00 299.29
MFS Growth with Income
Series 80.61 135.74 184.52 296.37
MFS New Discovery Series 82.51 141.40 193.89 314.73
MFS Utilities Series 80.91 136.64 186.00 299.29
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA 78.21 128.55 172.55 272.63
Oppenheimer Main Street
Growth & Income Fund/VA 79.11 131.25 177.05 281.60
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio 80.81 136.34 185.51 298.32
Government Bond
Portfolio 76.31 122.82 162.96 253.39
High Yield Portfolio 77.31 125.84 168.02 263.57
Total Return Portfolio 76.31 122.82 162.96 253.39
Rydex Variable Trust
Rydex OTC Fund 85.29 149.68 207.53 341.10
----------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
2. If you annuitize at the end of the applicable period, or do not surrender
(assuming each Annuitant is age 70 or younger at issue)*:
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund 23.11 71.23 122.01 261.54
AIM V.I. Growth Fund 23.11 71.23 122.01 261.54
AIM V.I. Value Fund 23.41 72.14 123.52 264.58
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio 25.51 78.45 134.05 285.56
Premier Growth Portfolio 28.71 87.99 149.87 316.64
Quasar Portfolio 27.81 85.32 145.45 308.01
Dreyfus
Dreyfus Investments Portfolios-Emerging Markets
Portfolio 30.80 94.21 160.11 336.45
The Dreyfus Socially Responsible Growth Fund,
Inc. 23.71 73.04 125.03 267.60
Federated Insurance Series
Federated High Income Bond Fund II 24.71 76.05 130.05 277.63
Federated International Small Company Fund II 30.80 94.21 160.11 336.45
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio 24.11 74.25 127.04 271.63
VIP Growth Portfolio 25.11 77.25 132.05 281.60
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 25.31 77.85 133.05 283.59
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 24.41 75.15 128.55 274.63
VIP III Mid Cap Portfolio 28.31 86.81 147.91 312.81
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 22.91 70.63 121.00 259.51
Money Market Fund 18.79 58.17 100.07 216.92
Premier Growth Equity Fund 22.61 69.72 119.48 256.46
S&P 500 Index Fund 19.70 60.92 104.70 226.43
Small Cap Value Fund 25.11 77.25 132.05 281.60
U.S. Equity Fund 21.91 67.60 115.93 249.29
Value Equity Fund 23.61 72.74 124.53 266.60
Janus Aspen Series
Aggressive Growth Portfolio 25.01 76.95 131.55 280.61
Balanced Portfolio 25.01 76.95 131.55 280.61
Capital Appreciation Portfolio 25.21 77.55 132.55 282.59
Global Life Sciences Portfolio 26.71 82.04 140.01 297.34
Global Technology Portfolio 26.11 80.25 137.03 291.47
Growth Portfolio 25.01 76.95 131.55 280.61
International Growth Portfolio 25.91 79.65 136.04 289.51
Worldwide Growth Portfolio 25.31 77.85 133.05 283.59
MFS Variable Insurance Trust
MFS Growth Series 26.91 82.64 141.00 299.29
MFS Growth with Income Series 26.61 81.74 139.52 296.37
MFS New Discovery Series 28.51 87.40 148.89 314.73
MFS Utilities Series 26.91 82.64 141.00 299.29
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA 24.21 74.55 127.55 272.63
Oppenheimer Main Street Growth & Income
Portfolio/VA 25.11 77.25 132.05 281.60
PIMCO Variable Insurance Trust
Foreign Bond Portfolio 26.81 82.34 140.51 298.32
Government Bond Portfolio 22.31 68.82 117.96 253.39
High Yield Portfolio 23.31 71.84 123.02 263.57
Total Return Portfolio 22.31 68.82 117.96 253.39
Rydex Variable Trust
Rydex OTC Fund 31.29 95.68 162.53 341.10
------------------------------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
EXAMPLES: An owner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Fee Table above:
3. If you surrender* your Contract at the end of the applicable period
(assuming either Annuitant is over age 70 at issue):
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I.Capital Appreciation Fund 79.11 131.25 177.05 281.60
AIM V.I. Growth Fund 79.11 131.25 177.05 281.60
AIM V.I. Value 79.41 132.15 178.55 284.58
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance
Growth & Income Portfolio 81.51 138.43 188.97 305.11
Premier Growth Portfolio 84.70 147.91 204.63 335.52
Quasar Portfolio 83.80 145.25 200.25 327.07
Dreyfus
Dreyfus Investment Portfolios --
Emerging Markets Portfolio 86.78 154.08 214.76 354.90
The Dreyfus Socially Responsible Growth Fund,
Inc. 79.71 133.05 180.04 287.54
Federated Insurance Series
Federated High Income Bond Fund II 80.71 136.04 185.01 297.34
Federated International Small Company Fund II 86.78 154.08 214.76 354.90
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio 80.11 134.25 182.03 291.47
VIP Growth Portfolio 81.11 137.23 186.99 301.24
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 81.31 137.83 187.98 303.18
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 80.41 135.14 183.52 294.41
VIP III Mid Cap Portfolio 84.30 146.73 202.68 331.78
GE Investments Funds, Inc.
Mid Cap Value Equity Fund 78.91 130.65 176.05 279.62
Money Market Fund 74.80 118.27 155.33 237.93
Premier Growth Equity Fund 78.61 129.75 174.55 276.63
S&P 500 Index Fund 75.71 121.00 159.92 247.24
Small Cap Value Equity Fund 81.11 137.23 186.99 301.24
U.S. Equity Fund 77.91 127.65 171.04 269.62
Value Equity Fund 79.61 132.75 179.55 286.55
Janus Aspen Series
Aggressive Growth Portfolio 81.01 136.94 186.50 300.27
Balanced Portfolio 81.01 136.94 186.50 300.27
Capital Appreciation Portfolio 81.21 137.53 187.49 302.21
Global Life Sciences Portfolio 82.71 141.99 194.87 316.64
Global Technology Portfolio 82.11 140.21 191.92 310.89
Growth Portfolio 81.01 136.94 186.50 300.27
International Growth Portfolio 81.91 139.62 190.94 308.97
Worldwide Growth Portfolio 81.31 137.83 187.98 303.18
MFS Variable Insurance Trust
MFS Growth Series 82.91 142.59 195.85 318.55
MFS Growth with Income Series 82.61 141.70 194.38 315.68
MFS New Discovery Series 84.50 147.32 203.65 333.65
MFS Utilities Series 82.91 142.59 195.85 318.55
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA 80.21 134.55 182.53 292.45
Oppenheimer Main Street Growth & Income
Fund/VA 81.11 137.23 186.99 301.24
PIMCO Variable Insurance Trust
Foreign Bond Portfolio 82.81 142.29 195.36 317.59
Long-Term U.S.Government Bond Portfolio 78.31 128.85 173.05 273.63
High Yield Bond Portfolio 79.31 131.85 178.05 283.59
Total Return Bond Portfolio 78.31 128.85 173.05 273.63
Rydex Variable Trust
Rydex OTC Fund 87.28 155.55 217.16 359.45
------------------------------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
11
<PAGE>
4. If you annuitize at the end of the applicable period, or do not surrender
(assuming either Annuitant is over age 70 at issue)*:
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I.Capital Appreciation Fund 25.11 77.25 132.05 281.60
AIM V.I. Growth Fund 25.11 77.25 132.05 281.60
AIM V.I. Value 25.41 78.15 133.55 284.58
Alliance
Growth & Income Portfolio 27.51 84.43 143.97 305.11
Premier Growth Portfolio 30.70 93.91 159.63 335.52
Quasar Portfolio 29.80 91.25 155.25 327.07
Dreyfus
Dreyfus Investment Portfolios -- Emerging
Markets Portfolio 32.78 100.08 169.76 354.90
The Dreyfus Socially Responsible Growth Fund,
Inc. 25.71 79.05 135.04 287.54
Federated Insurance Series
Federated High Income Bond Fund II 26.71 82.04 140.01 297.34
Federated International Small Company Fund II 32.78 100.08 169.76 354.90
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio 26.11 80.25 137.03 291.47
VIP Growth Portfolio 27.11 83.23 141.99 301.24
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 27.31 83.83 142.98 303.18
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 26.41 81.14 138.52 294.41
VIP III Mid Cap Portfolio 30.30 92.73 157.68 331.78
GE Investments Funds, Inc.
Mid Cap Value Equity Fund 24.91 76.65 131.05 279.62
Money Market Fund 20.80 64.27 110.33 237.93
Premier Growth Equity Fund 24.61 75.75 129.55 276.63
S&P 500 Index Fund 21.71 67.00 114.92 247.24
Small Cap Value Equity Fund 27.11 83.23 141.99 301.24
U.S. Equity Fund 23.91 73.65 126.04 269.62
Value Equity Fund 25.61 78.75 134.55 286.55
Janus Aspen Series
Aggressive Growth Portfolio 27.01 82.94 141.50 300.27
Balanced Portfolio 27.01 82.94 141.50 300.27
Capital Appreciation Portfolio 27.21 83.53 142.49 302.21
Global Life Sciences Portfolio 28.71 87.99 149.87 316.64
Global Technology Portfolio 28.11 86.21 146.92 310.89
Growth Portfolio 27.01 82.94 141.50 300.27
International Growth Portfolio 27.91 85.62 145.94 308.97
Worldwide Growth Portfolio 27.31 83.83 142.98 303.18
MFS Variable Insurance Trust
MFS Growth Series 28.91 88.59 150.85 318.55
MFS Growth with Income Series 28.61 87.70 149.38 315.68
MFS New Discovery Series 30.50 93.32 158.65 333.65
MFS Utilities Series 28.91 88.59 150.85 318.55
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA 26.21 80.55 137.53 292.45
Oppenheimer Main Street Growth & Income Fund/VA 27.11 83.23 141.99 301.24
PIMCO Variable Insurance Trust
Foreign Bond Portfolio 28.81 88.29 150.36 317.59
Long-Term U.S.Government Bond Portfolio 24.31 74.85 128.05 273.63
High Yield Bond Portfolio 25.31 77.85 133.05 283.59
Total Return Bond Portfolio 24.31 74.85 128.05 273.63
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Without OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------
<S> <C> <C> <C> <C>
Rydex Variable Trust
Rydex OTC Fund 33.28 101.55 172.16 359.45
----------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
EXAMPLES: An Owner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Fee Table above:
5. If you surrender* your Contract at the end of the applicable period
(assuming each Annuitant is age 70 or younger at issue):
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I.Capital Appreciation Fund 77.11 132.25 181.04 292.89
AIM V.I. Growth Fund 77.11 132.25 181.04 292.89
AIM V.I. Value 77.41 133.15 182.53 295.83
Alliance
Growth & Income Portfolio 79.51 139.43 192.94 316.19
Premier Growth Portfolio 82.71 148.93 208.58 346.33
Quasar Portfolio 81.81 146.27 204.20 337.96
Dreyfus
Dreyfus Investment Portfolios --
Emerging Markets Portfolio 84.80 155.11 218.70 365.55
The Dreyfus Socially Responsible Growth Fund,
Inc. 77.71 134.05 184.02 298.77
Federated Insurance Series
Federated High Income Bond Fund II 78.71 137.05 188.99 308.49
Federated International Small Company Fund II 84.80 155.11 218.70 365.55
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio 78.11 135.25 186.01 302.67
VIP Growth Portfolio 79.11 138.24 190.96 312.35
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 79.31 138.84 191.95 314.27
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 78.41 136.15 187.50 305.58
VIP III Mid Cap Portfolio 82.31 147.75 206.64 342.62
GE Investments Funds, Inc.
Mid Cap Value Equity Fund 76.91 131.65 180.04 290.92
Money Market Fund 72.79 119.25 159.34 249.59
Premier Growth Equity Fund 76.61 130.75 178.54 287.95
S&P 500 Index Fund 73.70 121.98 163.92 258.82
Small Cap Value Equity Fund 79.11 138.24 190.96 312.35
U.S. Equity Fund 75.91 128.64 175.03 281.00
Value Equity Fund 77.61 133.75 183.53 297.79
Janus Aspen Series
Aggressive Growth Portfolio 79.01 137.94 190.47 311.39
Balanced Portfolio 79.01 137.94 190.47 311.39
Capital Appreciation Portfolio 79.21 138.54 191.46 313.31
Global Life Sciences Portfolio 80.71 143.01 198.83 327.62
Global Technology Portfolio 80.11 141.22 195.89 321.92
Growth Portfolio 79.01 137.94 190.47 311.39
International Growth Portfolio 79.91 140.63 194.91 320.02
Worldwide Growth Portfolio 79.31 138.84 191.95 314.27
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Variable Insurance
Trust
MFS Growth Series 80.91 143.60 199.81 329.51
MFS Growth with Income
Series 80.61 142.71 198.34 326.67
MFS Utilities Series 80.91 143.60 199.81 329.51
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA 78.21 135.55 186.51 303.64
Oppenheimer Main Street
Growth & Income Fund/VA 79.11 138.24 190.96 312.35
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio 80.81 143.30 199.32 328.56
High Yield Bond
Portfolio 77.31 132.85 182.03 294.85
Long-Term U.S.Government
Bond Portfolio 76.31 129.84 177.04 284.98
Total Return Bond
Portfolio 76.31 129.84 177.04 284.98
Rydex Variable Trust
Rydex OTC Fund 85.29 156.58 221.09 370.06
---------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
6. If you annuitize at the end of the applicable period, or do not surrender
(assuming each Annuitant is age 70 or younger at issue)*:
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I.Capital Appreciation Fund 23.11 78.25 136.04 292.89
AIM V.I. Growth Fund 23.11 78.25 136.04 292.89
AIM V.I. Value 23.41 79.15 137.53 295.83
Alliance
Growth & Income Portfolio 25.51 85.43 147.94 316.19
Premier Growth Portfolio 28.71 94.93 163.58 346.33
Quasar Portfolio 27.81 92.27 159.20 337.96
Dreyfus
Dreyfus Investment Portfolios --
Emerging Markets Portfolio 30.80 101.11 173.70 365.55
The Dreyfus Socially Responsible Growth Fund,
Inc. 23.71 80.05 139.02 298.77
Federated Insurance Series
Federated High Income Bond Fund II 24.71 83.05 143.99 308.49
Federated International Small Company Fund II 30.80 101.11 173.70 365.55
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio 24.11 81.25 141.01 302.67
VIP Growth Portfolio 25.11 84.24 145.96 312.35
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 25.31 84.84 146.95 314.27
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 24.41 82.15 142.50 305.58
VIP III Mid Cap Portfolio 28.31 93.75 161.64 342.62
GE Investments Funds, Inc.
Mid Cap Value Equity Fund 22.91 77.65 135.04 290.92
Money Market Fund 18.79 65.25 114.34 249.59
Premier Growth Equity Fund 22.61 76.75 133.54 287.95
S&P 500 Index Fund 19.70 67.98 118.92 258.82
Small Cap Value Equity Fund 25.11 84.24 145.96 312.35
U.S. Equity Fund 21.91 74.64 130.03 281.00
Value Equity Fund 23.61 79.75 138.53 297.79
Janus Aspen Series
Aggressive Growth Portfolio 25.01 83.94 145.47 311.39
Balanced Portfolio 25.01 83.94 145.47 311.39
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation
Portfolio 25.21 84.54 146.46 313.31
Global Life Sciences
Portfolio 26.71 89.01 153.83 327.62
Global Technology
Portfolio 26.11 87.22 150.89 321.92
Growth Portfolio 25.01 83.94 145.47 311.39
International Growth
Portfolio 25.91 86.63 149.91 320.02
Worldwide Growth
Portfolio 25.31 84.84 146.95 314.27
MFS Variable Insurance
Trust
MFS Growth Series 26.91 89.60 154.81 329.51
MFS Growth with Income
Series 26.61 88.71 153.34 326.67
MFS New Discovery Series 28.51 94.34 162.61 344.48
MFS Utilities Series 26.91 89.60 154.81 329.51
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA 24.21 81.55 141.51 303.64
Oppenheimer Main Street
Growth & Income Fund/VA 25.11 84.24 145.96 312.35
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio 26.81 89.30 154.32 328.56
Long-Term U.S.Government
Bond Portfolio 22.31 75.84 132.04 284.98
High Yield Bond
Portfolio 23.31 78.85 137.03 294.85
Total Return Bond
Portfolio 22.31 75.84 132.04 284.98
Rydex Variable Trust
Rydex OTC Fund 31.29 102.58 176.09 370.06
---------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
7. If you surrender* your Contract at the end of the applicable period
(assuming either Annuitant is over age 70 at issue):
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund 79.11 138.24 190.96 312.35
AIM V.I. Growth Fund 79.11 138.24 190.96 312.35
AIM V.I. Value Fund 79.41 139.14 192.44 315.23
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio 81.51 145.38 202.74 335.15
Premier Growth Portfolio 84.70 154.82 218.22 364.64
Quasar Portfolio 83.80 152.18 213.89 356.45
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets
Portfolio 86.78 160.97 228.24 383.44
The Dreyfus Socially Responsible Growth Fund,
Inc. 79.71 140.03 193.92 318.11
Federated Insurance Series
Federated High Income Bond Fund II 80.71 143.01 198.83 327.62
Federated International Small Company Fund II 86.78 160.97 228.24 383.44
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio 80.11 141.22 195.89 321.92
VIP Growth Portfolio 81.11 144.19 200.79 331.39
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 81.31 144.79 201.77 333.27
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 80.41 142.11 197.36 324.77
VIP III Mid Cap Portfolio 84.30 153.65 216.30 361.01
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 78.91 137.64 189.97 310.42
Money Market Fund 74.80 125.32 169.49 269.98
Premier Growth Equity Fund 78.61 136.75 188.49 307.52
S&P 500 Index Fund 75.71 128.03 174.02 279.01
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Value Fund 81.11 144.19 200.79 331.39
U.S. Equity Fund 77.91 134.65 185.02 300.72
Value Equity Fund 79.61 139.73 193.43 317.15
Janus Aspen Series
Aggressive Growth
Portfolio 81.01 143.90 200.30 330.45
Balanced Portfolio 81.01 143.90 200.30 330.45
Capital Appreciation
Portfolio 81.21 144.49 201.28 332.33
Global Life Sciences
Portfolio 82.71 148.93 208.58 346.33
Global Technology
Portfolio 82.11 147.16 205.66 340.76
Growth Portfolio 81.01 143.90 200.30 330.45
International Growth
Portfolio 81.91 146.57 204.69 338.90
Worldwide Growth
Portfolio 81.31 144.79 201.77 333.27
MFS Variable Insruance
Trust
MFS Growth Series 82.91 149.52 209.55 348.18
MFS Growth with Income
Series 82.61 148.64 208.09 345.41
MFS New Discovery Series 84.50 154.23 217.26 362.83
MFS Utilities Series 82.91 149.52 209.55 348.18
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA 80.21 141.52 196.38 322.87
Oppenheimer Main Street
Growth & Income Fund/VA 81.11 144.19 200.79 331.39
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio 82.81 149.23 209.06 347.26
High Yield Portfolio 79.31 138.84 191.95 314.27
Long-Term U.S.
Government Bond
Portfolio 78.31 135.85 187.00 304.61
Total Return Portfolio 78.31 135.85 187.00 304.61
Rydex Variable Trust
Rydex OTC Fund 87.28 162.42 230.61 387.85
---------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
8. If you annuitize at the end of the applicable period, or do not surrender
(assuming either Annuitant is over age 70 at issue)*:
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds.
AIM V.I. Capital Appreciation Fund 25.11 84.24 145.96 312.35
AIM V.I. Growth Fund 25.11 84.24 145.96 312.35
AIM V.I. Value Fund 25.41 85.14 147.44 315.23
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio 27.51 91.38 157.74 335.15
Premier Growth Portfolio 30.70 100.82 173.22 364.64
Quasar Portfolio 29.80 98.18 168.89 356.45
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets
Portfolio 32.78 106.97 183.24 383.44
The Dreyfus Socially Responsible Growth Fund,
Inc. 25.71 86.03 148.92 318.11
Federated Insurance Series
Federated High Income Bond Fund II 26.71 89.01 153.83 327.62
Federated International Small Company Fund II 32.78 106.97 183.24 383.44
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio 26.11 87.22 150.89 321.92
VIP Growth Portfolio 27.11 90.19 155.79 331.39
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio 27.31 90.79 156.77 333.27
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio 26.41 88.11 152.36 324.77
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
With OEDB Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
VIP III Mid Cap
Portfolio 30.30 99.65 171.30 361.01
GE Investments Funds,
Inc.
Mid-Cap Value Equity
Fund 24.91 83.64 144.97 310.42
Money Market Fund 20.80 71.32 124.49 269.98
Premier Growth Equity
Fund 24.61 82.75 143.49 307.52
S&P 500 Index Fund 21.71 74.03 129.02 279.01
Small Cap Value Fund 27.11 90.19 155.79 331.39
U.S. Equity Fund 23.91 80.65 140.02 300.72
Value Equity Fund 25.61 85.73 148.43 317.15
Janus Aspen Series
Aggressive Growth
Portfolio 27.01 89.90 155.30 330.45
Balanced Portfolio 27.01 89.90 155.30 330.45
Capital Appreciation
Portfolio 27.21 90.49 156.28 332.33
Global Life Sciences
Portfolio 28.71 94.93 163.58 346.33
Global Technology
Portfolio 28.11 93.16 160.66 340.76
Growth Portfolio 27.01 89.90 155.30 330.45
International Growth
Portfolio 27.91 92.57 159.69 338.90
Worldwide Growth
Portfolio 27.31 90.79 156.77 333.27
MFS Variable Insurance
Trust
MFS Growth Series 28.91 95.52 164.55 348.18
MFS Growth with Income
Series 28.61 94.64 163.09 345.41
MFS New Discovery Series 30.50 100.23 172.26 362.83
MFS Utilities Series 28.91 95.52 164.55 348.18
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA 26.21 87.52 151.38 322.87
Oppenheimer Main Street
Growth & Income Fund/VA 27.11 90.19 155.79 331.39
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio 28.81 95.23 164.06 347.26
High Yield Bond
Portfolio 25.31 84.84 146.95 314.27
Long Term U.S.
Government Bond
Portfolio 24.31 81.85 142.00 304.61
Total Return Bond
Portfolio 24.31 81.85 142.00 304.61
Rydex Variable Trust
Rydex OTC Fund 33.28 108.42 185.61 387.85
---------------------------------------------------------
</TABLE>
* surrender includes annuitization over a period of less than 5 years
17
<PAGE>
Synopsis
What type of Contract am I buying? The Contract is an individual flexible
premium variable deferred annuity contract. We may issue it as a contract
qualified ("Qualified Contract") under the Internal Revenue Code of 1986, as
amended (the "Code"), or as a contract that is not qualified under the Code
("Non-Qualified Contract"). This Prospectus only provides disclosure about the
Contract. Certain features described in this Prospectus may vary from your
Contract. See The Contract.
How does the Contract work? Once we approve your application, we will issue a
Contract to you. During the accumulation period, while you are paying in, you
can use your purchase payments to buy Accumulation Units in the Separate
Account or interests in the Guarantee Account. Should you decide to annuitize
(that is, change your Contract to a payout mode rather than an accumulation
mode) we will convert your Accumulation Units to Annuity Units. You can choose
a fixed or variable income payment. If you choose a variable income payment, we
will base your periodic income payment upon the number of Annuity Units to
which you became entitled at the time you decided to annuitize and on the value
of each unit on the date the payment is determined. See The Contract.
What are my variable investment choices? Through its 41 Subaccounts, the
Account uses your purchase payments to purchase shares, at your direction, in
one or more portfolios of the 13 Funds. In turn, each portfolio holds
securities consistent with its own particular investment objective. Amounts you
allocate to the Separate Account will reflect the investment performance of the
portfolios you select. You bear the risk of investment gain or loss. See The
Separate Account -- Subaccounts.
What is the Guarantee Account? We offer fixed investment choices through our
Guarantee Account. The Guarantee Account is part of our General Account and
pays interest at declared rates we guarantee for selected periods of time. We
also guarantee the principal, after deductions. Since the Guarantee Account is
part of the General Account, we assume the risk of investment gain or loss on
this amount. You may transfer value between the Guarantee Account and the
Separate Account subject to certain restrictions. See Transfers Before the
Annuity Commencement Date.
What charges are associated with this Contract? Should you withdraw Contract
Value before your purchase payments have been in your Contract for six years,
we will assess a surrender charge of anywhere from 0% to 6%, depending upon how
many full years those payments have been in the Contract. We may waive the
surrender charge in certain circumstances. See Surrender Charge.
We assess annual charges in the aggregate at an effective annual rate of 1.45%
(1.65% for Contracts where either Annuitant was older than age 70 at issue)
against the daily net asset value of the Separate Account, including that
portion of the account attributable to your purchase payments. These charges
consist of a .15%
18
<PAGE>
administrative expense charge and a 1.30% (1.50% where either Annuitant was
older than age 70 at issue) mortality and expense risk charge. Additionally, we
may impose a $30 annual contract charge. We also charge for the optional
enhanced Death Benefit. For a complete discussion of all charges associated
with the Contract, See Charges and Other Deductions.
If a premium tax applies to your Contract, then at the time your Contract
incurs the tax (or at such other time as we may choose), we will deduct those
amounts from purchase payments or Contract Value, as applicable. See Charges
and Other Deductions and Deductions for Premium Taxes.
The portfolios also have certain expenses. These include management fees and
other expenses associated with the daily operation of each portfolio. See
Portfolio Annual Expenses. These expenses are more fully described in each
Fund's prospectus.
How much must I pay, and how often? Subject to certain minimum and maximum
payments, the amount and frequency of purchase payments are completely
flexible. See The Contract -- Purchase Payments.
How will my income payments be calculated? We will pay you a monthly income
beginning on the Annuity Commencement Date if the Annuitant is still living.
You may also decide to annuitize under one of the optional payment plans. We
will base your initial payment on Annuity Commencement Value and other factors.
See Income Payments.
What happens if an Annuitant dies before the Annuity Commencement Date? Before
the Annuity Commencement Date, if any Annuitant dies while the Contract is in
force, we will treat the Designated Beneficiary as the sole Owner of the
Contract, subject to certain distribution rules. We may pay a Death Benefit to
the Designated Beneficiary. See The Death Benefit.
May I Transfer Contract Value among Portfolios? Yes, but there may be limits on
how often you may do so. The minimum transfer amount is $100 or the entire
balance in the Subaccount if the transfer will leave a balance of less than
$100. See The Contract -- Transfers Before the Annuity Commencement Date and
Income Payments --Transfers After the Annuity Commencement Date.
May I surrender the Contract or make a withdrawal? Yes, subject to Contract
requirements and to restrictions imposed under certain retirement plans.
If you surrender the Contract or make a withdrawal, we may assess a surrender
charge as discussed above. In addition, you may be subject to income tax and,
if you are younger than age 59 1/2 at the time of the surrender or withdrawal,
a 10% penalty
19
<PAGE>
tax. A surrender or a withdrawal may also be subject to withholding. See
Federal Tax Matters. A withdrawal may reduce the Death Benefit by the
proportion that the withdrawal (including any applicable surrender charge and
premium tax) reduces Contract Value. See The Death Benefit.
Do I get a free look at this Contract? Yes. You have the right to return the
Contract to us at our Service Center, and have us cancel the Contract within
ten days after its delivery (or longer if required by applicable law).
If you exercise this right, we will cancel the Contract as of the day we
receive your request and send you a refund equal to your Contract Value
(without reduction for any surrender charges) plus any charges we have deducted
from purchase payments prior to the allocation to the Separate Account (and
excluding any charges the portfolios may have deducted) on or before the date
we received the returned Contract. See Return Privilege.
When are my allocations effective? Within two business days after we have
received all of the information necessary to process your purchase order, we
will allocate your initial purchase payment directly to the Guarantee Account
and/or the Subaccounts you choose.
Where may I find more information about Accumulation Unit Values? When
available, the Condensed Financial Information section at the end of this
Prospectus will provide more information about Accumulation Unit Values.
20
<PAGE>
Investment Results
At times, the Separate Account may compare its investment results to various
unmanaged indices or other variable annuities in reports to shareholders, sales
literature, and advertisements. We will calculate the results on a total return
basis for various periods, with or without surrender charges. Results
calculated without surrender charges will be higher. Total returns include the
reinvestment of all distributions of the portfolios. Total returns reflect Fund
charges and expenses and the administrative expense charge. They also reflect a
mortality and expense risk charge of 1.50% (which is the mortality and expense
risk charge that applies when either Annuitant is older than age 70 at issue).
(In addition, they may also reflect a mortality and expense risk charge of
1.30% (which is the mortality and expense risk charge that applies when each
Annuitant is age 70 or younger at issue).) They also assume that the $30 annual
contract charge is equivalent to 0.1% of Contract Value (this charge will be
waived if the Contract Value is more than $40,000 at the time the charge is
due). Total returns do not reflect the optional enhanced Death Benefit charge
and any premium taxes charge. See the Appendix and the SAI for further
information.
21
<PAGE>
Financial Statements
The financial statements for GE Capital Life Assurance Company of New York and
GE Capital Life Separate Account II are located in the SAI. If you would like a
free copy of the SAI, call 1-800-313-5282. Otherwise, the SAI is available on
the SEC's website at http://www.sec.gov.
22
<PAGE>
GE Capital Life Assurance Company
of New York
We are a stock life insurance company that was incorporated in New York on
February 23, 1988. We are ultimately a subsidiary of General Electric Capital
Corporation ("GE Capital"), a New York corporation that is a diversified
financial services company whose subsidiaries consist of specialty insurance,
equipment management, and commercial and consumer financing businesses. GE
Capital's ultimate parent, General Electric Company, founded more than one
hundred years ago by Thomas Edison, is the world's largest manufacturer of jet
engines, engineering plastics, medical diagnostic equipment, and large electric
power generation equipment.
We are licensed solely in New York and specialize in writing individual fixed-
rate deferred annuities, fixed payout immediate annuities, variable life
insurance, and variable deferred annuities.
We are subject to regulation by the Superintendent of Insurance of the State of
New York. We submit annual statements on our operations and finances to the
New York Insurance Department.
We are a member of the Insurance Marketplace Standards Association ("IMSA"). We
may use the IMSA membership logo and language in our advertisements, as
outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to
IMSA subscribe to a set of ethical standards covering the various aspects of
sales and service for individually sold life insurance and annuities.
23
<PAGE>
The Separate Account
We established the Separate Account as a separate investment account on April
1, 1996. The Separate Account may invest in mutual funds, unit investment
trusts, managed separate accounts, and other portfolios. We use the Separate
Account to support the Contract as well as for other purposes permitted by law.
The Separate Account currently has 41 Subaccounts available under the Contract,
but that number may change in the future. Each Subaccount invests exclusively
in shares representing an interest in a separate corresponding portfolio of the
Funds described below. We allocate net purchase payments in accordance with
your instructions among up to ten of the 41 Subaccounts available under the
Contract.
The assets of the Separate Account belong to us. Nonetheless, we do not charge
the assets in the Separate Account attributable to the Contracts with
liabilities arising out of any other business which we may conduct. The assets
of the Separate Account shall, however, be available to cover the liabilities
of our General Account to the extent that the assets of the Separate Account
exceed its liabilities arising under the Contracts supported by it. Income and
both realized and unrealized gains or losses from the assets of the Separate
Account are credited to or charged against the Separate Account without regard
to the income, gains, or losses arising out of any other business we may
conduct.
We registered the Separate Account with the SEC as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"). The Separate Account
meets the definition of a separate account under the Federal securities laws.
Registration with the SEC does not involve supervision of the management or
investment practices or policies of the Separate Account by the SEC. You assume
the full investment risk for all amounts you allocate to the Separate Account.
THE PORTFOLIOS
There is a separate Subaccount which corresponds to each portfolio of a Fund
offered in this Contract. You decide the Subaccounts to which you allocate net
purchase payments. You may change your allocation without penalty or charges.
Each Fund is registered with the Securities and Exchange Commission as an open-
end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one
portfolio has no effect on the investment performance of any other portfolio.
Before choosing a Subaccount to allocate your net purchase payments and
Contract Value, carefully read the prospectus for each Fund, along with this
Prospectus. We summarize the investment objectives of each portfolio below.
There is no assurance
24
<PAGE>
that any of the portfolios will meet these objectives. We do not guarantee any
minimum value for the amounts allocated to the Separate Account. You bear the
investment risk of investing in the portfolios.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
SUBACCOUNTS
We offer you a choice from among 41 Subaccounts, each of which invests in an
underlying portfolio of one of the Funds. You may allocate purchase payments to
up to ten Subaccounts plus the Guarantee Account at any one time.
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser,
Subaccount Investing In Investment Objective as applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital The fund's investment A I M Advisors,
Appreciation Fund objective is growth of Inc.
capital. Invests principally
in common stocks, with
emphasis on medium and small-
sized growth companies. This
fund may invest up to 25% of
the value of the total assets
in foreign securities.
-------------------------------------------------------------------------------
AIM V.I. Growth Fund The fund's investment A I M Advisors,
objective is to seek growth of Inc.
capital. Invests principally
in seasoned and better
capitalized companies
considered to have strong
earnings momentum. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
-------------------------------------------------------------------------------
AIM V.I. Value Fund Seeks to achieve long-term A I M Advisors,
growth of capital. Income is a Inc.
secondary objective. Invests
principally in equity
securities judged by the
investment advisor of the fund
to be undervalued. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
-------------------------------------------------------------------------------
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Growth and Income Seeks reasonable current Alliance Capital
Portfolio income and reasonable Management, L.P.
opportunity for appreciation
through investments primarily
in dividend-paying common
stocks of good quality. May
also invest in fixed-income
securities and convertible
securities.
-------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser,
Subaccount Investing In Investment Objective as applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Premier Growth Portfolio Seeks long term growth of Alliance Capital
capital by investing Management, L.P.
predominantly in the equity
securities of a limited number
of large, carefully selected,
high quality U.S. companies
judged likely to achieve
superior earnings growth.
-------------------------------------------------------------------------------
Quasar Portfolio Seeks growth of capital by Alliance Capital
pursuing aggressive investment Management, L.P.
policies. This fund invests
based upon the potential for
capital appreciation and only
incidentally for current
income. The investment
policies are aggressive.
-------------------------------------------------------------------------------
DREYFUS
Dreyfus Investment Seeks long-term capital growth The Dreyfus
Portfolios-Emerging by investing primarily in the Corporation
Markets Portfolio stocks of companies organized,
or with a majority of its
assets or business, in
emerging market countries.
-------------------------------------------------------------------------------
The Dreyfus Socially Seeks to provide capital The Dreyfus
Responsible Growth Fund, growth, with current income as Corporation
Inc. a secondary goal by investing
primarily in the common stock
of companies that in the
opinion of the Fund's
management, meet traditional
investment standards and
conduct their business in a
manner that contributes to the
enhancement of the quality of
life in America.
-------------------------------------------------------------------------------
FEDERATED INSURANCE SERIES
Federated High Income Seeks high current income by Federated
Bond Fund II investing primarily in a Investment
professionally managed, Management Company
diversified portfolio of fixed
income securities. Pursues
this objective by investing in
a diversified portfolio of
high- yield, lower-rated
corporate bonds (also known as
"junk bonds").
-------------------------------------------------------------------------------
Federated International Seeks to provide long-term Federated Global
Small Company Fund II growth of capital. Purses this Investment
objective by investing at Management Corp.
least 65% of its assets in
equity securities of foreign
companies that have a market
capitalization at the time of
purchase of $1.5 billion or
less.
-------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND (VIP)
Equity-Income Portfolio Seeks reasonable income and Fidelity Management
will consider the potential & Research Company;
for capital appreciation. The (beginning January
fund also seeks a yield, which 1, 2001, FMR Co.,
exceeds the composite yield on Inc. will
the securities comprising the subadvise.)
S&P 500 by investing primarily
in income-producing equity
securities and by investing in
domestic and foreign issuers.
-------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser,
Subaccount Investing In Investment Objective as applicable)
-----------------------------------------------------------------------------
<S> <C> <C>
Growth Portfolio Seeks capital appreciation by Fidelity Management
investing primarily in common & Research Company;
stocks of companies believed (beginning January
to have above-average growth 1, 2001, FMR Co.,
potential. Inc. will
subadvise.)
-----------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
Contrafund(TM) Portfolio Seeks long-term capital Fidelity Management
appreciation by investing & Research Company
primarily in common stocks and (subadvised by
securities of companies whose Fidelity Management
value it believes to have not & Research (U.K.)
fully been recognized by the Inc. and Fidelity
public. This fund invests in Management &
domestic and foreign issuers Research (Far East)
and also invests in "growth" Inc., and Fidelity
stocks or "value" stocks or Investments Japan
both. Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-----------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III (VIP III)
Growth & Income Portfolio Seeks high total return Fidelity Management
through a combination of & Research Company
current income and capital (subadvised by
appreciation by investing a Fidelity Management
majority of assets in common & Research (U.K.)
stocks with a focus on those Inc. and Fidelity
that pay current dividends and Management &
show potential for capital Research (Far East)
appreciation. Inc. and Fidelity
Investments Japan
Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-----------------------------------------------------------------------------
Mid Cap Portfolio Seeks long-term growth of Fidelity Management
capital by investing primarily & Research Company
in common stocks and at least (subadvised by
65% of total assets in Fidelity Management
securities of companies with & Research (U.K.),
medium market capitalizations. Inc. and Fidelity
Management &
Research Far East
Inc.)
-----------------------------------------------------------------------------
GE INVESTMENTS FUNDS, INC.
Mid-Cap Value Equity Fund Objective of providing long GE Asset Management
term growth of capital by Incorporated
investing primarily in common
stock and other equity
securities of companies that
the investment adviser
believes are undervalued by
the marketplace at the time of
purchase and that offer the
potential for above-average
growth of capital. Although
the current portfolio reflects
investments primarily within
the mid cap range, the Fund is
not restricted to investments
within any particular
capitalization and may in the
future invest a majority of
its assets in another
capitalization range.
-----------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Money Market Fund Objective of providing highest GE Asset Management
level of current income as is Incorporated
consistent with high liquidity
and safety of principal by
investing in various types of
good quality money market
securities.
-------------------------------------------------------------------------------
Premier Growth Equity Objective of providing long- GE Asset Management
Fund term growth of capital as well Incorporated
as future (rather than
current) income by investing
primarily in growth-oriented
equity securities.
-------------------------------------------------------------------------------
S&P 500 Index Fund(/1/) Objective of providing capital GE Asset Management
appreciation and accumulation Incorporated
of income that corresponds to (Subadvised by
the investment return of the State Street Global
Standard & Poor's 500 Advisers)
Composite Stock Price Index
through investment in common
stocks comprising the Index.
-------------------------------------------------------------------------------
Small-Cap Value Equity Objective of providing long- GE Asset Management
Fund term growth of capital by Incorporated
investing primarily in equity (Subadvised by
securities of small cap Palisade Capital
undervalued U.S. companies Management, L.L.C.)
that have solid growth
prospects.
-------------------------------------------------------------------------------
U.S. Equity Fund Objective of providing long- GE Asset Management
term growth of capital through Incorporated
investments primarily in
equity securities of U.S.
companies.
-------------------------------------------------------------------------------
Value Equity Fund Objective of providing long- GE Asset Management
term growth of capital and Incorporated
future income. Pursues
investments in equity
securities of large
undervalued U.S. companies
that have solid growth
prospects.
-------------------------------------------------------------------------------
JANUS ASPEN SERIES
Aggressive Growth Non-diversified portfolio Janus Capital
Portfolio pursuing long- term growth of Corporation
capital. Pursues this
objective by normally
investing at least 50% of its
assets in equity securities
issued by medium-sized
companies.
-------------------------------------------------------------------------------
Balanced Portfolio Seeks long term growth of Janus Capital
capital. Pursues this Corporation
objective consistent with the
preservation of capital and
balanced by current income.
Normally invests 40-60% of its
assets in securities selected
primarily for their growth
potential and 40-60% of its
assets in securities selected
primarily for their income
potential.
-------------------------------------------------------------------------------
</TABLE>
(/1/)"Standard & Poor's", "S&P", and "S&P 500" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by GE Asset Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard and Poor's makes no
representation or warranty, express or implied, regarding the advisability
of investing in this Fund or the Contract.
28
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser,
Subaccount Investing In Investment Objective as applicable)
----------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Non-diversified portfolio Janus Capital
Portfolio pursuing long-term growth of Corporation
capital. Pursues its objective
by investing primarily in
common stocks of companies of
any size.
----------------------------------------------------------------------------
Global Life Sciences Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Normally
invests at least 65% of its
total assets in securities of
companies that the portfolio
manager believes have a life
science orientation.
----------------------------------------------------------------------------
Global Technology Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Under normal
circumstances, it invests at
least 65% of its total assets
in securities of companies
that the portfolio manager
believes will benefit
significantly from advances or
improvements in technology.
----------------------------------------------------------------------------
Growth Portfolio Seeks long-term capital growth Janus Capital
consistent with the Corporation
preservation of capital and
pursues its objective by
investing in common stocks of
companies of any size.
Emphasizes larger, more
established issuers.
----------------------------------------------------------------------------
International Growth Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective primarily through
investments in common stocks
of issuers located outside the
United States. The portfolio
normally invests at least 65%
of its total assets in
securities of issuers from at
least five different
countries, excluding the
United States.
----------------------------------------------------------------------------
Worldwide Growth Seeks long-term capital growth Janus Capital
Portfolio in a manner consistent with Corporation
the preservation of capital.
Pursues this objective by
investing in a diversified
portfolio of common stocks of
foreign and domestic issuers
of all sizes. Normally invests
in at least five different
countries including the United
States.
----------------------------------------------------------------------------
MFS VARIABLE INSURANCE
TRUST
MFS(R) Growth Series Seeks to provide long-term Massachusetts
growth of capital and future Financial Services
income rather than current Company ("MFS")
income.
----------------------------------------------------------------------------
MFS(R) Growth With Income Seeks to provide reasonable Massachusetts
Series current income and long-term Financial Services
growth of capital and income. Company ("MFS")
----------------------------------------------------------------------------
MFS(R) New Discovery Seeks capital appreciation. Massachusetts
Series Pursues this objective by Financial Services
investing at least 65% of its Company ("MFS")
total assets in equity
securities of emerging growth
companies.
----------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser,
Subaccount Investing In Investment Objective as applicable)
----------------------------------------------------------------------------
<S> <C> <C>
MFS(R) Utilities Series Seeks capital growth and Massachusetts
current income. Purses this Financial Services
objective by investing at Company
least 65% of its total assets ("MFS")
in equity and debt securities
of domestic and foreign
companies in the utilities
industry.
----------------------------------------------------------------------------
OPPENHEIMER VARIABLE
ACCOUNT FUNDS
Global Securities Fund/VA Seeks long-term capital OppenheimerFunds,
appreciation by investing a Inc.
substantial portion of assets
in securities of foreign
issuers, "growth- type"
companies, cyclical industries
and special situations that
are considered to have
appreciation possibilities. It
invests mainly in common
stocks of U.S. and foreign
issuers.
----------------------------------------------------------------------------
Main Street Growth & Seeks high total return, which OppenheimerFunds,
Income Fund/VA includes growth in the value Inc.
of its shares as well as
current income, from equity
and debt securities. The Fund
invests mainly in common
stocks of U.S. companies.
----------------------------------------------------------------------------
PIMCO VARIABLE INSURANCE
TRUST
Foreign Bond Portfolio Non-diversified portfolio Pacific Investment
seeking to maximize total Management Company
return, consistent with
preservation of capital and
prudent investment management.
This fund primarily invests in
intermediate maturity hedged
foreign fixed income
securities.
----------------------------------------------------------------------------
High Yield Bond Portfolio Seeks to maximize total Pacific Investment
return, consistent with Management Company
preservation of capital and
prudent investment management.
Primarily invests in higher
yielding fixed income
securities (also known as
"junk bonds.")
----------------------------------------------------------------------------
Long-Term U.S. Government Seeks to maximize total Pacific Investment
Bond Portfolio return, consistent with the Management Company
preservation of capital and
prudent investment management.
Primarily invests in long-
term maturity fixed income
securities.
----------------------------------------------------------------------------
Total Return Bond Seeks to maximize total return Pacific Investment
Portfolio consistent with preservation Management Company
of capital and prudent
investment management.
Primarily invests in
intermediate maturity fixed
income securities.
----------------------------------------------------------------------------
RYDEX VARIABLE TRUST
Rydex OTC Fund(/2/) Non-diversified fund seeks to Rydex Global
provide investment results Advisors
that correspond to a benchmark
for over-the-counter
securities that invest
primarily in securities of
companies included in NASDAQ
100 Index(TM).
----------------------------------------------------------------------------
</TABLE>
(/2/)THE NASDAQ 100 Index(TM) is an unmanaged index that is a widely recognized
indicator of OTC Market performance.
30
<PAGE>
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Subaccounts of the Separate Account. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay Death Benefits,
surrender proceeds, withdrawals, to make income payments, or for other purposes
described in the Contract. We automatically reinvest all dividend and capital
gain distributions of the portfolios in shares of the distributing portfolios
at their net asset value on the date of distribution. In other words, we do not
pay portfolio dividends or portfolio distributions out to Owners as additional
units, but instead reflect them in unit values.
Shares of the portfolios of the Funds are not sold directly to the general
public. They are sold to the Company, and may be sold to other insurance
companies that issue variable annuity and variable life insurance contracts. In
addition, they may be sold to retirement plans.
When a Fund sells shares in any of its portfolios both to variable annuity and
to variable life insurance separate accounts, it engages in mixed funding. When
a Fund sells shares in any of its portfolios to separate accounts of
unaffiliated life insurance companies, it engages in shared funding.
Each Fund may engage in mixed and shared funding. Therefore, due to differences
in redemption rates or tax treatment, or other considerations, the interests of
various shareholders participating in a Fund could conflict. A Fund's Board of
Directors will monitor for the existence of any material conflicts, and
determine what action, if any, should be taken. See the Prospectuses for the
Funds.
We have entered into agreements with either the investment adviser or
distributor of each of the Funds under which the adviser or distributor pays us
a fee ordinarily based upon a percentage of the average aggregate amount we
have invested on behalf of the Separate Account and other separate accounts.
These percentages differ, and some investment advisers or distributors pay us a
greater percentage than other advisers or distributors. These agreements
reflect administrative services we provide. The amounts we receive under these
agreements may be significant.
We will also receive Service Share fees from certain of the portfolios. These
fees are deducted from portfolio assets, and are for the administrative
services we provide to those portfolios. In addition, our affiliate, Capital
Brokerage Corporation, the principal underwriter for the Contracts, will
receive 12b-1 fees, deducted from certain portfolio assets for providing
distribution and shareholder support services to some of the portfolios.
Because the Service Share fees and 12b-1 fees are paid out of a portfolio's
assets on an ongoing basis, over time they will increase the cost of an
investment in portfolio shares.
31
<PAGE>
CHANGES TO THE SEPARATE ACCOUNT AND THE SUBACCOUNTS
We reserve the right, within the law, to make additions, deletions and
substitutions for the Funds and/or any portfolios within the Funds in which the
Separate Account participates. We may substitute shares of other portfolios for
shares already purchased, or to be purchased in the future, under the Contract.
This substitution might occur if shares of a portfolio should no longer be
available, or if investment in any portfolio's shares should become
inappropriate, in the judgment of our management, for the purposes of the
Contract. The new portfolios may have higher fees and charges than the ones
they replaced, and not all portfolios may be available to all classes of
Contracts. No substitution of the shares attributable to your Contract may take
place without prior notice to you and before approval of the SEC, in accordance
with the 1940 Act.
We also reserve the right to establish additional Subaccounts, each of which
would invest in a separate portfolio of a Fund, or in shares of another
investment company, with a specified investment objective. We may also
eliminate one or more Subaccounts if, in our sole discretion, marketing, tax,
or investment conditions warrant. We will not eliminate a Subaccount without
prior notice to you and before approval of the SEC. Not all Subaccounts may be
available to all classes of contracts.
If permitted by law, we may deregister the Separate Account under the 1940 Act
in the event such registration is no longer required; manage the Separate
Account under the direction of a committee or in any other form; or combine the
Separate Account with other separate accounts of the Company. Further, to the
extent permitted by applicable law, we may transfer the assets of the Separate
Account to another separate account, and we may create new Separate Accounts.
32
<PAGE>
The Guarantee Account
Due to certain exemptive and exclusionary provisions of the Federal securities
laws, we have not registered interests in the Guarantee Account under the
Securities Act of 1933 (the "1933 Act"), and we have not registered either the
Guarantee Account or our General Account as an investment company under the
1940 Act. Accordingly, neither our Guarantee Account, nor our General Account
is generally subject to regulation under the 1933 Act and the 1940 Act.
Disclosures relating to the interests in the Guarantee Account, and the General
Account, however, may be subject to certain generally applicable provisions of
the Federal securities laws relating to the accuracy of statements made in a
registration statement.
You may allocate some or all of your net purchase payments and transfer some or
all of your Contract Value to the Guarantee Account. We credit the portion of
the Contract Value allocated to the Guarantee Account with interest (as
described below). Contract Value in the Guarantee Account is subject to some,
but not all, of the charges we assess in connection with the Contract. See
Charges and Other Deductions.
Each time you allocate net purchase payments or transfer Contract Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a specified
period of time.
We determine the interest rates in our sole discretion. The determination made
will be influenced by, but not necessarily correspond to, interest rates
available on fixed income investments which we may acquire with the amounts we
receive as purchase payments or transfers of Contract Value under the
Contracts. You will have no direct or indirect interest in these investments.
We also will consider other factors in determining interest rates for a
guarantee period including, but not limited to, regulatory and tax
requirements, sales commissions, and administrative expenses borne by us,
general economic trends, and competitive factors. Amounts you allocate to the
Guarantee Account will not share in the investment performance of our General
Account, or any portion thereof. We cannot predict or guarantee the level of
interest rates in future guarantee periods. However, the interest rates for any
interest rate guarantee period will be at least the guaranteed interest rate
shown in your Contract.
We will notify you in writing at least 10 days prior to the expiration date of
any interest rate guarantee period about the then currently available interest
rate guarantee periods and the guaranteed interest rates applicable to such
interest rate guarantee periods. A new one year interest rate guarantee period
will commence automatically unless we receive written notice prior to the end
of the 30 day period following the expiration of the interest rate guarantee
period ("30 day window") of your election of a different interest rate
guarantee period from among those being
33
<PAGE>
offered by us at that time, or instructions to transfer all or a portion of the
remaining amount to one or more Subaccounts, subject to certain restrictions.
(See Transfers Before the Annuity Commencement Date.) During the 30 day window,
the allocation will accrue interest at the new interest rate guarantee period's
interest rate.
We reserve the right to credit bonus interest on purchase payments allocated to
a Guarantee Account participating in the Dollar-Cost Averaging Program. (This
may not be available to all classes of Contracts.)
34
<PAGE>
Charges and Other Deductions
All of the charges described in this section apply to Contract Value allocated
to the Separate Account. Contract Value in the Guarantee Account is subject to
all of the charges described in this section except for the mortality and
expense risk charge and the administrative expense charge.
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the Contracts. We incur certain
costs and expenses for the distribution and administration of the Contracts and
for providing the benefits payable thereunder. Our administrative services
include:
. processing applications for and issuing the Contracts;
. maintaining records;
. administering annuity payouts;
. furnishing accounting and valuation services (including the calculation and
monitoring of daily Subaccount values);
. reconciling and depositing cash receipts;
. providing Contract confirmations and periodic statements;
. providing toll-free inquiry services; and
. furnishing telephone and internet transaction services.
The risks we assume include:
. the risk that the Death Benefit will be greater than the Surrender Value;
. the risk that the actual life-span of persons receiving income payments under
the Contract will exceed the assumptions reflected in our guaranteed rates
(these rates are incorporated in the Contract and cannot be changed); and
. the risk that our costs in providing the services will exceed our revenues
from Contract charges (which cannot be changed by us).
The amount of a charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. For example, the surrender charge we collect may not fully cover all of
the sales and distribution expenses we actually incur. We also may realize a
profit on one or more of the charges. We may use any such profits for any
corporate purpose, including the payment of sales expenses.
35
<PAGE>
TRANSACTION EXPENSES
Surrender Charge
We assess a surrender charge (except as described below) on withdrawals and
surrenders of purchase payments. You pay this charge to compensate us for the
losses we experience on Contract distribution costs.
We calculate the surrender charge separately for each purchase payment. For
purposes of calculating this charge, we assume that you withdraw purchase
payments on a first-in, first-out basis. We deduct the surrender charge
proportionately from the Subaccounts. However, if there is no Contract Value in
the Separate Account, we will deduct the charge from all monies in the
Guarantee Account. The charge will be taken first from any six year interest
guarantee periods to which you have allocated purchase payments and then from
the one year interest rate guarantee periods on a first-in, first-out basis.
The surrender charge is as follows:
<TABLE>
<CAPTION>
Number of Full and Partially Surrender Charge as a Percentage
Completed Years Since of the Surrendered or
We Received the Purchase Payment Withdrawn Purchase Payment
--------------------------------------------------------------------------
Year Percentage
---- ----------
<S> <C>
1 6%
2 6%
3 6%
4 6%
5 5%
6 4%
7 or more 0%
</TABLE>
We do not assess the surrender charge on surrenders:
. of amounts representing gain (as defined below);
. of free withdrawal amounts (as defined below);
. if taken under Optional Payment Plan 1, Optional Payment Plan 2 (for a period
of 5 or more years), Optional Payment Plan 3 (with a payment period of at
least 5 years based on guaranteed interest), or Optional Payment Plan 5.
You may withdraw any gain in your Contract free of any surrender charge. We
calculate gain in the Contract as: (a) plus (b) minus (c) minus (d), but not
less than zero where:
(a) is the Contract Value on the Valuation Day we receive your withdrawal or
surrender request;
(b) is the total of any withdrawals including surrender charges previously
taken;
36
<PAGE>
(c) is the total of purchase payments made; and
(d) is the total of any gain previously withdrawn.
In addition to any gain, you may withdraw an amount equal to 10% of your total
purchase payments each Contract year without a surrender charge (the "free
withdrawal amount"). The free withdrawal amount is not cumulative from Contract
year to Contract year.
Further, we will waive the surrender charge if you annuitize under Optional
Payment Plan 1 (Life Income with Period Certain), Optional Payment Plan 2
(Income for a Fixed Period) provided that you select a fixed period of 5 years
or more, Optional Payment Plan 3 (Income of a Definite Amount) with a payment
period of at least 5 years based on guaranteed interest, or Optional Payment
Plan 5 (Joint Life and Survivor Income). See Optional Payment Plans.
DEDUCTIONS FROM THE SEPARATE ACCOUNT
We deduct from the Separate Account an amount, computed daily, at an annual
rate of 1.45% (1.65% where either Annuitant was above age 70 at the Contract
Date) of the daily net asset value. The charge consists of an administrative
expense charge at an effective annual rate of .15% and a mortality and expense
risk charge at an effective annual rate of 1.30% (1.50% for Contracts where
either Annuitant was above age 70 at the Contract Date). These deductions from
the Separate Account are reflected in your Contract Value.
OTHER CHARGES
Charges for Optional Enhanced Death Benefit
We charge you for expenses related to the optional enhanced Death Benefit. At
the beginning of each Contract year after the first, we deduct this charge
against the average of the Contract Value at the beginning of the previous
Contract year and the Contract Value at the end of the previous Contract year.
At surrender, the charge is made against the average of the Contract Value at
the beginning of the current Contract year and the Contract Value at surrender.
The charge at surrender will be a pro rata portion of the annual charge. We
currently charge 0.20% times the average Contract Value as described above.
However, we reserve the right to charge an annual charge of 0.35% times the
average Contract Value, as described above. We will allocate the annual charge
among the Subaccounts in the same proportion that the Value in each Subaccount
bears to the total Contract Value in all subaccounts at the time we make the
charge. If the Guarantee Account is available under the Contract and the
Contract Value in the Separate Account is not sufficient to cover the charge,
we will deduct the charge first from the Contract Value in the Separate
Account, if any, and then from the Guarantee Account.
37
<PAGE>
Annual Contract Charge
We will deduct a charge of $30 annually from the Contract Value of each
Contract to compensate us for certain administrative expenses incurred in
connection with the Contracts. We will deduct the charge at each Contract
anniversary and at surrender. We will waive this charge if your Contract Value
at the time of deduction is more than $40,000.
We will allocate the annual contract charge among the Subaccounts in the same
proportion that the Contract's Contract Value in each Subaccount bears to the
total Contract Value in all Subaccounts at the time we make the charge. If
there is insufficient Contract Value allocated to the Separate Account, we will
deduct any remaining portion of the charge from the Guarantee Account
proportionally from all monies in the Guarantee Account. Other allocation
methods may be available upon request.
Deductions for Premium Taxes
We will deduct charges for any premium tax or other tax levied by any
governmental entity from Contract Value when incurred or at another time of our
choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax generally
ranges from 0.0% to 3.0%.
Other Charges and Deductions
Each portfolio incurs certain fees and expenses. To pay for these charges, the
Fund makes deductions from its assets. The deductions are described more fully
in each Fund's Prospectus.
In addition, we reserve the right to impose a charge of up to $10 for
transfers. This charge is at cost with no profit to us.
38
<PAGE>
ADDITIONAL INFORMATION
We may reduce or eliminate the administrative expense and surrender charges
described previously for any particular Contract. However, we will reduce these
charges only to the extent that we anticipate lower distribution and/or
administrative expenses, or that we perform fewer sales or administrative
services than those originally contemplated in establishing the level of those
charges. Lower distribution and administrative expenses may be the result of
economies associated with (1) the use of mass enrollment procedures, (2) the
performance of administrative or sales functions by the employer, (3) the use
by an employer of automated techniques in submitting deposits or information
related to deposits on behalf of its employees, or (4) any other circumstances
which reduce distribution or administrative expenses. We will state the exact
amount of administrative expense and surrender charges applicable to a
particular Contract in that Contract.
We may also reduce charges and/or deductions for sales of the Contracts to
registered representatives who sell the Contracts to the extent we realize
savings of distribution and administrative expenses. Any such reduction in
charges and/or deductions will be consistent with the standards we use in
determining the reduction in charges and/or deductions for other group
arrangements.
39
<PAGE>
The Contract
The Contract is an individual flexible premium variable deferred annuity
Contract. We describe your rights and benefits below and in the Contract. There
may be differences in your Contract.
PURCHASE OF THE CONTRACT
If you wish to purchase a Contract, you must apply for it through an authorized
sales representative. The sales representative will send your completed
application to us, and we will decide whether to accept or reject it. If we
accept your application, our legally authorized officers prepare and execute a
Contract. We then send the Contract to you through your sales representative.
See Distribution of the Contracts.
If we receive a completed application and all other information necessary for
processing a purchase order, we will apply your initial purchase payment no
later than two business days after we receive the order. While attempting to
finish an incomplete application, we may hold your initial purchase payment for
no more than five business days. If the incomplete application cannot be
completed within those five days, we will inform you of the reasons, and will
return your purchase payment immediately (unless you specifically authorize us
to keep it until the application is complete). Once you complete your
application, we must apply the initial purchase payment within two business
days. We will apply any additional premium payments you make on the Valuation
Day we receive them.
To apply for a Contract, you must be of legal age and eligible to participate
in any of the qualified or non-qualified retirement plans for which we designed
the Contracts. The Annuitant cannot be older than age 85, unless we approve a
different age.
This Contract may be used with certain tax qualified retirement plans. The
Contract includes attributes such as tax deferral on accumulated earnings.
Qualified retirement plans provide their own tax deferral benefit; the purchase
of this Contract does not provide additional tax deferral benefits beyond those
provided in the qualified plan. Accordingly, if you are purchasing this
Contract through a qualified plan, you should consider purchasing this Contract
for its Death Benefit, income benefits and other non-tax-related benefits.
Please consult a tax advisor for information specific to your circumstances in
order to determine whether the Contract is an appropriate investment for you.
OWNERSHIP
As Owner, you have all rights under the Contract, subject to the rights of any
irrevocable beneficiary. According to New York law, the assets of the Separate
Account are held for the exclusive benefit of all Owners and their Designated
Beneficiaries. Qualified Contracts may not be assigned or transferred except as
permitted by the Employee Retirement Income Security Act (ERISA) of 1974 and
upon
40
<PAGE>
written notification to us. We assume no responsibility for the validity or
effect of any assignment. Consult your tax advisor about the tax consequences
of an assignment.
If you name a Joint Owner in the application, we will treat the Joint Owners as
having equal undivided interests in the Contract. All Owners must together
exercise any ownership rights in this Contract.
PURCHASE PAYMENTS
You may make purchase payments at a frequency and in the amount you select,
subject to certain limitations. You must obtain our approval before you make
total purchase payments for an Annuitant age 79 or younger that exceed
$2,000,000. If any Annuitant is age 80 or older at the time of payment, the
total amount not subject to prior approval is $1,000,000. Payments may be made
or, if stopped, resumed at any time until the Annuity Commencement Date, the
surrender of the Contract, or the death of the Owner (or Joint Owner, if
applicable), whichever comes first. We reserve the right to refuse to accept a
purchase payment for any lawful reason.
The minimum initial purchase payment is $5,000 (or $2,000 if your Contract is
an IRA Contract). We may accept a lower initial purchase payment in the case of
certain group sales. Each additional purchase payment must be at least $500 for
Non-Qualified Contracts ($200 in the case of certain bank drafts), $50 for IRA
Contracts and $100 for other Qualified Contracts.
VALUATION DAY
We will value Accumulation and Annuity Units once daily as of the close of
regular trading (currently 4:00 p.m., New York time) for each day the New York
Stock Exchange is open except for days on which a Fund does not value its
shares (Valuation Day). If a Valuation Period contains more than one day, the
unit values will be the same for each day in the Valuation Period.
ALLOCATION OF PURCHASE PAYMENTS
We place net purchase payments into the Separate Account's Subaccounts, each of
which invests in shares of a corresponding portfolio of the Funds, and/or the
Guarantee Account, according to your instructions. You may allocate purchase
payments to up to ten Subaccounts at any one time.
The percentage of any purchase payment which you can put into any one
Subaccount or guarantee period must be a whole percentage and not less than
$100. Upon allocation to the appropriate Subaccounts we convert net purchase
payments into Accumulation Units. We determine the number of Accumulation Units
credited by dividing the amount allocated to each Subaccount by the value of an
Accumulation Unit for that Subaccount on the Valuation Day on which we receive
any additional
41
<PAGE>
purchase payment at our Service Center if received before 4:00 p.m., New York
time. If we receive the additional purchase payment at or after 4:00 p.m, New
York time, we will use the Accumulation Unit value computed on the next
Valuation Day. The number of Accumulation Units determined in this way is not
changed by any subsequent change in the value of an Accumulation Unit. However,
the dollar value of an Accumulation Unit will vary depending not only upon how
well the portfolio's investments perform, but also upon the charges of the
Separate Account and the fees and expenses of the portfolios.
You may change the allocation of subsequent purchase payments at any time,
without charge, by sending us acceptable notice in writing or over the phone.
The new allocation will apply to any purchase payments made after we receive
notice of the change.
VALUATION OF ACCUMULATION UNITS
We value Accumulation Units for each Subaccount separately. Initially, we
arbitrarily set the value of each Accumulation Unit at $10.00. Thereafter, the
value of an Accumulation Unit in any Subaccount for a Valuation Period equals
the value of an Accumulation Unit in that Subaccount as of the preceding
Valuation Period multiplied by the net investment factor of that Subaccount for
the current Valuation Period.
The net investment factor is an index used to measure the investment
performance of a Subaccount from one Valuation Period to the next. The net
investment factor for any Subaccount for any Valuation Period reflects the
change in the net asset value per share of the portfolio held in the Subaccount
from one Valuation Period to the next, adjusted for the daily deduction of the
administrative expense and mortality and expense risk charges from assets in
the Subaccount. If any "ex-dividend" date occurs during the Valuation Period,
we take into account the per share amount of any dividend or capital gain
distribution so that the unit value is not impacted. Also, if we need to
reserve money for taxes, we take into account a per share charge or credit for
any taxes reserved for which we determine to have resulted from the operations
of the Subaccount.
42
<PAGE>
Transfers
TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE
Before the earliest of the surrender of the Contract, payment of any Death
Benefit, and the Annuity Commencement Date, you may transfer all or a portion
of your investment between and among the Subaccounts of the Separate Account
and the Guarantee Account, subject to certain conditions. We process transfers
among the Subaccounts of the Separate Account and between the Subaccounts and
the Guarantee Account as of the end of the Valuation Period that we receive the
transfer request at our Service Center. For this reason there may be
limitations on multiple transfer request made at different times during the
same Valuation Period involving the same Subaccount of the Separate Account or
Guarantee Account. We may postpone transfers to, from or among the Subaccounts
of the Separate Account, under certain circumstances. See Requesting Payments.
We restrict tranfers from any particular allocation of a Guarantee Account to a
Subaccount. Unless you are participating in the dollar-cost averaging program
(see Dollar-Cost Averaging), you may make such transfers only during the 30 day
period beginning with the end of the preceding interest rate guarantee period
applicable to that particular allocation. We also may limit the amount which
may transfer to the Subaccounts. However, for any particular allocation to the
Guarantee Account, the limited amount will not be less than any accured
interest on that allocation plus 25% of the original amount of that allocation.
We may restrict certain transfers from the Subaccounts to the Guarantee
Account. We reserve the right to prohibit or limit transfers from a Subaccount
to the Guarantee Account during the six-month period following the transfer of
any amount from the Guarantee Account to any Subaccount.
Currently, there is no other limit on the number of transfers between and among
Subaccounts of the Separate Account and the Guarantee Account; however, we
reserve the right to limit the number of transfers each calendar year to twelve
or one transfer per month or, if it is necessary for the Contract to continue
to be treated as an annuity contract by the Internal Revenue Service, a lower
number. Currently, all transfers under the Contract are free. However, we
reserve the right to assess a charge of up to $10 per transfer. The minimum
transfer amount is $100 or the entire balance in the Subaccount or guarantee
period if the transfer will leave a balance of less than $100.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(i) if any Subaccount that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Subaccount invests;
43
<PAGE>
(ii) if the transfer is a result of more than one trade involving the same
Subaccount within a 30 day period; or
(iii) if the transfer would adversely affect Accumulation Unit values.
We also may not honor transfers made by third parties. (See Transfers by Third
Parties.)
When thinking about a transfer of Contract Value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that you will make a transfer at an inopportune time.
TELEPHONE TRANSACTIONS
We permit certain telephone transactions (including transfers) as described in
this Prospectus. We may be liable for losses resulting from unauthorized or
fraudulent telephone transactions if we fail to employ reasonable procedures to
confirm that the telephone instructions that we receive are genuine. Therefore,
we will employ means to prevent unauthorized or fraudulent telephone requests,
such as sending written confirmation, recording telephone requests, and/or
requesting other identifying information. In addition, we will require written
authorization before allowing you to make telephone transactions. We reserve
the right to limit telephone transactions.
To request a telephone transaction, you should call our Annuity Customer
Service Line at 1-800-352-9910. We will record all telephone transaction
requests. We will execute transfer requests received before the close of
regular trading on the New York Stock Exchange on a Valuation Day at that day's
prices. We will execute requests received after that time on the next Valuation
Day at that day's prices.
ON LINE TRANSFERS
We permit certain transactions to be performed through an electronic process
using the Internet (including transfers). We may be liable for losses resulting
from unauthorized or fraudulent electronic transactions if we fail to employ
reasonable procedures to confirm that the electronic instructions that we
receive are genuine. Therefore, we will employ means to prevent unauthorized or
fraudulent electronic requests, such as sending written confirmation, retaining
a record of electronic requests, and/or requesting other identifying
information. Unless you notify us in writing not to authorize electronic
transactions, such transactions also will be accepted on behalf of your behalf
from your registered representative. We reserve the right to limit electronic
transactions.
To request an electronic transaction, you should go to the Universal Resource
Locator ("URL") established for such purposes,
http://www.GEFinancialService.com. We will execute transfer requests received
before the close of regular trading on the
44
<PAGE>
New York Stock Exchange on a Valuation Day at that day's prices. We will
execute requests received after that time on the next Valuation Day at that
day's prices.
TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give third
parties the right to effect transfers on your behalf. However, when the same
third party makes transfers for many Owners, the result can be simultaneous
transfers involving large amounts of Contract Value. Such transfers can disrupt
the orderly management of the portfolios underlying the Contract, can result in
higher costs to Owners, and are generally not compatible with the long-range
goals of Owners. We believe that such simultaneous transfers effected by such
third parties are not in the best interests of all shareholders of the Funds
underlying the Contracts and the management of the Funds share this position.
Therefore, as described in your Contract, we may limit or disallow transfers
made by a third party.
DOLLAR-COST AVERAGING
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Money Market Subaccount
and/or the Guarantee Account to any combination of other Subaccounts (as long
as the total number of Subaccounts used does not exceed the maximum number
allowed under the Contract). The dollar-cost averaging method of investment is
designed to reduce the risk of making purchases only when the price of units is
high, but you should carefully consider your financial ability to continue the
program over a long enough period of time to purchase Accumulation Units when
their value is low as well as when it is high. Dollar-cost averaging does not
assure a profit or protect against a loss.
You may participate in the dollar-cost averaging program by selecting the
program on the application, completing a dollar-cost averaging agreement, or
calling our Annuity Customer Service Line. To use the dollar-cost averaging
program, you must transfer at least $100 from a Subaccount or an interest rate
guarantee period with each transfer. Once elected, dollar-cost averaging
remains in effect from the date we receive your request until the value of the
Subaccount or the interest rate guarantee period from which transfers are being
made is depleted, or until you cancel the program by written request or by
telephone if we have your telephone authorization on file. The dollar-cost
averaging program will start 30 days after we receive your instructions and
purchase payment, unless you specify an earlier date.
With regard to dollar-cost averaging from the Guarantee Account, we reserve the
right to determine the amount of each automatic transfer. We reserve the right
to transfer any remaining portion of an allocation used for dollar-cost
averaging to the Guarantee Account with a new guarantee period upon termination
of the dollar-cost averaging program for that allocation.
45
<PAGE>
There is no additional charge for dollar-cost averaging. We reserve the right
to discontinue offering or to modify the dollar-cost averaging program at any
time and for any reason. We reserve the right to prohibit simultaneous dollar-
cost averaging and systematic withdrawals.
PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Subaccounts, the performance of
each Subaccount may cause your allocation to shift. You may instruct us to
automatically rebalance (on a quarterly, semi-annual or annual basis) your
Contract Value among the Subaccounts to return to the percentages specified in
your allocation instructions. The program does not include allocations to the
Guarantee Account. You may elect to participate in the portfolio rebalancing
program at any time by completing the portfolio rebalancing agreement. Your
percentage allocations must be in whole percentages.
Subsequent changes to your percentage allocations may be made at any time by
written or telephone instructions to the Service Center. Once elected,
portfolio rebalancing remains in effect from the date we receive your written
request until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and we do not consider a
portfolio rebalancing transfer a transfer for purposes of assessing a transfer
charge or calculating the maximum number of transfers permitted in a calendar
year. We reserve the right to discontinue offering or to modify the portfolio
rebalancing program at any time and for any reason. We also reserve the right
to exclude Subaccounts from portfolio rebalancing. Portfolio rebalancing does
not guarantee a profit or protect against a loss.
GUARANTEE ACCOUNT INTEREST SWEEP PROGRAM
Before the Annuity Commencement Date, you may instruct us to transfer interest
earned on your Contract Value in the Guarantee Account to the Subaccounts to
which you are allocating purchase payments, in accordance with the allocation
instructions in effect on the date of the transfer. You must specify the
frequency of the transfers (either quarterly, semi-annually, or annually).
The minimum Contract Value in the Guarantee Account required to elect this
option is $1,000, but may be reduced at our discretion. The transfers under
this program will take place on the last calendar day of each period.
You may participate in the interest sweep program at the same time you
participate in either the dollar-cost averaging program or the portfolio
rebalancing program. If any interest sweep transfer is scheduled for the same
day as a portfolio rebalancing transfer, the interest sweep transfer will be
processed first.
46
<PAGE>
We limit the amount you may transfer from the Guarantee Account to the
Subaccounts for any particular allocation to the Guarantee Account. See
Transfers Before the Annuity Commencement Date. We will not process an interest
sweep transfer if that transfer would exceed the amount permitted to be
transferred.
You may cancel your participation in the interest sweep program at any time by
writing our Service Center or by calling our Annuity Customer Service Line. We
will cancel your participation in the program if your Contract Value in the
Guarantee Account is less than $1,000 or such a lower amount as we may
determine. There is no additional charge for the interest sweep program. We do
not consider interest sweep transfers a transfer for purposes of assessing a
transfer charge or calculating the maximum number of transfers permitted in a
calendar year.
47
<PAGE>
Surrenders and Withdrawals
SURRENDERS AND WITHDRAWALS
Subject to the rules discussed below, we will allow the surrender of the
Contract or a withdrawal of a portion of the Contract Value at any time before
the Annuity Commencement Date upon your written request.
We will not permit a withdrawal that is less than $1,000 or that reduces
Contract Value to less than $5,000. If your withdrawal request would reduce
Contract Value to less than $5,000, we will surrender only that amount of
Contract Value that would reduce the remaining Contract Value to $5,000 and
deduct any surrender charge from the amount you withdrew. Different limits and
other restrictions may apply to qualified retirement plans.
The amount payable on surrender of the Contract is the Surrender Value at the
end of the Valuation Period during which we receive the request. The Surrender
Value equals the Contract Value (after deduction of any applicable optional
benefit charges and annual contract charge) on the Valuation Day we receive a
request for surrender less any applicable surrender charge and any applicable
premium tax charge. We may pay the Surrender Value in a lump sum or under one
of the optional payment plans specified in the Contract, based on your
instructions.
You may indicate, in writing or by calling our Annuity Customer Service Line,
from which Subaccounts or guarantee periods we are to take your withdrawal. If
you do not so specify, we will deduct the amount of the withdrawal first from
the Subaccounts of the Separate Account on a pro-rata basis, in proportion to
the Contract Value in the Separate Account. We then will deduct any remaining
amount from the Guarantee Account. We will take deductions from the Guarantee
Account from the amounts (including any interest credited to such amounts)
which have been in the Guarantee Account for the longest period of time.
Please remember that a withdrawal may reduce the Death Benefit by the
proportion that the withdrawal (including any applicable surrender charge and
any premium tax) reduced Contract Value, depending on the amount of the
withdrawal and the applicable Death Benefit. See The Death Benefit.
SYSTEMATIC WITHDRAWALS
You may elect in writing on our form to take systematic withdrawals of a
specified dollar amount (in equal installments of at least $100) on a monthly,
quarterly, semi-annual or annual basis. Payments can begin at any time after 30
days from the Contract Date unless we allow an earlier date. Your systematic
withdrawals in a Contract year may not exceed the amount which is not subject
to a surrender charge. You may provide specific instructions as to how we are
to take the systematic withdrawals. If you have not provided specific
instructions, or if your specific instructions cannot be carried out, we will
process the withdrawals by first taking on
48
<PAGE>
a pro-rata basis Accumulation Units from all of the Subaccounts in which you
have an interest. To the extent that your Contract Value in the Separate
Account is not sufficient to accomplish the withdrawal, we will take any
Contract Value you have in the Guarantee Account to accomplish the withdrawal.
After your systematic withdrawals begin, you may change the frequency and/or
amount of your payments, subject to the following:
. you may request only one such change in a calendar quarter; and
. if you did not elect the maximum amount you could withdraw under this program
at the time you elected the current series of systematic withdrawals, then
you may increase the remaining payments up to the maximum amount.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Contract Value to be less than $5,000. If
a systematic withdrawal would cause the Contract Value to be less than $5,000,
then we will not process that systematic withdrawal transaction. If any of your
systematic withdrawals would be or becomes less than $100, we reserve the right
to reduce the frequency of payments to an interval that would result in each
payment being at least $100. You may discontinue systematic withdrawals at any
time by notifying us in writing at our Service Center or by telephone.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to Federal income taxes on any portion considered gain
for tax purposes. In addition, you may be assessed a 10% Federal penalty tax on
systematic withdrawals if you are under age 59 1/2 at the time of the
withdrawal.
Both withdrawals at your specific request and withdrawals under a systematic
withdrawal program will count toward the limit of the amount that you may
withdraw in any Contract year free under the free withdrawal privilege.
We reserve the right to prohibit simultaneous systematic withdrawals and
dollar-cost averaging. We also reserve the right to discontinue systematic
withdrawals upon 30 days written notice to Owners.
49
<PAGE>
The Death Benefit
DEATH BENEFIT AT DEATH OF ANY ANNUITANT BEFORE ANNUITY COMMENCEMENT DATE
If any Annuitant dies before income payments begin, regardless of whether the
Annuitant is also an Owner or Joint Owner of the Contract, the amount of
proceeds available is the Death Benefit. Upon receipt of due proof of an
Annuitant's death (generally, due proof is a certified copy of the death
certificate or a certified copy of the decree of a court of competent
jurisdiction as to the finding of death), we will calculate the Death Benefit.
We will treat the Death Benefit in accordance with your instructions, subject
to distribution rules and termination of contract provisions described
elsewhere. Until we receive instructions, the calculated Death Benefit will
remain allocated to the Subaccounts and/or the Guarantee Account proportionally
according to your last instructions. Accordingly, the Death Benefit proceeds
may fluctuate with the investment performance of the Subaccounts selected. You
should note that if Account Value decreases after the Annuitant's death there
may be situations in which your Death Benefit proceeds maybe less than the
purchase payments you have made.
The Death Benefit varies based on the age of the Annuitant at issue. If the
Annuitant is, or both the Annuitant and the Joint Annuitant are, age 80 or
younger at issue, the Death Benefit equals the greatest of:
(a) the Contract Value as of the date we receive due proof of death of any
Annuitant;
(b) the sum of (1) minus (2) plus (3), where
(1) is the greatest Contract Value as of any Contract anniversary up to and
including the Contract anniversary next following or coincident with the
80th birthday of the older of any Annuitant;
(2) is the Contract Value on the date of death; and
(3) is the Contract Value on the date we receive due proof of death; and
(c) purchase payments less any withdrawals.
Withdrawals reduce the sum calculated under (b) proportionately by the same
percentage that the withdrawal reduces your Contract Value.
If any Annuitant is older than age 80 at issue, the Death Benefit is equal to
the greatest of:
(a) the Contract Value as of the date we receive due proof of death of any
Annuitant;
(b) the sum of (1) minus (2) plus (3), where:
(1) is the greatest Contract Value as of any Contract anniversary up to and
including the Contract anniversary next following or coincident with the
85th birthday of the older of any Annuitant; and
(2) is the Contract Value on the date of death; and
(3) is the Contract Value on the date we receive due proof of death; and
(c) purchase payments less any withdrawals.
Withdrawals reduce the sum calculated under (b) proportionally by the same
percentage that the withdrawal reduces Contract Value.
50
<PAGE>
Example: Assuming an Owner: (i) purchases a Contract for $100,000; (ii) makes
no additional purchase payments and no withdrawals; (iii) is not subject to
premium taxes; (iv) the Annuitant's age is 75 on the Contract Date; and (v) we
receive due proof of death on the date of death then:
<TABLE>
<CAPTION>
End of Annuitant's Contract Death
Year Age Value Benefit
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 76 $103,000 $103,000
2 77 112,000 112,000
3 78 90,000 112,000
4 79 135,000 135,000
5 80 130,000 135,000
6 81 150,000 150,000
7 82 125,000 135,000
8 83 145,000 145,000
</TABLE>
The purpose of this example is to show how the Death Benefit works based on
purely hypothetical values and is not intended to depict investment performance
of the Contract.
Withdrawals may reduce the Death Benefit by the proportion that the withdrawal
(including any surrender charge and premium tax) reduced Contract Value. For
example:
<TABLE>
<CAPTION>
Purchase Contract Death
Date Payment Value Benefit
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/00 $5,000 $ 5,000 $ 5,000
3/31/01 -- $10,000 $10,000
3/31/02 -- $ 7,000 $10,000
</TABLE>
If a withdrawal of $3,500 is made on March 31, 2002, the Death Benefit
immediately after the withdrawal will be $5,000 ($10,000 to $5,000) since the
Contract Value is reduced 50% by the withdrawal ($7,000 to $3,500). This
example assumes that: (i) death occurs on March 31, 2002; (ii) due proof of
death was provided on March 31, 2002; (iii) no other withdrawals occurred; (iv)
the Annuitant and any Joint Annuitant were both younger than age 80 at issue;
(v) no surrender charge applies; and (vi) no premium tax applies to the
withdrawal. This example is based on purely hypothetical values and is not
intended to depict investment performance of the Contract.
OPTIONAL ENHANCED DEATH BENEFIT
The optional enhanced Death Benefit (which may be referred to as "GE Earnings
ProtectorSM" in our marketing materials) adds an extra feature and coordinates
with your Death Benefit.
The optional enhanced Death Benefit varies based on the age of the Annuitant at
issue. However, your optional enhanced Death Benefit will never be less than
zero.
51
<PAGE>
If the Annuitant is, or if there is a Joint Annuitant, both the Annuitant and
Joint Annuitant are, age 70 or younger at issue, the optional enhanced Death
Benefit is equal to 40% of (a) minus (b), where:
(a) is the Contract Value as of the date of death; and
(b) is the sum of purchase payments paid and not previously withdrawn.
The optional enhanced Death Benefit cannot exceed 70% of purchase payments paid
as adjusted for withdrawals.
If the Annuitant or the Joint Annuitant, if applicable, is older than age 70 at
issue, the optional enhanced Death Benefit is equal to 25% of (a) minus (b),
where:
(a) is the Contract Value as of the date of death; and
(b) is the sum of purchase payments paid and not previously withdrawn.
The optional enhanced Death Benefit cannot exceed 40% of purchase payments paid
as adjusted for withdrawals.
Under both age scenarios listed above, withdrawals or partial surrenders are
taken first from gain. For purposes of this benefit, gain is calculated as (a)
plus (b) minus (c) minus (d), but not less than zero where:
(a) is the Contract Value on the date we receive your withdrawal request:
(b) is the total of any withdrawals or surrenders, excluding surrender charges,
previously taken;
(c) is the total of purchase payments paid; and
(d) is the total of any gain previously withdrawn.
You may only elect the optional enhanced Death Benefit when you apply for a
Contract. Once elected, the benefit will remain in effect while your Contract
is in force until Income Payments begin. This benefit cannot otherwise be
terminated.
We charge you an additional amount for the optional enhanced Death Benefit.
Currently this amount is .20% times the average Contract Value at the beginning
of the previous Contract year and at the end of the previous Contract year. We
guarantee that this charge will not exceed .35% times the average Contract
Value, as described above. See Charges for the Optional Enhanced Death Benefit.
The optional enhanced Death Benefit may not be available in all states or
markets. In addition, to be eligible for this rider, the Annuitant or Joint
Annuitant, if applicable, cannot be older than age 75 at the time of issue
unless we approve a different age.
52
<PAGE>
The purpose of the following example is to show how the optional enhanced Death
Benefit works based on purely hypothetical values and is not intended to depict
investment performance of the Policy. This example assumes a Contract is
purchased with an Annuitant age 65 at the time of issue. No withdrawals are
made prior to the death of the Annuitant.
<TABLE>
<CAPTION>
Purchase Contract Death Optional Enhanced
Date Payment Value Gain Benefit Death Benefit
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/01/00 100,000 100,000 0 100,000 0
8/01/15 300,000 200,000 300,000 70,000
</TABLE>
If the Annuitant's death and notification of the death occurs on 8/01/15, the
optional enhanced Death Benefit will equal $70,000. This amount is determined
by multiplying the "gain" ($200,000) by 40%, which results in an amount of
$80,000. However, since the optional enhanced Death Benefit cannot exceed 70%
of the premiums paid ($100,000), the payment in this scenario will be $70,000.
There are important things you should consider before you purchase the optional
enhanced Death Benefit. These include:
. The optional enhanced Death Benefit does not guarantee that any amounts under
the rider will become payable at death. Market declines resulting in your
Contract Value being less than your purchase payments made and not previously
withdrawn may result in no enhanced Death Benefit being payable.
. Once you purchase the optional enhanced Death Benefit, you cannot cancel it.
This means that even if the investment performance of the portfolios is such
that as would result in a Death Benefit that is sufficient to meet your
needs, we still will assess the optional enhanced Death Benefit charges.
. Please take advantage of the guidance of a qualified financial adviser in
evaluating the optional enhanced Death Benefit option, as well as other
aspects of the Contract.
DEATH OF AN OWNER OR JOINT OWNER BEFORE THE ANNUITY COMMENCEMENT DATE
General: In certain circumstances, Federal tax law requires that distributions
be made under this Contract upon the first death of:
. an Owner or Joint Owner, or
. the Annuitant or Joint Annuitant if any Owner is a non-natural entity (such
as a trust or corporation).
The discussion below describes the methods available for distributing the value
of the Contract upon death.
53
<PAGE>
Designated Beneficiary: At the death of any Owner (or any Annuitant, if any
Owner is a non-natural entity), the person or entity first listed below who is
alive or in existence on the date of that death will become the Designated
Beneficiary:
(1) Owner or Joint Owners;
(2) Primary Beneficiary;
(3) Contingent Beneficiary; or
(4) Owner's estate.
We then will treat the Designated Beneficiary as the sole Owner of the
Contract. If there is more than one Designated Beneficiary, we will treat each
one separately in applying the tax law's rules described below.
Distribution Rules: The distributions required by Federal tax law differ
depending on whether the Designated Beneficiary is the spouse of the deceased
Owner (or of the Annuitant, if the Contract is owned by a non-natural entity).
. Spouses -- If the Designated Beneficiary is the surviving spouse of the
deceased person, we will continue the Contract in force with the surviving
spouse as the new Owner. If the deceased person was an Annuitant, the
surviving spouse will automatically become the new sole Annuitant. Any Joint
Annuitant will be removed from the Contract. At the death of the surviving
spouse, this provision may not be used again, even if the surviving spouse
remarries. In that case, the rules for non-spouses will apply. The Contract
Value on the date we receive due proof of death of the Annuitant will be set
equal to the Death Benefit, including any optional enhanced Death Benefit on
that date. Any increase in the Contract Value will be allocated to the
Subaccounts using the purchase payment allocation in effect at that time.
Any Death Benefit payable subsequently (at the death of the new Annuitant)
will be calculated as if the spouse had purchased a Contract for the new
Contract Value on the date we received due proof of death. It will be based
on the new Annuitant's age of the Contract Date, rather than the age of the
previously deceased Annuitant. All other provisions, including any surrender
charges, will continue as if your spouse had purchased the Contract on the
original Contract Date.
. Non-Spouses -- If the Designated Beneficiary is not the surviving spouse of
the deceased person, this Contract cannot be continued in force indefinitely.
Instead, upon the death of any Owner (or any Annuitant, if any Owner is a
non-natural entity), payments must be made to (or for the benefit of) the
Designated Beneficiary under one of the following payment choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt of due
proof of death.
54
<PAGE>
(2) Receive the Surrender Value at any time during the five year period
following the date of death. At the end of the five year period, we will
pay in a lump sum payment any Surrender Value still remaining.
(3) Apply the Surrender Value to provide a monthly income benefit under
Optional Payment Plan 1 or 2. The first monthly income benefit payment
must be made no later than one year after the date of death. Also, the
monthly income benefit payment period must be either the lifetime of the
Designated Beneficiary or a period not exceeding the Designated
Beneficiary's life expectancy.
If the Designated Beneficiary makes no choice within 30 days following receipt
of due proof of death, we will use payment choice 2 (payment of the entire
Surrender Value of the Contract within 5 years of the date of death). Due proof
of death must be provided within 90 days of the date of death. We will not
accept any purchase payments after the non-spouse's death. If the Designated
Beneficiary dies before we distributed the entire Surrender Value, we will pay
in a lump sum any Surrender Value still remaining to the person named by the
Designated Beneficiary. If no person is so named, we will pay the Designated
Beneficiary's estate.
Under payment choices 1 or 2, the Contract will terminate upon payment of the
entire Surrender Value. Under payment choice 3, this Contract will terminate
when we apply the Surrender Value to provide a Monthly Income Benefit.
Amount of the proceeds: The proceeds we pay will vary, in part, based on the
person who dies. We show the amount of proceeds below.
<TABLE>
<CAPTION>
Person Who Died Proceeds Paid
------------------------------------------
<S> <C>
Owner or Joint Owner Surrender Value
(who is not an Annuitant)
------------------------------------------
Owner or Joint Owner Death Benefit
(who is an Annuitant)
------------------------------------------
Annuitant Death Benefit
</TABLE>
Upon receipt of due proof of death, the Designated Beneficiary will instruct us
how to treat the proceeds subject to the distribution rules discussed above.
DEATH OF OWNER, JOINT OWNER, OR ANNUITANT AFTER INCOME PAYMENTS BEGIN
After the Annuity Commencement Date (including after income payments begin), if
an Owner, Joint Owner, Annuitant or Designated Beneficiary dies while the
Contract is in force, payments that are already being made under the Contract
will be made at least as rapidly as under the method of distribution in effect
at the time of such death, notwithstanding any other provision in the Contract.
55
<PAGE>
Income Payments
When you apply for a Contract, you may select any Annuity Commencement Date
permitted by law; however, this date can not be any later than the Contract
anniversary following the younger Annuitant's 90th birthday, unless we approve
otherwise. You may change the Annuity Commencement Date to any date at least
ten years after the date of the last purchase payment; however, the Annuity
Commencement Date cannot be a date later than the Contract anniversary
following the Annuitant's, or if there are joint Annuitant's, the younger
Annuitant's 90th birthday, unless we approve a later date. To make a change,
send written notice to our Service Center before the Annuity Commencement Date
then in effect. If you change the Annuity Commencement Date, Annuity
Commencement Date will then mean the new Annuity Commencement Date you
selected. (Please note the following exception: Contracts issued under
qualified retirement plans provide for income payments to start at the date and
under the option specified in the plan.)
We will pay a monthly income benefit to the Owner beginning on the Annuity
Commencement Date if the Annuitant is still living. We will pay the monthly
income benefit in the form of "Life Income with 10 Years Certain (automatic
payment plan)" variable income payments, using the gender and settlement age of
the Annuitant instead of the payee, unless you make another election. As
described in your Contract, the settlement age may be less than the Annuitant's
age. This means that payments may be lower than they would have been without
the adjustment. You may also choose to receive the Annuity Commencement Value
(that is, the Surrender Value of your Contract on the date immediately
preceding the Annuity Commencement Date) in one lump sum (in which case we will
cancel the Contract).
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than ten years, payments will continue for his or her life. If the Annuitant
dies before the end of ten years, we will discount the remaining payments for
the ten-year period at the same rate used to calculate the monthly income
payment. If the remaining payments are variable income payments, we will assume
the amount of each payment that we discount equals the payment amount on the
date we receive due proof of death. We will pay this discounted amount in one
sum.
The Contract also provides optional forms of annuity payments, each of which is
payable on a fixed basis. Optional Payment Plans 1 and 5 also are available on
a variable basis. The Contract provides that all or part of the Contract Value
may be used to purchase an annuity.
If you elect fixed income payments, the guaranteed amount payable will be
computed using interest at 3% compounded yearly. We may increase the interest
rate, which will increase the amount we pay to you or the payee.
56
<PAGE>
If you elect variable income payments, your income payments, after the first
payment, will reflect the investment experience of the Subaccounts to which you
allocated Contract Value.
We will make annuity payments monthly unless you elect quarterly, semi-annual
or annual installments. Under the monthly income benefit and all of the
optional payment plans, if any payment made more frequently than annually would
be or becomes less than $20, we reserve the right to reduce the frequency of
payments to an interval that would result in each payment being at least $20.
If the annual payment payable at maturity is less than $20, we will pay the
Annuity Commencement Value in a lump sum. Upon making such a payment, we will
have no future obligation under the Contract. Following are explanations of the
optional payment plans available.
OPTIONAL PAYMENT PLANS
Plan 1 -- Life Income with Period Certain. This option guarantees periodic
payments during a designated period. If the payee lives longer than the minimum
period, payments will continue for his or her life. The minimum period can be
10, 15, or 20 years. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating income payments. We
will pay the discounted amount in one sum to the payee's estate unless
otherwise provided. Discounted means we will deduct the amount of interest each
remaining payment would have earned had it not been paid out early.
Plan 2 -- Income for a Fixed Period. This option provides for periodic payments
to be made for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will discount the
amount of the remaining guaranteed payments to the date of the payee's death at
the same rate used in calculating income payments. We will pay the discounted
amount in one sum to the payee's estate unless otherwise provided.
Plan 3 -- Income of a Definite Amount. This option provides periodic payments
of a definite amount to be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120 for each
$1,000 of proceeds. Payments will continue until the proceeds are exhausted.
The last payment will equal the amount of any unpaid proceeds. If the payee
dies, we will pay the amount of the remaining proceeds with earned interest in
one sum to the payee's estate unless otherwise provided.
Plan 4 -- Interest Income. This option provides for periodic payments of
interest earned from the proceeds left with us. Payments can be annual, semi-
annual, quarterly, or monthly. If the payee dies, we will pay the amount of
remaining proceeds
57
<PAGE>
and any earned but unpaid interest in one sum to the payee's estate unless
otherwise provided. This plan is not available under Qualified Contracts.
Plan 5 -- Joint Life and Survivor Income. This option provides for us to make
monthly payments to two payees for a guaranteed minimum of 10 years. Each payee
must be at least 35 years old when payments begin. Payments will continue as
long as either payee is living. If both payees die before the end of the
minimum period, we will discount the amount of the remaining payments for the
10-year period at the same rate used in calculating income payments. We will
pay the discounted amount in one sum to the survivor's estate unless otherwise
provided.
If the payee is not a natural person, our consent must be obtained before
selecting an optional payment plan.
Before the Annuity Commencement Date, you may change:
. your Annuity Commencement Date to any date at least ten years after your last
purchase payment (however, the Annuity Commencement Date cannot be a date
later than the Contract anniversary following the younger Annuitant's 90th
birthday, unless we approve a later date):
. your optional payment plan;
. the allocation of your investment among the Subaccounts; and
. the Owner, Joint Owner, primary beneficiary, and contingent beneficiary upon
written notice to the Service Center if you reserved this right and the
Annuitant is living.
We must receive your request for a change in a form satisfactory to us. The
change will take effect as of the date you sign the request. The change will be
subject to any payment made before we recorded the change.
Fixed Income Payments, if selected, will begin on the date we receive due proof
of the Annuitant's death, on surrender, or on the Contract's Annuity
Commencement Date. Variable income payments will begin within seven days after
the date payments would begin under the corresponding fixed option. Payments
under Optional Payment Plan 4 (Interest Income) will begin at the end of the
first interest period after the date proceeds are otherwise payable.
VARIABLE INCOME PAYMENTS
We will determine your variable income payments using:
1. The annuity commencement value;
2. The annuity tables contained in the Contract including the settlement age
table;
58
<PAGE>
3. The optional payment plan selected; and
4. The investment performance of the Subaccounts selected.
To determine the amount of payment, we make this calculation:
1. First, we determine the dollar amount of the first income payment; then
2. we allocate that amount to the Subaccounts according to your instructions;
then
3. we determine the number of Annuity Units for each Subaccount by dividing the
amount allocated by the Annuity Unit Value seven days before the income
payment is due; and finally
4. we calculate the value of the Annuity Units for each Subaccount seven days
before the income payment is due for each income payment thereafter.
To calculate your first variable income payment, we need to make an assumption
regarding the investment performance of the Subaccounts you select. We call
this your assumed investment rate. This rate is simply the total return, after
expenses, you need to earn to keep your variable income payments level. We
assume an effective annual rate of 3%. This means that if the annualized
investment performance, after expenses, of your Subaccounts is less than 3%,
then the dollar amount of your variable income payments will decrease.
Conversely, if the annualized investment performance, after expenses, of your
Subaccounts is greater than 3%, then the dollar amount of your income payments
will increase.
TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE
If we are making variable income payments, the payee may change the Subaccounts
from which we are making the payments three times each calendar year. The
transfer will be effective as of the end of the Valuation Period during which
we receive written request at our Service Center. However, we reserve the right
to limit the number of transfers if necessary for the Contract to continue to
be treated as an annuity under the Code. We also reserve the right to refuse to
execute any transfer if any of the Subaccounts that would be affected by the
transfer is unable to purchase or redeem shares of the Fund in which the
Subaccount invests. If the number of Annuity Units remaining in a Subaccount
after a transfer is less than 1, we will transfer the remaining balance in
addition to the amount requested for the transfer. We will not transfer into
any Subaccount unless the number of Annuity Units of that Subaccount after the
transfer is at least 1.
We do not permit transfers between the Subaccounts and the Guarantee Account
after the Annuity Commencement Date.
59
<PAGE>
Federal Tax Matters
INTRODUCTION
This part of the Prospectus discusses the Federal income tax treatment of the
Contract. The Federal income tax treatment of the Contract is complex and
sometimes uncertain. The Federal income tax rules may vary with your particular
circumstances. This discussion does not address all of the Federal income tax
rules that may affect you and your Contract. This discussion also does not
address other Federal tax consequences, or state or local tax consequences,
associated with a Contract. As a result, you should always consult a tax
advisor about the application of tax rules to your individual situation.
TAXATION OF NON-QUALIFIED CONTRACTS
This part of the discussion describes some of the Federal income tax rules
applicable to Non-Qualified Contracts. A Non-Qualified Contract is a Contract
not issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral On Earnings. The Federal income tax law does not tax any increase
in an Owner's Contract Value until there is a distribution from the Contract.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
. An individual must own the Contract (or the tax law must treat the Contract
as owned by an individual);
. The investments of the Separate Account must be "adequately diversified" in
accordance with Internal Revenue Service ("IRS") regulations;
. The Owner's right to choose particular investments for a Contract must be
limited; and
. The Contract's Annuity Commencement Date must not occur near the end of the
Annuitant's life expectancy.
This part of the Prospectus discusses each of these requirements.
Contracts not owned by an individual -- no tax deferral and loss of interest
deduction: As a general rule, the Code does not treat a Contract that is owned
by an entity (rather than an individual) as an annuity contract for Federal
income tax purposes. The entity owning the Contract pays tax currently on the
excess of the Contract Value over the purchase payments paid for the Contract.
Contracts issued to a corporation or a trust are examples of Contracts where
the Owner pays current tax on the Contract's earnings.
There are several exceptions to this rule. For example, the Code treats a
Contract as owned by an individual if the nominal owner is a trust or other
entity that holds the Contract as an agent for an individual. However, this
exception does not apply in the
60
<PAGE>
case of any employer that owns a Contract to provide deferred compensation for
its employees.
In the case of a Contract issued after June 8, 1997 to a taxpayer that is not
an individual, or a Contract held for the benefit of an entity, the entity will
lose its deduction for a portion of its otherwise deductible interest expenses.
This disallowance does not apply if the Owner pays tax on the annual increase
in the Contract Value. Entities that are considering purchasing the Contract,
or entities that will benefit from someone else's ownership of a Contract,
should consult a tax advisor.
Investments in the Separate Account must be diversified: For a Contract to be
treated as an annuity contract for Federal income tax purposes, the investments
of a separate account such as the Separate Account must be "adequately
diversified." The IRS has issued regulations that prescribe standards for
determining whether the investments of the Separate Account are adequately
diversified. If the Separate Account fails to comply with these diversification
standards, the Owner could be required to pay tax currently on the excess of
the Contract Value over the purchase payments paid for the Contract.
Although we do not control the investments of all of the Funds (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
the Separate Account will be considered "adequately diversified."
Restrictions on the extent to which an Owner can direct the investment of
Contract Values: Federal income tax law limits the Owner's right to choose
particular investments for the Contract. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a
result, an Owner's right to allocate Contract Values among the portfolios may
exceed those limits. If so, the Owner would be treated as the owner of the
assets of the Separate Account and thus subject to current taxation on the
income and gains from those assets.
We do not know what limits the Treasury Department may set forth in any
guidance that the Treasury Department may issue or whether any such limits will
apply to existing Contracts. We therefore reserve the right to modify the
Contract without the Owners' consent to attempt to prevent the tax law from
considering the Owners as the owners of the assets of the Separate Account.
Age at which annuity payouts must begin: Federal income tax rules do not
expressly identify a particular age by which annuity payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through annuity payouts,
61
<PAGE>
of the contract's premiums paid and earnings. If annuity payouts under the
Contract begin or are scheduled to begin on a date past the Annuitant's 85th
birthday, it is possible that the tax law will not treat the Contract as an
annuity contract for Federal income tax purposes. In that event, the Owner
would be currently taxable on the excess of the Contract Value over the
purchase payments paid for the Contract.
No Guarantees Regarding Tax Treatment: We make no guarantees regarding the tax
treatment of any Contract or of any transaction involving a Contract. However,
the remainder of this discussion assumes that your Contract will be treated as
an annuity contract for Federal income tax purposes and that the tax law will
not impose tax on any increase in your Contract Value until there is a
distribution from your Contract.
Withdrawals and Surrenders. A withdrawal occurs when you receive less than the
total amount of the Contract's Surrender Value. In the case of a withdrawal,
you will pay tax on the amount you receive to the extent your Contract Value
before the withdrawal exceeds your "investment in the contract." (This term is
explained below.) This income (and all other income from your Contract) is
ordinary income. The Code imposes a higher rate of tax on ordinary income than
it does on capital gains.
A surrender occurs when you receive the total amount of the Contract's
Surrender Value. In the case of a surrender, you will pay tax on the amount you
receive to the extent it exceeds your "investment in the contract."
Your "investment in the contract" generally equals the total of your purchase
payments under the Contract, reduced by any amounts you previously received
from the Contract that you did not include in your income.
Your Contract imposes mortality charges relating to the Death Benefit,
including any optional Death Benefit. It is possible that all or a portion of
these charges could be treated as withdrawals from the Contract.
Assignments and Pledges. The Code treats any assignment or pledge of (or
agreement to assign or pledge) any portion of your Contract Value as a
withdrawal of such amount or portion.
Gifting a Contract. If you transfer ownership of your Contract -- without
receiving a payment equal to your Contract's value -- to a person other than
your spouse (or to your former spouse incident to divorce), you will pay tax on
your Contract Value to the extent it exceeds your "investment in the contract."
In such a case, the new owner's "investment in the contract" will be increased
to reflect the amount included in your income.
Systematic Withdrawals. In the case of systematic withdrawals, the amount of
each withdrawal should be considered a distribution and taxed in the same
manner as a withdrawal from the Contract.
62
<PAGE>
Taxation of Annuity Payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." The Company will notify you
annually of the taxable amount of your annuity payout.
Pursuant to the Code, you will pay tax on the full amount of your annuity
payouts once you have recovered the total amount of the "investment in the
contract." If annuity payouts cease because of the death of the Annuitant and
before the total amount of the "investment in the contract" has been recovered,
the unrecovered amount generally will be deductible.
If proceeds are left with us (Optional Payment Plan 4), they are taxed in the
same manner as a surrender. The Owner must pay tax currently on the interest
credited on these proceeds. This treatment could also apply to Plan 3 if the
payee is at an advanced age, such as age 80 or older.
Taxation of Death Benefits. We may distribute amounts from your Contract
because of the death of an Owner, a Joint Owner, or an Annuitant. The tax
treatment of these amounts depends on whether the Owner, Joint Owner, or
Annuitant dies before or after the Contract's Annuity Commencement Date.
Before the Contract's Annuity Commencement Date:
. If received under an annuity payout option, Death Benefits are taxed in the
same manner as annuity payouts.
. If not received under an annuity payout option, Death Benefits are taxed in
the same manner as a withdrawal.
After the Contract's Annuity Commencement Date:
. If received in accordance with the existing annuity payout option, Death
Benefits are excludible from income to the extent that they do not exceed the
unrecovered "investment in the contract." All annuity payouts in excess of
the unrecovered "investment in the contract" are includible in income.
. If received in a lump sum, the tax law imposes tax on Death Benefits to the
extent that they exceed the unrecovered "investment in the contract" at that
time.
Penalty Taxes Payable on Withdrawals, Surrenders, or Annuity Payouts. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Contract that is included in your gross income. The Code does not impose the
10% penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or annuity payouts that:
. you receive on or after you reach age 59 1/2,
63
<PAGE>
. you receive because you became disabled (as defined in the tax law),
. a beneficiary receives on or after the death of the Owner, or
. you receive as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer.
It is uncertain whether systematic withdrawals will qualify for this last
exception. If they did, any modification of the systematic withdrawals,
including additional withdrawals apart from the systematic withdrawals, could
result in certain adverse tax consequences. In addition, a transfer between
Subaccounts may result in payments not qualifying for this exception.
Special Rules If You Own More Than One Contract. In certain circumstances, you
must combine some or all of the Non-Qualified Contracts you own in order to
determine the amount of an annuity payout, a surrender, or a withdrawal that
you must include in income. For example:
. If you purchase a Contract offered by this Prospectus and also purchase at
approximately the same time an immediate annuity, the IRS may treat the two
contracts as one contract.
. If you purchase two or more deferred annuity contracts from the same life
insurance company (or its affiliates) during any calendar year, the Code
treats all such contracts as one contract.
The effects of such aggregation are not clear. However, it could affect:
. the amount of a surrender, a withdrawal or an annuity payout that you must
include in income, and
. the amount that might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
We also designed the Contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the Code. Contracts
issued to or in connection with a qualified retirement plan are called
"Qualified Contracts." We do not currently offer all of the types of Qualified
Contracts described, and may not offer them in the future. Prospective
purchasers should contact our Service Center to learn the availability of
Qualified Contracts at any given time.
The Federal income tax rules applicable to qualified plans are complex and
varied. As a result, this Prospectus makes no attempt to provide more than
general information about use of the Contract with the various types of
qualified plans. Persons intending to use the Contract in connection with a
qualified plan should obtain advice from a competent advisor.
64
<PAGE>
Types of Qualified Contracts. Some of the different types of Qualified
Contracts include:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEP's")
. Savings Incentive Matched Plan for Employees ("SIMPLE plans," including
"SIMPLE IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit-sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
Terms of Qualified Plans and Qualified Contracts. The terms of a qualified
retirement plan may affect your rights under a Qualified Contract. When issued
in connection with a qualified plan, we will amend a Contract as generally
necessary to conform to the requirements of the type of plan. However, the
rights of any person to any benefits under qualified plans may be subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contract. In addition, we are not bound by the terms and
conditions of qualified retirement plans to the extent such terms and
conditions contradict the Contract, unless we consent.
The Death Benefit and Qualified Contracts. Pursuant to IRS regulations, IRAs
may not invest in life insurance contracts. We do not believe that these
regulations prohibit the Death Benefit, including that provided by any Death
Benefit, from being provided under the Contracts when we issue the Contracts as
Traditional IRAs, Roth IRAs or SIMPLE IRAs. However, the law is unclear and it
is possible that the presence of the Death Benefit under a Contract issued as a
Traditional IRA, Roth IRA or SIMPLE IRA could disqualify a contract and result
in increased taxes to the Owner.
It is also possible that the Death Benefit could be characterized as an
incidental Death Benefit. If the Death Benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental Death Benefits that may be provided
under qualified plans, such as in connection with a 403(b) plan. Even if the
Death Benefit under the Contract were characterized as an incidental Death
Benefit, it is unlikely to violate those limits
65
<PAGE>
unless the purchaser also purchases a life insurance contract in connection
with such plan.
Treatment of Qualified Contracts Compared With Non-Qualified
Contracts. Although some of the Federal income tax rules are the same for both
Qualified and Non-Qualified Contracts, many of the rules are different. For
example:
. The Code generally does not impose tax on the earnings under either
Qualified or Non-Qualified Contracts until received.
. The Code does not limit the amount of purchase payments and the time at
which purchase payments can be made under Non-Qualified Contracts. However,
the Code does limit both the amount and frequency of purchase payments made
to Qualified Contracts.
. The Code does not allow a deduction for purchase payments made for Non-
Qualified Contracts, but sometimes allows a deduction or exclusion from
income for purchase payments made to a Qualified Contract.
The Federal income tax rules applicable to qualified plans and Qualified
Contracts vary with the type of plan and Contract. For example:
. Federal tax rules limit the amount of purchase payments that can be made,
and the tax deduction or exclusion that may be allowed for the purchase
payments. These limits vary depending on the type of qualified plan and the
circumstances of the plan participant, e.g., the participant's compensation.
. Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
Owner must begin receiving payments from the Contract in certain minimum
amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA before death.
Amounts Received Under Qualified Contracts. Amounts are generally subject to
income tax: Federal income tax rules generally include distributions from a
Qualified Contract in your income as ordinary income. Purchase payments that
are deductible or excludible from income do not create "investment in the
contract." Thus, under many Qualified Contracts there will be no "investment in
the contract" and you include the total amount you receive in your income.
There are exceptions. For example, you do not include amounts received from a
Roth IRA if certain conditions are satisfied.
Additional Federal taxes may be payable in connection with a Qualified
Contract: For example, failure to comply with the minimum distribution rules
applicable to certain qualified plans, such as Traditional IRAs, will result in
the imposition of an excise tax.
66
<PAGE>
This excise tax generally equals 50% of the amount by which a minimum required
distribution exceeds the actual distribution from the qualified plan.
Federal penalty taxes payable on distributions: The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Contract that
is includible in your income. The Code does not impose the penalty tax if one
of several exceptions apply. The exceptions vary depending on the type of
Qualified Contract you purchase. For example, in the case of an IRA, exceptions
provide that the penalty tax does not apply to a withdrawal, surrender, or
annuity payout:
. received on or after the Owner reaches age 59 1/2,
. received on or after the Owner's death or because of the Owner's disability
(as defined in the tax law),
. received as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer, or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
Moving Money from One Qualified Contract or Qualified Plan to
Another. Rollovers and Transfers: In many circumstances you may move money
between Qualified Contracts and qualified plans by means of a rollover or a
transfer. Special rules apply to such rollovers and transfers. If you do not
follow the applicable rules, you may suffer adverse Federal income tax
consequences, including paying taxes which you might not otherwise have had to
pay. You should always consult a qualified advisor before you move or attempt
to move funds between any Qualified Contract or plan and another Qualified
Contract or plan.
Direct Rollovers: The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, H.R. 10 plans, and Qualified Contracts used in connection with these
types of plans. (The direct rollover rules do not apply to distributions from
IRAs or section 457 plans). The direct rollover rules require Federal income
tax equal to 20% of the eligible rollover distribution to be withheld from the
amount of the distribution, unless the Owner elects to have the amount directly
transferred to certain Qualified Contracts or plans.
Prior to receiving an eligible rollover distribution from the Company, we will
provide you with a notice explaining these requirements and how you can avoid
20% withholding by electing a direct rollover.
67
<PAGE>
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a Contract unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, Federal income tax rules may
require us to withhold tax. At the time you request a withdrawal, surrender, or
annuity payout, we will send you forms that explain the withholding
requirements.
TAX STATUS OF THE COMPANY
Under existing Federal income tax laws, we do not pay tax on investment income
and realized capital gains of the Separate Account. We do not anticipate that
we will incur any Federal income tax liability on the income and gains earned
by the Separate Account. The Company, therefore, does not impose a charge for
Federal income taxes. If Federal income tax law changes and we must pay tax on
some or all of the income and gains earned by the Separate Account, we may
impose a charge against the Separate Account to pay the taxes.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this Prospectus. Congress, the IRS, and the courts may
modify these authorities, however, sometimes retroactively.
68
<PAGE>
Voting Rights
As required by law, we will vote the portfolio shares held in the Separate
Account at meetings of the shareholders of the Funds. The voting will be done
according to the instructions of Owners who have interests in any Subaccounts
which invest in the portfolios of the Funds. If the 1940 Act or any regulation
under it should be amended, and if as a result we determine that we are
permitted to vote the portfolios' shares in our own right, we may elect to do
so.
We will determine the number of votes which you have the right to cast by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, we will
recognize fractional shares.
We will vote portfolio shares of a class held in a Subaccount for which we
received no timely instructions in proportion to the voting instructions which
we received for all Contracts participating in that Subaccount. We will apply
voting instructions to abstain on any item to be voted on a pro-rata basis to
reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in a Subaccount will receive proxy voting material, reports and other
materials relating to the relevant portfolio. Since each Fund may engage in
shared funding, other persons or entities besides the Company may vote Fund
shares. See The Separate Account -- Subaccounts.
69
<PAGE>
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, withdrawal, or surrender proceeds
within seven days after receipt at our Service Center of all the requirements
for such a payment. We will determine the amount as of the end of the Valuation
Period during which our Service Center receives all such requirements.
We may delay making a payment, applying Contract Value to a payment plan, or
processing a transfer request if: (1) the disposal or valuation of the Separate
Account's assets is not reasonably practicable because the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists; or (2) the
SEC, by order, permits postponement of payment to protect our Owners. We also
may defer making payments attributable to a check that has not cleared (which
may take up to 15 days), and we may defer payment of proceeds from the
Guarantee Account for a withdrawal, surrender, or transfer request for up to
six months from the date we receive the request. The amount deferred will earn
interest at a rate and for a time period not less than the minimum required in
the jurisdiction in which we issued the Contract.
70
<PAGE>
Distribution of the Contracts
DISTRIBUTOR
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New
Mexico, and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is
the distributor and principal underwriter of the Contracts. Capital Brokerage,
a Washington corporation and an affiliate of ours, is located at 6630 W. Broad
St., Richmond, Virginia 23230. Properly licensed registered representatives of
both independent and affiliated broker/dealers (including our affiliate, Terra
Securities Corporation) will sell the Contracts. These broker/dealers have
selling agreements with Capital Brokerage and have been licensed by state
insurance departments to represent us. Properly licensed registered
representatives of Capital Brokerage will also sell the Contracts. Capital
Brokerage is registered with the SEC under the Securities Exchange Act of 1934
as a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). We will offer the Contracts in all states where we are
licensed to do business.
COMMISSIONS
We pay commissions and other expenses associated with the promotion and sales
of the Contracts to broker/dealers. Broker/dealers may receive aggregate
commissions of up to 6% of your aggregate purchase payments.
Under certain circumstances and in exchange for lower initial commissions,
certain sellers of the Contracts may be paid a persistency trail commission
which will take into account, among other things, the length of time purchase
payments have been held under the Contract, and Contract Values. A trail
commission is not anticipated to exceed, on an annual basis, 1.00% of the
Contract Values considered in connection with the trail commission. We may also
pay override payments, expense allowances, bonuses, wholesaler fees and
training allowances. Registered representatives earn commissions from the
broker/dealer with which they are affiliated and such arrangements may vary. In
addition, registered representatives who meet specified production levels may
qualify, under sales incentive programs adopted by us, to receive non-cash
compensation such as expense-paid trips, expense-paid educational seminars and
merchandise.
Capital Brokerage will receive 12b-1 fees assessed against certain portfolio
assets as compensation for providing certain distribution and shareholder
support services to some of the portfolios.
71
<PAGE>
Additional Information
OWNER QUESTIONS
The obligations to Owners under the Contracts are ours. Please direct your
questions and concerns to us at our Service Center.
RETURN PRIVILEGE
Within 10 days after you receive the Contract (or such period as may be
required by applicable law), you may cancel it for any reason by delivering or
mailing it postage prepaid, to our Service Center, Annuity New Business, 6610
W. Broad Street, Richmond, Virginia 23230. In the case of certain replacements,
the free look period may be longer. If you cancel your Contract, it will be
void. The amount of the refund you receive will equal the Contract Value
(without reduction for any surrender charges) plus any charges we have deducted
from purchase payments prior to the allocation to the Separate Account (and
excluding any charges the portfolios may have deducted) on or before the date
we received the returned Contract.
STATE REGULATION
As a life insurance company organized and operated under the laws of the State
of New York, we are subject to provisions governing life insurers and to
regulation by the New York Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the State of New York at all times. That Commission
conducts a full examination of our operations at least every five years.
RECORDS AND REPORTS
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to the Separate
Account. At least once each year, we will send you a report showing information
about your Contract for the period covered by the report. The report will show
the Contract Value in each Subaccount. The report also will show purchase
payments and charges made during the statement period. We also will send you an
annual and a semi-annual report for each portfolio underlying a Subaccount to
which you have allocated Contract Value, as required by the 1940 Act. In
addition, when you make purchase payments, transfers, or withdrawals, you will
receive a written confirmation of these transactions.
OTHER INFORMATION
We have filed a Registration Statement with the SEC, under the Securities Act
of 1933 as amended, for the Contracts being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further
information about the Separate Account, the Company, and the Contracts offered.
Statements in this Prospectus about the content of Contracts and other legal
instruments are
72
<PAGE>
summaries. For the complete text of those Contracts and instruments, please
refer to those documents as filed with the SEC and available on the SEC's
website at http://www.sec.gov.
LEGAL MATTERS
The Company, like other life insurance companies, is involved in lawsuits,
including class action lawsuits. In some class action and other lawsuits
involving insurance companies, substantial damages have been sought and/or
material settlement payments have been made. Although the Company cannot
predict the outcome of any litigation with certainty, the Company believes that
at the present time there are no pending or threatened lawsuits that are
reasonably likely to have a material adverse impact on it or the Separate
Account.
73
<PAGE>
Condensed Financial Information
Because the Subaccounts which are available under this Contract did not begin
operation before the date of this Prospectus, we did not include financial
information for the Subaccounts in this Prospectus or in the SAI.
74
<PAGE>
Appendix
This is a new product and the majority of the portfolios are new to GE Capital
Life Separate Account II. For this reason, standardized performance for the
majority of the Subaccounts is not yet available and, therefore, standardized
and non-standardized performance data for these Subaccounts is not yet listed.
STANDARDIZED PERFORMANCE DATA
We may advertise the historical total returns for the Subaccounts according to
SEC standards. These standards are discussed in the Statement of Additional
Information. The total return for a Subaccount assumes that an investment has
been held in the Subaccount for various periods of time including a period
measured from the date on which the particular portfolio was first available in
Separate Account II. When a portfolio has been available for one, five, and ten
years, we will provide the total return for these periods, adjusted to reflect
current Subaccount charges. The total return quotations represent the average
annual compounded rates of return that an initial investment of $1,000 in that
Subaccount would equal as of the last day of each period.
In Table 1, we show the standardized average annual total returns of the
Subaccounts for periods from the date on which a particular portfolio was first
available in Separate Account II to December 31, 1999, and for the one, five
and ten year periods ended December 31, 1999. Although the Contract did not
exist during the periods shown in Table 1 below, the returns of the Subaccounts
shown have been adjusted to reflect current Subaccount charges imposed under
the Contract and assume that the Annuitant and Joint Annuitant (if applicable)
are age 70 or younger at Contract issue. The total returns shown in Table 1
reflect the deduction of all common fees and charges assessed under the
Contract, that is, the portfolio charges and expenses, the mortality and
expense risk charge (deducted daily at an effective annual rate of 1.30% of
Contract Value held in the Separate Account), the administrative expense charge
(deducted daily at an effective annual rate of .15% of Contract Value held in
the Separate Account) the annual contract charge of $30 (assumed to be
equivalent to .1% of Contract Value), and the surrender charge. We assume that
you make a complete surrender of the Contract at the end of the period;
therefore, we deduct the surrender charge. Total returns do not reflect the
optional enhanced Death Benefit charge and assume that no premium taxes apply.
A-1
<PAGE>
Table 1
Standardized Total Returns
(assuming each Annuitant is age 70 or younger at issue)
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund NA NA NA NA **
AIM V.I. Growth Fund NA NA NA NA **
AIM V.I. Value Fund NA NA NA NA **
Alliance Capital
Management
Growth and Income
Portfolio -- Class B
Shares NA NA NA NA **
Premier Growth
Portfolio -- Class B
Shares NA NA NA NA **
Quasar Portfolio -- Class
B Shares NA NA NA NA **
Dreyfus
Dreyfus Emerging Markets
Portfolio NA NA NA NA **
The Dreyfus Socially
Responsible Growth
Portfolio, Inc. NA NA NA NA **
Federated Insurance Series
Federated High Income
Bond Fund II -- Service
Shares NA NA NA NA **
Federated International
Small Company Fund II NA NA NA NA **
Fidelity Variable
Insurance Products Fund
VIP
VIP Equity-Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP Growth Portfolio --
Service Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund
VIP II
VIP II Contrafund
Portfolio -- Service
Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund
VIP III
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares NA NA NA NA **
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.99 NA NA 17.39 05/01/97
Money Market Fund -2.09 2.91 3.20 3.61 05/02/88
Premier Growth Equity
Fund NA NA NA NA 05/03/99
S&P 500 Index Fund 13.28 25.45 15.87 16.06 05/02/88
Small-Cap Value Equity
Fund NA NA NA NA **
U.S. Equity Fund 12.30 NA NA 11.45 05/01/98
Value Equity Fund NA NA NA NA **
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Series
Aggressive Growth
Portfolio -- Service
Shares NA NA NA NA **
Balanced Portfolio --
Service Shares NA NA NA NA **
Capital Appreciation
Portfolio -- Service
Shares NA NA NA NA **
Global Life Sciences
Portfolio -- Service
Shares NA NA NA NA **
Global Technology
Portfolio -- Service
Shares NA NA NA NA **
Growth Portfolio --
Service Shares NA NA NA NA **
International Growth
Portfolio -- Service
Shares NA NA NA NA **
Worldwide Growth
Portfolio -- Service
Shares NA NA NA NA **
MFS(R) Variable Insurance
Trust
MFS(R) Growth Series --
Service Class Shares NA NA NA NA **
MFS(R) Growth with Income
Series -- Service Class
Shares NA NA NA NA **
MFS(R) New Discovery
Series -- Service Class
Shares NA NA NA NA **
MFS(R) Utilities
Series -- Service Class
Shares NA NA NA NA **
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares NA NA NA NA **
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares NA NA NA NA **
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio --
Administrative Shares NA NA NA NA **
High Yield Bond
Portfolio --
Administrative Shares NA NA NA NA **
Long-Term U.S. Government
Bond Portfolio --
Administrative Shares NA NA NA NA **
Total Return Bond
Portfolio --
Administrative Shares NA NA NA NA **
Rydex Variable Trust
Rydex OTC Fund NA NA NA NA **
-------------------------------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was first available in Separate Account
II. As Separate Account II is also used for other variable annuities offered
by GE Capital Life, this date may be different from the date the portfolio
was first available in this product.
** Subaccount had not yet been made available to the Separate Account.
A-3
<PAGE>
In Table 2, we show the standardized average annual total returns of the
Subaccounts for periods from the date on which a particular portfolio was first
available in Separate Account II to December 31, 1999, and for the one, five
and ten year periods ended December 31, 1999. Although the Contract did not
exist during the periods shown in Table 2 below, the returns of the Subaccounts
shown have been adjusted to reflect current Subaccount charges imposed under
the Contract and assume that the Annuitant or Joint Annuitant (if applicable)
are older than age 70 at issue. The total returns shown in Table 2 reflect the
deduction of all common fees and charges assessed under the Contract; that is,
the portfolio charges and expenses, the mortality and expense risk charge
(deducted daily at an effective annual rate of 1.50% of Contract Value held in
the Separate Account), the administrative expense charge (deducted daily at an
effective annual rate of .15% of Contract Value held in the Separate Account),
the annual contract charge of $30 (assumed to be equivalent to .1% of Contract
Value), and the surrender charge. We assume that you make a complete surrender
of the Contract at the end of the period; therefore, we deduct the surrender
charge. Total returns do not reflect the optional enhanced Death Benefit charge
and assume that no premium taxes apply.
Table 2
Standardized Total Returns
(assuming either Annuitant is over age 70 at issue)
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund NA NA NA NA **
AIM V.I. Growth Fund NA NA NA NA **
AIM V.I. Value Fund NA NA NA NA **
Alliance Capital
Management
Growth and Income
Portfolio -- Class B
Shares NA NA NA NA **
Premier Growth
Portfolio -- Class B
Shares NA NA NA NA **
Quasar Portfolio -- Class
B Shares NA NA NA NA **
Dreyfus
Dreyfus Emerging Markets
Portfolio NA NA NA NA **
The Dreyfus Socially
Responsible Growth
Portfolio, Inc. NA NA NA NA **
Federated Insurance Series
Federated High Income
Bond Fund II -- Service
Shares NA NA NA NA **
Federated International
Small Company Fund II NA NA NA NA **
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Variable
Insurance Products Fund
VIP
VIP Equity-Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP Growth Portfolio --
Service Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund
VIP II
VIP II Contrafund
Portfolio -- Service
Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund
VIP III
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares NA NA NA NA **
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.76 NA NA 17.15 05/01/97
Money Market Fund -2.30 2.70 2.99 3.40 05/02/88
Premier Growth Equity
Fund NA NA NA NA 05/03/99
S&P 500 Index Fund 13.04 25.19 15.63 15.82 05/02/88
Small-Cap Value Equity
Fund NA NA NA NA **
U.S. Equity Fund 12.06 NA NA 11.22 05/01/98
Value Equity Fund NA NA NA NA **
Janus Aspen Series
Aggressive Growth
Portfolio -- Service
Shares NA NA NA NA **
Balanced Portfolio --
Service Shares NA NA NA NA **
Capital Appreciation
Portfolio -- Service
Shares NA NA NA NA **
Global Life Sciences
Portfolio -- Service
Shares NA NA NA NA **
Global Technology
Portfolio -- Service
Shares NA NA NA NA **
Growth Portfolio --
Service Shares NA NA NA NA **
International Growth
Portfolio -- Service
Shares NA NA NA NA **
Worldwide Growth
Portfolio -- Service
Shares NA NA NA NA **
MFS(R) Variable Insurance
Trust
MFS(R) Growth Series --
Service Class Shares NA NA NA NA **
MFS(R) Growth with Income
Series -- Service Class
Shares NA NA NA NA **
MFS(R) New Discovery
Series -- Service Class
Shares NA NA NA NA **
MFS(R) Utilities
Series -- Service Class
Shares NA NA NA NA **
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares NA NA NA NA **
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares NA NA NA NA **
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio --
Administrative Shares NA NA NA NA **
High Yield Bond
Portfolio --
Administrative Shares NA NA NA NA **
Long-Term U.S. Government
Bond Portfolio --
Administrative Shares NA NA NA NA **
Total Return Bond
Portfolio --
Administrative Shares NA NA NA NA **
Rydex Variable Trust
Rydex OTC Fund NA NA NA NA **
-------------------------------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was first available in Separate Account
II. As Separate Account II is also used for other variable annuities offered
by GE Capital Life, this date may be different from the date the portfolio
was first available in this product.
** Subaccount had not yet been made available to the Separate Account.
Past performance is not a guarantee of future results.
NON--STANDARDIZED PERFORMANCE DATA
In addition to the standardized data discussed above, we may also show similar
performance data for other periods.
We may from time to time also advertise or disclose average annual total return
or other performance data in non-standardized formats for the Subaccounts. The
non-standardized performance data may make different assumptions regarding the
amount invested, the time periods shown, or the effect of withdrawals or income
payments.
All non-standardized performance data will be advertised only if we also
disclose the standardized performance data as shown in Table 2.
Non-Standard Performance Data. We may disclose historic performance data for
the portfolios since their inception reduced by some or all of the fees and
charges under the Contract. Such adjusted historic performance includes data
that precedes the date on which a particular portfolio was first available in
Separate Account II. This data is designed to show the performance that would
have resulted if
A-6
<PAGE>
the Contract had been in existence during that time, based on the portfolio's
performance. This data assumes that the Subaccounts available under the
Contract were in existence for the same period as the portfolio with a level of
charges equal to those currently assessed under the Contract. This data is not
intended to indicate future performance.
Based on the method of calculation described in the Statement of Additional
Information, the non-standard average annual total returns for the portfolios
for periods from the time a particular portfolio was declared effective by the
SEC to December 31, 1999, and for the one, five and ten year periods ended
December 31, 1999 is shown in Tables 3 through 6, below. The total returns of
the portfolios have been reduced by most charges currently assessed under the
Contract, as if the Contract had been in existence since the inception of the
portfolio.
In Table 3, we assume that you make a complete surrender of the Contract at the
end of the period; therefore, we deduct the surrender charge. These non-
standard total returns reflect portfolio charges and expenses, as well as
deductions for the mortality and expense risk charge (deducted daily at an
effective annual rate of 1.30% of Contract Value held in the Separate Account),
the administrative expense charge (deducted daily at an effective annual rate
of .15% of Contract Value in the Separate Account), and the surrender charge.
They do not reflect the annual contract charge, the optional enhanced Death
Benefit charge, and any applicable premium tax charge. These non-standard
returns assume that the Annuitant or Joint Annuitant (if applicable) is age 70
or younger at Contract issue.
Table 3
Non-Standard Performance Data
assuming surrender at the end of the applicable time period.
(assuming each Annuitant is age 70 or younger at issue)
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
Alliance Capital Management
Growth and Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Premier Growth Portfolio -- Class B Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.99 NA NA 05/01/97
Money Market Fund -2.09 2.91 3.20 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 13.28 25.45 15.87 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
U.S. Equity Fund 12.30 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS(R) Variable Insurance Trust
MFS(R) Growth Series -- Service Class
Shares NA NA NA 05/01/00
MFS(R) Growth with Income Series --
Service Class Shares NA NA NA 05/01/00
MFS(R) New Discovery Series -- Service
Class Shares NA NA NA 05/01/00
MFS(R) Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA -- Service Shares NA NA NA 04/26/00
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio -- Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
------------------------------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account. Past performance is not a guarantee of future results.
Returns for a period of less than one year are not annualized.
In Table 4, we assume that you make a complete surrender of the Contract at the
end of the period; therefore, we deduct the surrender charge. These non-
standard total returns reflect portfolio charges and expenses, as well as
deductions for the mortality and expense risk charge (deducted daily at an
effective annual rate of 1.50% of Contract Value held in the Separate Account),
the administrative expense charge (deducted daily at an effective annual rate
of .15% of Contract Value in the Separate Account), and the surrender charge.
They do not reflect the annual contract charge, the optional enhanced Death
Benefit charge, and any applicable premium tax charge. These non-standard
returns assume that the Annuitant or Joint Annuitant (if applicable) is older
than age 70 at Contract issue.
Table 4
Non-Standard Performance Data
assuming surrender at the end of the applicable time period.
(assuming either Annuitant is over age 70 at issue)
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Capital Management
Growth and Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Premier Growth Portfolio -- Class B
Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.76 NA NA 05/01/97
Money Market Fund -2.30 2.70 2.99 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 13.04 25.19 15.63 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
U.S. Equity Fund 12.06 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS(R) Variable Insurance Trust
MFS(R) Growth Series -- Service Class
Shares NA NA NA 05/01/00
MFS(R) Growth with Income Series --
Service Class Shares NA NA NA 05/01/00
MFS(R) New Discovery Series -- Service
Class Shares NA NA NA 05/01/00
MFS(R) Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA -- Service Shares NA NA NA 04/26/00
</TABLE>
A-10
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio -- Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
------------------------------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account. Past performance is not a guarantee of future results.
Returns for a period of less than one year are not annualized.
In Table 5, we assume that you do not surrender the Contract, and we do not
deduct the surrender charge. These non-standard total returns reflect portfolio
charges and expenses, as well as deductions for the mortality and expense risk
charge (deducted daily at an effective annual rate of 1.30% of Contract Value
held in the Separate Account), and the administrative expense charge (deducted
daily at an effective annual rate of .15% of Contract Value in the Separate
Account). They do not reflect the annual contract charge, the surrender charge,
the optional enhanced Death Benefit charge, and any applicable premium tax
charge. These non-standard returns assume that the Annuitant or Joint Annuitant
(if applicable) is age 70 or younger at Contract issue.
Table 5
Non-Standard Performance Data
assuming no surrender at the end of the applicable time period.
(assuming each Annuitant is age 70 or younger at issue)
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
Alliance Capital Management
Growth and Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Premier Growth Portfolio -- Class B Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
</TABLE>
A-11
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio, Inc. NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 15.51 NA NA 05/01/97
Money Market Fund 3.42 3.81 3.30 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 18.80 25.93 15.98 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
U.S. Equity Fund 17.81 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS Variable Insurance Trust
MFS Growth Series -- Service Class Shares NA NA NA 05/01/00
MFS Growth with Income Series -- Service
Class Shares NA NA NA 05/01/00
MFS New Discovery Series -- Service Class
Shares NA NA NA 05/01/00
MFS Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA -- Service Shares NA NA NA 04/26/00
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio -- Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares NA NA NA 12/24/97
</TABLE>
A-12
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
----------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account. Past performance is not a guarantee of future results.
Returns for a period of less than one year are not annualized.
In Table 6, we assume that you do not surrender the Contract, and we do not
deduct the surrender charge. These non-standard total returns reflect portfolio
charges and expenses, as well as deductions for the mortality and expense risk
charge (deducted daily at an effective annual rate of 1.50% of Contract Value
held in the Separate Account), and the administrative expense charge (deducted
daily at an effective annual rate of .15% of Contract Value in the Separate
Account). They do not reflect the annual contract charge, the surrender charge,
the optional enhanced Death Benefit charge, and any applicable premium tax
charge. These non-standard returns assume that the Annuitant or Joint Annuitant
(if applicable) is older than 70 at Contract issue.
Table 6
Non-Standard Performance Data
assuming no surrender at the end of the applicable time period.
(assuming either Annuitant is over age 70 at issue)
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
Alliance Capital Management
Growth and Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Premier Growth Portfolio -- Class B
Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio, Inc. NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
</TABLE>
A-13
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 15.27 NA NA 05/01/97
Money Market Fund 3.21 3.60 3.09 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 18.56 25.68 15.75 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
U.S. Equity Fund 17.58 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS Variable Insurance Trust
MFS Growth Series -- Service Class Shares NA NA NA 05/01/00
MFS Growth with Income Series -- Service
Class Shares NA NA NA 05/01/00
MFS New Discovery Series -- Service Class
Shares NA NA NA 05/01/00
MFS Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA -- Service Shares NA NA NA 04/26/00
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio--
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond Portfolio
-- Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio--
Administrative Shares NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
-------------------------------------------------------------------------------
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account. Past performance is not a guarantee of future results.
Returns for a period of less than one year are not annualized.
A-14
<PAGE>
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
--------------------------------------------------------------------------------
<S> <C>
The Contracts.............................................................. B-3
Transfer of Annuity Units................................................ B-3
Net Investment Factor.................................................... B-3
Termination of Participation Agreements.................................... B-3
Calculation of Performance Data............................................ B-4
Money Market Subaccount.................................................. B-4
Other Subaccounts........................................................ B-5
Other Performance Data................................................... B-7
Federal Tax Matters........................................................ B-8
Taxation of GE Capital Life.............................................. B-8
IRS Required Distributions............................................... B-8
General Provisions......................................................... B-9
Using the Contracts as Collateral........................................ B-9
The Beneficiary.......................................................... B-9
Non-Participating........................................................ B-9
Misstatement of Age or Gender............................................ B-9
Incontestability......................................................... B-9
Written Notice........................................................... B-9
Distribution of the Contracts.............................................. B-9
Legal Developments Regarding Employment-Related Benefit Plans.............. B-10
Legal Matters.............................................................. B-10
Experts.................................................................... B-10
Financial Statements....................................................... B-10
</TABLE>
Dated , 2000
GE Capital Life Assurance Company of New York
125 Park Avenue, 6th floor
New York, New York 10017-5529
Service Center
6610 West Broad Street
Richmond, VA 23230
<PAGE>
A Statement of Additional Information containing more detailed information
about the Contract and the Separate Account is available free by writing us at
the address below or by calling (800) 352-9910.
To GE Capital Life
Variable Annuity Service Center
6610 West Broad Street
Richmond, VA 23230
Please mail a copy of the Statement of Additional Information for Separate
Account II, Contract Form NY1155 4/00 to:
Name: ______________________________________________________
Address: ___________________________________________________
Street
______________________________________________________
City State Zip
Signature of Requestor: ____________________________________
Date
<PAGE>
PART B
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT II
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY CONTRACT
FORM NY1155 4/00
OFFERED BY
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
125 Park Avenue, 6th Floor
New York, New York 10017-5529
Service Center
6610 West Broad Street
Richmond, VA 23230
(800) 313-5282
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the above-named flexible premium variable deferred
annuity Contract offered by GE Capital Life Assurance Company of New York. You
may obtain a copy of the Prospectus dated by calling (800) 352-9910, or by
contacting us at our Service Center at the address or telephone number listed
above. The Prospectus is also available on the SEC's website at
http://www.sec.gov. Terms used in the current Prospectus for the Contract are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUSES FOR THE CONTRACT AND THE FUNDS.
Dated
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Contracts.............................................................. 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 3
Calculation of Performance Data............................................ 4
Money Market Subaccount.................................................. 4
Other Subaccounts........................................................ 5
Other Performance Data................................................... 7
Federal Tax Matters........................................................ 8
Taxation of GE Capital Life.............................................. 8
IRS Required Distributions............................................... 8
General Provisions......................................................... 9
Using the Contracts as Collateral........................................ 9
The Beneficiary.......................................................... 9
Non-Participating........................................................ 9
Misstatement of Age or Gender............................................ 9
Incontestability......................................................... 9
Written Notice........................................................... 9
Distribution of the Contracts.............................................. 9
Legal Developments Regarding Employment-Related Benefit Plans.............. 10
Legal Matters.............................................................. 10
Experts.................................................................... 10
Financial Statements....................................................... 10
</TABLE>
2
<PAGE>
THE CONTRACTS
Transfer of Annuity Units
At your request, Annuity Units may be transferred three times per calendar
year from the Subaccounts in which they are currently held. The number of
Annuity Units to be transferred is (a) times (b) divided by (c) where: (a) is
the number of Annuity Units in the current Subaccount desired to be
transferred; (b) is the Annuity Unit Value for the Subaccount in which the
Annuity Units are currently held; and (c) is the Annuity Unit Value for the
Subaccount to which the transfer is made. The amount of the income payment as
of the date of the transfer will not be affected by the transfer (however,
subsequent variable income payments will reflect the investment experience of
the selected Subaccounts).
Net Investment Factor
The net investment factor measures investment performance of the Subaccounts
during a Valuation Period. Each Subaccount has its own net investment factor.
The net investment factor of a Subaccount available under a Contract for a
Valuation Period is (a) divided by (b) minus (c) where:
(a) is the result of:
(1) the value of the net assets of that Subaccount at the end of the
preceding Valuation Period, plus
(2) the investment income and capital gains, realized or unrealized,
credited to the net assets of that Subaccount during the Valuation
Period for which the net investment factor is being determined,
minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period, minus
(4) any amount charged against that Subaccount for taxes; this includes
any amount we set aside during the Valuation Period as a provision
for taxes attributable to the operation or maintenance of that
Subaccount; and
(b) is the value of the net assets of that Subaccount at the end of the
preceding Valuation Period; and
(c) is a factor for the Valuation Period representing the mortality and
expense risk charge and the administrative expense charge; this factor
is shown in your Contract.
We will value their assets at fair market value in accordance with generally
accepted accounting practices and applicable laws and regulations.
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares
to Separate Account contain varying provisions regarding termination. The
following summarizes those provisions:
AIM Variable Insurance Funds This agreement may be terminated by the parties
on six months' advance written notice.
Alliance Variable Products Series Fund, Inc. This agreement may be
terminated by the parties on six months' advance written notice.
Dreyfus. This agreement may be terminated by the parties on six months'
advance written notice.
Federated Insurance Series. This agreement may be terminated by the parties
on six months' advance written notice.
3
<PAGE>
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, and Fidelity Variable Insurance Products Fund III ("The
Fund"). These agreements provide for termination (1) on one year's advance
notice by either party, (2) at the Company's option if shares of the Fund are
not reasonably available to meet requirements of the policies, (3) at the
option of either party if certain enforcement proceedings are instituted
against the other, (4) upon vote of the policyowners to substitute shares of
another mutual fund, (5) at the Company's option if shares of the Fund are not
registered, issued, or sold in accordance with applicable laws, if the Fund
ceases to qualify as a regulated investment company under the Code, (6) at the
option of the Fund or its principal underwriter if it determines that the
Company has suffered material adverse changes in its business or financial
condition or is the subject of material adverse publicity, (7) at the option of
the Company if the Fund has suffered material adverse changes in its business
or financial condition or is the subject of material adverse publicity, or (8)
at the option of the Fund or its principal underwriter if the Company decides
to make another mutual fund available as a funding vehicle for its policies.
GE Investments Funds, Inc. This agreement may be terminated at the option of
any party upon six months' written notice to the other parties, unless a
shorter time is agreed to by the parties.
Janus Aspen Series. This agreement may be terminated by the parties on six
months' advance written notice.
MFS Variable Insurance Trust. This agreement may be terminated by the
parties on six months' advance written notice.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
PIMCO Variable Insurance Trust. This agreement may be terminated by the
parties on six months' advance written notice, unless a shorter time is agreed
to by the parties.
Rydex Variable Trust. This agreement may be terminated by the parties on six
months' advance written notice.
CALCULATION OF PERFORMANCE DATA
From time to time, we may disclose total return, yield, and other
performance data for the Subaccounts pertaining to the Contracts. Such
performance data will be computed, or accompanied by performance data computed,
in accordance with the standards defined by the Securities and Exchange
Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Contract. Premium taxes currently range generally from 0% to 3% of purchase
payments and are generally based on the rules of the state in which you reside.
Money Market Subaccount
From time to time, advertisements and sales literature may quote the yield
of the Money Market Subaccount for a seven-day period, in a manner which does
not take into consideration any realized or unrealized gains or losses on
shares of the corresponding money market portfolio or on its portfolio
securities. This current annualized yield is computed by determining the net
change (exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation and income other than investment
income) at the end of the seven-day period in the value of a hypothetical
account under a Contract having a balance of one unit in the Money Market
Subaccount at the beginning of the period, dividing such net change in contract
value by the value of the account at the beginning of the period to determine
the base period return, and annualizing the result on a 365-day basis. The net
change in contract value reflects: 1) net income from the
4
<PAGE>
portfolio attributable to the hypothetical account; and 2) charges and
deductions imposed under the Contract which are attributable to the
hypothetical account. The charges and deductions include the per unit charges
for the $30 annual contract charge, the mortality and expense risk charge that
applies when either Annuitant is older than age 70 at issue (deducted daily at
an effective annual rate of 1.50% of Contract Value held in the Separate
Account), and the administrative expense charge (deducted daily at an effective
annual rate of .15% of Contract Value). (We may also show yield reflecting the
maximum mortality and expense risk charge that applies when each Annuitant is
age 70 or younger at issue (deducted daily at an effective annual rate of 1.30%
of Contract Value held in the Separate Account)). The annual contract charge is
only deducted if Contract Value at the time of deduction is $40,000 or less. We
assume for the purposes of the yield calculation that this charge will be
waived. Current Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the Subaccount (exclusive of realized
gains or losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the
seven-day period attributable to a hypothetical account having a
balance of one Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value on the first day of the seven-day period.
We may also quote the effective yield of the Money Market Subaccount
determined on a compounded basis for the same seven-day period. The effective
yield is calculated by compounding the base period return according to the
following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1 where:
NCP = the net change in the value of the Subaccount (exclusive of realized
gains or losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the
seven-day period attributable to a hypothetical account having a
balance of one Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value for the first day of the seven-day period.
The yield on amounts held in the Money Market Subaccount normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Subaccount's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Subaccount's corresponding money market portfolio, the types and quality of
portfolio securities held by that portfolio, and that portfolio's operating
expenses. Because of the charges and deductions imposed under the Contract, the
yield for the Money Market Subaccount will be lower than the yield for its
corresponding money market portfolio.
Yield calculations do not take into account the surrender charge under the
Contract.
Past Performance is not a Guarantee of Future Results.
Other Subaccounts
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Subaccounts for
various periods of time including 1 year, 5 years and 10 years, or from
inception if any of those periods are not available.
5
<PAGE>
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of the period. The ending date for each period for which total return
quotations are provided will be for the most recent practicable, considering
the type and media of the communication, and will be stated in the
communication.
For periods that began before the Contract was available, performance data
will be based on the performance of the underlying portfolios, adjusted for the
level of the Separate Account and Contract charges currently in effect for this
Contract. Average annual total return will be calculated using Subaccount unit
values and deductions for the annual contract charge and the surrender charge
as described below:
1. We calculate the unit value for each Valuation Period based on the
performance of the Subaccount's underlying investment portfolio (after
deductions for portfolio charges and expenses (assuming the current
applicable fee waivers and reimbursements continue), the maximum
administrative expense charge (deducted daily at an effective annual
rate of .15% of Contract Value held in the Separate Account), and the
mortality and expense risk charge that applies when either Annuitant is
older than age 70 at issue (deducted daily at an effective annual rate
of 1.50% of Contract Value held in the Separate Account). (In addition,
we may also calculate average annual total return based on the mortality
and expense risk charge that applies when each Annuitant is age 70 or
younger at issue (deducted daily at an effective annual rate of 1.30% of
Contract Value).)
2. The annual contract charge is $30 deducted at the beginning of each
Contract Year and is waived if the Contract Value is more than $40,000
at the time the charge is due. For purposes of calculating average
annual total return, we assume that the annual contract charge is
equivalent to .10% of Contract Value.
3. The surrender charge will be determined by assuming a surrender of the
Contract at the end of the period. Average annual total return for
periods of six years or less will therefore reflect the deduction of a
surrender charge.
4. Total return does not consider the optional enhanced Death Benefit or
reflect the deduction of any premium taxes.
5. Total return will then be calculated according to the following formula:
TR = (ERV/P)1/N - 1
where:
TR = the average annual total return for the period.
ERV = the ending redeemable value (reflecting deductions as described
above) of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
N = the duration of the period (in years).
Past Performance is not a Guarantee of Future Results.
The Funds have provided the price information used to calculate the adjusted
historical performance of the Subaccounts. While we have no reason to doubt the
accuracy of the figures provided by the Funds, we have not independently
verified such information.
6
<PAGE>
Other Performance Data
We may disclose cumulative total return in conjunction with the standard
format described above. The cumulative total return will be calculated using
the following formula:
CTR =(ERV/P) - 1
where:
CTR =the cumulative total return for the period.
ERV = the ending redeemable value (reflecting deductions as described
above) of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
Sales literature may also quote cumulative and/or average annual total return
that does not reflect the surrender charge. This is calculated in exactly the
same way as average annual total return, except that the ending redeemable
value of the hypothetical investment is replaced with an ending value for the
period that does not take into account any charges on withdrawn amounts.
Other non-standard quotations of Subaccount performance may also be used in
sales literature. Such quotations will be accompanied by a description of how
they were calculated. We will accompany any non-standard quotations of
Subaccount performance with standard performance quotations.
7
<PAGE>
FEDERAL TAX MATTERS
Taxation of GE Capital Life
We do not expect to incur any Federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Contracts. (See Federal Tax Matters section of the Prospectus.) Based upon
these expectations, no charge is being made currently to the Separate Account
for Federal income taxes. We will periodically review the question of a charge
to the Separate Account for Federal income taxes related to the Account. Such a
charge may be made in future years if we believe that we may incur Federal
income taxes. This might become necessary if the tax treatment of the Company
is ultimately determined to be other than what we currently believe it to be,
if there are changes made in the Federal income tax treatment of annuities at
the corporate level, or if there is a change in our tax status. In the event
that we should incur Federal income taxes attributable to investment income or
capital gains retained as part of the reserves under the Contracts, the
Contract Value would be correspondingly adjusted by any provision or charge for
such taxes.
We may also incur state and local taxes (in addition to premium taxes). At
present, these taxes, with the exception of premium taxes, are not significant.
If there is a material change in applicable state or local tax laws causing an
increase in taxes other than premium taxes (for which we currently impose a
charge), charges for such taxes attributable to the Separate Account may be
made.
IRS Required Distributions
In order to be treated as an annuity contract for Federal income tax
purposes, section 72(s) of the Code requires any Non-Qualified Contract to
provide that (a) if any Owner dies on or after the Annuity Commencement Date
but prior to the time the entire interest in the Contract has been distributed,
the remaining portion of such interest will be distributed at least as rapidly
as under the method of distribution being used as of the date of that Owner's
death; and (b) if any Owner dies prior to the Annuity Commencement Date, the
entire interest in the Contract will be distributed (1) within five years after
the date of that Owner's death, or (2) as income payments which will begin
within one year of that Owner's death and which will be made over the life of
the Owner's "designated beneficiary" or over a period not extending beyond the
life expectancy of that beneficiary. The "designated beneficiary" generally is
the person who will be treated as the sole Owner of the Contract following the
death of the Owner, Joint Owner or, in certain circumstances, the Annuitant or
Joint Annuitant. However, if the "designated beneficiary" is the surviving
spouse of the decedent, these distribution rules will not apply until the
surviving spouse's death (and this spousal exception will not again be
available). If any Owner is not an individual, the death of the Annuitant or
Joint Annuitant will be treated as the death of an Owner for purposes of these
rules.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code section 72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Contracts.
8
<PAGE>
GENERAL PROVISIONS
Using the Contracts as Collateral
A Non-Qualified Contract can be assigned as collateral security. We must be
notified in writing if a Contract is assigned. Any payment made before the
assignment is recorded at our Service Center will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment.
A Qualified Contract may not be sold, assigned, transferred, discounted,
pledged or otherwise transferred except under such conditions as may be allowed
under applicable law.
The basic benefits of the Contract are assignable. Additional benefits added
by rider may or may not be available/eligible for assignments.
The Beneficiary
You may select one or more primary and contingent beneficiaries during your
lifetime upon application and by filing a written request with our Service
Center. Each change of beneficiary revokes any previous designation.
Non-Participating
The Contract is non-participating. No dividends are payable.
Misstatement of Age or Gender
If an Annuitant's age or gender was misstated on the Contract data page, any
Contract benefits or proceeds, or availability thereof, will be determined
using the correct age and gender. If any overpayments have been made, an
adjustment including interest on the amount of the oveerpayment will be made to
the next payment(s). Any underpayments will be credited with interest on the
amount of the underpayment and will be paid in full with the next payment. The
interest rate used will be 3% per annum, unless otherwise required by law.
Incontestability
We will not contest the Contract.
Written Notice
Any written notice should be sent to us at our Service Center at 6610 West
Broad Street, Richmond, Virginia 23230. The Contract number and the Annuitant's
full name must be included.
We will send all notices to the Owner at the last known address on file with
the Company.
DISTRIBUTION OF THE CONTRACTS
The offering is continuous, and Capital Brokerage Corporation does not
anticipate discontinuing the offering of the Contracts. However, the Company
does reserve the right to discontinue the offering of the Contracts.
9
<PAGE>
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for
Tax Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of gender. The Contract contains guaranteed annuity purchase rates
for certain optional payment plans that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII generally,
on any employment-related insurance or benefit program for which a Contract may
be purchased.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to Federal securities laws applicable to the
issue and sale of the Contract described in this Prospectus. Donita M. King,
Senior Vice President, General Counsel and Secretary of the Company, has
provided advice on certain legal matters pertaining to the Contract, including
the validity of the Contract and the Company's right to issue the Contracts
under New York insurance law.
EXPERTS
The financial statements of GE Capital Life Assurance Company of New York as
of December 31, 1999 and 1998, and for each of the years in the three-year
period then ended December 31, 1999, and the financial statements of GE Capital
Life Separate Account II as of December 31, 1999 and for the periods then
ended, have been included herein in reliance upon the reports of KPMG LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
This Statement of Additional Information contains financial statements for
GE Capital Life Assurance Company of New York (the Company) as of December 31,
1999 and 1998, and for each of the years in the three-year period then ended
December 31, 1999, and the financial statements of GE Capital Life Separate
Account II as of December 31, 1999 and for the periods then ended.
The financial statements of GE Capital Life Assurance Company of New York
included herein should be distinguished from the financial statements of the
Separate Account and should be considered only as bearing on the ability of the
Company to meet its obligation under the Policy.
Such financial statements of the Company should not be considered as bearing
on the investment performance of the assets held in the Separate Account.
10
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
Year ended December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Table of Contents
Year ended December 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-7
Statements of Changes in Net Assets........................................ F-12
Notes to Financial Statements.............................................. F-20
</TABLE>
<PAGE>
Independent Auditors' Report
Contractholders
GE Capital Life Separate Account II
and
The Board of Directors
GE Capital Life Assurance Company of New York:
We have audited the accompanying statements of assets and liabilities of GE
Capital Life Separate Account II (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity,
Real Estate Securities, Global Income, Value Equity, Income, and U.S. Equity
Funds; the Variable Insurance Products Fund--Equity-Income, Growth and
Overseas Portfolios; the Variable Insurance Products Fund II--Asset Manager
and Contrafund Portfolios; the Variable Insurance Products III--Growth &
Income and Growth Opportunities Portfolios; the Oppenheimer Variable Account
Funds--High Income/VA, Bond/VA, Aggressive Growth/VA, Capital Appreciation/VA,
and Multiple Strategies/VA Funds; the Federated Insurance Series--American
Leaders, High Income Bond and Utility Funds II; the Janus Aspen Series--
Balanced, Aggressive Growth, Growth, Worldwide Growth, Flexible Income,
International Growth and Capital Appreciation Portfolios; the Alger American
Fund--Small Capitalization and Growth Portfolios; the PBHG Insurance Series
Fund, Inc.--PBHG Large Cap Growth and PBHG Growth II Portfolios; and the
Goldman Sachs Variable Insurance Trust--Growth and Income and Mid Cap Value
Funds) as of December 31, 1999 and the related statements of operations and
changes in net assets for the aforementioned funds for the period then ended.
These financial statements are the responsibility of the Account'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. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the underlying mutual funds or their transfer agent. 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 each of the respective
portfolios constituting GE Capital Life Separate Account II as of December 31,
1999 and the results of their operations and changes in their net assets for
the period then ended in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------------------------------------------------
Money Total International Real Estate Global Value U.S.
S&P 500 Market Return Equity Securities Income Equity Income Equity
Index Fund Fund Fund Fund Fund Fund Fund Fund Fund
Assets ---------- --------- ------ ------------- ----------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(78,181 shares,
cost -- $2,066,174)... $2,196,898 -- -- -- -- -- -- -- --
Money Market Fund
(1,703,159 shares,
cost -- $1,703,159)... -- 1,703,159 -- -- -- -- -- -- --
Total Return Fund
(5,580 shares,
cost -- $88,102)...... -- -- 88,501 -- -- -- -- -- --
International Equity
Fund
(1,865 shares, cost --
$25,210)............. -- -- -- 26,992 -- -- -- -- --
Real Estate Securities
Fund
(170 shares, cost --
$2,095).............. -- -- -- -- 1,852 -- -- -- --
Global Income Fund
(6,598 shares, cost --
$64,328)............. -- -- -- -- -- 63,274 -- -- --
Value Equity Fund
(7,554 shares,
cost-- $118,646)...... -- -- -- -- -- -- 119,283 -- --
Income Fund (14,004
share,
cost -- $167,623).... -- -- -- -- -- -- -- 161,190 --
U.S. Equity Fund (8,682
shares
cost -- $323,828).... -- -- -- -- -- -- -- -- 329,053
Receivable from
affiliate (note 3)..... -- 1,688 -- -- -- -- -- -- --
---------- --------- ------ ------ ----- ------ ------- ------- -------
Total assets........... 2,196,898 1,704,847 88,501 26,992 1,852 63,274 119,283 161,190 329,053
---------- --------- ------ ------ ----- ------ ------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 1,111 710 47 14 1 74 65 86 172
Payable for units
withdrawn.............. -- -- -- -- -- -- -- -- --
---------- --------- ------ ------ ----- ------ ------- ------- -------
Total liabilities...... 1,111 710 47 14 1 74 65 86 172
---------- --------- ------ ------ ----- ------ ------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $2,195,787 1,704,137 88,454 26,978 1,851 63,200 119,218 161,104 328,881
========== ========= ====== ====== ===== ====== ======= ======= =======
Outstanding units....... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
========== ========= ====== ====== ===== ====== ======= ======= =======
Net asset value per
unit................... $ 12.74 10.52 11.59 12.22 8.84 9.84 11.22 10.02 12.54
========== ========= ====== ====== ===== ====== ======= ======= =======
</TABLE>
F-2
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance Variable Insurance
Products Fund Products Fund II Products Fund III
----------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets --------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in Variable
Insurance Products
Fund,
at fair value (note 2):
Equity-Income Portfolio
(19,836 shares,
cost -- $511,803)..... $509,982 -- -- -- -- -- --
Growth Portfolio
(12,867 shares,
cost -- $607,122)..... -- 706,762 -- -- -- -- --
Overseas Portfolio
(4,946 shares, cost --
$106,143)............ -- -- 135,707 -- -- -- --
Investments in Variable
Insurance Products Fund
II,
at fair value (note 2):
Asset Manager Portfolio
(6,460 shares,
cost -- $114,149)..... -- -- -- 120,613 -- -- --
Contrafund Portfolio
(44,369 shares,
cost -- $1,179,317)... -- -- -- -- 1,293,371 -- --
Investments in Variable
Insurance Products Fund
III,
at fair value (note 2):
Growth & Income
Portfolio (8,804
shares,
cost -- $146,121)..... -- -- -- -- -- 152,302 --
Growth Opportunities
Portfolio (20,404
shares,
cost -- $456,535)..... -- -- -- -- -- -- 472,342
Receivable from
affiliate (note 3)..... -- 4 2 -- 1 -- --
-------- ------- ------- ------- --------- ------- -------
Total assets........... 509,982 706,766 135,709 120,613 1,293,372 152,302 472,342
-------- ------- ------- ------- --------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 258 369 73 58 653 81 268
Payable for units
withdrawn.............. -- -- -- -- -- -- --
-------- ------- ------- ------- --------- ------- -------
Total liabilities...... 258 369 73 58 653 81 268
-------- ------- ------- ------- --------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $509,724 706,397 135,636 120,555 1,292,719 152,221 472,074
======== ======= ======= ======= ========= ======= =======
Outstanding units....... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
======== ======= ======= ======= ========= ======= =======
Net asset value per
unit................... $ 10.59 15.13 13.45 11.39 13.24 11.70 11.27
======== ======= ======= ======= ========= ======= =======
</TABLE>
F-3
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds Federated Insurance Series
--------------------------------------------------- ----------------------------
High Aggressive Capital Multiple American High
Income Bond Growth Appreciation Strategies Leaders Income Bond Utility
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund II Fund II Fund II
Assets -------- ------- ---------- ------------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in
Oppenheimer Variable
Account Funds, at fair
value (note 2):
High Income Fund/VA
(16,514 shares,
cost -- $175,813)..... $177,029 -- -- -- -- -- -- --
Bond Fund/VA (37,194
shares,
cost-- $427,468)...... -- 428,477 -- -- -- -- -- --
Aggressive Growth
Fund/VA (1,811 shares,
cost -- $109,793)..... -- -- 149,068 -- -- -- -- --
Capital Appreciation
Fund/VA (2,012 shares,
cost -- $82,025)...... -- -- -- 100,296 -- -- -- --
Multiple Strategies
Fund/VA (2,921 shares,
cost -- $48,869)...... -- -- -- -- 51,001 -- -- --
Investments in Federated
Insurance Series, at
fair value (note 2):
American Leaders Fund
II (10,866 shares,
cost -- $222,665)..... -- -- -- -- -- 226,237 -- --
High Income Bond Fund
II (19,068 shares,
cost -- $194,005)..... -- -- -- -- -- -- 195,256 --
Utility Fund II (16,815
shares,
cost -- $240,944)..... -- -- -- -- -- -- -- 241,300
Receivable from
affiliate (note 3)..... -- -- 1 -- -- -- -- --
-------- ------- ------- ------- ------ ------- ------- -------
Total assets........... 177,029 428,477 149,069 100,296 51,001 226,237 195,256 241,300
-------- ------- ------- ------- ------ ------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 95 207 78 51 28 120 105 131
Payable for units
withdrawn.............. -- -- -- -- -- -- -- --
-------- ------- ------- ------- ------ ------- ------- -------
Total liabilities...... 95 207 78 51 28 120 105 131
-------- ------- ------- ------- ------ ------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $176,934 428,270 148,991 100,245 50,973 226,117 195,151 241,169
======== ======= ======= ======= ====== ======= ======= =======
Outstanding units....... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
======== ======= ======= ======= ====== ======= ======= =======
Net asset value per
unit................... $ 9.70 9.90 17.83 14.62 10.95 11.00 9.76 10.96
======== ======= ======= ======= ====== ======= ======= =======
</TABLE>
F-4
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series Alger American Fund
------------------------------------------------------------------------------ ------------------------
Aggressive Worldwide Flexible International Capital Small
Balanced Growth Growth Growth Income Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets ---------- ---------- --------- --------- --------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in
Janus Aspen
Series, at fair
value (note 2):
Balanced
Portfolio
(93,440 shares,
cost --
$2,401,229)... $2,608,851 -- -- -- -- -- -- -- --
Aggressive
Growth
Portfolio
(52,148 shares,
cost --
$2,230,874).... -- 3,112,739 -- -- -- -- -- -- --
Growth Portfolio
(38,459 shares,
cost --
$1,135,111)... -- -- 1,294,136 -- -- -- -- -- --
Worldwide Growth
Portfolio
(34,071 shares,
cost --
$1,316,287).... -- -- -- 1,626,898 -- -- -- -- --
Flexible Income
Portfolio
(6,152 shares,
cost --
$72,403)...... -- -- -- -- 70,259 -- -- -- --
International
Growth
Portfolio
(8,373 shares,
cost --
$241,185)...... -- -- -- -- -- 323,777 -- -- --
Capital
Appreciation
Portfolio
(102,297
shares,
cost --
$2,706,916).... -- -- -- -- -- -- 3,393,176 -- --
Investments in
Alger American
Fund, at fair
value (note 2):
Small
Capitalization
Portfolio
(6,969 shares,
cost --
$308,329)...... -- -- -- -- -- -- -- 384,322 --
Growth Portfolio
(10,758 shares,
cost --
$589,639)..... -- -- -- -- -- -- -- -- 692,601
Receivable from
affiliate
(note 3)........ -- 58 6 20 -- 7 35 5 2
---------- --------- --------- --------- ------ ------- --------- ------- -------
Total assets.... 2,608,851 3,112,797 1,294,142 1,626,918 70,259 323,784 3,393,211 384,327 692,603
---------- --------- --------- --------- ------ ------- --------- ------- -------
Liabilities
Accrued expenses
payable to
affiliates (note
3).............. 1,342 1,713 663 810 39 163 1,763 204 372
Payable for units
withdrawn....... 2,583 2,804 -- 2,692 -- -- 2,721 -- --
---------- --------- --------- --------- ------ ------- --------- ------- -------
Total
liabilities.... 3,925 4,517 663 3,502 39 163 4,484 204 372
---------- --------- --------- --------- ------ ------- --------- ------- -------
Net assets
attributable to
variable
deferred annuity
contractholders ... $2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621 3,388,727 384,123 692,231
========== ========= ========= ========= ====== ======= ========= ======= =======
Outstanding
units........... 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
========== ========= ========= ========= ====== ======= ========= ======= =======
Net asset value
per unit........ $ 13.99 25.64 15.85 16.08 10.25 16.71 18.89 14.62 14.60
========== ========= ========= ========= ====== ======= ========= ======= =======
</TABLE>
F-5
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Goldman Sachs
PBHG Insurance Variable Insurance
Series Fund, Inc. Trust
------------------- ------------------
PBHG
Large Cap PBHG Growth and Mid Cap
Growth Growth II Income Value
Portfolio Portfolio Fund Fund
Assets --------- --------- ---------- -------
<S> <C> <C> <C> <C>
Investments in PBHG Insurance Series
Fund, Inc., at fair value (note 2):
PBHG Large Cap Growth Portfolio (2,432
shares, cost -- $46,826)............. $62,050 -- -- --
PBHG Growth II Portfolio (6,089
shares, cost -- $94,474)............. -- 140,340 -- --
Investments in Goldman Sachs Variable
Insurance Trust, at fair value (note
2):
Growth and Income Fund (5,524 shares,
cost -- $57,831)..................... -- -- 60,155 --
Mid Cap Value Fund (31,488 shares,
cost -- $278,198).................... -- -- -- 265,132
Receivable from affiliate (note 3)..... 1 3 -- --
------- ------- ------ -------
Total assets.......................... 62,051 140,343 60,155 265,132
------- ------- ------ -------
Liabilities
Accrued expenses payable to affiliates
(note 3).............................. 32 76 34 147
Payable for units withdrawn............ -- -- -- --
------- ------- ------ -------
Total liabilities..................... 32 76 34 147
------- ------- ------ -------
Net assets attributable to variable
deferred annuity contractholders...... $62,019 140,267 60,121 264,985
======= ======= ====== =======
Outstanding units...................... 3,577 7,052 6,067 28,190
======= ======= ====== =======
Net asset value per unit............... $ 17.34 19.89 9.91 9.40
======= ======= ====== =======
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------------
Money Total International
S&P 500 Index Market Return Equity Real Estate
Fund Fund Fund Fund Securities Fund
-------------- ----------------- --------------- ------------------ ---------------
Period from Period from Period from
May 6, 1999 to Period from May 26, 1999 to Period from July 9, 1999 to
December 31, April 29, 1999 to December 31, August 26, 1999 to December 31,
1999 December 31, 1999 1999 December 31, 1999 1999
-------------- ----------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 14,793 10,043 1,782 68 102
Expenses -- Mortality
and expense risk
charges and
admistrative expenses
(note 3).............. 7,863 3,051 279 71 13
---------- ------------ ------------ ------------ ------------
Net investment income
(expense).............. 6,930 6,992 1,503 (3) 89
---------- ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 11,914 -- 61 292 (1)
Unrealized appreciation
(depreciation)........ 130,724 -- 399 1,782 (243)
Capital gain
distribution.......... 20,428 -- 2,092 1,639 5
---------- ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments......... 163,066 -- 2,552 3,713 (239)
---------- ------------ ------------ ------------ ------------
Increase (decrease) in
net assets from
operations............. $ 169,996 6,992 4,055 3,710 (150)
========== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Fund Fund Fund Fund
--------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 14, 1999 to May 14, 1999 to May 14, 1999 to June 2, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. 905 890 8,293 1,680
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 349 492 874 1,613
--------- ---------- ---------- ----------
Net investment income
(expense).............. 556 398 7,419 67
--------- ---------- ---------- ----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (573) 299 (1,204) (2,044)
Unrealized appreciation
(depreciation)........ (1,054) 637 (6,432) 5,225
Capital gain
distribution.......... 68 -- 257 15,120
--------- ---------- ---------- ----------
Net realized and
unrealized gain (loss)
on investments......... (1,559) 936 (7,379) 18,301
--------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations............. (1,003) 1,334 40 18,368
========= ========== ========== ==========
</TABLE>
F-7
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations, Continued
<TABLE>
<CAPTION>
Variable Insurance
Variable Insurance Products Fund Products Fund II
---------------------------------------------- ------------------------------
Equity-
Income Growth Overseas Asset Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
--------------- -------------- --------------- --------------- --------------
Period from Period from Period from Period from Period from
May 13, 1999 to May 6, 1999 to May 14, 1999 to June 7, 1999 to May 6, 1999 to
December 31, December 31, December 31, December 31, December 31,
1999 1999 1999 1999 1999
--------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 372 -- -- -- --
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 2,097 2,299 737 545 4,439
------------ ------------ ------------ ----------- ------------
Net investment income
(expense).............. (1,725) (2,299) (737) (545) (4,439)
------------ ------------ ------------ ----------- ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (2,045) 1,438 872 358 22,338
Unrealized appreciation
(depreciation)........ (1,822) 99,641 29,565 6,464 114,054
Capital gain
distribution.......... 828 -- -- -- --
------------ ------------ ------------ ----------- ------------
Net realized and
unrealized gain (loss)
on investments......... (3,039) 101,079 30,437 6,822 136,392
------------ ------------ ------------ ----------- ------------
Increase (decrease) in
net assets from
operations............. $ (4,764) 98,780 29,700 6,277 131,953
============ ============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance
Products Fund III
---------------------------------
Growth
Growth & Income Opportunities
Portfolio Portfolio
----------------- ---------------
Period from
Period from May 11, 1999 to
April 12, 1999 to December 31,
December 31, 1999 1999
----------------- ---------------
<S> <C> <C>
Investment income:
Income -- Ordinary Dividends................ -- --
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3)................................... 795 2,161
----------- ------------
Net investment income (expense).............. (795) (2,161)
----------- ------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).................... 649 (1,607)
Unrealized appreciation (depreciation)...... 6,182 15,807
Capital gain distribution................... -- --
----------- ------------
Net realized and unrealized gain (loss) on
investments................................. 6,831 14,200
----------- ------------
Increase (decrease) in net assets from
operations.................................. 6,036 12,039
=========== ============
</TABLE>
F-8
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Operations, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------------
Capital Multiple
High Income Bond Aggressive Appreciation Strategies
Fund/VA Fund/VA Growth Fund/VA Fund/VA Fund/VA
--------------- -------------- -------------- ----------------- ---------------
Period from Period from Period from Period from
May 21, 1999 to May 6, 1999 to May 5, 1999 to Period from May 14, 1999 to
December 31, December 31, December 31, April 23, 1999 to December 31,
1999 1999 1999 December 31, 1999 1999
--------------- -------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ -- -- -- -- --
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 698 1,470 513 477 220
------------ ------------ ------------ ------------ ------------
Net investment income
(expense).............. (698) (1,470) (513) (477) (220)
------------ ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,328 183 7,258 265 281
Unrealized appreciation
(depreciation)........ 1,216 1,010 39,274 18,271 2,132
Capital gain
distribution.......... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments......... 2,544 1,193 46,532 18,536 2,413
------------ ------------ ------------ ------------ ------------
Increase (decrease) in
net assets from
operations............. $ 1,846 (277) 46,019 18,059 2,193
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Federated Insurance Series
-------------------------------------------------
High
American Leaders Income Bond Utility
Fund II Fund II Fund II
----------------- --------------- ---------------
Period from Period from
Period from May 11, 1999 to July 8, 1999 to
April 23, 1999 to December 31, December 31,
December 31, 1999 1999 1999
----------------- --------------- ---------------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends.................. -- -- --
Expenses -- Mortality and
expense risk charges and
administrative expenses
(note 3)................... 1,030 792 1,059
------------ -------- --------
Net investment income
(expense)................... (1,030) (792) (1,059)
------------ -------- --------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss).... (2,562) (137) (314)
Unrealized appreciation
(depreciation)............. 3,572 1,251 356
Capital gain distribution... -- -- --
------------ -------- --------
Net realized and unrealized
gain (loss) on investments.. 1,010 1,114 42
------------ -------- --------
Increase (decrease) in net
assets from operations...... (20) 322 (1,017)
============ ======== ========
</TABLE>
F-9
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------------------
Worldwide Flexible
Balanced Aggressive Growth Growth Growth Income
Portfolio Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- --------------- ----------------- ---------------
Period from Period from
Period from Period from May 11, 1999 to Period from May 21, 1999 to
April 12, 1999 to April 23, 1999 to December 31, April 23, 1999 to December 31,
December 31, 1999 December 31, 1999 1999 December 31, 1999 1999
----------------- ----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 28,510 601 1,154 120 3,201
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 8,582 8,601 3,526 3,896 428
------------ --------- -------- --------- ---------
Net investment income
(expense).............. 19,928 (8,000) (2,372) (3,776) 2,773
------------ --------- -------- --------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 33,494 130,943 21,250 26,067 70
Unrealized appreciation
(depreciation)........ 207,622 881,865 159,025 310,611 (2,145)
Capital gain
distribution........... -- 1,024 193 -- 98
------------ --------- -------- --------- ---------
Net realized and
unrealized gain (loss)
on investments......... 241,116 1,013,832 180,468 336,678 (1,977)
------------ --------- -------- --------- ---------
Increase (decrease) in
net assets from
operations............. $ 261,044 1,005,832 178,096 332,902 796
============ ========= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued) Alger American Fund
--------------------------------- --------------------------------
International Capital Small
Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio
--------------- ----------------- -------------- -----------------
Period from Period from
May 26, 1999 to Period from May 6, 1999 to Period from
December 31, April 29, 1999 to December 31, April 29, 1999 to
1999 December 31, 1999 1999 December 31, 1999
--------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. 72 517 -- 23
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 903 9,883 1,488 3,169
----------- ----------- ----------- ------------
Net investment income
(expense).............. (831) (9,366) (1,488) (3,146)
----------- ----------- ----------- ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 14,943 48,923 14,121 (1,623)
Unrealized appreciation
(depreciation)........ 82,593 686,260 75,993 102,963
Capital gain
distribution........... -- 5,942 124 2,305
----------- ----------- ----------- ------------
Net realized and
unrealized gain (loss)
on investments......... 97,536 741,125 90,238 103,645
----------- ----------- ----------- ------------
Increase (decrease) in
net assets from
operations............. 96,705 731,759 88,750 100,499
=========== =========== =========== ============
</TABLE>
F-10
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Operations, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Goldman Sachs Variable
Fund, Inc. Insurance Trust
------------------------------------- -------------------------------
PBHG
Large Cap Growth and Mid Cap
Growth PBHG Growth II Income Value
Portfolio Portfolio Fund Fund
--------------------- --------------- --------------- ---------------
Period from Period from Period from Period from
September 21, 1999 to July 2, 1999 to May 14, 1999 to May 14, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ -- -- 657 2,047
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 127 481 321 1,071
------- ------ ----- -------
Net investment income
(expense).............. (127) (481) 336 976
------- ------ ----- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,640 139 (951) (5,954)
Unrealized appreciation
(depreciation)........ 15,224 45,866 2,324 (13,066)
Capital gain
distribution.......... -- -- -- --
------- ------ ----- -------
Net realized and
unrealized gain (loss)
on investments......... 16,864 46,005 1,373 (19,020)
------- ------ ----- -------
Increase (decrease) in
net assets from
operations............. $16,737 45,524 1,709 (18,044)
======= ====== ===== =======
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------------
S&P 500 Money Total International
Index Market Return Equity Real Estate
Fund Fund Fund Fund Securities Fund
-------------- ----------------- --------------- ------------------ ---------------
Period from Period from Period from
May 6, 1999 to Period from May 26, 1999 to Period from July 9, 1999 to
December 31, April 29, 1999 to December 31, August 26, 1999 to December 31,
1999 December 31, 1999 1999 December 31, 1999 1999
-------------- ----------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ 6,930 6,992 1,503 (3) 89
Net realized gain
(loss)............... 11,914 -- 61 292 (1)
Unrealized apprecia-
tion (depreciation)
on investments....... 130,724 -- 399 1,782 (243)
Capital gain distribu-
tion................. 20,428 -- 2,092 1,639 5
---------- --------- ------ ------ -----
Increase (decrease)
in net assets from
operations......... 169,996 6,992 4,055 3,710 (150)
---------- --------- ------ ------ -----
From capital transac-
tions:
Net premiums.......... 1,916,894 1,884,687 78,294 23,207 2,000
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (4,344) (207) (208) -- --
Transfer gains (loss)
and transfer fees
(note 3)............ 236 1,697 (92) 61 1
Transfers (to) from
the Guarantee Ac-
count................ 106,565 (51,805) 5,388 -- --
Interfund transfers... 6,440 (137,227) 1,017 -- --
---------- --------- ------ ------ -----
Increase (decrease)
in net assets from
capital
transactions....... 2,025,791 1,697,145 84,399 23,268 2,001
---------- --------- ------ ------ -----
Increase (decrease) in
net assets............ 2,195,787 1,704,137 88,454 26,978 1,851
Net assets at beginning
of period............. -- -- -- -- --
---------- --------- ------ ------ -----
Net assets at end of
year.................. $2,195,787 1,704,137 88,454 26,978 1,851
========== ========= ====== ====== =====
</TABLE>
F-12
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statement of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Fund Fund Fund Fund
--------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 14, 1999 to May 14, 1999 to May 14, 1999 to June 2, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ 556 398 7,419 67
Net realized gain
(loss)............... (573) 299 (1,204) (2,044)
Unrealized apprecia-
tion (depreciation)
on investments....... (1,054) 637 (6,432) 5,225
Capital gain distribu-
tion................. 68 -- 257 15,120
------- ------- ------- -------
Increase (decrease)
in net assets from
operations......... (1,003) 1,334 40 18,368
------- ------- ------- -------
From capital transac-
tions:
Net premiums.......... 64,472 130,953 155,833 207,811
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (204) -- -- (1,558)
Transfer gains (loss)
and transfer fees
(note 3)............ (65) 15 64 423
Transfers (to) from
the Guarantee Ac-
count................ -- -- 17,167 (3,965)
Interfund transfers... -- (13,084) (12,000) 107,802
------- ------- ------- -------
Increase (decrease)
in net assets from
capital
transactions....... 64,203 117,884 161,064 310,513
------- ------- ------- -------
Increase (decrease) in
net assets............ 63,200 119,218 161,104 328,881
Net assets at beginning
of period............. -- -- -- --
------- ------- ------- -------
Net assets at end of
year.................. $63,200 119,218 161,104 328,881
======= ======= ======= =======
</TABLE>
F-13
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund
----------------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
--------------- -------------- ---------------
Period from Period from Period from
May 13, 1999 to May 6, 1999 to May 14, 1999 to
December 31, December 31, December 31,
1999 1999 1999
--------------- -------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net as-
sets
From operations:
Net investment income (ex-
pense)........................ $ (1,725) (2,299) (737)
Net realized gain (loss)....... (2,045) 1,438 872
Unrealized appreciation (depre-
ciation) on investments....... (1,822) 99,641 29,565
Capital gain distribution...... 828 -- --
-------- ------- -------
Increase (decrease) in net
assets from operations...... (4,764) 98,780 29,700
-------- ------- -------
From capital transactions:
Net premiums................... 514,343 576,159 106,047
Transfer (to) from the general
account of GE Capital Life:
Surrenders.................... (8,408) (5,067) --
Transfer gains (loss) and
transfer fees (note 3)....... (1,528) 1,736 (111)
Transfers (to) from the Guaran-
tee Account................... 8,767 15,479 --
Interfund transfers............ 1,314 19,310 --
-------- ------- -------
Increase (decrease) in net
assets from capital transac-
tions....................... 514,488 607,617 105,936
-------- ------- -------
Increase (decrease) in net as-
sets........................... 509,724 706,397 135,636
Net assets at beginning of peri-
od............................. -- -- --
-------- ------- -------
Net assets at end of year....... $509,724 706,397 135,636
======== ======= =======
</TABLE>
F-14
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------------ ---------------------------------
Growth
Asset Manager Contrafund Growth & Income Opportunities
Portfolio Portfolio Portfolio Portfolio
--------------- -------------- ----------------- ---------------
Period from Period from Period from
June 7, 1999 to May 6, 1999 to Period from May 11, 1999 to
December 31, December 31, April 12, 1999 to December 31,
1999 1999 December 31, 1999 1999
--------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (545) (4,439) (795) (2,161)
Net realized gain
(loss)............... 358 22,338 649 (1,607)
Unrealized apprecia-
tion (depreciation)
on investments....... 6,464 114,054 6,182 15,807
Capital gain distribu-
tion................. -- -- -- --
-------- --------- ------- -------
Increase (decrease)
in net assets from
operations......... 6,277 131,953 6,036 12,039
-------- --------- ------- -------
From capital transac-
tions:
Net premiums.......... 114,263 1,104,259 162,340 481,850
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... -- (11,919) (7,583) (4,423)
Transfer gains (loss)
and transfer fees
(note 3)............ 15 220 (143) (4,683)
Transfers (to) from
the Guarantee Ac-
count................ -- 35,713 13,141 6,866
Interfund transfers... -- 32,493 (21,570) (19,575)
-------- --------- ------- -------
Increase (decrease)
in net assets from
capital transac-
tions.............. 114,278 1,160,766 146,185 460,035
-------- --------- ------- -------
Increase (decrease) in
net assets............ 120,555 1,292,719 152,221 472,074
Net assets at beginning
of period............. -- -- -- --
-------- --------- ------- -------
Net assets at end of
year.................. $120,555 1,292,719 152,221 472,074
======== ========= ======= =======
</TABLE>
F-15
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------------
Capital Multiple
High Aggressive Appreciation Strategies
Income Fund/VA Bond Fund/VA Growth Fund/VA Fund/VA Fund/VA
--------------- -------------- -------------- ----------------- ---------------
Period from Period from Period from Period from
May 21, 1999 to May 6, 1999 to May 5, 1999 to Period from May 14, 1999 to
December 31, December 31, December 31, April 23, 1999 to December 31,
1999 1999 1999 December 31, 1999 1999
--------------- -------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (698) (1,470) (513) (477) (220)
Net realized gain
(loss)............... 1,328 183 7,258 265 281
Unrealized apprecia-
tion (depreciation)
on investments....... 1,216 1,010 39,274 18,271 2,132
Capital gain distribu-
tion................. -- -- -- -- --
-------- ------- ------- ------- ------
Increase (decrease)
in net assets from
operations......... 1,846 (277) 46,019 18,059 2,193
-------- ------- ------- ------- ------
From capital transac-
tions:
Net premiums.......... 155,654 397,881 113,307 82,368 48,280
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (204) (204) -- -- (1,047)
Transfer gains (loss)
and transfer fees
(note 3)............ (15) 142 1,053 (390) 59
Transfers (to) from
the Guarantee
Account.............. 7,348 25,543 2,988 208 1,488
Interfund transfers... 12,305 5,185 (14,376) -- --
-------- ------- ------- ------- ------
Increase (decrease)
in net assets from
capital transac-
tions.............. 175,088 428,547 102,972 82,186 48,780
-------- ------- ------- ------- ------
Increase (decrease) in
net assets............ 176,934 428,270 148,991 100,245 50,973
Net assets at beginning
of period............. -- -- -- -- --
-------- ------- ------- ------- ------
Net assets at end of
year.................. $176,934 428,270 148,991 100,245 50,973
======== ======= ======= ======= ======
</TABLE>
F-16
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Federated Insurance Series
-------------------------------------------------
High
American Leaders Income Bond
Fund II Fund II Utility Fund II
----------------- --------------- ---------------
Period from Period from
Period from May 11, 1999 to July 8, 1999 to
April 23, 1999 to December 31, December 31,
December 31, 1999 1999 1999
----------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)..................... $ (1,030) (792) (1,059)
Net realized gain (loss).... (2,562) (137) (314)
Unrealized appreciation (de-
preciation) on invest-
ments...................... 3,572 1,251 356
Capital gain distribution... -- -- --
-------- ------- -------
Increase (decrease) in net
assets from operations... (20) 322 (1,017)
-------- ------- -------
From capital transactions:
Net premiums................ 203,647 190,800 236,827
Transfer (to) from the gen-
eral account of GE Capital
Life:
Surrenders................. -- -- --
Transfer gains (loss) and
transfer fees (note 3).... (97) (67) 586
Transfers (to) from the
Guarantee Account.......... 2,977 4,096 4,773
Interfund transfers......... 19,610 -- --
-------- ------- -------
Increase (decrease) in net
assets from capital
transactions............. 226,137 194,829 242,186
-------- ------- -------
Increase (decrease) in net
assets...................... 226,117 195,151 241,169
Net assets at beginning of
period...................... -- -- --
-------- ------- -------
Net assets at end of year.... $226,117 195,151 241,169
======== ======= =======
</TABLE>
F-17
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------------------------------------------
Flexible International
Balanced Aggressive Growth Growth Worldwide Growth Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- --------------- ----------------- --------------- ---------------
Period from Period from Period from
Period from Period from May 11, 1999 to Period from May 21, 1999 to May 26, 1999 to
April 12, 1999 to April 23, 1999 to December 31, April 23, 1999 to December 31, December 31,
December 31, 1999 December 31, 1999 1999 December 31, 1999 1999 1999
----------------- ----------------- --------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... $ 19,928 (8,000) (2,372) (3,776) 2,773 (831)
Net realized gain
(loss).......... 33,494 130,943 21,250 26,067 70 14,943
Unrealized
appreciation
(depreciation)
on investments.. 207,622 881,865 159,025 310,611 (2,145) 82,593
Capital gain
distribution.... -- 1,024 193 -- 98 --
---------- --------- --------- --------- ------ -------
Increase
(decrease) in
net assets from
operations..... 261,044 1,005,832 178,096 332,902 796 96,705
---------- --------- --------- --------- ------ -------
From capital
transactions:
Net premiums..... 2,220,553 2,262,136 1,009,031 1,233,902 64,850 219,408
Transfer (to)
from the general
account of GE
Capital Life:
Surrenders....... (14,752) (6,944) (228) (2,435) (205) (248)
Transfer gains
(loss) and
transfer fees
(note 3)........ (272) (1,889) 2,240 (19) 6 (18)
Transfers (to)
from the
guarantee
account......... 131,476 7,412 31,422 16,024 4,773 --
Interfund
transfers....... 6,877 (158,267) 72,918 43,042 -- 7,774
---------- --------- --------- --------- ------ -------
Increase
(decrease) in
net assets from
capital
transactions... 2,343,882 2,102,448 1,115,383 1,290,514 69,424 226,916
---------- --------- --------- --------- ------ -------
Increase
(decrease) in net
assets........... 2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621
Net assets at
beginning of
period........... -- -- -- -- -- --
---------- --------- --------- --------- ------ -------
Net assets at end
of year.......... $2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621
========== ========= ========= ========= ====== =======
<CAPTION>
Capital
Appreciation
Portfolio
-----------------
Period from
April 29, 1999 to
December 31, 1999
-----------------
<S> <C>
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... (9,366)
Net realized gain
(loss).......... 48,923
Unrealized
appreciation
(depreciation)
on investments.. 686,260
Capital gain
distribution.... 5,942
-----------------
Increase
(decrease) in
net assets from
operations..... 731,759
-----------------
From capital
transactions:
Net premiums..... 2,582,488
Transfer (to)
from the general
account of GE
Capital Life:
Surrenders....... (37,429)
Transfer gains
(loss) and
transfer fees
(note 3)........ (2,697)
Transfers (to)
from the
guarantee
account......... 43,093
Interfund
transfers....... 71,513
-----------------
Increase
(decrease) in
net assets from
capital
transactions... 2,656,968
-----------------
Increase
(decrease) in net
assets........... 3,388,727
Net assets at
beginning of
period........... --
-----------------
Net assets at end
of year.......... 3,388,727
=================
</TABLE>
F-18
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Goldman Sachs Variable
Alger American Fund Fund, Inc. Insurance Trust
-------------------------------- ------------------------------------- -------------------------------
PBHG
Small Large Cap Mid Cap
Capitalization Growth PBHG Growth II Growth and Value
Portfolio Growth Portfolio Portfolio Portfolio Income Fund Fund
-------------- ----------------- --------------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 6, 1999 to Period from Period from July 2, 1999 to May 14, 1999 to May 14, 1999 to
December 31, April 29, 1999 to September 21, 1999 to December 31, December 31, December 31,
1999 December 31, 1999 December 31, 1999 1999 1999 1999
-------------- ----------------- --------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
From operations:
Net investment
income
(expense)........ $ (1,488) (3,146) $ (127) (481) 336 976
Net realized gain
(loss)........... 14,121 (1,623) 1,640 139 (951) (5,954)
Unrealized
appreciation
(depreciation) on
investments...... 75,993 102,963 15,224 45,866 2,324 (13,066)
Capital gain
distribution..... 124 2,305 -- -- -- --
-------- -------- ------------ -------- --------- --------
Increase
(decrease) in
net assets from
operations...... 88,750 100,499 16,737 45,524 1,709 (18,044)
-------- -------- ------------ -------- --------- --------
From capital
transactions:
Net premiums...... 342,557 596,768 38,573 81,571 64,621 278,409
Transfer (to) from
the general
account of
GE Capital Life:
Death Benefits.... -- -- -- -- -- --
Surrenders........ (2,574) (25,065) -- -- -- --
Transfer gains
(loss) and
transfer fees
(note 3)......... (510) (564) 19 (12) 265 680
Transfers (to)
from the
guarantee
account.......... 900 2,000 5,673 100 1,488 15,173
Interfund
transfers........ (45,000) 18,593 1,017 13,084 (7,962) (11,233)
-------- -------- ------------ -------- --------- --------
Increase
(decrease) in
net assets from
capital
transactions.... 295,373 591,732 45,282 94,743 58,412 283,029
-------- -------- ------------ -------- --------- --------
Increase (decrease)
in net assets..... 384,123 692,231 62,019 140,267 60,121 264,985
Net assets at
beginning of
period............ -- -- -- -- -- --
-------- -------- ------------ -------- --------- --------
Net assets at end
of year........... $384,123 692,231 $ 62,019 140,267 60,121 264,985
======== ======== ============ ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Capital Life Separate Account II (the Account) is a separate investment
account established in 1996 by GE Capital Life Assurance Company of New York
(GE Capital Life) and is incorporated in New York. The Account operates as a
unit investment trust under the Investment Company Act of 1940. The Account
began selling flexible premium variable deferred annuities in 1999 and is used
to fund certain benefits for flexible premium variable deferred annuity life
insurance policies issued by GE Capital Life. GE Capital Life is a stock life
insurance company incorporated in New York on February 23, 1988. GE Capital
Life is a wholly-owned subsidiary by General Electric Capital Assurance
Company. General Electric Capital Assurance Company is an indirect, wholly-
owned subsidiary of General Electric Capital Corporation (GE Capital). GE
Capital, a diversified financial services company, is a wholly-owned
subsidiary of General Electric Company (GE), a New York corporation.
There are currently 37 investment subdivisions available in the Account as
listed in the statements of assets and liabilities. All designated portfolios
included in the Account are series type mutual funds.
(2) Summary of Significant Accounting Policies
(a) Unit Classes
As of December 31, 1999, there was only one unit class included in the
account. Type I units are sold under Policy Form P1066. Type II units are sold
under Policy Form NY1155 and expects to begin sales in the first quarter of
2000.
(b) Investments
Investments are stated at fair value, which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year.
The aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the period ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
-------------- ---------- -----------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index Fund................................... $2,492,470 438,210
Money Market Fund.................................... 3,264,197 1,561,038
Total Return Fund.................................... 114,985 26,944
International Equity Fund............................ 33,084 8,166
Real Estate Securities Fund.......................... 2,107 11
Global Income Fund................................... 87,076 22,175
Value Equity Fund.................................... 144,725 26,377
Income Fund.......................................... 198,503 29,676
U.S. Equity Fund..................................... 486,289 160,418
Oppenheimer Variable Account Funds:
Bond Fund/VA......................................... 506,950 79,665
Aggressive Growth Fund/VA............................ 142,943 40,408
Capital Appreciation Fund/VA......................... 87,405 5,644
High Income Fund/VA.................................. 214,401 39,915
Multiple Strategies Fund/VA.......................... 74,970 26,382
Variable Insurance Products Fund:
Equity-Income Portfolio.............................. 594,362 80,514
Growth Portfolio..................................... 722,654 116,970
Overseas Portfolio................................... 110,342 5,071
Variable Insurance Products Fund II:
Asset Manager Portfolio.............................. 120,654 6,863
Contrafund Portfolio................................. 1,536,802 379,823
</TABLE>
F-20
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
-------------- --------- -----------
<S> <C> <C>
Variable Insurance Products Fund III:
Growth & Income Portfolio............................. $ 195,927 50,455
Growth Opportunities Portfolio........................ 581,671 123,529
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund................................ 100,860 42,078
Mid Cap Value Fund.................................... 347,874 63,722
Janus Aspen Series:
Aggressive Growth Portfolio........................... 2,758,145 658,214
Growth Portfolio...................................... 1,391,386 277,525
Worldwide Growth Portfolio............................ 1,495,571 205,352
Balanced Portfolio.................................... 2,879,110 511,374
Flexible Income Portfolio............................. 78,383 6,050
International Growth Portfolio........................ 308,118 81,877
Capital Appreciation Portfolio........................ 3,113,347 455,354
Federated Insurance Series:
Utility Fund II....................................... 280,273 39,015
High Income Bond Fund II.............................. 204,066 9,924
American Leaders Fund II.............................. 286,013 60,786
Alger American Fund:
Small Capitalization Portfolio........................ 390,194 95,986
Growth Portfolio...................................... 718,126 126,864
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 51,508 6,322
PBHG Growth II Portfolio.............................. 95,342 1,007
</TABLE>
(c) Capital Transactions
The increase (decrease) in outstanding units from capital transactions for
the period ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
----------------------------------------------------------------------------------
S&P 500 Money Total International Real Estate Global Value U.S.
Index Market Return Equity Securities Income Equity Income Equity
Fund Fund Fund Fund Fund Fund Fund Fund Fund
------- ------- ------ ------------- ----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- -- -- --
------- ------- ----- ------- ------ ------ ------ ------ ------
From capital
transactions:
Net premiums........... 163,108 180,071 7,072 2,208 209 6,443 11,804 15,562 17,576
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (370) (20) (19) -- -- (20) -- -- (132)
Transfers (to) from the
Guarantee Account..... 9,068 (4,950) 487 -- -- -- -- 1,714 (335)
Interfund transfers.... 548 (13,111) 92 -- -- -- (1,179) (1,198) 9,118
------- ------- ----- ------- ------ ------ ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
------- ------- ----- ------- ------ ------ ------ ------ ------
Units outstanding at
December 31, 1999...... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
======= ======= ===== ======= ====== ====== ====== ====== ======
</TABLE>
F-21
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance Variable Insurance
Products Fund Products Fund II Products Fund III
----------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
From capital
transactions:
Net premiums........... 47,976 44,397 10,084 10,584 92,901 14,434 43,432
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (784) (390) -- -- (1,003) (674) (399)
Transfers (to) from the
Guarantee Account..... 818 1,193 -- -- 3,005 1,168 619
Interfund transfers.... 123 1,488 -- -- 2,734 (1,918) (1,764)
------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
------ ------ ------ ------ ------ ------ ------
Units outstanding at
December 31, 1999...... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds Federated Insurance Series
---------------------------------------------------- ----------------------------
High Aggressive Capital Multiple American High
Income Bond Growth Appreciation Strategies Leaders Income Bond Utility
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund II Fund II Fund II
------- ------- ---------- ------------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- -- --
------ ------ ------ ----- ----- ------ ------ ------
From capital
transactions:
Net premiums........... 16,215 40,178 9,290 6,840 4,613 18,504 19,575 21,569
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (21) (21) -- -- (100) -- -- --
Transfers (to) from the
Guarantee Account..... 765 2,579 245 17 142 270 420 435
Interfund transfers.... 1,282 524 (1,179) -- -- 1,782 -- --
------ ------ ------ ----- ----- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
------ ------ ------ ----- ----- ------ ------ ------
Units outstanding at
December 31, 1999...... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
====== ====== ====== ===== ===== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series Alger American Fund
----------------------------------------------------------------------------- ------------------------
Aggressive Worldwide Flexible International Capital Small
Balanced Growth Growth Growth Income Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- ---------- --------- --------- --------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding
at December 31,
1998............ -- -- -- -- -- -- -- -- --
------- ------- ------ ------- ----- ------ ------- ------ ------
From capital
transactions:
Net premiums.... 176,382 130,319 73,975 96,528 6,400 18,725 174,188 30,419 47,771
Transfers (to)
from the
general account
of GE Capital
Life:
Surrenders...... (1,172) (400) (17) (190) (20) (21) (2,525) (229) (2,006)
Transfers (to)
from the
Guarantee
Account........ 10,443 427 2,304 1,254 471 -- 2,907 80 160
Interfund
transfers...... 546 (9,118) 5,346 3,367 -- 663 4,823 (3,996) 1,488
------- ------- ------ ------- ----- ------ ------- ------ ------
Net increase
(decrease) in
units from
capital
transactions.... 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
------- ------- ------ ------- ----- ------ ------- ------ ------
Units outstanding
at December 31,
1999............ 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
======= ======= ====== ======= ===== ====== ======= ====== ======
</TABLE>
F-22
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
PBHG Insurance Variable Insurance
Series Fund, Inc. Trust
-------------------- ------------------
PBHG Large PBHG Growth and Mid Cap
Cap Growth Growth II Income Value
Portfolio Portfolio Fund Fund
---------- --------- ---------- -------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998................................. -- -- -- --
----- ----- ----- ------
From capital transactions:
Net premiums......................... 3,049 6,071 6,743 27,796
Transfers (to) from the general
account of GE Capital Life:
Surrenders........................... -- -- -- --
Transfers (to) from the Guarantee
Account............................. 448 7 155 1,515
Interfund transfers.................. 80 974 (831) (1,121)
----- ----- ----- ------
Net increase (decrease) in units from
capital transactions................. 3,577 7,052 6,067 28,190
----- ----- ----- ------
Units outstanding at December 31,
1999................................. 3,577 7,052 6,067 28,190
===== ===== ===== ======
</TABLE>
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Capital Life. GE Capital Life is taxed
as a life insurance company under the Internal Revenue Code (the Code). GE
Capital Life is included in the General Electric Capital Assurance Company
consolidated federal income tax return. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains of the
Account.
(e) Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect amounts and disclosures reported therein. Actual results could
differ from those estimates.
(3) Related Party Transactions
The premiums transferred from GE Capital Life to the Account represent gross
premiums recorded by GE Capital Life on its flexible variable deferred annuity
products. If a policy is surrendered or lapses during the first six years, a
charge is made by GE Capital Life to cover the expenses of issuing the policy.
In addition, surrender charges are assessed against payments made upon the
maturity date if the maturity date occurs before all of the premium payments
have been in the policy for seven years. Subject to certain limitations, the
charge generally equals 6% of the premium withdrawn in the first four years,
and this charge decreases 2% per year for every year thereafter.
GE Capital Life will deduct a charge of $25 plus .15% per year from the
Account for certain administrative charges. In addition, GE Capital Life
charges the Account 1.25% for the mortality and expense (M&E) risk that GE
Capital Life assumes. The administrative expenses as well as the M&E charges
are deducted daily and reflect the effective annual rates.
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Capital Life, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves
as principal underwriter for variable life insurance policies and variable
annuities issued by GE Capital Life.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid
an investment advisory fee by the Fund based on the average daily net assets
at an effective annual rate of .35% for the S&P 500 Index Fund, .50% for the
Money Market, Income, and Total Return Funds, .60% for the Global Income Fund,
.55% for the U.S. Equity Fund, .65% for the Value Equity Fund, .85% for the
Real Estate Securities Fund, and 1.00% for the International Equity Fund.
Certain officers and directors of GE Capital Life are also officers and
directors of Capital Brokerage Corporation.
F-23
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
GE Capital Life Assurance Company of New York:
We have audited the accompanying balance sheets of GE Capital Life Assurance
Company of New York as of December 31, 1999 and 1998, and the related
statements of income, shareholder's interest, and cash flows for each of the
years in the three-year period ended December 31, 1999. 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 GE Capital Life Assurance
Company of New York as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1999 in conformity with generally accepted accouting
principles.
/s/ KPMG LLP
Richmond, Virginia
January 21, 2000
F-1
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
------------------
1999 1998
-------- --------
<S> <C> <C>
Assets
Investments:
Fixed maturities available-for-sale, at fair value (amor-
tized cost of $1,667.2 in 1999 and $1,506.8 in 1998)..... $1,588.9 $1,530.6
Mortgage loans (net of valuation allowance of $1.3 in 1999
and $0.9 in 1998)........................................ 265.3 190.7
Policy loans.............................................. 1.4 1.4
Short-term investments.................................... 2.5 13.4
-------- --------
Total investments........................................ 1,858.1 1,736.1
-------- --------
Cash....................................................... 1.8 1.4
Accrued investment income.................................. 37.1 30.6
Deferred acquisition costs................................. 94.8 49.4
Intangible assets.......................................... 63.6 50.5
Deferred income tax asset.................................. 24.8 0.5
Other assets............................................... 22.5 12.5
Separate account assets.................................... 19.2 --
-------- --------
Total assets............................................. $2,121.9 $1,881.0
======== ========
Liabilities and Shareholder's Interest
Liabilities:
Future annuity and contract benefits...................... $1,737.0 $1,510.0
Unearned premiums......................................... 15.2 12.7
Liability for policy and contract claims.................. 19.1 10.6
Other policyholder liabilities............................ 44.0 25.8
Accounts payable and accrued expenses..................... 61.8 58.3
Separate account liabilities.............................. 19.2 --
-------- --------
Total liabilities........................................ 1,896.3 1,617.4
-------- --------
Shareholder's interest:
Net unrealized investment gains (losses).................. (32.5) 7.1
-------- --------
Accumulated non-owner changes in equity................... (32.5) 7.1
Common stock ($1,000 par value, 2,000 shares authorized,
issued and outstanding).................................. 2.0 2.0
Additional paid-in capital................................ 259.4 259.4
Accumulated deficit....................................... (3.3) (4.9)
-------- --------
Total shareholder's interest............................. 225.6 263.6
-------- --------
Total liabilities and shareholder's interest............. $2,121.9 $1,881.0
======== ========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Years ended December
31,
----------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Revenues:
Net investment income.................................. $126.0 $115.9 $111.6
Net realized investment gains.......................... 0.3 2.5 2.2
Premiums............................................... 79.1 83.3 46.9
Other income........................................... 3.4 3.0 3.7
------ ------ ------
Total revenues........................................ 208.8 204.7 164.4
------ ------ ------
Benefits and expenses:
Interest credited...................................... 69.3 69.3 71.7
Benefits and other changes in policy reserves.......... 78.4 78.7 42.5
Commissions............................................ 28.1 17.0 17.6
General expenses....................................... 19.6 9.0 11.0
Amortization of intangibles, net....................... 6.1 7.3 8.2
Increase in deferred acquisition costs, net............ (23.3) (9.8) (15.6)
------ ------ ------
Total benefits and expenses........................... 178.2 171.5 135.4
------ ------ ------
Income before income taxes............................ 30.6 33.2 29.0
Provision for income taxes.............................. 12.5 13.7 11.5
------ ------ ------
Net income............................................ $ 18.1 $ 19.5 $ 17.5
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF SHAREHOLDER'S INTEREST
Years ended December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Accumulated
non-owner
Common stock Additional changes Total
------------- paid-in other than Accumulated shareholder's
Shares Amount capital earnings deficit interest
------ ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1,
1997................... 2,000 $2.0 259.4 (1.3) (10.9) 249.2
Changes other than
transactions with
shareholder
Net income............. -- -- -- -- 17.5 17.5
Net unrealized gains on
securities (a)........ -- -- -- 8.6 -- 8.6
-----
Total changes other
than transactions with
shareholder........... 26.1
Dividend............... -- -- -- -- (15.0) (15.0)
----- ---- ----- ----- ----- -----
Balances at December 31,
1997 2,000 2.0 259.4 7.3 (8.4) 260.3
Changes other than
transactions with
shareholder
Net income............. -- -- -- -- 19.5 19.5
Net unrealized losses
on securities (a)..... -- -- -- (0.2) -- (0.2)
-----
Total changes other
than transactions with
shareholder........... 19.3
Dividend............... -- -- -- -- (16.0) (16.0)
----- ---- ----- ----- ----- -----
Balances at December 31,
1998................... 2,000 2.0 259.4 7.1 (4.9) 263.6
Changes other than
transactions with
shareholder
Net income............. -- -- -- -- 18.1 18.1
Net unrealized losses
on securities (a)..... -- -- -- (39.6) -- (39.6)
-----
Total changes other
than transactions with
shareholder........... (21.5)
Dividend............... -- -- -- -- (16.5) (16.5)
----- ---- ----- ----- ----- -----
Balances at December 31,
1999................... 2,000 $2.0 259.4 (32.5) (3.3) 225.6
===== ==== ===== ===== ===== =====
</TABLE>
-------
(a) Presented net of deferred taxes of $21.3 million, $0.1 million, and $(4.6)
million in 1999, 1998 and 1997, respectively.
See accompanying notes to financial statements.
F-4
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
Years ended December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 18.1 $ 19.5 $ 17.5
------- ------- -------
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in future policy benefits................ 117.6 128.5 106.1
Net realized investment gains..................... (0.3) (2.5) (2.2)
Amortization of investment premiums and dis-
counts........................................... (0.7) 4.7 4.7
Amortization of intangibles....................... 6.1 7.3 8.2
Deferred income tax benefit....................... (4.9) (1.9) (1.7)
Change in certain assets and liabilities:
Increase in:
Accrued investment income....................... (6.5) (0.3) (1.4)
Deferred acquisition costs, net................. (23.3) (9.8) (15.6)
Other assets, net............................... (8.8) (2.8) 10.6
Increase (decrease) in:
Other policy related balances................... 20.8 (3.7) 22.8
Policy and contract claims...................... 7.2 -- --
Accounts payable and accrued expenses........... 5.3 10.3 (19.6)
------- ------- -------
Total adjustments.............................. 112.5 129.8 111.9
------- ------- -------
Net cash provided by operating activities...... 130.6 149.3 129.4
------- ------- -------
Cash flows from investing activities:
Proceeds from sales and maturities of investments
in fixed maturities and real estate............... 408.2 457.9 264.9
Purchases of fixed maturities...................... (567.5) (498.3) (340.4)
Mortgage and policy loan originations.............. (93.8) (39.7) (40.6)
Mortgage and policy loan repayments................ 19.0 22.1 9.2
------- ------- -------
Net cash used in investing activities.......... (234.1) (58.0) (106.9)
------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of investment contracts..... 287.1 106.2 151.1
Redemption and benefit payments on investment con-
tracts............................................ (177.6) (171.1) (175.9)
Dividends paid..................................... (16.5) (16.0) (15.0)
------- ------- -------
Net cash provided by (used in) financing activ-
ities......................................... 93.0 (80.9) (39.8)
------- ------- -------
Net increase (decrease) in cash and cash equiv-
alents........................................ (10.5) 10.4 (17.3)
Cash and cash equivalents at beginning of year..... 14.8 4.4 21.7
------- ------- -------
Cash and cash equivalents at end of year........... $ 4.3 $ 14.8 $ 4.4
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(1) Basis of Presentation and Summary of Significant Accounting Policies
The accompanying financial statements include the historical operations and
accounts of GE Capital Life Assurance Company of New York (GECLA-NY or
Company).
GE Capital Life Assurance Company of New York is a wholly-owned subsidiary
of General Electric Capital Assurance Company (GE Capital Assurance), which,
in turn, is wholly-owned by GE Financial Assurance Holdings, Inc. (GE
Financial Assurance). Prior to January 1, 1999, the Company was a majority
owned subsidiary of GE Capital Assurance. The remaining minority interest was
owned by Great Northern Insured Annuity Corporation (GNAIC), which was also a
wholly-owned subsidiary of GE Capital Assurance. On January 1, 1999, GNAIC
merged with and into its parent company, GE Capital Assurance.
Basis of Presentation
These financial statements have been prepared on the basis of generally
accepted accounting principles (GAAP). The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts and related disclosures. Actual results could
differ from those estimates.
Products
The Company markets and sells products in the State of New York through
financial institutions and various agencies. The primary products of the
Company are investment type deferred annuities, structured settlements,
immediate annuities, variable annuities, and long-term care policies. During
1999, 1998, and 1997, 92%, 96%, and 77%, respectively, of product sales were
distributed through five financial institutions, including one financial
institution which accounted for 60%, 68%, and 55%, respectively, of total
product sales.
Revenues
Investment income is recorded when earned. Realized investment gains and
losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent immediate annuities, when the contracts are issued.
Premiums received under annuity contracts without significant mortality risk
are not reported as revenues but as liabilities for future annuity and
contract benefits. Variable product fees are charged to variable annuity
policyholders based upon the daily net assets of the policyholders' account
values, and are recognized as revenue when charged. Other income consists
primarily of surrender charges on certain policies. Surrender charges are
recognized as income when the policy is surrendered.
Cash Equivalents
Certificates and other time deposits are classified as short-term
investments on the balance sheets and considered cash equivalents in the
Statements of Cash Flows.
Investments
The Company has designated its fixed maturities (bonds, notes and redeemable
preferred stock) as available-for-sale. The fair value for fixed maturities is
based on quoted market prices, where available. For fixed maturities not
actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of private placements, are
estimated by discounting expected future cash flows using a current market
rate applicable to the credit quality, call features and maturity of the
investments, as applicable.
Changes in the fair values of investments available-for-sale, net of the
effect on deferred policy acquisition costs, present value of future profits
and deferred federal income taxes, are reflected as unrealized investment
gains or losses in a separate component of shareholder's interest and,
accordingly, have no effect on net income, but are shown as accumulated non-
F-6
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(1) Basis of Presentation and Summary of Significant Accounting Policies --
Continued
owner changes in equity. Unrealized losses that are considered other than
temporary are recognized in earnings through an adjustment to the amortized
cost basis of the underlying securities.
Investment income on mortgage and asset-backed securities is initially based
upon yield, cash flow and prepayment assumptions at the date of purchase.
Subsequent revisions in those assumptions are recorded using the retrospective
method, whereby the amortized cost of the securities is adjusted to the amount
that would have existed had the revised assumptions been in place at the date
of purchase. The adjustments to amortized cost are recorded as a charge or
credit to investment income.
Under certain securities lending transactions, the Company requires the
borrower provide collateral, consisting primarily of cash and government
securities, on a daily basis, in amounts equal to or exceeding 102% of the
market value of the applicable securities loaned.
Mortgage and policy loans are stated at the unpaid principal balance of such
loans, net of allowances for estimated uncollectible amounts.
Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts,
such as commissions, direct advertising and printing, and certain support
costs such as underwriting and policy issue expenses. Deferred acquisition
costs capitalized are determined by actual costs and expenses incurred by
product in the year of issue.
For investment contracts, the amortization of deferred acquisition cost is
based on the present value of the anticipated gross profits resulting from
investments, interest credited, surrender charges, mortality and maintenance
expenses. As actual gross profits vary from projected, the impact on
amortization is included in net income. For insurance contracts, the
acquisition costs are amortized in relation to the benefit payments or the
present value of expected future premiums.
Deferred acquisition costs are reviewed to determine if they are recoverable
from future income, including investment income, and, if not considered
recoverable, are charged to expense.
Goodwill
Goodwill is amortized over its estimated period of 25 years of benefit on
the straight-line method. Goodwill in excess of associated expected operating
cash flows is considered to be impaired and is written down to fair value.
Federal Income Taxes
The Company is included with GE Capital Assurance in a life insurance
consolidated federal income tax return. Deferred taxes are allocated by
applying the asset and liability method of accounting for deferred income
taxes to members of the group as if each member was a separate taxpayer.
Intercompany balances are settled annually.
Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance expenses
are reported net of the amounts relating to reinsurance ceded to other
companies, except for reinsurance costs for universal life products. Amounts
due from reinsurers for incurred and estimated future claims are reflected in
the reinsurance recoverable asset which is included in other assets on the
balance sheet. The cost of reinsurance is accounted for over the terms of the
related treaties using assumptions consistent with those used to account for
the underlying reinsured policies.
F-7
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(1) Basis of Presentation and Summary of Significant Accounting Policies --
Continued
Future Annuity and Contract Benefits
Future annuity and contract benefits consist of the liabilities for life
insurance policies, accident and health, and deferred annuity contracts. The
liability for insurance and accident and health contracts is calculated based
upon actuarial assumptions as to mortality, morbidity, interest, expense and
withdrawals, with experience adjustments for adverse deviation where
appropriate. The liability for deferred annuity contracts is generally equal
to the policyholder's current account value.
Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount needed to
provide for the estimated ultimate cost of settling claims relating to insured
events that have occurred on or before the end of the respective reporting
period. The estimated liability includes requirements for future payments of
(a) claims that have been reported to the insurer, (b) claims related to
insured events that have occurred but that have not been reported to the
insurer as of the date the liability is estimated, and (c) claim adjustment
expenses. Claim adjustment expenses include costs incurred in the claim
settlement process such as legal fees and costs to record, process, and adjust
claims.
Separate Account Assets and Liabilities
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company
receives mortality risk fees and administration charges from the variable
mutual fund portfolios. The separate account assets are carried at fair value
and are equivalent to the liabilities that represent the policyholders' equity
in those assets.
Accounting Pronouncement Not Yet Adopted
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (Statement 133), effective for the Company on January
1, 2001 (as amended by Statement of Financial Accounting Standards No. 137,
Deferral of the Effective Date of Statement No. 133). Upon adoption, all
derivative instruments (including certain derivative instruments embedded in
other contracts) will be recognized in the balance sheet at fair value, and
changes in such fair values must be recognized immediately in earnings unless
specific hedging criteria are met. Changes in the values of derivatives
meeting these hedging criteria will ultimately offset related earnings effects
of the hedged items; effects of qualifying changes in fair value are to be
recorded in equity pending recognition in earnings. Certain significant
refinements and interpretations of Statement 133 are being deliberated by the
FASB , and the effects on accounting for the Company's financial instruments
will depend to some degree on the results of such deliberations. Management
has not determined the total probable effects of adopting Statement 133, and
does not believe that an estimate of such effects would be meaningful at this
time.
(2) Investments
General
For the years ended December 31, the sources of investment income of the
Company were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities..................................... $109.1 $101.1 $ 99.1
Mortgage loans....................................... 17.8 15.4 13.6
------ ------ ------
Gross investment income.............................. 126.9 116.5 112.7
Investment expenses.................................. (0.9) (0.6) (1.1)
------ ------ ------
Net investment income................................ $126.0 $115.9 $111.6
====== ====== ======
</TABLE>
F-8
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(2) Investments -- Continued
For the years ended December 31, sales proceeds and gross realized
investment gains and losses resulting from the sales of investment securities
available-for-sale were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ -----
<S> <C> <C> <C>
Sales proceeds........................................ $143.0 $153.4 $88.0
------ ------ -----
Gross realized investment:
Gains................................................ 1.1 3.2 2.6
Losses............................................... (0.8) (0.7) (0.4)
------ ------ -----
Net realized investment gains......................... $ 0.3 $ 2.5 $ 2.2
====== ====== =====
</TABLE>
The additional proceeds from investments presented in the Statements of Cash
Flows result from principal collected on mortgage and asset-backed securities,
maturities, calls and sinking fund payments.
Net unrealized gains and losses on available-for-sale investment securities
reflected as a separate component of shareholder's interest are summarized as
follows:
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Net unrealized gains (losses) on fixed maturities
available-for-sale before adjustments............ $(78.3) $ 23.8 $ 22.0
Adjustments to the present value of future profits
and deferred acquisition costs................... 28.3 (12.9) (10.8)
Deferred income taxes............................. 17.5 (3.8) (3.9)
------ ------ ------
Net unrealized gains (losses) on available-for-
sale investment securities....................... $(32.5) $ 7.1 $ 7.3
====== ====== ======
</TABLE>
At December 31, the amortized cost, gross unrealized gains and losses, and
fair values of the Company's fixed maturities available-for-sale were as
follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
1999 Cost Gains Losses Value
---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agency........ $ 50.0 $ -- $ (9.8) $ 40.2
Non U.S. government............... 5.1 -- (0.1) 5.0
Non U.S. corporate................ 119.9 0.2 (5.4) 114.7
U.S. corporate.................... 940.6 2.3 (57.4) 885.5
Mortgage backed................... 221.0 2.2 (3.5) 219.7
Asset backed...................... 330.6 0.3 (7.1) 323.8
-------- ----- ------ --------
Total fixed maturities............. $1,667.2 $ 5.0 $(83.3) $1,588.9
======== ===== ====== ========
<CAPTION>
Amortized Unrealized Unrealized Fair
1998 Cost Gains Losses Value
---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agency........ $ 8.0 $ 0.1 $ -- $ 8.1
Non U.S. government............... 5.2 0.3 -- 5.5
Non U.S. corporate................ 63.7 1.8 (2.2) 63.3
U.S. corporate.................... 1,000.2 22.5 (7.7) 1,015.0
Mortgage backed................... 429.7 10.3 (1.3) 438.7
-------- ----- ------ --------
Total fixed maturities............. $1,506.8 $35.0 $(11.2) $1,530.6
======== ===== ====== ========
</TABLE>
F-9
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(2) Investments -- Continued
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 1999 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Due in one year or less.................................. $ 72.5 $ 71.5
Due after one year through five years.................... 397.9 386.8
Due after five years through ten years................... 229.3 219.3
Due after ten years...................................... 415.9 367.8
-------- --------
Subtotals.............................................. 1,115.6 1,045.4
Mortgage backed securities............................... 221.0 219.7
Asset backed securities.................................. 330.6 323.8
-------- --------
Totals................................................. $1,667.2 $1,588.9
======== ========
</TABLE>
At December 31, 1999, $79.4 of the Company's investments (excluding mortgage
and asset-backed securities) were subject to certain call provisions.
As required by law, the Company has investments on deposit with governmental
authorities and banks for the protection of policyholders of $0.5 and $0.4 at
December 31, 1999 and 1998, respectively.
At December 31, 1999, approximately 23.8%, 9.3% and 15.7% of the Company's
investment portfolio is comprised of securities issued by the manufacturing,
utility and financial industries, respectively, the vast majority of which are
rated investment grade, and which are senior secured bonds. This portfolio is
widely diversified among various geographic regions in the United States, and
is not dependent on the economic stability of one particular region.
At December 31, 1999, the Company did not hold any fixed maturity
securities, other than securities issued or guaranteed by the U.S. government,
which exceeded 10% of shareholder's interest.
The credit quality of the fixed maturity portfolio at December 31 follows.
The categories are based on the higher of the ratings published by Standard &
Poors or Moody's.
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
Fair Fair
Value Percent Value Percent
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Agencies and treasuries................... $ 166.6 10.5% $ 215.3 14.1%
AAA/Aaa................................... 379.4 23.9 196.8 12.9
AA/Aa..................................... 118.9 7.5 91.7 6.0
A/A....................................... 332.3 20.9 457.3 29.9
BBB/Baa................................... 415.4 26.1 444.5 29.0
BB/Ba..................................... 47.0 3.0 44.8 2.9
B/B....................................... 8.0 0.5 8.5 0.5
Not rated................................. 121.3 7.6 71.7 4.7
-------- ----- -------- -----
Totals.................................. $1,588.9 100.0% $1,530.6 100.0%
======== ===== ======== =====
</TABLE>
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa3 are generally regarded
as investment grade securities. Some agencies and treasuries (that is, those
securities issued by the United States government or an agency thereof) are
not rated, but all are considered to be investment grade securities. Finally,
some securities, such as private placements, have not been
F-10
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(2) Investments -- Continued
assigned a rating by any rating service and are therefore categorized as "not
rated." This has neither positive nor negative implications regarding the
value of the security.
At December 31, 1999 and 1998, there were no fixed maturities in default as
to principal or interest.
Mortgage Loans
At December 31, 1999 and 1998, the Company's mortgage loan portfolio
consisted of first mortgage loans on commercial real estate properties of 153
and 126, respectively. The loans, which are originated by the Company through
a network of mortgage bankers, are made only on completed, leased properties
and generally have a maximum loan-to-value ratio of 75% at the date of
origination.
At December 31, 1999 and 1998, respectively, the Company held $73.4 and
$40.2 in mortgages secured by real estate in California, comprising 27.7% and
21.0% of the respective total mortgage portfolio. For the years ended December
31, 1999, 1998 and 1997, respectively, the Company originated $38.3, $9.5 and
$11.4 of mortgages secured by real estate in California, which represent
40.9%, 24.0% and 28.0% and of the respective total originations for those
years.
As of December 31, 1999 and 1998, the Company was committed to fund $22.8
and $26.1, respectively, in mortgage loans.
"Impaired" loans are defined under generally accepted accounting principles
as loans for which it is probable that the lender will be unable to collect
all amounts due according to the original contractual terms of the loan
agreement. That definition excludes, among other things, leases, or large
groups of smaller-balance homogeneous loans, and therefore applies principally
to the Company's commercial loans. There were no impaired loans at December
31, 1999 and 1998.
(3) Deferred Acquisition Costs
Activity impacting deferred acquisition costs for the years ended December
31, was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Unamortized balance at January 1...................... $56.6 $46.8 $31.2
Costs deferred........................................ 29.9 14.4 18.5
Amortization, net..................................... (6.6) (4.6) (2.9)
----- ----- -----
Unamortized balance at December 31.................... 79.9 56.6 46.8
----- ----- -----
Cumulative effect of net unrealized investment (gains)
losses............................................... 14.9 (7.2) (4.1)
----- ----- -----
Balance at December 31................................ $94.8 $49.4 $42.7
===== ===== =====
</TABLE>
(4) Intangible Assets
Present Value of Future Profits (PVFP)
In conjunction with the acquisition of the Company in 1993, a portion of the
purchase price was assigned to the right to receive future gross profits
arising from existing insurance and investment contracts. This intangible
asset, PVFP, represents the actuarially determined present value of the
projected future cash flows from the acquired policies.
The method used by the Company to value PVFP is summarized as follows: (1)
identify the future gross profits attributable to certain lines of business,
(2) identify the risks inherent in realizing those gross profits, and (3)
discount those gross profits at the rate of return that the Company must earn
in order to accept the inherent risks.
F-11
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(4) Intangible Assets -- Continued
PVFP is amortized, net of accreted interest, in a manner similar to the
amortization of deferred acquisition costs. Interest accretes at rates
credited to policyholders on underlying contracts. As actual results vary from
projected amounts, the impact on amortization is included in net income.
Recoverability of PVFP is evaluated periodically by comparing the current
estimate of expected future gross profits to the unamortized asset balance. If
such comparison indicates that the expected gross profits will not be
sufficient to recover PVFP, the difference is charged to expense.
The following table presents the activity in PVFP for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Unamortized balance at January 1...................... $26.4 $32.2 $38.9
Interest accreted at 4.7% in 1999, 5.0% in 1998 and
5.6% in 1997......................................... 0.8 1.0 1.4
Amortization.......................................... (5.4) (6.8) (8.1)
----- ----- -----
Unamortized balance at December 31.................... 21.8 26.4 32.2
----- ----- -----
Cumulative effect of net unrealized investment (gains)
losses............................................... 13.4 (5.8) (6.7)
----- ----- -----
Balance at December 31................................ $35.2 $20.6 $25.5
===== ===== =====
</TABLE>
The estimated percentage of the December 31, 1999 balance, before the effect
of unrealized investment gains or losses, to be amortized over each of the
next five years is as follows:
<TABLE>
<S> <C>
2000..................................... 15%
2001..................................... 12%
2002..................................... 8%
2003..................................... 7%
2004..................................... 5%
</TABLE>
Goodwill
At December 31, 1999 and 1998, total unamortized goodwill was $28.4 and
$29.9, respectively, which is shown net of accumulated amortization of $10.0
and $8.5, respectively. Goodwill amortization was $1.5, $1.5, and $1.6 for the
years ended December 31, 1999, 1998 and 1997, respectively. Goodwill in excess
of associated expected operating cash flows is considered to be impaired and
is written down to fair value (no such write-downs have been made).
(5) Reinsurance
In order to limit the amount of loss retention, certain policy risks are
reinsured with other insurance companies. The maximum amount of life insurance
retained on any one life may not exceed $0.2. Reinsurance contracts do not
relieve the Company of its obligations to policyholders. In the unlikely event
that the reinsurers would be unable to meet their obligations, the Company is
liable for the reinsured claims. The Company monitors both the financial
condition of individual reinsurers and risk concentrations arising from
similar geographic regions, activities and economic characteristics of
reinsurers to lessen the risk of default by such reinsurers.
The Company has a reinsurance agreement with an affiliated company whereby
it assumed all liabilities and future premiums related to the affiliate's New
York business. Certain fixed maturities with a fair value of $60.0 at December
31, 1999 were held in trust for the benefit of policyholders.
F-12
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(5) Reinsurance -- Continued
The effects of reinsurance on premiums written and earned for the years
ended December 31 were as follows:
<TABLE>
<CAPTION>
Written Earned
------------------- -------------------
1999 1998 1997 1999 1998 1997
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Direct........................... $78.8 $82.8 $48.2 $76.2 $80.6 $44.5
Assumed.......................... 5.2 4.0 3.6 5.2 4.0 3.6
Ceded............................ (2.3) (1.7) (1.1) (2.3) (1.3) (1.2)
----- ----- ----- ----- ----- -----
Net Premiums..................... $81.7 $85.1 $50.7 $79.1 $83.3 $46.9
----- ----- ----- ----- ----- -----
Percentage of amount assumed to
net............................. 6.6% 4.8% 7.7%
===== ===== =====
</TABLE>
Reinsurance recoveries recognized as a reduction of benefits amounted to
$9.3, $10.8, and $11.2, during 1999, 1998 and 1997, respectively. These
recoveries were partially offset by certain changes in benefits and other
policy reserves.
(6) Future Annuity and Contract Benefits
Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholders' contracts. Interest rates credited
to investment contracts are guaranteed for the initial policy term with
renewal rates determined as necessary by management. At December 31, 1999 and
1998, investment contracts totaled $1,474.4 and $1,313.2, respectively.
Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
of insurance contracts is the present value of such benefits less the present
value of future net premiums based on mortality, morbidity, and other
assumptions which were appropriate at the time the policies were issued or
acquired. These assumptions are periodically evaluated for potential premium
deficiencies. Any changes in the estimated liability are reflected in income
as the estimates are revised. At December 31, 1999 and 1998, insurance
contracts, totaled $262.6 and $196.8, respectively.
Interest rate assumptions used in calculating the present value of future
annuity and contract benefits range from 3.6% to 9.9%.
(7) Related-Party Transactions
The Company receives administrative services from certain affiliates for
which progress payments for these services are made monthly. For the years
ended December 31, 1999, 1998 and 1997, these services were valued at $17.7,
$7.6, and $9.8, respectively.
(8) Income Taxes
The total provision for income taxes for the years ended December 31
consisted of the following components:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Current federal income tax provision.................... $13.7 $16.7 $13.2
Deferred federal income tax benefit..................... (1.2) (3.5) (1.7)
----- ----- -----
Federal provision....................................... 12.5 13.2 11.5
Current state income tax provision...................... -- 0.5 --
----- ----- -----
Total income tax provision.............................. $12.5 $13.7 $11.5
===== ===== =====
</TABLE>
F-13
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(8) Income Taxes -- Continued
The reconciliation of the federal statutory tax rate to the effective income
tax rate is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax, net of federal effect.................... -- 0.9 --
Goodwill amortization...................................... 1.8 1.6 1.9
Other, net................................................. 4.0 3.8 2.8
---- ---- ----
Effective rate............................................. 40.8% 41.3% 39.7%
==== ==== ====
</TABLE>
The components of the net deferred income tax asset at December 31 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Assets:
Net unrealized losses on investment securities.............. $ 17.5 $ --
Future annuity and contract benefits........................ 34.9 75.3
------ ------
Total deferred income tax assets............................. 52.4 75.3
====== ======
Liabilities:
Net unrealized gains on investment securities............... -- (3.8)
Investments................................................. (1.0) (6.8)
Present value of future profits............................. (5.2) (21.6)
Deferred acquisition costs.................................. (19.6) (32.9)
Other, net.................................................. (1.8) (9.7)
------ ------
Total deferred income tax liabilities........................ (27.6) (74.8)
------ ------
Net deferred income tax asset................................ $ 24.8 $ 0.5
====== ======
</TABLE>
The Company paid $11.2, $13.6 and $12.1, for federal and state income taxes
in 1999, 1998 and 1997, respectively.
Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient taxable
income enabling the Company to realize remaining deferred tax assets.
Accordingly, no valuation allowance for deferred tax assets is deemed
necessary.
(9) Commitments and Contingencies
Guaranty Association Assessments
The Company is required to participate in the guaranty association of the
state of New York. The state guaranty association ensures payment of
guaranteed benefits, with certain restrictions to policyholders of impaired or
insolvent insurance companies, by assessing all other companies involved in
similar lines of business. The insolvency of a major insurer that wrote
significant business in New York could have an adverse impact on the
profitability of the Company. The Company paid $0.3, $0.2, and $0.2 to the New
York State guaranty association during 1999, 1998 and 1997, respectively.
Litigation
The Company is a defendant in various cases of litigation considered to be
in the normal course of business. The Company believes that the outcome of
such litigation will not have a material effect on its financial position or
results of operations.
F-14
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(10) Fair Value of Financial Instruments
The fair values of financial instruments presented in the applicable notes
to the Company's financial statements are estimates of the fair values at a
specific point in time using available market information and valuation
methodologies considered appropriate by management. These estimates are
subjective in nature and involve uncertainties and significant judgment in the
interpretation of current market data. Therefore, the fair values presented
are not necessarily indicative of amounts the Company could realize or settle
currently. The Company does not necessarily intend to dispose of or liquidate
such instruments prior to maturity.
Fixed maturities which, as a matter of accounting policy, are reflected in
the accompanying financial statements at fair value are not included in the
following disclosures. The carrying value of policy loans, short-term
investments and accrued investment income approximates fair value at December
31, 1999 and 1998, respectively.
At December 31, the carrying amounts and fair values of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Mortgage loans........................... $ 265.3 $ 261.8 $ 190.7 $ 207.5
Investment contracts..................... 1,463.8 1,411.6 1,302.7 1,265.9
======== ======== ======== ========
</TABLE>
The fair value of mortgage loans is estimated by discounting the estimated
future cash flows using interest rates applicable to current loan
originations, adjusted for credit risks.
The estimated fair value of investment contracts is the amount payable on
demand (cash surrender value) for deferred annuities and the net present value
based on interest rates currently offered on similar contracts for non-life
contingent immediate annuities.
(11) Restrictions on Dividends
State insurance departments which regulate life insurance companies
recognize only statutory accounting practices for determining and reporting
the financial condition and results of operations of an insurance company, for
determining its solvency under law, and for determining whether its financial
condition warrants the payment of a dividend to its shareholders. The maximum
amount of dividends, which can be paid by State of New York insurance
companies to shareholders without prior approval of the Insurance
Commissioner, is subject to certain restrictions. No dividend payout may be
made without prior approval. The Company last paid a dividend to GECA of $16.5
in 1999.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners (NAIC)
that are prepared on an accounting basis prescribed or permitted by such
authorities (statutory basis). Statutory accounting practices differ from GAAP
in several respects, causing differences in reported net income and
shareholder's interest. Permitted statutory accounting practices encompass all
accounting practices not so prescribed but that have been specifically allowed
by state insurance authority. The Company has no significant permitted
accounting practices.
Statutory net income for the years ended December 31, 1999, 1998 and 1997
was $5.1, $24.8, and $13.7, respectively. Statutory capital and surplus as of
December 31, 1999 and 1998 was $153.7 and $168.8, respectively.
The NAIC has adopted Risk-Based Capital (RBC) requirements to evaluate the
adequacy of statutory capital and surplus in relation to risks associated
with: (i) asset quality, (ii) insurance risk, (iii) interest rate risk, and
(iv) other business factors.
F-15
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions)
(12) Supplementary Financial Data -- Continued
The RBC formula is designated as an early warning tool for the states to
identify possible under-capitalized companies for the purpose of initiating
regulatory action. In the course of operations, the Company periodically
monitors its level of RBC. At December 31, 1999 and 1998, the Company exceeded
the minimum required RBC levels.
(13) Business Segments
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide for a
means for replacing the income of the insured in the event of premature death,
and (2) Lifestyle Protection and Enhancement, comprised of products intended
to protect accumulated wealth and income from the financial drain of
unforeseen events.
The following is a summary of industry segment activity for 1999, 1998 and
1997:
<TABLE>
<CAPTION>
1999 1998
------------------------------------ ------------------------------------
Wealth Lifestyle Wealth Lifestyle
accumulation & protection & accumulation & protection &
transfer enhancement Total transfer enhancement Total
-------------- ------------ -------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Net investment income... $ 120.0 $ 6.0 $ 126.0 $ 111.9 $ 4.0 $ 115.9
Net unrealized
investment gains....... 0.3 -- 0.3 2.5 -- 2.5
Premiums................ 36.3 42.8 79.1 48.3 35.0 83.3
Other revenues.......... 3.4 -- 3.4 3.0 -- 3.0
-------- ------ -------- -------- ----- --------
Total revenues........ $ 160.0 $ 48.8 $ 208.8 $ 165.7 $39.0 $ 204.7
-------- ------ -------- -------- ----- --------
Interest credited,
benefits and other
changes in policy
reserves............... 114.0 33.7 147.7 122.0 26.0 148.0
Commissions............. 17.8 10.3 28.1 8.0 9.0 17.0
Amortization of
intangibles............ 5.5 0.6 6.1 6.3 1.0 7.3
Other operating costs
and expenses........... (3.5) (0.2) (3.7) 3.2 (4.0) (0.8)
-------- ------ -------- -------- ----- --------
Total benefits and
expenses............. 133.8 44.4 178.2 139.5 32.0 171.5
-------- ------ -------- -------- ----- --------
Income before income
taxes................ $ 26.2 $ 4.4 $ 30.6 $ 26.2 $ 7.0 $ 33.2
======== ====== ======== ======== ===== ========
Total assets............ $1,986.2 $135.7 $2,121.9 $1,787.7 $93.3 $1,881.0
======== ====== ======== ======== ===== ========
</TABLE>
<TABLE>
<CAPTION>
1997
------------------------------------
Wealth Lifestyle
accumulation & protection &
transfer enhancement Total
-------------- ------------ --------
<S> <C> <C> <C>
Net investment income................... $ 107.5 $ 4.1 $ 111.6
Net unrealized investment losses........ 2.2 -- 2.2
Premiums................................ 20.5 26.4 46.9
Other revenues.......................... 3.7 -- 3.7
-------- ----- --------
Total revenues........................ $ 133.9 $30.5 $ 164.4
-------- ----- --------
Interest credited, benefits and other
changes in policy reserves............. 99.1 15.1 114.2
Commissions............................. 8.9 8.7 17.6
Amortization of intangibles............. 7.4 0.8 8.2
Other operating costs and expenses...... (0.1) (4.5) (4.6)
-------- ----- --------
Total benefits and expenses........... 115.3 20.1 135.4
-------- ----- --------
Income before income taxes............ $ 18.6 $10.4 $ 29.0
======== ===== ========
Total assets............................ $1,711.9 $95.6 $1,807.5
======== ===== ========
</TABLE>
F-16
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
<TABLE>
<C> <S>
(1)(a) Resolution of Board of Directors of GE Capital Life Assurance Company
of New York ("GE Capital Life") authorizing the establishment of the
GE Capital Life Separate Account II (the "Separate Account").(1)
(1)(b) Resolution of Board of Directors of GE Capital Life Assurance Company
of New York authorizing the establishment of thirty-seven investment
subdivisions of Separate Account II investing in shares of Alger
American Small Capitalization Portfolio and Alger American Growth
Portfolio of the Alger American Fund; VIP Equity-Income Portfolio,
VIP Growth Portfolio and VIP Overseas Portfolio of Fidelity Variable
Insurance Products Fund; VIP II Asset Manager Portfolio and VIP II
Contrafund Portfolio of Fidelity Variable Insurance Products Fund
II; VIP III Growth & Income Portfolio and VIP III Growth
Opportunities Portfolio of Fidelity Variable Insurance Products Fund
III; Federated Utility Fund II, Federated High Income Bond Fund II
and Federated American Leaders Fund II of Federated Insurance
Series; Balanced Portfolio, Flexible Income Portfolio, Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio,
International Growth Portfolio and Capital Appreciation Portfolio of
Janus Aspen Series; Money Market Fund, Income Fund, S&P 500 Index
Fund, Total Return Fund, International Equity Fund, Real Estate
Securities Fund, Global Income Fund, Value Equity Fund and U.S.
Equity Fund of GE Investments Funds, Inc.; Oppenheimer High Income
Fund, Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund,
Oppenheimer Growth Fund and Oppenheimer Multiple Strategies Fund of
Oppenheimer Variable Account Funds; PBHG Growth II Portfolio and
PBHG Large Cap Growth Portfolio of PBHG Insurance Series Fund, Inc.
Goldman Sachs Growth and Income Fund and Goldman Sachs Mid Cap
Equity Fund of Goldman Sachs Asset Management, Inc.(5)
(1)(c) Resolution of Board of Directors of GE Capital Life Assurance Company
of New York authorizing the name change of certain investment
subdivisions of Separate Account II investing in shares of
Oppenheimer High Income Fund/VA, Oppenheimer Bond Fund/VA,
Oppenheimer Aggressive Growth Fund/VA, Oppenheimer Capital
Appreciation Fund/VA and Oppenheimer Multiple Strategies Fund/VA of
Oppenheimer Variable Account Funds and Goldman Sachs Mid Cap Value
Fund of Goldman Sachs Asset Management, Inc.(5)
(1)(d) Resolution of Board of Directors of GE Capital Life Assurance Company
of New York authorizing the establishment of additional investment
subdivisions of Separate Account II investing in shares of Premier
Growth Equity Fund of GE Investments Funds, Inc. and Salomon
Investors Fund, Salomon Total Return Fund and Salomon Strategic Bond
Fund of Salomon Brothers variable Series Fund, Inc.(5)
(1)(e) Resolution of Board of Directors of GE Capital Life Assurance Company
of New York authorizing the change in name of investment
subdivisions investing in shares of GE Investments Funds Value
Equity Fund to GE Mid-Cap Value Equity Fund.(5)
</TABLE>
1
<PAGE>
<TABLE>
<C> <S>
(1)(f) Resolution of Board of Directors of GE Capital Life Assurance
Company of New York authorizing additional investment subdivisions
of Separate Account II investing in shares of AIM V.I. Capital
Appreciation Fund, AIM V.I. Growth Fund, and AIM V.I. Value Fund
of AIM Variable Insurance Funds; Growth and Income Portfolio,
Premier Growth Portfolio and Quasar Portfolio of Alliance Variable
Products Series Fund, Inc.; Dreyfus Investment Portfolios-Emerging
Markets Portfolio and The Dreyfus Socially Responsible Growth
Fund, Inc. of The Dreyfus Corporation; Federated High Income Bond
Fund II and Federated International Small Company Fund II of the
Federated Insurance Series; Equity Income Portfolio and Growth
Portfolio of Fidelity Variable Insurance Products Fund; Contrafund
Portfolio of Fidelity Variable Insurance Products Fund II; Growth
& Income Portfolio and Mid Cap Portfolio of Fidelity Variable
Insurance Products Fund III; Mid-Cap Value Equity Fund, Money
Market Fund, Premier Growth Equity Fund, S&P 500 Index Fund,
Small-Cap Value Equity Fund, U.S. Equity Fund, and Value Equity
Fund of GE Investments Funds, Inc.; Aggressive Growth Portfolio,
Balanced Portfolio, Capital Appreciation Portfolio, Global Life
Sciences Portfolio, Global Technology Portfolio, Growth Portfolio,
International Growth Portfolio, and Worldwide Growth Portfolio of
Janus Aspen Series; MFS Growth Series, MFS Growth With Income
Series, MFS New Discovery Series and MFS Utilities Series of the
Massachusetts Financial Services Company Variable Insurance Trust;
Oppenheimer Global Securities Fund/VA and Oppenheimer Main Street
Growth & Income Fund/VA of Oppenheimer Variable Account Funds;
Foreign Bond Portfolio, High Yield Bond Portfolio, Long-Term U.S.
Government Bond Portfolio and Total Return Bond Portfolio of PIMCO
Variable Insurance Trust; and Rydex OTC Fund of Rydex Variable
Trust.(6)
(2) Not Applicable.
(3) Underwriting Agreement between GE Capital Life and Capital
Brokerage Corporation.(2)
(3)(i) Dealer Sales Agreement.(2)
(4)(i) Form of Policy NY1155 4/00.(6)
(4)(ii) Endorsements to Policy.
(a) Guarantee Account Rider NY4066.(1)
(b) Trust Endorsement NY5066.(1)
(c) Pension Endorsement NY5067.(2)
(d) Individual Retirement Annuity Endorsement NY5069.(2)
(e) 403(b) Annuity Endorsement NY5070.(2)
(f) Optional Death Benefit Rider NY5071.(3)
(g) Roth IRA Annuity Endorsement NY5134.(6)
(h) Optional Enhanced Death Benefit Rider NY5141.(6)
(5) Form of Application.(6)
(6)(a) Certificate of Incorporation of GE Capital Life.(1)
(6)(b) By-Laws of GE Capital Life.(1)
(7) Not Applicable.
(8)(a) Form of Participation Agreement regarding Alger American Fund.(2)
(8)(a)(i) Amendment to Participation Agreement between Alger American Fund
and GE Capital Life Assurance Company of New York.(7)
(8)(b) Form of Participation Agreement regarding Federated Insurance
Series.(2)
(8)(b)(i) Amendment to Participation Agreement between Federated Insurance
Series and GE Capital Life Assurance Company of New York.(7)
</TABLE>
2
<PAGE>
<TABLE>
<C> <S>
(8)(c) Form of Participation Agreement regarding GE Investments Funds,
Inc.(2)
(8)(c)(i) Amendment to Participation Agreement between GE Investments
Funds, Inc. and GE Capital Life Assurance Company of New
York.(5)
(8)(c)(ii) Amendment to Participation Agreement between GE Investments
Funds, Inc. and GE Capital Life Assurance Company of New
York.(7)
(8)(d) Form of Participation Agreement regarding Janus Aspen Series.(2)
(8)(e)(i) Amendment to Participation Agreement between Janus Aspen Series
and GE Capital Life.(5)
(8)(f) Form of Participation Agreement regarding Oppenheimer Variable
Account Funds.(7)
(8)(g) Form of Participation Agreement regarding PBHG Insurance Series
Fund.(2)
(8)(h) Form of Participation Agreement regarding Variable Insurance
Products Fund.(2)
(8)(i) Form of Participation Agreement regarding Variable Insurance
Products Fund II.(2)
(8)(j) Form of Participation Agreement regarding Variable Insurance
Products Fund III.(2)
(8)(j)(i) Amendment to Participation Agreement between Variable Insurance
Products Fund III and GE Capital Life Assurance Company of New
York.(7)
(8)(k) Form of Participation Agreement regarding Goldman Sachs Variable
Insurance Trust.(2)
(8)(l) Form of Participation Agreement regarding Salomon Brothers
Variable Series Fund.(4)
(8)(m) Form of Participation Agreement between AIM Variable Insurance
Series and GE Capital Life Assurance Company of New York.(7)
(8)(n) Form of Participation Agreement between Alliance Variable Series
and GE Capital Life Assurance Company of New York.(7)
(8)(o) Form of Participation Agreement between Dreyfus and GE Capital
Life Assurance Company of New York.(7)
(8)(p) Form of Participation Agreement between MFS Variable Insurance
Trust and GE Capital Life Assurance Company of New York.(7)
(8)(q) Form of Participation Agreement between PIMCO Variable Insurance
Trust and GE Capital Life Assurance Company of New York.(7)
(8)(r) Form of Participation Agreement between Rydex Variable Trust and
GE Capital Life Assurance Company of New York.(7)
(9) Opinion and Consent of Counsel.(7)
(10)(i) Consent of Sutherland Asbill & Brennan LLP.(7)
(10)(ii) Consent of Independent Auditors.(7)
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Power of Attorney.(1)
(14)(b) Power of Attorney.(5)
(14)(c) Power of Attorney.(6)
</TABLE>
--------
(1) Incorporated herein by reference to initial filing of the Registration
Statement on Form N-4 File No. 333-39955, filed with the Securities and
Exchange Commission on September 10, 1997.
3
<PAGE>
(2) Incorporated herein by reference to Pre-Effective Amendment No. 1 of the
Registration Statement on Form N-4 File No. 333-39955, filed with the
Securities and Exchange Commission on May 13, 1998.
(3) Incorporated herein by reference to Post-Effective Amendment No. 1 filing
of the Registration Statement on Form N-4 File No. 333-9955, filed with the
Securities and Exchange Commission on March 1, 1999.
(4) Incorporated herein by reference to Post-Effective Amendment No. 2 filing
of the Registration Statement on Form N-4 File No. 333-9955, filed with the
Securities and Exchange Commission on May 1, 1999.
(5) Incorporated herein by reference to Post-Effective Amendment No. 3 filing
of the Registration Statement on Form N-4 File No. 333-9955, filed with the
Securities and Exchange Commission on May 1, 2000.
(6) Incorporated herein by reference to the initial filing of the Registration
Statement on Form N-4 No. 333-47016, filed with the Securities and Exchange
Commission on September 29, 2000.
(7) Incorporated herewith.
Item 25. Directors and Officers of GE Capital Life
<TABLE>
<CAPTION>
Positions and Offices with
Name Address Depositor
---- ------- --------------------------
<S> <C> <C>
Pamela S. Schutz........ GE Financial Assurance Chairperson
6610 W. Broad Street
Richmond, VA 23230
Cheryl Whaley........... GE Capital Life of NY President, Chief Executive
125 Park Avenue, 6th floor Officer & Managing Officer
New York, NY 10017-5529
Marshall S. Belkin...... 345 Kear Street Director
Yorktown Heights, NY 10598
Richard I. Byer......... Clark & Pope, Inc. Director
317 Madison Avenue
New York, NY 10017
Thomas W. Casey......... GE Financial Assurance Vice President, Chief Financial
6604 W. Broad St. Officer and Director
Richmond, VA 23230
Bernard M. Eiber........ 55 Northern Blvd. Director
Room 302
Great Neck, NY 11021
Jerry S. Handler........ Handro Properties Director
151 West 40th St.
New York, NY 10018
Gerald A. Kaufman....... 33 Walt Whitman Rd., Suite 233 Director
Huntington Station, NY 11746
Donita King............. GE Financial Assurance Senior Vice President, General
6610 W. Broad Street Counsel & Secretary
Richmond, VA 23230
Leon E. Roday........... GE Financial Assurance Director and Senior
6604 West Broad St. Vice President
Richmond, VA 23230
A. Louis Parker......... GEFA Benefit Services Director
4850 Street Road
Trevose, PA 19049
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name Address Positions and Offices with Depositor
---- ------- ------------------------------------
<S> <C> <C>
Isidore Sapir........... Granit Apartments at the Granit Director
Apt. 756, P.O. Box 657
Kernonkson, NY 12446
Thomas A. Skiff......... GE Financial Assurance Director
1650 Los Gamos Dr.
San Rafael, CA 94903
Steven A. Smith......... First Colony Life Director
700 Main Street
Lynchburg, VA 24505
Geoffrey S. Stiff....... GE Financial Assurance Director
6610 W. Broad St.
Richmond, VA 23230
</TABLE>
5
<PAGE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
The following chart identifies the persons controlled by or under common
control with the Depositor or the Registrant.
ORGANIZATIONAL CHART
|
GENERAL ELECTRIC
COMPANY
|
(100%)
|
GENERAL ELECTRIC
CAPITAL SERVICES, INC.
|
(100%)
|
GENERAL ELECTRIC
CAPITAL CORPORATION
|
--------------
|
Other (100%)
Subsidiaries
|
GE FINANCIAL ASSURANCE
HOLDINGS, INC.
|
(100%)
|
GNA CORPORATION
|
(100%)
|
GENERAL ELECTRIC
CAPITAL ASSURANCE COMPANY
|
(100%)
|
GE CAPITAL LIFE
ASSURANCE COMPANY OF NEW YORK
6
<PAGE>
Item 27. Number of Policyowners
N/A
Item 28. Indemnification
The Bylaws of GE Capital Life provide that:
(a) See Exhibit (6)(ii)--Article VIII
Rule 484 Undertaking
Section 722 of the Code of New York, in brief, allow a corporation to
indemnify any person made party to a proceeding because such person is or was a
director, officer, employee, or agent of the corporation, against liability
incurred in the proceeding if: (1) he conducted himself in good faith; and (2)
he believed that (a) in the case of conduct in his official capacity with the
corporation, his conduct was in its best interests; and (b) in all other cases,
his conduct was at least not opposed to the corporation's best interests and
(3) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. The termination of a proceeding by judgment,
order, settlement or conviction is not, of itself, determinative that the
director, officer, employee, or agent of the corporation did not meet the
standard of conduct described. A corporation may not indemnify a director,
officer, employee, or agent of the corporation in connection with a proceeding
by or in the right of the corporation, in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging
improper personal benefit to such person, whether or not involving action in
his official capacity, in which such person was adjudged liable on the basis
that personal benefit was improperly received by him. Indemnification permitted
under these sections of the Code of New York in connection with a proceeding by
or in the right of the corporation is limited to reasonable expenses incurred
in connection with the proceeding.
Article VIII, Section 1 of the By-Laws of GE Capital Life Assurance Company
of New York further provides that:
(a) The Corporation may indemnify any person, made, or threatened to be
made, a party to an action or proceeding other than one by or in the right of
the Corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other Corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of
the Corporation, or served such other Corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
fines, amounts paid in settlement and reasonable expenses, including attorney's
fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonable believed to be in, or, in the case of
service for any other Corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests
of the Corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other Corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the Corporation or that he had reasonable
cause to believe that his conduct was unlawful.
7
<PAGE>
(c) A Corporation may indemnify any person made, or threatened to be made, a
party to an action by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he, his testator or intestate, is or
was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of any other Corporation of
any type or kind, domestic or foreign, of any partnership, joint venture,
trust, employee benefit plan or other enterprise, against amounts paid in
settlement and reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him in connection with the defense or settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in
good faith, for a purpose which he reasonably believed to be in or in the case
of service for other Corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to the best interests of
the Corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action or a pending action which is settled
or otherwise disposed of or (2) any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation, unless and
only to the extent that the court in which the action was brought, or, if no
action was brought, any court of competent jurisdiction, determines upon
application that, in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such portion of the settlement
and expenses as the court deems proper.
(d) For the purpose of this section, the Corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his duties to the Corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Corporation.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provision, or otherwise
under circumstances where the burden of proof set forth in Section 11(b) of the
Act has not been sustained, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
(a) Capital Brokerage Corporation is the principal underwriter of the
Policies as defined in the Investment Company Act of 1940.
8
<PAGE>
(b)
<TABLE>
<CAPTION>
Name Address Position and Offices with Underwriter
---- ------------------------ ------------------------------------------------
<S> <C> <C>
Christopher A. Cokinis.. GE Financial Assurance President and Chief Executive Officer
6610 W. Broad Street
Richmond, VA 23230
David J. Beck........... GE Financial Assurance Senior Vice President & Chief Investment Officer
601 Union St., Ste. 5600
Seattle, WA 98101
Scott A. Curtis......... GE Financial Assurance Senior Vice President
6604 W. Broad St.
Richmond, VA 23230
Thomas W. Casey......... GE Financial Assurance Senior Vice President & Chief Financial Officer
6604 W. Broad St.
Richmond, VA 23230
Gary T. Prizzia......... GE Financial Assurance Treasurer
6604 W. Broad Street
Richmond, VA 23230
Victor C. Moses......... GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff....... GE Financial Assurance Senior Vice President
6610 W. Broad St.
Richmond, VA 23230
Ward E. Bobitz.......... GE Financial Assurance Vice President & Assistant Secretary
6604 W. Broad St.
Richmond, VA 23230
Brenda Daglish.......... GE Financial Assurance Vice President & Assistant Treasurer
6604 W. Broad St.
Richmond, VA 23230
William E. Daner, Jr. .. GE Financial Assurance Vice President, Counsel & Secretary
6610 W. Broad St.
Richmond, VA 23230
Stephen N. DeVos........ GE Financial Assurance Vice President & Investment Officer
610 Union St., Ste. 5600
Seattle, WA 98101
Richard G. Fucci........ GE Financial Assurance Vice President & Controller
6604 W. Broad St.
Richmond, VA 23230
Scott A. Reeks.......... GE Financial Assurance Vice President & Assistant Treasurer
6610 W. Broad St.
Richmond, VA 23230
</TABLE>
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules under it are maintained by GE
Capital Life at its administrative office.
9
<PAGE>
Item 31. Management Services
All management Policies are discussed in Part A or Part B of this
Registration Statement.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this Registration Statement as frequently as 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 variable annuity Policies may
be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to GE Capital Life at the address or
phone number listed in the Prospectus.
SECTION 403(b) REPRESENTATIONS
GE Capital Life represents that in connection with its offering of Policies
as funding vehicles for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code of 1986, it is relying on a no-action
letter dated November 28, 1988, to the American Council of Life Insurance (Ref.
No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment
Company Act of 1940, and that paragraphs numbered (1) through (4) of that
letter will be complied with.
SECTION 26(e)(2)(A) REPRESENTATION
GE Capital Life hereby represents that the fees and charges deducted under
the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by GE
Capital Life.
10
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, GE Capital Life Separate Account II, has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, in the
County of Henrico in the Commonwealth of Virginia, on the 7th of December,
2000.
GE Capital Life Separate Account II
(Registrant)
/s/ Donita M. King
By: _________________________________
Senior Vice President, General
Counsel and Secretary
GE Capital Life Assurance Company
of New York
GE Capital Life Assurance Company of
New York (Depositor)
/s/ Donita M. King
By: _________________________________
Senior Vice President, General
Counsel and Secretary
GE Capital Life Assurance Company
of New York
As required by the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director, President, Chief December 7, 2000
______________________________________ Executive Officer
Cheryl Whaley Managing Officer
* Director, Chairperson of December 7, 2000
______________________________________ the Board
Pamela S. Schutz
* Senior Vice President and December 7, 2000
______________________________________ General Counsel
Leon E. Roday
* Director December 7, 2000
______________________________________
Richard I. Byer
* Vice President and Chief December 7, 2000
______________________________________ Financial Officer
Thomas M. Casey
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director December 7, 2000
______________________________________
Thomas A. Skiff
* Director December 7, 2000
______________________________________
Geoffrey S. Stiff
/s/ Donita M. King General Counsel, Sr. Vice December 7, 2000
______________________________________ President & Secretary
Donita M. King
</TABLE>
* By /s/ Donita M. King, pursuant to Power of Attorney executed on September 1,
2000.
12
<PAGE>
Exhibit List
<TABLE>
<C> <S>
(8)(b)(i) Amendment to Participation Agreement between Federated Insurance
Series and GE Capital Life Assurance Company of New York
(8)(c)(ii) Amendment to Participation Agreement between Janus Aspen Series
Inc. and GE Capital Life Assurance Company of New York
(8)(d)(i) Amendment to Participation Agreement between GE Investments Funds,
Inc. and GE Capital Life Assurance Company of New York
(8)(f) Participation Agreement between Oppenheimer Variable Account Funds
and GE Capital Life Assurance Company of New York
(8)(j)(i) Amendment to Participation Agreement between Variable Insurance
Products Fund III and GE Capital Life Assurance Company of New
York
(8)(m) Form of Participation Agreement between AIM Variable Insurance
Series and GE Capital Life Assurance Company of New York
(8)(n) Form of Participation Agreement between Alliance Variable Series
and GE Capital Life Assurance Company of New York
(8)(o) Form of Participation Agreement between Dreyfus and GE Capital Life
Assurance Company of New York
(8)(p) Form of Participation Agreement between MFS Variable Insurance
Trust and GE Capital Life Assurance Company of New York
(8)(q) Form of Participation Agreement between PIMCO Variable Insurance
Trust and GE Capital Life Assurance Company of New York
(8)(r) Form of Participation Agreement between Rydex Variable Trust and GE
Capital Life Assurance Company of New York
(9) Opinion and Consent of Counsel
(10)(i) Consent of Sutherland Asbill & Brennan LLP
(10)(ii) Consent of Independent Auditors
</TABLE>
13
